Professional Documents
Culture Documents
RULING: While Mel Velarde correctly invokes the ruling in Atienza v. Court In the case at bar, the respondent was not a corporate officer of Petitioner
of Appeals to postulate that not every denial of a motion to dismiss can be Corporation because his position as General Manager was not specifically
corrected by certiorari under Rule 65 and that, as a general rule, the remedy mentioned in the roster of corporate officers in its corporate by-laws. Thus
from such denial is to appeal in due course after a decision has been rendered respondent, can only be regarded as its employee or subordinate official.
on the merits, there are exceptions thereto, as when the court in denying the Accordingly, respondent's dismissal as Petitioner Corporation’s General
motion to dismiss acted without or in excess of jurisdiction or with patent grave Manager did not amount to an intra-corporate controversy. Jurisdiction
abuse of discretion, or when the assailed interlocutory order is patently therefore properly belongs with the Labor Arbiter and not with the RTC.
erroneous and the remedy of appeal would not afford adequate and expeditious
relief, or when the ground for the motion to dismiss is improper venue, res In this Petition for Review on Certiorari under Rule 45 of the Rules of Court,
judicata, or lack of jurisdiction as in the case at bar. herein petitioners Marc II Marketing, Inc. and Lucila V. Joson assailed the
In determining which has jurisdiction over a case, the averments of the Decision[1] dated 20 June 2005 of the Court of Appeals in CA-G.R. SP No.
complaint “counterclaim” taken as a whole are considered. 76624 for reversing and setting aside the Resolution[2] of the National Labor
Relations Commission (NLRC) dated 15 October 2002, thereby affirming the
With regards to Mel Velarde‘s claim for unpaid salaries, unpaid share in net Labor Arbiters Decision[3] dated 1 October 2001 finding herein respondent
income, reasonable return on the stock ownership plan and other benefits for Alfredo M. Josons dismissal from employment as illegal. In the questioned
services rendered to Sky Vision, jurisdiction thereon pertains to the Securities Decision, the Court of Appeals upheld the Labor Arbiters jurisdiction over the
and Exchange Commission even if the complaint by a corporate officer case on the basis that respondent was not an officer but a mere employee of
includes money claims since such claims are actually part of the prerequisite of petitioner Marc II Marketing, Inc., thus, totally disregarding the latters
his position and, therefore interlinked with his relations with the corporation. allegation of intra-corporate controversy. Nonetheless, the Court of Appeals
The question of remunerations involving a person who is not a mere employee remanded the case to the NLRC for further proceedings to determine the proper
but a stockholder and officer of the corporation is not a simple labor problem amount of monetary awards that should be given to respondent.
but a matter that comes within the area of corporate affairs and management as
is in fact a corporate controversy in contemplation of the Corporation Code. 6. Chung Ka Bio v. IAC, G.R. No. L-71837, July 26, 1988
Mel Velarde argues nevertheless that jurisdiction over the subsidiary is justified
Philippine Blooming Mills Company, Inc. was incorporated for a term of 25
by piercing the veil of corporate fiction. Piercing the veil of corporate fiction is
years. The members of its board of directors executed a deed of assignment of
warranted, however, only in cases when the separate legal entity is used to all of the account receivables, properties, obligations and liabilities of the old
defeat public convenience, justify wrong, protect fraud, or defend crime, such PBM in favor of Chung Siong Pek in his capacity as treasurer of the new PBM,
that in the case of two corporations, the law will regard the corporations as then in the process of reincorporation. The new PMB was issued a certificate of
merged into one. incorporation by the Securities and Exchange Commission. Chung Ka Bio and
the other petitioners herein, all stockholders of the old PBM, filed with the SEC
5. Marc II Marketing, Inc. v. Joson, G.R. No. 171993, December 12, a petition for liquidation of both the old PBM and the new PBM. The allegation
2011 was that the former had become legally non-existent for failure to extend its
corporate life and that the latter had likewise been ipso facto dissolved for non-
Respondent Alfredo Joson was the General Manager, incorporator, director and use of the charter and continuous failure to operate within 2 years from
stockholder of Marc II Marketing (Petitioner Corporation). Before Petitioner incorporation.
Corporation was officially incorporated, respondent has already been engaged
by petitioner Lucila Joson, in her capacity as President of Marc Marketing Inc., ISSUE: Whether the new corporation has not substantially complied with the
to work as the General Manager of Petitioner Corporation through a two-year requirement of Section 22 of the new Corporation Code on non-user
management contract. because its stockholders never adopted a set of by-laws.
However, Petitioner Corporation decided to stop and cease its operation RULING: No. Non-filing of the by-laws will not result in automatic
wherein respondent's services were then terminated. Feeling aggrieved, dissolution of the corporation. Under Section 6(i) of PD 902-A, the SEC is
respondent filed a Complaint for Reinstatement and Money Claim against empowered to “suspend or revoked, after proper notice and hearing, the
petitioners before the Labor Arbiter which ruled in favor of respondent. The franchise or certificate of registration of a corporation” on the ground inter alia
National Labor and Relations Commission (NLRC) reversed said decision. The of “failure to file by-laws within the required period.” It is clear from this
Court of Appeals (CA) however, upheld the ruling of the Labor Arbiter. Hence, provision that there must first of all be a hearing to determine the existence of
this petition. the ground, and secondly, assuming such finding, the penalty is not necessarily
revocation but may be only suspension of the charter. In fact, under the rules
ISSUE: Whether or not the Labor Arbiter has jurisdiction over the controversy and regulations of the SEC, failure to file the by-laws on time may be penalized
at bar merely with the imposition of an administrative fine without affecting the
corporate existence of the erring firm.
RULING: Yes. While Article 217(a) 229 of the Labor Code, as amended,
provides that it is the Labor Arbiter who has the original and exclusive 7. CBBS, Inc. v. DBP, G.R. No. 154366, November 17, 2010
jurisdiction over cases involving termination or dismissal of workers when the
person dismissed or terminated is a corporate officer, the case automatically Spouses Robles entered into a mortgage contract with the DBP to create the
falls within the province of the Regional Trial Court (RTC). The dismissal of a State Theatre Building in Talisay, Cebu. Upon completion, Rudy Robles
corporate officer is always regarded as a corporate act and/or an intra-corporate executed a contract of lease in favour of Cebu Bionic Builders Supply.
controversy. However, the spouses defaulted on their obligation to pay and DBP
extrajudicially foreclosed the mortgage. DBP sent a letter to Cebu Bionic that if
In conformity with Section 25 of the Corporation Code, whoever are the they were interested in leasing the facilities, they would have to pay DBP.
corporate officers enumerated in the by-laws are the exclusive officers of the However, nothing came from these correspondences.
corporation and the Board has no power to create other officers without
amending first the corporate by-laws. However, the Board may create DBP then invited parties to bid on the property. Initially, Cebu Bionic submitted
their interest in bidding, but the price that they gave was insufficient. DBP then Potenciano wrote Bitanga, requesting for a postponement of the stockholders’
awarded the auction to Respondents To Chip, Yap and Balila. In response to meeting due to the absence of a thirty-day advance notice. However, there was
several demand letters by the Respondents, Cebu Bionic filed a petition for no response on whether or not the request for postponement was favorably
preliminary injunction, cancellation of deed of sale and specific performance acted upon. On the scheduled date of the meeting, a notice of postponement of
against DBP. Petitioners then related that, without their knowledge, DBP sold the stockholders’ meeting was published in the Manila Bulletin. Inasmuch as
the subject properties to respondents To Chip, Yap andBalila.The sale was there was no notice of postponement prior to that, a total of 286 stockholders
claimed to be simulated and fictitious, as DBP still received rentals from arrived and attended the meeting. The majority of the stockholders present
petitioners until March 1991.By acquiring the subject properties, petitioners rejected the postponement and voted to proceed with the meeting. The
contended that DBP was deemed to have assumed the contract of lease Potenciano group was re-elected to the Board of Directors, however, the
executed between them and Rudy Robles. They alleged that the original leases Bitanga group refused to relinquish their positions and continued to act as
clause of the Right of First Option to Buy should be upheld. directors and officers of BLTB.
Respondents To Chip, Yap and Balila argue that the instant petition should be The Bitanga group filed with the SEC a Complaint for Damages and Injunction
dismissed outright as the verification and certification of non-forum shopping which, however, was denied. Likewise, the Potenciano group filed a Complaint
was executed only by petitioner Lydia Sia in her personal capacity, without the for Injunction and Damages with Preliminary Injunction and Temporary
participation of Cebu Bionic. Restraining Order with the SEC which issued a TRO enjoining the Bitanga
group from acting as officers and directors of BLTB.
The trial court granted their complaint. The Court of Appeals similarly upheld
the decision of the trial court. Cebu Bionic filed a motion for entry of judgment, The Bitanga group filed another complaint which was granted. It declared that
but Respondents filed a motion for reconsideration on the ground that they the stockholders’ meeting was void on the grounds that, first, Michael
relied on the friend of their lawyer to personally file the MR, but apparently did Potenciano had himself asked for its postponement due to improper notice; and,
not. The court granted their MR, and reversed their judgment before. Thus, the second, there was no quorum, since BMB Holdings, Inc., represented by the
petitioners file the case before the Supreme Court. Bitanga group, which then owned 50.26% of BLTB’s shares having purchased
the same from the Potenciano group, was not present at the said meeting.
ISSUE: Whether the verification (and certification of non-forum
shopping) in the instant petition was proper and was valid despite its The Potenciano group filed a petition for certiorari with the SEC En Banc. The
being signed by only one of the two petitioners SEC En Banc set aside the Order of the Hearing Panel and issued the writ of
preliminary injunction prayed for. The Bitanga group immediately filed a
RULING: No. The Court is not persuaded. Except for the powers petition for certiorari with the Court of Appeals which reversed the assailed
which are expressly conferred on it by the Corporation Code and Orders of the SEC En Banc and reinstating the Order of the Hearing Panel. The
those that are implied by or are incidental to its existence, a Court of Appeals denied the Motions for Reconsideration.
corporation has no powers. It exercises its powers through its board
of directors and/or its duly authorized officers and agents. Thus, its ISSUE: Whether the SEC En Banc committed error in jurisdiction as to entitle
power to sue and be sued in any court is lodged with the board of the Bitanga group to the extraordinary remedy of certiorari
directors that exercises its corporate powers. Physical acts, like the
signing of documents, can be performed only by natural persons duly RULING: No. In the Order of the SEC En Banc, the validity of the BLTB
authorized for the purpose by corporate by-laws or by a specific act stockholders’ meeting held was sustained, in light of the time-honored doctrine
of the board of directors. in corporation law that a transfer of shares is not valid unless recorded in the
books of the corporation. The SEC En Banc went on to rule that –
In this case, respondents To Chip, Yap and Balila obviously
overlooked the Secretarys Certificate [55] attached to the instant It is not disputed that the transfer of the shares of the group of Dolores
petition, which was executed by the Corporate Secretary of Cebu Potenciano to the Bitanga group has not yet been recorded in the books of the
Bionic. Unequivocally stated therein was the fact that the Board of corporation. Hence, the group of Dolores Potenciano, in whose names those
Directors of Cebu Bionic held a special meeting shares still stand, were the ones entitled to attend and vote at the stockholders’
meeting of the BLTB. This being the case, the Hearing Panel committed grave
8. BLTBC, Inc. v. Bitanga, G.R. No. 137934, August 10, 2011 abuse of discretion in holding otherwise and in concluding that there was no
quorum in said meeting.
For a valid transfer of stocks, there must be strict compliance with the mode of
transfer prescribed by law. The requirements are: (a) There must be delivery of Based on the foregoing premises, the SEC En Banc issued a writ of preliminary
the stock certificate; (b) The certificate must be endorsed by the owner or his injunction against the Bitanga group. In so ruling, the SEC En Banc merely
attorney-in-fact or other persons legally authorized to make the transfer; and exercised its wisdom and competence as a specialized administrative agency
(c) To be valid against third parties, the transfer must be recorded in the books specifically tasked to deal with corporate law issues. We are in full accord with
of the corporation. A deed of assignment of shares without requisite the SEC En Banc on this matter. Indeed, until registration is accomplished, the
endorsement and delivery is only valid between the parties. It does not transfer, though valid between the parties, cannot be effective as against the
necessarily make the transfer effective as against the corporation. corporation. Thus, the unrecorded transferee, the Bitanga group in this case,
Consequently, the petitioners, as mere assignees, cannot enjoy the status of a cannot vote nor be voted for. The purpose of registration, therefore, is two-
stockholder, cannot vote nor be voted for, and will not be entitled to dividends, fold: to enable the transferee to exercise all the rights of a stockholder,
insofar as the assigned shares are concerned. Parenthetically, the private including the right to vote and to be voted for, and to inform the corporation of
respondents cannot, as yet, be deprived of their rights as stockholders, until any change in share ownership so that it can ascertain the persons entitled to the
and unless the issue of ownership and transfer of the shares in question is rights and subject to the liabilities of a stockholder. Until challenged in a proper
resolved with finality. proceeding, a stockholder of record has a right to participate in any meeting; his
vote can be properly counted to determine whether a stockholders’ resolution
The Potencianos, Delfin C. Yorro, and Maya Industries, Inc., entered into a Sale was approved, despite the claim of the alleged transferee. On the other hand, a
and Purchase Agreement, whereby they sold to BMB Property Holdings, Inc., person who has purchased stock, and who desires to be recognized as a
represented by its President, Benjamin Bitanga, their shares of stock in BLTB stockholder for the purpose of voting, must secure such a standing by having
representing 47.98% of the total outstanding capital stock of BLTB. Barely a the transfer recorded on the corporate books. Until the transfer is registered, the
month after the Agreement was executed, Bitanga and Monina Grace Lim were transferee is not a stockholder but an outsider.
elected as new directors.
9. Cosare v. BA Inc., G.R. No. 201298, February 5, 2014
During a meeting of the Board, the newly elected directors scheduled the
annual stockholders’ meeting. Before the scheduled meeting, Michael
Cosare filed a complaint against Broadcom and Dante Arevalo for constructive
dismissal, illegal suspension and monetary claims with the NCR Arbitration RULING: As a rule, the illegal dismissal of an officer or other employee of a
Branch of the NLRC. LA ruled for the respondents but NLRC ruled for Cosare private employer is properly cognizable by the LA Where the complaint for
and declared that there was constructive illegal dismissal. Before the CA, illegal dismissal concerns a corporate officer, however, the controversy falls
Broadcom & Arevalo assail the LA’s jurisdiction over the complaint alleging under the jurisdiction of the Securities and Exchange Commission (SEC),
that since the case concerns an intracorporate controversy, it is the RTC which because the controversy arises out of intra-corporate or partnership relations.
has exclusive jurisdiction pursuant to PD 902-A; hence, the labor complaint
should be dismissed. As basis for their contention that the case involved an The petitioners argue that the power to create corporate offices and to appoint
intracorporate controversy, they allege that Cosare is a stockholder, specifically the individuals to assume the offices was delegated by Matling’s Board of
an incorporator of Broadcom who was assigned 100 shares of stock; he was Directors to its President through By-Law No. V, as amended; and that any
also a corporate officer as he was promoted as AVP for Sales and Head of the office the President created, like the position of the respondent, was as valid
Technical Coordination. While generally, the president, vice-president, and effective a creation as that made by the Board of Directors.
secretary or treasurer are commonly regarded as the principal or executive
officers of a corporation, under Sec. 25 of the Corporation Code and under The respondent counters that Matling’s By-Laws did not list his position as
Broadcom’s By Laws, the Board of Directors of Broadcom is allowed to Vice President for Finance and Administration as one of the corporate offices;
appoint such other officers as it may deem necessary. that Matling’s By-Law No. III listed only four corporate officers, namely:
President, Executive Vice President, Secretary, and Treasurer; 18 that the
ISSUE: Whether there exists an intracorporate controversy corporate offices contemplated in the phrase "and such other officers as may be
provided for in the by-laws" found in Section 25 of the Corporation Code
RULING: There is no intracorporate controversy; hence, LA had jurisdiction should be clearly and expressly stated in the By-Laws.
over the complaint. Cosare is not a corporate officer but merely a regular officer
even if the by-laws empowered the board of directors to create such an office. We agree with respondent. Conformably with Section 25, a position must be
To allow the creation of a corporate officer position by virtue of such enabling expressly mentioned in the By-Laws in order to be considered as a corporate
clause wi result in the circumvention of that constitutionally well-protected office. Thus, the creation of an office pursuant to or under a By-Law enabling
right of every employee to security of tenure. That he is a stockholder is of no provision is not enough to make a position a corporate office.
importance since not all conflicts bet. stockholders and the company are
intracorporate disputes. Cosare, having been constructively dismissed is entitled An "office" is created by the charter of the corporation and the officer is elected
to damages and claims. by the directors or stockholders. On the other hand, an employee occupies no
office and generally is employed not by the action of the directors or
DOCTRINE: stockholders but by the managing officer of the corporation who also
Not all conflicts between the stockholders and the corporation are determines the compensation to be paid to such employee. In this case,
classified as intra-corporate. There are other facts to consider in respondent was appointed vice president for nationwide expansion by Malonzo,
determining whether the dispute involves corporate matters as to consider petitioner’s general manager, not by the board of directors of petitioner. It was
them as intra-corporate controversies.” also Malonzo who determined the compensation package of respondent. Thus,
In determining the existence of an intra-corporate dispute, the status or respondent was an employee, not a "corporate officer."
relationship of the parties AND the nature of the question that is the
subject of the controversy must be taken into account. Moreover, the Board of Directors of Matling could not validly delegate the
CONTROVERSY TEST. Under the nature of the controversy test, power to create a corporate office to the President, in light of Section 25 of the
the incidents of that relationship must also be considered for the purpose Corporation Code requiring the Board of Directors itself to elect the corporate
of ascertaining whether the controversy itself is intra-corporate. The officers. Verily, the power to elect the corporate officers was a discretionary
controversy must not only be rooted in the existence of an intra-corporate power that the law exclusively vested in the Board of Directors, and could not
relationship, but must as well pertain to the enforcement of the parties’ be delegated to subordinate officers or agents.22 The office of Vice President
correlative rights and obligations under the Corporation Code and the for Finance and Administration created by Matling’s President pursuant to By
internal and intra-corporate regulatory rules of the corporation. If the Law No. V was an ordinary, not a corporate, office.
relationship and its incidents are merely incidental to the controversy or if
there will still be conflict even if the relationship does not exist, then NO To emphasize, the power to create new offices and the power to appoint the
intra-corporate controversy exists. officers to occupy them vested by By-Law No. V merely allowed Matling’s
President to create non-corporate offices to be occupied by ordinary employees
10. MICC v. Coros, G.R. No. 157802, October 13, 2010 of Matling. Such powers were incidental to the President’s duties as the
executive head of Matling to assist him in the daily operations of the business.
Ricardo Coros, the Vice President for Finance and Administration of Matling
Industrial was dismissed. On August 10, 2000, he filed a complaint for illegal 11. Esguerra v. HP, Inc., G.R. No. 182571, September 2, 2013
suspension and illegal dismissal against Matling in the NLRC. Matling moved
to dismiss the complaint on the ground of lack of jurisdiction. They allege that Respondent Esguerra filed on December 12, 1989 with the RTC, Malolos,
since Coros is a member of Matling’s Board of Directors and a corporate office, Bulacan, an action to annul the Free Patent in the name of de Guzman.
the issue is an intra-corporate controversy. As such, jurisdiction lies with the Esguerra claimed that he was the owner of the subject land with an approximate
Securities and Exchange Commission (SEC). area of 47,000 square meters. Esguerra learned that the said parcel of land was
being offered for sale by de Guzman to Hi-Cement Corporation (now HOLCIM
Coros, in opposing the motion filed by Matling, alleged that his status as a Philippines, Inc.). He later amended his complaint to impleaded Hi-Cement as a
member of the Board was doubtful since he was not formally elected and he did co-defendant since the latter was hauling marble from the subject land. The
not own a single share of stock. Even assuming that he had been a Director of RTC dismissed Esguerra’s complaint but on appeal, the CA reversed. The
Matling, he had been removed as the Vice President for Finance and Supreme Court in its Decision dated December 27, 2002 affirmed the CA’s
Administration, not as a Director, a fact that the notice of his termination dated decision. After attaining finality, the case was remanded to the RTC for
April 10, 2000 showed. execution.
Now, herein petitioners (heirs of Esguerra), filed an Omnibus Motion with the
Labor Arbiter (LA) ruled in favor of Matling. On appeal, the NLRC reversed RTC, manifesting that the Court’s December 27, 2002 decision has yet to be
the decision of the LA and ruled that the case is cognizable by the LA. Matling executed. HOLCIM filed a motion for reconsideration alleging that it did not
appealed to the CA through a petition for certiorari which the CA dismissed as owe any amount of royalty to the petitioners for the extracted limestone from
well. the subject land. It also filed a Manifestation and Motion for Ocular Inspection
to prove that it did not extract limestone from the subject land. Despite all of
ISSUE: Whether or not Coros was a corporate officer of Matling this, an alias writ of execution and notices of garnishment on several banks
against HOLCIM have been issued by the RTC to cover the payment of purposely provided for petitioner's disqualification and deprived him of his
royalties to petitioner for the former's extraction of limestone, etc. HOLCIM vested right as afore-mentioned, hence the amended by-laws are null and void.
filed a Petition for Certiorari with Urgent Applications for Temporary
Restraining Order and/or Writ of Preliminary Injunction with the CA. The CA ISSUE: Whether SMC’s BoD acted in bad faith in making the amendment
granted the motion. which disqualified Gokongwei from being elected as Director.
ISSUE: Whether the CA gravely erred in not dismissing HOLCIM's petition RULING: NO. SMC is merely protecting its interest from Gokongwei, who
for certiorari on the ground of lack of Board Resolution authorizing the filing of owns companies in direct competition with SMC’s business. Although in the
petition. strict and technical sense, directors of a private corporation are not regarded as
trustees, there cannot be any doubt that their character is that of a fiduciary
RULING: The general rule is that a corporation can only exercise its powers insofar as the corporation and the stockholders as a body are concerned. As
and transact its business through its board of directors and through its officers agents entrusted with the management of the corporation for the collective
and agents when authorized by a board resolution or its bylaws. The power of a benefit of the stockholders, they occupy a fiduciary relation, and in this sense
corporation to sue and be sued is exercised by the board of directors. The the relation is one of trust. It springs from the fact that directors have the
physical acts of the corporation, like the signing of documents, can be control and guidance of corporate affairs and property; hence of the property
performed only by natural persons duly authorized for the purpose by corporate interests of the stockholders. Equity recognizes that stockholders are the
bylaws or by a specific act of the board. Absent the said board resolution, a proprietors of the corporate interests and are ultimately the only beneficiaries
petition may not be given due course. thereof
In the case at bar, HOLCIM attached to its Petition for Certiorari before the CA It is obviously to prevent the creation of an opportunity for an officer or
a Secretary’s Certificate authorizing Mr. Paul M. O’Callaghan (O’Callaghan), director of San Miguel Corporation, who is also the officer or owner of a
its Chief Operating Officer, to nominate, designate and appoint the competing corporation, from taking advantage of the information which he
corporation’s authorized representative in court hearings and conferences and acquires as director to promote his individual or corporate interests to the
the signing of court pleadings. It also attached the Special Power of Attorney prejudice of San Miguel Corporation and its stockholders, that the questioned
dated June 9, 2006, signed by O’Callaghan, appointing Sycip Salazar amendment of the by-laws was made.
Hernandez & Gatmaitan and/or any of its lawyers to represent HOLCIM; and
consequently, the Verification and Certification of Non Forum Shopping signed Certainly, where two corporations are competitive in a substantial sense, it
by the authorized representative. To be sure, HOLCIM, in its Reply filed in the would seem improbable, if not impossible, for the director, if he were to
CA, attached another Secretary’s Certificate, designating and confirming discharge effectively his duty, to satisfy his loyalty to both corporations and
O’Callaghan’s power to authorize Sycip Salazar Hernandez & Gatmaitan place the performance of his corporation duties above his personal concerns.
and/or any of its lawyers to file for and on behalf of HOLCIM, the pertinent
civil and/or criminal actions pending before the RTC. 13. GD Express Worldwide NV v. CA, G.R. No. 136978, May 8, 2009
The foregoing convinces the Court that the CA did not err in admitting Petitioner GD Express Worldwide N.V. (GD Express) is a corporation duly
HOLCIM’s petition before it. HOLCIM attached all the necessary documents organized and existing under the laws of the Netherlands. On 27 September
for the filing of a petition for certiorari before the CA. Indeed, there was no 1990, its predecessor-in-interest, TNT Limited (TNT) entered into a joint
complete failure to attach a Certificate of Non-Forum Shopping. In fact, there venture agreement with Philippine Aerospace Development Corporation
was such a certificate. While the board resolution may not have been attached, (PADC) for the establishment of a domestic corporation as their corporate
HOLCIM complied just the same when it attached the Secretary’s Certificate vehicle to operate as an international air freight carrier. The joint venture
dated July 17, 2006, thus proving that O’Callaghan had the authority from the agreements stipulated that PADC would own 80% of the shares of stock of the
board of directors to appoint the counsel to represent them. The Court corporate vehicle while TNT would own the remaining 20%.
recognizes the compliance made by HOLCIM in good faith since after the
petitioners pointed out the said defect, HOLCIM submitted the Secretary’s The agreements essentially laid down the relationship between TNT and PADC
Certificate dated July 17, 2006, confirming the earlier Secretary’s Certificate and the management, control and existence of the corporation. Also, pursuant to
dated June 9, 2006. the joint venture agreements, PADC and TNT registered with the SEC a
corporation to be known as Air Philippines Corporation (APC).
12. Gokongwei, Jr. v. SEC, G.R. No. L-45911, April 11, 1979
Subsequently, on 11 December 1992, APC amended its articles of incorporation
Gokonwei alleged that on September 18, 1976, individual respondents amended to change its corporate name to Pacific East Asia Cargo Airlines, Inc. (PEAC).
by bylaws of San Miguel Corporation, basing their authority to do so on a On 02 April 1993, TNT transferred all its shares in PEAC to petitioner GD
resolution of the stockholders adopted on March 13, 1961, when the Express. PEAC immediately commenced operations. Herein petitioner Amihan
outstanding capital stock of respondent corporation was only P70,139.740.00, Management Services, Inc. (Amihan), a domestic corporation, was contracted
divided into 5,513,974 common shares at P10.00 per share and 150,000 to undertake the daily operations in PEAC pursuant to the joint venture
preferred shares at P100.00 per share. At the time of the amendment, the agreement.
outstanding and paid up shares totalled 30,127,043, with a total par value of
P301,270,430.00. It was contended that according to section 22 of the Sometime in 1994, the Office of the President mandated the Committee on
Corporation Law and Article VIII of the by-laws of the corporation, the power Privatization to require the Asset Privatization Trust (APT) to dispose of
to amend, modify, repeal or adopt new by-laws may be delegated to the Board PADC’s 80% share in PEAC. Thus, petitioner GD Express and PADC executed
of Directors only by the affirmative vote of stockholders representing not less the Terms of Reference that would govern the disposition of PADC’s equity
than 2/3 of the subscribed and paid up capital stock of the corporation, which comprising 12,800 subscribed shares of stock in PEAC.
2/3 should have been computed on the basis of the capitalization at the time of
the amendment. Since the amendment was based on the 1961 authorization, ISSUE: Whether an intra-corporate dispute is exclusively cognizable by the
petitioner contended that the Board acted without authority and in usurpation of SEC
the power of the stockholders.
RULING: NO. The designation of certain RTC branches to handle specific
It was claimed that prior to the questioned amendment, petitioner had all the cases is nothing new. For instance, pursuant to the provisions of the R.A. No.
qualifications to be a director of respondent corporation, being a substantial 6657 or the Comprehensive Agrarian Reform Law, the Supreme Court has
stockholder thereof; that as a stockholder, petitioner had acquired rights assigned certain RTC branches to hear and decide cases under Sections 56 and
inherent in stock ownership, such as the rights to vote and to be voted upon in 57 of R.A. No. 6657.
the election of directors; and that in amending the by-laws, respondents
The RTC exercising jurisdiction over an intra-corporate dispute can be likened CCDCP Mining Corporation (CDCP Mining), an affiliate of CDCP, obtained
to an RTC exercising its probate jurisdiction or sitting as a special agrarian loans from Marubeni Corporation of Japan (Marubeni). A CDCP official issued
court. The designation of the SCCs as such has not in any way limited their letters of guarantee for the loans although there was no CDCP Board Resolution
jurisdiction to hear and decide cases of all nature, whether civil, criminal or authorizing the issuance of such letters of guarantee. CDCP Mining secured the
special proceedings. Marubeni loans when CDCP and CDCP Mining were still privately owned and
managed.
Incidentally, not all the prayers and reliefs sought by respondent Filchart in
SEC Case No. 08-97-5746 can be characterized as intra-corporate in nature. For In 1983, CDCP’s name was changed to Philippine National Construction
instance, respondent Filchart’s petition does not allege that the cause of action Corporation (PNCC) in order to reflect that the Government already owned
for the nullification of the management contract between PEAC and petitioner 90.3% of PNCC and only 9.70% is under private ownership. Meanwhile, the
Amihan is being instituted as a derivative suit. It is an ordinary action for the Marubeni loans to CDCP Mining remained unpaid.
nullification of a contract, which is cognizable by courts of general jurisdiction.
On 20 October 2000 and 22 November 2000, the PNCC Board of Directors
14. LBP v. Ascot Holdings & Equities, Inc., G.R. No. 175163, October (PNCC Board) passed Board Resolutions admitting PNCC’s liability to
19, 2007 Marubeni. Previously, for two decades the PNCC Board consistently refused to
admit any liability for the Marubeni loans.
After the Philippine Airlines (PAL) was privatized, Land Bank purchased from
the National Government PAL shares. Minority stockholders in PR Holdings In January 2001, Marubeni assigned its entire credit to Radstock Securities
filed a case with the Securities and Exchange Commission (SEC), seeking the Limited (Radstock), a foreign corporation. Radstock immediately sent a notice
distribution of PR Holdings’ shares of stock in PAL to its stockholders in and demand letter to PNCC.
proportion to their equity. Land Bank, along with PNB, DBP, AFP-RSBS and
GSIS, have the so- called put-option to sell their PAL shares of stock to PNCC and Radstock entered into a Compromise Agreement. Under this
respondents and the latter are obligated to buy the same at Five Pesos (P5.00) agreement, PNCC shall pay Radstock the reduced amount of
per share on the sixth year after the effectivity of the Stockholders’ Agreement. P6,185,000,000.00 in full settlement of PNCC’s guarantee of CDCP Mining’s
Instead of honoring the Stockholders' Agreement, respondents filed with the debt allegedly totaling P17,040,843,968.00 (judgment debt as of 31 July 2006).
RTC of Makati a complaint against Land Bank, PNB, DBP, GSIS, AFP-RSBS To satisfy its reduced obligation, PNCC undertakes to (1) "assign to a third
and the Republic of the Philippines, praying that they be released from the party assignee to be designated by Radstock all its rights and interests" to the
obligation to buy the PAL shares of petitioner and other defendants therein at listed real properties of PNCC; (2) issue to Radstock or its assignee common
P5.00 per share, as earlier agreed upon under the Stockholders' Agreement, on shares of the capital stock of PNCC issued at par value which shall comprise
ground of alleged radical change in the conditions prevailing at the time the 20% of the outstanding capital stock of PNCC; and (3) assign to Radstock or its
said agreement was entered and the present. Trial court ruled in favor of the assignee 50% of PNCC’s 6% share, for the next 27 years, in the gross toll
respondents. Trial court denied Land Bank's motion for reconsideration. revenues of the Manila North Tollways Corporation.
Therefrom, Land Bank decided to go to the CA on a petition for review. For the Luis Sison, a stockholder and former PNCC President and Chairman, filed a
purpose, it filed with the CA, a motion for extension of time to file the intended derivative suit questioning the legality of the compromise agreement.
petition for review. The motion was denied by the CA.
ISSUE: Whether Sison’s derivative suit is valid
ISSUE: Whether the filing of a motion for reconsideration before the trial court
toll the reglementary period to appeal the judgment RULING: YES. Sison has legal standing to challenge the Compromise
Agreement. Although there was no allegation that Sison filed the case as a
RULING: No. It is beyond quibbling that the assailed “Judgment” in Civil derivative suit in the name of PNCC, it could be fairly deduced that Sison was
Case was issued by the RTC in the exercise of its special jurisdiction over intra- assailing the Compromise Agreement as a stockholder of PNCC.
corporate controversies under R.A. No. 8799. Civil Case was, therefore,
governed by the Interim Rules of Corporate Rehabilitation and the Interim A derivative action is a suit by a stockholder to enforce a corporate cause of
Rules of Procedure Governing Intra- Corporate Controversies under R.A. No. action. Under the Corporation Code, where a corporation is an injured party, its
8799, as well as A.M. No. 04- 9-07-SC of this Court prescribing the mode of power to sue is lodged with its board of directors or trustees. However, an
appeal from decisions of the RTC in intra-corporate controversies. individual stockholder may file a derivative suit on behalf of the corporation to
protect or vindicate corporate rights whenever the officials of the corporation
Under Section 8(3), Rule 1 of the Interim Rules of Procedure Governing Intra- refuse to sue, or are the ones to be sued, or hold control of the corporation. In
Corporate Controversies Under R.A. No. 8799, motion for new trial, or for such actions, the corporation is the real party-in-interest while the suing
reconsideration of judgment or order, or for re- opening of trial are prohibited stockholder, on behalf of the corporation, is only a nominal party.
pleadings in said cases. Hence, the filing by petitioner of a motion for
reconsideration before the trial court did not toll the reglementary period to In this case, the PNCC Board cannot conceivably be expected to attack the
appeal the judgment via a petition for review under Rule 43 of the 1997 Rules validity of the Compromise Agreement since the PNCC Board itself approved
of Civil Procedure, as amended. the Compromise Agreement. In fact, the PNCC Board steadfastly defends the
Compromise Agreement for allegedly being advantageous to PNCC.
As a consequence, the CA has no more jurisdiction to entertain the petition for
review which Land Bank intended to file before it, much less to grant the
motion for extension of time for the filing thereof. The prohibited motion for
reconsideration filed by the petitioner with the trial court did not suspend the
period to appeal the RTC’s “Judgment”.