Title
Aytona vs. Calalang
Case
G.R. No. 77274-75
Decision Date
Jun 20, 1988
A stockholder sought to enforce a foreign injunction in a Philippine court, but the Supreme Court ruled it lacked jurisdiction, as the intra-corporate dispute fell under the SEC's exclusive jurisdiction.
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Case Digest (G.R. No. 77274-75)

Facts:

    Background of the Case

    • Petitioner Dominador R. Aytona, in his personal capacity and as executor of the estate of Daniel R. Aguinaldo, is a stockholder in the domestic corporation Nationwide Development Corporation (NADECOR).
    • Respondents include Conrado T. Calalang, Jose G. Ricafort, Salvador O. Rivera, Benjamin V. Aritao, Edgar de Castro, and Sawyer-Adecor International, Inc. (an American corporation), who are either officers or stockholders in NADECOR or related corporations.
    • The underlying controversy involves a dispute over the voting of a large block of NADECOR shares, registered in the name of Daniel R. Aguinaldo, which came under scrutiny due to conflicting orders from foreign and local courts.

    Filing of the Petition

    • On August 15, 1985, petitioner Aytona filed a petition for a restraining order/injunction with damages (Civil Case No. Q-45704) before the Regional Trial Court of Quezon City, Branch 88.
    • The petition was based on an order of preliminary injunction issued by the Superior Court of California, which enjoined certain stockholders from voting a substantial number of NADECOR shares owned by Sawyer-Adecor International, Inc.

    Issuance of the Restraining Order

    • On August 16, 1985, the Regional Trial Court issued a restraining order enjoining:
    • Respondents Calalang, et al. from voting the shares.
    • Benguet Corporation (as holder of a proxy for Sawyer shares) and Sawyer-Adecor, Inc. from voting said shares at the upcoming NADECOR stockholders’ meeting and in any subsequent meeting for the duration of the order.
    • The order directly affected the regular NADECOR stockholders’ meeting scheduled on August 19, 1985, causing an adjournment.

    Service of Process and Subsequent Developments

    • On August 19, 1985, the Regional Trial Court’s process server effected the service of the restraining order and summons.
    • Sawyer-Adecor was to be served through its President, Ms. Carol Garvic, during the stockholders’ meeting, but she refused to accept the documents, citing improper service.
    • On September 3, 1985, respondents Calalang, et al. filed a motion to dismiss Civil Case No. Q-45704 on multiple grounds:
    • Lack of jurisdiction over the subject matter and nature of the action.
    • Non-enforceability of the foreign order of injunction and consequent failure to state a cause of action.
    • Failure of Aytona’s counsel to indicate his official IBP number.
    • Simultaneously, Sawyer-Adecor made a special appearance and also moved to dismiss, arguing the court lacked jurisdiction over its person as it was not doing business in the Philippines.

    Judicial Proceedings in the Lower Courts and Appellate Reviews

    • On November 8, 1985, the trial court denied the respondents’ and Sawyer-Adecor’s motions to dismiss, holding that:
    • There was no intra-corporate dispute within NADECOR.
    • The power to enforce foreign judgments included the authority to issue writs to enforce interlocutory orders from foreign courts.
    • Respondents reacted by petitioning the Court of Appeals via:
    • A petition for certiorari and prohibition (docketed CA-G.R. SP No. 07943) by Calalang, et al. on December 16, 1985.
    • A petition for certiorari and prohibition (docketed CA-G.R. SP No. 08421) by Sawyer-Adecor on January 30, 1986.
    • The petitions were consolidated, and on November 28, 1986, the Court of Appeals annulled the Regional Trial Court’s order (dated October 25, 1985) and its accompanying writ of preliminary injunction (issued on November 5, 1985).
    • Petitioners sought reconsideration on December 9, 1986, but the Court of Appeals denied their motion on January 23, 1987.

    Underlying Jurisdictional Issue

    • The core matter involves a dispute among stockholders of NADECOR, which is by law considered an intra-corporate dispute.
    • Under Presidential Decree No. 902-A (as amended) and relevant case law, such disputes fall exclusively within the jurisdiction of the Securities and Exchange Commission (SEC).
    • The Regional Trial Court’s issuance of an injunction was challenged for overstepping its jurisdiction in light of these legal principles.

Issue:

    Jurisdiction over Intra-Corporate Disputes

    • Whether the Regional Trial Court had the proper jurisdiction to issue a writ of injunction in a matter that is essentially an intra-corporate dispute among stockholders of NADECOR.
    • Whether such disputes, by their nature, should be exclusively handled by the Securities and Exchange Commission (SEC) under Presidential Decree No. 902-A and its amendments.

    Enforceability of a Foreign Order

    • Whether the local court may enforce a writ of injunction issued by a foreign court (Superior Court of California) through its own injunction order.
    • Whether the absence of a final or enforceable foreign judgment precludes the issuance of a local writ of injunction.

    Proper Service and Procedural Issues

    • Whether the service of the restraining order, particularly on a corporation not directly transacting business in the Philippines (Sawyer-Adecor), was judicially proper.
    • The implications of defects in service and the failure to comply with procedural requirements (such as the indication of an IBP number by counsel).

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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