Case Summary (G.R. No. L-61048)
Factual Background
On May 24, 1982, Filomeno and Neville Lamis initiated a derivative suit (Civil Case No. 749) against the aforementioned petitioners for various corporate grievances, including the demand for corporate accounting, inspection of books, and allegations of embezzlement and falsification. Accompanying their complaint was a request for a writ of preliminary injunction. On June 8, 1982, Judge Filomeno S. Gapultos issued a preliminary injunction ex parte, severely restricting the petitioners' rights to perform corporate functions and manage ETCO’s operations, including logging activities in the concession area and representation of ETCO in business dealings.
Procedural Irregularities
In response, the petitioners contested the injunction, citing significant procedural flaws, including lack of notice and hearing, jurisdictional issues, and improper venue. Despite filing a motion to dismiss and reconsider the injunction, Judge Gapultos passed away before the motion could be heard. Subsequently, the petitioners faced immediate enforcement of the injunction by the respondent Sheriff Ramon Progalidad, prompting them to file a special civil action for certiorari, seeking to annul the injunction order.
Violations of Procedural Rules
The Supreme Court found merit in the petitioners' claims, particularly emphasizing the violation of procedural requirements as established by Rule 58 of the Rules of Court, which mandates that no preliminary injunction may be granted without a prior notice to the defendants. The court noted that if immediate irreparable harm to the applicant is demonstrated, a temporary restraining order could be issued for a maximum period of twenty days, during which the judge must conduct a hearing. Since the judge did not follow these procedures, the court ruled the injunction invalid.
Jurisdictional Issues
Additionally, the Court addressed the jurisdictional challenge concerning the nature of the claims made by the respondents. The issues presented were characterized as intra-corporate disputes, which fall under the exclusive jurisdiction of the Securities and Exchange Commission (SEC) as per Presidential Decree No. 902-A. This legislation confers authority to the SEC to adjudicate matters pertaining to intra-corporate relations and fraudulent actions within corporations. The Supreme Court highlighted that once
...continue readingCase Syllabus (G.R. No. L-61048)
Case Background
- The case is a derivative suit filed by stockholders of ETCO Timber Corporation, namely Filomeno Lamis and Neville Lamis.
- The suit was initiated on May 24, 1982, against several officers and stockholders of ETCO, including Apolonio V. Dionisio and others.
- The plaintiffs sought various forms of legal redress, including corporate accounting, damages for alleged embezzlement and falsification, and the enforcement of corporate governance.
- The petition included a request for a preliminary injunction against the defendants.
Preliminary Injunction Issued
- On June 8, 1982, without notice or hearing, Judge Filomeno S. Gapultos issued a preliminary injunction against the defendants.
- The Order prohibited the defendants from:
- Continuing logging operations within ETCO's concession area.
- Representing ETCO in any manner or conducting business with any entities.
- Interfering with the plaintiffs' operations within the timber area.
- Selling or disposing of log production.
- Enforcing specific Board resolutions.
- The Order also mandated the seizure of logs that had already been cut, placing them under the court's temporary custody.
Defendants' Response
- The defendants filed an answer and a motion to dismiss the complaint, citing:
- Lack of notice and hearing prior to the injunction.
- Lack of jurisdiction of the court over the subject matter.
- Improper