Case Summary (G.R. No. 200620)
Case Background
This case involves a dispute for control over sequestered corporations PHILCOMSAT and POTC, stemming from multiple legal battles initiated in 2004. The Supreme Court reviewed the Court of Appeals' decisions that reversed a Regional Trial Court (RTC) order dismissing a complaint for inspection of corporate books.
• Parties involved: Petitioners (Roberto L. Abad, Manuel D. Andal, Benito V. Araneta, Philip G. Brodett, Enrique L. Locsin, Roberto V. San Jose) vs. Respondent (Philippine Communications Satellite Corporation, represented by Victor Africa). • Central issue: Jurisdiction over a stockholder's right to inspect corporate records amid ongoing power struggles between competing factions.
Jurisdiction Over Intra-Corporate Disputes
The Supreme Court addressed the jurisdictional question between the Sandiganbayan and the RTC regarding intra-corporate disputes involving sequestered corporations.
• The RTC, not the Sandiganbayan, has jurisdiction over cases that do not involve incidents directly related to sequestration. • Intra-corporate controversies are defined as disputes arising between and among stockholders or between stockholders and the corporation.
Legal Framework
The legal framework relevant to this case is rooted in several laws and prior rulings:
• Presidential Decree No. 902-A: Originally vested jurisdiction over intra-corporate disputes in the SEC. • Republic Act No. 8799 (Securities Regulation Code): Transferred jurisdiction over intra-corporate controversies to the RTC. • Court Resolutions: Designated specific RTC branches to handle such disputes, including RTC Branch 138 in Makati City.
Authority and Legitimacy of Directors
The legitimacy of the board of directors elected by conflicting factions was a critical aspect of the case.
• The court ruled that the Africa-Bildner group held the controlling interest in PHILCOMSAT, invalidating the elections held by the opposing Nieto-PCGG group. • The legitimacy of directors is determined by who held the majority shareholdings in the corporation.
Right to Inspect Corporate Records
The right of a stockholder to inspect corporate records is a fundamental corporate governance principle.
• The complaint filed by PHILCOMSAT for inspection of corporate books was deemed valid because it was authorized by a board resolution. • The petitioners' refusal to allow inspection was based on ongoing disputes over board legitimacy, which the court ruled did not invalidate the right to inspect.
Decision and Rulings
The Supreme Court ultimately affirmed the Court of Appeals' decision, granting the petition and reversing the RTC's dismissal.
• Final Ruling: The case was remanded to the RTC for further proceedings, with an emphasis on expeditious handling. • No Costs: The court ordered no pronouncement on costs.
Cross-References to Other Cases
The decision referenced multiple prior rulings that established legal precedents regarding the authority of the PCGG, compromise agreements, and the legitimacy of corporate elections.
• Notable cases included G.R. Nos. 141796 and 141804, which validated the compromise agreement affecting shareholdings and control issues.
Key Takeaways
- The RTC ha
Case Syllabus (G.R. No. 200620)
Case Background
- The case arises from a prolonged conflict over control of two sequestered corporations, PHILCOMSAT and POTC, which began in 2004.
- The Supreme Court had previously resolved related issues in 2013.
- The petition for review under Rule 45 challenges the Decision dated October 21, 2011, and Resolution dated February 10, 2012, of the Court of Appeals (CA) in CA-G.R. SP No. 99789, which reversed the June 21, 2007 Order of the Regional Trial Court (RTC) of Makati City, Branch 149 in Civil Case No. 06-095.
Sequestration and Corporate Structure
- PHILCOMSAT was among the private companies sequestered by the Philippine Commission on Good Government (PCGG) post-EDSA Revolution in 1986.
- PHILCOMSAT holds an 81% stake in Philcomsat Holdings Corporation (PHC).
- The shareholders of PHILCOMSAT include seven families that also control POTC.
Nominee Directors and Factions
- During President Gloria Macapagal-Arroyo's administration, Enrique L. Locsin, Manuel D. Andal, and Julio Jalandoni were appointed as nominee-directors representing the Republic through the PCGG.
- These nominees aligned with the Nieto family against the Africa-Bildner group, leading to a power struggle over the boards of POTC, PHILCOMSAT, and PHC.
Election and Proxy Issues
- On August 31, 2004, a stockholders' meeting of PHC resulted in new directors being elected, primarily from the Nieto-PCGG faction.
- Concurrently, an organizational meeting of PHILCOMSAT was held, where the Nieto-PCGG group elected its officers and issued proxies for