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STRATEGIC
ALLIANCE DEVELOPMENT CORPORATION, Petitioner, |
G.R. No. 187872
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- versus - STAR INFRASTRUCTURE DEVELOPMENT
CORPORATION ET AL., Respondents. |
Present: CORONA, C. J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, PERALTA*
and PEREZ,
JJ. Promulgated: November 17, 2010 |
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PEREZ, J.:
The classification of causes of
action as intra-corporate disputes is at the heart of this petition for review
on certiorari filed pursuant to Rule
45 of the 1997 Rules of Civil Procedure,
assailing the 22 December 2008 Decision rendered by the Ninth Division of the
Court of Appeals (CA) in CA-G.R. No. 96945[1] as
well as the 30 April 2009 resolution which denied the motion for
reconsideration of the same decision.[2]
The Facts
Petitioner
Strategic Alliance Development Corporation (STRADEC) is a domestic corporation
primarily engaged in the business of a development company in all the elements
and details thereof, with principal place of business at Poblacion Sur,
Bayambang, Pangasinan.[3] Along with five individuals[4]
and three other corporations,[5]
STRADEC incorporated respondent Star Infrastructure Development Corporation
(SIDC) on 28 October 1997, for the purpose of engaging in the general
construction business. As such
incorporator, STRADEC fully paid and owned 2,449,998 shares or 49% of the
5,000,000 shares of stock into which SIDC’s authorized capital stock of P5,000,000.00
were divided.[6] Pursuant to an amendment of its Articles of
Incorporation on 5 June 1998, SIDC transferred its principal place of business
from
On 8 October
2004, respondents Aderito Z. Yujuico and Bonifacio C. Sumbilla, in their
respective capacities as then President and Treasurer of STRADEC, executed a
Promissory Note for and in consideration of a loan in the sum of P10,000,000.00
ostensibly extended in favor of said corporation by respondent Robert L. Wong, one
of the incorporators of SIDC.[9] As security for the payment of the principal
as well as the stipulated interests thereon, a pledge constituted over
STRADEC’s entire shareholdings in SIDC was executed by respondent Yujuico on 1 April
2005.[10] In view of STRADEC’s repeated default on its
obligations,[11] however, the shares thus
pledged were sold by way of the 26 April 2005 notarial sale conducted in P11,800,000.00,[12]
respondent Wong was issued the corresponding certificates of stocks by
respondent Bede S. Tabalingcos, SIDC’s Corporate Secretary for the years 2004
and 2005, after the transfer was recorded in the corporation’s stock and
transfer book.[13]
On 17 July
2006, Cezar T. Quiambao, in his capacity as President and Chairman of the Board
of Directors of STRADEC, commenced the instant suit with the filing of the
petition which was docketed as Civil Case No. 7956 before Branch 2 of the
Regional Trial Court (RTC) of
STRADEC
further averred that it already caused the National Bureau of Investigation
(NBI) to conduct an investigation of the unlawful transfer of its shares; that
it was altogether eased out during the 30 July 2005 SIDC annual stockholders’
meeting where respondent Wong was acknowledged as the holder of the subject
shares and the further transfer of the corporation’s principal place of
business to Lipa, Batangas was approved; and, that despite being left out in
the notice sent by respondent Cynthia Laureta, SIDC’s new Corporate Secretary,
it fielded a proxy to the 20 July 2006 SIDC
stockholders’ special meeting where the increase of the corporation’s
authorized capital stock to P850,000,000.00 was discussed together with
the decrease of the number of its directors from nine to five. In addition to a
temporary restraining order and/or writ of preliminary injunction to enjoin,
among other matters, CTCII’s exercise of proprietary rights over the subject
shares, SIDC’s implementation of the resolutions passed during the 20 July 2006
stockholders’ meeting and any action thereon by respondent Securities and
Exchange Commission (SEC), STRADEC prayed for the grant of the following
reliefs: (a) the nullification of the loan and pledge respondents Yujuico and
Sumbilla contracted with respondent Wong; (b) the avoidance of the notarial
sale conducted by respondent Caraos; (c) the cancellation of the transfer of
its shares in SIDC’s books; (d) the invalidation of the 30 July 2005 and 20 July
2006 SIDC stockholders’ meetings; and, (e) the grant of its claims for
attorney’s fees and the costs.[16]
On 30 August 2006, the RTC issued a
resolution denying STRADEC’s application for writ of preliminary injunction on
the ground that the grant thereof would effectively dispose of the main action
without trial; and, that the right to the relief sought was, as yet, uncertain
in view of the pendency of cases before the courts of Pasig and Urdaneta City
involving, among other issues, the ownership of STRADEC’s shares and the
legitimacy of its two opposing sets of directors.[17] Anent STRADEC’s amended petition as
aforesaid, the RTC issued the following order on the same date:
The Amended
Petition dated July 31, 2006 presents four (4) main causes of action.
The Court
holds that as for the first and second causes of action, to wit: First – declaration of nullity of the
supposed loan extended by respondent Wong to STRADEC and the Deed of Pledge
covering STRADEC’s entire shareholding in SIDC; Second – declaration of nullity
of the 26 April 2005 auction sale of STRADEC’s entire shareholdings in SIDC in
Makati City, this Court is the wrong venue; The Rules of Court provides
that all other actions (other than real) may be commenced and tried where the
plaintiff or any of the principal plaintiffs resides; or where the defendant or
any of the principal defendants resides, at the election of the plaintiff. By the foregoing, STRADEC should file the
case, under the first cause of action, either in Bayambang, Pangasinan, its
principal place of business as stated in the Articles of Incorporation or in
any of the residences of Yujuico, Sumbilla or Wong. The same holds true with respect to the
second cause of action. The matter is
between STRADEC and its alleged erring officers over the alleged irregular
auction sale of STRADEC’s shareholdings in SIDC, hence, venue should be at the
residences of the parties, as plaintiff may elect, as discussed above.
Although
this Court is not the correct venue, the Court will not dismiss the case but
however will not act thereon.
As for the
third and fourth causes of action which are the
cancellation of registration of fraudulent transfers involving STRADEC’s
shareholding in SIDC and the
declaration of invalidity of the 30 July 2005 annual stockholders meeting and
20 July 2006 special stockholder’s meeting of SIDC, the Court resolves to
hold in abeyance any action thereon until after the Supreme Court shall have
rendered a ruling as to who between the conflicting two (2) sets of Board of
Directors of STRADEC should be recognized as legitimate, because it is only
then that this Court could make a determination on the issue raised by the
respondents on the authority of Mr. Quiambao to represent STRADEC in this suit.
SO ORDERED.[18]
Dissatisfied
with the foregoing order, STRADEC, through its counsel of record, interposed an
oral motion for reconsideration on the ground that the solidary liability the
individual respondents and SIDC incurred for the tortious transfer of the
subject shares justified the laying of venue at the latter’s principal place of
business in Batangas; that the pledge executed by respondent Yujuico violated
the 18 October 2004 temporary restraining order issued by Branch 48 of the RTC
of Urdaneta City in Civil Case No. U-14 (SCC-2874), the intra-corporate dispute
earlier filed to determine STRADEC’s legitimate Directors and Officers; and,
that pursuant to the 25 November 2004 order issued in the same case, a writ of
preliminary injunction had been issued enjoining respondent Yujuico and his
cohorts from acting as STRADEC’s Officer’s and committing acts inimical to its
interests.[19] The motion was, however, denied for lack of
merit in the second 30 August 2006 order issued by the RTC upon the finding
that the theory of solidary liability foisted by STRADEC had no basis in its
pleadings and that the injunctive writ issued in Civil Case No. U-14 (SCC-2874)
was not determinative of the issue of ownership of its shares.[20]
Aggrieved,
STRADEC filed the petition for certiorari docketed before the CA as CA-G.R. SP
No. 96945, on the ground that the RTC acted without or in excess of jurisdiction
or with grave abuse of discretion in finding that venue was improperly laid, in
holding in abeyance further proceedings in the case and in denying its
application for a writ of preliminary injunction.[21] In receipt of respondents’ separate comments[22]
to the petition and the memoranda subsequently filed by the parties,[23]
the Ninth Division of the CA rendered the herein assailed 22 December 2008
decision,[24] discounting the grave
abuse of discretion STRADEC imputed against the RTC upon the following findings
and conclusions, to wit:
1. STRADEC’s first and second causes of
action for nullification of the pledge constituted over its shares and the
subsequent notarial sale thereof are purely civil in nature and were,
therefore, erroneously joined with its third and fourth causes of action for
invalidation of the registration of the transfer in SIDC’s books as well as its
annual and special stockholders’ meetings;
2. Aside from correctly applying the rule
on venue in personal actions for STRADEC’s first and second causes of action,
the RTC cannot be faulted for not ordering the dismissal of the same since
misjoinder of causes of action does not involve a question of jurisdiction and
the discretionary authority to order separation of the misjoined causes of action
necessarily includes the authority to stay proceedings with respect thereto;
3. Further proceedings with respect to the
third and fourth causes of action were also correctly held in abeyance by the
RTC in view of the pendency of cases in other courts involving, among other
issues, the ownership of STRADEC’s shares, its legitimate Directors and
Corporate Officers and the authority of Cezar T. Quiambao to act for and its
behalf; and
4. The pendency of said cases discounts
the existence of a clear and unmistakable right on the part of STRADEC as would
justify the grant of its application to an injunctive writ which would, at any
rate, effectively dispose of the main case without trial.[25]
STRADEC’s
motion for reconsideration[26]
of the foregoing decision was denied in the 30 April 2009 resolution issued in
the case,[27] hence, this petition.
The Issues
STRADEC urges
the reversal and setting aside of the assailed CA decision and resolution on
the following grounds:
THE COURT OF APPEALS HAS NOT ONLY DECIDED QUESTIONS OF
SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISIONS OF THIS
HONORABLE COURT, BUT HAS ALSO SO FAR SANCTIONED THE LOWER COURT’S DEPARTURE
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN
EXERCISE OF THIS HONORABLE COURT’S POWER OF SUPERVISION, IN THAT –
A. THE COURT
OF APPEALS GRIEVOUSLY ERRED IN NOT CHARACTERIZING THE FIRST AND SECOND CAUSES
OF ACTION IN CIVIL CASE NO. 7956 AS INTRA-CORPORATE AND PLACE ITS VENUE AND
JURISDICTION IN
B. THE COURT
OF APPEALS GRIEVOUSLY ERRED IN NOT ASCRIBING GRAVE ABUSE OF DISCRETION TO
C. THE COURT
OF APPEALS GRIEVOUSLY ERRED IN NOT ASCRIBING GRAVE ABUSE OF DISCRETION TO
D. THE COURT
OF APPEALS GRIEVOUSLY ERRED IN NOT ASCRIBING GRAVE ABUSE TO
The Court’s Ruling
We
find merit in the petition.
An
intra-corporate dispute is understood as a suit arising from intra-corporate
relations[29] or between or among
stockholders or between any or all of them and the corporation.[30] Applying what has come to be known as the
relationship test, it has been held that the types of actions embraced by the
foregoing definition include the following suits: (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
insofar as its franchise, permit or license to operate is concerned; and, (d) among
the stockholders, partners or associates themselves.[31] As the definition is broad enough to cover
all kinds of controversies between stockholders and corporations, the
traditional interpretation was to the effect that the relationship test brooked
no distinction, qualification or any exemption whatsoever.[32]
However,
the unqualified application of the relationship test has been modified on the
ground that the same effectively divests regular courts of jurisdiction over
cases for the sole reason that the suit is between the corporation and/or its
corporators. It was held that the better
policy in determining which body has jurisdiction over a case would be to
consider not only the status or relationship of the parties but also the nature
of the question that is the subject of their controversy.[33] Under the nature of the controversy test, the
dispute must not only be rooted in the existence of an intra-corporate
relationship, but must also refer to the enforcement of the parties'
correlative rights and obligations under the Corporation Code as well as the
internal and intra-corporate regulatory rules of the corporation.[34] The combined application of the relationship
test and the nature of the controversy test has, consequently, become the norm
in determining whether a case is an intra-corporate controversy or is purely
civil in character.
In
the case at bench, STRADEC’s first and second causes of action seek the
nullification of the loan and pledge over its SIDC shareholding contracted by
respondents Yujuico, Sumbilla and Wong as well the avoidance of the notarial
sale of said shares conducted by respondent Caraos. STRADEC’s 31 July 2006 amended petition
significantly set forth the following allegations common to its main causes of
action, to wit:
x x x
“4.
Sometime in June 2005, STRADEC’s President and Chairman of the Board of
Directors, Cezar T. Quiambao, received information that STRADEC had been
divested of its shareholdings in SIDC.
Apparently, all of STRADEC’s 49% shareholdings in SIDC
were transferred and placed in the name of respondent Wong, another
incorporator of SIDC, upon the instance of respondents Yujuico and Sumbilla,
former officers of STRADEC.
5. However,
respondents Yujuico and Sumbilla, despite being former officers of STRADEC, never
possessed authority to transact any business in behalf of STRADEC involving any
of its corporate assets and investments, including STRADEC’s shareholdings in
SIDC.
6. Upon learning of this highly irregular development,
STRADEC immediately called the attention of SIDC’s Board of Directors and
officers and requested official confirmation of the recording of any such sale
in the books of SIDC cautioning that STRADEC had not authorized the sale or
transfer of its shares in SIDC.
x x x x
7. To date,
however, STRADEC has not received any response from SIDC’s Board of Directors
and officers.
8. Instead, STRADEC was able to secure from a
secondary source a copy of the Certification
dated 23 September 2005 issued by respondent Tabalingcos, SIDC’s Corporate
Secretary, narrating how all of STRADEC’s shareholdings in SIDC, among others,
were acquired by respondent Wong by reason of respondents Yujuico and
Sumbilla’s unauthorized acts.
The same Certification
states that the shareholdings were in turn transferred by respondent Wong to
respondent CTCII, which as STRADEC would later learn was a newly-formed
corporation of respondent Wong’s family;
x x x x
11. STRADEC was able to get hold of a document
entitled Deed of Pledge dated 08 October 2004 purportedly signed by respondents
Yujuico and Sumbilla in behalf of STRADEC as pledgor, and by respondent Wong as
pledgee.
x x x x
12. The Deed of Pledge made it appear, among
others, that for and in partial consideration of a loan from respondent Wong in
the principal amount of only TEN MILLION PESOS (P10,000,000.00), STRADEC
pledged its 2,449,998 shares of stocks in SIDC worth TWO HUNDRED FORTY-FOUR
MILLION, NINE HUNDRED NINETY-NINE THOUSAND EIGHT HUNDRED PESOS (P244,999,800.00).
13.
STRADEC, however, had never authorized respondents Yuhuico and Sumbilla to
enter into any loan agreement with respondent Wong, much less pledge its
shareholdings in SIDC.
14. Neither
has STRADEC at any time received any amount of loan personally from Mr. Wong.
x x x x
15. Moreover,
a subsequent examination of the Notarial Records of respondent Caraos for the
year 2004 with the Office of the Clerk of Court and Ex-Officio Sheriff of the
16. STRADEC
was also able to get hold of a Certificate
of Sale issued by respondent Caraos on 26 April 2005 stating that an
auction sale was held on 26 April 2005 wherein all of STRADEC’s 2,449,998
shares of stock in SIDC, among others, were sold to respondent Wong to satisfy
STRADEC’s alleged outstanding obligation in the amount of ELEVEN MILLION EIGHT
HUNDRED THOUSAND PESOS (P11,800,000.00);
From the Certificate of Sale, it appears that
respondent Caraos proceeded with the auction sale without any notice to STRADEC
as the supposed pledgor, and despite the fact that that respondent Wong, the
supposed pledgee, was the only bidder.
x x x x
17.
Incidentally, respondent CARAOS and SIDC’s Corporate Secretary, Atty. Tabalingcos,
are partners of the same law firm;
18. STRADEC
has good reasons to believe that while it immediately informed the officers of
SIDC of the irregularities attending the divestment of its shareholdings in said
respondent corporation, its Corporate Secretary, respondent Tabalingcos,
apparently went on to register the transfers in the corporation’s stock and
transfer book, as evidenced by SIDC’s General
Information Sheet for 2005, wherein it was annotated that ‘the shares of
STRADEC or Strategic Alliance Development Corp. has been acquired by Mr. Wong
in view of the Notarial Sale conducted on April 26, 2005.
x x x x
19. Worse,
it would appear now that respondent Wong had likewise unlawfully transferred
STRADEC’s 49% shareholdings in SIDC to his newly formed Corporation, respondent
CTCII.
x x x x”[35]
Applying
the relationship test, we find that STRADEC’s first and second causes of action
qualify as intra-corporate disputes since said corporation and respondent Wong
are incorporators and/or stockholders of SIDC.
Having acquired STRADEC’s shares thru the impugned notarial sale
conducted by respondent Caraos, respondent Wong appears to have further
transferred said shares in favor of CTCII, a corporation he allegedly formed
with members of his own family. By
reason of said transfer, CTCII became a stockholder of SIDC and was, in fact,
alleged to have been recognized as such by the latter and its corporate
officers. To our mind, these relationships were erroneously disregarded by the
RTC when it ruled that venue was improperly laid for STRADEC’s first and second
causes of action which, applying Section 2, Rule 4 of the 1997 Rules of Civil Procedure,[36]
should have been filed either at the place where it maintained its principal
place of business or where respondents Yujuico, Sumbilla and Wong resided.
Considering
that they fundamentally relate to STRADEC’s status as a stockholder and the
alleged fraudulent divestment of its stockholding in SIDC, the same causes of
action also qualify as intra-corporate disputes under the nature of the
controversy test. As part of the fraud
which attended the transfer of its shares, STRADEC distinctly averred, among
other matters, that respondents Yujuico and Sumbilla had no authority to
contract a loan with respondent Wong; that the pledge executed by respondent
Yujuico was simulated since it did not receive the proceeds of the loan for
which its shares in SIDC were set up as security; that irregularities attended
the notarial sale conducted by
respondent Caraos who sold said shares to respondent Wong; that the latter unlawfully transferred the
same shares in favor of CTCII; and, that SIDC and its officers recognized and
validated said transfers despite being alerted about their defects. Ultimately, the foregoing circumstances were
alleged to have combined to rid STRADEC of its shares in SIDC and its right as
a stockholder to participate in the latter’s corporate affairs.
In addition to
being conferred by law,[37] it
bears emphasizing that the jurisdiction of a court or tribunal over the case is
determined by the allegations in the complaint[38]
and the character of the relief sought,[39]
irrespective of whether or not the plaintiff is entitled to recover all or some
of the claims asserted therein.[40] Moreover, pursuant to Section 5.2 of
Republic Act No. 8799,[41]
otherwise known as the Securities Regulation Code, the jurisdiction of the SEC
over all cases enumerated under Section 5 of Presidential Decree No. 902-A has
been transferred to RTCs designated by this Court as SCCs[42]
pursuant to A.M. No. 00-11-03-SC promulgated on 21 November 2000. Thus, Section 1(a), Rule 1 of the Interim Rules of Procedure Governing
Intra-Corporate Controversies (Interim Rules) provides as follows:
“SECTION 1. (a) Cases
covered. — These Rules shall govern the procedure to be observed in
civil cases involving the following:
(1) Devices
or schemes employed by, or any act of, the board of directors, business
associates, officers or partners, amounting to fraud or misrepresentation which
may be detrimental to the interest of the public and/or of the stockholders,
partners, or members of any corporation, partnership, or association;
(2) Controversies
arising out of intra-corporate, partnership, or association relations, between
and among stockholders, members, or associates; and between, any or all of them
and the corporation, partnership, or association of which they are
stockholders, members, or associates, respectively;
(3) Controversies in the election or appointment
of directors, trustees, officers, or managers of corporations, partnerships, or
associations;
(4) Derivative suits; and
(5) Inspection of corporate books.” (Italics
supplied)
In upholding
the RTC’s pronouncement that venue was improperly laid, the CA ruled that
STRADEC’s first and second causes of action were not intra-corporate disputes
because the issues pertaining thereto were civil in nature. In support of the foregoing conclusion, the
CA cited Speed Distributing Corporation
vs. Court of Appeals[43]
where this Court essentially ruled out the existence of an intra-corporate
dispute from an action instituted by the wife for the nullification of the
transfer of a property between corporations of which her deceased husband was a
stockholder. The CA also relied on this
Court’s pronouncement in Nautica Canning
Corporation vs. Yumul[44] to the effect, among others, that an
action to determine the validity of the transfer of shares from one stockholder
to another is civil in nature and is, therefore, cognizable by regular courts
and not the SEC.[45] In addition to the fact that the first case
involved a civil action instituted against corporations by one who was not a
stockholder thereof, however, STRADEC correctly points out that, unlike the
second case, the limited jurisdiction of the SEC is not in issue in the case at
bench.
Even
prescinding from the different factual and legal milieus of said cases, the CA
also failed to take into consideration the fact that, unlike the SEC which is a
tribunal of limited jurisdiction,[46]
SCCs like the RTC are still competent to tackle civil law issues incidental to
intra-corporate disputes filed before them.
In G.D. Express Worldwide N.V. vs.
Court of Appeals,[47] this Court ruled as follows:
It should
be noted that the SCCs are still considered courts of general jurisdiction.
Section 5.2 of R.A. No. 8799 directs merely the Supreme Court's designation of
RTC branches that shall exercise jurisdiction over intra-corporate disputes.
Nothing in the language of the law suggests the diminution of jurisdiction of
those RTCs to be designated as SCCs. The assignment of intra-corporate disputes
to SCCs is only for the purpose of streamlining the workload of the RTCs so
that certain branches thereof like the SCCs can focus only on a particular
subject matter.
The
designation of certain RTC branches to handle specific cases is nothing new.
For instance, pursuant to the provisions of R.A. No. 6657 or the Comprehensive
Agrarian Reform Law, the Supreme Court has assigned certain RTC branches to
hear and decide cases under Sections 56 and 57 of R.A. No. 6657.
The RTC
exercising jurisdiction over an intra-corporate dispute can be likened to an
RTC exercising its probate jurisdiction or sitting as a special agrarian court.
The designation of the SCCs as such has not in any way limited their
jurisdiction to hear and decide cases of all nature, whether civil, criminal or
special proceedings.
Viewed
in the foregoing light and the intra-corporate nature of STRADEC’s first and
second causes of action, the CA clearly erred in upholding the RTC’s finding
that venue therefor was improperly laid.
Given that the question of venue is decidedly not jurisdictional and
may, in fact, be waived,[48]
said error was further compounded when the RTC handed down its first 30 August
2006 order even before respondents were able to file pleadings squarely raising
objections to the venue for said causes of action.[49]
Pursuant to Section 5, Rule 1 of the Interim
Rules,[50] at any rate, it cannot be
gainsaid that STRADEC correctly commenced its petition before the RTC
exercising jurisdiction over SIDC’s principal place of business which was
alleged to have been transferred from Bayambang, Pangasinan to Lipa, Batangas.[51] It matters little that STRADEC, as pointed
out by respondents, also questions the validity of the 30 July 2005 SIDC
stockholders’ annual meeting where the aforesaid change in the address of its
principal place of business was allegedly approved. Said matter should be
properly threshed out in the proceedings before the RTC alongside such issues
as the validity of the transfers of STRADEC’s shares to respondents Wong and
CTCII, the propriety of the recording of said transfers in SIDC’s books,
STRADEC’s status as a stockholder of SIDC, the legality of the 20 July 2006
SIDC stockholders’ special meeting or, for that matter, Cezar T. Quiambao’s
authority to represent STRADEC in the case at bench.
The rule is
settled that rules of procedure ought not to be applied in a very rigid,
technical sense,[52] for they have been
adopted to help secure – not override – substantial justice.[53] Considering that litigation is not a game of
technicalities[54] courts have been
exhorted, time and again, to afford every litigant the amplest opportunity for
the proper and just determination of his case free from the constraints of
technicalities. Since rules of procedure
are mere tools designed to facilitate the attainment of justice, it is well
recognized that courts are empowered to suspend its rules, when the rigid
application thereof tends to frustrate rather than promote the ends of justice.[55] No less than Section 3, Rule 1 of the Interim Rules provides that the
provisions thereof are to “be liberally construed in order to promote their
objective of securing a just, summary, speedy and inexpensive determination of
every action or proceeding.”
The CA also
erred in upholding the RTC’s suspension of proceedings for STRADEC’s third and
fourth causes of action assailing the registration of the transfers of its
shares as well as the 30 July 2005 annual meeting and 20 July 2006 special
meeting of SIDC’s stockholders, in view of the pendency of actions in other
courts involving ownership of the shares into which STRADEC’s own capital stock
has been divided and its legitimate directors and officers. On the principle that a corporation is a
legal entity with a personality separate and distinct from its individual
stockholders or members and from that of its officers who manage and run its
affairs,[56] we find that said other
actions have little or no bearing to the issues set forth in STRADEC’s amended
petition which, at bottom, involve the transfer of its own shareholding in SIDC
and its status and rights as such stockholder.
The record also shows that the impugned loan transaction was contracted
by respondents Yujuico and Sumbilla on 8 October 2004 or before the 10 December
2004 election of STRADEC’s Board of Directors conducted pursuant to the 25 November
2004 order issued in Civil Case No. U-14 (SCC-2874). Thus, even the restoration of status quo ante in said case pursuant to
this Court’s 29 January 2007 decision in G.R. No. 168639, entitled Alderito Yujuico, et al. vs. Cezar T.
Quiambao, et al.[57]
is no hindrance to the determination of the issues of want of authority and
consideration for the transfer of STRADEC’s shares.
Considering that the determination of the factual and legal
issues presented in the case can proceed independent of those being litigated
in the other cases filed against each other by the members of STRADEC's Board of
Directors, we find that the CA finally erred in denying STRADEC's application
of a writ of preliminary injunction to restrain (a) CTCII from further
exercising proprietary rights over the subject shares; (b) SIDC and its
officers from recognizing the transfer or further transfers of the same; (c)
the implementation of the resolutions passed during the 20 July 2006 SIDC
stockholders’ special meeting; and (d) the SEC from acting on any report
submitted in respect thereto. A provisional remedy which
has, for its object, the preservation of the status quo,[58]
preliminary injunction may be resorted to by a party in order to preserve and
protect certain rights and interests during the pendency of an action.[59]
By both law and jurisprudence, said provisional writ may be issued upon the
concurrence of the following essential requisites, to wit: (1) that the
invasion of the right is material and substantial; (2) that the right of
complainant is clear and unmistakable; and, (3) that there is an urgent and
paramount necessity for the writ to prevent serious damage.[60]
As the owner, STRADEC is undoubtedly possessed
of clear and unmistakable rights over the subject SIDC shares which respondent
Yujuico pledged in favor of respondent Wong.
Unless collectively restrained, the aforesaid acts will completely
divest STRADEC of its shares and unfairly deprive it of participation in SIDC's
corporate affairs pending the determination of the validity of the impugned
transfers. Given that the parties have
already submitted their arguments for and against the writ of preliminary
injunction sought, STRADEC is, however, required to put up an injunction bond
pursuant to Section 1, Rule 10 of the Interim
Rules.[61]
Conditioned to answer for damages respondents may sustain as a consequence of the
issuance of the writ,[62]
the amount of the bond is fixed at P10,000,000.00 which is equivalent to
the supposed loan for which STRADEC's shares were pledged by respondent
Yujuico.
WHEREFORE, premises
considered, the petition is GRANTED and
the assailed decision and resolution are, accordingly, REVERSED and SET ASIDE. In lieu thereof, another is entered ORDERING the resumption of proceedings
in Civil Case No. 7956 without further delay.
Subject to the posting of the requisite bond in the sum of P10,000,000.00,
STRADEC's application for a writ of preliminary injunction is likewise GRANTED.
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SO ORDERED.
JOSE Associate Justice |
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WE
CONCUR: RENATO C.
CORONA Chief Justice Chairperson |
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PRESBITERO
J. VELASCO, JR. Associate Justice |
TERESITA J. LEONARDO-DE
CASTRO Associate Justice |
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DIOSDADO M. PERALTA Associate Justice |
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C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII
of the Constitution, 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.
RENATO C. CORONA
Chief Justice
* Additional member in lieu of Associate Justice Mariano C. del Castillo per Special Order No. 913 dated 2 November 2010.
[1] Rollo, pp. 64-88.
[2]
[3]
[4] Cezar T. Quiambao, Melvin B. Nazareno, Jaime H. Pajara, Robert L. Wong and Leopoldo P. Campos.
[5] JH Pajara Construction Corporation, William Uy Construction Corporation, Betonval Ready Concrete Incorporated.
[6] Rollo, pp. 182-194.
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29] Pilipinas Bank v. Court of Appeals, 383 Phil.18, 27 (2000).
[30] Sps. Abejo v. Judge Dela Cruz, 233 Phil.668, 681 (1987).
[31] Union Glass & Container Corp., et al. v. SEC, et al., 211 Phil. 222, 230-231 (1983).
[32] Fabia v. Court of Appeals, 437 Phil. 389, 398 (2002).
[33] Viray v. Court of Appeals, G.R. No. 92481, 9 November 1990, 191 SCRA 308, 323.
[34] Reyes v. Regional Trial Court of Makati, Branch 142, G.R. No. 165744, 11 August 2008, 561 SCRA 593, 611.
[35] Rollo, pp. 323-329.
[36] Sec. 2. Venue of personal actions. – All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.
[37] Deltaventures Resources, Inc. v. Cabato, 384 Phil. 252, 259-260 (2000).
[38] Gochan v. Young, 406 Phil. 663, 679 (2001).
[39] Sunny Motor Sales, Inc. v. Court of Appeals, et al., 415 Phil. 515, 520 (2001).
[40] Intestate Estate of Alexander T. Ty v. Court of Appeals, 408 Phil 792, 798 (2001).
[41] 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.
[42] Atwel v. Concepcion Progressive Association, Inc., G.R. No. 169370, 14 April 2008, 551 SCRA 272, 279-280.
[43] G.R. 149351, 469 Phil. 739 (2004).
[44] G.R. No. 164588, 19 October 2005, 473 SCRA 415.
[45] Rollo, pp. 77-79.
[46] Yap Sumndad v. Harrigan, 430 Phil. 612, 624 (2002).
[47] G.R. No. 136978, 8 May 2009, 587 SCRA 333.
[48] Rudolf Lietz Holdings, Inc. v. Registry of Deeds of
[49] Rollo, pp. 1000; 1029; 1085.
[50] SECTION 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.
[51] Rollo, p. 332.
[52] Ramiscal, Jr. v. Hon. Sandiganbayan, 487 Phil. 384, 400 (2004).
[53] Remulla v. Manlongat, 484 Phil. 832, 841 (2004).
[54] Fulgencio v. National Labor Relations Commission, 868 Phil. 881 (2003).
[55] Thermphil, Inc. v. Court of Appeals, 421 Phil. 589, 595-596 (2001).
[56] PNB v. Andrada Electric & Engineering Company, 430 Phil. 882, 894 (2002).
[57] Rollo, pp. 1046-1065.
[58] Ocampo v. Sison
Vda. De Fernandez, G.R. No. 164529, 19 June 2007, 525 SCRA 79, 94.
[59] Buyco v. Baraquia,
G.R. No. 177486, 21 December 2009,
608 SCRA 699, 704.
[60] Samahan ng Masang Pilipino sa Makati, Inc.
(SMPMI) v. Bases Conversion Development Authority (BCDA), G.R. No. 142255,
26 January 2007, 513 SCRA 88, 98
[61] SECTION 1. Provisional remedies. — A party
may apply for any of the provisional remedies provided in the Rules of Court as
may be available for the purposes. However, no temporary restraining order or
status quo order shall be issued save in exceptional cases and only after
hearing the parties and the posting of a bond.
[62] Limitless
Potentials, Inc. v. Court of Appeals, G. R. No. 164459, 24 April 2007, 522
SCRA 70, 83.