Olotayan Realty & Development Corporation, et al. vs. Imelda Pilapil-Geiling, et al.

[SEC-SICD * CASE NO. 2446. March 6, 1985.] OLOTAYAN REALTY & DEVELOPMENT CORPORATION, EDWARD GO, ET AL. , petitioners , vs . IMELDA PILAPIL-GEILING, MARILEN RAMIRO, ET AL. , respondents . D E C I S I O N Petitioners, by this petition filed on May 4, 1983, pray that respondents be restrained from representing themselves as officers/directors of petitioner corporation; that respondents be required to surrender and turn over the corporate records and books of the corporation; and that they (petitioners) be recognized as the duly elected directors/officers of petitioner corporation. In addition, petitioners ask that respondents be ordered to pay damages. LLpr In their Motion to Dismiss, respondents claim that the individual petitioners are not stockholders of record of petitioner corporation. Hence, the controversy is not an intra-corporate controversy and is, therefore, outside the jurisdiction of this Commission. The basic issue involved in the case is allegedly the ownership of the shares of stock in question over which the regular court has jurisdiction. During the series of hearings on the motion to dismiss, respondents presented substantially all the available records and books of Olotayan Realty and Development Corporation which established that the said corporation was organized by a German national, Eric Geiling, and his Filipina wife, Imelda Pilapil, with the former holding 30% of the outstanding capital stock while the latter, together with three other Filipinos holding nominal shares, holding 70%, apparently to meet the nationality requirement since the corporation was primarily intended to acquire real properties in the Philippines. The corporate records, particularly Exhibits H-3 and H-4 however, show that Eric Geiling, obtained practically full control of the corporation by virtue of a special power of attorney executed by his wife, Imelda Pilapil, giving him the right to alienate or encumber all her shares. The main thrust of the petition is to enjoin the respondents from representing themselves as the officers/directors of Olotayan Realty Development Corporation. However, the motion to dismiss filed by respondents put at issue the personality of the petitioners to file the present case before this Commission considering the allegation of respondents that petitioners are not stockholders of record of the corporation and, therefore, the controversy is not intra-corporate in nature and as such, the Commission has no jurisdiction over it. We find merit in respondents' position. While it is true that the petition seems to focus on causes of action arising from a seeming intra-corporate controversy, the fact remains that as pointed out in the motion to dismiss under consideration, the basic issue in this case is the ownership of the shares belonging to respondent Imelda Pilapil which were subsequently assigned by her husband to the other petitioners herein by virtue of a special power of attorney which allegedly had already been revoked when the assignment was made. Anyway, the legality of said assignment is now one of the issues raised and litigated in Civil Case No. 83-17701, entitled "Imelda Pilapil-Geiling, et al. vs. Edward Go and Catalina Mallari (Exh. "Y") pending before the Regional Trial Court of Manila. cdll In one case, the Commission had occasion to rule on whether or not questions of ownership of shares fall within the jurisdiction of this Commission. Thus, the Commission stated that "Pertinent to this query is Section 5 of PD 902-A which provides that the Securities and Exchange Commission shall have original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any and/or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity." "From this legal provision, we find that among the controversies enumerated in this Section 5 (b) which this Commission has original and exclusive jurisdiction to hear and decide are those between and among stockholders. Controversies between confirmed stockholders on the one hand and persons claiming ownership of stock of the former or registered in the name of the former in the corporate books, on the other, are not included. Controversies between and among stockholders presuppose that the adverse parties are stockholders of record. It would be unduly stretching matters if persons who are asserting ownership of shares adverse to that of the registered stockholders were to be included within the concept of the term 'stockholders.'" (Emphasis supplied) Premised on the foregoing, the instant case is hereby DISMISSED for lack of jurisdiction the question presented herein being primarily and ultimately one involving the ownership of shares of the corporation which issue is now being litigated in the regular court. No pronouncement as to costs. LLpr (SGD.) RAQUEL C. CLEMENTE Hearing Officer