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168639, January 29, 2007 jurisdiction over all cases enumerated in Section 5 of Presidential
Facts: On July 27, 1998, the Securities and Exchange Commission Decree No. 902-A is hereby transferred to the Courts of general
(SEC) approved the amendment of Strategic Alliance Development jurisdiction or the appropriate Regional Trial Court, Provided, That
Corporation’s (STRADEC) Articles of Incorporation authorizing the the Supreme Court in the exercise of its authority may designate the
change of its principal office from Pasig City Pangasinan. On March Regional Trial Court branches that shall exercise jurisdiction over
1, 2004, STRADEC held its annual stockholders meeting in Pasig City these cases. The Commission shall retain jurisdiction over pending
its office as indicated in the notices sent to the stockholders. Herein cases involving intra- corporate disputes submitted for final
petitioners and respondents were elected members of the Board of resolution which should be resolved within one (1) year from the
Directors. Five months thereafter, respondents filed with the RTC in enactment of this Code. The Commission shall retain jurisdiction
Pangasinan a complaint against STRADEC. The complaint seeks for over pending suspension of payments/rehabilitation cases filed as
the nullification of the election on the ground of improper venue, of 30 June 2000 until finally disposed. The RTC has the power to
pursuant to Section 51 of the Corporation Code, next is the hear and decide the intra-corporate controversy of the parties
nullification of all subsequent transactions conducted by the elected herein. Concomitant to said power is the authority to issue orders
directors and lastly that a special stockholder’s meeting be held necessary or incidental to the carrying out of the powers expressly
once again. The RTC under pairing Judge Emuslan issued an Order granted to it. Thus, the RTC may, in appropriate cases, order the
for granting respondents application for preliminary injunction holding of a special meeting of stockholders or members of a
ordering (1) the holding of a special stockholders meeting of corporation involving an intra-corporate dispute under its
STRADEC on December 10, 2004 in the principal office of the supervision.
corporation in Bayambang, Pangasinan; and (2) the turn-over by
petitioner Bonifacio Sumbilla to the court of the duplicate key of the
safety deposit box in Export Industry Bank, Shaw Boulevard, Pasig
City where the original Stock and Transfer Book of STRADEC was
deposited. The plaintiff filed with the Court of Appeals (CA) a
Petition for Certiorari. CA dismissed such petition and upheld the
jurisdiction of the RTC.

Issue: Whether the RTC has the power to call a special stockholder’s
meeting involving an intra-corporate controversy?

Ruling: Yes. Upon the enactment of R.A. No. 8799, otherwise known
as The Securities Regulation Code which took effect on August 8,
2000, the jurisdiction of the SEC over intra- corporate controversies
and other cases enumerated in Section 5 of P.D. No. 902-A has been
transferred to the courts of general jurisdiction, or the appropriate
RTC. Section 5.2 of R.A. No. 8799 provides: 5.2. The Commissions
3. Roman Vs. Sec course;

MENDOZA, J.: (c) For the purpose of acquiring the Properties, to obtain loans from ALI for
the purpose of acquiring the Montalban properties up to an aggregate
This petition[1] for review on certiorari under Rule 45 of the Rules of Court amount of One Hundred Fifty Million (P150,000,000.00) to be secured by (a)
seeks to review and reverse the November 30, 2010 Decision[2] and the real estate mortgage on the properties; and (b) assignment of the proceeds
March 15, 2011 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. to be paid in connection with the Joint Venture for the development of the
101613, which dismissed the petition for prohibition filed by petitioners first nine (9) holes of the existing golf course of the corporation and under
Pablo B. Roman, Jr. (Roman) and Atty. Matias V. Defensor (Defensor), the Deed of Absolute Sale, dated April 10, 1992, between ALI and the
President and Corporate Secretary, respectively, of Capitol Hills Golf and Corporation covering the sale of the former driving range of the corporation
Country Club, Inc., (Capitol). The said petition before the CA questioned the to ALI under such terms, payment scheme and conditions as the President
jurisdiction of respondent Securities and Exchange Commission (SEC) for may deem reasonable and necessary under the circumstances;
acting upon the letter-complaint,[4] dated May 8, 2007, filed by the minority
shareholders of Capitol and for issuing its December 5, 2007 Order[5] (d) To (1) negotiate, agree to terms of, execute, sign and deliver the
creating the Management Committee (MANCOM) tasked to oversee the following agreements: (a) A letter-agreement with ALI embodying the
affairs of the said company. foregoing terms; (b) A deed of sale for the purchase of the Properties; (c)
Joint Venture Agreement with ALI covering the first nine (9) holes of the
Factual Antecedents existing golf course of the corporation; (d) Promissory Notes, real estate
mortgages and assignment agreements in favor of ALI; and (e) such other
On June 6, 2007, private respondents Atty. Narciso T. Atienza, Eusebio A. documents and agreements related to or in connection with the
Abaquin, Atty. Clodualdo C. De Jesus, Sr., Atty. Clodualdo Antonio R. De transactions contemplated in this resolution and (2) to do any and all acts
Jesus, Jr., Atty. Ireneo T. Aguirre, Jr., Sunday O. Pineda, Porfirio M. Florez, necessary and appropriate to carry this resolution into effect.[6]
and Atty. Zosimo Padro, Jr. (private respondents) filed a verified letter- It was further alleged that Roman also asked the Board to pass a resolution
complaint against the petitioners before the SEC. authorizing a third-party, Pacific Asia Capital Corporation (Pacific Asia), to
receive from Ayala Land, Inc. (ALI) the proceeds of the loan, or any portion
In their letter-complaint, private respondents alleged that on April 23, 1996, thereof, and ALI to cause the release of the proceeds of the aforesaid loan,
a Special Board of Directors Meeting was held and, thereafter, a resolution or any portion thereof, to Pacific Asia, and that any release by ALI and
was passed by the Board of Directors of Capitol (Board) authorizing Roman, receipt by Pacific Asia be deemed a valid release and receipt of such
as its President: amount;[7] that the issued resolutions were erroneously made;[8] that in
(a) To acquire for and in behalf of the corporation four (4) parcels of land evident bad faith, Roman, as President of Capitol, never informed the Board
located at Montalban, Rizal xxx for a consideration of ONE HUNDRED FIFTY that, at the time he made the proposals and before the resolutions were
PESOS (P150.00) per sq. m. xxx; issued, ALI had already made substantial initial cash advance in favor of
Capitol but directly payable to Pacific Asia;[9] that ALI had no legal basis to
(b) To enter for and in behalf of the corporation [Capitol] into a Joint make cash advances as Roman had no authority yet to enter into any
Venture Agreement with ALI [Ayala Land Inc.] for the purpose of (1) having agreement with ALI; that part of the representations made by Roman was
ALI develop and market the area occupied by the first nine (9) holes of the that ALI would not commence the conversion of the area occupied by the
existing golf course of the corporation into saleable lots in consideration of first nine (9) holes of the existing golf course of Capitol in Old Balara,
the payment to the corporation of a forty percent (40%) share in the Quezon City, until such time that one (1) 18 hole golf course of the promised
proceeds of the sale of such lots (NET OF TAXES AND DISCOUNTS); and (2) two (2) championship golf courses in Macabud, Montalban, Rizal, would
granting to ALI the right to develop the Properties into a first class golf have been finished and playable; and that after more than ten (10) long
years, no golf course existed or was even under construction in Macabud, Golf and Country Club, preserve its assets and protect the interests of the
Montalban, Rizal, and yet the Old Balara property had already been minority stockholders and other stakeholders:
converted and developed into a residential subdivision called the Ayala Oversee and supervise the activities of the Club upon turn over thereof
Hillside Estate.[10] to the Committee;
Take custody of all the assets and properties owned or held by the Club
To private respondents, all these were irregularities and anomalies under management;
amounting to fraud and misrepresentation that prompted them to ask the Oversee the performance of the duties and responsibilities of the
SEC to investigate the Board and to order the constitution of the MANCOM (c) management and board of directors of the Club, in order to preserve its
to temporarily oversee the affairs of Capitol. assets and properties; and
To perform or discharge the powers and functions of the Management
The said complaint was then docketed as SEC Case No. 169, series of 2007. Committee under Sec. 5 of Rule 9 of the Interim Rules of Procedure
Governing Intra-Corporate Controversies under R.A. 8799, insofar as
In its letter[11] to Roman, dated July 3, 2007, the SEC informed him of the may be applicable.
verified complaint and gave him 15 days upon receipt to file his answer to The above notwithstanding, the incumbent Board of Directors and Officers
the said complaint. shall continue to discharge their functions relative to the day to day
operations of the Club and shall submit a report to the Management
In their Answer,[12] the petitioners invoked the SEC's lack of jurisdiction Committee at such time and frequency as it may determine.
claiming that the complaint of private respondents involved an intra-
corporate controversy. Accordingly, they argued that under the Securities SO ORDERED.[14]
Regulation Code (SRC), jurisdiction over such intra-corporate controversies The MANCOM, in turn, notified the petitioners of its assumption of duties. It
should be with the Regional Trial Court (RTC) acting as special commercial also ordered that relevant documents of Capitol be made available to it.
Subsequently, the petitioners questioned the December 5, 2007 SEC order
In its December 5, 2007 Order,[13] the SEC, after finding merit in the before the CA via a petition for prohibition under Rule 65 of the Rules of
arguments presented in the complaint, composed the membership of the Court. It asked the CA to enjoin the SEC from conducting further
MANCOM pursuant to its authority under Section 5 of the SRC and proceedings and to dismiss the case and, in addition, prayed for the
Presidential Decree (P.D.) No. 902-A. Thus: issuance of a temporary restraining order and/or writ of preliminary
Pursuant to Section 5 of the Securities Regulation Code and Presidential injunction.
Decree No. 902-A, as amended, and finding merit in the arguments
presented for the creation of a Management Committee (Mancom) for The Ruling of the CA
Capitol Hills Golf and country Club, as prayed for by the Petitioners in their
letter dated May 08, 2007, the following are hereby designated to compose In its November 30, 2010 decision,[15] the CA dismissed the petition stating
the Mancom of the aforenamed corporation: that while the letter-complaint filed by private respondents raised intra-
Atty. Franklin I. Cueto - Chairman corporate matters, the case did not necessarily involve a controversy arising
Atty. Noel Y. Artiza - Member purely out of intra-corporate relations so as to deprive the SEC of its
Mr. Manuel Baldeo, Jr. - Member jurisdiction. The CA pointed out that the said letter-complaint was seeking
to perform the following duties and functions, for a period of one (1) month that the SEC investigate alleged irregularities committed by the petitioners
from the date of receipt of this Order, and until further Orders from the which, if found true, would constitute serious violations of the SRC and the
Commission, to prevent the paralyzation of the operations of Capitol Hills pertinent rules and regulations.[16] Thus, the CA concluded that private
respondents were merely seeking the administrative intervention of the SEC
on a matter within its competence. and that as correctly appreciated by the CA, the letter-complaint readily
showed that it was an invocation for the SEC to exercise its mandated
The CA agreed with the Office of the Solicitor General (OSG), representing power/authority by conducting an investigation on the perceived
the SEC, that the creation of the MANCOM was authorized under SEC irregularities and fraudulent transactions allegedly committed by the
Memorandum Circular (MC) No. 11, Series of 2003. The said memorandum petitioners which, if found to be true, would constitute serious violations of
stated that the SEC had the power "to do any and all acts to carry out the the SRC and its rules and regulations. Private respondents further argued
effective implementation of the laws it is mandated to enforce, that is, that the creation of the MANCOM was justified under SEC-MC No. 11, Series
constitute a management committee; appoint receivers, issue cease and of 2003.
desist orders to prevent fraud or injury to the public; and such other
measures to carry out its role as a regulator."[17] The petitioners failed to file a reply despite the Court's several notices. In
the Manifestation,[22] dated April 20, 2015, their lawyer[23] explained that
In brief, the CA affirmed the power of the SEC to investigate and constitute the petitioners had not been responding to calls or other communication
the MANCOM because such actions were pursuant to the administrative, after Capitol was taken over by ALI sometime in the middle of 2011.
supervisory and oversight powers of the SEC over Capitol. According to the
CA, no grave abuse of discretion could be attributed to the SEC. Hence, the The Court's Ruling
petition was dismissed.[18]
The CA ruled in the negative on both scores and this Court agrees for the
The petitioners moved for reconsideration, but their motion was denied by reasons discussed hereinafter.
the CA in its March 15, 2011 resolution.
On SEC's authority to take cognizance of the letter-complaint
Hence, this petition.
ISSUE/S Under the SRC, jurisdiction on matters stated under Section 5 of P.D. No.
902-A, which was originally vested in the SEC, has already been transferred
WAS TAKING COGNIZANCE OF THE LETTER- COMPLAINT FILED BY THE to the RTC acting as a special commercial court. Despite the said transfer,
(1) however, the SEC still retains sufficient powers to justify its assumption of
WAS THE SEC ORDER CREATING THE MANCOM ISSUED IN EXCESS OF jurisdiction over matters concerning its supervisory, administrative and
(2) regulatory functions. In SEC v. Subic Bay Golf and Country Club, Inc. (SBGCCI)
In its Comment,[19] the SEC submitted that it correctly took cognizance of and Universal International Group Development Corporation (UIGDC),[24] for
the subject letter-complaint and appointed the MANCOM to temporarily instance, the Court affirmed the SEC's assumption of jurisdiction over a
oversee Capitol. It asserted that Section 5 of the SRC authorized the SEC to complaint, which alleged that SBGCCI and UIGDC committed
assume jurisdiction over the subject matter to determine whether the misrepresentations in the sale of their shares. The Court held in the said
petitioners, who were officers of Capitol, violated the SRC and its case that nothing prevented the SEC from assuming jurisdiction to
implementing rules and regulations. Lastly, the SEC justified its act in determine if SBGCCI and UIGDC committed administrative violations and
creating the MANCOM on the basis of SEC-MC No. 11, Series of 2003, which were liable under the SRC despite the complaint having raised intra-
included the constitution of such a committee as one of its powers. corporate issues. It also ruled that the SEC may investigate activities of
corporations to ensure compliance with the law.
Private respondents, in their Comment/Opposition,[20] stated that the SEC
had retained its administrative, regulatory and oversight powers over In ruling that way, the Court cited Sections 5 and 53 of the SRC as
corporations citing Orendain v. BF Homes, Inc.;[21] that in the exercise of justifications, to wit:
such powers, the SEC was justified in entertaining their letter-complaint;
SECTION 5. Powers and Functions of the Commission. — 5.1. The even motu proprio whether corporations comply with the Corporation
Commission shall act with transparency and shall have the powers and Code, the SRC and the implementing rules and regulations.
functions provided by this Code, Presidential Decree No. 902-A, the
Corporation Code, the Investment Houses Law, the Financing Company Act Thus, in this case, there is simply no doubt that the SEC acted properly in
and other existing laws. Pursuant thereto the Commission shall have, among assuming jurisdiction over the letter-complaint filed by private respondents.
others, the following powers and functions: A perusal of their letter-complaint demonstrates that private respondents
(a) Have jurisdiction and supervision over all corporations, partnerships or sought the SEC's intervention in the interest of the minority stockholders by
associations who are the grantees of primary franchises and/or a license "conducting thorough investigation"[25] on the actions of the petitioners
or permit issued by the Government; over "the apparent anomalies and fraud over the agreement with ALI," the
growing labor unrest at [Capitol], the unpaid individual creditors some of
xxx whom have already gone into courts to enforce collection, the continuing
financial mismanagement and gross negligence and incompetence shown by
(d) Regulate, investigate or supervise the activities of persons to ensure Mr. Pablo B. Roman, Jr., et al. in running the business affairs of [Capitol] xxx
compliance; that resulted in losses, wastages and dissipation of funds of the
corporation.[26] Their prayer for the SEC to exercise its investigatory powers
xxx in the end would adequately justify the assumption of jurisdiction over the
letter-complaint regardless if, indeed, intra-corporate allegations were
(n) Exercise such other powers as may be provided by law as well as those raised.
which may be implied from, or which are necessary or incidental to the
carrying out of, the express powers granted the Commission to achieve the As the SEC is not ousted of its regulatory and administrative jurisdiction to
objectives and purposes of these laws. determine and act if administrative violations were committed,[27] no grave
abuse of discretion can be attributed to it when it assumed jurisdiction over
xxx the letter-complaint. Accordingly, the Court finds no error with what was
SECTION 53. Investigations, Injunctions and Prosecution of Offenses. — 53.1. held by the CA.
The Commission may, in its discretion, make such investigations as it
deems necessary to determine whether any person has violated or is On the Constitution of the MANCOM
about to violate any provision of this Code, any rule, regulation or order
thereunder, or any rule of an Exchange, registered securities association, The SEC submits that the power to constitute a management committee is
clearing agency, other self-regulatory organization, and may require or based on its supervisory and regulatory functions. It cites SEC-MC No. 11,
permit any person to file with it a statement in writing, under oath or Series of 2003 as authority, which provides in part:
otherwise, as the Commission shall determine, as to all facts and 4. Notwithstanding the foregoing, the Commission, as provided in Section 5
circumstances concerning the matter to be investigated. xxx of the SRC and the effective provisions of PD 902-A, shall have the power to
Beyond doubt, therefore, is the authority of the SEC to hear cases regardless do any and all acts to carry out the effective implementation of the laws it is
of whether an action involves issues cognizable by the RTC, provided that mandated to enforce, i.e.: constitute a Management Committee; appoint
the SEC could only act upon those which are merely administrative and receivers, issue Cease and Desist Orders to prevent fraud or injury to the
regulatory in character. In other words, the SEC was never dispossessed of public; and such other measures to carry out its role as a regulator.
the power to assume jurisdiction over complaints, even if these are riddled In effect, the authority of the SEC is viewed as one that is intimately related
with intra-corporate allegations, if their invocation of authority is confined to its functions as a regulator.
only to the extent of ensuring compliance with the law and the rules, as well
as to impose fines and penalties for violation thereof; and to investigate The petitioners reject this and opine that constituting the MANCOM
involves an intra-corporate controversy, which is within the jurisdiction of Yet, it must be stressed that under Section 5.1 (n) of the SRC, the SEC is
the RTC. Invoking Section 5.2 of the SRC, they contend that the authority to permitted to exercise such other powers as may be provided for by law as
create the MANCOM is exclusive to the RTC and no longer with the SEC. well as those which may be implied from, or which are necessary or
incidental to the carrying out, of the express powers granted the SEC to
Indeed, Section 5.2. of the SRC has transferred jurisdiction over intra- achieve the objectives and purposes of these laws.
corporate controversies to the RTC. It provides:
The Commission's jurisdiction over all cases enumerated under Section 5 of With such broad authority, it is beyond question that the SEC, as a
Presidential Decree No. 902-A is hereby transferred to the Courts of general regulator, has broad discretion to act on matters that relate to its express
jurisdiction or the appropriate Regional Trial Court: Provided, that the power of supervision over all corporations, partnerships or associations who
Supreme Court in the exercise of its authority may designate the Regional are the grantees of primary franchises and/or a license or permit issued by
Trial Court branches that shall exercise jurisdiction over these cases. The the Government. Such grant of express power of supervision, necessarily
Commission shall retain jurisdiction over pending cases involving intra- includes the power to create a management committee following the
corporate disputes submitted for final resolution which should be resolved doctrine of necessary implication.
within one (l) year from the enactment of this Code. The Commission shall
retain jurisdiction over pending suspension of payments/ rehabilitation The reason is simple. The creation of a management committee is one that
cases filed as of 30 June 2000 until finally disposed. is premised on the immediate and speedy protection of the interest not
Relative thereto, Section 5 of P.D. No. 902-A states: only of minority stockholders, but also of the general public from immediate
SECTION 5. In addition to the regulatory and adjudicative functions of the danger of loss, wastage or destruction of assets or the paralyzation of
Securities and Exchange Commission over corporations, partnerships and business of a concerned corporation or entity.[28] No body is more
other forms of associations registered with it as expressly granted under competent to provide such a temporary relief other than the regulatory
existing laws and decrees, it shall have original and exclusive jurisdiction to body of these companies - the SEC.
hear and decide cases involving
Thus, such authority is expressly sanctioned under SEC-MC No. 11, Series of
Devices or schemes employed by or any acts, of the board of directors, 2003. Suffice it to state that such circular enjoys the presumption of validity
business associates, its officers or partnership, amounting to fraud and unless this Court declares otherwise.
a) misrepresentation which may be detrimental to the interest of the
public and/or of the stockholder, partners, members of associations or WHEREFORE, the petition is DENIED.
organizations registered with the Commission;
Controversies arising out of intra-corporate or partnership relations, SO ORDERED.
between and among stockholders, members, or associates; between
any or all of them and the corporation, partnership or association of Carpio, (Chairperson), and Leonen, JJ., concur.
b) which they are stockholders, members or associates, respectively; and Brion, and Jardeleza,** JJ., on official leave.
between such corporation, partnership or association and the state
insofar as it concerns their individual franchise or right to exist as such
entity; and
Controversies in the election or appointments of directors, trustees,
officers or managers of such corporations, partnerships or associations.
Clearly, any dispute concerning intra-corporate issues is now beyond the
province of the SEC.
4. FLORENCIO ORENDAIN, petitioner, vs. BF HOMES, INC., respondent. Ruling:
G.R. No. 146313 (October 31, 2006) YES. The controversy involves matters purely civil in character and is beyond
Associate Justice Presbiterio J. Velasco, Jr. the ambit of the limited jurisdiction of the SEC. As held in Viray v. Court of
Appeals, "[t]he better policy in determining which body has jurisdiction over
Doctrine: a case would be to consider not only[1] the status or relationship of the
In controversies arising out of intra-corporate relations, between and parties but also [2] the nature of the question that is thesubject of their
among stockholders, members or associates, and between, any, or all of controversy."
them and the corporation, it is the RTC, not SEC, which has jurisdiction over
the case. The LSFSIPI is neither an officer nor a stockholder of BF Homes, and this
case does not involve intra-corporateproceedings. In addition, the seller,
Facts: petitioner Orendain, is being sued in hisindividual capacity for the
BF Homes, Inc., a domestic corporation organized to develop and sell unauthorized sale of the property in controversy. Hence, there is no reason
residential lots and houses, availed itself of financial assistance from various to sustain petitioner's manifestation that the resolution of the controversy
sources to buy properties and convert them into residentialsubdivisions. depends on the ratification by the SEC of the acts of its agent or the
During its business operations, it was able toacquire properties and assets receiverbecause the act of Orendain was allegedly not within the scope of
which, if liquidated, were more than enough to pay all its creditors. Despite his authority as receiver.Furthermore, the determination of the validity of
its solvent status, respondent filed a Petition for Rehabilitation before the sale to LSFSIPI will necessitate the application of the provisions of the
theSecurities and Exchange Commission (SEC).The SEC thereby issued an Civil Code on obligations and contracts, agency, and other pertinent
Order, creating a Management Committee with Atty. Florencio Orendain as provisions.
Chairman, and appointing FBO Management Networks, Inc. as rehabilitation

Thereafter, a Deed of Absolute Sale was executed between BF Homes,

represented by petitioner Orendain as absolute and registered owner, and
the Local Superior of the Franciscan Sisters of the Immaculate Phils., Inc.
(LSFSIPI) over a parcel of land situated in Metro Manila.BF Homes filed a
Complaint before the RTC against LSFSIPI and petitioner Orendain for
reconveyance of the property.Orendain, on the other hand, filed a Motion
to Dismiss for lack of merit. RTC issued Orders denying the Motion to
Dismiss and the subsequent Motion for Reconsideration.

Petitioner filed before the CA a Petition for Certiorari and Prohibition which
sought to annul the RTC’s Orders for the denial of Motion to Dismiss and
Motion for Reconsideration.Petitioner alleged that these motions were
issued without jurisdiction or with grave abuseof discretion amounting to
lack or in excess of jurisdiction. CA dismissed the petition.

Whether the RTC had jurisdiction over the action for reconveyance
5. Go v. Distinction Properties Development and Construction, Inc. statement of the ultimate facts constituting the plaintiff's cause of action.
G.R. No. 194024 The nature of an action, as well as which court or body has jurisdiction over
it, is determined based on the allegations contained in the complaint of the
FACTS plaintiff, irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. The averments in the
Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered complaint and the character of the relief sought are the ones to be
individual owners of condominium units in Phoenix Heights Condominium consulted. Once vested by the allegations in the complaint, jurisdiction also
developed by the respondent. remains vested irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted therein. Thus, it was ruled
In August 2008, petitioners, as condominium unit-owners, filed a that the jurisdiction of the HLURB to hear and decide cases is determined by
complaintbefore the HLURB against DPDCI for unsound business practices the nature of the cause of action, the subject matter or property involved
and violation of the MDDR, alleging that DPDCI committed and the parties.
misrepresentation in their circulated flyers and brochures as to the facilities
or amenities that would be available in the condominium and failed to In this case, the complaint filed by petitioners alleged causes of action that
perform its obligation to comply with the MDDR. apparently are not cognizable by the HLURB considering the nature of the
action and the reliefs sought.
In defense, DPDCI alleged that the brochure attached to the complaint was
“a mere preparatory draft”. HLURB rendered its decision in favor of 2.An indispensable party is defined as one who has such an interest in the
petitioners. DPDCI filed with the CA its Petition for Certiorari and Prohibition controversy or subject matter that a final adjudication cannot be made, in
on the ground that HLURB acted without or beyond its jurisdiction. his absence, without injuring or affecting that interest.It is "precisely ‘when
an indispensable party is not before the court (that) an action should be
The CA ruled that the HLURB had no jurisdiction over the complaint filed by dismissed.’ The absence of an indispensable party renders all subsequent
petitioners as the controversy did not fall within the scope of the actions of the court null and void for want of authority to act, not only as
administrative agency’s authority. to the absent parties but even to those present. The purpose of the rules
on joinder of indispensable parties is a complete determination of all issues
ISSUES: not only between the parties themselves, but also as regards other persons
who may be affected by the judgment.
1.Whether the HLURB has jurisdiction over the complaint filed by the PHCC is an indispensable party and should have been impleaded,
petitioners as it would be directly and adversely affected by any determination therein.
2. Whether PHCC is an indispensable party Evidently, the cause of action rightfully pertains to PHCC.


1. Jurisdiction over the subject matter of a case is conferred by law and

determined by the allegations in the complaint which comprise a concise
CORPORATION, Before us is the petition for review on certiorari with prayer for a
Petitioner, Present:
temporary restraining order filed by Chateau de Baie Condominium
*CARPIO MORALES, J., Chairperson,
Corporation (petitioner) challenging the decision1[1] of the Court of Appeals
- versus - **BRION, Acting Chairperson,
BERSAMIN, (CA) that dismissed its petition for certiorari, prohibition and mandamus.
***ABAD, The petition, the CA ruled upon, questioned the ruling2[2] of the Regional
SPS. RAYMOND and SERENO, JJ. Trial Court (RTC), Branch 258, Paraaque City, that denied the petitioners
MA. ROSARIO MORENO, motion to dismiss the complaint filed by respondent spouses Raymond and
Respondents. Promulgated:
Ma. Rosario Moreno.
February 23, 2011
This case is the second of two related cases submitted to us
x ---------------------------------------------------------------------------------------- x involving the condominium unit of Ma. Rosario Moreno. We had decided
the first case Oscar S. Salvacion v. Chateau de Baie Condominium
Corporation, G.R. No. 1785493[3] and our ruling has attained finality.

The Facts
the Moreno spouses who offered to settle their obligation, but the
petitioner declined the offer.
Mrs. Moreno is the registered owner of a penthouse unit and two
parking slots in Chateau de Baie Condominium (Chateau Condominium) in
Roxas Boulevard, Manila. These properties are covered by Condominium
Certificates of Title (CCT) Nos. 4153, 4154, and 4155 (Moreno properties). As Subsequently, to enforce its lien, the president of the petitioner
a registered owner in Chateau Condominium, Mrs. Moreno is a wrote the Clerk of Court/Ex-Officio Sheriff of Paraaque City for the
member/stockholder of the condominium corporation. extrajudicial public auction sale of the Moreno properties. The extrajudicial
sale was scheduled on February 10, 2005.5[5]

Mrs. Moreno obtained a loan of P16,600,000.00 from Oscar

Salvacion, and she mortgaged the Moreno properties as security; the The first case - the Salvacion Case (Civil Case No. 05-0061;
mortgage was annotated on the CCTs.
CA-G.R. SP No. 90339; and G.R. No. 178549)

Under Section 20 of Republic Act (R.A.) No. 4726 (the Condominium

To stop the extrajudicial sale, Salvacion, as mortgagee, filed, on
Act),4[4] when a unit owner fails to pay the association dues, the
condominium corporation can enforce a lien on the condominium unit by February 3, 2005, a petition for certiorari and prohibition with prayer for the
issuance of a temporary restraining order and/or writ of preliminary
selling the unit in an extrajudicial foreclosure sale.
injunction before the RTC, Branch 196, Paraaque City. The case was
On November 23, 2001, the petitioner caused the annotation of a docketed as Civil Case No. 05-0061.6[6] The petition sought to prohibit the
Notice of Assessment on the CCTs of the Moreno properties for unpaid
association dues amounting to P323,870.85. It also sent a demand letter to
scheduled extrajudicial sale for lack of a special power to sell from the the applicable law because it is a special law that exclusively applies to
registered owner as mandated by Act No. 3135,7[7] and to declare the lien condominiums. Thus, the CA upheld the validity of the extrajudicial sale.8[8]
to be excessive. It ruled that R.A. No. 4726 does not require a special authority from the
condominium owner before a condominium corporation can initiate a
foreclosure proceeding. It additionally observed that Section 5 of the By-
Laws of the petitioner provides that it has the authority to avail of the
On February 9, 2005, the RTC dismissed Salvacions petition and
remedies provided by law, whether judicial or extrajudicial, to collect unpaid
denied the injunctive relief for lack of merit. The extrajudicial sale
dues and other charges against a condominium owner. The CAs Third
proceeded as scheduled, and the Moreno properties were sold to the
Division also denied Salvacions motion for reconsideration.9[9]
petitioner, the lone bidder, for P1,328,967.12. The RTC denied Salvacions
motion for reconsideration.

Salvacion appealed to this Court through a petition for review on

certiorari.10[10] The Courts Third Division denied the petition for technical
Salvacion went to the CA via a petition for certiorari and prohibition
infirmities and for failing to show that the CA committed any reversible
(CA-G.R. SP No. 90339) and, among others, submitted the issue of whether
error. An entry of judgment was made on January 24, 2008.11[11]
the RTC erred in finding Section 5, Article 4 of the By-Laws of the petitioner
as blanket authority to institute an extrajudicial foreclosure, contrary to
Section 20 of R.A. No. 4726 and Section 1 of Act No. 3135.

On February 27, 2007, the CAs Third Division ruled that Act No.
3135 covers only real estate mortgages and is intended merely to regulate
the extrajudicial sale of mortgaged properties. It held that R.A. No. 4726 is
The present case the Moreno Case

(Civil Case No. 05-0183 and CA-G.R. SP No. 93217)

While the Salvacion case was pending before the CA, the Moreno
spouses filed before the RTC, Paraaque City, a complaint for intra-corporate likewise ordered the motion to dismiss expunged from the records, and
dispute against the petitioner12[12] to question how it calculated the dues declared the petitioner in default for failing to answer within the
assessed against them, and to ask an accounting of the association dues. reglementary period. The RTC denied the petitioners motion for
They asked for damages and the annulment of the foreclosure proceedings, reconsideration in its order of January 20, 2006.15[15]
and prayed for the issuance of a writ of preliminary injunction. The case was
raffled to Branch 258 and was docketed as Civil Case No. 05-0183.

The petitioner went to the CA via a petition for certiorari,

prohibition and mandamus under Rule 65 of the Rules of Court. It alleged
The petitioner moved to dismiss the complaint on the ground of grave abuse of discretion on the part of the RTC for not dismissing the
lack of jurisdiction, alleging that since the complaint was against the Moreno spouses complaint because (1) the Moreno spouses are guilty of
owner/developer of a condominium whose condominium project was forum shopping, (2) of litis pendencia, and (3) the appeal pending before the
registered with and licensed by the Housing and Land Use Regulatory Board CA (CA-G.R. SP No. 90339 [SPL CV No. 05-0061]).
(HLURB), the HLURB has the exclusive jurisdiction.

The CAs First Division denied the petition in its decision of August
In an order dated October 15, 2005,13[13] the RTC denied the 29, 2008.16[16] It found no grave abuse of discretion on the part of the RTC
motion to dismiss because it was a prohibited pleading under the Interim because the complaint involved an intra-corporate dispute. It ruled:
Rules of Procedure Governing Intra-Corporate Controversies.14[14] It
Since the instant civil case involves an intra- The Issue
corporate controversy, it is the RTC which has jurisdiction
over the same pursuant to R.A. 8799 otherwise known as
the Securities Regulation Code and Section 9 of the Interim
Rules. The public respondent indeed correctly applied the
provisions of the Interim Rules. And under Section 8(1), Rule The petitioner submits this sole issue for our consideration:
1 thereof, it is expressly stated that a Motion to Dismiss is a
prohibited pleading. Thus, the motion to dismiss on the
ground of lack of jurisdiction filed by petitioner must
necessarily be denied and expunged from the record.
Petitioner should have instead averred its defense of lack of WITH DUE RESPECT, THE COURT OF APPEALS ERRED
jurisdiction and even the issue of forum shopping in its IN NOT DISMISSING THE COMPLAINT IN VIEW OF THE
Answer. Section 6, par. (4), Rule 2 of the Interim Rules, DECISION RENDERED BY ANOTHER DIVISION OF THE COURT
explicitly provides that in the Answer, the defendant can OF APPEALS IN CA-G.R. SP. NO. 90339 ENTITLED OSCAR S.
state the defenses, including the grounds for a motion to SALVACION VS. ATTY. CLEMENTE E. BOLOY, IN HIS CAPACITY
dismiss under the Rules of Court. AS EX-OFFICIO SHERIFF, OFFICE OF THE CLERK OF COURT,
Considering that the motion to dismiss filed by AND CHATEAU DE BAIE CONDOMINIUM CORPORATION
private respondent is a prohibited pleading, hence, it did SUSTAINING THE VALIDITY OF THE [EXTRAJUDICIAL] PUBLIC
not toll the running of the period for filing an Answer, the AUCTION OF THE CONDOMINIUM UNIT AND PARKING
public respondent properly declared the petitioner in SLOTS OWNED BY RESPONDENT MA. ROSARIO MORENO,
default for its failure to file its Answer within fifteen (15) WHICH DECISION BECAME FINAL AND EXECUTORY ON
days from its receipt of summons.17[17] JANUARY 24, 2008.19[19]

The CAs First Division also denied the petitioners motion for
reconsideration;18[18] hence, this appeal by way of a Rule 45 petition. The Courts Ruling

We deny the petition for lack of merit. The CA did not err when it
did not dismiss the Moreno spouses complaint despite the full completion
of the extrajudicial sale.
stockholder, Bayot, and is, thus, within the exclusive original jurisdiction of
the Securities and Exchange Commission (SEC).21[21] We ruled in that case
The case before the RTC involved an intra-corporate dispute the
that since the extrajudicial sale was authorized by Wack Wack
Moreno spouses were asking for an accounting of the association dues and
Condominium Corporations by-laws and was the result of the nonpayment
were questioning the manner the petitioner calculated the dues assessed
of the assessments, the legality of the foreclosure was necessarily an issue
against them. These issues are alien to the first case that was initiated by
within the exclusive original jurisdiction of the SEC. We added that:
Salvacion a third party to the petitioner-Moreno relationship to stop the
extrajudicial sale on the basis of the lack of the requirements for a valid
Just because the property has already been sold
foreclosure sale. Although the extrajudicial sale of the Moreno properties to
extrajudicially does not mean that the questioned
the petitioner has been fully effected and the Salvacion petition has been assessments have now become legal and valid or that they
have become immaterial. In fact, the validity of the
dismissed with finality, the completion of the sale does not bar the Moreno
foreclosure depends on the legality of the assessments and
spouses from questioning the amount of the unpaid dues that gave rise to the issue must be determined by the SEC if only to insure
that the private respondent was not deprived of her
the foreclosure and to the subsequent sale of their properties. The
property without having been heard. If there were no valid
propriety and legality of the sale of the condominium unit and the parking assessments, then there was no lien on the property, and if
there was no lien, what was there to foreclose? Thus, SEC
spaces questioned by Salvacion are different from the propriety and legality
Case No. 2675 has not become moot and academic and the
of the unpaid assessment dues that the Moreno spouses are questioning in SEC retains its jurisdiction to hear and decide the case
despite the extrajudicial sale.22[22]
the present case.

Based on the foregoing, we affirm the decision of the CAs First

The facts of this case are similar to the facts in Wack Wack
Division dismissing the petitioners petition. The way is now clear for the RTC
Condominium Corporation, et al. v. Court of Appeals, et al.,20[20] where we
to continue its proceedings on the Moreno case.
held that the dispute as to the validity of the assessments is purely an intra-
corporate matter between Wack Wack Condominium Corporation and its
The antecedent facts are as follows:

Petitioner Sylvia S. Ty was married to Alexander T. Ty. Son of private

WHEREFORE, premises considered, we DENY the petition for review
respondent Alejandro B. Ty, on January 11, 1981. Alexander died of
on certiorari and AFFIRM the Decision, dated August 29, 2008, and the leukemia on May 19, 1988 and was survived by his wife, petitioner Sylvia,
and only child, Krizia Katrina. In the settlement of his estate, petitioner was
Resolution, dated February 5, 2009, of the Court of Appeals in CA-G.R. SP
appointed administratrix of her late husbands intestate estate.
No. 93217. The Regional Trial Court, Branch 258, Paraaque City is directed
On November 4, 1992, petitioner filed a motion for leave to sell or mortgage
to continue its proceedings in Civil Case No. 05-0183. Costs against the
estate property in order to generate funds for the payment of deficiency
petitioner. estate taxes in the sum of P4,714,560.00 Included in the inventory of
property were the following:

1) 142,285 shares of stock in ABT Enterprises valued at

Administratrix, SYLVIA S. TY, petitioner, vs. COURT OF APPEALS, HON. 2) 5,000 shares of stock in Intercontinental Paper Industries valued at
ILDEFONSO E. GASCON, and ALEJANDRO B. TY, respondents. P500,000.00;

[G.R. No. 114672. April 19, 2001] 3) 15,873 shares of stock in Philippine Crystal Manufacturing, Inc.
valued at P1,587,300.00;
SYLVIA S. TY, in her capacity as Administratrix of the Intestate Estate of
Alexander T. Ty, petitioner, vs. COURT OF APPEALS and ALEJANDRO B. TY, 4) 800 shares of stock in Polymart Paper Industries, Inc. valued at
respondents. P80,000.00;

DECISION 5) 1,880 shares of stock in A.T. Car Care Center, Inc. valued at
6) 360 shares of stock in Union Emporium, Inc. valued at P36,000.00;
Before the Court are two separate petitions for Certiorari, G.R. 112872
under Rule 65 alleging grave abuse of discretion amounting to lack or excess 7) 380 shares of stock in Lexty, Inc. valued at P38,000.00; and
of jurisdiction, and G.R. No. 114672 under Rule 45 on purely questions of
law. As these two cases involve the same parties and basically the same 8) a parcel of land in Biak-na-Bato, Matalahib, Sta. Mesa, with an area
issues, including the main question of jurisdiction, the Court resolves to of 823 square meters and covered by Transfer Certificate of Title Number
consolidate them. 214087.

On February 27, 2001, the Court issued its resolution in A.M. 00-9-03 Private respondent Alejandro Ty then filed two complaints for the recovery
directing the re-distribution of old cases such as ones on hand. Thus, the of the above-mentioned property, which was docketed as Civil Case Q-91-
present ponencia. 10833 in Branch 105 Regional Trial Court of Quezon City (now herein G.R.
No. 112872), praying for the declaration for nullity of the deed of absolute based on the allegations contained in the complaint of the plaintiff
sale of the shares of stock executed by private respondent in favor of the (Serdoncillo vs. Benolirao, 297 SCRA 448 [1998]; Tamano vs. Ortiz, 291 SCRA
deceased Alexander, and Civil Case Q-92-14352 in Branch 90 Regional Trial 584 [1998]), irrespective of whether or not plaintiff is entitled to recover
Court of Quezon City (now G.R. No. 114672), praying for the recovery of the upon all or some of the claims asserted therein (Citibank , N.A. vs. Court of
pieces of property that were placed in the name of deceased Alexander by Appeals, 299 SCRA 390 [1998]). Jurisdiction cannot depend on the defenses
private respondent, the same property being sought to be sold out, set forth in the answer, in a motion to dismiss, or in a motion for
mortgaged, or disposed of by petitioner. Private respondent claimed in both reconsideration by the defendant (Dio vs. Concepcion, 296 SCRA 579
cases that even if said property were placed in the name of deceased [1998]).
Alexander, they were acquired through private respondents money, without
any cause or consideration from deceased Alexander. Petitioner argues that the present case involves a suit between two
stockholders of the same corporation which thus places it beyond the
Motions to dismiss were filed by petitioner. Both motions alleged lack of jurisdictional periphery of regular trial courts and more within the exclusive
jurisdiction for the trial court, claiming that the cases involved intra- competence of the SEC by reason of Section 5(b) of Presidential Decree 902-
corporate disputes cognizable by the Securities and Exchange Commission A, since repealed. However, it does not necessarily follow that when both
(SEC). Other grounds raised in G.R. NO. 114672 were: parties of a dispute are stockholders of a corporation, the dispute is
automatically considered intra-corporate in nature and jurisdiction
1) An express trust between private respondent Alejandro and his consequently falls within the SEC. Presidential Decree 902-A did not confer
deceased son Alexander; upon the SEC absolute jurisdiction and control over all matters affecting
corporations, regardless of the nature of the transaction which gave rise to
2) Bar by the statute of limitations; such disputes (Jose Peneyra, vs. Intermediate Appellate Court, et. al.,
181 SCRA 245 [1990] citing DMRC Enterprises vs. Este del Sol Mountain
3) Private respondents violation of Supreme Court Circular 28-91 for Reserve, Inc., 132 SCRA 293 [1984]). The better policy in determining which
failure to include a certification of non-forum shopping in his complaints; body has jurisdiction over this case would be to consider, not merely the
and status of the parties involved, but likewise the nature of the question that is
the subject of the controversy (Viray vs. Court of Appeals, 191 SCRA 309
4) Bar by laches. [1990]). When the nature of the controversy involves matters that are
purely civil in character, it is beyond the ambit of the limited jurisdiction of
The motions to dismiss were denied. Petitioner then filed petitions for the SEC (Saura vs. Saura, Jr., 313 SCRA 465 [1999]).
certiorari in the Court of Appeals, which were also dismissed for lack of
merit. Thus, the present petitions now before the Court. In the cases at bar, the relationship of private respondent when he sold his
shares of stock to his son was one of vendor and vendee, nothing else. The
Petitioner raises the issue of jurisdiction of the trial court. She alleges that question raised in the complaints is whether or not there was indeed a sale
an intra-corporate dispute is involved. Hence, under Section 5(b) of in the absence of cause or consideration. The proper forum for such a
Presidential Decree 902-A, the SEC has jurisdiction over the case. The Court dispute is a regular trial court. The Court agrees with the ruling of the Court
cannot agree with petitioner. of appeals that no special corporate skill is necessary in resolving the issue
of the validity of the transfer of shares from one stockholder to another of
Jurisdiction over the subject matter is conferred by law (Union Bank of the the same corporation. Both actions, although involving different property,
Philippines vs. Court of Appeals, 290 SCRA 198 [1998]). The nature of an sought to declare the nullity of the transfers of said property to the
action, as well as which court or body has jurisdiction over it, is determined decedent on the ground that they were not supported by any cause or
consideration, and thus, are considered void ab initio for being absolutely
simulated or fictitious. The determination whether a contract is simulated having been effected without cause of consideration, a resulting trust was
or not is an issue that could be resolved by applying pertinent provisions of created.
the Civil Code particularly those relative to obligations and contracts.
Disputes concerning the application of the Civil Code are properly A resulting trust arises in favor of one who pays the purchase money of an
cognizable by courts of general jurisdiction. No special skill is necessary that estate and places the title in the name of another, because of the
would require the technical expertise of the SEC. presumption that he who pays for a thing intends a beneficial interest
therein for himself. The trust is said to result in law from the acts of the
It should also be noted that under the newly enacted Securities Regulation parties. Such a trust is implied in fact (Tolentino, Civil Code of the
Code (Republic Act No. 8799), this issue is now moot and academic because Philippines, Vol. 4, p. 678).
whether or not the issue is intra-corporate, it is the regional trial court and
no longer the SEC that takes cognizance of the controversy. Under Section If a trust was then created, it was an implied, not an express trust, which
5.2 of Republic Act No. 8799, original and exclusive jurisdiction to hear and may be proven by oral evidence (Article 1457, Civil code), and it matters not
decide cases involving intra-corporate controversies have been transferred whether property is real or personal (Paras, Civil Code of the Philippines,
to courts of general jurisdiction or the appropriate regional trial court. Annotated, Vol. 4, p. 814).

Other issues raised by the petitioner in G.R. No. 114672 are equally not Petitioners assertion that private respondents action is barred by the
impressed with merit. statute of limitations is erroneous. The statue of limitations cannot apply in
this case. Resulting trusts generally do not prescribe (Caladiao vs. Vda. De
Petitioner contends that private respondent is attempting to enforce an Blas, 10 SCRA 691 [1964]), except when the trustee repudiates the trust.
unenforceable express trust over the disputed real property. Petitioner is in Further, an action to reconvey will not prescribe so long as the property
error when she contends that an express trust was created by private stands in the name of the trustee (Manalang, et. al. vs. Canlas, et. al., 94
respondent when he transferred the property to his son. Judge Abraham P. Phil. 776 [1954]). To allow prescription would be to permit a trustee to
Vera, in his order dated March 31, 1993 in Civil Case No. Q-92-14352, acquire title against his principal and the true owner.
Petitioner is also mistaken in her contention that private respondent
[e]xpress trust are those that are created by the direct and positive acts violated Supreme Court Circular 28-91, dated September 17, 1991 and
of the parties, by some writing or deed or will or by words evidencing which took effect on January 1, 1992. Although Section 5, Rule 7 of the 1997
an intention to create a trust. On the other hand, implied trusts are Rules on Civil procedure makes the requirement of filing a verification and
those which, without being expressed, are deducible from the nature certificate of non-forum-shopping applicable to all courts, this cannot be
of the transaction by operation of law as matters of equity, applied in the case at bar. At the time the original complaint was first filed
independently of the particular intention of the parties. Thus, if the on December 10 (for G.R. 112872) and 28 (for G.R. 114672), 1992, such
intention to establish a trust is clear, the trust is express; if the intent certification requirement only pertained to cases in the Court of Appeals
to establish a trust is to be taken from circumstances or other matters and the Supreme Court. The Revised Circular 28-91, which covered the
indicative of such intent, then the trust is implied (Cuaycong vs. certification requirement against non-forum shopping in all courts, only
Cuaycong, 21 SCRA 1191 [1967]. took effect April 1, 1994. Further, the subject heading of the original circular
alone informs us of its topic: that of additional requisites for petitions filed
In the cases at hand, private respondent contends that the pieces of with the Supreme Court and the Court of Appeals to prevent forum
property were transferred in the name of the deceased Alexander for the shopping or multiple filing of petitions and complaints. Section 1 of the
purpose of taking care of the property for him and his siblings. Such transfer Circular makes it mandatory to include the docket number of the case in the
lower court or quasi-judicial agency whose order or judgment is sought to
be reviewed. Such a requirement clearly indicates that the Circular only
applies to actions filed with the Court of Appeals and the Supreme Court.

Contrary to what petitioner contends, there could be no laches in this case.

Private respondent filed his complaint in G.R. No. 112872 on December 10,
1992 (later amended on December 23, 1992) and in G.R. No. 114672 on
December 28, 1992, only over a month after petitioner filed in the probate
proceedings a petition to mortgage or sell the property in dispute. Private
respondents actions were in fact very timely. As stated in the complaints,
private respondent instituted the above actions as the property were in
danger of being sold to a third party. If there were no pending cases to stop
their sale, he would no longer be able to recover the same from an innocent
purchaser for value.

Withal, the Court need not go into any further discussion on whether the
trial court erred in issuing a writ of preliminary injunction.

WHEREFORE, the petition for certiorari in G.R. No. 112872 is DISMISSED,

having failed to show that grave abuse of discretion was committed in
declaring that the regional trial court had jurisdiction over the case. The
petition for review on certiorari in G.R. 114672 is DENIED, having found no
reversible error was committed.


Vitug, Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

validation of proxies, (3) the manner and validity of elections and (4) the
qualifications of candidates, including the proclamation of winners.

Under Section 5(c) of Presidential Decree No. 902-A, in relation to the SRC,
the jurisdiction of the regular trial courts with respect to election-related
controversies is specifically confined to “controversies in the election or
appointment of directors, trustees, officers or managers of corporations,
partnerships, or associations.” Evidently, the jurisdiction of the regular
courts over so-called election contests or controversies under Section 5(c)
does not extend to every potential subject that may be voted on by
shareholders, but only to the election of directors or trustees, in which
stockholders are authorized to participate under Section 24 of the
8. GSIS v. CA (G.R. No. 183905) Corporation Code.

Facts: The power of the SEC to investigate violations of its rules on proxy
solicitation is unquestioned when proxies are obtained to vote on matters
GSIS, a major shareholder in Meralco, was distressed over the proxy unrelated to the cases enumerated under Section 5 of Presidential Decree
validation proceedings and the resulting certification of proxies in favor of No. 902-A. However, when proxies are solicited in relation to the election of
the Meralco Management. The proceedings were presided over by corporate directors, the resulting controversy, even if it ostensibly raised
Meralco’s assistant corporate secretary and chief legal counsel instead of the violation of the SEC rules on proxy solicitation, should be properly seen
the person duly designated by Meralco’s Board of Directors. Thus, GSIS as an election controversy within the original and exclusive jurisdiction of
moved before the SEC to declare certain proxies, those issued to herein the trial courts by virtue of Section 5.2 of the SRC in relation to Section 5(c)
private respondents, as invalid. Private respondents contend that dispute in of Presidential Decree No. 902-A.
the validity of proxies is an election contest which falls under the trial
court’s jurisdiction. GSIS argues there was no election yet at the time it filed That the proxy challenge raised by GSIS relates to the election of the
its petition with the SEC, hence no proper election contest over which the directors of Meralco is undisputed. The controversy was engendered by the
regular courts may have jurisdiction. looming annual meeting, during which the stockholders of Meralco were to
elect the directors of the corporation. GSIS very well knew of that fact.

Whether or not the proxy challenge is an election contest cognizable by the

regular courts.

Ruling: YES.

Section 2, Rule 6 of the Interim Rules broadly defines the term “election
contest” as encompassing all plausible incidents arising from the election of
corporate directors, including: (1) any controversy or dispute involving title
or claim to any elective office in a stock or non-stock corporation, (2) the
majority shareholders of PHILCOMSAT are also the seven families who have
owned and controlled POTC (Ilusorio, Nieto, Poblador, Africa, Benedicto,
Ponce Enrile and Elizalde).

During the administration of President Gloria Macapagal-Arroyo, Enrique L.

Locsin and Manuel D. Andal, along with Julio Jalandoni, were appointed
nominee-directors representing the Republic of the Philippines through the
PCGG in the board of directors of POTC and the board of directors of
PHILCOMSAT. These PCGG nominees have aligned with the Nieto family
against the group of Africa and Ilusorio (Africa-Bildner), in the ensuing battle
for control over the respective boards of POTC, PHILCOMSAT and PHC.
Benito Araneta was also a nominee of PCGG during the term of President
9. G.R. No. 200620, March 18, 2015 Joseph Ejercito Estrada.

ROBERTO L. ABAD, MANUEL D. ANDAL, BENITO V. ARANETA, PHILIP G. On August 31, 2004, the following were elected during the annual
BRODETT, ENRIQUE L. LOCSIN AND ROBERTO V. SAN stockholders’ meeting of PHC conducted by the Nieto-PCGG group: Locsin
JOSE, Petitioners, v. PHILIPPINE COMMUNICATIONS SATELLITE (Director and Acting Chairman); OliverioLaperal (Director and Vice-
CORPORATION, REPRESENTED BY VICTOR AFRICA, Respondent. Chairman); Manuel H. Nieto, Jr. (Director, President and Chief Executive
Officer); Philip G. Brodett (Director and Vice-President); Andal (Director,
Treasurer and Chief Financial Officer); Roberto V. San Jose (Director and
Corporate Secretary); Jalandoni, Lokin, Jr., PrudencioSomera, Roberto Abad
Ponente: Villarama, Jr., J. and Benito Araneta as Directors. Said election at PHC was the offshoot of
separate elections conducted by the two factions in POTC and PHILCOMSAT,
the Africa-Bildner group and the Nieto-PCGG group.
This case is a remnant of the multiple suits generated by the two factions
battling for control of two sequestered corporations since 2004, a
In the July 28, 2004 stockholders’ meetings of POTC and PHILCOMSAT,
controversy we already resolved with finality in 2013.
Victor Africa was among those in the Africa-Bildner group who were elected
as Directors. He was designated as the POTC proxy to the PHILCOMSAT
Assailed in this petition for review under Rule 45 are the Decision1 dated
stockholders’ meeting. While Locsin, Andal and Nieto, Jr. were also elected
October 21, 2011 and Resolution2 dated February 10, 2012 of the Court of
as Directors, they did not accept their election as POTC and PHILCOMSAT
Appeals (CA) in CA-G.R. SP No. 99789. The CA reversed the Order3 dated
Directors. Instead, the Nieto-PCGG group held the stockholders’ meeting for
June 21, 2007 of the Regional Trial Court (RTC) of Makati City, Branch 149 in
PHILCOMSAT on August 9, 2004 at the Manila Golf Club. Immediately after
Civil Case No. 06-095.
the stockholders’ meeting, an organizational meeting was held, and Nieto,
Jr. and Locsin were respectively elected as Chairman and President of
Respondent Philippine Communications Satellite Corporation
PHILCOMSAT. At the same meeting, they issued a proxy in favor of Nieto, Jr.
(PHILCOMSAT), along with Philippine Overseas Telecommunications
and/or Locsin authorizing them to represent PHILCOMSAT and vote the
Corporation (POTC) were among those private companies sequestered by
PHILCOMSAT shares in the stockholders’ meeting of PHC scheduled on
the Philippine Commission on Good Government (PCGG) after the EDSA
August 31, 2004.
People Power Revolution in 1986. PHILCOMSAT owns 81% of the
outstanding capital stock of Philcomsat Holdings Corporation (PHC). The
Thereafter, the two factions took various legal steps including the filing of
suits and countersuits to gain legitimacy for their respective election as documents was with the knowledge and authority of PHC’s board of
directors and officers of POTC and PHILCOMSAT. The Africa group had directors. But no reply or communication was received by Africa from the
sought the invalidation of the proxy issued in favor of Nieto, Jr. and/or PHC.7cralawred
Locsin and consequent nullification of the elections held during the annual
stockholders’ meeting of PHC on August 31, 2004 (Civil Case No. 04-1049 of On February 2, 2006, PHILCOMSAT filed in the RTC a Complaint8 for
RTC, Makati City, Branch 138). Prior to this, there was the pending case Inspection of Books against the incumbent PHC directors and/or officers, to
involving the compromise agreement dated June 28, 1996 entered into by enforce its right under Sections 74 and 75 of theCorporation Code of the
Atty. PotencianoIlusorio with the Republic of the Philippines and the PCGG Philippines. The original defendants were Julio J. Jalandoni, Luis K. Lokin, Jr.,
relative to the Ilusorio family’s shareholdings in POTC, including those Oliverio G. Laperal, Nieto, Jr., Prudencio C. Somera, and herein petitioners
shares forcibly taken from him by former President Ferdinand Marcos which Andal, Locsin, Brodett, San Jose and Araneta.
were placed in the name of Independent Realty Corporation (IRC) and Mid-
Pasig Land Development (Mid-Pasig). By Decision dated June 15, 2005, this In its Order dated June 21, 2007, the RTC dismissed the complaint for lack of
Court affirmed the validity of the said compromise agreement in G.R. Nos. jurisdiction. Citing Del Moral v. Republic of the Philippines9 and Olaguer v.
141796 and 141804. As a result of the compromise agreement, the Ilusorio, RTC, National Capital Judicial Region, Br. 48, Manila,10 said court ruled that
Africa, Poblador, Benedicto and Ponce Enrile families gained majority it is the Sandiganbayan which has jurisdiction considering that plaintiff is a
control (51.37%) and the Nieto family and PCGG became the minority. sequestered corporation of the Republic through the PCGG alleging a right
of inspection over PHC but which right or authority was being raised as a
On November 17, 2005, Africa in his capacity as President and CEO of defense by the defendants.
PHILCOMSAT, and as stockholder in his own right, wrote the board and
management of PHC that PHILCOMSAT will exercise its right of inspection PHILCOMSAT appealed to the CA thru a petition for review under Rule
over the books, records, papers, etc. pertinent to the business transactions 43 arguing that it is the RTC and not Sandiganbayan which has jurisdiction
of PHC for the 3rd quarter of 2005, specifically the company’s financial over the case involving a stockholder’s right to inspect corporate books and
documents.4cralawred records. Petitioners countered that the main controversy is rooted upon
the issue of who are the rightful representative and board of directors of
In his letter dated November 22, 2005, Nieto, Jr. said that Africa’s request PHILCOMSAT. Accordingly, PHILCOMSAT’s right of inspection hinges on the
will be referred to the PHC Board of Directors or Executive Committee in resolution of the ongoing power struggle within PHILCOMSAT, specifically
view of the several pending cases involving the Africa and Nieto-PCGG on the issue of who between the Africa and Nieto-Locsin groups is the
groups on one hand, and the PHC and its board of directors on the other. legitimate board of directors. It was further pointed out that POTC and
He further advised Africa to inform them in writing of his reasons and PHILCOMSAT were both under sequestration by the PCGG, and hence all
purposes for such inspection.5 In reply, Africa reiterated his request for issues and controversies arising therefrom or related or incidental thereto
inspection asserting that the PHILCOMSAT board of directors was elected on fall under the exclusive and original jurisdiction of the Sandiganbayan.
September 22, 2005 under circumstances in consonance with the final Petitioners also contended that the petition should be dismissed on the
decision of this Court and that there is no case against its ground of litispendentia as the CA may take judicial notice of the fact that
legitimacy.6cralawred many cases involving Africa’s purported authority to represent PHILCOMSAT
are pending before several courts, which issue must necessarily be resolved
On the day of the scheduled inspection, PHILCOMSAT sent its to determine who possesses the right of inspection of PHC’s books and
representatives, Atty. Samuel Divina and Enrico Songco. However, Brodett records.
disallowed the conduct of the inspection which prompted PHILCOMSAT
through its counsel to make a written query whether the refusal of Brodett Finding merit in petitioners’ arguments, the CA granted the petition, as
to permit the conduct of PHC’s inspection of corporate books and financial follows:chanRoblesvirtualLawlibrary
WHEREFORE, the Petition is hereby GRANTED. The Order of dismissal dated Originally, Section 5 of Presidential Decree (P.D.) No. 902-A vested the
21 June 2007 of the Regional Trial Court of Makati City, Branch 149, in Civil original and exclusive jurisdiction over cases involving the following in the
Case No. 06-095, isREVERSED and SET ASIDE. Accordingly, the case is SEC, to wit:
remanded to the court a quo for further proceedings. The court a quo is x xxx
reminded to hear and decide the case with dispatch.
(a) Devices or schemes employed by, or any acts of the board of directors,
SO ORDERED.11cralawred business associates, its officers or partners, amounting to fraud and
cralawlawlibrary misrepresentation which may be detrimental to the interest of the public
and/or of the stockholder, partners, members of associations or
With the denial of their motion for reconsideration, petitioners are now organization registered with the Commission;ChanRoblesVirtualawlibrary
before this Court.
(b) Controversies arising out of intra-corporate or partnership relations,
The issues submitted for our resolution are: (1) whether it is the between and among stockholders, members or associates; between any or
Sandiganbayan or RTC which has jurisdiction over a stockholders’ suit to all of them and the corporation, partnership or association of which they
enforce its right of inspection under Section 74 of theCorporation Code; and are stockholders, members or associates, respectively; and between such
(2) whether the complaint failed to state a cause of action considering that corporation, partnership or association and the State insofar as it concerns
PHILCOMSAT never authorized Africa or any other person to file the said their individual franchise or right as such entity;ChanRoblesVirtualawlibrary
(c) Controversies in the election or appointment of directors, trustees,
The petition has no merit. officers or managers of such corporations, partnership or
Both issues presented in this case pertaining to the jurisdiction of the RTC in
intra-corporate disputes within the sequestered corporations of PCGG, and (d) Petitions of corporations, partnerships or associations to be declared in
who between the contending groups held the controlling interest in POTC, the state of suspension of payment in cases where the corporation,
and consequently in PHILCOMSAT and PHC, have already been resolved in partnership or association possesses sufficient property to cover all its
the consolidated petitions docketed as G.R. No. 184622 (Philippine Overseas debts but foresees the impossibility of meeting them when they respective
Telecommunications Corp. [POTC] and Philippine Communications Satellite fall due or in cases where the corporation, partnership or association has no
Corporation [PHILCOMSAT] v. Victor Africa, et al.), G.R. Nos. 184712-14 sufficient assets to cover its liabilities but is under the management of a
(POTC and PHILCOMSAT v. Hon. Jenny Lin Aldecoa-Delorino, Pairing Judge Rehabilitation Receiver or Management Committee created pursuant to this
of RTC Makati City, Br. 138, et al.), G.R. No. 186066 (Philcomsat Holdings Decree.
Corp., represented by Concepcion Poblador v. PHILCOMSAT, represented by Upon the enactment of Republic Act No. 8799 (The Securities Regulation
Victor Africa), and G.R. No. 186590 (Philcomsat Holdings Corp., represented Code), effective on August 8, 2000, the jurisdiction of the SEC over intra-
by Erlinda I. Bildner v. Philcomsat Holdings Corp., represented by Enrique L. corporate controversies and the other cases enumerated in Section 5 of P.D.
Locsin).12cralawred No. 902-A was transferred to the Regional Trial Court pursuant to Section
5.2 of the law, which provides:
On the first issue, we ruled that it is the RTC and not the Sandiganbayan 5.2. The Commission’s jurisdiction over all cases enumerated in Section 5 of
which has jurisdiction over cases which do not involve a sequestration- Presidential Decree No. 902-A is hereby transferred to the Courts of general
related incident but an intra-corporate controversy. 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 Section 2 of Executive Order No. 14 had no application herein simply
within one (1) year from the enactment of this Code. The Commission shall because the subject matter involved was an intra-corporate controversy,
retain jurisdiction over pending suspension of payments/rehabilitation cases not any incidents arising from, incidental to, or related to any case involving
filed as of 30 June 2000 until finally disposed. assets whose nature as ill-gotten wealth was yet to be determined. In San
To implement Republic Act No. 8799, the Court promulgated its resolution Miguel Corporation v. Kahn, the Court held that:
of November 21, 2000 in A.M. No. 00-11-03-SC designating certain branches The subject matter of his complaint in the SEC does not therefore fall within
of the RTC to try and decide the cases enumerated in Section 5 of P.D. No. the ambit of this Court’s Resolution of August 10, 1988 on the cases just
902-A. Among the RTCs designated as special commercial courts was the mentioned, to the effect that, citing PCGG v. Pena, et al., all cases of the
RTC (Branch 138) in Makati City, the trial court for Civil Case No. 04-1049. Commission regarding ‘the funds, moneys, assets, and properties illegally
acquired or misappropriated by former President Ferdinand Marcos, Mrs.
On March 13, 2001, the Court adopted and approved the Interim Rules of Imelda Romualdez Marcos, their close relatives, Subordinates, Business
Procedure for Intra-Corporate Controversies under Republic Act No. 8799 in Associates, Dummies, Agents, or Nominees, whether civil or criminal, are
A.M. No. 01-2-04-SC, effective on April 1, 2001, whose Section 1 and Section lodged within the exclusive and original jurisdiction of the Sandiganbayan,’
2, Rule 6 state: and all incidents arising from, incidental to, or related to, such cases
Section 1. Cases covered. – The provisions of this rule shall apply toelection necessarily fall likewise under the Sandiganbayan’s exclusive and original
contests in stock and non-stock corporations. jurisdiction, subject to review on certiorari exclusively by the Supreme
Court.” His complaint does not involve any property illegally acquired or
Section 2. Definition. – An election contest refers to any controversy or misappropriated by Marcos, et al., or “any incidents arising from, incidental
dispute involving title or claim to any elective office in a stock or non-stock to, or related to” any case involving such property, but assets indisputably
corporation, the validation of proxies, the manner and validity of elections, belonging to San Miguel Corporation which were, in his (de los Angeles')
and the qualifications of candidates, including the proclamation of winners, view, being illicitly committed by a majority of its board of directors to
to the office of director, trustee or other officer directly elected by the answer for loans assumed by a sister corporation, Neptunia Co., Ltd.
stockholders in a close corporation or by members of a non-stock
corporation where the articles of incorporation or by-laws so provide. (bold De los Angeles’ complaint, in fine, is confined to the issue of the validity of
underscoring supplied) the assumption by the corporation of the indebtedness of Neptunia Co.,
Conformably with Republic Act No. 8799, and with the ensuing resolutions Ltd., allegedly for the benefit of certain of its officers and stockholders, an
of the Court on the implementation of the transfer of jurisdiction to the issue evidently distinct from, and not even remotely requiring inquiry into
Regional Trial Court, the RTC (Branch 138) in Makati had the authority to the matter of whether or not the 33,133,266 SMC shares sequestered by
hear and decide the election contest between the parties herein. There the PCGG belong to Marcos and his cronies or dummies (on which, issue, as
should be no disagreement that jurisdiction over the subject matter of an already pointed out, de los Angeles, in common with the PCGG, had in fact
action, being conferred by law, could neither be altered nor conveniently espoused the affirmative). De los Angeles’ dispute, as stockholder and
set aside by the courts and the parties. director of SMC, with other SMC directors, an intra-corporate one, to be
sure, is of no concern to the Sandiganbayan, having no relevance whatever
To buttress its position, however, the Nieto-Locsin Group relied on Section 2 to the ownership of the sequestered stock. The contention, therefore, that
of Executive Order No. 14, which expressly mandated that the PCGG “shall in view of this Court's ruling as regards the sequestered SMC stock above
file all such cases, whether civil or criminal, with the Sandiganbayan, which adverted to, the SEC has no jurisdiction over the de los Angeles complaint,
shall have exclusive and original jurisdiction thereof.” cannot be sustained and must be rejected. The dispute concerns acts of the
board of directors claimed to amount to fraud and misrepresentation
The reliance was unwarranted. which may be detrimental to the interest of the stockholders, or is one
arising out of intra-corporate relations between and among stockholders, concern the recovery of ill-gotten wealth.13 (Emphasis
or between any or all of them and the corporation of which they are supplied)cralawlawlibrary
Moreover, the jurisdiction of the Sandiganbayan has been held not to In the case at bar, the complaint concerns PHILCOMSAT’s demand to
extend even to a case involving a sequestered company notwithstanding exercise its right of inspection as stockholder of PHC but which petitioners
that the majority of the members of the board of directors were PCGG refused on the ground of the ongoing power struggle within POTC and
nominees. The Court marked this distinction clearly in Holiday Inn (Phils.), PHILCOMSAT that supposedly prevents PHC from recognizing
Inc. v. Sandiganbayan, holding thusly: PHILCOMSAT’s representative (Africa) as possessing such right or authority
The subject-matter of petitioner’s proposed complaint-in-intervention from the legitimate directors and officers. Clearly, the controversy is intra-
involves basically, an interpretation of contract, i.e., whether or not the corporate in nature as they arose out of intra-corporate relations between
right of first refusal could and/or should have been observed, based on the and among stockholders, and between stockholders and the corporation.
Addendum/Agreement of July 14, 1988, which extended the terms and
conditions of the original agreement of January 1, 1976. The question of As to the issue of whether the complaint should be dismissed for failure to
whether or not the sequestered property was lawfully acquired by Roberto state a cause of action since PHILCOMSAT never authorized Africa to file it,
S. Benedicto has no bearing on the legality of the termination of the we rule in the negative.
management contract by NRHDC’s Board of Directors. The two are
independent and unrelated issues and resolution of either may proceed A complaint should not be dismissed for insufficiency of cause of action if it
independently of each other. Upholding the legality of Benedicto’s appears clearly from the complaint and its attachments that the plaintiff is
acquisition of the sequestered property is not a guarantee that HIP’s entitled to relief. Conversely, a complaint may be dismissed for lack of
management contract would be upheld, for only the Board of Directors of cause of action if it is obvious from the complaint and its annexes that the
NRHDC is qualified to make such a determination. plaintiff is not entitled to any relief.14 Here, attached to the complaint is the
Board Secretary’s Certificate15 stating, among others, that PHILCOMSAT
Likewise, the Sandiganbayan correctly denied jurisdiction over the proposed board of directors had authorized its President to exercise the right of
complaint-in-intervention. The original and exclusive jurisdiction given to inspection in its subsidiary PHC, and to file a case in court in case of refusal
the Sandiganbayan over PCGG cases pertains to (a) cases filedby the PCGG, by PHC.
pursuant to the exercise of its powers under Executive Order Nos. 1, 2 and
14, as amended by the Office of the President, and Article XVIII, Section 26 Petitioners insist that the board meeting held on September 22, 2005 where
of the Constitution, i.e., where the principal cause of action is the recovery the aforesaid resolution was approved, is void for want of a quorum “as the
of ill-gotten wealth, as well as all incidents arising from, incidental to, majority of the legitimate directors of PHILCOMSAT were not present at and
or related to such cases and (b) cases filed by those who wish to question or notified of the meeting.” This clearly alludes to the Nieto-PCGG group’s non-
challenge the commission’s acts or orders in such cases. recognition of the election of the board of directors of POTC and
PHILCOMSAT conducted by the Africa-Bildner group.
Evidently, petitioner’s proposed complaint-in-intervention is an ordinary
civil case that does not pertain to the Sandiganbayan. As the Solicitor The issue thus boils down to the legitimacy of the Africa-Bildner group as
General stated, the complaint is not directed against PCGG as an entity, but the controlling interest in PHILCOMSAT.
against a private corporation, in which case it is not per se, a PCGG case.
In the cases now before the Court, what are sought to be determined are In the same cited case of Philippine Overseas Telecommunications Corp.
the propriety of the election of a party as a Director, and his authority to (POTC) v. Africa,16 we have further settled with finality, under the doctrine
act in that capacity. Such issues should be exclusively determined only by of stare decisis, the question of who between the contending factions
the RTC pursuant to the pertinent law on jurisdiction because they did not
(Africa-Bildner) and (Nieto-PCGG) held the controlling interest in POTC, and 04-1049,the RTC (Branch 138) correctly concluded that the Nieto-PCGG
consequently PHILCOMSAT and PHC. Thus:chanRoblesvirtualLawlibrary Group, because it did not have the majority control of POTC, could not
have validly convened and held the stockholders’ meeting and election of
The question of who held the majority shareholdings in POTC and POTC officers on August 5, 2004 during which Nieto, Jr. and PCGG
PHILCOMSAT was definitively laid to rest in G.R. No. 141796 and G.R. No. representative Guy De Leon were respectively elected as President and
141804, whereby the Court upheld the validity of the compromise Chairman; and that there could not be a valid authority for Nieto, Jr.
agreement the Government had concluded with Atty. Ilusorio. Said the and/or Locsin to vote the proxies of the group in the PHILCOMSAT
Court: meeting.
With the imprimatur of no less than the former President Fidel V. Ramos
and the approval of the Sandiganbayan, the Compromise Agreement must For the same reason, the POTC proxies used by Nieto, Jr. and Locsin to
be accorded utmost respect. Such amicable settlement is not only allowed elect themselves respectively as Chairman and President of PHILCOMSAT;
but even encouraged. Thus, in Republic vs. Sandiganbayan, we held: and the PHILCOMSAT proxies used by Nieto, Jr. and Locsin in the August
x xxx 31, 2004 PHC elections to elect themselves respectively as President and
Acting Chairman of PHC, were all invalid for not having the support of the
The authority of the PCGG to enter into Compromise Agreements in civil majority shareholders of said corporations.
cases and to grant immunity, under certain circumstances, in criminal cases
is now settled and established. In Republic of the Philippines and Jose O. While it is true that judicial decisions should be given a prospective effect,
Campos, Jr. vs. Sandiganbayan, et al. (173 SCRA 72 [1989]), this Court such prospectivity did not apply to the June 15, 2005 ruling in G.R. No.
categorically stated that amicable settlements and compromises are not 141796 and G.R. No. 141804 because the ruling did not enunciate a new
only allowed but actually encouraged in civil cases. A specific grant of legal doctrine or change the interpretation of the law as to prejudice the
immunity from criminal prosecutions was also sustained. InBenedicto vs. parties and undo their situations established under an old doctrine or prior
Board of Administrators of Television Stations RPN, BBC, and IBC (207 SCRA interpretation. Indeed, the ruling only affirmed the compromise agreement
659 [1992]), the Court ruled that the authority of the PCGG to validly enter consummated on June 28, 1996 and approved by the Sandiganbayan on
into Compromise Agreement for the purpose of avoiding litigation or June 8, 1998, and accordingly implemented through the cancellation of the
putting an end to one already commenced was indisputable. x xx (italics shares in the names of IRC and MLDC and their registration in the names of
supplied) Atty. Ilusorio to the extent of 673 shares, and of the Republic to the extent
Having been sealed with court approval, the Compromise Agreement has of 4,727 shares. In a manner of speaking, the decision of the Court in G.R.
the force of res judicata between the parties and should be complied with in No. 141796 and G.R. No. 141804 promulgated on June 15, 2005 declared
accordance with its terms. Pursuant thereto, Victoria C. de los Reyes, the compromise agreement valid, and such validation properly retroacted
Corporate Secretary of the POTC, transmitted to Mr. Magdangal B. Elma, to the date of the judicial approval of the compromise agreement on June 8,
then Chief Presidential Legal Counsel and Chairman of PCGG, Stock 1998.
Certificate No. 131 dated January 10, 2000, issued in the name of the
Republic of the Philippines, for 4,727 POTC shares. Thus, the Compromise Consequently, although the assailed elections were conducted by the Nieto-
Agreement was partly implemented.cralawlawlibrary PCGG group on August 31, 2004 but the ruling in G.R. No. 141796 and G.R.
No. 141804 was promulgated only on June 15, 2005, the ruling was the legal
As a result of the Government having expressly recognized that 673 POTC standard by which the issues raised in Civil Case No. 04-1049 should be
shares belonged to Atty. Ilusorio, Atty. Ilusorio and his group gained the resolved.17 (Emphasis supplied)cralawlawlibrary
majority control of POTC.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated
Applying the ruling in G.R. No. 141796 and G.R. No. 141804 to Civil Case No. October 21, 2011 and Resolution dated February 10, 2012 of the Court of
Appeals in CA-G.R. SP No. 99789 are herebyAFFIRMED.

No pronouncement as to costs.

SO ORDERED.cralawlawlibrary

Velasco, Jr., (Chairperson), Peralta, Reyes, and Jardeleza, JJ., concur.