OSCAR C. REYES,
Petitioner, -
versus - HON. REGIONAL TRIAL COURT OF
MAKATI, Branch 142, ZENITH INSURANCE CORPORATION, and RODRIGO C. REYES,
Respondents. |
G.R. No. 165744
Present: QUISUMBING, J., Chairperson, * carpio MORALES, VELASCO, JR., and BRION, JJ. Promulgated: August 11, 2008 |
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D E C I S I O N
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BRION, J.: |
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This Petition for Review on Certiorari
under Rule 45 of the Rules of Court seeks to set aside the Decision of the
Court of Appeals (CA)[1]
promulgated on
BACKGROUND
FACTS
Oscar and private respondent Rodrigo
C. Reyes (Rodrigo) are two of the
four children of the spouses Pedro and Anastacia Reyes. Pedro, Anastacia, Oscar, and Rodrigo each
owned shares of stock of Zenith Insurance Corporation (Zenith), a domestic corporation established by their family. Pedro died in 1964, while Anastacia died in
1993. Although Pedro’s estate was
judicially partitioned among his heirs sometime in the 1970s, no similar
settlement and partition appear to have been made with Anastacia’s estate,
which included her shareholdings in Zenith.
As of
On
In his Answer with Counterclaim,[6]
Oscar denied the charge that he illegally acquired the shares of Anastacia
Reyes. He asserted, as a defense, that he
purchased the subject shares with his own funds from the unissued stocks of
Zenith, and that the suit is not a bona
fide derivative suit because the requisites therefor have not been complied
with. He thus questioned the SEC’s
jurisdiction to entertain the complaint because it pertains to the settlement
of the estate of Anastacia Reyes.
When Republic Act (R.A.) No. 8799[7] took effect, the
SEC’s exclusive and original jurisdiction over cases enumerated in Section 5 of
Presidential Decree (P.D.) No. 902-A
was transferred to the RTC designated as a special commercial court.[8]
The records of Rodrigo’s SEC case were
thus turned over to the RTC, Branch 142,
On
A close reading of the
Complaint disclosed the presence of two (2) causes of action, namely: a) a
derivative suit for accounting of the funds and assets of the corporation which
are in the control, custody, and/or possession of the respondent [herein
petitioner Oscar] with prayer to appoint a management committee; and b) an
action for determination of the shares of stock of deceased spouses Pedro and
Anastacia Reyes allegedly taken by respondent, its accounting and the
corresponding delivery of these shares to the parties’ brothers and sisters. The latter is not a derivative suit and
should properly be threshed out in a petition for settlement of estate.
Accordingly, the motion is
denied. However, only the derivative
suit consisting of the first cause of action will be taken cognizance of by
this Court.[10]
Oscar
thereupon went to the CA on a petition for certiorari, prohibition, and mandamus[11] and prayed that
the RTC Order be annulled and set aside and that the trial court be prohibited
from continuing with the proceedings. The
appellate court affirmed the RTC Order and denied the petition in its Decision
dated
Petitioner
now comes before us on appeal through a petition for review on certiorari under
Rule 45 of the Rules of Court.
ASSIGNMENT
OF ERRORS
Petitioner
Oscar presents the following points as conclusions the CA should have made:
1. that the complaint is a mere nuisance or harassment suit
that should be dismissed under the Interim Rules of Procedure of
Intra-Corporate Controversies; and
2. that the complaint is not a bona fide derivative suit but is in fact in the nature of a
petition for settlement of estate; hence, it is outside the jurisdiction of the
RTC acting as a special commercial court.
Accordingly, he prays for the setting aside
and annulment of the CA decision and resolution, and the dismissal of Rodrigo’s
complaint before the RTC.
THE
COURT’S RULING
We find the petition meritorious.
The
core question for our determination is whether the trial court, sitting as a special
commercial court, has jurisdiction over the subject matter of Rodrigo’s
complaint. To resolve it, we rely on the
judicial principle that “jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations of the complaint,
irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein.”[12]
Jurisdiction of Special Commercial Courts
P.D.
No. 902-A enumerates the cases over which the SEC (now the RTC acting as a special
commercial court) exercises exclusive jurisdiction:
SECTION
5. In addition to the regulatory and adjudicative functions of the Securities
and Exchange Commission over corporations, partnership, 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; and
c)
Controversies in the election or
appointment of directors, trustees, officers, or managers of such corporations,
partnerships, or associations.
The
allegations set forth in Rodrigo’s complaint principally invoke Section 5,
paragraphs (a) and (b) above as basis for the exercise of the RTC’s special
court jurisdiction. Our focus in
examining the allegations of the complaint shall therefore be on these two
provisions.
Fraudulent
Devices and Schemes
The
rule is that a complaint must contain a plain, concise, and direct statement of
the ultimate facts constituting the plaintiff’s cause of action and must
specify the relief sought.[13] Section 5, Rule 8 of the Revised Rules of
Court provides that in all averments of
fraud or mistake, the circumstances constituting fraud or mistake must be
stated with particularity.[14] These rules find specific application to
Section 5(a) of P.D. No. 902-A which speaks of corporate devices or schemes
that amount to fraud or misrepresentation detrimental to the public and/or to
the stockholders.
In
an attempt to hold Oscar responsible for corporate fraud, Rodrigo alleged in the
complaint the following:
3. This is a complaint…to determine the shares of stock of the deceased spouses
Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated
for himself [herein petitioner Oscar] which were not collated and taken
into account in the partition, distribution, and/or settlement of the estate of
the deceased Spouses Pedro and Anastacia Reyes, for which he should be ordered
to account for all the income from the time he took these shares of stock, and
should now deliver to his brothers and sisters their just and respective shares
with the corresponding equivalent amount of P7,099,934.82 plus interest thereon
from 1978 representing his obligations to the Associated Citizens’ Bank that
was paid for his account by his late mother, Anastacia C. Reyes. This amount was not collated or taken into
account in the partition or distribution of the estate of their late mother,
Anastacia C. Reyes.
3.1. Respondent Oscar
C. Reyes, through other schemes of fraud including misrepresentation, unilaterally,
and for his own benefit, capriciously transferred and took possession and
control of the management of Zenith Insurance Corporation which is
considered as a family corporation, and other properties and businesses
belonging to Spouses Pedro and Anastacia Reyes.
x
x x x
4.1. During the increase of capitalization of Zenith
Insurance Corporation, sometime in 1968, the property covered by TCT No. 225324
was illegally and fraudulently used by respondent as a collateral.
x
x x x
5. The complainant Rodrigo C. Reyes discovered that by some manipulative scheme, the
shareholdings of their deceased mother, Doña Anastacia C. Reyes, shares of
stocks and [sic] valued in the corporate books at P7,699,934.28, more or less,
excluding interest and/or dividends, had
been transferred solely in the name of respondent. By such fraudulent
manipulations and misrepresentation, the shareholdings of said respondent Oscar
C. Reyes abruptly increased to P8,715,637.00 [sic] and becomes [sic] the
majority stockholder of Zenith Insurance Corporation, which portion of said
shares must be distributed equally amongst the brothers and sisters of the
respondent Oscar C. Reyes including the complainant herein.
x
x x x
9.1
The shareholdings of deceased
Spouses Pedro Reyes and Anastacia C.
Reyes valued at P7,099,934.28 were
illegally and fraudulently transferred solely to the respondent’s [herein
petitioner Oscar] name and installed himself as a majority stockholder of
Zenith Insurance Corporation [and] thereby deprived his brothers and
sisters of their respective equal shares thereof including complainant hereto.
x
x x x
10.1
By refusal of the respondent to account
of his [sic] shareholdings in the company, he illegally and fraudulently
transferred solely in his name wherein [sic] the shares of stock of the
deceased Anastacia C. Reyes [which] must be properly collated and/or
distributed equally amongst the children, including the complainant Rodrigo C.
Reyes herein, to their damage and prejudice.
x
x x x
11.1
By continuous refusal of the respondent to account of his [sic] shareholding
with Zenith Insurance Corporation[,] particularly the number of shares of
stocks illegally and fraudulently transferred to him from their deceased
parents Sps. Pedro and Anastacia Reyes[,] which are all subject for collation
and/or partition in equal shares among their children. [Emphasis supplied.]
Allegations
of deceit, machination, false pretenses, misrepresentation, and threats are
largely conclusions of law that, without supporting statements of the facts to
which the allegations of fraud refer, do not sufficiently state an effective
cause of action.[15] The late Justice Jose Feria, a noted
authority in Remedial Law, declared that fraud and mistake are required to be
averred with particularity in order to enable the opposing party to controvert
the particular facts allegedly constituting such fraud or mistake.[16]
Tested
against these standards, we find that the charges of fraud against Oscar were not
properly supported by the required factual allegations. While the complaint contained allegations of
fraud purportedly committed by him, these allegations are not particular enough
to bring the controversy within the special commercial court’s jurisdiction;
they are not statements of ultimate facts, but are mere conclusions of law: how
and why the alleged appropriation of shares can be characterized as “illegal
and fraudulent” were not explained nor elaborated on.
Not
every allegation of fraud done in a corporate setting or perpetrated by corporate
officers will bring the case within the special commercial court’s
jurisdiction. To fall within this
jurisdiction, there must be sufficient nexus showing that the corporation’s
nature, structure, or powers were used to facilitate the fraudulent device or
scheme. Contrary to this concept, the
complaint presented a reverse situation.
No corporate power or office was alleged to have facilitated the
transfer of the shares; rather, Oscar, as an individual and without reference
to his corporate personality, was alleged to have transferred the shares of
Anastacia to his name, allowing him to become the majority and controlling stockholder
of Zenith, and eventually, the corporation’s President. This is the essence of the complaint read as
a whole and is particularly demonstrated under the following allegations:
5. The complainant Rodrigo C. Reyes discovered that by some
manipulative scheme, the shareholdings of their deceased mother, Doña Anastacia
C. Reyes, shares of stocks and [sic] valued in the corporate books at
P7,699,934.28, more or less, excluding interest and/or dividends, had been
transferred solely in the name of respondent. By such fraudulent manipulations and misrepresentation, the
shareholdings of said respondent Oscar C. Reyes abruptly increased to
P8,715,637.00 [sic] and becomes [sic] the majority stockholder of Zenith
Insurance Corporation, which portion of said shares must be distributed
equally amongst the brothers and sisters of the respondent Oscar C. Reyes
including the complainant herein.
x
x x x
9.1 The shareholdings of deceased Spouses Pedro Reyes and Anastacia C. Reyes valued at
P7,099,934.28 were illegally and fraudulently transferred solely
to the respondent’s [herein petitioner Oscar] name and installed himself as a
majority stockholder of Zenith Insurance Corporation [and] thereby deprived
his brothers and sisters of their respective equal shares thereof including
complainant hereto. [Emphasis supplied.]
In
ordinary cases, the failure to specifically allege the fraudulent acts does not
constitute a ground for dismissal since such defect can be cured by a bill of
particulars. In cases governed by the
Interim Rules of Procedure on Intra-Corporate Controversies, however, a bill of
particulars is a prohibited pleading.[17] It is essential, therefore, for the complaint
to show on its face what are claimed to be the fraudulent corporate acts if the
complainant wishes to invoke the court’s special commercial jurisdiction.
We
note that twice in the course of this case, Rodrigo had been given the
opportunity to study the propriety of amending or withdrawing the complaint,
but he consistently refused. The court’s
function in resolving issues of jurisdiction is limited to the review of the
allegations of the complaint and, on the basis of these allegations, to the determination
of whether they are of such nature and subject that they fall within the terms
of the law defining the court’s jurisdiction.
Regretfully, we cannot read into the complaint any specifically alleged corporate
fraud that will call for the exercise of the court’s special commercial jurisdiction.
Thus, we cannot affirm the RTC’s assumption of jurisdiction over Rodrigo’s
complaint on the basis of Section 5(a) of P.D. No. 902-A.[18]
Intra-Corporate
Controversy
A
review of relevant jurisprudence shows a development in the Court’s approach in
classifying what constitutes an intra-corporate controversy. Initially,
the main consideration in determining whether a dispute constitutes an
intra-corporate controversy was limited to a consideration of the intra-corporate
relationship existing between or among the parties.[19] The types of relationships embraced under
Section 5(b), as declared in the case of Union
Glass & Container Corp. v. SEC,[20] were as follows:
a)
between the corporation, partnership, or
association and the public;
b)
between the corporation, partnership, or
association and its stockholders, partners, members, or officers;
c)
between the corporation, partnership, or
association and the State as far as its franchise, permit or license to operate
is concerned; and
d)
among
the stockholders, partners, or associates themselves. [Emphasis
supplied.]
The existence of any of
the above intra-corporate relations was sufficient to confer jurisdiction to
the SEC, regardless of the subject matter of the dispute. This came to be known as the relationship test.
However,
in the 1984 case of DMRC Enterprises v.
Esta del Sol Mountain Reserve, Inc.,[21] the Court introduced the nature of the controversy test. We declared in this case that it is not the
mere existence of an intra-corporate relationship that gives rise to an
intra-corporate controversy; to rely on the relationship test alone will divest
the regular courts of their jurisdiction for the sole reason that the dispute involves
a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in
disregarding or minimizing the value of the nature of the transactions which gives
rise to the dispute.
Under
the nature of the controversy test, the incidents
of that relationship must also be considered for the purpose of ascertaining
whether the controversy itself is intra-corporate.[22]
The controversy must not only be rooted
in the existence of an intra-corporate relationship, but must as well pertain
to the enforcement of the parties’ correlative rights and obligations under the
Corporation Code and the internal and intra-corporate regulatory rules of the
corporation. If the relationship and
its incidents are merely incidental to the controversy or if there will still
be conflict even if the relationship does not exist, then no intra-corporate controversy
exists.
The
Court then combined the two tests and declared that jurisdiction should be
determined by considering not only the status or relationship of the parties,
but also the nature of the question under controversy.[23] This two-tier test was adopted in the recent
case of Speed Distribution, Inc. v. Court
of Appeals:[24]
To determine
whether a case involves an intra-corporate controversy, and is to be heard and
decided by the branches of the RTC specifically designated by the Court to try
and decide such cases, two elements must concur: (a) the status or relationship
of the parties; and (2) the nature of the question that is the subject of their
controversy.
The first element requires that the controversy must
arise out of intra-corporate or partnership relations between any or all of the
parties and the corporation, partnership, or association of which they are
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
franchises. The second element requires
that the dispute among the parties be intrinsically connected with the
regulation of the corporation. If the
nature of the controversy involves matters that are purely civil in character,
necessarily, the case does not involve an intra-corporate controversy.
Given
these standards, we now tackle the question posed for our determination under
the specific circumstances of this case:
Application
of the Relationship Test
Is
there an intra-corporate relationship between the parties that would
characterize the case as an intra-corporate dispute?
We
point out at the outset that while Rodrigo holds shares of stock in Zenith, he
holds them in two capacities: in his own right with respect to the 4,250 shares
registered in his name, and as one of the heirs of Anastacia Reyes with respect
to the 136,598 shares registered in her name.
What is material in resolving the issues of this case under the
allegations of the complaint is Rodrigo’s interest as an heir since
the subject matter of the present controversy centers on the shares of stocks
belonging to Anastacia, not on Rodrigo’s personally-owned shares nor on his
personality as shareholder owning these shares. In this light, all reference to
shares of stocks in this case shall pertain to the shareholdings of the
deceased Anastacia and the parties’ interest therein as her heirs.
Article
777 of the Civil Code declares that the successional rights are transmitted
from the moment of death of the decedent.
Accordingly, upon Anastacia’s death, her children acquired legal title
to her estate (which title includes her shareholdings in Zenith), and they are,
prior to the estate’s partition, deemed co-owners thereof.[25] This status as co-owners, however, does not immediately
and necessarily make them stockholders of the corporation. Unless and until there is compliance with
Section 63 of the Corporation Code on the manner of transferring shares, the
heirs do not become registered stockholders of the corporation. Section 63 provides:
Section 63. Certificate of stock and transfer of shares. – The capital stock of
stock corporations shall be divided into shares for which certificates signed
by the president or vice-president, countersigned by the secretary or assistant
secretary, and sealed with the seal of the corporation shall be issued in
accordance with the by-laws. Shares of
stock so issued are personal property and may be transferred by delivery of the
certificate or certificates indorsed by the owner or his attorney-in-fact or
other person legally authorized to make the transfer. No transfer, however, shall be valid,
except as between the parties, until the transfer is recorded in the books of
the corporation so as to show the names of the parties to the transaction, the
date of the transfer, the number of the certificate or certificates, and the
number of shares transferred. [Emphasis
supplied.]
No shares of stock against which the
corporation holds any unpaid claim shall be transferable in the books of the corporation.
Simply
stated, the transfer of title by means of succession, though effective and
valid between the parties involved (i.e.,
between the decedent’s estate and her heirs), does not bind the corporation and
third parties. The transfer must be
registered in the books of the corporation to make the transferee-heir a
stockholder entitled to recognition as such both by the corporation and by third
parties.[26]
We
note, in relation with the above statement, that in Abejo v. Dela Cruz[27]
and TCL Sales Corporation v. Court of
Appeals[28]
we did not require the registration of the transfer before considering the
transferee a stockholder of the corporation (in effect upholding the existence
of an intra-corporate relation between the parties and bringing the case within
the jurisdiction of the SEC as an intra-corporate controversy). A marked difference, however, exists between
these cases and the present one.
In Abejo and TCL Sales, the
transferees held definite and
uncontested titles to a specific number of shares of the corporation;
after the transferee had established prima
facie ownership over the shares of stocks in question, registration became
a mere formality in confirming their status as stockholders. In the present case, each of Anastacia’s
heirs holds only an undivided interest in the shares. This interest, at this point, is still inchoate
and subject to the outcome of a settlement proceeding; the right of the heirs
to specific, distributive shares of inheritance will not be determined until
all the debts of the estate of the decedent are paid. In short, the heirs are only entitled to what
remains after payment of the decedent’s debts;[29] whether there will
be residue remains to be seen. Justice
Jurado aptly puts it as follows:
No succession
shall be declared unless and until a liquidation of the assets and debts left
by the decedent shall have been made and all his creditors are fully paid. Until a final liquidation is made and all the
debts are paid, the right of the heirs to inherit remains inchoate. This is so
because under our rules of procedure, liquidation
is necessary in order to determine whether or not the decedent has left any
liquid assets which may be transmitted to his heirs.[30]
[Emphasis supplied.]
Rodrigo
must, therefore, hurdle two obstacles before he can be considered a stockholder
of Zenith with respect to the shareholdings originally belonging to Anastacia. First, he must prove that there
are shareholdings that will be left to him and his co-heirs, and this can be
determined only in a settlement of the decedent’s estate. No such proceeding has been commenced to date.
Second, he must register the transfer
of the shares allotted to him to make it binding against the corporation. He cannot demand that this be done unless and
until he has established his specific allotment (and prima facie ownership) of the shares. Without the settlement of Anastacia’s estate,
there can be no definite partition and distribution of the estate to the
heirs. Without the partition and
distribution, there can be no registration of the transfer. And without the registration, we cannot
consider the transferee-heir a stockholder who may invoke the existence of an
intra-corporate relationship as premise for an intra-corporate controversy
within the jurisdiction of a special commercial court.
In
sum, we find that – insofar as the subject shares of stock (i.e., Anastacia’s shares) are concerned
– Rodrigo cannot be considered a stockholder of Zenith. Consequently, we cannot declare that an intra-corporate
relationship exists that would serve as basis to bring this case within the special
commercial court’s jurisdiction under Section 5(b) of PD 902-A, as
amended. Rodrigo’s complaint, therefore,
fails the relationship test.
Application
of the Nature of Controversy Test
The
body rather than the title of the complaint determines the nature of an action.[31]
Our examination of the complaint yields
the conclusion that, more than anything else, the complaint is about the
protection and enforcement of successional rights. The controversy it presents is purely civil
rather than corporate, although it is denominated as a “complaint for
accounting of all corporate funds and assets.”
Contrary
to the findings of both the trial and appellate courts, we read only one cause
of action alleged in the complaint. The
“derivative suit for accounting of the funds and assets of the corporation
which are in the control, custody, and/or possession of the respondent [herein petitioner
Oscar]” does not constitute a separate cause of action but is, as correctly
claimed by Oscar, only an incident to the “action for determination of the
shares of stock of deceased spouses Pedro and Anastacia Reyes allegedly taken
by respondent, its accounting and the corresponding delivery of these shares to
the parties’ brothers and sisters.” There
can be no mistake of the relationship between the “accounting” mentioned in the
complaint and the objective of partition and distribution when Rodrigo claimed
in paragraph 10.1 of the complaint that:
10.1 By refusal of the respondent to
account of [sic] his shareholdings in the company, he illegally and
fraudulently transferred solely in his name wherein [sic] the shares of stock
of the deceased Anastacia C. Reyes [which] must be properly collated and/or
distributed equally amongst the children including the complainant Rodrigo C.
Reyes herein to their damage and prejudice.
We particularly note that the complaint
contained no sufficient allegation that justified the need for an accounting other than to determine the extent of
Anastacia’s shareholdings for purposes of distribution.
Another
significant indicator that points us to the real nature of the complaint are
Rodrigo’s repeated claims of illegal and fraudulent transfers of Anastacia’s
shares by Oscar to the prejudice of the other heirs of the decedent; he cited these
allegedly fraudulent acts as basis for his demand for the collation and
distribution of Anastacia’s shares to the heirs. These claims tell us unequivocally that the present
controversy arose from the parties’ relationship as heirs of Anastacia and not
as shareholders of Zenith. Rodrigo,
in filing the complaint, is enforcing his rights as a co-heir and not as a
stockholder of Zenith. The injury he
seeks to remedy is one suffered by an heir (for the impairment of his
successional rights) and not by the corporation nor by Rodrigo as a shareholder
on record.
More
than the matters of injury and redress, what Rodrigo clearly aims to accomplish
through his allegations of illegal acquisition by Oscar is the distribution of
Anastacia’s shareholdings without a prior settlement of her estate – an objective
that, by law and established jurisprudence, cannot be done. The RTC of Makati, acting as a special
commercial court, has no jurisdiction to settle, partition, and distribute the
estate of a deceased. A relevant provision
– Section 2 of Rule 90 of the Revised Rules of Court – that contemplates
properties of the decedent held by one of the heirs declares:
Questions as to advancement made or
alleged to have been made by the deceased to any heir may be heard and determined by the court
having jurisdiction of the estate proceedings; and the final order of
the court thereon shall be binding on the person raising the questions and on
the heir. [Emphasis supplied.]
Worth noting are this Court’s statements in the
case of Natcher v. Court of Appeals:[32]
Matters
which involve settlement and distribution of the estate of the decedent fall
within the exclusive province of the probate court in the exercise of its
limited jurisdiction.
x
x x x
It is clear that trial courts trying an ordinary action cannot
resolve to perform acts pertaining to a special proceeding because it is
subject to specific prescribed rules. [Emphasis supplied.]
That
an accounting of the funds and assets of Zenith to determine the extent and
value of Anastacia’s shareholdings will be undertaken by a probate court and
not by a special commercial court is completely consistent with the probate court’s
limited jurisdiction. It has the power to
enforce an accounting as a necessary means to its authority to determine the
properties included in the inventory of the estate to be administered, divided
up, and distributed. Beyond this, the
determination of title or ownership over the subject shares (whether belonging
to Anastacia or Oscar) may be conclusively
settled by the probate court as a question of collation or advancement. We had occasion to recognize the court’s
authority to act on questions of title or ownership in a collation or
advancement situation in Coca v.
Pangilinan[33] where
we ruled:
It should be clarified that whether
a particular matter should be resolved by the Court of First Instance in the
exercise of its general jurisdiction or of its limited probate jurisdiction is
in reality not a jurisdictional question. In essence, it is a procedural question
involving a mode of practice "which may be waived."
As a general rule, the question as
to title to property should not be passed upon in the testate or intestate
proceeding. That question should be ventilated in a separate action. That
general rule has qualifications or exceptions justified by expediency and
convenience.
Thus, the probate court may
provisionally pass upon in an intestate or testate proceeding the question of
inclusion in, or exclusion from, the inventory of a piece of property without
prejudice to its final determination in a separate action.
Although
generally, a probate court may not decide a question of title or ownership, yet
if the interested parties are all heirs, or the question is one of collation or advancement, or the parties
consent to the assumption of jurisdiction by the probate court and the rights
of third parties are not impaired, the
probate court is competent to decide the question of ownership. [Citations
omitted. Emphasis supplied.]
In
sum, we hold that the nature of the
present controversy is not one which may be classified as an intra-corporate
dispute and is beyond the jurisdiction of the special commercial court to resolve. In short, Rodrigo’s complaint also fails the
nature of the controversy test.
DERIVATIVE
SUIT
Rodrigo’s
bare claim that the complaint is a derivative suit will not suffice to confer jurisdiction
on the RTC (as a special commercial court) if he cannot comply with the
requisites for the existence of a derivative suit. These requisites are:
a.
the party bringing suit should be a
shareholder during the time of the act or transaction complained of, the number
of shares not being material;
b.
the party has tried to exhaust
intra-corporate remedies, i.e., has
made a demand on the board of directors for the appropriate relief, but the
latter has failed or refused to heed his plea; and
c.
the cause of action actually devolves on
the corporation; the wrongdoing or harm having been or being caused to the
corporation and not to the particular stockholder bringing the suit.[34]
Based
on these standards, we hold that the allegations of the present complaint do
not amount to a derivative suit.
First,
as already discussed above, Rodrigo is not a shareholder with respect to the
shareholdings originally belonging to Anastacia; he only stands as a
transferee-heir whose rights to the share are inchoate and unrecorded. With respect to his own individually-held
shareholdings, Rodrigo has not alleged any individual cause or basis as a
shareholder on record to proceed against Oscar.
Second, in order that a stockholder
may show a right to sue on behalf of the corporation, he must allege with some
particularity in his complaint that he has exhausted his remedies within the corporation by making a
sufficient demand upon the directors or other officers for appropriate relief
with the expressed intent to sue if relief is denied.[35]
Paragraph 8 of the complaint hardly satisfies this requirement since what the
rule contemplates is the exhaustion of remedies within the corporate setting:
8. As members of the same family, complainant Rodrigo C.
Reyes has resorted [to] and exhausted all legal means of resolving the dispute
with the end view of amicably settling the case, but the dispute between them
ensued.
Lastly,
we find no injury, actual or threatened, alleged to have been done to the
corporation due to Oscar’s acts. If
indeed he illegally and fraudulently transferred Anastacia’s shares in his own
name, then the damage is not to the corporation but to his co-heirs; the
wrongful transfer did not affect the capital stock or the assets of
Zenith. As already mentioned, neither
has Rodrigo alleged any particular cause or wrongdoing against the corporation
that he can champion in his capacity as a shareholder on record.[36]
In
summary, whether as an individual or as a derivative suit, the RTC – sitting as
special commercial court – has no jurisdiction to hear Rodrigo’s complaint since
what is involved is the determination and distribution of successional rights
to the shareholdings of Anastacia Reyes.
Rodrigo’s proper remedy, under the circumstances, is to institute a
special proceeding for the settlement of the estate of the deceased Anastacia
Reyes, a move that is not foreclosed by the dismissal of his present complaint.
WHEREFORE,
we hereby GRANT the petition and REVERSE
the decision of the Court of Appeals dated
SO
ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
|
RENATO C. CORONA Associate Justice |
CONCHITA CARPIO
MORALES Associate Justice |
PRESBITERO J. VELASCO,
JR.
Associate Justice
I
attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
LEONARDO
A. QUISUMBING
Associate Justice
Chairperson
REYNATO S. PUNO
Chief Justice
* Designated Additional
Member of the Second Division per Special Order No. 512 dated
[1] Penned by Associate Justice Juan Q. Enriquez,
Jr., with Associate Justice Romeo A. Brawner (deceased) and Associate Justice Aurora
Santiago-Lagman, concurring; rollo, pp. 55-60.
[2] Quoted in full in Petition, id., p. 18.
[3]
[4]
[5]
[6]
[7] Section 5.2 thereof states: The Commission’s jurisdiction over all cases enumerated under Section 5 of P.D. 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. x x x.
[8] Per A.M. No. 00-11-03 SC dated
[9] Rollo, pp. 119-132.
[10] Supra note 2.
[11] Under Rule 65 of the Revised Rules of Court,
rollo, pp. 11-49.
[12] Speed Distributing Corp. v. Court of
Appeals, G.R. No. 149351, March 17, 2004, 425 SCRA 691; Intestate Estate
of Alexander Ty v. Court of Appeals, G.R. No. 112872, April 19, 2001, 356
SCRA 661.
[13] See Revised Rules of Court, Rule 6, Section 1; Rule 7 Section 2(c); and Rule 8, Section 1.
[14] Abad v. CFI Pangasinan, G.R. No.
58507-08,
[15]
[16] Civil Procedure Annotated, Vol. 1 (2001
ed.), p. 303.
[17] Rule 1, Section 8(2).
[18] Referring specifically to corporate fraud; see quoted provision at page 5 hereof.
[19] See Sunset View Condominium Corp. v.
[20] G.R. No. 64013,
[21] G.R. No. 57936,
[22] PSBA
v. Leaño, G.R. No. L-58468,
[23] CMH
Agricultural Corporation v. Court of Appeals, G.R. No. 112625,
[24] Speed
Distributing Corp., v. Court of Appeals, supra note 12.
[25] Article 1078 of the Civil Code states: Where
there are two or more heirs, the whole estate of the decedent is, before its
partition, owned in common by such heirs, subject to the payment of debts of
the deceased.
[26] Additionally,
Section 97 of the National Internal Revenue Code requires a certification from
the Commissioner of Internal Revenue that the estate taxes have been paid
before any shares in a domestic corporation is transferred in the name of the
new owner.
[27] G.R. No. L-63558,
[28] G.R. No. 129777,
[29]
[30] Comments and Jurisprudence on Succession (1991 ed.), p. 5.
[31] 13 Fletcher §5912.
[32] G.R.
133000,
[33] G.R. No. L-27082,
[34] Villanueva,
C., Philippine Corporate Law (1998 ed.), p. 370.
[35] 13
Fletcher §5963.
[36] See 13 Fletcher §5915.