G.R. No. 206649 - Forest Hills Golf and Country Club, Inc. vs. Fil-Estate Properties, Inc.

On March 31, 1993, Kingsville Construction and Development Corporation (Kingsville) and Kings Properties Corporation (KPC) entered into a project agreement with respondent Fil-Estate Properties, Inc. (FEPI) for the development of land in Antipolo, Rizal, into Forest Hills Residential Estates and Golf and Country Club.
Respondent FEPI was tasked to incorporate Forest Hills Golf and Country Club, Inc. (FHGCCI), with an authorized capital stock of 3,600 shares, and to perform development and construction work as payment for its subscription to the capital stock.
The remaining club shares were retained by Kingsville in exchange for the land parcels used in the golf course development.
On July 10, 1995, FEPI assigned its rights and obligations over the project to Fil-Estate Golf Development, Inc. (FEGDI).

On July 19, 1996, Rainier L. Madrid purchased two Class “A” shares and applied for club membership.
Due to delays in constructing the second 18-Hole Golf Course, Madrid sent two demand letters, dated October 29, 2009, and March 15, 2010, to FHGCCI’s Board of Directors requesting legal action against FEPI and FEGDI.
The Board of Directors failed or refused to act on these demands.

On April 21, 2010, Madrid, in a derivative capacity on behalf of FHGCCI, filed a Complaint for Specific Performance with Damages against respondents FEPI and FEGDI before the Regional Trial Court (RTC) of Antipolo City.
Respondents FEPI and FEGDI filed an Answer with Compulsory Counterclaim, denying any cause of action, claiming no prior demand was made, questioning the derivative suit’s propriety for failure to exhaust intra-corporate remedies, and alleging the failure to implead the Board of Directors as indispensable parties.
Petitioner replied contending the case does not involve intra-corporate controversy and exhaustion of remedies was futile because the Board of Directors owned respondent FEGDI.
Respondents filed a Rejoinder and a Motion to set affirmative defenses for preliminary hearing.
Petitioner moved to amend the Complaint to add KPC and Kingsville as defendants and include Madrid as an additional plaintiff in his personal capacity; respondents opposed.

On May 14, 2012, the RTC, applying the "relationship and nature of controversy" tests in Reyes v. RTC of Makati, Branch 142, dismissed the case for lack of jurisdiction without prejudice to refiling before the special commercial court.
The motion to amend the Complaint was rendered moot.
The petitioner’s motion for reconsideration was denied on February 1, 2013.
Aggrieved, petitioner FHGCCI filed a Petition for Review on Certiorari before the Supreme Court raising a pure question of law regarding jurisdiction.

Whether the ordinary civil suit for specific performance with damages filed by petitioner FHGCCI in a derivative capacity against respondents FEPI and FEGDI, concerning their obligation under the project agreement to complete the Forest Hills Residential Estates and Golf and Country Club development, is cognizable by the regular RTC branch or by the designated special commercial court as an intra-corporate controversy.