Professional Documents
Culture Documents
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 126891 August 5, 1998
LIM TAY, petitioner,
vs.
COURT OF APPEALS, GO FAY AND CO. INC., SY GUIOK, and
THE ESTATE OF ALFONSO LIM, respondents.
PANGANIBAN, J.:
pledge, and to sell the said shares to issue to him and to apply the
proceeds of the sale to the payment of the said sum and interest, in
the manner hereinabove provided;
4. In the event of the foreclosure of this pledge and the sale of the
pledged certificate, any surplus remaining in the hands of the
PLEDGEE after the payment of the said sum and interest, and the
expenses, if any, connected with the foreclosure sale, shall be paid
by the PLEDGEE to the PLEDGOR;
AFFIRMATIVE DEFENSE
7. Respondent repleads and incorporates herein by reference the
foregoing allegations.
8. The Complaint states no cause of action against [r]espondent.
9. Complainant is not a stockholder of [r]espondent. Hence, the
Honorable Commission has no jurisdiction to enter the present
controversy since their [sic] is no intracorporate relationship
between complainant and respondent.
10. Granting arguendo that a pledge was constituted over
shareholdings of Sy Guiok in favor of the complainant and that
former defaulted in the payment of his obligations to the latter,
same did not automatically vest [i]n complainant ownership of
pledged shares. ( pace 37, Rollo)
the
the
the
the
equitable
[are]
likewise
prayed
for.
grounds that: (a) the issue between the [p]etitioner and the
[r]espondents being one involving the ownership of the shares of
stock pledged by Respondent Guiok and Sy Lim, the SEC had no
jurisdiction over the action filed by the [p]etitioner; (b) the latter
had no cause of action for mandamus against the Respondent
Corporation, the right of ownership of the [p]etitioner over the 300
shares of stock pledged by Respondent Guiok and Sy Lim not
having been as yet, established, preparatory to the institution of
said Petition for Mandamus with the SEC.
Ruling of the Court of Appeals
On the issue of jurisdiction, the Court of Appeals ruled:
In ascertaining whether or not the SEC had exclusive jurisdiction
over [p]etitioner's action, the [a]ppellate [c]ourt must delve into
and ascertain: (a) whether or not there is a need to enlist the
expertise and technical know-how of the SEC in resolving the issue
of the ownership of the shares of stock; (b) the status of the
relationships of the parties; [and] (c) the nature of the question that
is the subject of the controversy. Where the controversy is purely a
civil matter resoluble by civil law principles and there is no need for
the application of the expertise and technical know-how of the SEC,
then the regular courts have jurisdiction over the action. 8 [citations
omitted]
On the issue of whether mandamus can be availed of by the
petitioner, the Court of Appeals agreed with the SEC,viz.:
. . . [T]he [p]etitioner failed to establish a clear and legal right to
the writ of mandamus prayed for by him. . . . Mandamus will not
issue to enforce a right which is in substantial dispute or to which a
substantial doubt exists . . . . The principal function of the writ of
mandamus is to command and expedite, and not to inquire and
adjudicate and, therefore it is not the purpose of the writ to
establish a legal right, but to enforce one which has already been
established. 9 [citations omitted]
had
5. By the
borrowers
pledge is
[p]laintiff,
through
DECISION
CALLEJO, SR., J.:
Before the Court are two consolidated petitions: a petition for
review on certiorari filed by the People of the Philippines, docketed
as G.R. No. 149403 of the Resolution [1] of the Court of Appeals (CA)
in CA-G.R. SP No. 52440 which reversed its decision and granted
the petition for certiorari, prohibition and mandamus filed by
respondent Hajime Umezawa; and the petition for review
on certiorari docketed as G.R. No. 149357 filed by petitioner Mobilia
Products, Inc. (MPI), the intervenor in the CA, assailing the same
Resolution of the appellate court.
The Antecedents
The antecedents were amply summarized by the Office of the
Solicitor General (OSG) in the petition at bar, to wit:
Mobilia Products, Inc. is a corporation engaged in the manufacture
and export of quality furniture which caters only to the purchase
orders booked and placed through Mobilia Products Japan, the
mother company which does all the marketing and booking. After
orders from customers are booked at the mother company in Japan,
the same are coursed through Mobilia Philippines for
implementation and production, after which, the ordered items are
shipped to Japan through the mother company.
Mobilia Products Japan sent Hajime Umezawa to the Philippines in
order to head Mobilia Products, Inc. as President and General
Manager. To qualify him as such and as a Board Director, he was
entrusted with one nominal share of stock.
Sometime in the last week of January 1995, Umezawa, then the
President and General Manager of Mobilia Products, Inc., organized
another company with his wife Kimiko, and his sister, Mitsuyo
Yaguchi, to be known as Astem Philippines Corporation, without
the knowledge of the Chairman and Chief Executive Officer
Astem customers had it not been for the timely discovery of the
previous theft. [2]
The Board of Directors of MPI, consisting of its Chairman
Susumo Kodaira and members Yasushi Kato and Rolando Nonato,
approved a Resolution on May 2, 1995 authorizing the filing of a
complaint against Umezawa for two counts of qualified theft
allegedly committed on February 18 and 19, 1995. Attached to the
complaint was the Joint Affidavit of Danilo Lallaban, George del Rio
and Yasushi Kato. The case was docketed as I.S. No. 95-275.
On May 15, 1995, the public prosecutor filed an Information for
qualified theft against Umezawa with the Regional Trial Court (RTC)
of Lapu-Lapu City. The accusatory portion of the Information,
docketed as Criminal Case No. 013231-L, reads:
That during or about the period comprised between the 18 th and
19th day of February 1995, in the City of Lapu-Lapu, Philippines,
within the jurisdiction of this Honorable Court, the accused, while
being then the President and General Manager of Mobilia Products,
Inc., a corporation engaged in the manufacture and export of
furniture, holding office and doing business in the Mactan Export
Processing Zone, Lapu-Lapu City, with grave abuse of the
confidence reposed upon him by his employer, with intent to gain,
did then and there willfully, unlawfully and feloniously take, steal
and carry away from the corporations factory in Mactan Export
Processing Zone, Lapu-Lapu City, expensive pieces of furniture, to
wit:
1) 1 set, Model No. 3, 2-seater
German leather sofa, worth - - - - - - - - - - - - - - - - - - P
208,125.00
2) 1 set, Model No. 8, 2-seater
German leather sofa, worth - - - - - - - - - - - - - - - - - - P
315,000.00
3) 1 set, Model No. 5, 2-seater
German leather sofa, worth - - - - - - - - - - - - - - - - - - P
108,000.00
4) 1 set, Model No. 4, 2-seater
German leather sofa, worth - - - - - - - - - - - - - - - - - - P
277,500.00
5) 1 set, Model No. 6, 1-seater
German leather sofa, worth - - - - - - - - - - - - - - - - - - P
146,250.00
6) 1 set, Model No. 2, 2-seater
Contrary to law.[3]
unlawfully and feloniously take, steal and carry away from the
corporations factory the following expensive pieces of furniture, to
wit:
1) 1 set, Model No. 2, 2-seater Germanleather sofa, all valued
at . . . . . . . . . . . . . . P
225,000.00
2) 1 set, Model No. 1, 2-seater Germanleather sofa, all valued
at . . . . . . . . . . . . . . . . P
275,000.00
with an aggregate value of P500,000.00 Philippine Currency, to
the damage and prejudice of Mobilia Products, Inc.
CONTRARY TO LAW.[4]
Another Information for estafa was thereafter filed against the
same accused, docketed as Criminal Case No. 013424-L. The
accusatory portion reads:
That sometime in March 1995, in the City of Lapu-Lapu, Philippines,
within the jurisdiction of this Honorable Court, the above-named
accused, by means of unfaithfulness and abuse of confidence
reposed upon him as the President and General Manager of Mobilia
Products, Inc., did then and there willfully, unlawfully and
feloniously misappropriate and convert to his own personal use and
benefit the amount of Seventeen Million One Hundred Eight
Thousand Five Hundred (P17,108,500.00) Pesos, Philippine
Currency, which was the total value of the furnitures ordered and
manufactured by the accused or at his instance using Mobilia
supplies, materials and machineries, as well as time and personnel
which were supposed to be for the exclusive use of Mobilia
Products, Inc. but were converted for the use and benefit of the
accused and Astem Philippines Corporation, a company or firm
engaged in the same business as that of Mobilia Products, Inc.,
which is, [in] the manufacture and production of quality furniture
for export, owned by the accused, to the damage and prejudice of
Mobilia Products, Inc.
CONTRARY TO LAW.[5]
On April 25, 1996, Umezawa filed a motion for the suspension
of the proceedings on the ground of the pendency of his petition
with the SEC in Case No. 002919. The trial court, however, issued
an Order on May 21, 1996, denying the said motion. It held that the
filing and the pendency of a petition before the SEC did not warrant
a suspension of the criminal cases.
On September 25, 1998, Umezawa was arraigned and pleaded
not guilty.
1.
THE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF
LAW AND GRAVE ABUSE OF DISCRETION IN FINDING THAT THE
PETITION FOR MANDAMUS, CERTIORARI AND INJUNCTION WAS
FILED OUT OF TIME AND THAT PETITIONER HAS LOST ITS RIGHT TO
APPEAL;
2.
THE COURT OF APEALS COMMITTED SERIOUS ERRORS OF
LAW IN RULING THAT NOT ALL THE ELEMENTS OF QUALIFIED THEFT
AND ESTAFA ARE PRESENT;
3.
THE COURT OF APPEALS COMMITTED BLATANT AND SERIOUS
ERRORS OF LAW IN FINDING THAT THE SECURITIES AND EXCHANGE
COMMISSION (SEC) HAS JURISDICTION OVER THE SUBJECT
CRIMINAL CASES;
4.
THE COURT OF APPEALS COMMITTED SERIOUS ERRORS OF
LAW AND GRAVE ABUSE OF DISCRETION IN GIVING DUE COURSE TO
THE PRO-FORMA MOTION FOR RECONSIDERATION OF UMEZAWA.[14]
II
WHETHER OR NOT ALL THE NECESSARY ELEMENTS OF THE CRIMES
OF QUALIFIED THEFT AND ESTAFA ARE SUFFICIENTLY ALLEGED IN
THE INFORMATIONS.
III
EVEN ASSUMING ARGUENDO THAT THE FACTS ALLEGED DO NOT
CONSTITUTE AN OFFENSE THE CORRECT RULING IS NOT TO
DISMISS THE CASE BUT TO ORDER AMENDMENT.
IV
WHETHER OR NOT THE STATE HS LOST ITS RIGHT TO APPEAL.
V
WHETHER OR NOT THE MOTION FOR RECONSIDERATION OF
UMEZAWA IS PRO FORMA.[13]
The People of the Philippines filed a separate petition for review
on certiorari, contending that:
year of each additional ten thousand pesos, but the total of the
penalty which may be imposed shall not exceed twenty years. In
such cases, and in connection with the accessory penalties which
may be imposed and for the purpose of the other provisions of this
Code, the penalty shall be termed prision mayor orreclusion
temporal, as the case may be.
Article 310 of the Revised Penal Code further provides for the
penalty for qualified theft:
Art. 310. Qualified theft. The crime of theft shall be punished by
the penalties next higher by two degrees than those respectively
specified in the next preceding article, if committed by a domestic
servant, or with grave abuse of confidence, or if the property stolen
is motor vehicle, mail matter or large cattle or consists of coconuts
taken from the premises of a plantation, fish taken from a fishpond
or fishery or if property is taken on the occasion of fire, earthquake,
typhoon, volcanic eruption, or any other calamity, vehicular
accident or civil disturbance.
On the other hand, in Criminal Case No. 013424-L for estafa,
the amount of the fraud involved is P500,000.00, and under Article
315 of the Revised Penal Code, the penalty for such crime is
1st. The penalty of prision correccional in its maximum period
to prision mayor in its minimum period, if the amount of the fraud
is over 12,000 pesos but does not exceed 22,000 pesos; and if such
amount exceeds the latter sum, the penalty provided in this
paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos; but the total penalty which
may be imposed shall not exceed twenty years. In such cases, and
in connection with the accessory penalties which may be imposed
and for the purpose of the other provisions of this Code, the penalty
shall be termed prision mayor or reclusion temporal, as the case
may be.
Patently, then, based on the material allegations of the
Informations in the three cases, the court a quo had exclusive
jurisdiction over the crimes charged.
The bare fact that the respondent was the president and
general manager of the petitioner corporation when the crimes
charged were allegedly committed and was then a stockholder
thereof does not in itself deprive the court a quo of its exclusive
jurisdiction over the crimes charged. The property of the
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."5 [Emphasis supplied.]
When Republic Act (R.A.) No. 87997 took effect, the SECs 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 Rodrigos
SEC case were thus turned over to the RTC, Branch 142, Makati,
and docketed as Civil Case No. 00-1553.
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.
and
fraudulently
used
by
xxxx
5. The complainant Rodrigo C. Reyes discovered that by
some manipulative scheme, the shareholdings of
their deceased mother, Doa 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.
xxxx
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
respondents [herein petitioner Oscar] name and
installed himself as a majority stockholder of
ZenithInsurance Corporation [and] thereby deprived his
brothers and sisters of their respective equal shares thereof
including complainant hereto.
xxxx
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.
xxxx
Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the
Courts 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
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
Rodrigos interest as an heir since the subject matter of the present
controversy centers on the shares of stocks belonging to Anastacia,
not on Rodrigos 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 Anastacias death, her children acquired legal
title to her estate (which title includes her shareholdings in Zenith),
and they are, prior to the estates 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 vicepresident, 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.
00-1553,
is
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 177066
SO ORDERED.4
an appeal via certiorari, the Court may not review the factual
findings of the CA. It is not the Courts function under Rule 45 of the
Rules of Court to review, examine, and evaluate or weigh the
probative value of the evidence presented. 9
A certificate of live birth purportedly identifying the putative father
is not competent evidence of paternity when there is no showing
that the putative father had a hand in the preparation of the
certificate. The local civil registrar has no authority to record the
paternity of an illegitimate child on the information of a third
person.10 As correctly observed by the CA, only petitioners mother
supplied the data in the birth certificate and signed the same.
There was no evidence that Carlos L. Puno acknowledged petitioner
as his son.
As for the baptismal certificate, we have already decreed that it can
only serve as evidence of the administration of the sacrament on
the date specified but not of the veracity of the entries with respect
to the childs paternity.11
In any case, Sections 74 and 75 of the Corporation Code enumerate
the persons who are entitled to the inspection of corporate books,
thus
Sec. 74. Books to be kept; stock transfer agent. x x x.
The records of all business transactions of the corporation and the
minutes of any meeting shall be open to the inspection of any
director, trustee, stockholder or member of the corporation at
reasonable hours on business days and he may demand, in writing,
for a copy of excerpts from said records or minutes, at his expense.
xxxx
Sec. 75. Right to financial statements. Within ten (10) days from
receipt of a written request of any stockholder or member, the
corporation shall furnish to him its most recent financial statement,
which shall include a balance sheet as of the end of the last taxable
year and a profit or loss of statement for said taxable year, showing
in reasonable detail its assets and liabilities and the result of its
operations.12
and the necessity for self-protection. After all, a shareholder has the
right to be intelligently informed about corporate affairs. 13 Such
right rests upon the stockholders underlying ownership of the
corporations assets and property.14
Similarly, only stockholders of record are entitled to receive
dividends declared by the corporation, a right inherent in the
ownership of the shares.151avvphi1
Upon the death of a shareholder, the heirs do not automatically
become stockholders of the corporation and acquire the rights and
privileges of the deceased as shareholder of the corporation. The
stocks must be distributed first to the heirs in estate proceedings,
and the transfer of the stocks must be recorded in the books of the
corporation. Section 63 of the Corporation Code provides that no
transfer shall be valid, except as between the parties, until the
transfer is recorded in the books of the corporation. 16 During such
interim period, the heirs stand as the equitable owners of the
stocks, the executor or administrator duly appointed by the court
being vested with the legal title to the stock. 17 Until a settlement
and division of the estate is effected, the stocks of the decedent are
held by the administrator or executor. 18 Consequently, during such
time, it is the administrator or executor who is entitled to exercise
the rights of the deceased as stockholder.
DECISION
The Antecedents
xxx
xxx
Aside from the undue preference that would have been given to
BENHAR under the Revised BENHAR/RUBY Plan, we also found
RUBYs dealing with BENHAR highly irregular and its proposed
financing scheme more costly and ultimately prejudicial to RUBY.
Thus:
Parenthetically, BENHAR is a domestic corporation engaged in
importing and selling vehicle spare parts with an authorized capital
stock of thirty million pesos. Yet, it offered to lend its credit facility
On March 17, 2000, Lim filed a Motion informing the SEC of acts
being performed by BENHAR and RUBY through directors who were
illegally elected, despite the pendency of the appeal before this
Court questioning the SEC approval of the BENHAR/RUBY Plan and
creation of a new management committee, and after this Court had
denied their motion for reconsideration of the January 20, 1998
decision in G.R. Nos. 124185-87. Lim reiterated that before the
matter of extension of corporate life can be passed upon by the
stockholders, it is necessary to determine the percentage
ownership of the outstanding shares of the corporation. The
majority stockholders claimed that they have increased their
shareholdings from 59.828% to 74.75% as a result of the illegal and
invalid stockholders meeting on September 3, 1996. The additional
subscription of shares cannot be done as it implements the
BENHAR/RUBY Plan against which an existing injunction is still
effective based on the SEC Order dated January 6, 1989, and which
was struck down under the final decision of this Court in G.R. Nos.
124185-87. Hence, the implementation of the new percentage
stockholdings of the majority stockholders and the calling of
stockholders meeting and the subsequent resolution approving the
extension of corporate life of RUBY for another twenty-five (25)
years, were all done in violation of the decisions of the CA and this
Court, and without compliance with the legal requirements under
the Corporation Code. There being no valid extension of corporate
term, RUBYs corporate life had legally ceased. Consequently, Lim
moved that the SEC: (1) declare as null and void the infusion of
additional capital made by the majority stockholders and restore
the capital structure of RUBY to its original structure prior to the
time injunction was issued; and (2) declare as null and void the
resolution of the majority stockholders extending the corporate life
of RUBY for another twenty-five (25) years.
assets,
funds
and
Ruling of the CA
On May 26, 2004, the CA rendered its Decision, 45 the dispositive
portion of which states:
WHEREFORE, the Questioned Order dated 18 September 2002
issued by the Securities and Exchange Commission in SEC Case No.
2556 entitled "In the Matter of the Petition for Suspension of
Payments, Ruby Industrial Corporation, Petitioner," is hereby SET
ASIDE, and consequently:
(1) the infusion of additional capital made by the majority
stockholders be declared null and void and restoring the
capital structure of Ruby to its original structure prior to the
time the injunction was issued, that is, majority stockholders
59.828% and the minority stockholders 40.172% of the
authorized capital stock of Ruby Industrial Corporation.
(2) the resolution of the majority stockholders, who
represents only 59.828% of the outstanding capital stock of
Ruby, extending the corporate life of Ruby for another
twenty-five (25) years which was made during the supposed
stockholders meeting held on 03 September 1996 be
declared null and void;
(3) implementing the invalidation of any and all illegal
assignments of credit/purchase of credits and the
cancellation of mortgages connected therewith made by the
SO ORDERED.46
According to the CA, the SEC erred in not finding that the October
2, 1991 meeting held by RUBYs board of directors was illegal
because the MANCOM was neither involved nor consulted in the
resolution approving the issuance of additional shares of RUBY.
The CA further noted that the October 2, 1991 board meeting was
conducted on the basis of the September 18, 1991 order of the SEC
Hearing Panel approving the Revised BENHAR/RUBY Plan, which
plan was set aside under this Courts January 20, 1998 Decision in
G.R. Nos. 124185-87. The CA pointed out that records confirmed
the proposed infusion of additional capital for RUBYs rehabilitation,
approved during said meeting, as implementing the Revised
BENHAR/RUBY Plan. Necessarily then, such capital infusion is
covered by the final injunction against the implementation of the
revised plan. It must be recalled that this Court affirmed the CAs
ruling that the revised plan not only recognized the void deeds of
assignments entered into with some of RUBYs creditors in violation
of the CAs decision in CA-G.R. SP No. 18310, but also maintained a
financing scheme which will just make the rehabilitation plan more
costly and create a worse situation for RUBY.
On the supposed delay of the minority stockholders in raising the
issue of the validity of the infusion of additional capital effected by
the board of directors, the CA held that laches is inapplicable in this
case. It noted that Lim sought relief while the case is still pending
before the SEC. If ever there was delay, the same is not fatal to the
cause of the minority stockholders.
Corporation
be
Kim Giang (who headed the first MANCOM) with the December 22,
1989 Order directing them to turn over the cash, financial records
and documents of RUBY, including certificates of title over RUBYs
real properties, and render an accounting of all moneys received
and payments made by RUBY. On January 18, 2002, the MANCOM
even filed a Motion57 to require Yu Kim Giang to render
report/accounting of RUBY from 1983 to the 1st quarter of 1990,
stating that despite a commitment from Mr. Giang, he has
seemingly delayed his compliance, hence frustrating the desire of
MANCOM to submit a comprehensive and complete report for the
whole period of 1983 up to the present. To underscore the
importance of making the said records available for scrutiny of the
SEC and MANCOM, Lim manifested before the SEC that-Indeed, the majority is actually unwilling (and not merely unable) to
submit such records because these will show, among others:
(1) The majority to minority ratio in the corporate ownership
is 59.828% :40.172%;
(2) The actual amounts of the bank loans paid off by Benhar
International[,] Inc. and/or Henry Yu would be very low;
(3) The illegal payment of the bank loans and illegal
assignments of the mortgages to Benhar/Henry Yu are
contrary to the Honorable Commissions Order of 20
December 1983 for suspension of payments;
(4) The earnings of the corporation from 1983 to 1989
amounted to millions and cannot be accounted for by the
majority and the first Mancom;
(5) The money may have been spent to pay off some of the
loans to the bank but Benhar and Henry Yu fraudulently
claim credit therefor.58
It must be noted that MANCOM had rejected the two rehabilitation
plans proposed by BENHAR and the majority stockholders. In
shifting the blame to the MANCOM and minority stockholders for
the delay in the approval of a viable rehabilitation plan, the SEC
apparently overlooked that from the time the SEC approved the
Revised BENHAR/RUBY Plan and dissolved the MANCOM, the
majority stockholders has denied MANCOM access to corporate
papers, documents evidencing the amounts actually paid to
their objection during the said meeting by asking the board to defer
action as the SEC September 18, 1991 Order was still on appeal
with the SEC En Banc. When the SEC En Banc denied their appeal
and motion for reconsideration under its July 30, 1993 and October
15, 1993 orders, Lim, MANCOM and ALFC filed petitions for review
with the CA which set aside the said orders. As already mentioned,
this Court affirmed the CA ruling in G.R. Nos. 124185-87.
Contrary to the assertion of petitioners majority stockholders, our
decision in G.R. Nos. 124185-87 nullified the deeds of assignment
not solely on the ground of violation of the injunction orders issued
by the SEC and CA. As earlier mentioned, we affirmed the CAs
finding that the re-lending scheme under the Revised
BENHAR/RUBY Plan will not only make rehabilitation more costly for
RUBY, but also worsen its financial condition because of the
mortgage of its assets to a new creditor. To better illumine this
point, we quote from the CA decision in CA-G.R. SP Nos. 32404,
32469 and 32483 comparing the provisions of the rehabilitation
proposals submitted by the majority stockholders (Revised
BENHAR/RUBY Plan) and the minority stockholders (Alternative
Plan):
there is no need for Benhar to act as financier, as Ruby itself can
very well secure such credit accommodation using its assets as
collateral. Verily, Benhars pretext at magnanimity is deception of
the highest order considering that: (1) as embodied in the heading
Sources and Uses of Funds in the Revised Benhar/Ruby Plan,
the P80-Million loan/credit facility to be extended by Benhar will be
used to pay P60.437-Million loans of Ruby. Of the P60.437Million, P34.068-Million will be paid to Benhar as payment for the
amounts it paid in consideration of the nullified assignments; (2)
The Deed of Assignment of Credit Facility will be executed by
Benhar in favor of Ruby only upon payment of Ruby of such amount
already advanced by Benhar, i.e. the P34.068-Million credit
assigned to Benhar by the seven (7) secured creditors.
Benhar/Ruby Plan
Alternative Plan
"Secured
Creditors P17.022M
China
Banking
Corp.
BPI
Philippine Orient
2. Direct credit of P80M loan and will be borrowed
from the bank(s) like
Allied, UCPB,
Metrobank
or
Unsecured
Creditors
P 9.347M
Equitable Bank or even
China Bank. Leasing
Allied
Filcor Finance
Benhar
For
having
paid
Ruby
obligations
3. Mortgaged to bank(s)
to 7 directly.
creditors
P34.068M
To
be
paid
with interest charge
P2.871M
(p.a. for 3 years)
Totalling P8.614M to be
installment, interest-free"
Trade/Other
Creditors
4. Plant B = P25,640
Year IV estimated P40. M
Plant A = 22.40
Year V estimated P30. M
Needless
to
state,
the
foregoing
payment
schedules as embodied in
the said plan which gives
Benhar undue advantage
over the other creditors goes
against the very essence of
rehabilitation, which requires
that no creditor should be
preferred over the other.
Indeed, a comparison of the
salient
features
of
the
Revised Benhar/Ruby Plan
and the Alternative Plan will
readily show just how stacked in favor of Benhar are the provisions
of the former plan:
1wphi1
x x x x61
Prior to the September 18, 1991 Order approving the Revised
BENHAR/RUBY Plan and dissolving the MANCOM, majority of RUBYs
creditors (90%) have already withdrawn their support to the revised
plan and manifested that they were only lately informed about
another plan submitted by the minority stockholders. Hence, these
creditors wrote individual letters to the SEC Hearing Panel
expressing their agreement with and endorsement of the
Alternative Plan of the minority stockholders.62
The Revised BENHAR/RUBY Plan had proposed the calling for
subscription of unissued shares through a Board Resolution from
the P11.814 million of the P23.7 million ACS "in order to allow the
long overdue program of the REHAB Program." RUBY will offer for
subscription 118,140 shares of stocks at par value of P100 each to
all stockholders on record, payable within 15 days, or within a
reasonable period from SEC approval of the revised plan. 63 This was
implemented by the October 2, 1991 meeting of the Board of
Directors led by Yu Kim Giang. The minority directors claimed they
were not notified of said board meeting. At any rate, the CA
decision nullifying the Revised BENHAR/RUBY Plan was affirmed by
this Court on January 20, 1998. Hence, the legitimate concerns of
the minority stockholders and MANCOM who objected to the capital
infusion which resulted in the dilution of their shareholdings, the
expiration of RUBYs corporate term and the pending incidents on
the void deeds of assignment of credit all these should have been
duly considered and acted upon by the SEC when the case was
remanded to it for further proceedings. With the final rejection of
the courts of the Revised BENHAR/RUBY Plan, it was grave error for
the SEC not to act decisively on the motions filed by the minority
stockholders who have maintained that the issuance of additional
shares did not help improve the situation of RUBY except to stifle
the opposition coming from the MANCOM and minority stockholders
by diluting the latters shareholdings. Worse, the SEC ignored the
evidence adduced by the minority stockholders indicating that the
correct amount of subscription of additional shares was not paid by
the majority stockholders and that SEC official records still reflect
the 60%-40% percentage of ownership of RUBY.
a body corporate for three (3) years after the time when it would
have been so dissolved, for the purpose of prosecuting and
defending suits by or against it and enabling it to settle and close
its affairs, to dispose of and convey its property and to distribute its
assets, but not for the purpose of continuing the business for which
it was established.
At any time during said three (3) years, said corporation is
authorized and empowered to convey all of its property to trustees
for the benefit of stockholders, members, creditors, and other
persons in interest. From and after any such conveyance by the
corporation of its property in trust for the benefit of its
stockholders, members, creditors and others in interest, all
interests which the corporation had in the property terminates, the
legal interest vests in the trustees, and the beneficial interest in the
stockholders, members, creditors or other persons in interest.
Upon winding up of the corporate affairs, any asset distributable to
any creditor or stockholder or member who is unknown or cannot
be found shall be escheated to the city or municipality where such
assets are located.
Except by decrease of capital stock and as otherwise allowed by
this Code, no corporation shall distribute any of its assets or
property except upon lawful dissolution and after payment of all its
debts and liabilities.
Since the corporate life of RUBY as stated in its articles of
incorporation expired, without a valid extension having been
effected, it was deemed dissolved by such expiration without need
of further action on the part of the corporation or the State. 71 With
greater reason then should liquidation ensue considering that the
last paragraph of Sec. 4-9 of the Rules of Procedure on Corporate
Recovery mandates the SEC to order the dissolution and liquidation
proceedings under Rule VI. Sec. 6-1, Rule VI likewise authorizes the
SEC on motion or motu proprio, or upon recommendation of the
management committee, to order dissolution of the debtor
corporation and the liquidation of its remaining assets, appointing a
Liquidator for the purpose, if "the continuance in business of the
debtor is no longer feasible or profitable or no longer works to the
best interest of the stockholders, parties-litigants, creditors, or the
general public."
It cannot be denied that with the current divisiveness, distrust and
antagonism between the majority and minority stockholders, the
creditor, who
Court.1wphi1
then
filed
petition
for
review
with
this
We ruled that the SEC observed the correct procedure under the
present law, in cases where it merely retained jurisdiction over
pending cases for suspension of payments/rehabilitation, thus:
Republic Act No. 8799 (RA 8799) transferred to the appropriate
regional trial courts the SECs jurisdiction defined under Section
5(d) of Presidential Decree No. 902-A. Section 5.2 of RA 8799
provides:
The Commissions jurisdiction over all cases enumerated under
Sec. 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. (Emphasis supplied)
The SEC assumed jurisdiction over CMCs petition for suspension of
payment and issued a suspension order on 2 April 1996 after it
found CMCs petition to be sufficient in form and substance. While
CMCs petition was still pending with the SEC as of 30 June 2000, it
was finally disposed of on 29 November 2000 when the SEC issued
its Omnibus Order directing the dissolution of CMC and the transfer
of the liquidation proceedings before the appropriate trial court.
The SEC finally disposed of CMCs petition for suspension of
payment when it determined that CMC could no longer be
successfully rehabilitated.
However, the SECs jurisdiction does not extend to the liquidation of
a corporation. While the SEC has jurisdiction to order the
dissolution of a corporation, jurisdiction over the liquidation of the
corporation now pertains to the appropriate regional trial courts.
This is the reason why the SEC, in its 29 November 2000 Omnibus
Order, directed that "the proceedings on and implementation of the
order of liquidation be commenced at the Regional Trial Court to
which this case shall be transferred." This is the correct procedure
because the liquidation of a corporation requires the settlement of
claims for and against the corporation, which clearly falls under the
jurisdiction of the regular courts. The trial court is in the best
position to convene all the creditors of the corporation, ascertain
their claims, and determine their preferences. 80 (Additional
emphasis supplied.)
In view of the foregoing, the SEC should now be directed to transfer
this case to the proper RTC which shall supervise the liquidation
proceedings under Sec. 122 of the Corporation Code. Under Sec. 6
(d) of P.D. 902-A, the SEC is empowered, on the basis of the
findings and recommendations of the management committee or
rehabilitation receiver, or on its own findings, to determine that the
continuance in business of a debtor corporation under suspension
of payment or rehabilitation would not be feasible or profitable nor
work to the best interest of the stockholders, parties-litigants,
creditors, or the general public, order the dissolution of such
corporation and its remaining assets liquidated accordingly. As
mentioned earlier, the procedure is governed by Rule VI of the
SECRules of Procedure on Corporate Recovery.
However, R.A. No. 1014281 otherwise known as the Financial
Rehabilitation and Insolvency Act (FRIA) of 2010, now provides for
court proceedings in the rehabilitation or liquidation of debtors,
both juridical and natural persons, in a manner that will "ensure or
maintain certainty and predictability in commercial affairs, preserve
and maximize the value of the assets of these debtors, recognize
creditor rights and respect priority of claims, and ensure equitable
treatment of creditors who are similarly situated." Considering that
this case was still pending when the new law took effect last year,
the RTC to which this case will be transferred shall be guided by
Sec. 146 of said law, which states:
SEC. 146. Application to Pending Insolvency, Suspension of
Payments and Rehabilitation Cases. This Act shall govern all
petitions filed after it has taken effect. All further proceedings in
insolvency, suspension of payments and rehabilitation cases then
pending, except to the extent that in opinion of the court their
application would not be feasible or would work injustice, in which
event the procedures set forth in prior laws and regulations shall
apply.
WHEREFORE, the petitions for review on certiorari are DENIED. The
Decision dated May 26, 2004 and Resolution dated November 4,
2004 of the Court of Appeals in CA-G.R. SP No. 73195 are hereby
AFFIRMED with MODIFICATION in that the Securities and Exchange
fully paid; and that the defendant refused to register said shares in
his name in the books of the corporation in spite of repeated
demands to that effect made by him upon said corporation, which
refusal caused him damages amounting to P500. Plaintiff prayed for
a judgment ordering the Botica Nolasco, Inc. to register in his name
in the books of the corporation the five shares of stock recorded in
said books in the name of Manuel Gonzalez, and to indemnify him
in the sum of P500 as damages, and to pay the costs. The
defendant again filed a demurrer on the ground that the amended
complaint did not state facts sufficient to constitute a cause of
action, and that said amended complaint was ambiguous,
unintelligible, uncertain, which demurrer was overruled by the
court.
The defendant answered the amended complaint denying generally
and specifically each and every one of the material allegations
thereof, and, as a special defense, alleged that the defendant,
pursuant to article 12 of its by-laws, had preferential right to buy
from the plaintiff said shares at the par value of P100 a share, plus
P90 as dividends corresponding to the year 1922, and that said
offer was refused by the plaintiff. The defendant prayed for a
judgment absolving it from all liability under the complaint and
directing the plaintiff to deliver to the defendant the five shares of
stock in question, and to pay damages in the sum of P500, and the
costs.
Upon the issue presented by the pleadings above stated, the cause
was brought on for trial, at the conclusion of which, and on August
21, 1924, the Honorable N. Capistrano, judge, held that, in his
opinion, article 12 of the by-laws of the corporation which gives it
preferential right to buy its shares from retiring stockholders, is in
conflict with Act No. 1459 (Corporation Law), especially with section
35 thereof; and rendered a judgment ordering the defendant
corporation, through its board of directors, to register in the books
of said corporation the said five shares of stock in the name of the
plaintiff, Henry Fleischer, as the shareholder or owner thereof,
instead of the original owner, Manuel Gonzalez, with costs against
the defendant.
The defendant appealed from said judgment, and now makes
several assignment of error, all of which, in substance, raise the
question whether or not article 12 of the by-laws of the corporation
is in conflict with the provisions of the Corporation Law (Act No.
1459).
xxx
xxx
xxx
xxx
xxx
The by-law now in question was adopted under the power conferred
upon the corporation by section 13, paragraph 7, above quoted;
but in adopting said by-law the corporation has transcended the
limits fixed by law in the same section, and has not taken into
consideration the provisions of section 35 of Act No. 1459.
As a general rule, the by-laws of a corporation are valid if they
reasonable and calculated to carry into effect the objects of
corporation, and are not contradictory to the general policy of
laws of the land. (Supreme Commandery of the Knights of
Golden Rule vs. Ainsworth, 71 Ala., 436; 46 Am. Rep., 332.)
are
the
the
the
For resolution before this Court are two motions filed by the
petitioner, J.G. Summit Holdings, Inc. for reconsideration of our
Resolution dated September 24, 2003 and to elevate this case to
the Court En Banc. The petitioner questions the Resolution which
reversed our Decision of November 20, 2000, which in turn
SO ORDERED.
Motion to Elevate this Case to the
In separate Motions for Reconsideration, respondents submit[ted]
three basic issues for x x x resolution: (1) Whether PHILSECO is a
public utility; (2) Whether under the 1977 JVA, KAWASAKI can
exercise its right of first refusal only up to 40% of the total
capitalization of PHILSECO; and (3) Whether the right to top
granted to KAWASAKI violates the principles of competitive
bidding.3 (citations omitted)
In a Resolution dated September 24, 2003, this Court ruled in favor
of the respondents. On the first issue, we held that Philippine
Shipyard and Engineering Corporation (PHILSECO) is not a public
utility, as by nature, a shipyard is not a public utility 4 and that no
law declares a shipyard to be a public utility. 5 On the second issue,
we found nothing in the 1977 Joint Venture Agreement (JVA) which
prevents Kawasaki Heavy Industries, Ltd. of Kobe, Japan
(KAWASAKI) from acquiring more than 40% of PHILSECOs total
capitalization.6 On the final issue, we held that the right to top
granted to KAWASAKI in exchange for its right of first refusal did not
violate the principles of competitive bidding. 7
On October 20, 2003, the petitioner filed a Motion for
Reconsideration8 and a Motion to Elevate This Case to the Court En
Banc.9 Public respondents Committee on Privatization (COP) and
Asset Privatization Trust (APT), and private respondent Philyards
Holdings, Inc. (PHILYARDS) filed their Comments on J.G. Summit
Holdings, Inc.s (JG Summits) Motion for Reconsideration and
Motion to Elevate This Case to the Court En Banc on January 29,
2004 and February 3, 2004, respectively.
II. Issues
Based on the foregoing, the relevant issues to resolve to end this
litigation are the following:
1. Whether there are sufficient bases to elevate the case at
bar to the Court en banc.
Court En Banc
The petitioner prays for the elevation of the case to the Court en
banc on the following grounds:
1. The main issue of the propriety of the bidding process
involved in the present case has been confused with the
policy issue of the supposed fate of the shipping industry
which has never been an issue that is determinative of this
case.10
2. The present case may be considered under the Supreme
Court Resolution dated February 23, 1984 which included
among en banc cases those involving a novel question of
law and those where a doctrine or principle laid down by the
Court en banc or in division may be modified or reversed.11
3. There was clear executive interference in the judicial
functions of the Court when the Honorable Jose Isidro
Camacho, Secretary of Finance, forwarded to Chief Justice
Davide, a memorandum dated November 5, 2001, attaching
a copy of the Foreign Chambers Report dated October 17,
2001, which matter was placed in the agenda of the Court
and noted by it in a formal resolution dated November 28,
2001.12
Opposing J.G. Summits motion to elevate the case en banc,
PHILYARDS
points
out
the
petitioners
inconsistency
in
previously opposing PHILYARDS Motion to Refer the Case to the
Court En Banc. PHILYARDS contends that J.G. Summit should now
be estopped from asking that the case be referred to the Court en
banc. PHILYARDS further contends that the Supreme Court en
banc is not an appellate court to which decisions or resolutions of
its divisions may be appealed citing Supreme Court Circular No. 289 dated February 7, 1989.13 PHILYARDS also alleges that there is
no novel question of law involved in the present case as the
assailed Resolution was based on well-settled jurisprudence.
Likewise, PHILYARDS stresses that the Resolution was merely an
PHILYARDS,
public
We uphold the validity of the mutual rights of first refusal under the
JVA between KAWASAKI and NIDC. First of all, the right of first
refusal is a property right of PHILSECO shareholders, KAWASAKI and
NIDC, under the terms of their JVA. This right allows them to
purchase the shares of their co-shareholder before they are offered
to a third party. The agreement of co-shareholders to
mutually grant this right to each other, by itself, does not
constitute a violation of the provisions of the Constitution
limiting
land
ownership
to
Filipinos
and
Filipino
corporations. As PHILYARDS correctly puts it, if PHILSECO still
owns land, the right of first refusal can be validly assigned to a
qualified Filipino entity in order to maintain the 60%-40% ratio. This
transfer, by itself, does not amount to a violation of the AntiDummy Laws, absent proof of any fraudulent intent. The transfer
could be made either to a nominee or such other party which the
holder of the right of first refusal feels it can comfortably do
business with. Alternatively, PHILSECO may divest of its
landholdings, in which case KAWASAKI, in exercising its right of first
refusal, can exceed 40% of PHILSECOs equity. In fact, it can even
be said that if the foreign shareholdings of a landholding
corporation exceeds 40%, it is not the foreign stockholders
ownership of the shares which is adversely affected but the
capacity of the corporation to own land that is, the
corporation becomes disqualified to own land. This finds support
under the basic corporate law principle that the corporation and its
stockholders are separate juridical entities. In this vein, the right of
first refusal over shares pertains to the shareholders whereas the
capacity to own land pertains to the corporation. Hence, the fact
that PHILSECO owns land cannot deprive stockholders of their right
of first refusal. No law disqualifies a person from purchasing
shares in a landholding corporation even if the latter will
exceed the allowed foreign equity, what the law disqualifies
is the corporation from owning land. This is the clear import of
the following provisions in the Constitution:
Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be alienated.
The exploration, development, and utilization of natural resources
shall be under the full control and supervision of the State. The
State may directly undertake such activities, or it may enter into
co-production,
joint
venture,
or
production-sharing
agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is
32.1 This provision is the same as Section 7, Article XII of the 1987
Constitution.
The Facts
Petitioner Grace Christian High School (GCHS) is a nonstock, nonprofit educational corporation with fifteen (15) regular members,
who also constitute the board of trustees. [4] During the annual
members meeting held on April 6, 1998, there were only eleven
(11) [5] living member-trustees, as four (4) had already died. Out of
the eleven, seven (7) 6 attended the meeting through their
respective proxies. The meeting was convened and chaired by Atty.
Sabino Padilla Jr. over the objection of Atty. Antonio C. Pacis, who
argued that there was no quorum. 7 In the meeting, Petitioners
Ernesto Tanchi, Edwin Ngo, Virginia Khoo, and Judith Tan were voted
to replace the four deceased member-trustees.
Issues
16
"The SEC ruled against the petitioners solely on the basis of a 1989
SEC Opinion that did not even involve a non-stock corporation as
petitioner GCHS.
"The Honorable Court of Appeals on the other hand simply refused
to resolve this question and instead dismissed the petition for
review on a technicality the failure to timely submit an SPA from
the petitioners authorizing their co-petitioner Padilla, their counsel
and also a petitioner before the Court of Appeals, to sign the
petition on behalf of the rest of the petitioners.
"Petitioners humbly submit that the action of both the SEC and the
Court of Appeals are not in accord with law particularly the
pronouncements of this Honorable Court in Escorpizo v. University
of Baguio (306 SCRA 497),Robern Development Corporation v.
Quitain (315 SCRA 150,) and MC Engineering, Inc. v. NLRC, (360
SCRA 183). Due course should have been given the petition below
and the merits of the case decided in petitioners favor." 17
In sum, the issues may be stated simply in this wise: 1) whether the
CA erred in denying the Petition below, on the basis of a defective
Verification and Certification; and 2) whether dead members should
still be counted in the determination of the quorum, for purposes of
conducting the annual members meeting.
The Courts Ruling
September 4, 2012
x-----------------------x
G.R. No. 178193
DANILO B. URSUA, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
RESOLUTION
VELASCO, JR., J.:
For consideration is a Motion for Reconsideration of the Decision of
the Court dated January 24, 2012 interposed by petitioners in G.R.
Nos. 177857-58, namely: Philippine Coconut Producers Federation,
Inc. (COCOFED), Manuel V. del Rosario, Domingo P. Espina, Salvador
P. Ballares, Joselito A. Moraleda, Paz M. Yason, Vicente A. Cadiz,
Cesaria De Luna Titular, and Raymundo C. De Villa.
On March 14, 2012, petitioner-movants filed a Manifestation and
Motion stating that they failed to include the Office of the Solicitor
General (OSG) in the list of persons to be furnished with a copy of
the Motion for Reconsideration. They accordingly moved that their
belated service of a copy of the Motion for Reconsideration on the
OSG be considered compliance with the rules on service of motions
for reconsideration. This Court noted and accepted the
Manifestation and Motion. On March 15, 2012, petitioner-movants
filed a Memorandum in support of the instant motion for
reconsideration.
To the said motion, intervenors Wigberto E. Taada, et al. filed on
June 10, 2012 their Comment and Opposition. The OSG, on the
other hand, after filing two motions for extension on May 22, 2012
and June 21, 2012, respectively, filed its Motion to Admit Comment,
with Comment attached, on July 13, 2012. This Court noted and
admitted the Comment.
As will be recalled, the Court, in its January 24, 2012 Decision,
affirmed, with modification, the Partial Summary Judgments (PSJs)
rendered by the Sandiganbayan (1) on July 11, 2003 in Civil Case
No. 0033-A (PSJ-A), as amended by a Resolution issued on June 5,
2007; and (2) on
May 7, 2004 in Civil Case No. 0033-F (PSJ-F), as amended by a
Resolution issued on May 11, 2007.
xxx
xxx
SO ORDERED.
The Partial Summary Judgment in Civil Case No. 0033-F dated May
7, 2004, is hereby MODIFIED, and shall read as follows:
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL SUMMARY
JUDGMENT (RE: CIIF BLOCK OF SMC SHARES OF STOCK) dated
August 8, 2005 of the plaintiff is hereby denied for lack of merit.
However, this Court orders the severance of this particular claim of
Plaintiff. The Partial Summary Judgment dated May 7, 2004 is now
considered a separate final and appealable judgment with respect
to the said CIIF Block of SMC shares of stock.1wphi1
The Partial Summary Judgment rendered on May 7, 2004 is
modified by deleting the last paragraph of the dispositive portion,
which will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants CIIF
Companies, 14 Holding Companies and Cocofed, et al) filed by
Plaintiff is hereby GRANTED. ACCORDINGLY, THE CIIF COMPANIES,
NAMELY:
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
SO ORDERED.
6. AP Holdings, Inc.;
7. Fernandez Holdings, Inc.;
SO ORDERED.
In a manifestation dated July 22, 1988, the DBP claimed that it was
not authorized to receive summons on behalf of ALFA since the DBP
had not taken over the company which has a separate and distinct
corporate personality and existence.
On April 25, 1989, the trial court reversed itself by setting aside its
previous Order dated January 2, 1989 and declared that service
upon the petitioners who were no longer corporate officers of ALFA
cannot be considered as proper service of summons on ALFA.
On July 18, 1988, the petitioners filed their answer to the third party
complaint.
from the other attributes of ownership; (2) that the voting rights
granted are intended to be irrevocable for a definite period of time;
and (3) that the principal purpose of the grant of voting rights is to
acquire voting control of the corporation. (5 Fletcher, Cyclopedia of
the Law on Private Corporations, section 2075 [1976] p.
331 citingTankersly v. Albright, 374 F. Supp. 538)
to the
stocks
things
shares
Considering that the voting trust agreement between ALFA and the
DBP transferred legal ownership of the stock covered by the
agreement to the DBP as trustee, the latter became the stockholder
of record with respect to the said shares of stocks. In the absence
of a showing that the DBP had caused to be transferred in their
names one share of stock for the purpose of qualifying as directors
of ALFA, the petitioners can no longer be deemed to have retained
their status as officers of ALFA which was the case before the
execution of the subject voting trust agreement. There appears to
be no dispute from the records that DBP has taken over full control
and management of the firm.
Moreover, in the Certification dated January 24, 1989 issued by the
DBP through one Elsa A. Guevarra, Vice-President of its Special
Accounts Department II, Remedial Management Group, the
petitioners were no longer included in the list of officers of ALFA "as
of April 1982." (CA Rollo, pp. 140-142)
WHEREAS,
in
consideration
of
additional
accommodations from the TRUSTEE, ALFA had
offered and the TRUSTEE has accepted participation
in the management and control of the company and
to assure the aforesaid participation by the TRUSTEE,
the TRUSTORS have agreed to execute a voting trust
covering their shareholding in ALFA in favor of the
TRUSTEE;
AND WHEREAS, DBP is willing to accept the trust for
the purpose aforementioned.
NOW, THEREFORE, it is hereby agreed as follows:
xxx xxx xxx
6. This Agreement shall last for a period of Five (5)
years, and is renewable for as long as the obligations
of ALFA with DBP, or any portion thereof, remains
outstanding; (CA Rollo, pp. 137-138)
The petitioners in this case do not fall under any of the enumerated
officers. The service of summons upon ALFA, through the
petitioners, therefore, is not valid. To rule otherwise, as correctly
argued by the petitioners, will contravene the general principle that
a corporation can only be bound by such acts which are within the
scope of the officer's or agent's authority. (see Vicente v. Geraldez,
52 SCRA 210 [1973]).
WHEREFORE, premises considered, the petition is hereby GRANTED.
The appealed decision dated March 19, 1990 and the Court of
Appeals' resolution of May 10, 1990 are SET ASIDE and the Orders
dated April 25, 1989 and October 17, 1989 issued by the Regional
Trial Court of Makati, Branch 58 are REINSTATED.
SO ORDERED.