XII.

JURISDICTION
STRATEGIC ALLIANCE DEVELOPMENT CORPORATION
vs.
STAR INFRASTRUCTURE DEVELOPMENT CORPORATION ET AL.
G.R. No. 187872
November 17, 2010
FACTS:
Respondents Aderito Z. Yujuico and Bonifacio C. Sumbilla, in their respective
capacities as then President and Treasurer of STRADEC, executed a Promissory Note
for and in consideration of a loan in the sum of P10,000,000.00 ostensibly extended in
favor of said corporation by respondent Robert L. Wong, one of the incorporators of
SIDC. As security for the payment of the principal as well as the stipulated interests
thereon, a pledge constituted over STRADECs entire shareholdings in SIDC was
executed by respondent Yujuico on 1 April 2005. In view of STRADECs repeated default
on its obligations,11 however, the shares thus pledged were sold by way of the 26 April
2005 notarial sale conducted in Makati City by respondent Raymond M. Caraos. Having
tendered the sole bid of P11,800,000.00, respondent Wong was issued the
corresponding certificates of stocks by respondent Bede S. Tabalingcos, SIDCs
Corporate Secretary for the years 2004 and 2005, after the transfer was recorded in the
corporations stock and transfer book.
On 17 July 2006, Cezar T. Quiambao, in his capacity as President and Chairman
of the Board of Directors of STRADEC, commenced the instant suit with the filing of the
petition which was docketed as Civil Case No. 7956 before Branch 2 of the Regional
Trial Court of Batangas City, sitting as a Special Commercial Court (SCC).
ISSUE:
Whether or not the RTC has jurisdiction over the case.
RULING:
YES.
In addition to being conferred by law, it bears emphasizing that the jurisdiction of
a court or tribunal over the case is determined by the allegations in the complaint and
the character of the relief sought, irrespective of whether or not the plaintiff is entitled to
recover all or some of the claims asserted therein. Moreover, pursuant to Section 5.2 of
Republic Act No. 8799, otherwise known as the Securities Regulation Code, the
jurisdiction of the SEC over all cases enumerated under Section 5 of Presidential Decree
No. 902-A has been transferred to RTCs designated by this Court as SCCs pursuant to
A.M. No. 00-11-03-SC promulgated on 21 November 2000.
It should be noted that the SCCs are still considered courts of general
jurisdiction. Section 5.2 of R.A. No. 8799 directs merely the Supreme Court's designation
of RTC branches that shall exercise jurisdiction over intra-corporate disputes. Nothing in
the language of the law suggests the diminution of jurisdiction of those RTCs to be
designated as SCCs. The assignment of intra-corporate disputes to SCCs is only for the
purpose of streamlining the workload of the RTCs so that certain branches thereof like
the SCCs can focus only on a particular subject matter.

The RTC exercising jurisdiction over an intra-corporate dispute can be likened to

an RTC exercising its probate jurisdiction or sitting as a special agrarian court. The
designation of the SCCs as such has not in any way limited their jurisdiction to hear and
decide cases of all nature, whether civil, criminal or special proceedings.

RENATO REAL
vs.
SANGU PHILIPPINES, INC. and/ or KIICHI ABE
G.R. No. 168757. January 19, 2011
FACTS:
Petitioner Renato Real was the Manager of respondent corporation Sangu
Philippines, Inc., a corporation engaged in the business of providing manpower for
general services, like janitors, janitresses and other maintenance personnel, to various
clients. In 2001, petitioner, together with 29 others who were either janitors, janitresses,
leadmen and maintenance men, all employed by respondent corporation, filed their
respective Complaints for illegal dismissal against the latter and respondent Kiichi Abe,
the corporations Vice-President and General Manager. These complaints were later on
consolidated.
With regard to petitioner, he was removed from his position as Manager through
Board Resolution 2001-033 adopted by respondent corporations Board of Directors.
Petitioner complained that he was neither notified of the Board Meeting during which
said board resolution was passed nor formally charged with any infraction. He just
received from respondents a letter4 dated March 26, 2001 stating that he has been
terminated from service effective March 25, 2001 for the following reasons: (1)
continuous absences at his post at Ogino Philippines Inc. for several months which was
detrimental to the corporations operation; (2) loss of trust and confidence; and, (3) to cut
down operational expenses to reduce further losses being experienced by respondent
corporation.
ISSUE:
Whether or not petitioners complaint for illegal dismissal constitutes an intracorporate controversy and thus, beyond the jurisdiction of the Labor Arbiter.
RULING:
NO.
With the elements of intra-corporate controversy being absent in this case, we
thus hold that petitioners complaint for illegal dismissal against respondents is not intracorporate. Rather, it is a termination dispute and, consequently, falls under the
jurisdiction of the Labor Arbiter pursuant to Section 217 of the Labor Code.
With the foregoing, it is clear that the CA erred in affirming the decision of the
NLRC which dismissed petitioners complaint for lack of jurisdiction. In cases such as
this, the Court normally remands the case to the NLRC and directs it to properly dispose

of the case on the merits. "However, when there is enough bases on which a proper
evaluation of the merits of petitioners case may be had, the Court may dispense with
the time-consuming procedure of remand in order to prevent further delays in the
disposition of the case." It is already an accepted rule of procedure for us to strive to
settle the entire controversy in a single proceeding, leaving no root or branch to bear the
seeds of litigation. If, based on the records, the pleadings, and other evidence, the
dispute can be resolved by us, we will do so to serve the ends of justice instead of
remanding the case to the lower court for further proceedings."We have gone over the
records before us and we are convinced that we can now altogether resolve the issue of
the validity of petitioners dismissal and hence, we shall proceed to do so.

MEDICAL PLAZA MAKATI CONDOMINIUM CORPORATION, Petitioners, v.ROBERT

H. CULLEN, Respondent.
PERALTA, J.:
Facts:
Respondent purchased from Meridien Land Holding, Inc. (MLHI) a
condominium unit of the Medical Plaza Makati Condominium Corporation (MPMCC). On
September 19 2002, petitioner demanded from respondent payment for alleged unpaid
association dues and assessments amounting to P145,567.42.
Respondent disputed this demand claiming that he had been paying his dues
as shown by the fact that he was previously elected president and director of petitioner.
Petitioner, on the other hand, claimed that respondents obligation was a carry-over of
that of MLHI. Consequently, respondent was prevented from exercising his right to vote
and be voted for during the 2002 election of petitioners Board of Directors.
Respondent clarified from MLHI the said claim but MLHI claimed that such had
already been settled. Thereafter, a Complaint for Damages was filed by respondent
against petitioner and MLHI.
Petitioner filed a motion to dismiss, two of the grounds for the dismissal were the
RTCs lack of jurisdiction as the case involves an intra-corporate controversy and citing
prematurity for failure of respondent to exhaust all intra-corporate remedies.
Issues:
Whether or not the controversy involves intra-corporate issues as would fall
within the jurisdiction of the RTC sitting as a special commercial court.
Ruling:
Yes. In determining whether a dispute constitutes an intra-corporate controversy,
two tests are used, namely, the relationship test and the nature of the controversy test.
An intra-corporate controversy is one which pertains to any of the
following relationships: (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. Thus, under the relationship test, the existence of any of
the above intra-corporate relations makes the case intra-corporate.
Under the nature of the controversy test, the controversy must not only
be rooted in the existence of an intra-corporate relationship, but must as well
pertain to the enforcement of the parties correlative rights and obligations under
the Corporation Code and the internal and intra-corporate regulatory rules of the
corporation. In other words, jurisdiction should be determined by considering
both the relationship of the parties as well as the nature of the question involved.
Applying the two tests it was held that the case involves intra-corporate
controversy. It obviously arose from the intra-corporate relations between the
parties as petitioner is a condominium corporation duly organized and existing
under Philippine laws, and respondent, on the other hand, is the registered
owner of Unit No. 1201 and is thus a stockholder/member of the condominium
corporation. Clearly, there is an intra-corporate relationship between the
corporation and a stockholder/member.
Further, the questions involved pertain to their rights and obligations
under the Corporation Code and matters relating to the regulation of the
corporation.

XIII. CORPORATE POWERS

REPUBLIC OF THE PHILIPPINES
vs.
ACOJE MINING COMPANY, INC.
G.R. No. L-18062. February 28, 1963
FACTS:
On May 17, 1948, the Acoje Mining Company, Inc. wrote the Director of Posts
requesting the opening of a post, telegraph and money order offices at its mining camp
at Sta. Cruz, Zambales, to service its employees and their families that were living in
said camp. Acting on the request, the Director of Posts wrote in reply stating that if aside
from free quarters the company would provide for all essential equipment and assign a
responsible employee to perform the duties of a postmaster without compensation from
his office until such time as funds therefor may be available he would agree to put up the
offices requested. The company in turn replied signifying its willingness to comply with all
the requirements.
On April 11, 1949, the Director of Posts again wrote a letter to the company
stating among other things that "In cases where a post office will be opened under
circumstances similar to the present, it is the policy of this office to have the company
assume direct responsibility for whatever pecuniary loss may be suffered by the Bureau
of Posts by reason of any act of dishonesty, carelessness or negligence on the part of
the employee of the company who is assigned to take charge of the post office," thereby
suggesting that a resolution be adopted by the board of directors of the company

expressing conformity to the above condition relative to the responsibility to be assumed

buy it in the event a post office branch is opened as requested.
On September 2, 1949, the company informed the Director of Posts of the
passage by its board of directors of a resolution The letter further states that the
company feels that that resolution fulfills the last condition imposed by the Director of
Posts and that, therefore, it would request that an inspector be sent to the camp for the
purpose of acquainting the postmaster with the details of the operation of the branch
office.
ISSUE:
Whether or not the act of the Board in issuing the said resolution of conformity
was ultra vires.
RULING:
NO.
The corporate act was a necessary corollary to promote the interest and welfare
of the corporation. This is further bolstered by the fact that the opening of the post was
upon the request of the company for the convenience and benefit of its employees, and
not an idea of the Director of Posts. Thus, having benefited from the agreement, the
corporation is estopped from raising the defense that the said corporate act by its board
in conforming to the condition imposed by the Director of Posts is ultra vires.
Neither can the corporation interpose the defense that its liability is only that of a
guarantor. A mere reading of the resolution of the Board of Directors dated August 31,
1949, upon which the plaintiff based its claim, would show that the responsibility of the
defendant company is not just that of a guarantor. The phraseology and the terms
employed are so clear and sweeping and that the defendant assumed 'full responsibility
for all cash received by the Postmaster.' Here the responsibility of the defendant is not
just that of a guarantor. It is clearly that of a principal."

DATU TAGORANAO BENITO

vs.
SECURITIES AND EXCHANGE COMMISSION and JAMIATUL PHILIPPINE-AL
ISLAMIA, INC.
G.R. No. L-56655. July 25, 1983
FACTS:
On February 6, 1959, the Articles of Incorporation of respondent Jamiatul
Philippine-Al Islamia, Inc. (originally Kamilol Islam Institute, Inc.) were filed with the
Securities and Exchange Commission (SEC) and were approved on December 14,
1962. The corporation had an authorized capital stock of P200,000.00 divided into
20,000 shares at a par value of P10.00 each. Of the authorized capital stock, 8,058
shares worth P80,580.00 were subscribed and fully paid for. Petitioner Datu Tagoranao
Benito subscribed to 460 shares worth P4,600.00.

On October 28, 1975, the respondent corporation filed a certificate of increase of

its capital stock from P200,000.00 to P1,000,000.00. Thus, P110,980.00 worth of shares
were subsequently issued by the corporation from the unissued portion of the authorized
capital stock of P200,000.00. Of the increased capital stock of P1,000,000.00,
P160,000.00 worth of shares were subscribed by Mrs. Fatima A. Ramos, Mrs. Tarhata A.
Lucman and Mrs. Moki-in Alonto.
Petitioner Datu Tagoranao filed a petition alleging that the additional issue (worth
P110,980.00) of previously subscribed shares of the corporation was made in violation of
his pre-emptive right to said additional issue and that the increase in the authorized
capital stock of the corporation from P200,000.00 to P1,000,000.00 was illegal
considering that the stockholders of record were not notified of the meeting wherein the
proposed increase was in the agenda.
Respondents denied the material allegations of the petition and claimed that
petitioner has no cause of action and that the stock certificates covering the shares
alleged to have been sold to petitioner were only given to him as collateral for the loan of
Domocao Alonto and Moki-in Alonto. The SEC affirmed the sale.
ISSUE:
Whether or not the issuance of the unissued shares was subject to the preemptive right of the stockholders.
RULING:
NO.
The Court held that the questioned issuance of the unsubscribed portion of the
capital stock worth P110,980.00 is not invalid even if assuming that it was made without
notice to the stockholders as claimed by petitioner. The power to issue shares of stocks
in a corporation is lodged in the board of directors and no stockholders' meeting is
necessary to consider it because additional issuance of shares of stocks does not need
approval of the stockholders.
Petitioner bewails the fact that in view of the lack of notice to him of such
subsequent issuance, he was not able to exercise his right of pre-emption over the
unissued shares. However, the general rule is that pre-emptive right is recognized only
with respect to new issue of shares, and not with respect to additional issues of originally
authorized shares. This is on the theory that when a corporation at its inception offers its
first shares, it is presumed to have offered all of those which it is authorized to issue. An
original subscriber is deemed to have taken his shares knowing that they form a definite
proportionate part of the whole number of authorized shares. When the shares left
unsubscribed are later re-offered, he cannot therefore claim a dilution of interest.

XIV. CONTROL AND MANAGEMENT

ZAMBOANGA TRANSPORTATION COMPANY, INC., plaintiff-appellee,

vs. THE BACHRACH MOTOR CO., INC., defendant-appellant.
FACTS:
Zamboanga Transportation Co., Inc. (Zamboanga), is managed by a
board of directors composed of five stockholders; Bachrach Motor Co. is a
corporation engaged in selling automobiles and their parts. For 10 years, the two
have been dealing with each other. Zamboanga buys trucks, automobiles, repair
and accessory parts for use in the business of transportation in which it is
engaged. Payments were made by installments, and Zamboanga executed
several chattel mortgages to secure it. Jose Erquiaga (Erquiaga) was appointed
as general manager in 1924,elected president, and acted as an auditor in 1925.
He is also one of the majority stockholders and has been its attorney and legal
adviser.
Zamboanga lacked funds and contacted Mons. Jose Clos, Bishop of
Zamboanga and a principal stock holder of the company, for loans of money.
Since, he was leaving for Rome in February 1925 and could not continue to loan
money to Zamboanga, additional agreements were entered between Mons. Clos
and the Bachrach Motor Co., Inc. A new chattel mortgage was executed on by
Zamboanga represented by President Erquiaga. In this last mortgage the same
goods were pledged that had been hypothecated by the Zamboanga
Transporatation Co., Inc., to the Bachrach Motor Co., by virtue of instruments to
Mons. Jose Clos Bishop of Zamboanga, by the virtue of the deed. President
Erquiaga submitted the mortgage deed to the Board of directors. Upon returning
to Zamboanga from Manila, He discussed the mortgage with two board of
directors, who expressed satisfaction. Zamboanga also partially complied with
the mortgage contract. Zamboanga paid Bachrach two times. Bachrach sent a
letter cancelling the 2 former chattel mortgage. Bachrach told Erguiaga to
register the cancellation. Erquiaga replied by stating that the last mortgage was
not approved by the Board of Directors. Jose Erquiaga went to E.M. Bachman,
president of Bachrach Motor co., to secure his consent to sell the trucks that
were mortgaged. He said this will be used to pay the unpaid debt. Bachrach
denied. Erquiaga and Zamboaga later on discovered that the last mortgage was
registered in the register of deed. Zamboanga, then filed for annulment of the last
mortgage because it was registered without their consent. Bachrach, filed a
complaint for Zamboanga to obtain possession of all the chattels. Bchrach won
and sold the chattel in a public auction where they were held the highest bidder.
ISSUE: W/N the chattel mortgage executed by the president and general
manager of the plaintiff corporation, the Zamboanga Transportation Co., Inc., is
valid
RULING: YES.

While it is true that said last chattel mortgage contract was not approved by the
board of directors of the Zamboanga Transportation Co., Inc., whose approval
was necessary in order to validate it according to the by-laws of said corporation,
the broad powers vested in Jose Erquiaga as president, general manager,
auditor, attorney or legal adviser, and one of the largest shareholders; the
approval of his act in connection with said chattel mortgage contract in question,
with which two other directors expressed satisfaction, one of which is also one of
the largest shareholders, who together with the president constitute a majority:
The payments made under said contract with the knowledge of said three
directors are equivalent to a tacit approval by the board of directors of said
chattel mortgage contract and binds the Zamboanga Transportation Co., Inc. In
truth and in fact Jose Erquiaga, in his multiple capacity, was and is the factotum
of the corporation and may be said to be the corporation itself.
"Halley First National Bank vs. G. V. B. Min. Co.": Where the chief officers of a
corporation are in reality its owners, holding nearly all of its stock, and are
permitted to manage the business by the directors, who are only interested
nominally or to a small extent, and are controlled entirely by the officers, the acts
of such officers are binding on the corporation, which cannot escape liability as to
third persons dealing with it in good faith on the pretense that such acts were
ultra vires.
When the president of a corporation, who is one of the principal stockholders and
at the same time its general manager, auditor, attorney or legal adviser, is
empowered by its by-laws to enter into chattel mortgage contracts, subject to the
approval of the board of directors, and enters into such contracts with the tacit
approval of two other members of the board of directors, one of whom is also a
principal shareholder, both of whom, together with the president, form a majority,
and said corporation takes advantage of the benefits afforded by said contract,
such acts are equivalent to an implied ratification of said contract by the board of
directors and binds the corporation even if not formally approved by said board of
directors as required by the by-laws of the aforesaid corporation.

MATLING INDUSTRIAL AND COMMERCIAL CORPORATION vs.

RICARDO COROS
G.R. No. 157802

October 13, 2010

FACTS: After respondent Ricardo Coros dismissal by Matling as its Vice

President for Finance and Administration, he filed on August 10, 2000 a
complaint for illegal suspension and illegal dismissal against Matling and
some of its corporate officers in the NLRC, Sub-Regional Arbitration Branch
XII, Iligan City. The petitioners moved to dismiss the complaint, raising the
ground, among others, that the complaint pertained to the jurisdiction of the
Securities and Exchange Commission due to the controversy being intracorporate inasmuch as the respondent was a member of Matlings Board of
Directors aside from being its Vice-President for Finance and Administration
prior to his termination. The respondent opposed the petitioners motion to
dismiss, insisting that his status as a member of Matlings Board of Directors
was doubtful, considering that he had not been formally elected as such; that
he did not own a single share of stock in Matling, considering that he had
been made to sign in blank an undated indorsement of the certificate of stock
he had been given in 1992; that Matling had taken back and retained the
certificate of stock in its custody; and that even assuming that he had been a
Director of Matling, he had been removed as the Vice President for Finance
and Administration, not as a Director, a fact that the notice of his termination
dated April 10, 2000 showed. On October 16, 2000, the Labor Arbiter granted
the petitioners motion to dismiss, ruling that the respondent was a corporate
officer. On March 13, 2001, the NLRC set aside the dismissal, concluding that
the respondents complaint for illegal dismissal was properly cognizable by
the LA, not by the SEC, because he was not a corporate officer by virtue of
his position in Matling, albeit high ranking and managerial, not being among
the positions listed in Matlings Constitution and By-Laws. On motion for
reconsideration, petitioners submitted a certified machine copies of Matlings
Amended Articles of Incorporation and By Laws to prove that the President of
Matling was thereby granted "full power to create new offices and appoint
the officers thereto and the minutes of special meeting held on June 7, 1999
by Matlings Board of Directors to prove that the respondent was, indeed, a
Member of the Board of Directors. Nonetheless, the NLRC denied the
petitioners motion for reconsideration. The petitioners elevated the issue to
the CA by petition for certiorari. The CA dismissed the petition for
certiorari and ruled that for a position to be considered as a
corporate office, or, for that matter, for one to be considered as a
corporate officer, the position must, if not listed in the by-laws, have
been created by the corporation's board of directors, and the
occupant thereof appointed or elected by the same board of
directors or stockholders. Motion for reconsideration was likewise denied.
Hence this petition for review on certiorari.
ISSUE: Whether or not respondent was a corporate officer of Matling
Industrial and Commercial Corporation.
RULING: Conformably with Section 25, a position must be expressly
mentioned in the By-Laws in order to be considered as a corporate office.
Thus, the creation of an office pursuant to or under a By-Law enabling
provision is not enough to make a position a corporate office. Guerrea v.
Lezama, the first ruling on the matter, held that the only officers of a
corporation were those given that character either by the Corporation Code

or by the By-Laws; the rest of the corporate officers could be considered only
as employees or subordinate officials.
It is relevant to state in this connection that the SEC, the primary agency
administering the Corporation Code, adopted a similar interpretation of
Section 25 of the Corporation Code in its Opinion dated November 25, 1993,
to wit:
Thus, pursuant to Section 25 of the Corporation Code, whoever are the
corporate officers enumerated in the by-laws are the exclusive Officers of the
corporation and the Board has no power to create other Offices without
amending first the corporate By-laws. However, the Board may create
appointive positions other than the positions of corporate Officers, but the
persons occupying such positions are not considered as corporate officers
within the meaning of Section 25 of the Corporation Code and are not
empowered to exercise the functions of the corporate Officers, except those
functions lawfully delegated to them. Their functions and duties are to be
determined by the Board of Directors/Trustees.
Moreover, the Board of Directors of Matling could not validly delegate the
power to create a corporate office to the President, in light of Section 25 of
the Corporation Code requiring the Board of Directors itself to elect the
corporate officers. Verily, the power to elect the corporate officers was a
discretionary power that the law exclusively vested in the Board of Directors,
and could not be delegated to subordinate officers or agents. The office of
Vice President for Finance and Administration created by Matlings President
pursuant to By Law No. V was an ordinary, not a corporate, office.
To emphasize, the power to create new offices and the power to appoint the
officers to occupy them vested by By-Law No. V merely allowed Matlings
President to create non-corporate offices to be occupied by ordinary
employees of Matling. Such powers were incidental to the Presidents duties
as the executive head of Matling to assist him in the daily operations of the
business.

RENATO REAL, Petitioner, vs. SANGU PHILIPPINES, INC. and/ or KIICHI

ABE, Respondents.
G.R. No. 168757

January 19, 2011

DEL CASTILLO, J.:
FACTS:
Renato Real was the Manager of respondent corporation Sangu
Philippines, Inc. which is engaged in the business of providing manpower
for general services. He filed a complaint for illegal dismissal against the
respondents stating that he was neither notified of the Board meeting
during which his removal was discussed nor was he formally charged with
any infraction.
Respondents, on the other hand, said that Real committed gross acts of
misconduct detrimental to the company since 2000. The LA declared
petitioner as having been illegally dismissed. Sangu appealed to NLRC
and established petitioners status as a stockholder and as a corporate
officer and hence, his action against respondent corporation is an intracorporate controversy over which the Labor Arbiter has no jurisdiction.
NLRC modified the LAs decision. On appeal, the CA affirmed the decision
of NLRC.
Hence, this petition.
ISSUE: WON petitioners complaint for illegal dismissal constitutes an
intra-corporate controversy.
RULING:
To determine whether a case involves an intra-corporate controversy, and
is to be heard and decided by the branches of the RTC specifically
designated by the Court to try and decide such cases, two elements must
concur: (a) the status or relationship of the parties, and (2) the nature of
the question that is the subject of their controversy.
The first element requires that the controversy must arise out of intracorporate or partnership relations between any or all of the parties and
the corporation x x . The second element requires that the dispute
among the parties be intrinsically connected with the regulation of the
corporation. If the nature of the controversy involves matters that are
purely civil in character, necessarily, the case does not involve an intracorporate controversy.

Guided by this recent jurisprudence, we thus find no merit in

respondents contention that the fact alone that petitioner is a
stockholder and director of respondent corporation automatically
classifies this case as an intra-corporate controversy. To reiterate, not all
conflicts between the stockholders and the corporation are classified as
intra-corporate. There are other factors to consider in determining
whether the dispute involves corporate matters as to consider them as
intra-corporate controversies.