Republic of the Philippines
Supreme Court
Manila
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Hikoi Suzuki, Ramon del |
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G.R. No. 146979 |
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Rosario and Takayuki Sato, |
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Petitioners, |
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Present: |
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PANGANIBAN,
CJ., Chairperson, |
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YNARES-SANTIAGO, |
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AUSTRIA-MARTINEZ, |
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- versus - |
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CALLEJO,
SR. and |
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CHICO-NAZARIO, JJ. |
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Promulgated: |
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Diana de Guzman, |
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Respondent. |
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July
27, 2006 |
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D E C I S I O N
AUSTRIA-MARTINEZ,
J.:
Before the Court is a petition for
review on certiorari under Rule 45 of
the 1997 Rules of Civil Procedure assailing the Decision[1]
dated January 26, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 52030
which dismissed petitioners’ petition for certiorari
and prohibition, and the CA Resolution dated February 2, 2001 which denied
petitioners’ motion for reconsideration.
The
procedural antecedents and factual background of the case are as follows:
On
January 10, 1996, the Suzuki Beach Hotel, Inc. (SBHI) located at 1 Samar
Street, Bo. Barretto, Olongapo City was registered with the Securities and
Exchange Commission (SEC), with Diana de Guzman (respondent) and Editha Taborda
(Taborda) as two of the incorporators. Respondent subscribed to 29,800 shares
with a total par value of P2,980,000.00 and paid her subscription in the
amount of P745,000.00. Taborda subscribed to 100 shares with a total par
value of P10,000.00 and paid P2,500.00 on her subscription.
On
December 12, 1997, Hikoi Suzuki, Ramon del Rosario, Takayuki Sato
(petitioners), acting as Board of Directors of SBHI, issued a Resolution declaring
due and demandable all unpaid shares of stock and gave the stockholders until
December 30, 1997 to pay their unpaid subscription. Notice of the call for payment was sent to
respondent and Taborda[2] but
they failed to pay their respective unpaid subscriptions.
On
January 9, 1998, petitioners scheduled a meeting of the Board on January 12,
1998 to discuss the sale of delinquent shares of stocks. On January 10, 1998, notice of the meeting
was sent to respondent and Taborda.[3] On January 12, 1998, petitioners approved a
Resolution to sell all delinquent shares of stock at a public auction set on
January 30, 1998.
On
January 30, 1998, the auction sale was conducted. Petitioner Ramon del Rosario
and Agnes Rodriguez (Rodriguez) submitted the winning bids for the shares of
stock of respondent and Taborda, respectively.[4] On the same day, respondent and Taborda filed
an Affidavit of Protest on the auction sale of their shares of stock.[5]
On
March 4, 1998, respondent and Taborda filed with the SEC a Petition for Calling
Special Stockholders Meetings and for Election of Directors and Officers,
Declaration of Nullity of the Call of Sale of Unpaid Stock Subscription with
Writ of Preliminary Injunction and Temporary Restraining Order, docketed as SEC
Case No. 03-98-5924.
On
March 23, 1998, petitioners filed a Motion to Dismiss on the ground of lack of
jurisdiction, alleging that jurisdiction over the case was lodged with the
civil courts. On April 7, 1998, SEC Hearing
Officer C.A. Gerard M. Lukban denied petitioners’ Motion to Dismiss.[6] He held that the controversy involves
intra-corporate matters which falls within the jurisdiction of the SEC,
pursuant to Section 5 of Presidential Decree (P.D.) No. 902-A.
Respondent and Taborda filed an Amended
Petition. Petitioners again filed a Motion
to Dismiss, invoking the same ground of lack of jurisdiction raised in their
first Motion to Dismiss. On May 22,
1998, the SEC denied petitioners’ Motion to Dismiss. Thus, petitioners filed their Answer.
Meanwhile,
on June 13, 1998, during the pendency of the case, petitioners issued another Resolution
calling for payment of delinquent shares of stock, to give respondent and
Taborda a second chance to pay their unpaid subscriptions.[7] Letters, dated June 16, 1998, were sent to
respondent and Taborda informing them that, to obviate further legal questions
on the validity of the call for payment, petitioners gave them a second chance,
until June 30, 1998, to pay their unpaid subscriptions.[8] Respondent and Taborda
again failed to heed the call for payment.
On July 6, 1998, petitioners set a
meeting of the Board on July 12, 1998 to discuss the delinquent shares of
stock. On July 8, 1998, notice of the
meeting was sent to respondent and Taborda.[9] On July 12, 1998, petitioners approved a
Resolution to sell all delinquent shares at a public auction set on August 12,
1998.[10]
Respondent and Taborda filed with the
SEC an Urgent Ex-Parte Motion for the Issuance of a Temporary Restraining Order
and Writ of Preliminary Injunction but the SEC denied it in its Order dated
July 30, 1998.[11] Thus, the auction sale proceeded on August 12,
1998. Again, petitioner del Rosario and
Rodriguez submitted the winning bids for the shares of stock of respondent and
Taborda, respectively.[12]
On August 31, 1998 respondents filed with
the SEC a Supplemental Pleading seeking to nullify the August 12, 1998 auction
sale.[13] On September 19, 1998, petitioners filed a
Motion to Dismiss Supplemental Pleading on the ground of lack of jurisdiction,
claiming once again that the case is cognizable by civil courts.
On November 13, 1998, the SEC issued
its Order denying petitioners Motion to Dismiss the Supplemental Pleading.[14] The SEC held that the cause of action raised
in the supplemental pleading is but an incident arising out of the original
controversy between the parties over which it has jurisdiction; that the
auction sale, subject of the supplemental petition, proceeds from the notice of
delinquency which is the very same notice of delinquency based on the December
12, 1997 call for payment by the Board of Directors of SBHI, the validity of
which is the issue raised in the original petition; that such a dispute, being
an offshoot of an intra-corporate relationship existing between the parties,
undisputedly falls within the jurisdiction of the SEC.
Petitioners filed a Motion for Reconsideration
but the SEC denied it in its Order dated March 2, 1999.[15]
Thereafter,
on March 29, 1999, the petitioners filed a petition for certiorari and prohibition with the CA, assailing Orders of the SEC
dated November 13, 1998 and March 2, 1999.[16] They maintain that the case falls within the
jurisdiction of civil courts, not the SEC, since respondent and Taborda are no
longer stockholders of SBHI for failure to pay their delinquent shares of stock.
They further allege that respondent and
Taborda failed to comply with the condition precedent under Section 69 of the
Corporation Code.[17]
On
January 26, 2000, the CA rendered the assailed Decision dismissing the petition
for being insufficient in form and substance.
The CA held that the petition is procedurally deficient because: (a) it
failed to indicate the date when the motion for reconsideration was filed with
the SEC; (b) the attached material portions of the record are not certified
copies; (c) the certification of non-forum shopping was signed by counsel, not by
petitioners themselves; and, (d) there was no written explanation as to why personal
service was not effected. As to the
merits of the petition, the CA ruled that since the controversy arose out of an
intra-corporate dispute, it is within the jurisdiction of the SEC; and the
supplemental pleading did not raise a new cause of action to warrant dismissal.[18]
On March 14, 2000, petitioners filed
a motion for reconsideration[19]
but the CA denied it in its Resolution dated February 2, 2001.[20]
Hence, the present petition anchored
on the following grounds:
I.
THE PUBLIC RESPONDENT COURT OF APPEALS
GRIEVOUSLY ERRED IN RESOLVING THE PETITION ON THE BASIS OF MERE TECHNICALITIES.
II. THE PUBLIC RESPONDENT COURT OF APPEALS
SERIOUSLY AND GRAVELY ERRED IN RULING THAT SECTION 69 OF THE CORPORATION CODE
IS NOT APPLICABLE TO THIS CASE.[21]
Following the submission of
respondent’s Comment,[22]
the Court gave due course to the petition; and in compliance with the Court’s order,
both parties submitted their respective memoranda.[23]
Petitioners pose three issues for
resolution, to wit: (1) whether petitioners failed to comply with the
requirements provided by the Rules cited in the CA Decision; (2) whether
Section 69 of the Corporation Law is applicable to the instant case; and (3)
whether the SEC has jurisdiction over the case.[24]
Petitioners contend that the CA erred
when it dismissed the petition on grounds of pure technicality. Regarding the failure to indicate the date
when the motion for reconsideration was filed, they aver that the CA misquoted
Section 3, par. 2, Rule 46 of the 1997 Rules of Civil Procedure; that the
requirement to indicate said date is not found in said provision; that it is
not necessary to indicate said date since what is important in determining the
timeliness of the filing of the petition is the date of receipt of the order
denying the motion for reconsideration.
As to the attached documents which are
not certified copies, they allege that the attached documents need not be
certified since they are not material portions of the records but mere
documents of petitioners attached to substantiate the allegations.
With respect to the certification of
non-forum shopping, they argue that the CA should have noted that there were three
petitioners such that the signing of counsel substantially complies with the Rule.
As to the absence of a written
explanation, they point out that the explanation is found in page 14 of the
petition.
In any event, petitioners strongly
assert that the CA’s strict adherence to procedure undermines the oft-repeated
doctrine by this Court that the rules of procedure are used only to help
secure, not override, substantial justice.
Petitioners maintain that respondent
failed to comply with the condition precedent set forth in Section 69 of the
Corporation Code, in which the party seeking to maintain action to question the
auction sale is required to pay the party holding the stock the sum for which
the same was sold.
Petitioners also insist that the SEC
has no jurisdiction over the dispute since Section 5 of P.D. 902-A has been
repealed by Section 5.2 of Republic Act No. 8799 (RA 8799), the Securities
Regulation Code, which transferred jurisdiction over intra-corporate disputes
from the SEC to the Regional Trial Courts.
Respondent, for her part, staunchly
maintains that petitioners’ wanton disregard of the Rules of Court warrant the
outright dismissal of their petition. As to the question of jurisdiction, P.D. 902-A vests upon the SEC jurisdiction
to hear intra-corporate cases and not Section 69 of the Corporation Code.
The Court shall first dispose of the
procedural issues raised in the petition.
Section 3[25]
of Rule 46 of the 1997 Rules of Civil Procedure provides that there are three material dates that must be stated in a
petition for certiorari brought under Rule 65: (a) the date when
notice of the judgment or final order or resolution was received, (b) the date
when a motion for new trial or for reconsideration when one such was filed,
and, (c) the date when notice of the denial thereof was received. This
requirement is for the purpose of determining the timeliness of the petition,
since the perfection of an appeal in the manner and within the period
prescribed by law is jurisdictional and failure to perfect an appeal as
required by law renders the judgment final and executory.[26]
Section 3 also requires the pleader
to submit a certificate of non-forum shopping to be executed by the plaintiff
or principal party. Obviously, it is the
plaintiff or principal party, and not the counsel whose professional services
have been retained for a particular case, who is in the best position to know
whether he or it actually filed or caused the filing of a petition in that
case.[27]
As a general rule, these requirements
are mandatory, meaning, non-compliance therewith is a sufficient ground for the
dismissal of the petition.[28] While the Court is not unmindful of
exceptional cases where this Court has set aside procedural defects to correct
a patent injustice, concomitant to a liberal application of the rules of
procedure should be an effort on the part of the party invoking liberality to
at least explain his failure to comply with the rules.[29] There must be at least a reasonable attempt
at compliance with the Rules. Utter disregard of the Rules cannot
justly be rationalized by harking on the policy of liberal construction.[30]
In the present case, the petition was
bereft of any persuasive explanation as to why petitioners failed to observe
procedural rules properly. The date of
filing of the motion for reconsideration cannot simply be ascertained from the
attached documents. The Order dated
March 2, 1999 of
the SEC even presents an impossible
situation – the stated date of the Motion for Reconsideration (October 4, 1998)
is one month ahead of the Order of the SEC it seeks to have reconsidered
(November 13, 1998).[31]
The argument raised by petitioners’
counsel that the CA misquoted the Rules is utterly bereft of merit. Supreme Court Circular No. 39-98[32]
which amended Section 3, Rule 46 of the 1997 Rules of Civil Procedure added the
paragraph requiring the statement of material dates. The Circular was published in several
newspapers of general circulation in the country on July 26, 1998, and took
effect on September 1, 1998. Thus, the amendments were introduced more than six
months prior to the filing of the petition before the CA.
The Court also cannot accept the
signature of petitioners’ counsel as substantial compliance with the Rules. The attestation contained in the certification
on non-forum shopping requires personal knowledge by the party who executed the
same. The fact that there are three
petitioners is not valid excuse or exception to the requirement. A certification
against forum shopping signed by counsel is a defective certification that is
equivalent to non-compliance with the requirement and constitutes a valid cause
for the dismissal of the petition.[33]
Thus, the CA was correct in
dismissing the petition on grounds of non-compliance with rules on material
date and certification of non-forum shopping.
The Court, however, takes exception
from the other procedural grounds for dismissal. As to the failure to attach certified copies
of material portions of the record, the Court held in Cadayona v.
Court of Appeals,[34]
that supporting documents to the petition are not required to be certified true
copies, it being enough that the assailed judgment, order or resolution is a
certified true copy.[35] With respect to the absence of a written
explanation, a perusal of the petition reveals that the explanation is found in
page 14 thereof.[36]
It is an elementary principle in law
that negligence of counsel binds the client.[37] This is based on the rule that any act
performed by a lawyer within the scope of his general or implied authority is
regarded as an act of his client.[38] Thus, the invocation of “the interest
of substantial justice” is not a magic wand
that automatically compels courts to suspend procedural rules. Except
only for the most persuasive of reasons when they may be relaxed to relieve a
litigant of an injustice not commensurate with the degree of thoughtlessness in
not complying with the procedure prescribed, procedural rules must be followed.[39]
To determine whether there is
persuasive reason to relax the application of the rules, the Court shall now
look into the substance of the petition.
Petitioners’ argument that the
supplemental pleading should be dismissed for non-compliance with the alleged
condition precedent under Section 69 of the Corporation Code is unavailing. The Court notes that this issue was never
alleged or raised in the proceedings before the SEC. It was raised for the first time in
petitioners’ petition for certiorari and
prohibition in the CA. It is settled
that points of law, theories, issues and arguments not adequately brought to
the attention of the lower court need not be, and ordinarily will not be,
considered by a reviewing court as they cannot be raised for the first
time on appeal.[40]
Basic considerations of due process impel this rule.[41] This principle equally applies to special
civil actions for certiorari under
Rule 65.[42] Thus, petitioners are deemed to have waived
such issue for their failure to raise the same before the SEC.
As to the question of jurisdiction, at
the time the CA promulgated the assailed Decision on January 26, 2000, the SEC
was still empowered, under Section 5 of P.D. 902-A, to hear and decide cases
involving intra-corporate disputes, thus:
SEC. 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission over corporations,
partnerships and other forms of association registered with it as expressly
granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide
cases involving: …
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 the
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; x x x (Emphasis supplied)
However, on August 9, 2000, during
the pendency of petitioners’ Motion for Reconsideration of the CA Decision, R.A.
No. 8799 took effect. Section 5.2 of R.A. No. 8799,
provides:
5.2.
The Commission’s jurisdiction over all
cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby
transferred to the Courts of general jurisdiction or the appropriate Regional
Trial Court: Provided, That the Supreme
Court in the exercise of its authority may designate the Regional Trial Court
branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction
over pending cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the enactment of
this Code. The Commission shall
retain jurisdiction over pending suspension of payments/rehabilitation cases
filed as of 30 June 2000 until finally disposed. (Emphasis supplied)
Thus, original and
exclusive jurisdiction to hear and decide cases involving intra-corporate
controversies have been transferred to courts of general jurisdiction or the
appropriate Regional Trial Court.[43] The case involving herein parties has not been
submitted for final resolution on the merits in the SEC. Only the issue on jurisdiction was dealt with
by the SEC which is the subject of herein petition. Thus, herein case does not fall within the
exception adverted to in the aforequoted Section 5.2.
All the foregoing considered, the CA
should have noted that R.A. No. 8799 was already in force and effect, for more
than five months, and therefore applicable at the time of the promulgation of
the herein assailed Resolution on February 2, 2001. Although the petition filed with the CA was procedurally deficient for
non-compliance with the rules on material date and certification of non-forum
shopping, the CA should have
reconsidered its Decision on the question of jurisdiction in view of the advent
of R.A. No. 8799 transferring cases originally cognizable by the SEC to the
Regional Trial Courts. Technicalities
must give way to the realities of the situation. It is elementary that jurisdiction over the
subject matter, or the jurisdiction to hear and decide a case, is conferred by
law[44]
and it is not within the courts, let alone the parties, to themselves
determine and
conveniently set aside.[45]
Pursuant to Section 5.2 of R.A. No.
8799, this Court designated specific branches of the Regional Trial Courts to
try and decide cases formerly cognizable by the SEC. For the Third Judicial Region, specifically
in the Province of Zambales, the RTC of Olongapo City, Branch 72, is the
designated court.[46]
WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 52030 are REVERSED and SET ASIDE
and SEC Case No. 03-98-5924 is ordered remanded to the Regional Trial Court of
Olongapo City, Branch 72, for further proceedings and proper disposition.
No costs.
SO ORDERED.
MA.
ALICIA AUSTRIA-MARTINEZ
Associate
Justice
WE CONCUR:
Chief Justice
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CONSUELO YNARES-SANTIAGO Associate Justice |
ROMEO J. CALLEJO, SR. Associate Justice |
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MINITA V. CHICO-NAZARIO Associate Justice |
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, it is hereby certified that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
ARTEMIO V. PANGANIBAN
Chief Justice
[1] Penned by Associate Justice Mariano M. Umali and concurred in by Associate Justices Salome A. Montoya and Bernardo Ll. Salas (all retired); rollo, pp. 22-29.
[2] Annexes “C” and “D” of the Petition, CA rollo, pp. 24-a, 25.
[3] Annexes “E” and “F” of the Petition, id. at 26, 27.
[4] Annex “I” of the Petition, id. at 30.
[5] Annex “H” of the Petition, id. at 29.
[6] Annex “J” of the Petition, id. at 32.
[7] Annex “L” of the Petition, id. at 35.
[8] Annexes “M” and “N” of the Petition, id. at 36, 38.
[9] Annexes “O” and “P” of the Petition, id. at 40, 41.
[10] Annex “Q” of the Petition, id. at 42.
[11] Annex “K” of the Petition, id. at 33.
[12] Annexes “R” and “S” of the Petition, id. at 44, 45.
[13] Annex “T” of the Petition, id. at 46.
[14] Annex “A” of the Petition, id. at 20.
[15] Annex “B” of the Petition, CA rollo, p. 22.
[16] Id. at 2.
[17] Id. at 10.
[18] Id. at 66.
[19] Id. at 75.
[20] Id. at 84.
[21] Rollo, p. 13.
[22] Id. at 51.
[23] Id. at 57, 80.
[24] Id. at. 62.
[25] SEC.
3. Contents and filing of petition;
effect of non-compliance with requirements.-
x x x
In actions filed under Rule 65, the petition shall further indicate the
material dates showing when notice of the judgment or (final) order or resolution
subject thereof was received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was received.
x
x x
The petitioner shall also submit together with the petition a sworn
certification that he has not theretofore commenced any other action involving
the same issues in the Supreme Court, the Court of Appeals or different
divisions thereof, or any other tribunal or agency; if there is such other
action or proceeding, he must state the status of the same; and if he should
thereafter learn that a similar action or proceeding has been filed or is
pending before the Supreme Court, the Court of Appeals, or different divisions
thereof, or any other tribunal or agency, he undertakes to promptly inform the
aforesaid courts and other tribunal or agency thereof within five (5) days
therefrom.
x x x
The failure of the petitioner to comply with any of
the foregoing requirements shall be sufficient ground for the dismissal of the
petition. (As amended by SC Circular No. 39-98)
[26] Great Southern Maritime Services Corporation v. Acuña, G.R. No. 140189, February 28, 2005, 452 SCRA 422, 432-433; Lapid v. Laurea, 439 Phil. 887, 895-896 (2002); Santos v. Court of Appeals, 413 Phil. 41, 54 (2001).
[27] Great
Southern Maritime Services Corporation v. Acuña, supra; Chan v. Regional Trial Court of Zamboanga
del Norte in Dipolog City, Br. 9, G.R. No. 149253, April 15, 2004, 427 SCRA 796, 806; Mendigorin v. Cabantog, 436 Phil. 483, 491 (2002); Digital
Microwave Corporation v. Court
of Appeals, 384 Phil. 842, 846-847 (2000).
[28] Last paragraph, Section 3 of Rule 46 of the 1997 Rules of Civil Procedure.
[29] Lapid v. Laurea, supra; Banco
Filipino Savings and Mortgage Bank v. Court of Appeals, 389
Phil. 644, 656 (2000).
[30] Delgado v. Court of Appeals, G.R. No. 137881, August 19, 2005, 467 SCRA 418, 424; Chua vs. Santos, G.R. No. 132467, October 18, 2004, 440 SCRA 365, 376.
[31] Annex “B” of the Petition, CA rollo, p. 22.
[32] Bar Matter
No. 803 - Re: Correction Of Clerical Errors In And Adoption Of Amendments To
The 1997 Rules Of Civil Procedure.
[34] 381 Phil. 619, 627 (2000).
[35] See also Padilla, Jr. v. Alipio, G. R. No. 156800, November 25, 2004, 444 SCRA 322, 327; Van Melle Phils., Inc. v. Endaya, G.R. NO. 143132, September 23, 2003, 411 SCRA 528, 536.
[36] CA rollo, p. 15.
[37] Lapid v. Laurea, supra; Del Mar v.
Court of Appeals, 429 Phil. 19, 28 (2002).
[38] STI Drivers Association v. Court of Appeals, 441 Phil. 166, 173 (2002); Salonga v. Court of Appeals, 336 Phil. 514, 526 (1997).
[39] Bacarra v. National Labor Relations Commission, G.R. No. 162445, October 20, 2005, 473 SCRA 581, 586.
[40] Eastern Assurance & Surety Corporation v. Land Transportation Franchising and Regulatory Board, 459 Phil. 395, 415 (2003); Philippine Nails and Wires Corporation v. Malayan Insurance Company, Inc., 445 Phil. 465, 478 (2003).
[41] Eastern Assurance & Surety Corporation v. Land Transportation Franchising and Regulatory Board, supra; Philippine Nails and Wires Corporation v. Malayan Insurance Company, Inc., supra.
[42] Corona International, Inc. v. Court of Appeals, 397 Phil. 575, 581 (2000); Buñag v. Court of Appeals, 363 Phil. 216, 221 (1999) .
[43] Sumndad v. Harrigan, 430 Phil. 612, 623 (2002); Intestate Estate of Alexander T. Ty v. Court of Appeals, G.R.
Nos. 112872 & 114672, April 19, 2001, 356 SCRA 661, 668.
[44] Fernandez
v. Court of Appeals, G.R. No. 131094, May 16, 2005, 458 SCRA 454, 461;
Sumndad v. Harrigan, supra.
[45] Metromedia
Times Corporation v. Pastorin, G.R. No. 154295, July 29, 2005, 465 SCRA
320, 334-335; De Rossi v. National Labor
Relations Commission, 373 Phil. 17, 26 (1999); La Naval Drug Corp. v. Court of Appeals, G.R.
No. 103200, August 31, 1994, 236 SCRA 78, 90.
[46] En Banc Resolution, A.M. No. 00-11-03-SC, promulgated November 21, 2000.