Case Digest (G.R. No. 165887)
Facts:
Majority Stockholders of Ruby Industrial Corporation, petitioner (G.R. No. 165887), and China Banking Corporation, petitioner (G.R. No. 165929), v. Miguel Lim, in his personal capacity and representing the minority stockholders, and the Management Committee of Ruby Industrial Corporation — Third Division, Supreme Court, June 06, 2011, Villarama, Jr., J., writing for the Court.
Ruby Industrial Corporation (RUBY) filed a petition for suspension of payments with the Securities and Exchange Commission (SEC) on December 13, 1983; the SEC issued a suspension order on December 20, 1983. A Management Committee (MANCOM) was created on August 10, 1984 composed of several creditors (including Allied Leasing and Finance Corporation (ALFC), China Bank, and Pilipinas Shell) and a RUBY representative (Yu Kim Giang). Two rehabilitation plans were advanced: the majority-sponsored BENHAR/RUBY Plan (involving Benhar International, Inc. (BENHAR) and a proposed credit facility) and the minority-sponsored Alternative Plan (proposed by Miguel Lim).
The SEC Hearing Panel initially approved the BENHAR/RUBY Plan (October 28, 1988), but the SEC En Banc enjoined its implementation and later issued a preliminary injunction (December 20, 1988) after petitions and appeals by the minority. Despite the injunction, BENHAR paid off certain secured creditors (e.g., Far East Bank & Trust Company) and received assignments of credits and mortgages; the SEC Hearing Panel later nullified those deeds of assignment and held the parties in indirect contempt. The Court of Appeals (CA) affirmed the nullification; this Court likewise affirmed (G.R. No. 96675).
BENHAR and RUBY persisted: RUBY sought approval of a Revised BENHAR/RUBY Plan and creation of a new MANCOM (May 29, 1990). The SEC Hearing Panel approved the revised plan and dissolved the original MANCOM (September 18, 1991); the SEC En Banc initially affirmed but later relaxed limits on BENHAR’s use of RUBY assets (July–October 1993). The CA set aside the SEC approval of the Revised BENHAR/RUBY Plan (March 31, 1995), and this Court affirmed that ruling (G.R. Nos. 124185-87, January 20, 1998), finding the revised plan circumvents prior nullifications and gives undue preference to BENHAR.
After remand, lengthy proceedings followed. Disputes arose over an October 2, 1991 board resolution and a September 3, 1996 stockholders’ meeting that purportedly approved a capital infusion and extension of RUBY’s corporate term; the minority (Lim) and MANCOM alleged those acts diluted minority shareholding (from 40.172%) and were implemented in violation of injunctions and without MANCOM participation. Creditors (e.g., BPI, China Bank) filed motions (e.g., to vacate the suspension order), and the SEC directed MANCOM to report. On September 18, 2002 the SEC denied RUBY’s petition for suspension of payments, applied Sec. 4-9 of the SEC Rules of Procedure on Corporate Recovery and dissolved MANCOM, ordering turnover and accounting.
Lim (representing minority stockholders) petitioned the CA to set aside the SEC order. The CA (May 26, 2004) set aside the SEC order, declared the additional capital infusion and extension of corporate term null and void, ordered the unwinding/delivery of deeds of assignment (including those involving China Bank and BPI) to MANCOM or a Liquidator, and directed the SEC to supervise RUBY’s liquidation. The majority stockholders, RUBY and China Bank elevated separate petitions to the Supreme Court (Rule 45 petitions), contesting the ...(Subscriber-Only)
Issues:
- Did private respondents (MANCOM and Lim) engage in forum shopping by filing separate petitions before the Court of Appeals?
- Did defects in the certificate of non-forum shopping (and the belated submission of a special power of attorney) warrant dismissal of Lim’s petition in the CA?
- Was the Court of Appeals correct in setting aside the SEC’s September 18, 2002 Order dismissing RUBY’s petition and dissolving the MANCOM (i.e., should...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)