APOLONIO V. DIONISIO, VALERIANA R. DIONISIO, FLORENIO N. SANGIL, CLARITA G. BAUTISTA, EDILBERTO C. VILLANUEVA, EVENER VILLASANTA, ET AL., PETITIONERS, VS. HONORABLE COURT OF FIR…

As stockholders of ETCO Timber Corporation (ETCO), Filomeno Lamis and Neville Lamis filed a derivative suit (Civil Case No. 749) with the
Court of First Instance of South Cotobato, Branch II
(Koronadal), on May 24, 1982 against Apolonio V. Dionisio, Valeriana R. Dionisio, Florenio N. Sangil, Clarita G.
Bautista, Edilberto Villanueva, Evener Villasanta and Dolorico Mejorada – all officers/stockholders of ETCO – “for rendition of
corporate accounting, inspection of books of accounts, damages through embezzlement and falsification, annullment of undertaking and contract, upholding of
corporate presidency and management, and injunction”, with
application for a writ of preliminary injunction.

On June 8, 1982, without notice
and hearing, Judge Filomeno S. Gapultos,
then Presiding Judge of respondent court, issued an Order of preliminary
injunction enjoining the defendants and their representatives

–    from continuing
logging operations within the ETCO concession area in General
Santos City
and South Cotabato;

–    from representing
ETCO in any manner and from conducting its business with the government or any
private person or entity;

–    from interfering with plaintiff’s operations within the
timber area of ETCO;

–    from selling/disposing of their log production; and

–    from enforcing certain Board resolutions.

The Order also directed the seizure of
logs already cut and placed them under the temporary custody of the respondent
court.

The defendants, aside from filing an answer, filed a motion to
dismiss the complaint and to reconsider the preliminary injunction on the
ground of lack of notice and hearing, lack of jurisdiction of the court over
the subject matter of the case,
and improper venue.

Before the motion could be heard, Judge Gapultos
unfortunately died. There being no replacement, the defendants were faced with
the immediate implementation of the writ of preliminary injunction by
respondent Sheriff Ramon Progalidad.

At this juncture, the defendants filed the instant special civil
action for certiorari
with application for injunction, assailing the order of preliminary injunction dated June 8, 1982 of the respondent court for being a patent nullity on the
same grounds raised before the trial court, namely: (a) that the Order was
issued without notice and hearing; (b) that respondent court did not have
jurisdiction over the subject matter of the action; and (c) that venue was
improperly laid.

The petition is meritorious.

In the first place, the assailed Order of June 8, 1982 was issued in violation of Section 5
of Rule 58 of the Rules of Court, as amended on April 16, 1982 by Batas Pambansa
Blg. 224, which reads:

“SEC. 5. Preliminary injunction
not granted without notice; issuance of restraining order. – No preliminary injunction shall be granted without notice to the defendant. If it shall appear from the facts shown by affidavits or by the verified complaint that great or
irreparable injury would result to the applicant before the matter can be heard
on notice, the judge to whom the application for preliminary
injunction was made, may issue a restraining order to be effective only for a
period of twenty days from date of its issuance. Within the said twenty-day
period, the judge must cause an order to be served on the defendant,
requiring him to show cause, at a specified time and place, why the injunction should not be granted, and determine within the same period whether or not the preliminary injunction shall
be granted, and shall accordingly issue the corresponding order. In the event
that the application for preliminary
injunction is denied, the restraining order is deemed automatically
vacated.”*

The above-quoted amendatory provision was adopted as a reaction
against the indiscriminate issuance of ex–parte preliminary injunctions which, not
infrequently, converted the writ from an instrument in furtherance of justice
to a shield for injustice. Thereunder, in no case may
a preliminary injunction be issued without notice. The rule is absolute. Nevertheless,
if it appears that great or irreparable injury would result to the applicant
before his application for preliminary injunction could be heard on notice, the
judge could issue a temporary restraining order with a limited life of 20 days
from date of issue. If before the expiration of the 20-day period, the
application for preliminary injunction is denied, the temporary restraining order would thereby be
deemed automatically vacated. But if no action is taken by the judge on the
application for preliminary injunction within the said 20 days, the temporary
restraining order would automatically expire on the 20th day by the sheer force
of law, no judicial declaration to that effect being necessary. Thus, by the
terms of Batas Pambansa Blg.
224, a temporary, restraining order can no longer exist indefinitely; it has
become truly temporary.

There is another reason, equally compelling, why the
assailed order of preliminary injunction must be struck down. The respondent
court has no jurisdiction to hear and decide the basic complaint which raised
issues arising from supposed intra-corporate machinations involving alleged
falsification by corporate officers of corporate records, misappropriation of
corporate funds, fraudulent transfer/acquisition of shares of stocks, and
usurpation of corporate offices. These are clearly intra-corporate and kindred
disputes which fall within the exclusive
and original jurisdiction of the Securities and Exchange Commission pursuant to Section 5 of
Presidential Decree No. 902-A which took effect on March 11, 1976. This law reads:

“SEC. 5. In addition to the
regulatory and adjudicative functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of associations registered with
it as expressly granted under existing laws and decrees, it shall have original
and exclusive jurisdiction to hear and decide cases involving:

a)     Devices or schemes employed by or any acts,
of the board of directors, business associates
(sic), its officers or partners, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public and/or
of the stockholder, partners, members of associations or organizations
registered with the Commission.

b)     Controversies arising out of
intra-corporate or partnership relations, between and among stockholders,
members, or
associates; between any or all of them and the corporation, partnership or association
of which they are stockholders, members of associates, respectively; and
between such corporation, partnership or association and the state insofar as
it concerns their individual franchise or right to exist as such entity;

c)     Controversies in the election or
appointments of directors, trustees, officers or managers of such corporations,
partnerships or associations.”

The evident purpose to law in investing a specialized
administrative body like the Securities and Exchange Commission with additional
adjudicatory powers over intracorporate and kindred
disputes is to promote dispatch arising from expertise enhanced by
specialization in the settlement of the said controversies. On this premise, it
would not really matter whether the acts or events giving rise to litigation
occurred before or after the adoption of Presidential
Decree No. 902-A on March 11, 1976. Moreover, the settled rule on this point is
that the jurisdiction of a tribunal is determined by the statute in force at
the time of the commencement of the action. (Encarnacion vs. Baltazar, 1 SCRA 860; Aquizap
vs. Basilio, 21 SCRA 1434; People vs. Mariano, 71
SCRA 600.) There is no reason why this principle should not be applied
to both judicial and quasi-judicial bodies. Therefore, when the derivative suit
here in question was filed on May 24, 1982 by private respondent with the Court of
First Instance of South Cotabato, the said Court had
no more jurisdiction to entertain it, jurisdiction
over intra-corporate disputes having been previously
transferred by law to the Securities and Exchange Commission.

The foregoing considerations make it unnecessary to rule on the
issue of venue.

WHEREFORE, the petition is hereby granted. The questioned
Order of the court a quo dated June 8, 1982 is set aside and the complaint ordered
dismissed without prejudice to the filing thereof with the proper forum. The
temporary restraining order heretofore issued by this Court is made permanent. No
costs.

SO ORDERED.

Melencio-Herrera, Relova,
and Gutierrez, Jr., JJ.,
concur.

Teehankee, Acting C.J., in the result.

Vasquez, J., no part.

*
See also Presidential Decree No.
605 dated December 12, 1974
banning the issuance by courts of preliminary injunctions in cases involving
concessions, licenses, and other permits issued by public administrative
officials or bodies for the
exploitation of natural resources. Section 1 of this law provides: “No
court of the Philippines shall have jurisdiction to issue any restraining order, preliminary injunction or preliminary
mandatory injunction in any case involving or growing out of the issuance,
approval or disapproval, revocation or suspension of, or any action whatsoever
by the proper administrative official or body on concessions, licenses, permits, patents, or public grants of any kind in connection with the
disposition, explosition, utilization, exploration and/or development of the natural resources
of the Philippines.”