Corporation Law, Mercantile Law

SAN JOSE vs. OZAMIZ G.R. No. 190590 July 12, 2017, Intra-corporate Controversy – Jurisdiction

FACTS:

San Jose was elected Corporate Secretary and as a member of the Board of Directors of Philcomsat Holdings Corporation (PHC) since 1996 until he resigned and ceased to be connected with PHC in 2007. He was then replaced Angcao as the Corporage Secretary.

Angcao received a letter from Ozamiz, a stockholder of PHC requesting for a copy of all the Minutes of the Meetings of the Board of Directors and Executive Committee of PHC from 2000 to 2007 and a certification as to the completeness thereof.

Ozamiz and his secretary followed-up with the petitioners to no avail.

Ozamiz filed a complaint for inspection of books with the RTC.

Petitioners filed their Answer Ad Cautelam where they denied the allegations of Ozamiz and argued that the RTC had no jurisdiction over the complaint.

Petitioners asserted that since 80.35% of PHC is owned by Philippine Communications Satellite Corporation (Philcomsat), and Philcomsat is wholly owned by Philippine Overseas Telecommunications Corporation (POTC), and both Philcomsat and POTC are subjects of a standing sequestration order issued by the Presidential Commission on Good Government (PCGG), the case should have been filed before the Sandiganbayan. They prayed that the complaint be dismissed for lack of jurisdiction and for lack of merit.

The RTC dismissed the complaint for lack of jurisdiction.

Ozamiz assailed the Order of the RTC with the CA.

The CA reversed and set aside the Order of the RTC, finding that the case filed by Ozamiz was a simple intra-corporate dispute, and thus it was the RTC which had jurisdiction over the case.

The CA denied the Motion for Reconsideration filed by petitioners.Hence, this petition.

ISSUE:

Whether or not this case involves a mere intracorporate dispute.

RULING:

This petition is without merit.

To determine whether or not a case involves an intra-corporate dispute, two tests are applied – the relationship test and the nature of the controversy test.

Under the relationship test, there is an intra-corporate controversy when the conflict is (1) between the corporation, partnership, or association and the public; (2) between the corporation, partnership, or association and the State insofar as its franchise, permit, or license to operate is concerned; (3) between the corporation, partnership, or association and its stockholders, partners, members, or officers; and (4) among the stockholders, partners, or associates themselves.

On the other hand, in accordance with the nature of controversy test, an intra-corporate controversy arises when the controversy is not only rooted in the existence of an intra-corporate relationship, but also in the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation.

Based on the foregoing tests, it is clear that this case involves an intra-corporate dispute. It is a conflict between a stockholder and the corporation, which satisfies the relationship test, and it involves the enforcement of the right of Ozamiz, as a stockholder, to inspect the books of PHC and the obligation of the latter to allow its stockholder to inspect its books.

We find that the dispute at hand, which involves the stockholder, Ozamiz, demanding to inspect the books of PHC and the consequent refusal of the corporation to show its books, is simply an intra-corporate dispute. And because this is an intra-corporate dispute, the matter was properly elevated to the CA.

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