SECOND DIVISION
GD
EXPRESS WORLDWIDE N.V. G. R.
No. 136978
and
AMIHAN MANAGEMENT
SERVICES,
INC., Present:
Petitioners,
CARPIO
MORALES, J.,*
Acting
Chairperson,
- versus
-
TINGA,
VELASCO, JR.,
LEONARDO DE CASTRO,** and
HON. COURT OF APPEALS (FOURTH BRION, JJ.
DIVISION),
HON. SECURITIES AND
EXCHANGE
COMMISSION (en banc),
Promulgated:
HON.
ROSITA R. GUERRERO, in
her capacity as Hearing Officer, and May 8, 2009
FILCHART AIRWAYS, INC.,
x------------------------------------------------------------------------------------x
D E C I S I O N
Tinga, J.:
Before
the Court is a petition for review on certiorari[1]
under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision[2] of
the Court of Appeals in CA-G.R. SP No. 48442 and praying for the dismissal of
the petition filed before the Securities and Exchange Commission (SEC) by respondent Filchart Airways, Inc. (Filchart) in
SEC Case No. 08-97-5746.
The following factual antecedents are
matters of record.
Petitioner GD Express Worldwide N.V. (GD
Express) is a corporation duly organized and existing under the laws of the
The agreements essentially laid down
the relationship between TNT and PADC and the management, control and existence
of the corporation. Also, pursuant to the joint venture agreements, PADC and
TNT registered with the SEC a corporation to be known as Air Philippines
Corporation (APC).
Subsequently, on
Sometime in 1994, the Office of the
President mandated the Committee on Privatization to require the Asset
Privatization Trust (APT) to dispose of PADC’s 80% share in PEAC. Thus,
petitioner GD Express and PADC executed the Terms of Reference that would
govern the disposition of PADC’s equity comprising 12,800 subscribed shares of
stock in PEAC.[6]
In March 1996, the APT issued the
Asset Specific Bidding Rules (ASBR) incorporating the Terms of Reference for
the sale of PADC’s shares of stock in PEAC. The ASBR required prospective
bidders, among others, to comply with the obligations and
undertakings/warranties enumerated therein. At the bidding conducted on
Alleging that respondent Filchart was
bent on reneging on its obligations and warranties under the ASBR and Terms of
Reference, petitioner GD Express instituted on 14 October 1996, Civil Case No.
96-1675 for specific performance before the Regional Trial Court (RTC) of Makati
to compel PADC and APT to faithfully comply with the joint venture agreements,
the ASBR and the Terms of Reference, with a prayer for the preservation of the status
quo ante litem.
During the pendency of Civil Case No.
96-1675, PADC and respondent Filchart executed on P110,000,000.00.[7]
The sale was duly recorded in PEAC’s stock and transfer book and the shares of
stock were transferred in the name of respondent Filchart.[8]
This prompted petitioner GD Express
to file an amended complaint[9] to
introduce another cause of action for the nullification of the said transfer and
to implead the Committee on Privatization, the PEAC and respondent Filchart as
additional defendants. The amended complaint reiterated the prayer for the
issuance of a temporary restraining order (TRO) and writ of preliminary
injunction. Respondent Filchart opposed the issuance of TRO, claiming that the
dispute was intra-corporate in nature falling within the SEC’s jurisdiction.[10]
In the amended complaint dated 06
June 1997, petitioner sought to nullify the approval by the Committee on
Privatization and the notice of award issued by the APT in favor of respondent Filchart and to compel the
defendants to perform all their respective obligations under the joint venture
agreements, the ASBR and the Terms of Reference and to desist from committing
further breach thereof or, in the alternative, to nullify any transfer and/or
issuance of PADC’s subscribed shares of stock in PEAC in favor of respondent
Filchart. Petitioner GD Express also prayed for an award of temperate and
exemplary damages and attorney’s fees.[11] On
Meanwhile, on 12 August 1997,
respondent Filchart filed before the SEC a petition, docketed as SEC Case No. 08-97-5746,
praying for the appointment of a management committee to take over the business
operations of PEAC pending litigation and for judgment declaring, among others,
the nullity of certain provisions in the joint venture agreement between PADC
and petitioner GD Express, particularly those requiring the consent of
petitioner GD Express in the sale of PADC’s shareholdings in PEAC. Also sought
to be nullified were certain provisions in PEAC’s articles of incorporation and
by-laws, and the management agreement between petitioners GD Express and Amihan.
Named respondents were herein petitioners GD Express and Amihan.[13]
On 29 September 1997, petitioners filed
a motion to dismiss the petition in SEC Case No. 08-97-5746 on the grounds that
its filing constituted a willful and deliberate act of forum shopping and that
respondent Filchart had no capacity to sue and cause of action to ask for the
appointment of a management committee pending the determination of its status
as a stockholder.[14]
On 21 November 1997, Hearing Officer Rosita
R. Guerrero issued an order denying petitioners’ motion to dismiss, holding
that SEC Case No. 08-97-5746 pertained to different causes of action falling
under the exclusive jurisdiction of the SEC. Petitioners’ motion for
reconsideration was denied in an Order dated 08 December 1997.[15]
Petitioners elevated the matter to the
SEC en banc via a petition for certiorari. Acting on petitioners’ prayer
for the issuance of a TRO, the SEC en banc issued an order on
Aggrieved, petitioners filed a Rule
43 petition before the Court of Appeals arguing that the Hearing Officer had no
jurisdiction over SEC Case No. 08-97-5746 on the following grounds: (1) the
dispute was not intra-corporate in character considering that respondent
Filchart had not fully paid the subscription rights in PADC; (2) respondent
Filchart’s status as stockholder in PEAC must be settled first in Civil Case
No. 96-1675; and (3) a request from the supervising government agency must be
secured first before the appointment of a management committee to undertake the
management of PEAC. Petitioners also pointed out that the filing of the
petition in SEC Case No. 08-97-5746 constituted a willful and deliberate act of
forum shopping and that the Hearing Officer dismissed petitioners’ motion to
dismiss and motion for reconsideration without stating clearly and distinctly
the reasons of the dismissal.[17]
On
Hence, the instant petition, arguing
that the SEC Hearing Officer was not authorized to assume jurisdiction over SEC
Case No. 08-97-5746 for the following reasons: (1) the status of respondent
Filchart must first be resolved with finality in Civil Case No. 96-1675; (2)
there is no intra-corporate dispute since respondent Filchart is not a
stockholder; (3) SEC jurisdiction under Section 5(a) of P.D. No. 902-A does not
apply to SEC Case No. 08-97-5746; (4) prior request of the supervising
government agency must first be secured before the SEC Hearing Officer can
appoint a management committee; and (5) the filing of SEC Case No. 08-97-5746
constitutes a willful and deliberate act of forum shopping.[19]
Subsequently, petitioners filed a
supplemental petition,[20]
which was admitted by the Court. The supplemental petition averred that the SEC
constituted a Hearing Panel in SEC Case No. 08-97-5746. On the same day the
instant petition was filed or on
The supplemental petition was accompanied
by an application for the issuance of a TRO and/or writ of preliminary
injunction to enjoin the SEC Hearing Panel from assuming jurisdiction over SEC
Case No. 08-97-5746 and the Interim Management Committee from implementing the
Order dated
At the core of the instant petition
is the issue of whether the SEC erred in assuming jurisdiction over respondent
Filchart’s petition in SEC Case No. 08-97-5746 during the pendency of Civil
Case No. 96-1675. Corollary to this is the question whether the filing thereof during
the pendency of Civil Case No. 96-1675 constitutes a willful and deliberate act
of forum shopping on the part of respondent Filchart.
At the outset, it must be emphasized
that pursuant to Section 5.2[24]
of Republic Act No. 8799,[25] the SEC’s jurisdiction over intra-corporate
controversies has been transferred to the RTCs or Special Commercial Courts
(SCC) designated by the Court pursuant to A.M. No. 00-11-03-SC promulgated on
In view of the said transfer of
jurisdiction, the SEC Hearing Panel
which the SEC constituted and the Interim Management Committee which the SEC
Hearing Panel appointed have become functus officio. Petitioners’ prayer
for a TRO and/or writ of injunction to prevent the said bodies from acting upon
their authority has been rendered moot and academic by this development.
R.A. No. 8799 became effective during
the pendency of both Civil Case No. 96-1675 and SEC Case No. 08-97-5746. It
appears that the records of SEC Case No. 08-97-5746 have already been forwarded
to the Office of the Court Administrator for proper transmittal to the
appropriate SCC.[26] Be that as it may, the resolution of this
petition is not rendered moot by the transfer of jurisdiction from the SEC to
the SCC. The question whether Civil Case No. 96-1675 can proceed simultaneously
and independently with the intra-corporate case or whether both cases should be
consolidated or either case suspended or dismissed remains to be settled.
Petitioners argue that the assumption
of jurisdiction by the SEC over SEC Case No. 08-97-5746 has resulted in the
splitting of jurisdiction over the issues of which the RTC has already
previously assumed jurisdiction in Civil Case No. 96-17-675. Petitioners
theorize that all issues pertaining to the validity and enforceability
of the obligations of respondent Filchart under the joint venture agreements,
the ASBR and the Terms of Reference, as well as the validity of certain
provisions in PEAC’s articles of incorporation and by-laws, the supposed
transfer and issuance of subscribed shares to respondent Filchart and the
exercise of rights of ownership over said shares, must be resolved by the RTC
in Civil Case No. 96-17-675.
On the other hand, respondent
Filchart argues that Civil Case No. 96-17-675 is an intra-corporate dispute exclusively
cognizable by the SEC because the questions therein necessarily involve a
determination of the validity of certain acts of a shareholder of a
corporation, that is, whether the sale by PADC of its shares in PEAC to
respondent Filchart is valid.
Respondent Filchart’s petition in SEC
Case No. 08-97-5746 prays for the following reliefs:
WHEREFORE, it is respectfully prayed that, after
notice and hearing:
1. Pending judgment on the merits, an interim order be
issued creating and appointing a Management Committee to take over the
management of the business operations and affairs of PEAC; such Management
Committee to be composed of a SEC representative to serve as Chairman, three (3)
members to be nominated by Filchart and one (1) member to be nominated by GD
Express.
2. After hearing on the merits, judgment be rendered
in favor of Filchart:
(a) Declaring void ab initio for being contrary
to law and public policy, and the Constitution (i) Sec. 6.1 of the
Pre-Incorporation Agreement and Section 21.1 of the Shareholders Agreement
which provisions purport to restrict PADC’s right to sell, assign or transfer
its shareholdings in PEAC without the written consent of GD Express; (ii)
Article 10 [2], [3] of the Article of Incorporation of PEAC; and (iii) Section
8, Article II Section 5, Article III of the By-Laws of PEAC.
(b) Annulling and setting aside for being contrary to
law, public policy and the Constitution the Management Agreement entered into
between PEAC and Amihan.
(c) Directing the stockholders of PEAC to amend PEAC’s
Articles of Incorporation and By-Laws by deleting the provisions declared void
ab initio as prayed for above.
(d) Declaring Filchart’s nominees, namely: Robin Sy, Jose
Antonio Lim, Eduardo R. Ceniza, Domingo G. Castillo and Ricardo P.G. Ongkiko,
as having been duly elected directors of PEAC at the Special Meeting of the
Stockholders held on August 5, 1997, and ordering defendant GD Express, its
officers, and all persons acting in their behalf to allow said nominee
directors of Filchart to have access to the office premises of PEAC, its
records and its properties.
(e) Ordering GD Express to pay Filchart –
[i] nominal damages in the amount of P1,000,000.00;
[ii] temperate damages in such amount as the Honorable
Commission may fix in its discretion;
[iii] exemplary damages in the amount of P500,000.00;
[iv] attorney’s fees, in the amount of P2,000,000.00,
plus expenses of litigation the amount of which will be proved at the trial.
[v] the costs of suit.
Filchart prays for such other reliefs just and
equitable under the premises.[27]
There is no question that the prayers
for the appointment of a management receiver, the nullification and amendment of
certain provisions of PEAC’s articles of incorporation and by-laws, the recognition
of the election of respondent Filchart’s directors, as well as the inspection
of the corporate books, are intra-corporate in nature as they pertain to the regulation
of corporate affairs.
Even the issue of respondent Filchart’s
status as stockholder in PEAC and, concomitantly, its capacity to file SEC Case
No. 08-97-5746 must be threshed out in the intra-corporate proceedings. Petitioner
GD Express’ allegation that respondent Filchart has not fully paid its
subscription to the shares in PEAC and, thus, cannot claim to be a stockholder
in PEAC does not oust the SCC of its jurisdiction over the case. For the
purpose of determining whether SEC Case No. 08-97-5746 should be heard as an intra-corporate
proceeding, the allegation in respondent Filchart’s petition that it is a
stockholder in PEAC is deemed hypothetically admitted. It is only after a
full-blown hearing that the SCC may determine whether respondent Filchart’s may
be considered a bona fide stockholder of PEAC and is entitled to the
reliefs prayed for in its petition.
However, in view of the transfer of
jurisdiction over intra-corporate disputes from the SEC to the SCCs, which are
the same RTCs exercising general jurisdiction, the question of jurisdiction is
no longer decisive to the resolution of the instant case.
It should be noted that the SCCs are
still considered courts of general jurisdiction. Section 5.2 of R.A. No. 8799[28]
directs merely the Supreme Court’s designation of RTC branches that shall
exercise jurisdiction over intra-corporate disputes. Nothing in the language of
the law suggests the diminution of jurisdiction of those RTCs to be designated as
SCCs. The assignment of intra-corporate disputes to SCCs is only for the
purpose of streamlining the workload of the RTCs so that certain branches
thereof like the SCCs can focus only on a particular subject matter.
The designation of certain RTC
branches to handle specific cases is nothing new. For instance, pursuant to the
provisions of the R.A. No. 6657 or the Comprehensive Agrarian Reform Law, the
Supreme Court has assigned certain RTC branches to hear and decide cases under Sections
56 and 57 of R.A. No. 6657.
The RTC exercising jurisdiction over
an intra-corporate dispute can be likened to an RTC exercising its probate
jurisdiction or sitting as a special agrarian court. The designation of the
SCCs as such has not in any way limited their jurisdiction to hear and decide
cases of all nature, whether civil, criminal or special proceedings.
There is no jurisdictional infirmity
for either court (the RTC hearing Civil Case No. 96-17-675 and the SCC assigned
to hear SEC Case No. 08-97-5746), the only question that remains is whether
Civil Case No. 96-17-675 and SEC Case No. 08-97-5746, now transferred to the
proper SCC, may proceed concurrently or should be consolidated or whether SEC
Case No. 08-97-5746 should be suspended to await the outcome of Civil Case No.
96-17-675.
Incidentally, not all the prayers and
reliefs sought by respondent Filchart in SEC Case No. 08-97-5746 can be
characterized as intra-corporate in nature. For instance, respondent Filchart’s
petition does not allege that the cause of action for the nullification of the
management contract between PEAC and petitioner Amihan is being instituted as a
derivative suit. It is an ordinary action for the nullification of a contract,
which is cognizable by courts of general jurisdiction.
The issue of the interpretation of
the provisions of the joint venture agreements is among the subjects of Civil
Case No. 96-17-675. On the one hand, petitioner GD Express is claiming therein
that the joint venture agreements requiring the petitioner GD Express’ consent
to the sale of PADC’s shares in PEAC must be enforced while respondent Filchart
instituted SEC Case No. 08-97-5746 precisely to nullify the said provision.
There is no doubt that the objects of both suits are necessarily connected;
hence, respondent Filchart’s prayer for the nullification of the joint venture
agreements should have been raised as a defense in Civil Case No. 96-17-675
because there exists a logical relationship between the two claims. Conducting
separate trials of the respective claims of the parties would entail
substantial duplication of time and effort by the parties and the court.[29]
As regards the aforementioned
intra-corporate issues raised in SEC Case No. 08-97-5746, the resolution
thereof is necessarily connected with the outcome of Civil Case No. 96-17-675.
The transactions alleged in SEC Case No. 08-97-5746 had come about as an
offshoot of the events forming the basis of Civil Case No. 96-17-675. The
latter ultimately seeks to nullify the award in favor of and the consequent
transfer of PEAC shares to respondent Filchart. The outcome in Civil Case No.
96-17-675, that is, whether or not the award in favor of and the sale of PEAC’s
shares to respondent Filchart is valid, will have a bearing on respondent Filchart’s
capacity to institute the intra-corporate suit.
The test to determine whether the
suspension of the proceedings in the SECOND CASE is proper is whether the
issues raised by the pleadings in the FIRST CASE are so related with the issues
raised in the SECOND CASE, such that the resolution of the issues in the FIRST
CASE would determine the issues in the SECOND CASE.[30]
The power to stay proceedings is
incidental to the power inherent in every court to control the disposition of
the cases on its dockets, considering its time and effort, that of counsel and
the litigants. But if proceedings must be stayed, it must be done in
order to avoid multiplicity of suits and prevent vexatious litigations,
conflicting judgments, confusion between litigants and courts. It bears
stressing that whether or not the RTC, in this case the SCC, would suspend the
proceedings in the SECOND CASE is submitted to its sound discretion.[31]
Thus, the SCC to which SEC Case No.
08-97-5746 was transferred has sufficient discretion to determine whether under
the circumstances of the case, it should await the outcome of Civil Case No. 96-17-675.
Furthermore, petitioners also contend
that respondent Filchart committed a deliberate act of forum shopping in filing
SEC Case No. 08-97-5746.
The essence of forum shopping is the
filing of multiple suits involving the same parties for the same cause of
action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment. The elements of forum shopping are: (a) identity of
parties, or at least such parties as represent the same interests in both
action; (b) identity of rights asserted and reliefs prayed for, the reliefs
being founded on the same facts; and (c) the identity with respect to the two
preceding particulars in the two cases is such that any judgment rendered in
the pending cases, regardless of which party is successful, amount to res
judicata in the other case.[32]
To begin with, respondent Filchart
did not file multiple suits but only a single action which is SEC Case No.
08-97-5746. As already explained above, the outcome in Civil Case No. 96-17-675
will only determine respondent Filchart’s capacity to institute the
intra-corporate suit. Thus, the judgment in the said civil case cannot amount
to res judicata in SEC Case No. 08-97-5746. Strictly speaking, the
latter can still proceed independently of Civil Case No. 96-17-675, but the SCC
may exercise its sound discretion to suspend the intra-corporate proceeding if
it believes that the outcome of the civil case will affect the causes of action
raised in SEC Case No. 96-17-675.
WHEREFORE, the instant petition is DENIED.
Costs against petitioners.
SO ORDERED.
DANTE
O. TINGA
Associate Justice
WE CONCUR:
CONCHITA CARPIO
MORALES
Associate
Justice
Acting Chairperson
PRESBITERO J. VELASCO, JR. TERESITA LEONARDO DE CASTRO
Associate Justice Associate Justice
ARTURO D. BRION
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONCHITA CARPIO MORALES
Associate
Justice
Acting Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Acting Chairperson’s Attestation, it is
hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO
S. PUNO
Chief Justice
*Acting Chairperson as replacement of Justice Leonardo A. Quisumbing who is on official leave per Special Order No. 618.
**Additional member of the Second Division per Special Order No. 619.
***In a Supplemental Petition dated 03 February 1999, which was admitted pursuant to a Resolution dated 08 February 1999, petitioners impleaded the following additional respondents: SEC Hearing Officers Ysobel S.Y. Murillo and Juanito B. Almosa, Jr. and members of the Interim Management Committee, namely, Atty. Cornelio T. Peralta and Jose Antonio Lim.
[1]Rollo, pp. 10-113.
[2]Dated 23 December 1998 and penned by Justice Marina L. Buzon and concurred in by Justices Jesus M. Elbinias, Chairman of the Fourth Division, and Eugenio S. Labitoria; Id. at 115-123.
[24]R.A. No. 8799, Section 5.2. The Commission’s
jurisdiction over all cases enumerated under section 5 of Presidential Decree
No. 902-A is hereby transferred to the Courts of general jurisdiction or the
appropriate Regional Trial Court: Provided,
That the Supreme Court in the exercise of its authority may designate the
Regional Trial Court branches that shall exercise jurisdiction over the cases.
The Commission shall retain jurisdiction over pending cases involving
intra-corporate disputes submitted for final resolution which should be
resolved within one (1) year from the enactment of this Code. The Commission
shall retain jurisdiction over pending suspension of payment/rehabilitation
cases filed as of
[25]Entitled “The Securities Regulation Code;” approved on