Case Summary (G.R. No. 218738)
Issue: Jurisdiction Over Derivative Suits
Whether the RTC (Branch 9), not designated as a special commercial court, had jurisdiction to entertain SARC’s derivative suit to annul a mortgage purportedly entered without proper corporate authorization and thereby clouding corporate titles.
Derivative Suits and Intra-Corporate Controversies
Under the 1987 Constitution and the Corporation Code, the power to sue vests in the board of directors, and suits on behalf of the corporation ordinarily must be authorized by the board. Equity recognizes the derivative suit as an exception when corporate management refuses to redress a wrong to the corporation itself. Jurisprudence established that derivative suits require a stockholder-relator to allege:
- share ownership at the time the challenged act occurred and at suit filing;
- exhaustion of intra-corporate remedies or futility thereof;
- the cause of action belongs to the corporation;
- no appraisal rights are available; and
- the suit is not a nuisance or harassment.
The SEC Reorganization Decree (PD 902-A) and the SRC transferred jurisdiction over “controversies arising out of intra-corporate relations” (including derivative actions) from the SEC to the RTCs. The Supreme Court, via A.M. Nos. 00-11-03-SC and 03-03-03-SC, designated certain RTC branches as special commercial courts. The 2001 IRPIC enumerates intra-corporate controversies—including derivative suits—as within their exclusive procedure.
Special Commercial Courts and the Gonzales Guidelines
While special commercial courts exercise the transferred jurisdiction, the Supreme Court’s Gonzales en banc ruling clarified that all RTC branches constitute “courts of general jurisdiction” for intra-corporate cases:
• If a derivative/intra-corporate case is filed in a non-designated branch, it must be transferred to a special commercial court.
• If filed in a designated special branch that lacks general civil jurisdiction, it must be re-docketed as an ordinary civil case and raffled among all branches.
This regime promotes uniform application of the 2001 IRPIC to all derivative/intra-corporate actions before the RTCs.
Application to the Present Case
The Supreme Court found that SARC’s suit is manifestly a derivative action:
• It was filed in SARC’s name by incorporator-stockholders;
• It assails intra-corporate authorizations (board resolutions) that allegedly enabled an unauthorized mortgage encumbering substantially all corporate assets;
• The directors whose authority was in question (including the late Ramon Ve. Salazar and Consuelo A. Salazar) were not available to remedy the wrong, justifying non-exhaustion of intra-corporate remedies.
Under the 2001 IRPIC, this derivative suit should have been transferred to a special commercial court per Gonzales.
Procedural Defects Warranting Dismissal
Notwithstanding transfer, the petition failed to satisfy critical derivative-suit requisites under the 2001 IRPIC:
- Appraisal Rights: SARC’s petition alleged mortgage of substantially all assets requiring stockholder authorization under Section 40 of the Corporation Code. It did not specifically allege unavailability or proper exercise of appraisal rights or explain why appraisal was impossible
Case Syllabus (G.R. No. 218738)
Parties and Nature of the Case
- Petitioner: Metropolitan Bank & Trust Company (Metrobank), a Philippine banking corporation.
- Respondent-corporation: Salazar Realty Corporation (SARC), a Philippine real estate corporation.
- Nominal plaintiffs: Ramon Ang Salazar, Jr., Robert Ang Salazar, Roger Ang Salazar, Rosemarie Salazar Fernandez (Ramon et al.), incorporators and stockholders of SARC.
- Third corporation involved: Tacloban RAS Construction Corporation (Tacloban RAS), borrower under promissory notes secured by SARC lands.
- Relief sought: Nullification of loan and mortgage agreements, annulment of extrajudicial foreclosure proceedings, cancellation of titles issued in favor of Metrobank.
Antecedent and Factual Background
- 1992–1999: Tacloban RAS obtained and increased loans from Metrobank, culminating in an ₱18,500,000 promissory note (Oct. 6, 1999) signed by Consuelo and Ralph Salazar as its officers.
- January 9, 1996: Metrobank and SARC executed a mortgage of five SARC-owned parcels in Tacloban City as security, later amended to cover the final loan amount.
- March 30, 1995 & October 21, 2001: Deaths of SARC Vice President Ramon Ve. Salazar and director Consuelo Salazar left vacancies unfilled.
- Tacloban RAS defaulted; Metrobank foreclosed extrajudicially, became highest bidder, and caused SARC titles to be cancelled and reissued in Metrobank’s name.
- Ramon et al. discovered cancelled titles, registered adverse claims, and filed suit in SARC’s name challenging the validity of the loan, mortgage, and foreclosure.
Procedural History
- Civil Case No. 2001-11-164 (RTC Tacloban Branch 9): SARC (through Ramon et al.) filed petition for quieting of title and nullification of contracts (Nov. 5, 2001).
- Metrobank’s motions to dismiss based on lack of standing, intra-corporate controversy, and defective pleadings were denied (2002–2009).
- RTC issued two assailed orders (Jun