Facts:

The case involves a legal dispute between Roberto L. Abad, Manuel D. Andal, Benito V. Araneta, Philip G. Brodett, Enrique L. Locsin, and Roberto V. San Jose (collectively referred to as the "petitioners") and the Philippine Communications Satellite Corporation (PHILCOMSAT), represented by Victor Africa (the "respondent"). The events leading to this case stem from a protracted power struggle for control over PHILCOMSAT and its subsidiary, Philcomsat Holdings Corporation (PHC), which began in 2004. This conflict arose after the sequestering of several corporations, including PHILCOMSAT and the Philippine Overseas Telecommunications Corporation (POTC), by the Philippine Commission on Good Government (PCGG) following the EDSA People Power Revolution in 1986.

On August 31, 2004, a stockholders' meeting of PHC was conducted by the Nieto-PCGG group, resulting in the election of several directors, including Locsin as Acting Chairman and Andal as Treasurer. T...

Facts:

Background and Corporate Context

• The case is part of a series of disputes arising from the battle for control over two sequestered corporations—Philippine Communications Satellite Corporation (PHILCOMSAT) and Philippine Overseas Telecommunications Corporation (POTC)—which were taken over by the Philippine Commission on Good Government (PCGG) following the 1986 EDSA People Power Revolution.
• PHILCOMSAT holds 81% of the outstanding capital stock of Philcomsat Holdings Corporation (PHC), and its majority shareholders, along with those of POTC, include the influential families: Ilusorio, Nieto, Poblador, Africa, Benedicto, Ponce Enrile and Elizalde.
• During the administrations of Presidents Gloria Macapagal-Arroyo and Joseph Ejercito Estrada, PCGG nominee-directors—Enrique L. Locsin, Manuel D. Andal, and Benito V. Araneta (among others)—were appointed to the boards of POTC and PHILCOMSAT, leading to factions aligned with two rival groups: the Nieto-PCGG group and the Africa-Bildner group.

Factional Battles and Stockholders’ Meetings (2004)

• In the annual stockholders’ meeting of PHC held on August 31, 2004:
• The Nieto-PCGG group conducted the meeting at the Manila Golf Club, electing themselves into key positions (e.g., Locsin as Acting Chairman, Nieto, Jr. as President and CEO).
• A proxy was issued in favor of Nieto, Jr. and/or Locsin to represent PHILCOMSAT’s voting power in PHC.
• On July 28, 2004, separate stockholders’ meetings at POTC and PHILCOMSAT saw the election of representatives from the Africa-Bildner faction, including Victor Africa who was designated as the POTC proxy for PHILCOMSAT’s meeting.
• Subsequent legal actions followed as both factions filed suits and countersuits to validate or invalidate the respective proxy issuances and election results.

Dispute over the Right of Inspection and Filing of the Complaint

• After the controversy regarding the election of corporate officers and the legitimacy of certain board resolutions, Africa (representing or aligning with the Africa-Bildner group) sought to inspect the books, records, and financial documents of PHC for the third quarter of 2005.
• PHILCOMSAT, opposing the inspection due to the ongoing internal power struggle, initially refused the inspection.
• A written query by PHILCOMSAT’s counsel to clarify if the refusal was authorized met with no response.
• On February 2, 2006, PHILCOMSAT, acting as a stockholder, filed a Complaint for Inspection of Books in the Regional Trial Court (RTC) of Makati City to enforce its right under Sections 74 and 75 of the Corporation Code.
• The original defendants included directors and officers of PHC, many of whom were also petitioners in the case.
• The RTC dismissed the complaint due to a purported lack of jurisdiction.

Procedural History and Prior Resolutions

• The Court of Appeals (CA) reversed the RTC’s dismissal in its Decision dated October 21, 2011 and Resolution dated February 10, 2012, thereby remanding the case back to the RTC for further proceedings.
• The issues in the case were not isolated; they were intertwined with multiple cases previously resolved by the Supreme Court and consolidated in other petitions (e.g., G.R. Nos. 184622, 184712-14, 186066, and 186590), which settled the controlling issue between the two factions.
• The underlying controversy also touched upon the validity of the proxy issuances and the authority of the PCGG nominees to act as representatives in corporate actions, all of which had been subject to earlier definitive rulings.

The Compromise Agreement and Its Repercussions

• Reference is made to a compromise agreement entered on June 28, 1996 by Atty. Potenciano Ilusorio with the Republic and the PCGG.
• This agreement, subsequently validated by the Court in G.R. Nos. 141796 and 141804, resulted in a reallocation of shareholdings which eventually contributed to resolving the dispute over the majority control.
• The Court’s recognition of the compromise agreement played a key role in dismissing arguments regarding the legitimacy of the electoral processes conducted by the competing factions.

Issue:

Jurisdictional Issue

• Whether the Regional Trial Court (RTC) or the Sandiganbayan has jurisdiction over a stockholder’s suit seeking to enforce the right of inspection under Section 74 of the Corporation Code.
• The contention revolves around whether the subject matter should be treated as an intra-corporate dispute (thus under RTC jurisdiction) or as a sequestration-related issue (which would fall under the exclusive jurisdiction of the Sandiganbayan).

Cause of Action

• Whether the complaint for inspection should be dismissed for failure to state a cause of action, particularly on the ground that PHILCOMSAT never explicitly authorized Victor Africa—or any representative—to file such a complaint.
• This issue challenges the sufficiency of the complaint, focusing on the evidentiary basis (such as the Board Secretary’s certificate) of the filing party’s authority to act on behalf of PHILCOMSAT.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)