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ALDERITO Z.
YUJUICO, BONIFACIO C. SUMBILLA, and DOLNEY S.
SUMBILLA, Petitioners, -versus- CEZAR T.
QUIAMBAO, JOSE M. MAGNO III, MA. CHRISTINA F. FERREROS, ANTHONY K. QUIAMBAO,
SIMPLICIO T. QUIAMBAO, JR., ERIC C. PILAPIL, ALBERT M. RASALAN, and REGIONAL
TRIAL COURT, BRANCH 48, Respondents. |
G.R. No.
168639 Present: pUNO, CJ., Chairperson, Sandoval-Gutierrez, AZCUNA, and GARCIA, JJ. Promulgated: |
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SANDOVAL-GUTIERREZ,
J.:
Before us for resolution is the Petition for Review on
Certiorari[1]
challenging the Decision dated
The facts are:
Strategic Alliance Development Corporation (STRADEC) is a
domestic corporation engaged in the business of providing financial and
investment advisory services and investing in projects through consortium or
joint venture information.[2] From its inception, STRADEC’s principal
place of business was located at the 24th Floor,
On
After five
(5) months, or on August 16, 2004, respondents filed with the Regional
Trial Court (RTC), San Carlos City, Pangasinan a Complaint against STRADEC (represented
by herein petitioners as members of its Board of Directors), docketed as Civil
Case No. SCC-2874 and raffled off to Branch 56. The complaint prays that: (1) the
Subsequently, respondents filed an Amended Complaint dated
As the controversy involves an intra-corporate dispute, the
trial court, on
Since Branch 48 of RTC,
On
Meanwhile, Judge Aurelio R. Ralar, Jr. was appointed
presiding judge of RTC, Branch 48,
O R D E R
This resolves the application of plaintiffs for the issuance of writ of preliminary prohibitory injunction.
During the hearing on the
application for Temporary Restraining Order/Injunction on
Plaintiff Magno III testified that he did not attend the Annual Stockholders’ meeting held last March 1, 2004 and that he did not authorize anybody to appear for and in his behalf.
Lastly, witness Pilapil testified on the principal place of business of defendant corporation, the holding of the Annual Stockholders’ Meeting in a place outside the principal place of business of the corporation, and the fact that two (2) other stockholders, namely, Jose Magno III and Angel Umali were neither present nor represented in said meeting, contrary to what was alleged in defendants’ Answer with Counterclaim (see par. 50, Answer with Counterclaim).
x x x
After a careful evaluation of the records and all the pleadings extant in this case as well as the testimonies of the witnesses for the plaintiffs, this court is inclined to grant the plaintiffs’ application for the writs of preliminary prohibitory injunction in order to restrain the defendants from acting as officers of the corporation and committing further acts inimical to the corporation and to the rest of the stockholders thereof. It is also evident from the pleadings that defendants would not yield to the demand of plaintiffs for the maintenance of the status quo until after the resolution of the merits of the instant controversy.
x x x
The effect of the issuance of this Order would create a hiatus in the action of the board of directors of STRADEC, pending the determination of the merits of the case and after trial on the merits.
It would thus be for the
best interest of the corporation as well as its stockholders that an election
be undertaken of the members of the board and officers pursuant to STRADEC’S
Articles of the corporation (sic) and the Corporation Code of the
This is to avoid discontinuity of the operations of the corporation, which may result to its damage and prejudice.
WHEREFORE, premises considered, let the Writ of Preliminary Injunction
issue, upon posting of the requisite bond in the amount of Five Hundred
Thousand Pesos (P500,000.00) to answer for whatever damages that the
defendants would suffer on account of the issuance of the injunction writ,
restraining defendants from acting as officers of the Corporation and
committing further acts inimical to the corporation.
It is likewise ordered that a special stockholders’ meeting in the principal place of office of the
corporation in Bayambang, Pangasinan on
SO ORDERED.
In compliance with the above Order, the court sheriff (and respondent
Cezar Quiambao, as claimed by petitioners) caused the opening of the safety
deposit box of STRADEC in the Export Industry Bank, Shaw Boulevard Branch,
On December 10, 2004, petitioners, claiming that a motion for
reconsideration is a prohibited pleading under Section 8(3), Rule 1 of the
Interim Rules of Procedure Governing Intra-Corporate Controversies under R.A. No.
8799, filed with the Court of Appeals a Petition for Certiorari with Prayer for
the Issuance of a TRO and/or Preliminary Injunction,[11]
assailing Judge Emuslan’s November 25, 2004 Order. The petition was docketed as CA-G.R. SP No.
87785. In the proceedings before the
appellate court, petitioners raised the following issues:
A. Only the SEC, not the RTC, has jurisdiction to order the
holding of a special stockholders’ meeting involving an intra-corporate
controversy;
B. Judge Meliton Emuslan had no authority to issue the assailed
Order dated November 25, 2004 as Judge Aurelio Ralar, Jr. was already the
presiding judge of RTC, Branch 48, Urdaneta City;[12]
and
C. Assuming Judge Emuslan had authority to issue the assailed
Order, he nonetheless acted with grave abuse of discretion amounting to lack or
excess of jurisdiction.
Meanwhile, on the same day (December 10), as directed in the
November 25, 2004 Order of Judge Emuslan, a special stockholders’ meeting of
STRADEC was held in Bayambang, Pangasinan wherein a new set of directors were
elected for the term 2004-2005, namely: Cezar T. Quiambao, Anthony K. Quiambao,
and Simplicio T. Quiambao, Jr.
Immediately thereafter, the new directors elected the following
officers: Cezar T. Quiambao as Chairman and President; Eric C. Pilapil as
Corporate Secretary; Anthony K. Quiambao as Corporate Treasurer; and Albert M.
Rasalan as Assistant Corporate Secretary.
On
Hence, the instant Petition for Review on Certiorari.
FIRST,
petitioners contend that the Court of Appeals erred in ruling that the RTC has
the power to call a special
stockholders’ meeting involving an intra-corporate controversy. They maintain that it is only the SEC that
may do so to be held under its supervision.
The
respondents, in their comment, counter that the appellate court correctly ruled
that the power to hear and decide controversies involving intra-corporate
disputes, as well as to act on matters
incidental and necessary thereto, have been transferred from the SEC to the
RTCs designated as Special Commercial Courts.
It would be the height of absurdity, they argue, to require the filing
of a separate case with the SEC for the sole purpose of asking the said agency
to order the holding of a special stockholders’ meeting where there is already
a pending case involving the same matter before the proper court.
We agree with respondents.
An intra-corporate controversy is one which “pertains to any
of the following relationships: (1) between the corporation, partnership or
association and the public; (2) between the corporation, partnership or
association and the State in so far as its franchise, permit or license to operate
is concerned; (3) between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among the stockholders, partners or associates themselves.”[15] There
is thus no dispute that respondents’ complaint in Civil (SEC) Case No. U-14
before the RTC, Branch 48,
Originally, Section 5 of Presidential Decree (P.D.) No. 902-A
bestowed the SEC original and exclusive jurisdiction over cases involving the
following:
(a) Devices or schemes employed by, or any act 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, or members of associations 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 and the State insofar as it concerns their
individual franchise or right as such entity;
(c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations, partnership or associations;
(d) Petitioners
of corporations, partnerships or associations to be declared in the state of
suspension of payment 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 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.[16] (Underscoring supplied)
Upon the
enactment of R.A. No. 8799, otherwise known as “The Securities Regulation Code”
which took effect on
5.2. The Commission’s jurisdiction over all cases enumerated in 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
Pursuant to
R.A. No. 8799, the Court issued a Resolution dated
902-A. Branch 48 of RTC,
SEC. 1. Cases covered. – The provisions of this rule shall apply to election contests in stock and non-stock corporations.
SEC. 2. Definition. – An election contest refers to any controversy or dispute involving title or claim to any elective office in a stock or non-stock corporation, the validation of proxies, the manner and validity of elections, and the qualifications of candidates, including the proclamation of winners, to the office of director, trustee or other officer directly elected by the stockholders in a close corporation or by members of a non-stock corporation where the articles of incorporation or by-laws so provide. (Underscoring supplied)
In Morato v. Court of
Appeals,[19]
we held that pursuant to R.A. No.
8799 and the Interim Rules of Procedure Governing Intra-Corporate Controversies,
“among the powers and functions of the SEC which were transferred to the RTC
include the following: (a) jurisdiction and supervision over all corporations,
partnerships or associations which are the grantees of primary franchises
and/or a license or permit issued by the Government; (b) the approval,
rejection, suspension, revocation or requirement for registration statements,
and registration and licensing applications; (c) the regulation, investigation,
or supervision of the activities of persons to ensure compliance; (d) the
supervision, monitoring, suspension or take over the activities of exchanges,
clearing agencies, and other SROs; (e) the imposition of sanctions for the
violation of laws and the rules, regulations and orders issued pursuant
thereto; (f) the issuance of cease-and-desist orders to prevent fraud or injury
to the investing public; (g) the
compulsion of the officers of any registered corporation or association to call
meetings of stockholders or members thereof under its supervision; and (h)
the exercise of such other powers as may be provided by law as well as those which may be implied from,
or which are necessary or incidental to the carrying out of, the express powers
granted the Commission to achieve the objectives and purposes of these laws.”
Clearly, the RTC has the power to hear
and decide the intra-corporate controversy of the parties herein. Concomitant
to said power is the authority to issue orders necessary or incidental to the
carrying out of the powers expressly granted to it. Thus, the RTC may, in appropriate cases, order
the holding of a special meeting of stockholders or members of a corporation involving
an intra-corporate dispute under its supervision.
SECOND, petitioners
assert that Judge Emuslan did not have
the authority to issue the assailed Order of
Significantly,
respondents never refuted petitioners’ assertion. The Court of Appeals, for its part,
dismissed petitioners’ allegation by merely ruling that “this is the first time
they are raising this issue – which is much too late in the day. In any event, one cannot question the
authority of the court when it does not suit him and accepts such authority
when it favors him.”[20]
The ruling suggests that petitioners
are barred by laches and/or estoppel from raising that issue. The appellate court likewise denied petitioners’
motion to set the case for oral arguments.
The Court of Appeals should have resolved the issue of
whether Judge Emuslan had the authority to issue the
assailed Order, a jurisdictional question crucial to the resolution of the
petition. It is elementary that a
jurisdictional controversy may be raised at any time.[21]
Indeed, as early as
TO : ALL JUDGES OF THE REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS, AND MUNICIPAL CIRCUIT TRIAL COURTS
SUBJECT : EXPANDED AUTHORITY OF PAIRING COURTS
In
the interest of efficient administration of justice, the authority of the
pairing judge under Circular No. 7 dated
For
this purpose, the provisions of Circular No.7, dated
x x x. (Underscoring supplied)
Thus,
although the RTC, Branch 48,
x x x. Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, not the decision rendered therein. Where there is jurisdiction over the person and the subject matter, the decision on all other questions arising in the case is but an exercise of the jurisdiction. x x x. (Underscoring supplied)
There are instances where a judge may commit errors. He may issue an order without authority. And if
clothed with power, he may exercise it in
excess of his authority or with
grave abuse of discretion amounting to lack or excess of jurisdiction. Any of these acts may be struck down as a
nullity through a petition for certiorari,[23]
as what petitioners did before the Court of Appeals. It bears stressing that any act or order
rendered by a judge without authority,
such as the questioned
THIRD,
petitioners further contend that even if Judge Emuslan had the authority to
issue the challenged Order, still he issued it with grave abuse of discretion amounting to lack or excess of
jurisdiction. They lament that the
Order effectively disposed of the merits
of the main case [Civil (SEC) Case No. U-14].
Unfortunately, despite the significance of this issue, the
Court of Appeals totally ignored it by failing to render a ruling thereon. Respondents, for their part, merely aver that
Judge Emuslan “only had the best interest of STRADEC in mind” when he issued
the questioned Order. [25]
We find for petitioners.
The duty of the court taking cognizance of an application for
a writ of preliminary injunction is to determine whether the requisites
necessary for the grant of such writ are present. The requisites for the issuance of a writ of
preliminary injunction are: (1) the applicant for such writ must show that he
has a clear and unmistakable right that
must be protected; and (2) there exists an urgent
and paramount necessity for the writ to prevent serious damage.[26]
In this case, Judge Emuslan’s
In the instant case, however, the trial
court’s order of
In its order of
x x x.
x x x the possibility of irreparable damage
without proof of actual existing right is not a ground for an injunction (Heirs of Asuncion v. Gervacio, Jr., 304
SCRA 322 [1999]). Where the
complainant’s right is doubtful or disputed, injunction is not proper. Absent a clear legal right, the issuance of
the injunctive relief constitutes grave abuse of discretion (
Furthermore, Judge
Emuslan’s
x x x. Injunction is not designed to protect
contingent or future rights. It is not
proper when the complainant’s right is doubtful or disputed.
x x x, courts should avoid issuing this writ which in effect disposes of the main case without trial (F. Regalado, Remedial Law Compendium, Vol. I, 639 (7th revised ed., 1999). x x x. (Underscoring supplied)
In the same case of Manila
International Airport Authority v. Court of Appeals,[30] we urged the courts to exercise extreme
caution in issuing the writ, thus:
x x x. We remind trial courts that while generally
the grant of a writ of preliminary injunction rests on the sound discretion of
the court taking cognizance of the case, extreme
caution must be observed in the exercise of such discretion. The discretion of the court a quo to grant an injunctive writ must
be exercised based on the grounds and in the manner provided by law. Thus,
the Court declared in Garcia v. Burgos:
It has been consistently held that there is no power the exercise of
which is more delicate, which requires greater caution, deliberation and sound
discretion, or more dangerous in a doubtful case, than the issuance of an
injunction. It is the strong arm of
equity that should never be extended unless to cases of great injury, where
courts of law cannot afford an adequate or commensurate remedy in damages.
Every court should remember that an
injunction is a limitation upon the freedom of action of the defendant and
should not be granted lightly or precipitately. It should be granted only when the court is
fully satisfied that the law permits it and the emergency demands it [citations
omitted]. (Underscoring supplied)
To repeat, the purpose of the writ of preliminary injunction is
to preserve the status quo until the
court could hear the merits of the case.[31] The status
quo is the last actual peaceable uncontested status that preceded the
controversy[32]
which, in the instant case, is the holding of the annual stockholders’ meeting
on
Equally important is the fact that the Order was issued even
though respondents’ right to an injunctive relief is doubtful or has been
vehemently disputed. We note that
petitioners, in their answer with counterclaim, raised serious and valid
defenses, among which is that the action is premature since the principal
office of STRADEC in Bayambang, Pangasinan is
yet to be established, as authorized by the SEC.[34] Obviously, pending the establishment of a
principal office in Bayambang, Pangasinan, all the stockholders’ meetings of
STRADEC have been properly held in their principal office in Pasig City.
Another
weighty defense raised by petitioners is that the action has prescribed. One of
the reliefs sought by respondents in the complaint is the nullification of the
election of the Board of Directors and corporate officers held during the
SEC. 1. Cases covered. – The
provisions of this rule shall apply to election
contests in stock and non-stock corporations.
SEC. 2. Definition. – An election contest refers to any controversy or dispute involving
title or claim to any elective office in a stock or non-stock corporation, the
validation of proxies, the manner and validity
of elections, and the qualifications of candidates, including the
proclamation of winners, to the office of director, trustee or other officer
directly elected by the stockholders in a close corporation or by members of a
non-stock corporation where the articles of incorporation or by-laws so
provide. (Underscoring supplied)
It is important
to note that the Court of Appeals itself ruled that respondents’ action before
the RTC, Branch 48,
Likewise, as clearly provided in Section 1, Rule 1 of the Interim Rules
of Procedure Governing Intra-Corporate Controversies under R.A. No. 8799, among
the intra-corporate controversies transferred to the special courts are:
x x x
(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporation, partnerships or associations;
x x x
Undoubtedly, therefore,
the instant case is an intra-corporate controversy among the stockholders
themselves relative to the election of
directors or officers of STRADEC, specifically between respondents x x x on
one hand and petitioners x x x on the other. x x x. If
there is still any doubt that the
x x x
Clearly, therefore, said Rule empowers the special corporate courts to
decide election cases x x x.[35] (Underscoring
supplied)
As
pointed out by petitioners in their answer with counterclaim, under Section 3,
Rule 6 of the Interim Rules of Procedure Governing Intra-Corporate
Controversies under R.A. No. 8799, an election contest must be “filed within 15
days from the date of the election.”[36] It was only on
In sum, Judge Emuslan, in granting
the writ of preliminary injunction, acted with grave abuse of discretion amounting
to lack or excess of jurisdiction.
WHEREFORE, we GRANT the instant petition and reverse
the assailed Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 87785.
The Order dated
The last actual peaceable uncontested status of the parties
prior to the filing by respondents herein of Civil (SEC) Case No. U-14 is RESTORED.
This case is REMANDED
to the RTC, Branch 48,
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief
Justice Chairperson |
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|
RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA Associate Justice |
|
CANCIO C. GARCIA Associate Justice |
|
Chief Justice
[1] Filed under Rule 45 of the 1997 Rules of Civil
Procedure, as amended.
[2] Petitioners’ Memorandum, Rollo, p. 532.
[3]
[4] Annex “C,” Petition,
[5] Pursuant to Supreme Court Resolution dated
[6] Pursuant to Supreme Court Circular No.
19-98 dated
[7] Annex “L,” Petition, Rollo, pp. 139-163.
[8]
[9] Certification dated January 10, 2005,
issued by Bernadette E. Palting, Clerk of Court, Regional Trial Court, Urdaneta
City; Records of the Office of the Court Administrator.
[10] Rollo,
pp. 166-168.
[11] Filed under Rule 65 of the 1997 Rules of
Civil Procedure, as amended.
[12] This issue was resolved by the Court of
Appeals in its Resolution denying petitioners’ motion for reconsideration of its Decision.
[13] Annex “A,” Petition, Rollo, pp. 81-94.
[14] Annex “B,” id., pp. 95-107.
[15] Embassy
Farms, Inc. v. Court of Appeals, G.R. No. 80682, August 13, 1990, 188 SCRA
492, citing Union Glass and Container
Corp. v. SEC, 126 SCRA 31 (1983); DMRC
Enterprises v. Este Del Sol Mountain Reserve, Inc., 132 SCRA 293 (1984); Rivera v. Florendo, 144 SCRA 643 (1986);
Abeijo v. De la Cruz, 149 SCRA 654
(1987).
[16] Section 5, PD 902-A. See also Section 1, Rule 1 of the Interim
Rules of Procedure Governing Intra-Corporate Controversies under R.A. No. 8799.
[17] See Morato
v. Court of Appeals, G.R. No. 141510,
[18] Speed
Distributing Corp. v. Court of Appeals, G.R. No. 149351,
[19] Supra,
p. 457.
[20] Assailed Resolution dated
[21] Manila
International Airport Authority v. Court of Appeals, G.R. No. 118249,
February 14, 2003, 397 SCRA
348, 358, citing Garcia v. Burgos,
291 SCRA 546 (1998).
[22] G.R. No. 156118,
[23] Section 1, Rule 65, 1997 Rules of Civil
Procedure, as amended.
[24] Arcelona v. Court of Appeals, G.R. No. 102900, October 2, 1997, 280 SCRA 20, citing Leonor v. Court of Appeals, 256 SCRA 69, 82 (1996).
[25] Respondents’ Memorandum, Rollo, p. 739.
[26] Manila
International Airport Authority v. Court of Appeals, supra, citing Ong Ching Kian
Chuan v. Court of Appeals, 363 SCRA 145 (2001).
[27]
[28] Supra,
pp. 360, 363.
[29] G.R. No. 165662,
[30] Supra,
cited in Selegna Management and
Development Corporation v. United Coconut Planters Bank, id., p. 145.
[31] Mirasol
v. Department of Public Works and Highways, G.R. No. 158793, June 8, 2006,
490 SCRA 318.
[32] Searth
Commodities Corp. v. Court of Appeals, G.R. No. 64220, March 31, 1992, 207
SCRA 622, citing Rivas v. Securities and Exchange Commission, 190 SCRA 295 (1990); Bengzon v. Court of Appeals, 161 SCRA
745 (1988); Rodulfa v. Alonso, 76
Phil. 225 (1946).
[33] Central
Bank of the Philippines v. Court of Appeals, G.R. Nos. 88353 and 92943, May
8, 1992, 208 SCRA 652, 684; Searth
Commodities Corp. v. Court of Appeals, id.,
629-630, citing Rivas v. Securities and
Exchange Commission, id.; Government Service Insurance System v.
Florendo, 178 SCRA 76 (1989); Ortigas
& Co. Ltd. Partnership v. Court of Appeals, 162 SCRA 165 (1988).
[34] Petitioners’ Answer with Counterclaim, Rollo, pp. 151-152.
[35] Assailed Resolution dated
[36] Rollo, pp. 150-151.