National Investment and Development Corp. (NIDC) v.
Aquino
30 June 1988| Ponente, Padilla, J..
FACTS
1. In 1965, the total indebtedness of Batjak amounted
to P 11.9M. As security, Batjak had mortaged its 3
coco-oil processing mills is Davao City, Misamis and
Leyte to Manilabank, Republic Bank and PCI Bank.
Moreover, as it was necessary to place additional
capital to optimize the operation of the mills,
Batjak obtained “financial assistance” from PNB.
2. Per Batjak’s agreement with PNB, the following
happened:
a. NIDC (a PNB subsidiary) invested P 6.7M in
Batjak in the form of preferred shares,
convertible within 5yrs at par into common
stock.
b. The 3 mortgagee banks released in favor of PNB
the mortgages they held; Batjak also executed
first mortgages in favor of PNB
c. PNB granted Batjak an export-advance line of P
3M, later increased to P 5M.
d. A voting trust agreement (VTA) was executed in
favor of PNB by the stockholders representing
60% of the outstanding paid-up and subscribed
shares of Batjak. (The VTA was for a period of
5yrs, subject to renegotiation)
4. In 1965, as Batjak was insolvent, PNB / NIDC
foreclosed on the 3 mills. Subsequently, ownership
was consolidated in NIDC.
5. In 1970, Batjak wrote to NIDC inquiring if it was
interested in a renegotiation. Having received no
reply, it wrote another letter informing NIDC that it
(Batjak) would safely assume that NIDC was no
longer interested. It then sent a third letter asking
for a complete accounting of the assets, properties,
management and operation of Batjak, preparatory
to the turn-over and transfer of the shares covered
by the VTA. NIDC replied and refused to comply.
6. NIDC replied and refused to comply.
7. Batjak sued for mandamus. Batjak also filed a
petition for receivership of property / assets.
8. NIDC files a motion to dismiss; denied.
Subsequentky, the CFI judge granted the petition
for receivership, appointing 3 receivers.
ISSUES
1. WON the denial of the motion to dismiss was proper.
NO.
2. WON the grant of receivership was proper. NO.
HELD / RATIO:
I. Action must be dismissed
1. PNB’s / NIDC’s basis for seeking dismissal:
a. CFI has no jurisdiction
b. Venue is improperly laid
c. Batjak has no capacity to sue
d. Batjak has no cause of action
2. Re: Jurisdiction:
a. Rule: The jurisdiction of a CGI to issue an
injunction is confined to the province where
the land in controversy is located
b. In this case: the subject properties, the 3 oil
mills are located in 3 separate provinces
(Davao, Misamis and Leyte)
3. Re: Venue.
- Should have been filed where the oild mills are
located
4. Re: capacity to sue
- The parties to the VTA are NIDC and the
stockholders representing the 60% share in
Batjak
- Rule 3, Sec 2: Every action must be prosecuted
and defended in the name of the real party in
interest
- The real party in interest here is thus the
stockhplders of Batjak, not Batjak itself.
5. Re: Cause of action
- When is mandamus available: When there is a
clear legal right sought to be enforced.
- But here: Batjak seeks to reclaim the 3 oil mills
which were already validly obtained by NIDC by
way of foreclosure; hence Batjak has no clear
legal right.
II. Receivership improperly granted
1. When is receivership allowed: A receiver may be
appointed when it appears that the party applying
has an interest in the subject property, ie, an
interest that is present and existing.
- Here, NIDC is the owner of the mills
∴ Batjak no longer has any right / interest
2. But Batjak offers the following theory: under the
VTA, NIDC was constituted trustee of the assets,
 operations and management of Batjak; accordingly,
with the expiration of the VTA, NIDC should
relinquish possession of the subject properties (oil
mills) in favor of Batjak.

3. SC refutes Batjak’s theory: Per paragraphs 1 and 9 of

the VTA, what was assigned to NIDC was the power
to vote the shares of stock representing 60%
shareholding in Batjak, included was the authority
to execute any agreement that may be necessary to
express consent by the stockholders pertaining to
said 60%. However, nowehere in said VTA does it
appear that properties were ceded to NIDC.

4. That no properties were ceded is buttressed by par.9

of the VTA (termination clause), which provides
that on expiration, what are to be returned to
Batjak are only the certificates of stock
representing 60% shareholding subject of the VTA.

5. In any event, per Sec. 59, par1 of the Corp.Code a

voting trust transfers only voting or other rights
pertaining to the shares subject of the
agreement, or control over the stock.

6. That PNB/NIDC ended up in possession of the mills is

because of its capacity as foreclosing creditor and
not as trustee per the VTA.

DOCTRINE:
In bold letters.