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DANILO G. PUNONGBAYAN, Petitioner, - versus
- PERFECTO G. PUNONGBAYAN, JR., MARILOU P. VISITACION,
and SOTERO A. PUNONGBAYAN, Respondents. |
G.R. No. 157671 Present: PUNO, J.,
Chairman, Sandoval-Gutierrez, AZCUNA, and GARCIA,
JJ. Promulgated: |
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SANDOVAL-GUTIERREZ, J.:
Before us is
a petition for review on certiorari assailing the Decision[1]
dated March 17, 2003 of the Court of Appeals in CA-G.R. SP No. 65420, entitled
“Perfecto G. Punongbayan, Jr. and Marilou P. Visitacion vs. Hon. Maximo Magno-Libre (in his official
capacity as Presiding Judge of the Regional Trial Court of Lanao Del Norte, Branch
5 of Iligan City), Danilo Punongbayan, Rico Quilab, Luis Lacar and Adelfa Silor
(in their official capacity as members of the management committee of St.
Peter’s College).”
The facts are:
St. Peter’s College is a non-stock, non-profit educational corporation
in
In 1995, Leonila and Leonora died, leaving as members of the Board
Danilo, petitioner, Perfecto, Jr., respondent, and Sotero, respondent-intervenor.
Danilo was then the President, while Perfecto, Jr. acted as Treasurer. Marilou Visitacion, another respondent, acted
as the Corporate Secretary. However, there
has been no Board meeting.
In 1998, Sotero filed with the Securities and Exchange Commission (SEC)
a Petition for Disqualification of Members/Trustees/Officers; Production of
Corporate and Financial Records; Examination and Accounting of Corporate Assets;
and Damages with Prayer for a Temporary Restraining Order and/or Writ of
Preliminary Injunction against Danilo, Perfecto, Jr., and Marilou, docketed as
SEC Case No. 10-96-5471. The petition prays
for the immediate creation of a management committee on the ground of lack of
quorum among the members of the Board resulting in an impending halt of the
school’s operation.
In an Order[2]
dated
On
Subsequently, Carmen Dormitorio inhibited herself as a member and chairperson
of the committee. This resulted in a
deadlock among the remaining members.
Meanwhile, SEC Case No. 10-96-5471 was transferred to the Regional
Trial Court (RTC), Branch 5,
Sotero then filed with the RTC a Motion to Abolish the Management Committee,
assailing the Orders of the SEC creating and appointing the members of the
management committee. He prayed that the
original members of the Board (himself, Danilo, and Perfecto, Jr.) be required to
reconvene and run the affairs of the school.
On
WHEREFORE, premises considered, the instant
motion to abolish the management committee is ordered denied. Instead, the Mancom will have to be revamped
to be composed only of three members as mandated by the aforequoted interim
rules of procedure, but before the three members to be appointed by the court
to constitute the new Mancom will be made, the parties-movants are directed to
jointly nominate three members they wish to be appointed to the Mancom, and the
oppositor to do likewise.
x x x.
On
Sotero filed a Motion for Reconsideration but the same was not acted
upon being a prohibited pleading under the Interim Rules of Procedure for Intra-Corporate
Controversies.
On
On
In the meantime, Sotero filed with the Appellate Court his
petition-in-intervention.
On
In a Resolution dated
Danilo filed a Motion for Reconsideration but the same was denied in a
Resolution dated
On
The Decision of the SEC that created MANCOM
1 was contained in the Order of
It is a well-established rule that a
judgment which had become final and executory can no longer be amended or
modified by the courts (Cardoza vs. Singson, 181 SCRA 53) as it thereby becomes
immutable and unalterable (Mining International Corp. vs. NLRC, 195 SCRA
155). x x x Clearly, then, the
respondent Judge acted capriciously, arbitrarily and with grave abuse of
discretion amounting to lack or excess of jurisdiction when he issued the
assailed Orders on June 5, 2001 abolishing MANCOM 1 and creating MANCOM 2, and
on June 20, 2001 appointing the members of MANCOM 2. Public respondent had no legal authority to
abolish MANCOM 1 which was formed, duly constituted, and its members chosen by
SEC, which is the government agency tasked with the supervision of
corporations.
x x x what public respondent should have
done was to convene the Board of Trustees of the corporation composed of
Sotero, Danilo, and Perfecto, Jr., which, under its Charter and By-Laws, is
tasked with its management and operation, and only after there shall have been
no quorum should he have ordered the revamp of the old MANCOM. There appeared to be no legal impediment to the
exercise by the Board of Trustees of the School of its corporate powers. Under the By-Laws of the School, a majority
of the trustees shall constitute a quorum for the transaction of the corporate
business. Since there were only three
surviving members, then at least two of the surviving members could constitute
a quorum.
The
situation now obtaining being different from that prevailing during the filing
of the instant petition in that the Board of Trustees had convened on July 4,
2001 and new members in the persons of Henie N. Punongbayan, Marilou P.
Visitacion and Restituto Punongbayan had been elected to the Board, and a new
By-Laws of the School had been adopted and approved by the SEC on August 21,
2001, the necessity of creating a MANCOM is rendered already moot and academic. x x x
WHEREFORE, premises considered, the petition is given
DUE COURSE. The assailed Orders of
public respondent Judge dated
SO ORDERED.
Hence, the instant petition for review
on certiorari raising the following issues:
1. WHETHER OR NOT THE APPELLATE COURT COMMITTED AN ERROR THROUGH
GROSS MISAPPREHENSION OF FACTS AS IT RULED THAT THE
2. WHETHER OR NOT THE APPELLATE COURT COMMITTED AN ERROR THROUGH
GRAVE MISAPPREHENSION OF FACTS WHEN IT RULED THAT THE
3. WHETHER OR NOT THE APPELLATE COURT ERRED IN RULING TO THE
EFFECT THAT ‘UNDER THE BY-LAWS OF THE SCHOOL, A MAJORITY OF THE TRUSTEES SHALL
CONSTITUTE A QUORUM FOR THE TRANSACTION OF THE CORPORATE BUSINESS. SINCE THERE WERE ONLY THREE SURVIVING
MEMBERS, THAT AT LEAST TWO OF THE SURVIVING MEMBERS COULD CONSTITUTE A
QUORUM.’ THE APPELLATE COURT HAS THUS
DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND THE APPLICABLE
DECISION OF THE SUPREME COURT.
4. WHETHER OR NOT THE APPELLATE COURT ERRED IN MAKING A FINDING
THAT THERE IS NOW A FUNCTIONING BOARD OF TRUSTEES AND IT MUST BE ALLOWED TO
FUNCTION AND TO EXERCISE ITS POWER AND DUTIES, AS IN DOING SO THE APPELLATE
COURT WENT BEYOND THE ISSUES OF THE CASE.
5. A QUESTION OF LAW IS ALSO BEING POSED AS TO WHETHER THE
APPELLATE COURT CAN RULE THAT THERE IS NOW A FUNCTIONING BOARD OF TRUSTEES AND
THAT THE NECESSITY OF CREATING A MANCOM IS RENDERED MOOT AND ACADEMIC IN THE
LIGHT OF THE PROVISION OF SEC. 12, RULE 9 OF THE INTERIM RULES OF PROCEDURE FOR
INTRA-CORPORATE CONTROVERSIES.
Petitioner Danilo Punongbayan contends
that the management committee created by the SEC was not abolished by the RTC. Its composition was only reorganized because
of the existence of a deadlock among the members.
Respondents maintain that the RTC gravely abused its discretion when it
ordered the creation of a new management committee in lieu of the one created
by the SEC. Instead, it should have
directed the remaining three members to reconvene.
The main issue for our consideration is
whether the RTC could reorganize the management committee created by the SEC.
We rule in the affirmative.
Under Section 5[7]
of Presidential Decree No. 902-A, the SEC has jurisdiction, among others, to
hear and decide controversies in the appointments of directors, trustees,
officers or managers of corporations.
Section 6 provides:
SECTION 6. In order to effectively exercise such
jurisdiction, the Commission shall possess the following powers:
x x x
d) To create a management committee x x x
The management committee x x x shall have the power to take
custody of, and control over, all the existing assets and property of such
entities under management; to evaluate the existing assets and liabilities,
earnings and operations of such corporations, partnerships or other
associations; to determine the best way to salvage and protect the interest of
the investors and creditors; to study, review and evaluate the feasibility of
continuing operations and restructure and rehabilitate such entities if
determined to be feasible by the Commission.
It shall report and be responsible to the Commission until dissolved by
order of the Commission: Provided,
however, That the Commission may, on the basis of the findings and
recommendation of the management committee x x x or on its own findings,
determine that the continuance in business of such corporation or entity would
not be feasible or profitable nor work to the best interest of the
stockholders, parties-litigants, creditors, or the general public, order the
dissolution of such corporation entity and its remaining assets liquidated
accordingly. The management committee x
x x may overrule or revoke the actions of the previous management and board of
directors of the entity or entities under management notwithstanding any
provision of law, articles of incorporation or by-laws to the contrary.
x x x
A management committee is tasked to manage, take custody of and control all existing assets, funds and
records of the corporation, and to determine the best way to protect the
interest of its stockholders and creditors.
In
this case, the SEC created a management committee, upon Sotero’s application, and
appointed its five members. However, one
member, Carmen Dormitorio (representing the CHED), inhibited herself from sitting
in the committee, resulting in a deadlock among the remaining members. The committee became so divided, hence, the
school’s business and affairs could no longer be conducted effectively to the prejudice
of the stockholders and the students. In
the meantime, the SEC’s jurisdiction over intra-corporate controversies was
transferred to the RTC. This prompted
Sotero to file with the RTC, Branch 5,
Republic Act No. 8799,
which became effective on
Having the
power to create a management committee, it follows that the RTC can order the
reorganization of the existing management committee. Here, knowing that the deadlock among the
members of the committee (appointed by the SEC) may lead to the paralyzation of
the school’s business operations, the RTC removed the said members and
appointed new members. This is pursuant
to Section 11, Rule 9 of the Interim Rules of Procedure Governing Intra-Corporate
Controversies which provides:
A member of the management committee is deemed removed upon
appointment by the court of his replacement chosen in accordance with Section 4
of this Rule.
Such
appointment of new members does not mean the creation of a new management
committee. The existing management
committee was not abolished. The RTC merely reorganized it by appointing
new members. The management committee created
by the SEC continues to exist. However,
when it failed to function due to the division among the members, the RTC
replaced them. Clearly, there was no
revocation of the final Order of the SEC.
Significantly,
in appointing new members of the management committee, chosen from the lists of
nominees submitted by both petitioner and respondents, the RTC did not deprive
respondents herein of their representation in the committee.
In fine, we
find no grave abuse of discretion committed by the RTC.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals
is REVERSED.
SO ORDERED.
ANGELINA
SANDOVAL-GUTIERREZ
Associate Justice
WE
CONCUR:
REYNATO S. PUNO
Associate Justice Chairman |
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RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA Associate Justice |
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CANCIO C. GARCIA Associate Justice |
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I
attest 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.
Associate
Justice
Chairman, Second Division
Chief Justice
[1] Penned by Associate Justice Sergio L. Pestaño (deceased),
and concurred in by Associate Justices
Buenaventura L. Guerrero, Delilah Vidallon-Magtolis (both retired), and Justice
Mario L. Guariña. Associate Justice
Martin S. Villarama, Jr., dissented; Rollo, pp. 10-28.
[2]
[3]
[4] Otherwise known as the Securities Regulation Code (jurisdiction over intra-corporate controversies was transferred to courts of general jurisdiction or appropriate Regional Trial Courts).
[5] Rollo, pp. 89-96.
[6]
[7] Section 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, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, 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 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, partnerships or associations; and
d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree.
[8] 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