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HI-YIELD REALTY, INCORPORATED, Petitioner, - versus - HON. COURT OF APPEALS, HON. CESAR O. UNTALAN, in his capacity as PRESIDING
JUDGE OF RTC-MAKATI, BRANCH 142, HONORIO TORRES & SONS, INC., and ROBERTO
H. TORRES, Respondents. |
G.R. No. 168863
Present: Quisumbing,
J., Chairperson, ynares-santiago,* CHICO-NAZARIO,** LEONARDO-DE
CASTRO,*** and BRION, JJ. Promulgated: June 23, 2009 |
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QUISUMBING, J.:
This is a special civil action for certiorari
seeking to nullify and set aside the Decision[1] dated
The
antecedent facts of the case are undisputed.
On July 31, 2003, Roberto H. Torres
(Roberto), for and on behalf of Honorio Torres & Sons, Inc. (HTSI), filed a
Petition for Annulment of Real Estate Mortgage and Foreclosure Sale[3] over two parcels of land located in Marikina
and Quezon City. The suit was filed
against Leonora, Ma. Theresa, Glenn and Stephanie, all surnamed Torres, the
Register of Deeds of Marikina and
On
Thereafter, petitioner filed a
petition for certiorari and prohibition before the Court of Appeals. In a
Decision dated
WHEREFORE,
premises considered, this Petition is hereby DISMISSED. However, public respondent is hereby DIRECTED to instruct his Clerk of Court to compute the
proper docket fees and thereafter, to order the
private respondent to pay the same IMMEDIATELY.
SO ORDERED.[7]
Petitioner’s motion for reconsideration[8] was denied in a Resolution dated
Hence, this petition which raises the following issues:
I.
WHETHER THE HONORABLE COURT OF APPEALS GRAVELY ABUSED
ITS DISCRETION IN NOT DISMISSING THE CASE AGAINST HI-YIELD FOR IMPROPER VENUE
DESPITE FINDINGS BY THE TRIAL COURT THAT THE ACTION IS A REAL ACTION.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN NOT
DISMISSING THE COMPLAINT AS AGAINST HI-YIELD EVEN IF THE JOINDER OF PARTIES IN
THE COMPLAINT VIOLATED THE RULES ON VENUE.
III.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT THE ANNULMENT OF REAL ESTATE MORTGAGE AND FORECLOSURE
The pivotal issues for resolution are as follows: (1) whether
venue was properly laid; (2) whether there was proper joinder of parties; and (3)
whether the action to annul the real estate mortgage and foreclosure sale is a
mere incident of the derivative suit.
Petitioner imputes grave abuse of discretion on the Court
of Appeals for not dismissing the case against it even as the trial court found
the same to be a real action. It explains
that the rule on venue under the Rules of Court prevails over the rule
prescribing the venue for intra-corporate controversies; hence, HTSI erred when
it filed its suit only in
On the other hand, respondents maintain that the action is primarily
a derivative suit to redress the alleged unauthorized acts of its corporate
officers and major stockholders in connection with the lands. They postulate that the nullification of the
mortgage and foreclosure sale would just be a logical consequence of a decision
adverse to said officers and stockholders.
After careful consideration, we are in agreement that the
petition must be dismissed.
A petition for certiorari is proper if a tribunal, board or
officer exercising judicial or quasi-judicial functions acted without or in
excess of jurisdiction or with grave abuse of discretion amounting to lack or
excess of jurisdiction and there is no appeal, or any plain, speedy and
adequate remedy in the ordinary course of law.[10]
Petitioner sought a review of the trial court’s Orders
dated
For the
extraordinary remedy of certiorari to lie by reason of grave abuse of discretion,
the abuse of discretion must be so patent and gross as to amount to an evasion
of positive duty, or a virtual refusal to perform the duty enjoined or to act
in contemplation of law, or where the power is exercised in an arbitrary and
despotic manner by reason of passion and personal hostility.[15] We find no grave
abuse of discretion on the part of the appellate court in this case.
Simply, the resolution of the issues posed by petitioner rests
on a determination of the nature of the petition filed by respondents in the
RTC. Both the RTC and Court of Appeals
ruled that the action is in the form of a derivative suit although captioned as
a petition for annulment of real estate mortgage and foreclosure sale.
A derivative action is a suit by a
shareholder to enforce a corporate cause of action.[16]
Under the Corporation Code, where a
corporation is an injured party, its power to sue is lodged with its board of
directors or trustees. But an individual
stockholder may be permitted to institute a derivative suit on behalf of the
corporation in order to protect or vindicate corporate rights whenever the
officials of the corporation refuse to sue, or are the ones to be sued, or hold
control of the corporation. In such actions,
the corporation is the real party-in-interest while the suing stockholder, on
behalf of the corporation, is only a nominal party.[17]
In the case of Filipinas Port Services, Inc. v. Go,[18] we enumerated
the foregoing requisites before a stockholder can file a derivative suit:
a) the party bringing suit should be a shareholder as
of the time of the act or transaction complained of, the number of his shares
not being material;
b) he 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.[19]
Even then, not every suit filed on behalf of the
corporation is a derivative suit. For a
derivative suit to prosper, the minority stockholder suing for and on behalf of
the corporation must allege in his complaint that he is suing on a derivative cause
of action on behalf of the corporation and all other stockholders similarly
situated who may wish to join him in the suit.[20] The Court finds
that Roberto had satisfied this requirement in paragraph five (5) of his
petition which reads:
5. Individual petitioner, being a minority
stockholder, is instituting the instant proceeding by way of a derivative suit
to redress wrongs done to petitioner corporation and vindicate corporate rights
due to the mismanagement and abuses committed against it by its officers and
controlling stockholders, especially by respondent Leonora H. Torres (Leonora,
for brevity) who, without authority from the Board of Directors, arrogated upon
herself the power to bind petitioner corporation from incurring loan
obligations and later allow company properties to be foreclosed as hereinafter
set forth;[21]
Further,
while it is true that the complaining stockholder must satisfactorily show that
he has exhausted all means to redress his grievances within the corporation; such
remedy is no longer necessary where the corporation itself is under the
complete control of the person against whom the suit is being filed. The reason is obvious: a demand upon the board
to institute an action and prosecute the same effectively would have been
useless and an exercise in futility.[22]
Here,
Roberto alleged in his petition that earnest efforts were made to reach a
compromise among family members/stockholders before he filed the case. He also maintained that Leonora Torres held
55% of the outstanding shares while Ma. Theresa, Glenn and Stephanie excluded him from the affairs of the
corporation. Even more glaring was the
fact that from
Derivative suits are governed by a special set of rules
under A.M. No. 01-2-04-SC[23] otherwise known
as the Interim Rules of Procedure Governing Intra-Corporate Controversies under
Republic Act No. 8799.[24] Section 1,[25] Rule 1 thereof
expressly lists derivative suits among the cases covered by it.
As regards the venue of derivative suits, Section 5, Rule 1
of A.M. No. 01-2-04-SC states:
SEC.
5. Venue. - All
actions covered by these Rules shall be commenced and tried in the Regional
Trial Court which has jurisdiction over the principal office of the
corporation, partnership, or association concerned. Where the principal office of the
corporation, partnership or association is registered in the Securities and
Exchange Commission as Metro Manila, the action must be filed in the city or
municipality where the head office is located.
Thus, the Court of Appeals did not commit grave abuse of
discretion when it found that respondents correctly filed the derivative suit
before the Makati RTC where HTSI had its principal office.
There being no showing of any grave abuse of discretion on
the part of the Court of Appeals the other alleged errors will no longer be
passed upon as mere errors of judgment are not proper subjects of a petition
for certiorari.
WHEREFORE,
the instant petition is hereby DISMISSED. The Decision dated
No
pronouncement as to costs.
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
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WE CONCUR: CONSUELO
YNARES-SANTIAGO
Associate Justice |
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MINITA V. CHICO-NAZARIO Associate Justice |
TERESITA J. LEONARDO-DE CASTRO Associate Justice |
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ARTURO D. BRION Associate Justice |
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A T T E S T A T I O N
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
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII
of the Constitution and the Division Chairperson’s Attestation, I certify 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.
REYNATO S. PUNO
Chief Justice
* Designated member of the Second Division per Special Order No. 645 in place of Associate Justice Conchita Carpio Morales who is on official leave.
** Designated member of the Second Division per Special Order No. 658.
*** Designated member of the Second Division per Special Order No. 635 in view of the retirement of Associate Dante O. Tinga.
[1] Rollo, pp. 20-31. Penned by Associate Justice Andres B. Reyes, Jr., with Associate Justices Lucas P. Bersamin (now a member of this Court) and Celia C. Librea-Leagogo concurring.
[2]
[3] Records, pp. 1-6.
[4]
[5] Resolution
Designating Certain Branches of Regional Trial Courts to Try and Decide Cases
Formerly Cognizable by the Securities and Exchange Commission, took
effect on
[6] Records, p. 77.
[7] Rollo, p. 31.
[8]
[9]
[10] Banco Filipino Savings and Mortgage Bank v. Court of Appeals,
G.R No. 132703,
[11] SEC. 4. When and where petition filed. - The petition may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court whether or not the same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed in and cognizable only by the Court of Appeals.
[12] Banco Filipino Savings and Mortgage Bank v. Court of Appeals, supra at 316.
[13]
[14] Petitioner received a copy of the assailed
Resolution dated
[15] Banco Filipino Savings and Mortgage Bank v. Court of Appeals, supra at 315.
[16] R.N. Symaco Trading Corporation v. Santos,
G.R. No. 142474,
[17] Filipinas Port Services, Inc. v. Go,
G.R. No. 161886,
[18]
[19]
[20] Chua v. Court of Appeals, G.R. No.
150793,
[21] Rollo, p. 35.
[22] Filipinas Port Services, Inc., v. Go, supra at 472.
[23] Took effect on
[24] The
Securities Regulation Code, approved on
[25] SECTION 1.
(a) Cases covered. – These Rules shall govern the procedure to be observed in civil cases involving the following:
x x x x
(4) Derivative suits; and
x x x x