Sunday, March 11, 2012

Atwel vs Concepcion Progressive Assoc., Inc. [GR No. 169370, April 14 2008]

Facts: In 1948 Concepcion Progressive Association (CPA) was founded by then Assemblyman Melgazo in Leyte. In 1968 CPA president Melgazo bought a parcel of land in behalf of the association. The property was later on converted into a wet market, it also housed a cockpit and various forms of amusement. The income generated from the property, mostly rentals from the wet market, was paid to CPA. When Melgazo died, his son, petitioner Manuel Melgazo, succeeded him as CPA president and administrator of the property. On the other hand, petitioners Atwel and Pilpil were elected as CPA vice-president and treasurer, respectively. In 1997 while CPA was in the process of registering as a stock corporation, its other elected officers and members formed their own group and registered themselves in the SEC as officers and members of respondent Concepcion Progressive Association, Inc. (CPAI). Petitioners were not listed either as officers or members of CPAI. Later, CPAI objected to petitioners' collection of rentals from the wet market vendors. 

CPAI filed a case in the SEC for mandatory injunction. With the passage of RA 8799, the case was transferred to RTC, a special commercial court. In the complaint, CPAI alleged that it was the owner of the property and petitioners, without authority, were collecting rentals from the wet market vendors. The special commercial court ruled that the deed of sale covering the property was in the name of CPA, not Emiliano Melgazo. However, the court considered CPA the same as CPAI. On appeal, the petitioners went to the CA and contested the jurisdiction of the special commercial court over the case. According to them, they were not CPAI members, hence the case did not involve an intra-corporate dispute "between and among members" so as to warrant the special commercial court's jurisdiction over it. CPAI, on the other hand, argued that petitioners were already in estoppel as they had participated actively in the court proceedings. 

CA found that the special commercial court should not have tried the case since there was no intra-corporate dispute among CPAI members or officers, it nonetheless held that petitioners were already barred from questioning the court's jurisdiction based on the doctrine of estoppels enunciated in the SC ruling in Tijam v. Sibonghanoy. Hence, this appeal 


(1) Whether or not instant case involves intra-corporate controversy that is within jurisdiction of the special commercial court. 

(2) Whether or not the petitioner is barred by the doctrine of estoppels from questioning the jurisdiction of the special commercial court. 


(1) NO. To determine whether a case involves an intra-corporate controversy to be heard and decided by the RTC, two elements must concur: (1) the status or relationship of the parties and (2) the nature of the question that is subject of their controversy. 

The first element requires that the controversy must arise out of intra-corporate or partnership relations: (a) between any or all of the parties and the corporation, partnership or association of which they are stockholders, members or associates; (b) between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates and (c) between such corporation, partnership or association and the State insofar as it concerns their individual franchises. On the other hand, the second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. 

In the case at bar, these elements are not present. The records reveal that petitioners were never officers nor members of CPAI. CPAI itself admitted this in its pleadings. In fact, petitioners were the only remaining members of CPA which, obviously, was not the CPAI that was registered in the SEC. Moreover, the issue in this case does not concern the regulation of CPAI (or even CPA). The determination as to who is the true owner of the disputed property entitled to the income generated therefrom is civil in nature and should be threshed out in a regular court. Cases of this nature are cognizable by the RTC under BP 129. Therefore, the conflict among the parties here was outside the jurisdiction of the special commercial court. 

(2) NO. In Lozon v. NLRC, this Court came up with a clear rule on when jurisdiction by estoppel applies and when it does not: 

The operation of estoppel on the question of jurisdiction seemingly depends on whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist as a matter of law, and may not be conferred by the consent of the parties or by estoppel." However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position – that the lower court had jurisdiction.... (emphasis supplied) 

We likewise held in Metromedia that Tijam provided an exceptional circumstance. To void the trial court's decision in Tijam for lack of jurisdiction was not only unfair but patently revolting considering that the question on jurisdiction was raised only after 15 years of tedious litigation. The rule remains that estoppel does not confer jurisdiction on a tribunal that has none over the cause of action or subject matter of the case. Unfortunately for CPAI, no exceptional circumstance appears in this case to warrant divergence from the rule. Jurisdiction by estoppel is not available here. 

Consequently, CPAI cannot be permitted to wrest from petitioners (as the remaining CPA officers) the administration of the disputed property until after the parties' rights are clearly adjudicated in the proper courts. It is neither fair nor legal to bind a party to the result of a suit or proceeding in a court with no jurisdiction. The decision of a tribunal not vested with the appropriate jurisdiction is null and void.

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