G.R. No. 184622, 3 July 2013

FACTS:

POTC is a domestic corporation organized for the purpose of, among others, constructing, installing, maintaining, and operating communications satellite systems, satellite terminal stations and associated equipments and facilities in the Philippines. The ownership structure of these corporations implies that whoever had control of POTC necessarily held 100% control of PHILCOMSAT, and in turn whoever controlled PHILCOMSAT wielded 81% majority control of PHC. Records reveal that POTC has been owned by seven families through their individual members or their corporations, namely:

(a) the Ilusorio Family;
(b) the Nieto Family;
(c) the Poblador Family;
(d) the Africa Family;
(e) the Benedicto Family;
(f) the Ponce Enrile Family; and
(g) the Elizalde Family.

On February 25, 1986, the EDSA People Power Revolution deposed President Marcos from power and forced him and his family to flee the country. On February 28, 1986, newly-installed President Corazon C. Aquino issued Executive Order No. 1 to create the PCGG whose task was to assist the President in the recovery of all ill-gotten wealth amassed by President Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, through the takeover or sequestration of all business enterprises and entities owned or controlled by them during President Marcos’ administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationships.

On July 28, 2004, the Africa-Bildner Group held successive stockholders’ meetings for POTC and PHILCOMSAT. Victor Africa was elected as one of the directors in the Africa-Bildner Group; he was designated as the POTC proxy to the PHILCOMSAT stockholders’ meeting.

Locsin and Andal were also elected as PHILCOMSAT Directors. However, Nieto, Jr., Locsin and Andal did not accept their election as POTC and PHILCOMSAT Directors.

On August 5, 2004, the Nieto-PCGG Group conducted the annual stockholders’ meeting for POTC at the Manila Golf Club. Elected were Nieto, Jr. as President and Guy de Leon, a government nominee to POTC, as Chairman. At the same meeting, the Nieto-PCGG Group, through its elected Board of Directors, issued a proxy in favor of Nieto, Jr. and/or Locsin authorizing them to represent POTC and vote the POTC shares in the PHILCOMSAT stockholders’ meeting scheduled on August 9, 2004.

Various suits were filed against each other by the two factions to gain legitimacy of their election as respective officers of POTC and PHILCOMSAT. Prior to this, there was a pending case involving a compromise agreement which resulted to Africa and others to gain majority control and the Nieto family and PCGG became the Minority.

Africa, the president and CEO of the PHILCOMSAT, the wrote a letter to the PHC Board, informing that PHILCOMSAT will exercise its right of inspection over the books, record, papers, etc. pertinent to the business transaction of PHC. Africa’s group were disallowed which prompted him to file with the RTC, a Complaint for Inspection of Books against incumbent PHC Board. RTC held that it is Sandiganbayan, not the RTC, which has jurisdiction since Plaintiff is a sequestered corporation of the Republic through the PCGG.

ISSUE:

Whether or not it is the Sandiganbayan or RTC which has jurisdiction over a stockholders’ suit to enforce its right of inspection under the Corporation Code.

RULING:

The RTC and not the Sandiganbayan has jurisdiction over the case which do not involved sequestration-related incident but an intra corporate controversy. It is settled that there is an intra-corporate controversy when the dispute involves any of the following relationships, to wit:

(a) between the corporation, partnership or association and the public;
(b) between the corporation, partnership or association and the State in so far as its franchise, permit or license to operate is concerned;
(c) between the corporation, partnership or association and its stockholders, partners, members or officers; and
(d) among the stockholders, partners or associates themselves.

*Case Digest by Catherine C. Velasco, LLB-IV, Andres Bonifacio Law School, SY 2019-2020