THIRD DIVISION
[G.R. No. 205460. July 5, 2017.]
ROUND PEAK REALTY AND DEVELOPMENT CORPORATION, petitioner,vs. LOLITA M. PAULINO, VIOLINDA B. ROSALES, MA. LUISA P. PESTAÑO, ROLANDO F. BAYBAY, LOURDES DEL ROSARIO-ILACAD, ALPHA METALCRAFTS, INC., CARMEN K. DEL ROSARIO, IRENEA J. LAMZON, AND DYNAHOMES DEVELOPMENT CORPORATION, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedJuly 5, 2017which reads as follows:
"G.R. No. 205460 (Round Peak Realty and Development Corporation vs. Lolita M. Paulino, Violinda B. Rosales, Ma. Luisa P. Pestaño, Rolando F. Baybay, Lourdes Del Rosario-Ilacad, Alpha Metalcrafts, Inc., Carmen K. Del Rosario, Irenea J. Lamzon, and Dynahomes Development Corporation). — Through this Petition for Review 1 under Rule 45, petitioner Round Peak Realty and Development Corporation, as represented by its alleged "real" President Victor T. Yu (Yu), 2 assails the Decision 3 dated May 31, 2012 and Resolution 4 dated January 18, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 117893. The CA affirmed the Order 5 dated January 13, 2011 of the Securities and Exchange Commission (SEC) en banc dismissing petitioner's complaint to expunge alleged spurious corporate documents filed by herein respondents for lack of jurisdiction.
The Antecedent Facts
Petitioner is a domestic corporation duly registered with the SEC on February 11, 1991 under SEC Registration No. 186827. 6 Its original incorporators were Simon L. Ongjoco (Ongjoco), Enrico G. Maclang (Maclang), Donato C. Madamba (Madamba), Hector C. Fajardo (Fajardo) and Juan N. Feliciano (Feliciano). 7
However, this is only as far as the undisputed and established facts reach. What follows are a different version and set of documents which tend to give the impression that the shares of the above original incorporators were transferred to two different groups, i.e., the group of Yu who alleges to be the "real" stockholders and officers who were authorized to file the present petition in the name of the corporation, and the group of herein respondent Violinda B. Rosales (Rosales).
The group of Yu alleges that under separate Deeds of Assignment, the shares of Ongjoco were transferred to Johnny C. Subaldo (Subaldo); 8 Maclang to Sally T. Jao (Jao); 9 Madamba to George H. Ong (Ong); 10 Fajardo to Stewart Lim (Lim); 11 and Feliciano to Fernando C. Yeo (Yeo). 12 Later, Lim transferred his shares to Yu.
However, under another set of separate unnotarized Deeds of Assignment, the shares of Ongjoco appear to have been transferred to Rosales; 13 Maclang to Carmel K. Del Rosario; 14 Madamba to Lolita M. Paulino; 15 Fajardo to Luisa Pestano; 16 and Feliciano to Vicky M. Manalac. 17
On May 26, 2003, counsel for petitioner, representing Yu's group, wrote a letter 18 to the Company Registration and Monitoring Department (CRMD) of the SEC claiming that petitioner's lawful stockholders and officers are Yu, Yeo, Subaldo, Ong and Jao. In said letter also, petitioner claims that herein respondents Carmen K. Del Rosario (Del Rosario), Ma. Luisa P. Pestano (Pestano), Lolita M. Paulino (Paulino), Rosales and Rolando F. Baybay (Baybay) falsely claim and represent themselves as petitioner's stockholders, directors and officers. CAIHTE
Yu's group further divulged that respondents have submitted the following documents, which it claims to be simulated, bogus and spurious, to the SEC:
1. Special Power of Attorney in favor of Ma. Luisa Pestano for the sale of Round Peak's property in Bacoor, Cavite as filed on 8 May 2000. x x x
2. Director's Certificate appointing Ma. Luisa Pestano for the sale of Round Peak's property in Bacoor, Cavite as filed on 8 May 2000. x x x
3. Addendum to the Special Power of Attorney, which appointed Ma. Luisa Pestano for the sale of Round Peak's property in Bacoor, Cavite as filed on 22 May 2000. x x x
4. Letter Request dated 31 May 2001 for the issuance of shares from unsubscribed portion of the authorized capital stock filed on [sic] July 2001. x x x
5. List of Stockholders as of 31 December 2000 filed on [sic] July 2001. x x x
6. General Information Statements for fiscal year ending 2000 and filed on [sic] July 2001. x x x
7. Excerpts of the Minutes of Board of Directors is held on 16 July 2001 and filed on [sic] July 2001 relative [to] the appointment of Ma. Luisa Pestano to sell its property located at Bacoor Cavite. x x x
8. Secretary's Certificate dated 16 July 2001 whereby Mesdames del Rosario, Pestano and Rosales were appointed bank signatories for the corporation's bank account at Equitable PCI Bank Salcedo-Alfaro Branch, as well as other matters filed on [sic] July 2001. x x x
9. Excerpts of the Minutes of Board of Directors held on 1 December 2001 and filed on [sic] January 2002 relative [to] the appionment of Judge Jesus B. Mupas to sell and/or mortgage its property covered by TCT No. 390534 located at Bacoor, Cavite. x x x
10. Secretary's Certificate dated 20 February 2002 whereby Ms. Violinda Rosales was appointed representative of the corporation to initiate the correction of the transfer certificate of title of its property located at Bacoor Cavite. x x x
11. General Information Sheet for Fiscal Year ending 31 December 2001 filed on [sic] July 2002. x x x 19
Yu's group prayed that the above documents be stricken off the records of the SEC. 20
The SEC initially denied the request as the same involves a "litigious or criminal case or intra-corporate matter." 21 They then moved for reconsideration and additionally requested that the SEC conduct internal investigation for the purpose of sanctioning and penalizing insiders who may be responsible for the fraud. 22 They argued, among others, that there is no intra-corporate dispute as respondents are not stockholders and are complete strangers to the corporation. 23
In response, the SEC directed the group of Yu to bring its stock and transfer book as well as certified copies of the entries and other documents showing the right, interest, participation or ownership of shares, including any change therein, of its respective stakeholders. 24 They complied by submitting copies of its SEC Certificate of Registration, Articles of Incorporation, By-Laws, Stock and Transfer book, Deeds of Assignment from the original incorporators to the present stockholders, Minutes of the Meeting for the years 1991, 1992 and 1993, General Information Sheet for 2003, Deed of Absolute Sale covering the parcel of land in Bacoor, Cavite, Transfer Certificate of Title No. T-60620 and Secretary's Certificate authorizing its President to purchase the Bacoor property. 25
Hearings were thereafter held wherein the group of Yu presented its evidence consisting of copies of its corporate filings as well as copies of documents filed by respondents with the SEC. 26 Respondents, on the other hand, failed to appear on the scheduled presentation, of their evidence and to submit the required corporate documents. 27
The Ruling of the SEC en banc
On January 13, 2011, the SEC en banc issued its Order 28 dismissing to complaint for lack of jurisdiction. It held that the cancellation of records, as prayed for by the group of Yu, is predicated on the question as to who are the lawful stockholders of the corporation, which is an intra-corporate dispute that needs to be resolved by the regular courts. It further held that the determination of which set of documents should be expunged from the records of the SEC requires the determination of the authenticity and admissibility of the documents. The SEC opined that such appreciation of evidence falls within the competency of regular courts. Finally, the SEC dismissed petitioner's request for administrative investigation for failure to specifically identify the person or persons complained of. DETACa
The SEC en banc accordingly disposed:
WHEREFORE, foregoing premises considered, the instant complaint is hereby DISMISSED for lack of merit.
SO ORDERED. 29
The Ruling of the CA
Finding the SEC en banc's Order unacceptable, the group of Yu promptly elevated the case to the CA. The CA, however, dismissed the petition and held that the SEC en banc correctly determined that the complaint involves an intra-corporate controversy over which regular courts enjoy jurisdiction. In disposal, the CA stated:
Accordingly, the Petition for Review is hereby DISMISSED.
SO ORDERED. 30
Their motion for reconsideration suffered the same rejection from the CA. Hence, resort to the instant petition filed under the corporation's name through its alleged authorized President, Yu.
The Issue
The lone issue posed in this petition is whether the complaint to expunge the corporate filings made by respondents from the records of the SEC constitutes an intra-corporate controversy. A resolution of this issue is in turn determinative of which between the SEC and the regular courts has jurisdiction over petitioner's complaint.
The Ruling of the Court
We deny the petition.
Jurisdiction over the subject matter is conferred by law. Republic Act (R.A.) No. 8799 31 conferred jurisdiction over intra-corporate controversies on courts of genera jurisdiction or RTCs. 32 Thus, as long as the nature of the controversy is intra-corporate, the designated RTCs have the authority to exercise jurisdiction.
To determine which are intra-corporate controversies, R.A. No. 8799 refers to Section 5 of Presidential Decree No. 902-A, 33 as follows:
a) Devices or schemes employed by, or any act of, the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder, partners, members of associations or organizations registered with the Commission;
b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any 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; and
c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.
In turn, Rule 1 of the Interim Rules of Procedure Governing Intra-corporate Controversies reflects the jurisdiction spelled under R.A. No. 8799, thus:
SECTION 1. (a) Cases Covered — These Rules shall govern the procedure to be observed in civil cases involving the following:
(1) Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association;
(2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively;
(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations;
(4) Derivative suits; and
(5) Inspection of corporate books.
Further, case law consistently instructs that an intra-corporate dispute is one that arises from intra-corporate relations; relationships between or among stockholders; or the relationships between the stockholders and the corporation. 34
However, in order to limit the broad definition of intra-corporate dispute, the Court has developed a standard approach in classifying what constitutes an intra-corporate controversy by applying the so-called relationship test and the controversy test. 35
In Union Glass & Container Corp., et al. v. SEC, et al., 36 the Court declared that the relationship test determines whether the relationship is: "[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 in so far as its franchise, permit or license to operate is concerned; and [d] among the stockholders, partners or associates themselves."
The Court nevertheless later on held that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy. Otherwise stated, relationship alone does not ipso facto make the dispute intra-corporate. The incidents of that relationship must be considered to ascertain whether the controversy itself is intra-corporate. 37
Thus, under the controversy test, the dispute must be rooted in the existence of an intra-corporate relationship, and must refer to the enforcement of the parties' correlative rights and obligations under the Corporation Code, as well as the internal and intra-corporate regulatory rules of the corporation, 38 in order to be an intra-corporate dispute. These are essentially determined through the allegations in the complaint. Fundamental is the rule that the allegations in the complaint and the reliefs prayed for are the determinants of the nature of the action and of which court has jurisdiction over the matter. 39
Guided by the foregoing tests, we examined the allegations in the letter-complaint as follows:
First, it is therein alleged that the corporation's lawful stockholders and officers are Yu. Yeo, Subaldo, Ong and Jao; second, that herein respondents Del Rosario, Pestano, Paulino, Rosales and Baybay, being total strangers to the corporation, falsely claim and represent themselves as petitioner's stockholders, directors and officers; third, that respondents submitted several fraudulent corporate documents before the SEC purporting to be genuine corporate filings of petitioner; and fourth, that said bogus and spurious documents were submitted by respondents for purposes of selling petitioner's corporate property located in Bacoor, Cavite. By way of relief, the group of Yu asks that the SEC expunge the earlier enumerated corporate documents submitted by respondents. aDSIHc
Essentially then, what the "real" stockholders/officers of the corporation dispute are the status of the respondents as stockholders and/or officers of the corporation and their right (or the lack thereof), to file such corporate documents. The group of Yu insists that no intra-corporate controversy exists because respondents are in fact not stockholders and/or officers and are mere strangers to the corporation, while respondents maintain and insist on their status and right as such. Respondents, in fact, assail the authority of the group of Yu to file the present petition on behalf of the corporation. Clearly, the determination of who, between the alleged "real" stockholder/officers and respondents, are the rightful stockholder and/or officers of the corporation involves an intra-corporate controversy requiring the submission of the parties' respective evidence. In fact, the SEC cannot begin to ascertain which of the two sets of corporate documents filed before it should be expunged without first determining who are the real stockholders and/or officers of the corporation.
Examining the case before us in relation to the jurisprudentially established criteria, the Court finds and so holds that the case is essentially an intra-corporate dispute. It obviously arose from the intra-corporate relations between the parties, and the questions involved pertain to their rights and obligations under the Corporation Code and matters relating to the regulation of the corporation.
With the elements of intra-corporate controversy being present in this case, we thus hold that the complaint to expunge the alleged fraudulent and spurious documents is an intra-corporate dispute, falling under the competent jurisdiction of the RTCs.
WHEREFORE, the petition is DISMISSED. The Decision dated May 31, 2012 and Resolution dated January 18, 2013 of the Court of Appeals in CA-G.R. SP No. 117893 affirming the Order dated January 13, 2011 of the Securities and Exchange Commission en banc which dismissed the complaint to expunge alleged spurious corporate documents filed by herein respondents for lack of jurisdiction are AFFIRMED.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 12-43.
2.Id. at 36-38.
3. Penned by Associate Justice Jane Aurora C. Lantion with Associate Justices Isaias P. Dicdican and Florito S. Macalino concurring; id. at 45-58.
4.Id. at 60-61.
5.Id. at 171-175.
6.Id. at 62.
7.Id. at 66.
8.Id. at 116.
9.Id. at 114.
10.Id. at 116.
11.Id. at 118.
12.Id. at 117.
13.Id. at 140-141.
14.Id. at 136-137.
15.Id. at 138-139.
16.Id. at 144-145.
17.Id. at142-143.
18.Id. at 146.
19.Id. at 148-149.
20.Id.
21.Id. at 150.
22.Id. at 151-152.
23.Id.
24.Id. at 154.
25.Id. at 157-159.
26.Id. at 60-165.
27.Id. at 169.
28.Id. at 171-175.
29.Id. at 174-175.
30.Id. at 57.
31. The Securities Regulation Code.
32. SECTION 5. Powers and Functions of the Commission. — 5.1 x x x
5.2. The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. x x x
33. The SEC Reorganization Act.
34.Reyes v. Zenith Insurance Corp., G.R. No. 165744, August 11, 2008.
35.Id., Speed Distributing Corp. v. Court of Appeals, 469 Phil. 739, 758-759 (2004).
36. 211 Phil. 222, 230-231 (1983).
37.DMRC Enterprises v. Este Del Sol Mountain Reserve, Inc., 217 Phil. 280, 299 (1984).
38.Reyes v. Regional Trial Court of Makati, Br.142, G.R. No. 165744, August 11, 2008, 561 SCRA 593, 611.
39.Del Rosario v. Gerry Roxas Foundation, Inc., G.R. No. 170575, June 8, 2011, 651 SCRA 414, 416-417, citing Spouses Huguete v. Spouses Embudo, 453 Phil. 170, 176-177 (2003); and Co Tiamco v. Diaz, 75 Phil. 672, 683-684 (1946).