Title
DMRC Enterprises vs. Este Del Sol Mountain Reserve, Inc.
Case
G.R. No. L-57936
Decision Date
Sep 28, 1984
DMRC sued Este del Sol for unpaid equipment rentals; dispute over jurisdiction—regular courts ruled proper, not SEC, as case involved contractual obligations, not intra-corporate matters.

Case Digest (G.R. No. L-57936)
Expanded Legal Reasoning Model

Facts:

  • Background of the Parties
    • Petitioner: DMRC Enterprises, a partnership engaged in the business of general construction, heavy equipment leasing, and related transactions.
    • Respondent: Este del Sol Mountain Reserve, Inc., a private corporation involved in a transaction with DMRC Enterprises.
  • The Agreement
    • On May 12, 1978, DMRC Enterprises made a written offer to lease three units of heavy equipment to the respondent.
      • Equipment details included:
        • One unit Payloader “KIMCO” (2-1/2 cubic yard) at P130.00 per hour;
ii. One unit Bulldozer D-80-A with ripper at P150.00 per hour; iii. One unit Bulldozer at P130.00 per hour with a guaranteed minimum use of 200 hours per month (excluding breakdown).
  • The agreement provided that the expenses for transporting the equipment to the jobsite were for the account of the respondent.
  • Payment Terms and Conditions
    • Part payment of the lease was to be made in cash, and another part through the acquisition of shares in the respondent corporation.
    • It was stipulated that an amount equivalent to 30% of the collection would be invested in shares of stock valued at P37,000.00 per share.
    • Respondent was also required to advance P5,000.00 per unit, to be deducted from the first collection.
  • Performance and Dispute
    • Performance by the Petitioner
      • DMRC Enterprises performed its contractual obligations from September 1, 1978 to October 15, 1978.
      • Total job performance was credited at P122,207.31, broken down into P87,106.83 in cash and P35,100.48 in share-based payments.
    • Default by the Respondent
      • Despite periodic submission of statements of account and repeated demands, the respondent failed to pay the outstanding obligations.
      • This failure led DMRC to file a complaint for the recovery of money and the delivery of personal property in Civil Case No. Q-29585.
  • Procedural Posture
    • Filing of the Complaint
      • The complaint was filed before the Court of First Instance of Rizal, Quezon City, Branch LII.
      • The basis of jurisdiction was anchored in Section 44 of the Judiciary Act of 1948.
    • Motion to Dismiss by the Respondent
      • The respondent moved to dismiss the case on the ground of lack of jurisdiction.
      • The respondent argued that under Section 5 of Presidential Decree No. 902-A, the Securities and Exchange Commission (SEC) holds original and exclusive jurisdiction over matters involving issuance of shares as payment, enabling it to hear controversies arising from intra-corporate or partnership relations.
  • Respondent’s Jurisdictional Argument
    • Argument on SEC's Exclusive Jurisdiction
      • The respondent contended that compelling the corporation to issue shares of stock, in payment of a valid debt, amounts to an intra-corporate controversy.
      • The SEC’s jurisdiction under PD 902-A was cited, particularly emphasizing that disputes involving internal corporate relations belong exclusively to the SEC.
    • Petitioner’s Counterargument
      • DMRC argued that the dispute was essentially an action for the collection of money arising out of a lease contract.
      • The petitioner maintained that the claim, despite the inclusion of share issuance, was primarily a monetary claim and thus well within the regular courts’ jurisdiction.

Issues:

  • Jurisdictional Competence
    • Whether the regular courts have jurisdiction over a dispute involving a contract that provides for lease payments partly in cash and partly in the form of shares of stock.
    • Whether the inclusion of the issuance of shares as partial payment transforms the nature of the dispute into an intra-corporate controversy subject to the exclusive jurisdiction of the Securities and Exchange Commission under PD 902-A.
  • Classification of the Dispute
    • Whether the dispute, characterized by a breach of contractual obligations for payment, constitutes a matter of basic contract enforcement or an intra-corporate issue.
    • Whether the allegation of non-payment for lease services could be separated from the provision involving share issuance to fall exclusively under the SEC’s purview.
  • Proper Forum Determination
    • Whether the complaint, as framed by the petitioner, properly submits to the jurisdiction of the regular courts based on the allegations and the nature of the claim.
    • Whether the alleged intra-corporate facet (issuance of shares) is substantive enough to invoke the SEC’s original and exclusive jurisdiction.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)

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