COURT DECISION on the Islamic Bank by DIMAPUNONG

VIEWS: 127 PAGES: 10

More Info
									               Final Decision
             On the Islamic Bank




             By Abdel aziz dimapunong



       The Charter of the Islamic Bank, R.A. Act 6848
has gone through the grind of the judicial branch of
the government in the case of Abdel Aziz
Dimapunong, et. al, vs. Hon. Zosimo Angeles, as
Judge of RTC Makati, Branch 58, and Roberto De
Ocampo, et. al.. Docketed as C.A. - G.R. SP No.
28445, The case involves mostly on intracorporate
controversies in the Islamic Bank. It also touches on
the powers and functions of the Board of Arbitration
of the Islamic Bank as provided for under Section 9
of its Charter. What follows below is the complete
text of a Decision of the Hon. Court of Appeals.




             COURT OF APPEALS
            SEVENTEENTH DIVISION

                     DECISION


ISLAMIC BANKING IN THE PHILIPPINES                  0
           Promulgated January 13, 1993


                         Members:

                               HERRERA, O.,
                               MONTOYA, and
                               MONTENEGRO, J.J.

MONTOYA J.:

       From the pleadings filed in this petition, it
appears that on June 1, 1992, the Al Amanah Islamic
Investment Bank of the Philippines (AIIBP) filed a
complaint for injunction with damages before the
respondent Regional Trial Court of Makati (Br. 58)
against Abdel Aziz Dimapunong, et al. The AIIBP
alleged in its complaint that it is managed by a Board
consisting of six (6) members who are to serve until
the scheduled stockholders meeting in June, 1992;
that on April 28, 1992, the defendants Dimapunong,
et. al. declared themselves to be the newly elected
directors and officers of the AIIBP after an alleged
annual stockholders meeting held at the Army and
Navy Club in Manila; that said defendants have
circulated to the general public and all government
offices concerned, official notices of their alleged
assumption of office, directing everyone to recognize
them as such and threatening legal prosecution of
any one who may deal with the old Board unless
authorized by Dimapunong; that while the incumbent
management of the AIIBP was discussing the proper
legal action to take, Dimapunong et. al. with the
assistance of military/police authorities and other
armed persons, stormed the premises of the bank at
the Pacific Star Building in Makati and its branch
ISLAMIC BANKING IN THE PHILIPPINES                   1
office at the Manulife Center Building in Salcedo
Village, Makati and insisted on entering said offices
to install themselves thereat; and that while the
security forces at said premises were able to prevent
the defendants' siege of the building, the latter have
declared their intention to return for the same
purpose.

       The AIIBP prayed for the issuance of a
restraining order; pending resolution of its prayer for
a writ of preliminary injunction, to prevent the
defendants from committing further acts of
misrepresentation and from sowing further chaos
and disrupting the normal banking operations of the
plaintiff; and for the issuance of a permanent writ of
injunction against the defendants and for an order
directing them to pay the AIIBP moral, actual, and
exemplary damages, plus attorneys fees and costs of
suit.

       On June 2, 1992 respondent court issued a
temporary restraining order as prayed for by the
AIIBP.

       The defendants Dimapunong, et. al. filed a
"Motion to Dismiss and Dissolve Restraining Order",
alleging that the respondent court had no jurisdiction
over the subject and nature of the action; that venue
was improperly laid; that the plaintiff has no capacity
to sue; and that there is no cause of action, the
plaintiff is not entitled to the relief demanded, and the
complaint itself was insufficient.

      The defendants argued, among others, that the
issue between the parties is intra-corporate and falls
under the exclusive and original jurisdiction of the
ISLAMIC BANKING IN THE PHILIPPINES                      2
Securities and Exchange Commission under P.D. No.
902-A as amended; that the person who signed the
complaint, Oscar S. Ramirez, had no capacity to sue
as he is not a stockholder or a member of the alleged
Board of Directors and there is no Board resolution
authorizing him to file the complaint; that since the
AIIBP is a government bank, only the Corporate
Counsel for the Solicitor General can initiate the
action; and that power to sue is vested in the Board
of Directors.

       The defendants prayed for the dismissal of the
complaint and for the dissolution of the temporary
restraining order issued by the respondent court.

     On June 23, 1992, the respondent court denied
the motion to dismiss filed by defendants
Dimapunong, et. al., stating in its Order:

       "x x x It is noted that an intracorporate
       controversy has been defined as 'one which
       arises between a stockholder and the
       corporation'. (Rivera vs. Florendo, 144 SCRA
       643) In the case at bar, it appears that not all
       of the defendants are stockholders or
       shareholders of plaintiff corporation and
       therefore     any controversy between the
       plaintiff and the defendants cannot be said to
       be an intracorporate controversy which will
       fall within the jurisdiction of the Securities
       and Exchange Commission. Furthermore, in
       the case of Sunset View Condiminium
       Corporation versus Campos, Jr., 104 SCRA
       303, April 27, 1981, the Hon. Supreme Court
       has held ' that cases of private respondents
       who are not stockholders of the corporation,
ISLAMIC BANKING IN THE PHILIPPINES                   3
       cannot be a controversy arising out of
       intracorporate or partnership relations x x x."




       A " Motion for Reconsideration" filed by the
defendants was denied on July 6, 1992 by the
respondent court which, however, found plaintiff's
officials Roberto de Ocampo and Ernesto Duran in
contempt of court for having violated its temporary
restraining order.

       The defendants Dimapunong, et. al. are now
before this Court on a petition for certiorari with
prohibition with a prayer for the issuance of a
preliminary injunction, seeking the annulment and
setting aside of the aforecited Orders of June 23,
1992 and July 6, 1992, on the following grounds:

       "1. THAT THE COURT ERRED IN DENYING
       PETITIONERS MOTION TO DISMISS DATED
       JUNE    8,  1992  AND  MOTION   FOR
       RECONSIDERATION DATED JUNE 26, 1992
       BECAUSE IT IS THE SECURITIES AND
       EXCHANGE COMMISSION UNDER PD NO.
       902-A, NOT THE REGULAR COURTS, THAT
       HAS JURISDICTION TO HEAR AND DECIDE
       INTRACORPORATE CONTROVERSIES.

       "2. THE CASE AT BAR SHOULD HAVE BEEN
       SETTLED BY THE BOARD OF ARBITRATORS
       UNDER R.A. NO. 6848.

       "3. OSCAR RAMIREZ DOES NOT HAVE THE
       CAPACITY TO SUE SINCE HE IS NOT A
ISLAMIC BANKING IN THE PHILIPPINES                   4
       SHARE-HOLDER        OR   DIRECTOR OF        THE
       ISLAMIC BANK."

       The private respondents, commenting on this
petition and in opposition thereto aver that:

       Significantly, however, the Office of the
Solicitor    General,    representing    the   public
respondents, filed a manifestation that on the basis
of law and jurisprudence, it agrees with the position
of the petitioners and submits that jurisdiction over
the controversy below is legally vested with the
Securities     and   Exchange     Commission,     and
recommends that respondent judge be ordered to lift
the preliminary injunction (actually only a temporary
restraining order) issued, enjoined from further
proceeding with Civil Case No. 92-1487, and directed
to dismiss the said case.

      We agree with the petitioners and the Solicitor
General that it is the Securities and Exchange
Commission which has jurisdiction over the
controversy subject of the proceedings before the
respondent court.

       Presidential Decree No. 902-A provides that the
SEC is vested with absolute jurisdiction, supervision
and control over all corporations, partnership or
associations, who are the grantees of primary
franchise and/or a license or permit issued by the
government to operate in the Philippines (Section 3).
The primary franchise of a corporation may either be
its certificate of incorporation issued by the SEC or a
special law which creates a corporation and serves
as its charter. There is no question that the AIIBP is a
corporation created by R.A. NO. 6848 to replace the
ISLAMIC BANKING IN THE PHILIPPINES                     5
former Philippine Amanah Bank and is therefore
under the jurisdiction and subject to the control and
supervision of the SEC.

      The same P.D. No. 902-A likewise provides
under Section 5 thereof that the SEC shall have
original and exclusive jurisdiction to hear and decide
cases involving the following:

      "a) Devices or schemes employed by or any
      acts of the board of directors, business
      associates, its officers or partners, amounting
      to fraud and        misrepresentation     which
      may be detrimental to the interest of the public
      and/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 or
      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, partnership or
           association x x x (emphasis supplied)

     A reading of the complaint filed before the
respondent court shows that the controversy
submitted by the plaintiff involves the validity of the
ISLAMIC BANKING IN THE PHILIPPINES                    6
calling and holding of the shareholders' meeting held
on April 28, 1992 and the election during said
meeting of the defendants Dimapunong, et. al. as
directors and officers of the corporation. Another set
of officers, led by Roberto de Ocampo, claim to be
the legitimate directors and officers of the AIIBP and
the main issue to be resolved therefore is, which of
the two (2) sets of officers is the legitimate one --- a
matter clearly within the competence of the SEC to
resolve. And although the private respondents claim
that petitioners Abdel Aziz Dimapunong and Victor
Santos are not shareholders of AIIBP and do not have
the authority to represent the Office of the President
and of the Government Service Insurance System,
respectively, there is no question that the other
petitioners, Abbas, Dianaton, and Malambut, are
shareholders of the bank.

      There should be nor more doubt, therefore,
that under the aforecited provisions of both Sec. 3
and Sec. 5 of P.D. 902-A it is the SEC, not the Civil
Courts, that has jurisdiction over the case filed
before the respondent court.

       The Solicitor General aptly cites Union Glass &
Container Corp. vs. SEC, 126 SCRA 31, 38 on this
point:

       "The principal function of the SEC is the
       supervision and control over corporations,
       partnerships and associations with the end in
       view that investment in these entities may be
       encouraged and protected, and their activities
       pursued for the promotion of economic
       development. It is in aid of this office that the
       adjudicative power of the SEC must be
ISLAMIC BANKING IN THE PHILIPPINES                     7
       exercised. Thus, the law explicitly specified
       and delimited its jurisdiction to      matters
       intrinsically connected with the regulation of
              corporations,       partnership     and
       associations and those dealing with internal
       affairs of such corporations, partnership or
       associations (emphasis supplied)."

      And as held in Viray vs. Court of Appeals, 191
SCRA 308, the better policy in determining which
body has jurisdiction over a case is to consider not
only the status or relationship of the parties but also
the nature of the question that is the subject of the
controversy.

      We find no need to dwell on the two (2) other
issues presented by the petitioners as the same have
been rendered moot and academic with our ruling on
the question of jurisdiction in favor of the SEC.

       WHEREFORE, the     questioned Orders of the
respondent court dated    June 23, 1992 and July 6,
1992 are SET ASIDE and    said respondent is ordered
to dismiss Civil Case      No. 92-1487 for lack of
jurisdiction.

No costs.

      SO ORDERED.
                         (SGD.)       SALOME        A.
MONTOYA
                         Associate Justice
WE CONCUR:

      (SGD.) OSCAR M. HERRERA
      Associate Justice
ISLAMIC BANKING IN THE PHILIPPINES                    8
      (SGD.) EDUARDO G. MONTENEGRO
      Associate Justice

CERTIFICATION
       I hereby certify that this Decision was reached
after due consultation among the members of the
Division in accordance with the provisions of Section
13, Article VIII of the Constitution.


                         (SGD) OSCAR M. HERRERA
                                   Chairman
                               Seventeenth Division




ISLAMIC BANKING IN THE PHILIPPINES                   9

								
To top