THIRD DIVISION
G.R. No. 185894, August 30, 2017
BELO MEDICAL GROUP, INC., Petitioner, v. JOSE L. SANTOS AND VICTORIA G. BELO, Respondents.
D E C I S I O N
LEONEN, J.:
A conflict between two (2) stockholders of a corporation does not automatically render their dispute as intra-corporate. The nature of the controversy must also be examined.1
In this Petition for Review on Certiorari2 under Rule 45 of the Rules of Court, Belo Medical Group, Inc. (Belo Medical Group) assails the Regional Trial Court December 8, 2008 Joint Resolution in Civil Case No. 08-397.3 This Joint Resolution granted respondent Jose L. Santos' (Santos) Motion to Dismiss and Belo Medical Group's Complaint for interpleader and Supplemental Complaint for Declaratory Relief against Santos and Victoria G. Belo (Belo), and declared all other pending incidents as moot.4
The controversy began on May 5, 20085 when Belo Medical Group received a request from Santos for the inspection of corporate records.6 Santos claimed that he was a registered shareholder and a co-owner of Belo's shares, as these were acquired while they cohabited as husband and wife.7 Santos sought advice on his probable removal as director of the corporation considering that he was not notified of meetings where he could have been removed. He also inquired on the election of Alfredo Henares (Henares) as Corporate Secretary in 2007 when Santos had not been notified of a meeting for Henares' possible election. Finally, he sought explanation on the corporation's failure to inform him of the 2007 annual meeting and the holding of an annual meeting in 2008.8 Santos' concern over the corporate operations arose from the alleged death of a patient in one (1) of its clinics.9
Santos was unsuccessful in inspecting the corporate books as Henares, the officer-in-charge of corporate records, was travelling. Belo Medical Group asked for time in order for Henares to accommodate Santos' request.10
After the first attempt to inspect, Belo wrote Belo Medical Group on May 14, 2007 to repudiate Santos' co-ownership of her shares and his interest in the corporation. She claimed that Santos held the 25 shares in his name merely in trust for her, as she, and not Santos, paid for these shares. She informed Belo Medical Group that Santos already had a pending petition with the Regional Trial Court to be declared as co-owner of her properties. She asserted that unless a decision was rendered in Santos' favor, he could not exercise ownership rights over her properties.11
Belo also informed Belo Medical Group that Santos had a business in direct competition with it. She suspected that Santos' request to inspect the records of Belo Medical Group was a means to obtain a competitor's business information, and was, therefore, in bad faith.12
A second inspection was attempted through a written demand by Santos on May 15, 2008.13 Again, he was unsuccessful.
Belo wrote to Belo Medical Group on May 20, 2008 to reiterate her objections to Santos' attempts at inspecting corporate books and his inquiry regarding a patient. Belo further manifested that she was exercising her right as a shareholder to inspect the books herself to establish that the 25 shares were not owned by Santos, and that he did not pay for these shares.14
Thus, Belo Medical Group filed a Complaint for Interpleader15 with Branch 149, Regional Trial Court, Makati City on May 21, 2008. Belo Medical Group alleged that while Santos appeared to be a registered stockholder, there was nothing on the record to show that he had paid for the shares under his name. The Complaint was filed "to protect its interest and compel [Belo and Santos] to interplead and litigate their conflicting claims of ownership of, as well as the corresponding right of inspection arising from, the twenty-five (25) [Belo Medical Group] shares between themselves pursuant to Rule 62 of the 1997 Rules of Civil Procedure . . ."16 The following reliefs were prayed for:
(i) issue an Order summoning and requiring defendants Santos and Belo to interplead with each other to resolve their conflicting claims of ownership of the 25 shares of stock of [Belo Medical Group], including their opposing claims of exclusive entitlement to inspect [Belo Medical Group] corporate records;On the same day, Henares wrote Belo's and Santos' respective counsels to inform them of the Complaint.18 Despite receipt, Santos' counsel still proceeded to Belo Medical Group's Makati office on May 22, 2008, where, again, they were unsuccessful in inspecting the corporate books.19
(ii) after due proceedings render judgment in favor of the proper defendant; and
(iii) allow plaintiff [Belo Medical Group] to recover attorney's fees and litigation expenses in the amount of at least Php1,000,000.00 jointly and solidarity against both defendants and for them to pay the costs of suit.17
a. exercise its power under Rule 63 of the Revised Rules of Civil Procedure and give a proper construction of Sections 74 and 75 of the Corporation Code in relation to the facts presented above, and declare that plaintiff can rightfully decline defendant Santos's request for inspection under those sections and related provisions and jurisprudence; andBelo Medical Group's Complaint and Supplemental Complaint were raffled to Branch 149 of the Regional Trial Court of Makati, a special commercial court,27 thus classifying them as intra-corporate.28
b. allow plaintiff to recover attorney's fees and litigation expenses from defendant Santos in the amount of at least PHP1,000,000.00 and the costs of suit.26
Plaintiff clearly admits in the complaint that defendant Santos is the registered stockholder of the subject shares albeit no records show that he made any payments thereof. Also, notwithstanding defendant Belo's claim that she is the true owner thereof, there was no allegation that defendant Santos is no longer the holder on record of the same or that it is now defendant Belo who is the registered stockholder thereof. In fact, the complaint even alleges that defendant Santos holds the 25 BMGI shares merely as nominal qualifying shares in trust for defendant Belo. Thus, the complaint failed to state a cause of action that would warrant the resort to an action for interpleader.61Though a motion to dismiss is a prohibited pleading under the Interim Rules of Procedure Governing Intra-Corporate Controversies, the trial court ruled that Section 2, Rule 1 of these rules allowed for the Rules of Court to apply suppletorily. According to the Rules of Court, motions to dismiss are allowed in interpleader cases.62
What is critical is the vexation brought upon the courts and the litigants by a party who asks different courts to rule on the same or related causes and grant the same or substantially the same reliefs and in the process creates the possibility of conflicting decisions being rendered by the different fora upon the same issues.80Rule 7, Section 5 of the Rules of Court contains the rule against forum shopping:
Section 5. Certification against forum shopping. - The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other per ding action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.When willful and deliberate violation is clearly shown, it can be a ground for all pending cases' summary dismissal with prejudice81 and direct contempt 82
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice; unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions.
Section 1. (a) Cases Covered - These Rules shall govern the procedure to be observed in civil cases involving the following:The same rules prohibit the filing of a motion to dismiss:
- Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association;
- Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively;
- Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations;
- Derivative suits; and
- Inspection of corporate books.87
Section 8. Prohibited Pleadings. -The following pleadings are prohibited: (1) Motion to dismiss;To determine whether an intra-corporate dispute exists and whether this case requires the application of these rules of procedure, this Court evaluated the relationship of the parties. The types of intra-corporate relationships were reviewed in Union Glass & Container Corporation v. Securities and Exchange Commission:88
(2) Motion for a bill of particulars;
(3) Motion for new trial or for reconsideration of judgment or order, or for reopening of trial;
(4) Motion for extension of time to file pleadings, affidavits or any other paper, except those filed due to clearly compelling reasons. Such motion must be verified and under oath; and
(5) Motion for postponement and other motions of similar intent, except those filed due to clearly compelling reasons. Such motion must be verified and under oath.
[a] between the corporation, partnership or association and the public; [b] between the corporation, partnership or association and its stockholders, partners, members, or officers; [c] between the corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned; and [d] among the stockholders, partners or associates themselves.89For as long as any of these intra-corporate relationships exist between the parties, the controversy would be characterized as intra-corporate.90 This is known as the "relationship test."
The purpose and the wording of the law escapes the respondent. Nowhere in said decree do we find even so much as an intimidation that absolute jurisdiction and control is vested in the Securities and Exchange Commission in all matters affecting corporations. To uphold the respondent's argument would remove without legal imprimatur from the regular courts all conflicts over matters involving or affecting corporations, regardless of the nature of the transactions which give rise to such disputes. The courts would then be divested of jurisdiction not by reason of the nature of the dispute submitted to them for adjudication, but solely for the reason that the dispute involves a corporation. This cannot be done. To do so would not only be to encroach on the legislative prerogative to grant and revoke jurisdiction of the courts but such a sweeping interpretation may suffer constitutional infirmity. Neither can we reduce jurisdiction of the courts by judicial fiat (Article X, Section 1, The Constitution).92This Court now uses both the relationship test and the nature of the controversy test to determine if an intra-corporate controversy is present.93
Since there is an active conflict of interests between the two defendants, now herein respondent Benito Gervasio Tan and petitioner Zoila Co Lim, over the disputed shares of stock, the trial court gravely abused its discretion in dismissing the complaint for interpleader, which practically decided ownership of the shares of stock in favor of defendant Benito Gervasio Tan. The two defendants, now respondents in G.R. No. L-41831, should be given full opportunity to litigate their respective claims.In Lim, the corporation was presented certificates of shares of stock in So Bi's name. This proof was sufficient for Continental Development Corporation to reasonably conclude that controversy on ownership of the shares of stock existed.
Rule 63, Section 1 of the New Rules of Court tells us when a cause of action exists to support a complaint in interpleader:Whenever conflicting claims upon the same subject matter are or may be made against a person, who claims no interest whatever in the subject matter, or an interest which in whole or in part is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves . . .This provision only requires as an indispensable requisite:that conflicting claims upon the same subject matter are or may be made against the plaintiff-in-interpleader who claims no interest whatever in the subject matter or an interest which in whole or in part is not disputed by the claimants (Beltran vs. People's Homesite and Housing Corporation, No. L-25138, 29 SCRA 145).This ruling, penned by Mr. Justice Teehankee, reiterated the principle in Alvarez vs. Commonwealth (65 Phil. 302), thatThe action of interpleader, under section 120, is a remedy whereby a person who has personal property in his possession. or an obligation to render wholly or partially, without claiming any right in both comes to court and asks that the persons who claim the said personal property or who consider themselves entitled to demand compliance with the obligation. be required to litigate among themselves, in order to determine finally who is entitled to one or the other thing. The remedy is afforded not to protect a person against a double liability but to protect him against a double vexation in respect of one liability.An interpleader merely demands as a sine qua non element. . . that there be two or more claimants to the fund or thing in dispute through separate and different interests. The claims must be adverse before relief can be granted and the parties sought to be interpleaded must be in a position to make effective claims (33 C.J. 430).Additionally, the fund thing, or duty over which the parties assert adverse claims must be one and the same and derived from the same source (33 C.J., 328; Martin, Rules of Court, 1969 ed., Vol. 3, 133-134; Moran, Rules of Court, 1970 ed., Vol. 3, 134-136).
Indeed, petitioner corporation is placed in the same situation as a lessee who does not know the person to whom he will pay the rentals due to the conflicting claims over t[h]e property leased, or a sheriff who finds himself puzzled by conflicting claims to a property seized by him. In these examples, the lessee (Pangkalinawan vs. Rodas, 80 Phil. 28) and the sheriff (Sy-Quia vs. Sheriff, 46 Phil. 400) were each allowed to file a complaint in interpleader to determine the respective rights of the claimants.99
1. All decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealable to the Court of Appeals through a petition for review under Rule 43 of the Rules of Court.On the other hand, Rule 43 of the Rules of Court allows for appeals to the Court of Appeals to raise questions of fact, of law, or a mix of both. Hence, a party assailing a decision or a final order of the trial court acting as a special commercial court, purely on questions of law, must raise these issues before the Court of Appeals through a petition for review.101 A.M. No. 04-9-07-SC mandates it. Rule 43 allows it.
2. The petition for review shall be taken within fifteen (15) days from notice of the decision or final order of the Regional Trial Court. Upon proper motion and the payment of the full amount of the legal fee prescribed in Rule 141 as amended before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days within which to file the petition for review. No further extension shall be granted except for the most compelling reasons and in no case to exceed fifteen (15) days.
Section 5. Joinder of Causes of Action. A party may in one pleading assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party, subject to the following conditions:Assuming this case continues on as an interpleader, it cannot be joined with the Supplemental Complaint for declaratory relief as both are special civil actions. However, as the case was classified and will continue as an intra-corporate dispute, the simultaneous complaint for declaratory relief becomes superfluous. The right of Santos to inspect the books of Belo Medical Group and the appreciation for his motives to do so will necessarily be determined by the trial court together with determining the ownership of the shares of stock under Santos' name.
(a) The party joining the causes of action shall comply with the rules on joinder of parties;
(b) The joinder shall not include special civil actions or actions governed by special rules;
(c) Where the causes of action are between the same parties but pertain to different venues or jurisdictions, the joinder may be allowed in the Regional Trial Court provided one of the causes of action falls within the jurisdiction of said court and the venue lies therein; and
(d) Where the claims in all the causes of action are principally for recovery of money, the aggregate amount claimed shall be the test of jurisdiction. (Emphasis supplied)
Endnotes:
1Reyes v. Hon. Regional Trial Court of Makati, etc., et al., 583 Phil. 591 (1984) [Per J. Brion, Second Division].
2Rollo, pp. 3-32.
3 Id. at 33-35. The Joint Resolution was penned by Presiding Judge Cesar O. Untalan of Branch 149, Regional Trial Court, Makati City.
4 Id. at 35.
5 Id. at 7.
6 Id. at 43-44.
7 Id. at 43.
8 Id. at 43-44.
9 Id. at 70-74, as culled from the April 25, 2008 letters of Santos' counsel to Belo Medical Group and Belo Medical Group's May 14, 2008 reply.
10 Id. at 45, Belo Medical Group's letter to Santos' counsel dated May 14, 2008.
11 Id. at 46-47.
12 Id. at 47.
13 Id. at 48-49.
14 Id. at 50-51.
15 Id. at 52-59.
16 Id. at 56.
17 Id.
18 Id. at 75.
19 Id. at 76.
20 Id. at 76-77.
21 Id. at 78-79.
22 Id. at 80-81.
23 Id. at 82-92.
24 CORP. CODE, sec. 74 provides:
Section 74. Books to be kept; stock transfer agent. - Every corporation shall keep and carefully preserve at its principal office a record of all business transactions and minutes of all meetings of stockholders or members, or of the board of directors or trustees, in which shall be set forth in detail the time and place of holding the meeting, how authorized, the notice given, whether the meeting was regular or special, if special its object, those present and absent, and every act done or ordered done at the meeting. Upon the demand of any director, trustee, stockholder or member, the time when any director, trustee, stockholder or member entered or left the meeting must be noted in the minutes; and on a similar demand, the yeas and nays must be taken on any motion or proposition, and a record thereof carefully made. The protest of any director, trustee, stockholder or member on any action or proposed action must be recorded in full on his demand.
The records of all business transactions of the corporation and the minutes of any meetings shall be open to inspection by any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense.
Any officer or agent of the corporation who shall refuse to allow any director, trustee, stockholder or member of the corporation to examine and copy excerpts from its records or minutes, in accordance with the provisions of this Code, shall be liable to such director trustee, stockholder or member for damages, and in addition, shall be guilty of an offense which shall be punishable under Section 144 of this Code: Provided, That if such refusal is made pursuant to a resolution or order of the board of directors or trustees, the liability under this section tor such action shall be imposed upon the directors or trustees who voted for such refusal: and Provided, further, That it shall be a defense to any action under this section that the person demanding to examine and copy excerpts from the corporation's records and minutes has improperly used any information secured through any prior examination of the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making his demand.
25Rollo, pp. 88-89.
26 Id. at 90.
27 Pursuant to A.M. No. 03-03-03-SC (2003).
28Rollo, p. 13.
29 Id. at 114-122.
30 Id. at 118.
31 Id. at 155-156, as indicated in Sheriff Robert V. Alejo's Sheriffs Returns.
32 Id. at 155.
33 Id. at 156.
34 Id. at 128-135.
35 A.M. No. 01-2-04-SC (2001).
36 Id. at 131.
37 Id. at 150-158.
38 Id. at 165-189.
39 Id. at 174.
40 Id. at 179.
41 Id. at 180-181.
42 Id. at 182-183.
43 Id. at 183-184, 189.
44 Id. at 185.
45 Id. at 192, Articles of Incorporation of Belo Medical Group, Inc.
46 Id. at 36, Articles of Incorporation of the Obago Skin Health, Inc.
47 Id. at 207-22l.
48 Id. at 216.
49 Id. at 218 citing Wack Wack Golf & Country Club, Inc. v. Won, 162 Phil. 233 (1976) [Per J. Castro, En Banc].
50 Id. at 219.
51 Id. at 222-254.
52 Id. at 265-290.
53 Id. at 266-272.
54 Id. at 284-288.
55 Id. at 274-284.
56 Id. at 33-35.
57 Id. at 35.
58 Id. at 33.
59 Id.
60 Id. at 34.
61 Id.
62 Id.
63 Id. at 35 citing Kawasaki Port Service Corp. v. Amores, 276 Phil. 249 (1991) [Per J. Bidin, Third Division].
64 Id. at 334-388.
65 Id. at 21.
66 161 Phil. 453 (1976) [Per J. Makasiar, First Division].
67Rollo, p. 20.
68 Id. at 329-332.
69 Id. at 390-395.
70 Id. at 683-686.
71 Id. at 701-706.
72 Id. at 707-729.
73 Id. at 707.
74 Id. at 718.
75 Id. at 820-831.
76See Asia United Bank v. Goodland Company, 660 Phil. 504 (2011) [Per J. Del Castillo, First Division].
77Yap v. Chua, 687 Phil. 392, 399 (2012) [Per J. Reyes, Second Divison].
78Catayas v. Court of Appeals, 693 Phil. 451, 456 (2012) [Per J. Medoza, Second Division].
79 457 Phil. 740 (2003) [Per J. Bellosillo, Second Division].
80 Id. at 748.
81See Ao-as v. Court of Appeals, 524 Phil. 645 (2006) [Per J. (Chico-Nazario, First Division).
82 RULES OF COURT, Rule 7, sec. 5; Municipality of Taguig v. Court of Appeals, 506 Phil. 567, 581 (2005) [Per J. Austria-Martinez, Second Division] citing Biñan Steel Corporation v. Court of Appeals, 439 Phil. 688 (2002) [Per J. Corona, Third Division] and Supreme Court Circular No. 28-91.
83Rollo, pp. 3 and 390.
84 Id. at 826-829.
85 Id. at 821-831.
86Philippine Postal Corporation v. Court of Appeal and Guzman, 722 Phil. 860 (2013) [Per J. Perlas-Bernabe, Second Division].
87 Id.
88 211 Phil. 222 (1983) [Per J. Escolin, En Banc].
89 Id. at 231.
90See Philex Mining Corporation v. Hon. Reyes, 204 Phil. 241 (1982) [Per J. Melencio-Herrera, First Division].
91 217 Phil. 280 (1984) [Per J. Gutierrez, Jr., First Division].
92 Id. at 287.
93See Aguirres II v. FQB+7, Inc., 701 Phil. 216 (2013) [Per J. Del Castillo, Second Division]; Reyes v. Hon. Regional Trial Court of Makati, etc., et al., 583 Phil. 591 (2008) [Per J. Brion, Second Division]; Speed Distributing Corp. et al. v. Court of Appeals and Rufina Lim, 469 Phil. 739 (2004) [Per J. Callejo, Sr., Second Division].
94Rollo, pp. 190-199.
95 Id. at 200-206.
96 Id. at 114-122.
97 Id. at 56.
98 161 Phil. 453 (1976) [Per J. Makasiar, First Division].
99 Id. at 460-462.
100See Aldersgate College, Inc. v. Gauuan, et al., 698 Phil. 821 (2012) [Per J. Perlas-Bernabe, Second Division].
101San Jose v. Ozamis, G.R. No. 190590, July 12, 2017, 7 [Per J. Carpio, Second Division].
102Cathay Metal Corp. v. Laguna West Multi Purpose Cooperative, Inc., 738 Phil. 37, 63 (2014) [Per J. Leonen, Third Division].