NOE S. ANDAYA, PETITIONER, VS. LISANDRO C. ABADIA, RENE R. CRUZ, VICTOR M. PUNZALAN, LYSIAS C. CABUSAO, JOSE O. BARNUEVO, JOSE M. FORONDA, LAMBERTO TORRES, EDGAR C. GALVANTE, EM…

Maintaining that the Regional Trial Court (RTC) and not the
Securities and Exchange Commission (SEC) has jurisdiction over his complaint,
petitioner argues that the court a quo^[1]
should not have dismissed Civil Case No. Q-91-10470 filed by him against herein
respondents, who were original defendants in the court below. He asserts that “actually, the complaint
is based not so much on plaintiff’s attempted removal but rather on the manner
of his removal and the consequent effects thereof.”^[2]
Specifically, he alleges in his petition that –

Before the Regional Trial Court, Branch 101, Quezon City, in an
action denominated ‘Injunction and Damages with Restraining Order and/or
Preliminary Injunction’, docketed as Civil Case No. Q-91-10470 of said Court,
petitioner NOE S. ANDAYA, as plaintiff, sued respondents LISANDRO C. ABADIA,
RENE R. CRUZ, VICTOR M. PUNZALAN, LYSIAS C. CABUSAO, JOSE O. BARNUEVO, JOSE M.
FORONDA, LAMBERTO TORRES, EDGAR C. GALVANTE, EMERSON C. TANGAN, PRIMITIVO A.
SOMERA and BENJAMIN N. SANTOS, SR., as defendants, alleging x x x that said
respondents, as directors of the Armed Forces and Police Savings and Loan
Association, Inc., (AFPSLAI) x x x acting in concert and pursuant to an illegal
and nefarious scheme to oust petitioner from his then positions as President
and General Manager of the AFPSLAI, with grave abuse of authority and in gross and
deliberate violation of the norms of human relations and of petitioner’s right
to due process, illegally, maliciously and with evident bad faith, convened a
meeting of the AFPSLAI Board of Directors and illegally reorganized the
management of AFPSLAI by ousting and removing, without just and lawful cause,
petitioner from his positions therein, causing petitioner moral and exemplary
damages, and praying x x x for the issuance of a temporary restraining order x
x x and x x x a writ of preliminary injunction, restraining respondents from
implementing the result of the irregularly convened and illegally conducted
reorganization of the management of the AFPSLAI, as well as respondents
Punzalan and Tangan from assuming and taking over from petitioner the offices
of President and General Manager of said AFPSLAI and from performing and
exercising the functions and powers thereof pending final determination of the
case.^[3]

On 30 October 1991, the trial court granted the prayer of
petitioner for temporary restraining order and set the hearing on the injunctive relief.^[4]

On 4 November
1991, respondents filed an Urgent Motion to Dismiss on the ground that the
complaint raised intra-corporate controversies over which the Securities and
Exchange Commission, and not the court a
quo, has exclusive
original jurisdiction.^[5] On 5
November 1991, respondents filed an Urgent Motion to Lift Restraining Order and
Opposition to Preliminary Injunction.^[6]
Petitioner filed a Consolidated Opposition to Urgent Motion to Dismiss and
Motion to Lift Restraining Order with Reply to Opposition to Preliminary
Injunction and Reiteration of Motions for Contempt (for violation of the
Temporary Restraining Order), arguing that “the case is mainly based not
on petitioner’s attempted removal per
se but rather on the manner of his removal and the effect thereof,
which was done anti-socially, oppressively, in gross violation of the norms of
human relations and without giving petitioner his due x x x x”^[7]

On 12 November 1991, before the trial court could rule on the
motion to dismiss, petitioner filed an amended complaint impleading as
additional defendants then Central Bank Governor Jose L. Cuisia, Jr., Central
Bank SRDC Managing Director Ricardo P. Lirio and Central Bank SES Acting
Director Candon B. Guerrero.^[8] On 13
November 1991, respondents filed an Omnibus Motion contending, inter alia,
that the filing of an amended complaint seeking to confer jurisdiction on the
court was improper and should not be allowed.^[9]

On 14 November 1991, Judge Pedro T. Santiago of the court a
quo issued an order dismissing the case for lack of jurisdiction insofar as
herein respondents were concerned and denied petitioner’s motions to declare
respondents in contempt of court. While
the order mentioned the amended complaint, it made no express disposition
thereon. It simply ruled that –

Evidently, the prayers for damages and injunction are predicated on
corporate matters. It should be
stressed at this point that the subject causes of action stated in the
complaint, from the alleged illegal notices of meetings to the election and
tenure of officers, are matters covered by the AFPSLAI By-Laws. Specifically, on the allegation that the
plaintiff was ousted and removed in a votation by the AFPSLAI Board of
Directors, whether rightly or without just cause, this is covered by the
AFPSLAI By-Laws, Sec. 3, that: ‘All
executive officers shall hold office at the pleasure of the Board, and all
other officers, agents, and employees shall hold office for such time as it is
provided for in their contract of employment and if none is provided, at the
pleasure of the Board (underscoring supplied).

The specific law, P.D. No. 902-A, defines and vests jurisdiction
over corporate matters in the Securities and Exchange Commission in no
uncertain terms, Section 3, to be ‘absolute jurisdiction, supervision and
control over all corporations.’ In the case at bar, AFPSLAI is a corporation
and the alleged causes of action in the complaint are clearly corporate
matters.

The damages sought as a
consequence of the alleged corporate wrongs committed by the
defendants becomes merely incidental. The other relief for injunction prayed for is also within the
jurisdictional power of the SEC (Sec. 6, P.D. 902-A).

In resume therefore, the very allegations in the complaint being
indubitably corporate matters militate against the jurisdiction of this Court
over the instant case.^[10]

On 18 November 1991, petitioner moved to reconsider the 14
November 1991 order arguing, among others, that “since the case under the
Amended Complaint impleads parties-defendant not in any way connected with the
AFPSLAI, any apparent corporate element in the case is swept away.”^[11]
Respondents filed an opposition thereto, and on 10 February 1992, the court a
quo denied the motion for reconsideration as well as the motion to dismiss
the amended complaint earlier filed by defendants Cuisia, et al., holding that
–

x x x the fact
remains that the substance and essence of the complaint against the original 11
defendants in both the first and the amended complaint are the same – that the
said defendants are being held civilly liable for their corporate acts in the
AFPSLAI.

Consequently, the Court finds no reason to change its resolution
dismissing the instant complaint FOR LACK OF JURISDICTION insofar as the original
defendants are concerned, namely: Lisandro C. Abadia, Rene R. Cruz, Victor M. Punzalan, Lysias C. Cabusao,
Jose O. Barnuevo, Jose M. Foronda, Lamberto Torres, Edgar C. Galvante, Emerson
C. Tangan, Primitivo A. Somera, Benjamin N. Santos, Sr.

x x x x Thus, where the defendants Abadia, et al., were dismissed
from the case, it does not necessarily follow that the whole case, specifically
the amended complaint, is also dismissed as the allegations therein insofar as
the defendants Cuisia, et al. x x x x
are concerned, are within the context of the jurisdiction of this Court. The matter does not only present a case of
splitting the causes of action, which is frowned upon, but a matter of
jurisdiction. This Court has no
jurisdiction on corporate matters as in the case of defendants Abadia, et
al. x x x x but not so, however, in the
case of defendants Cuisia, et al. x x x
x where their alleged acts stated in the amended complaint fall within the
jurisdiction of the Court.^[12]

Petitioner now comes to us on appeal praying for the reversal of
the orders of the court dated 14 November 1991 and 10 February 1992 insofar as
the case against herein respondents is concerned.

The allegations against herein respondents in the amended
complaint unquestionably reveal intra-corporate controversies cleverly
concealed, although unsuccessfully, by use of civil law terms and phrases. The amended complaint impleads herein
respondents who, in their capacity as directors of AFPSLAI, allegedly convened
an illegal meeting and voted for the reorganization of management resulting in
petitioner’s ouster as corporate officer. While it may be said that the same corporate acts also give rise to
civil liability for damages, it does not follow that the case is necessarily
taken out of the jurisdiction of the SEC as it may award damages which can be
considered consequential in the exercise of its adjudicative powers. Besides, incidental issues that properly
fall within the authority of a tribunal may also be considered by it to avoid
multiplicity of actions. Consequently,
in intra-corporate matters such as those affecting the corporation, its
directors, trustees, officers, shareholders, the issue of consequential damages
may just as well be resolved and adjudicated by the SEC.

Moreover, mere allegations of violation of the provisions of the
Civil Code on human relations do not necessarily call for the application of
the provisions of the Civil Code in place of AFPSLAI By-Laws. In De Tavera v. Philippine Tuberculosis
Society, Inc.,^[13] we ruled –

Petitioner cannot likewise seek relief from the general provisions
of the New Civil Code on Human Relations nor from the fundamental principles of
the New Constitution on preservation of human dignity. While these provisions present some basic principles
that are to be observed for the rightful relationship between human beings and
the stability of social order, these are merely guides for human conduct in the
absence of specific legal provisions and definite contractual stipulations. In the case at bar, the Code of By-Laws of
the Society contains a specific provision governing the term of office of
petitioner. The same necessarily limits
her rights under the new Civil Code and the New Constitution upon acceptance of
the appointment.

The determination of the rights of petitioner arising from the
alleged illegal convening of the meeting of AFPSLAI Board of Directors and his
subsequent ouster from corporate offices as a result of the voting for the
reorganization of management are obviously intra-corporate controversies
subject to the jurisdiction of SEC as provided in P.D. No. 902-A which states:

Sec. 5. – In addition to
the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations x x x it shall have original and exclusive
jurisdiction to hear and decide cases involving x x x x (b) Controversies
arising out of intra-corporate x x x relations x x x x (c) Controversies in the
election or appointment of directors, trustees, officers or managers of such
corporations x x x x

The same may also be said of petitioner’s prayer for damages,
considering that his right thereto either depends on, or is inextricably linked
with, the resolution of the corporate controversies. For instance, the prayer for moral damages is grounded on
“defendants’ gross and evident bad faith, insidious machinations and
conspirational acts, false and derogatory misrepresentations and imputations
against plaintiff and other malevolent and illegal acts calculated to realize
and accomplish the threatened illegal removal of plaintiff from his positions
aforesaid x x x x;”^[14] while the prayer for exemplary
damages is dependent on alleged respondents’ “concerted illegal effort to
maliciously set him up for, and fraudulently consummate, his illegal ouster
from his positions in the AFPSLAI x x x x”^[15]

Even the supposed allegations of violation of the provisions of
the Civil Code on human relations, as in par. 7 of the Complaint which states
that “certain parties, including defendant SANTOS, masterminded a plot to
degrade plaintiff and to denigrate his accomplishments in the AFPSLAI by
spreading false and derogatory rumors against plaintiff,” are all treated
in the complaint as mere components of the general scheme allegedly perpetrated
by respondents as directors to oust him from his corporate offices, and not as
causes of action independent of intra-corporate matters. Moreover, the injunction prayed for in the
complaint is within the jurisdiction of SEC pursuant to Sec. 6, par. (a), of
P.D. 902-A which states: “(i)n
order to effectively exercise such jurisdiction, the Commission shall possess
the following powers x x x x (t)o issue preliminary or permanent injunction,
whether prohibitory or mandatory, in all cases in which it has jurisdiction x x x x”

In his Supplemental Appeal by Certiorari With Prayer for
Issuance of Preliminary Injunction or Restraining Order,^[16]
petitioner refers to allegations in pars. 7, 11, 15 and 16^[17]
of the complaint which supposedly disclose that the case is within the
jurisdiction of the court a quo. Petitioner wilily, but unavailingly, tries to mangle his complaint,
dismember its parts, and present to us only those paragraphs which he considers
are beyond the jurisdiction of SEC.

We are not distracted by this artful maneuver. In giving utmost importance to these
paragraphs and in treating them as his strongest arguments to support his
position, petitioner unwittingly exposes his achilles’ heel. These paragraphs themselves show that the allegations
of violations of the rules on human relations also fall within the jurisdiction
of SEC because they are treated merely as ingredients of “malevolent and
illegal acts calculated to realize and accomplish the threatened illegal
removal of plaintiff from his (corporate) positions.

In sum, what petitioner filed against respondents before the
court a quo was an intra-corporate case under the
guise of an action for injunction and damages.

Petitioner also seeks reversal of the assailed orders on the alleged procedural infirmity that
“despite the filing of an Amended Complaint before a responsive pleading
has been filed, which superseded the original complaint and rendered
respondents’ Motion to Dismiss the original complaint functus officio, the Court a quo without first admitting the
Amended Complaint and merely upon respondents’ Omnibus Motion x x x dismissed the case as against
respondents.”

First of all, under Sec. 2, Rule 10, Rules of Court, the filing
of an amended complaint before answer is an undisputed right of plaintiff,
hence, there is no need for the court to allow its admission.^[18]
Quite obviously, any statement admitting such amended complaint may reasonably
be considered a superfluity. Considered
in this light, the court a quo could not be faulted for not making
any statement admitting the amended complaint.

It appears however that the Omnibus Motion (seeking dismissal of
the Amended Complaint) was already filed when the court a quo rendered the order of 14 November 1991 resolving, not the
Omnibus Motion, but the Urgent Motion to Dismiss (seeking dismissal of the
original Complaint). Ordinarily, the
filing of the Omnibus Motion should render the Urgent Motion to Dismiss
superseded.^[19]
Petitioner thus posits that the court a
quo was precluded from acting not only on the Urgent Motion to
Dismiss because it was deemed superseded, but also on the Omnibus Motion
because no hearing was had thereon thus leaving the assailed orders without
basis to lean on. Where in this case,
however, the Omnibus Motion already comprehended the lone issue raised in the
Urgent Motion to Dismiss (i.e., the court has no jurisdiction over intra­-corporate
matters) and upon which ground the court a quo dismissed the case against respondents, the previous
hearing^[20]
on the Urgent Motion to Dismiss may cure the defect of absence of hearing on
the Omnibus Motion but only insofar as said issue was concerned. What is important is that petitioner was
heard on that issue, hence, due process was observed. Moreover, the Omnibus Motion made an express statement adopting
the arguments in the Urgent Motion to Dismiss. While this practice of adopting another pleading is not necessarily
encouraged,^[21]
the peculiar circumstances of this case demand the application of
liberality. Besides, even if the Urgent
Motion to Dismiss may have been deemed superseded, the court is not precluded
from considering the same which still remains in the record. The withdrawal of motions or pleadings from
the record cannot easily be implied.^[22]

The foregoing notwithstanding, remedial rights and privileges
under the Rules of Court are utterly useless in a forum that has no
jurisdiction over the case. It should
be noted that the court a quo dismissed
the case against respondents on the ground that it has no jurisdiction over the
subject matter thereof which mainly involves intra-corporate controversies.

Jurisdiction over subject matter is essential in the sense that
erroneous assumption thereof may put at naught whatever proceedings the court
might have had. Hence, even on appeal,
and even if the parties do not raise the issue of jurisdiction, the reviewing
court is not precluded from ruling that it has no jurisdiction over the
case. It is elementary that
jurisdiction is vested by law and cannot be conferred or waived by the parties
or even by the judge. It is also
irrefutable that a court may at any stage of the proceedings dismiss the case
for want of jurisdiction. For this
matter, the ground of lack of jurisdiction in dismissing a case is not
waivable. Hence, the last sentence of
Sec. 2, Rule 9, Rules of Court, expressly states: “Whenever it appears that the court has no jurisdiction over
the subject matter, it shall dismiss the action.”

We note that Sec. 2, Rule 9 uses the word “shall,”
leaving the court no choice under the given situation but to dismiss the
case. The same Rule also uses the
phrase “whenever it appears,” which means at anytime after the
complaint or amended complaint is filed, because the lack of jurisdiction may
be apparent from the allegations therein. Hence, from the foregoing, even if no answer or motion to dismiss is
filed the court may dismiss the case for want of jurisdiction. In this sense, dismissal for lack of
jurisdiction may be ordered by the court motu proprio. Applying this notion to the case at
bar, with the dismissal of the case against respondents for lack of jurisdiction, it then becomes
inconsequential whether the court acted on the Urgent Motion to Dismiss or on
the Omnibus Motion without the requisite notice as provided in Secs. 4 and 6 of
Rule 15 of the Rules of Court. The
determination of lack of jurisdiction over respondents being apparent from the
face of the amended complaint, the defect of want of prior notice and hearing
on the Omnibus Motion could not by itself confer jurisdiction upon the court a
quo.

WHEREFORE, finding no reversible error committed by the
court a quo, the instant petition is DISMISSED and the assailed orders of 14
November 1991 and 10 February 1992 are AFFIRMED. Costs against petitioner.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Regalado,
Davide, Jr., Romero, Nocon, Quiason, Puno, and
Vitug, JJ., concur.

Melo, J., no part.

^[1]
Regional Trial Court, Br. 101, Quezon City, presided by Judge Pedro T.
Santiago.

^[2]
Petition, p. 14; Rollo, p. 24.

^[3]
Id., par. 1, pp. 2-3; Rollo, pp. 12-13.

^[4]
Id., par. 2, p. 3; Rollo, p. 13.

^[5]
Id., par. 3.

^[6]
Id., par. 4, p. 4; Rollo, p. 14.

^[7]
Id., par. 5.

^[8]
Id., par. 6, p. 5; Rollo, p. 15.

^[9]
Memorandum for Respondents, par. 10, p. 5; Rollo, p. 380.

^[10]
Order of 14 November 1991, p. 2, Annex “A”, Petition; Rollo,
p. 34.

^[11]
Petition, par. 9, p. 6; Rollo, p. 16.

^[12]
Order of 10 February 1992, pp. 1-3, Annex “B”, Petition; Rollo,
pp. 38-40.

^[13]
No. L-48928, February 25, 1982; 112 SCRA 243, 254.

^[14]
Complaint, par. 14, pp. 7-8, Annex “C”, Petition; Rollo, pp. 47-48.

^[15]
Id., par. 15, p. 8, Annex “C”, Petition; Rollo, p. 48.

^[16]
Rollo, pp. 274-285.

^[17]
7. THAT plaintiff is informed,
believed and therefore alleges that, obviously envious of his achievements at the
helm of the AFPSLAI, certain parties, including defendant SANTOS, masterminded
a plot to degrade plaintiff and to denigrate his accomplishments in the AFPSLAI
by spreading false and derogatory rumors against plaintiff and his
administration, feeding the Chairman with false and misleading reports,
furnishing derogatory and distorted information to political quarters and
submitting adverse and falsified reports to the Central Bank which not only
alienated and placed plaintiff in an unfavorable light in the view of the
parties concerned and even unduly motivated a Senator’s adverse speech on the
Senate ‘floor but also provoked threats for the ouster of plaintiff as
President and General Manager of the AFPSLAI x x x x

11. THAT, despite all the
foregoing, defendant ABADIA, obviously yielding to pressure from influential
elements both in the AFP and political circles, acting in connivance with the
other defendants in pursuing their illegal and nefarious scheme to oust
plaintiff from his positions in the AFPSLAI, with grave abuse of authority and
in gross and deliberate violation of the norms of human relations, convened the
illegally called meeting of the AFPSLAI Board of Directors and, acting with
evident bad faith and without giving plaintiff his due, did then and there,
concertedly and in connivance with each other, illegally and maliciously voted
to reorganize the management by ousting and removing, without just and lawful
cause, plaintiff from his positions as President and General Manager of the
AFPSLAI x x x x

15. THAT the acts of defendants in
the duplicitous dealings with plaintiff and in their concerted effort to
maliciously set him up for, and fraudulently consummate, his illegal ouster
from his positions in the AFPSLAI, have been repeatedly characterized and
tainted with wantonness, duplicity, recklessness, malevolence, abuse of
authority and brazen disregard of the norms of human relations designed to
malign plaintiff’s good name and reputation and injure his rights and
interests, for which defendants should be held liable, by way of example and
correction for the public good and as deterrence for others who may be minded
to act in a similar manner, for exemplary damages in the amount of P9 Million;

16. THAT defendants’ actuations
detailed and described in the preceding paragraphs have compelled plaintiff to
incur actual damages in the concept of destroyed business opportunities,
including but not limited to consultancy fees, transportation and
representation expenses, and such other resulting from defendants’ unlawful
actuations, in the sum of P10 Million, and have likewise compelled plaintiff to
institute this suit for the vindication of his good name and reputation and the
protection of his rights and interests and, for the purpose, had to engage the
services of counsel, incurring therefor, attorney’s fees of P1 Million, besides
expenses of litigation x x x x (Rollo, pp. 44-49).

^[18]
Soledad v. Mamañgun, No. L-17983,
30 May 1963; 8 SCRA 110, 113.

^[19]
Where the original complaint is superseded by the filing of the amended
complaint, the filing of a motion to dismiss the amended complaint should
likewise render the motion to dismiss the original complaint superseded. However, if after the amendment no motion to
dismiss the amended complaint is filed, the motion to dismiss the original
complaint should stand. This is because
the amended complaint takes the place of the original complaint and generally
relates back to the filing of the original complaint; the result is as if the
motion to dismiss was filed after the amended complaint. Undoubtedly, it is permissible that the
amended complaint may be filed to rectify any defect in the complaint. On the other hand, if in the amended
complaint the defects pointed out in the defendant’s motion to dismiss are not
rectified, the court may favorably act on the motion to dismiss. This finds support in the last sentence of
Sec. 3, Rule 11, which pertains to an answer to amended complaint. The entire section reads: “If the complaint is amended, the time
fixed for the filing and service of the answer shall, unless otherwise ordered,
run from notice of the order admitting the amended complaint or from service of
such amended complaint. An answer filed
before the amendment shall stand as an answer to the amended complaint, unless
a new answer is filed within ten (10) days from notice or service as herein
provided.” Consequently, what renders the motion to dismiss the original
complaint superseded by the amended complaint is not the filing thereof as
suggested by petitioner, but the filing of the motion to dismiss it.

^[20]
Order of 10 February 1992, p. 1; Rollo, p. 38.

^[21]
Orbit Transportation Company v. Workmen’s Compensation Commission, No.
L-38768, 23 July 1974; 58 SCRA 78, 83.

^[22]
Sec. 5, Rule 9, Rules of Court, provides: Upon motion made by a party before responding to a pleading or, if no
responsive pleading is permitted by these rules, upon motion made by a party
within twenty (20) days after the service of the pleading upon him, or upon
court’s initiative at any time, the court may order any pleading to be stricken
out or that any sham or false, redundant, immaterial, impertinent, or
scandalous matter be stricken out therefrom.