96407449 Petition for Certiorari

8/11/2019 96407449 Petition for Certiorari

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Section 1. Petition for certiorari.

When any tribunal, board or officer

exercising judicial or quasi-judicial

functions has acted without or inexcess of its or his jurisdiction, or

with grave abuse of discretion

amounting to lack or excess of

jurisdiction, and there is no appeal,

or any plain, speedy, and adequate

remedy in the ordinary course of law, a

person aggrieved thereby may file a

verified petition in the proper court,

alleging the facts with certainty and

praying that judgment be rendered

annulling or modifying the proceedings

of such tribunal, board or officer, and

granting such incidental reliefs as law

and justice may require.

The petition shall be accompanied by acertified true copy of the judgment,

order or resolution subject thereof,

copies of all pleadings and documents

relevant and pertinent thereto, and a.

sworn certification of non-forum

shopping as provided in the third

paragraph of section 3, Rule 46

THIS IS A RULE 45 CASE WALANG RULE 65 SO MODIFY NALANG,

REPUBLIC OF THE PHILIPPINESSUPREME COURTMANILA

ThirdDivision

ADERITO Z. CULLEN,


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ADERITO CULLEN, ET AL.V. HON. JUDGE ALEGRE, ET AL.PETITION FOR CERTIORARI

G.R. NO. 168639

04381.10.004

pds/CULLEN/SC/petition for certiorari

2

BONIFACIO C. CULLEN,and DOLNEY S. CULLEN,

Petitioners,

- versus - G.R. No. 168639

MAUREEN, CEZAR T. LADYDEL ROSARIO, JOSE M.XXXXXX III , CHRISTINA F.XXXXXX, ANTHONY K. LADYDEL ROSARIO, SIMPLICIO T.LADY DEL ROSARIO, JR.,ERIC C. DOE, RUSTIKOY M.

XXXXXX, and REGIONALTRIAL COURT, FIRSTJUDICIAL REGION, BRANCH48, SAMAR CITY

Respondents.

[CA-G.R. SP No. 87785, Court ofAppeals, Eighth Div.; Civil(SEC) Case No. U-14 (SCC-2874), RTC, Samar city, Branch48]

For: Review on Certiorari, withtemporary restraining order andpreliminary injunction.

x----------------------------------------------------------------------------------------------------x

P E T I T I O N

Petitioners Aderito Z. CULLEN,1 Bonifacio C. CULLEN2 and

Dolney S. CULLEN,3by counsel, respectfully state:

Introductory

Petitioners are before this Honorable Court to correct a

patent injustice perpetrated by respondent Cezar T. LADY DEL

ROSARIO and his counsel, Atty. JOHN G., who connived with

respondent Judge Meliton G. ALEGRE, pairing judge of the

Regional Trial Court, First Judicial Region, Branch 48 in Samar city,

to remove petitioners as directors of AAACCCBDDDDevelopment

Corporation4through a preliminary injunction issued eight months

after petitioners were elected in a valid stockholders meeting. In

his Order dated November 25, 2004 granting the preliminary

1Hereafter, CULLEN.2Hereafter, B. Sumbilla.3Hereafter, D. Sumbilla.4Hereafter, XXXXX INC.


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injunction, respondent Judge not only enjoined petitioners from

performing acts as directors and officers of the corporation but also

directed the holding of a special stockholders meeting in

Bayambang, to elect the new directors and officers of the

corporation, effectively disposing of the merits of the case ahead of

trial.

Respondent Judge facilitated the removal of petitioners from

office by acting on Mr. LADY DEL ROSARIOs election protest,

which was filed beyond the statutory period to contest the election.

He issued a temporary restraining order ex parte, in violation of

circulars of this Honorable Court and applicable decisions, and set

the hearings on the preliminary injunction on short notice so as to

prevent the petitioners and their counsel from participating in the

proceeding. Despite objections to his impartiality and to his

jurisdiction, respondent Judge proceeded and allowed himself to be

used as an instrument of injustice.

This case illustrates how legal knowledge may be abused by

litigants to mislead the courts and to frustrate justice. Thus, Mr.

LADY DEL ROSARIO and his counsel took full advantage of the

articles of incorporation of ABC INCORPORATED, which states

the principal office of the corporation in Bayambang, BULACAN,

to file their action in Samar city despite the fact that the corporation

never operated in that far-flung municipality nor held any

meetings there. The distance of Samar city from Metro Manila,

where petitioners and private respondents as well as their counsel

reside and hold office, require at least six hours of travel by private

transportation, thereby rendering it impracticable for petitioners to

prove their defenses in a timely manner. At every opportunity, Mr.

LADY DEL ROSARIO and Atty. ABUGADO invoked the summary

nature of the Interim Rules of Procedure on Intra-Corporate

Controversy to penalize petitioners.


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This Honorable Court has recently held that the peoples

confidence in the judicial system is founded not only on the

magnitude of legal knowledge and the diligence of the members of

the bench, but also on the highest standard of integrity and moral

uprightness they are expected to possess.5 To be sure, this

Honorable Court as the staunch guardian of the citizens righs

and welfare - cannot and will not sanction an injustice so patent on

its face, and allow itself to be an instrument in the perpetration

thereof.6

Petitioners, by filing this appeal, seek to correct the patent

injustice they suffered at the hands of Mr. LADY DEL ROSARIO,

his counsel, respondent Judge, and only recently the Court of

Appeals. They invoke the inherent power of this Honorable Court

not only to pronounce what the law is in adjudicating every

dispute but, more importantly, to level the playing field by

rendering substantial justice to petitionerscause.

P a r t i e s

Petitioners CULLEN, B. CULLEN and D. CULLEN are all of

legal age. Mr. CULLEN is the President and Chairman of the Board

of Directors of ABC INCORPORATED, a domestic corporation withprincipal office at the 24thFloor, One Magnificent Mile-Babuun INC

Building, San Miguel Avenue, Ortigas Center, Pasig City, while B.

CULLEN is ABC INCORPORATEDs Treasurer. Petitioners are all

stockholders of ABC INCORPORATED. They may be served with

notices and other processes of this Honorable Court through

undersigned counsel.

5Yu vs. Leanda, 349 SCRA 58, 64-65 (2001).6EPG Construction Co. vs. Vigilar, 354 SCRA 566, 576 (2001).


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Respondent Meliton G. ALEGRE is the pairing Judge and

presiding Judge of the Regional Trial Court, Samar city, Branches 48

and 47, respectively. He may be served with notices and other

processes of this Honorable Court at his station at the Regional Trial

Court, Samar city, Branch 48 located at the Hall of Justice, Samar city,

BULACAN.

Private respondents Cezar T. LADY DEL ROSARIO, Jose M.

XXXXXX III and Christina XXXXXX7 are all of legal age. They are

impleaded as plaintiffs in Civil (SEC) Case No. U-14 and, hence, as

necessary parties. They may be served with notices and other

processes of this Honorable Court through their counsel of record

below, ABUGADO ABUGADO and XXXXXX Concepcion Law

Offices at Unit 1112, Manila Astral Tower, 1330 Taft Avenue corner

Padre Faura Street, Manila.

Private respondents Anthony K. LADY DEL ROSARIO,

Simplicio T. LADY DEL ROSARIO, Jr., Eric C. DOE, and RUSTIKOY

M. XXXXXX8 are impleaded as directors and officers unlawfully

elected during the void stockholders meeting of ABC

INCORPORATED subject of this petition. They are impleaded as

necessary parties and may be served with notices through

respondent LADY DEL ROSARIOs counsel, ABUGADO ABUGADO

and XXXXXX Concepcion Law Offices at Unit 1112, Manila Astral

Tower, 1330 Taft Avenue corner Padre Faura Street, Manila.

Respondent Regional Trial Court, First Judicial Region, Branch

48, Samar city is a court created under Batas Pambansa Bldg. 129

7Hereafter, plaintiffs below.8Hereafter, respondent directors and officers.


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(1981), as amended. It may be notified of the proceedings and served

with processes of this Honorable Court at its official station at the

Hall of Justice, Samar city, BULACAN.

Nature of the Petition

This is a petition under Rule 45 of the 1997 Rules of Civil

Procedure to review by certiorari the Court of Appeals Decision

dated March 31, 20059 and Resolution dated June 29, 200510 in CA-

G.R. SP No. 87785, entitled Aderito A. CULLEN, et al. vs. Hon. Meliton

G. ALEGRE, et al.

In its Decision, the Court of Appeals denied due course to the

petition therein and erroneously dismissed it on grounds that (a) the

Regional Trial Court, First Judicial Region, Branch 48 in Samar city,11

had authority to directly call a stockholders meeting of ABC

INCORPORATED; (b) there was a valid notice of the stockholders

meeting as shown by the letter dated December 1, 2004 of private

respondents counsel, which was purportedly received by ABC

INCORPORATEDsCorporate Secretary; and (c) private respondents

did not engage in forum shopping. The appellate court refused to

consider other grounds raised by petitioners.

In its Resolution, the Court of Appeals denied petitioners

motion for reconsideration of the appellate courts Decision.

Petitioners respectfully submit that the Court of Appeals Decision

9Hereafter, the Decision, a certified true copy of which is attached as Annex A hereof.10Hereafter, the Resolution, a certified true copy of which is attached as Annex B hereof.11Hereafter, the RTC XXXXXX.


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and Resolution were rendered in a way not in accord with law and

the applicable decisions of this Honorable Court. Hence, this

petition.

Timeliness of the Petition

On April 11, 2005, petitioners received a copy of the Decision.

They moved to reconsider the same in a Motion for

Reconsideration dated April 26, 2005, which petitioners filed on

even date. However, petitioners motion for reconsideration was

denied by the appellate court in its Resolution, a copy of which they

received on July 8, 2005. Under Rule 45, Section 1 of the Rules,

petitioners had 15 days from July 8, 2005, or until July 23, 2005,

within which to file a petition for review on certiorari with this

Honorable Court.

On July 14, 2005, petitioners filed a Motion for Extension of

Time to File Petition dated July 13, 2005 where theyprayed for an

extension of 30 days from July 23, 2005, or until August 22, 2005,

within which to file their petition for review on certiorari with this

Honorable Court.

Statement of Facts and the Case

1. On July 27, 1998, the Securities and Exchange

Commission12approved the amendment of ABC INCORPORATEDs

articles of incorporation to authorize the establishment of its

principal office from the 24th Floor of the One Magnificent Mile-

Babuun INC Building in Ortigas Center, Pasig City to Bayambang,

12Hereafter, SEC.


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BULACAN. The change in the location of ABC INCORPORATEDs

principal office was made at the instance of its then President,

respondent LADY DEL ROSARIO, to make it difficult for any

claimant to sue ABC INCORPORATED and/or respondent LADY

DEL ROSARIO in his hometown of Bayambang, BULACAN, and

not for any bona fidepurpose.

2. ABC INCORPORATED never opened an office in

Bayambang, BULACAN, much less conducted any business activity

or transaction in said municipality. Hence, the change in location of

the principal office was never implemented, such that ABC

INCORPORATED continued to hold its principal office on the 24th

Floor, One Magnificent Mile-Babuun INC Building, San Miguel

Avenue, Ortigas Center, Pasig City.13 The meetings of the

stockholders and directors of ABC INCORPORATED were held at

the Pasig office.

3. On March 1, 2004, ABC INCORPORATED held its annual

stockholders meeting at the Pasig office, which was attended by all

of its stockholders, in person and by proxy. Notices14 of the said

meeting were sent to the stockholders by respondent Eric C. DOE,15

then the Corporate Secretary of ABC INCORPORATED, indicating

that the meeting was to be held at ABC INCORPORATEDs Pasig

office.

4. None of the stockholders, plaintiffs below included,

objected to the venue of the meeting. In fact, respondents LADY DEL

ROSARIO and XXXXXX attended the meeting, during which they

13Hereafter, Pasig office.14A copy of the Notice is attached as Annex C hereof.15Hereafter, Atty. Pilapil or respondent Pilapil.


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were elected as directors. Respondents LADY DEL ROSARIO and

XXXXXX also assented to the election of petitioners CULLEN and B.

CULLEN as ABC INCORPORATEDs Chairman/President and

Treasurer, respectively.16

5. Since then, ABC INCORPORATEDs business was

transacted through its Board of Directors composed of respondents

LADY DEL ROSARIO and XXXXXX as well as petitioners, without

any protest or objection on the part of plaintiffs below or any other

stockholder of ABC INCORPORATED.17 Respondents LADY DEL

ROSARIO and XXXXXX, at whose instigation the case a quo was filed,

received per diems from ABC INCORPORATED as duly elected

directors.

6. As the corporate secretary of ABC INCORPORATED,

Atty. DOE kept all the corporate and business records of the

corporation. However, upon his cessation from office on June 21,

2004, Atty. DOE failed and/or refused to turn over the said records

to his successor. Hence, ABC INCORPORATEDs records were lost,

misplaced or incomplete. Furthermore, respondent LADY DEL

ROSARIO unlawfully took ABC INCORPORATEDs stock and

transfer book18and refused to deliver it to ABC INCORPORATED or

to its new corporate secretary, Atty. Joselito G. Blando.

7. On June 21, 2004, petitioner CULLEN filed Civil Case No.

70027, entitled Aderito Z. CULLEN vs. United Resources Asset

Management, Inc., Atty. Richard J. Nethercott and Atty. Honorato R.

16Please see the Minutes of the Organizational Meeting of the Board of Directors on March 1,2004, a copy of which is attached as Annex D hereof.17Please see the Minutes of the Regular Meeting of the Board of Directors on June 14, 2004, acopy of which is attached as Annex E hereof.18Hereafter, STB.


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Mataban,19 which was raffled to the Regional Trial Court,20 Pasig

City, Branch 71.21

8. In Civil Case No. 70027, petitioner CULLEN sought to (a)

immediately restrain and preliminarily enjoin defendants therein

from proceeding with the auction sale of the ABC

INCORPORATED shares

pledged by petitioners to CCCCC INC; (b) enjoin defendants therein

from [i] executing any certificate of sale of such shares; [ii] recording

such shares in the books of ABC INCORPORATED; [iii] canceling the

pledged shares and issuing new ones in favor of defendants therein

or any bidder; or [iv] exercising any rights of ownership over such

shares; and (c) declare void therein defendants foreclosure of the

pledged shares, any auction sale, certificate of sale, registration of

sale, cancellation of shares, issuance of new shares, transfer or

assignment of new shares and the exercise of any rights of ownership

over such pledged shares.

9. Before the RTC Pasig could issue a temporary restraining

order,22 Atty. Mataban conducted the auction sale of the pledged

shares in Bayambang, BULACAN, with CCCCC INC being the

highest bidder for said shares. On the same day, before any

certificate of stock could be issued in its name, CCCCC INC sold the

auctioned shares to respondent LADY DEL ROSARIO. On June 30,

2004, the RTC Pasig issued its TRO, stating that:

In the broader interest of justice and so as not to render mootand academic the issue on the grant or not of the writ, let thisTemporary Restraining Order be issued enjoining defendants, their

19Hereafter, URAMI, Atty. Nethercott and Atty. Mataban, respectively.20Hereafter, RTC.21Hereafter, RTC Pasig.22Hereafter, TRO.


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officers, agents and assigns from recording such sale in the books ofABC INCORPORATED or from canceling the pledged shares andissuing new ones in favor of defendants or from exercising anyrights of ownership over such shares in violation of plaintiffsrights. The Corporate Secretary of ABC INCORPORATED is

directed to hold in abeyance the cancellation of the pledged sharesand to restore them, if cancelled, in the books of the corporationuntil further orders from this Court.23

10. On June 30, 2004, upon learning of the issuance of the

TRO, respondent LADY DEL ROSARIO and Atty. Nethercott rushed

to ABC INCORPORATEDs corporate secretary, Atty. Blando, toask

him to record entries in the STB immediately transferring theauctioned shares to CCCCC INC and then to transfer them again

from CCCCC INC to respondent LADY DEL ROSARIO. The

pressure exerted upon Atty. Blando was sweetened by payment of

substantial sums of money to Atty. Blando. The cancellation and

transfer of the shares were made in the STB without surrendering it

to ABC INCORPORATED or Atty. Blando, to beat the TRO that by

then had been issued by the RTC Pasig.

11. While unlawfully holding on to the STB, respondent

LADY DEL ROSARIO and Atty. DOE demanded Atty. Blando to

cancel the pledged shares and issue new shares to CCCCC INC and

respondent LADY DEL ROSARIO. Respondent LADY DEL

ROSARIO and Atty. DOE likewise ordered Atty. Blando to perform

the cancellation and issuance of the shares in Atty. DOEs office

inside the Land Transportation Office compound in Quezon City, to

be witnessed by respondent LADY DEL ROSARIO alone.

Respondent LADY DEL ROSARIO and Atty. DOE refused to allow

the recording to be done by Atty. Blando outside of Atty. DOEs

office.

23A copy of the RTC Pasigs Order dated June 30, 2004 is attached as Annex F hereof.


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12. After Atty. Blando received the TRO on July 1, 2004 and

tried, but failed, to undo the cancellation and transfer of the shares in

the absence of the STB which was then unlawfully withheld by

respondent LADY DEL ROSARIO, ABC INCORPORATED

authorized the reconstitution of the STB and its entries. The

cancellation and transfer made at the instance of LADY DEL

ROSARIO were then reversed by ABC INCORPORATED in the

reconstituted STB to comply with the TRO.

13. In the meantime, on July 19, 2004, the RTC Pasig issued a

writ of preliminary injunction24 against CCCCC INC and Attys.

Nethercott and Mataban, as well as all persons acting under them,

stating that:

IT IS HEREBY ORDERED by the undersigned Judge of thisCourt, that until further orders, you, the said defendants UnitedResources Asset Management, Inc. (CCCCC INC for short), Atty.Richard J. Nethercott, and Atty. Honorato R. Mataban, and allpersons acting under them, to desist and refrain from furtherproceeding with the public auction sale of the pledged shares ofstocks by registering/recording the sold shares of stocks in thebooks of ABC INCORPORATED, or canceling them and issuingnew ones in favor of defendant CCCCC INC to enable it to exercisethe rights of ownership over said shares owned by plaintiff inviolation of the latters rights.

SO ORDERED.

14. Thereafter, respondent LADY DEL ROSARIO refused to

comply with the subpoena issued by the RTC Pasig to produce the

STB in Civil Case No. 70027. He also rejected the demand of

petitioner CULLENs counsel to surrender the STB within 24 hours,on the ground that the STBs possession was being litigated in that action:

24A copy of the RTC Pasigs Writ of Preliminary Injunction is attached as Annex G hereof.


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As you are aware, the matter of possession of ABCINCORPORATEDs Stock and Transfer Book is currently beinglitigated in Civil Case No. 70027, entitled Aderito Z. CULLEN vs.United Resources Asset Management, Inc., Et Al., pending before theRegional Trial Court of Pasig City (Branch 71), where I am

represented by Tan Acut & Lopez Law Offices, my counsel departe.25

15. Respondent LADY DEL ROSARIO, by way of special

appearance, then participated in Civil Case No. 70027 by filing

motions and pleadings, examining witnesses, presenting evidence,

and otherwise actively prosecuting and defending his claims therein

as if he were a party in that case.26

16. On August 16, 2004, plaintiffs below filed an election

protest before the RTC, San Carlos City, to (a) invalidate the March 1,

2004 election of ABC INCORPORATEDs directors and officers;and

(b) enjoin petitioners from discharging their functions as directors

and officers of ABC INCORPORATED. The case a quowas initially

docketed as Civil Case No. SCC 2874 entitled Cezar T. LADY DEL

ROSARIO, et al. vs. ABC INCORPORATED, et al.,and was raffled to

Branch 56 of the said court.27

17. Plaintiffs below thereafter filed an Amended Complaint

dated September 2, 2004, further praying the RTC San Carlos to issue

a TRO and/or writof preliminary injunction based on the same facts

alleged in their original complaint.

25 A copy of respondent Quiambaos letter dated September 6, 2004 is attached as Annex Hhereof.26A sample pleading filed by respondent Quiambao in Civil Case No. 70027 is attached as AnnexI hereof.27Hereafter, RTC San Carlos.


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18. On September 22, 2004, plaintiffs below filed their first

Supplemental Complaint dated September 16, 200428before the RTC

San Carlos, praying the court a quoto (a) direct Export Industry Bank,

respondent LADY DEL ROSARIO and petitioner B. CULLEN to

surrender to the custody of the court a quo the original and

reconstituted STB and other relevant certified true copies of ABC

INCORPORATEDs corporate documents; and (b) nullify the

reconstituted STB and the reconveyance effected therein. However,

the RTC San Carlosdid not issue a TRO in favor of plaintiffs.

19. Subsequently, SUPER LAND CORPCorporation,29

through (a) Melvin Nazareno, as President of CAKELAND

Infrastructure Development Corporation;30 and (b) petitioner

CULLEN, as Chairman and President of ABC INCORPORATED,

with CAKELAND Infrastructure and ABC INCORPORATED being

the owners of a majority of the shares of stock of CAKELAND

Tollways, issued a notice of the Annual Stockholders Meeting of

SUPER LAND CORPdated September 30, 2004, to be held on October

20, 2004, at 11:00 a.m. Said notice was duly served on and received

by respondent LADY DEL ROSARIO.

20. Then, in an Order dated October 4, 2004, the RTC San

Carlos suddenly ordered the case transferred to the RTC, Samar city

pursuant to Supreme Court Administrative Circular No. 08-2001,

without the approval of the Executive Judge of the RTC, San Carlos

City, and without prior leave of the Supreme Court. As a result, the

case a quo was transferred to the RTC XXXXXX, which was then

vacant, where it was docketed anew as Civil (SEC) Case No. U-14.

28 A copy of the Supplemental Complaint dated September 16, 2004 is attached as Annex Jhereof.29Hereafter, CAKELAND Tollways.30Hereafter, CAKELAND Infrastructure.


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This was done despite the fact that none of the parties to the case

were residents of the city and the municipalities over which RTC

XXXXXX exercised its territorial jurisdiction. Respondent Judge then

acted on the case as a pairing judge of the RTC XXXXXX.

21. In a Second Supplemental Complaint dated October 6,

2004, plaintiffs below prayed for reliefs similar to those sought in

their Complaint, Amended Complaint and Supplemental Complaint.

In an Order dated October 12, 2004, respondent Judge motuproprio

admitted the two supplemental complaints filed by plaintiffs below.

22. On Monday, October 18, 2004, respondent Judge issued

ex parte a TRO effective for a period of 72 hours, enjoining petitioners

from acting as officers of ABC INCORPORATED and/or from

committing further acts inimical to the interests of ABC

INCORPORATED and its stockholders, and directing respondent

LADY DEL ROSARIO and petitioners to bring to RTC XXXXXX the

original as well as the reconstituted STB of ABC INCORPORATED.31

The trial court then set the summary hearing of LADY DEL

ROSARIOs application for TRO on October 20, 2004, which was a

Wednesday. Considering the distance between Metro Manila, where

petitioners and their counsel reside and held office, and the RTC

XXXXXX, it was physically impossible for petitioners to prepare for

and attend the hearing in a timely manner.

23. Thus, on October 20, 2004, petitioners filed a Motion to

Inhibit and to Quash Temporary Restraining Orderdated October

19, 2004 before the RTC XXXXXX. Petitioners likewise moved to

defer the hearing scheduled on October 20, 2004 because of the long

31A copy of the RTC XXXXXXs Temporary Restraining Order dated October 18, 2004 is attachedas Annex K to K-1 hereof.


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distance required and the short notice for petitioners to prepare for

the hearing. However, respondent Judge refused to defer the hearing.

He proceeded with the hearing and received ex parte the testimonies

of respondents LADY DEL ROSARIO and Jose M. XXXXXX III as

well as Atty. DOE. Thereafter, plaintiffs below submitted their

application for a TRO to respondent Judge, in the absence of

petitioners and their counsel who were unable to attend the hearing.

24. On October 29, 2004, respondent Judge issued an order

holding in abeyance plaintiffs application for a TRO, pending the

exchange of pleadings by the parties. Hence, on November 2, 2004,

petitioners filed their Answer with Counterclaim dated October 28,

2004.32In the meantime, on November 2, 2004, Hon. Aurelio R. Ralar

assumed his offices as presiding judge of RTC XXXXXX, thereby

divesting respondent Judge of further authority to act on Civil (SEC)

Case No. U-14.

25. On November 9, 2004, petitioners received a copy of

plaintiffs Manifestation with Motion for Early Resolution dated

November 2, 2004, praying for the resolution of their application for

preliminary injunction before the RTC XXXXXX. On the date their

pleading was written, plaintiffs below were apparently aware of the

appointment of Judge Ralar as presiding judge of the RTC XXXXXX.

26. In an Order dated November 10, 2004, respondent Judge

set the reception of petitioners evidence, as defendants below, on

Thursday, November 19, 2004 at 2:00 p.m., oblivious of the fact that

Judge Ralar had assumed his office as presiding judge of the RTC

XXXXXX. Petitioners, through undersigned counsel, received a

32 A copy of petitioners Answer with Counterclaim dated October 28, 2004 is attached asAnnex L hereof.


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copy of the order on Tuesday, November 17, 2004, at 2:24 p.m.

However, as none of the lawyers handling the case for petitioners

was available to go to Samar city on short notice, petitioners again

were not represented during the hearing. Upon LADY DEL

ROSARIOs motion, petitioners were deemed to have waived their

right to present evidence and the application for preliminary

injunction was ordered submitted for resolution.33

27. On November 19, 2004, petitioners received a copy of

plaintiffs Answer to Counterclaim dated November 10, 2004.

Unknown to petitioners, on November 25, 2004, respondent Judge

had issued an Order granting plaintiffs application for preliminary

injunction and ordering the holding of a special stockholders

meeting in Bayambang, BULACAN on December 10, 2004, which

Order practically disposed of the merits of the case. The dispositive

portion of the Order read:

WHEREFORE, premises considered, let the Writ ofPreliminary Injunction issue, upon posting of the requisite bond inthe amount if Five Hundred Thousand Pesos (P500,000.00) toanswer for whatever damages that the defendants would suffer onaccount of the issuance of the injunction writ, restrainingdefendants from acting as officers of the corporation andcommitting further acts inimical to the corporation.

It is likewise ordered that a special stockholders meeting in theprincipal office of the corporation in Bayambang, BULACAN onDecember 10, 2004 be held. The Branch Clerk of this Court shallattend the said meeting to observe the proceedings and report hisobservations to this court. For this purpose, the defendantBonifacio CULLEN is ordered to surrender to the court, not laterthan December 3, 2004 the duplicate key given to him by ExportIndustry Bank, Shaw Blvd., Pasig City, of the safety deposit boxwhere he and plaintiff Cezar T. LADY DEL ROSARIO deposited

the Original Stock and Transfer Book of ABC INCORPORATEDwhich shall be the basis in the determination of the corporatestockholding during the meeting scheduled on the above-mentioned dated.

33 A copy of the RTC XXXXXXs Order dated November 19, 2004 is attached as Annex Mhereof.


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SO ORDERED.34

28. On December 6, 2004, petitioner B. CULLEN received by

registered mail a copy of an undated Notice of Special Annual

Stockholders Meeting,35 issued by the Branch Clerk of Court of

respondent Judge, informing B. CULLEN that pursuant to the Order

dated November 25, 2004, a special annual stockholders meeting of

ABC INCORPORATED would be held four days later on December

10, 2004, 9:00 a.m., at ABC INCORPORATEDs supposed office in

Poblacion Sur, Bayambang, BULACAN. By this time, petitioners had

not been notified of respondent Judges invalid Order dated

November 25, 2004.

29. On December 8, 2004, before petitioners received a copy

of the Order dated November 25, 2004, respondent LADY DEL

ROSARIO, together with the Sheriff of the RTC XXXXXX, caused the

opening of the safety deposit box in Export Industry Bank, Pasig City

branch, on the basis of the Order, even if the bank was well outside

the territorial jurisdiction of the RTC XXXXXX. Petitioners were not

notified by the Export Industry Bank before it allowed the opening of

the safety deposit box. Upon the opening of the safety deposit box,

respondent LADY DEL ROSARIO took custody of ABC

INCORPORATEDs STB, which he placed there for safekeeping in his

and B. CULLENs names instead of turning it over to ABC

INCORPORATED or to Atty. Blando.

30. On December 10, 2004, petitioners were compelled to filebefore the RTC XXXXXX an Urgent Motion to Set Aside Notice of

34A copy of the RTC XXXXXXs Order dated November 25, 2004 is attached as Annex N hereof.35Hereafter, Notice.


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Stockholders Meeting dated December 9, 2004.36 Despite

petitioners motion, however, the RTC XXXXXX refused to act on the

motion and plaintiffs below proceeded to hold an invalid

stockholders meeting of ABC INCORPORATED in Bayambang,

BULACAN on December 10, 2004, on the basis of the unlawful

Notice issued by the Branch Clerk of Court of respondent Judge.

During this invalid meeting, which was presided by the Branch Clerk

of Court of respondent Judge, the following respondents elected

themselves as directors and officers of the corporation:

Directors:

Cezar T. LADY DEL ROSARIOAnthony K. LADY DEL ROSARIOSimplicio T. LADY DEL ROSARIO, Jr.

Corporate Officers:

Cezar T. LADY DEL ROSARIO - Chairman and

PresidentAnthony K. LADY DEL ROSARIO - TreasurerEric C. DOE - Corporate SecretaryRUSTIKOY M. XXXXXX - Assistant Corp. Sec.37

31. Petitioners immediately filed on December 10, 2004, a

petition for certiorari38before the Court of Appeals and applied for a

TRO and/or a writ of preliminary injunction to enjoin plaintiffs

below from further implementing the Order dated November 25,

2004 and/or causing grave and irreparable damage to petitioners.

The petition was docketed as CA-G.R. SP No. 87785 and assigned to

Associate Justice Mariano C. del Castillo of the then Ninth Division of

the appellate court.

36

A copy of the Urgent Motion to Set Aside Notice of Stockholders Meeting dated December 9,2004 is attached as Annex O hereof.37 Copies of the Certification dated December 10, 2004 issued by the secretary of the invalidstockholders meeting of XXXXX INC, Jeffrey P. Punzalan, and the Notice of even date issued bythe alleged Assistant Corporate Secretary of XXXXX INC, Albert M. Rasalan, are attached asAnnexes P and Q hereof, respectively.38A copy of the Petition dated December 10, 2004, without the voluminous annexes, is attachedas Annex R hereof.


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32. In a belated Resolution dated December 17, 2004, a copy

of which petitioners received only on December 28, 2004, eighteen days

after the invalid stockholders meeting, the Court of Appeals directed

plaintiffs below to file their comment on the Petition within 10 days

from notice, without necessarily giving due course to the instant

petition for certiorari with prayer for the issuance of temporary

restraining order and/or writof preliminary injunction.

33. On December 29, 2004, petitioners, citing grave and

irreparable injury to themselves and to third parties dealing with

plaintiffs below, filed a Motion for Partial Reconsideration dated

December 28, 200439 of the Court of Appeals Resolution dated

December 17, 2004 insofar as it did not address petitioners

application for a TRO. Thereafter, private respondents therein filed

(a) a Comment on the Petition dated January 6, 2005; and (b) an

Opposition to Motion for Partial Reconsideration dated January 7,

2005.40

34. On January 14, 2005, petitioners again filed with the

Court of Appeals an Urgent Ex-Parte Motion for Temporary

Restraining Order and/or Writ of Preliminary Injunction dated

January 14, 2005 in CA-G.R. SP No. 87785, to which private

respondents therein filed an Opposition To Urgent Ex-Parte Motion

for Temporary Restraining Order and/or Writ of Preliminary

Injunction dated January 21, 2005.41

39 A copy of the Motion for Partial Reconsideration dated December 28, 2004 is attached asAnnex S hereof.40Copies of the Comment on the Petition dated January 6, 2005 and Opposition to Motion forPartial Reconsideration dated January 7, 2005 are attached as Annexes T and U hereof,respectively.41 Copies of the Urgent Ex-Parte Motion for Temporary Restraining Order and/or Writ ofPreliminary Injunction dated January 14, 2005 and Opposition To Urgent Ex-Parte Motion for


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35. In a Resolution dated January 27, 2005, a copy of which

petitioners received on February 1, 2005, the Court of Appeals (a)

deferred action on petitioners Motion for Partial Reconsideration,

which it ruled to resolve simultaneously with the main case; and (b)

directed the parties to file their respective memoranda. The Court of

Appeals did not act on petitioners Urgent Ex-Parte Motion for TRO

and Preliminary Injunction.

36. After the parties filed their respective memoranda, the

Court of Appeals issued the assailed Decision denying due course to

the petition. On April 26, 2005, petitioners filed a Motion for

Reconsideration dated April 26, 2005.42 On July 8, 2005, petitioners

received a copy of the Court of Appeals Resolution denying their

motion for reconsideration of the appellate courts Decision.

37. Thus, on July 14, 2005, petitioners filed with this

Honorable Court a Motion for Extension of Time to File Petition

dated July 13, 2005 where they prayed for an extension of 30 days

from July 23, 2005, or until August 22, 2005, to file their petition for

review on certiorariwith this Honorable Court.

Hence, this petition.

Grounds for the Petition

Temporary Restraining Order and/or Writof Preliminary Injunction dated January 21, 2005 areattached as Annexes V and W hereof, respectively.42 A copy of the Motion for Reconsideration dated April 26, 2005 is attached as Annex Xhereof.


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Petitioners respectfully submit that the Court of Appeals

Decision and Resolution are void and should be set aside for having

been rendered contrary to law, procedural rules and applicable

decisions of this Honorable Court, in that:

I. THE APPELLATE COURT ERRED IN RULINGTHAT THE RTC XXXXXX HAD AUTHORITY TODIRECTLY CALL A STOCKHOLDERS MEETING.

II. THE APPELLATE COURT ERRED IN RULINGTHAT THERE WAS A VALID NOTICE OF THE

PURPORTED STOCKHOLDERS MEETING HELDON DECEMBER 10, 2004.

III. THE APPELLATE COURT ERRED IN RULINGTHAT PLAINTIFFS BELOW WERE NOT GUILTYOF FORUM SHOPPING.

IV. THE APPELLATE COURT ERRED IN RULINGTHAT PLAINTIFFS BELOW WERE NOTESTOPPED FROM QUESTIONING ABCINCORPORATEDS STOCKHOLDERS MEETINGAND ELECTION OF OFFICERS HELD ONMARCH 1, 2004.

V. THE APPELLATE COURT ERRED IN RULINGTHAT NO GRAVE ABUSE OF DISCRETIONAMOUNTING TO LACK OR EXCESS OF

JURISDICTION COULD BE IMPUTED TORESPONDENT JUDGE IN ISSUING THE ORDERDATED NOVEMBER 25, 2004.

VI. HON. MARIANO C. DEL CASTILLO ISDISQUALIFIED FROM ACTING IN CA-G.R. SPNO. 87785.

A r g u m e n t s

Respondent Judge did not haveauthority to act in Civil (SEC) Case


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No. U-14 upon the appointment of theregular Presiding Judge.

38. The Order dated November 25, 2004 was issued byrespondent Judge, in his capacity as pairing judge of RTC XXXXXX,

after the regular presiding Judge, Hon. Ralar, was appointed and

assumed office on November 2, 2004. Pursuant to Supreme Court

Circular No. 19-98, respondent Judge, as pairing judge of RTC

XXXXXX, was only authorized to take cognizance of all the cases

thereat as acting judge therein until the appointment and assumption to

duty of the regular judge. Thus, after the appointment and assumption

into office of the regular Judge of RTC XXXXXX, respondent Judge

ceased to have any authority to issue the appealed Order.

Consequently, all Orders of respondent Judge issued from November

2, 2004, including the questioned Order dated November 25, 2004, are

void.

RTC XXXXXX did not have theauthority to order the holding of astockholders meeting.

39. Under Section 5 of the Securities Regulation Code,43only

the SEC has the authority to compel officers of any registered

corporation to call a stockholders meeting:

Powers and Functions of the Commission. --- 5.1 TheCommission shall act with transparency and shall have the powersand functions provided by this Code, Presidential Decree No. 902-A, the Corporation Code, the Investment Houses Law, theFinancing Company Act and other existing laws. Pursuant theretothe Commission shall have, among others, the following powersand functions:

. . .

43Republic Act No. 8799 (2000).


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(k) Compel the officer of any registered corporation orassociation to call meetings of stockholders or members thereofunder its supervision;

. . .

40. Furthermore, the functions that were transferred from the

SEC to the regular courts are limited to those enumerated under

Section 5 of Presidential Decree44No. 902-A (1976), as amended. This

enumeration does not include the power to compel the holding of a

stockholders meeting. Section 5.2 of the Securities Regulation Code

limited the transfer only to those functions defined under Section 5 ofP.D. 902-A, to wit:

5.2. The Commissions jurisdiction over all casesenumerated under Section 5 of Presidential Decree No. 902-A ishereby transferred to the Courts of general jurisdiction or theappropriate Regional Trial Court: Provided, That the SupremeCourt in the exercise of its authority may designate the RegionalTrial Court branches that shall exercise jurisdiction over these

cases. The Commission shall retain jurisdiction over pending casesinvolving intra-corporate disputes submitted for final resolutionwhich should be resolved within one (1) year from the enactment ofthis Code. The Commission shall retain jurisdiction over pendingsuspension of payments/rehabilitation cases filed as of 30 June2000 until finally disposed.45

41. On the other hand, Section 5 of P.D. No. 902-A states:

SECTION 5. In addition to the regulatory and adjudicativefunctions of the Securities and Exchange Commission overcorporations, partnerships and other forms of associationsregistered with it as expressly granted under existing laws anddecrees, it shall have original and exclusive jurisdiction to hear anddecide cases involving:

(a) Devices or schemes employed by or any acts, of theboard of directors, business associates, its officers or partnership,

amounting to fraud and misrepresentation which may bedetrimental to the interest of the public and/or of the stockholder,partners, members of associations or organizations registered withthe Commission;

44Hereafter, P.D.45Emphasis supplied.


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(b) Controversies arising out of intra-corporate orpartnership relations, between and among stockholders, members,or associates; between any or all of them and the corporation,partnership or association of which they are stockholders, members

or associates, respectively; and between such corporation,partnership or association and the state insofar as it concerns theirindividual franchise or right to exist as such entity;

(c) Controversies in the election or appointments ofdirectors, trustees, officers or managers of such corporations,partnerships or associations.

(d) Petitions of corporations, partnerships or associationsto be declared in the state of suspension of payments in caseswhere the corporation, partnership or association possessessufficient property to cover all its debts but foresees theimpossibility of meeting them when they respectively fall due or incases where the corporation, partnership or association has nosufficient assets to cover its liabilities, but is under the managementof a Rehabilitation Receiver or Management Committee createdpursuant to this Decree. (As added by PD No. 1758.)

42. Rule 1 of the Interim Rules of Procedure Governing Intra-

Corporate Controversies46

virtually restates the same enumeration inSection 5 of P.D. 902-A:

SECTION 1. (a) Cases covered These Rules shall governthe procedure to be observed in civil cases involving the following:

(1) Devices or schemes employed by, or any act of, theboard of directors, business associates, officers or partners,

amounting to fraud or misrepresentation which may be detrimentalto the interest of the public and/or of the stockholders, partners, ormembers of any corporation, partnership, or association;

(2) Controversies arising out of intra-corporate,partnership, or association relations, between and amongstockholders, members, or associates; and between, any or all ofthem and the corporation, partnership, or association of which theyare stockholders, members, or associates, respectively;

(3) Controversies in the election or appointment ofdirectors, trustees, officers, or managers of corporations,partnerships, or associations;

(4) Derivative suits; and

46Hereafter, the Interim Rules.


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45. In view of the foregoing provisions of the Securities

Regulation Code, P.D. No. 902-A and the Interim Rules, the notice of

special annual stockholders meeting issued by the Branch Clerk of

RTC XXXXXX is void for having no basis in law. In the first place, the

Branch Clerk of Court of RTC XXXXXX should not have been

ordered by the respondent Judge to oversee the special meeting of a

private corporation as this was not a function germane to his office as

a judicial officer. In Republic vs. Sandiganbayan,47this Honorable Court

discussed the rationalewhy clerks of court should be prohibited from

supervising or controlling the special meetings of private

corporations:

The Clerk of Court, who is already saddled with judicialresponsibilities, need not be burdened with the additional duties ofa corporate secretary. Moreover, the Clerk of Court may not havethe requisite knowledge and expertise to discharge the functions ofa corporate secretary.

. . .

The appointment of a sitting member of the Sandiganbayanis particularly unsound for, as the PCGG points out:

. . . . What then is the reason for him to attend and supervise themeeting? To observe so that he can later testify in the court wherehe himself sits in the court which will eventually decide anycontroversy which may arise from the meeting?

Obviously, under such situation, the justice so appointedwould be compelled to inhibit himself from any judicialcontroversy arising from the stockholders meeting. Worse, if hewere to preside at the meeting and rule upon the objections thatmay be raised by some stockholders, the Sandiganbayan would befaced with the "anomaly" of eventually reviewing the decisionsrendered by a member of its court during the stockholders meeting.

This Court appreciates the quandary that the Sandiganbayanfaced when it ordered its Division Clerk of Court to call the

meeting: ETPI has two sets of officers and, presumably, twocorporate secretaries. And given the stakes involved, thestockholders meeting would be contentious, to say the least, hence,the need for an impartial referee to supervise and control themeeting.

47402 SCRA 84 (2003).


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Happily, the case of Board of Directors and Election Committeeof SMB Workers Savings and Loan Asso., Inc. v. Tan, etc., et al.provides a solution to the Sandiganbayan's dilemma. There, thisCourt upheld the creation of a committee empowered to call,

conduct and supervise the election of the board of directors:

As regards the creation of a committee of three vested withthe authority to call, conduct and supervise the election, and theappointment thereto of Candido C. Viernes as chairman andrepresentative of the court and one representative each from theparties, the Court in the exercise of its equity jurisdiction mayappoint such committee, it having been shown that the ElectionCommittee that conducted the election annulled by the respondentcourt if allowed to act as such may jeopardize the rights of therespondents.

In a proper proceeding a court of equity may direct theholding of a stockholders' meeting under the control of a specialmaster, and the action taken at such a meeting will not be set asidebecause of a wrongful use of the court's interlocutory decree, wherenot brought to the attention of the court prior to the meeting. (18C.J.S. 1270.)

A court of equity may, on showing of good reason, appointa master to conduct and supervise an election of directors when itappears that a fair election cannot otherwise be had. Such a courtcannot make directions contrary to statute and public policy withrespect to the conduct of such election. (19 C.J.S. 41)

This Court also approved a similar action by the Securitiesand Exchange Commission in Sales v. Securities and ExchangeCommission.

Such a committee composed of impartial personsknowledgeable in corporate proceedings would provide theneeded expertise and objectivity in the calling and the holding ofthe meeting without compromising the Sandiganbayan or its

officers. The appointment of the committee members and thedelineation of the scope of the duties of the committee may bemade pursuant to an agreement by the parties or in accordancewith the provisions of Rule 9 (Management Committee) of theInterim Rules of Procedure for Intra-Corporate Controversiesinsofar as they are applicable.48

46. Assuming arguendothat the RTC XXXXXXsOrder dated

November 25, 2004 was valid, the Notice issued by the Branch Clerkof Court of the RTC XXXXXX was nevertheless defective since (a) the

Branch Clerk of Court did not base the Notice on the STB, which was

48402 SCRA 84, 112 (2003).


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not in his possession; and (b) the Notice was sent to petitioners only

on December 6, 2004, or in the same week of the scheduled

stockholders meeting on December 10, 2004. This is inclear violation

of Section 50 of the Corporation Code which partly states:

Special meetings of stockholders or members shall be held atany time deemed necessary or as provided in the by-laws:Provided, however, That at least one (1) week written notice shall be sentto all stockholdersor members, unless otherwise provided in the by-laws.49

In view thereof, the special stockholders meeting held on

December 10, 2004 was not valid.

The notice of the special stockholdersmeeting sent by Atty. JOHN G.ABUGADO was not a valid notice ofthe stockholders meeting onDecember 10, 2004.

47. The Court of Appeals erred in finding that the letter

dated December 1, 2004 prepared by Atty. ABUGADO constituted a

valid notice of the stockholders meeting.50His letter dated December

1, 2004 addressed to ABC INCORPORATED cannot possibly

constitute the notice contemplated under Section 50 of the

Corporation Code since it is undisputed that: (a) it was addressed to

ABC INCORPORATED, not to petitioners; (b) it was received by

ABC INCORPORATEDs counsel and corporate secretary, Atty.

Milagros Cristobal Amar,51not by petitioners; (c) this letter advised

against the holding of the December 2, 2004 Board of Directors

meeting of ABC INCORPORATED; and (d) Atty. ABUGADO was

not authorized to send notices of stockholders meetings as he was

49Emphasis supplied.50Decision, p. 11.51 Atty. XXXXr succeeded Atty. XXXafter the latter resigned as a result of his dealings withrespondents XXX Atty. PXXXXil and Atty. NXXXXtt.


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not the corporate officer of ABC INCORPORATED authorized to

send such a notice. As confirmed by the Court of Appeals:

It should be noted that the meeting of the Board of Directors

of ABC INCORPORATED was originally scheduled on December2, 2004. In view however, of the Order dated November 25, 2004 ofthe respondent court, private respondents, through counsel, in aletter dated December 1, 2004, requested for the deferment of theDecember 2, 2004 Meeting. Also, attached to the letter is a copy of theOrder dated November 25, 2005, which ordered the holding of aspecial stockholders meeting to be held at ABCINCORPORATEDs principal place of business in Bayambang,BULACAN on December 10, 2004, which letter was received by thenCorporate Secretary Milagros Isabel Cristobal Amar on December 2,

2004.52

48. It is an established principle in corporation law that when

a special meeting is called, notice should be given to each stockholder

of record of the corporation entitled to vote at the meeting53and that

generally, such notice must be served on the stockholders

personally.54

Hence, petitioners should have been personally notifiedof the meeting. The letter sent by Atty. ABUGADO to ABC

INCORPORATEDs corporate secretary was not the notice required

by law and ABC INCORPORATEDs by-laws, which provide that:

Section 3. - Notice of meeting written or printed for everyregular or special meeting of the stockholders shall be preparedand mailed to the registered post office address of each stockholder

not less than ten (10) days prior to the date set for such meeting,and if for a special meeting, such notice shall state the object orobjects of the same. No failure or irregularity of notice of anymeeting shall invalidate such meeting at which all the shareholdersare present or represented by proxy and voting without protest.55

Thus, the special stockholders meeting called by respondent

Judge on December 10, 2004 in Bayambang, BULACAN was clearly

and plainly invaliddue, among others, to the defective notice to ABC

52Decision, pp. 10-11; emphasis supplied.535 Fletcher, Cyclopedia of the Law of Private Corporations 47 (1976).54Id., p. 49.55 A copy of XXXXX INCs By-Laws is attached as Annex BB hereof.


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INCORPORATEDs stockholders, rendering the notice ineffective as

if it was not issued at all.

Plaintiffs below are estopped fromquestioning the validity of thestockholders meeting of ABCINCORPORATED on March 1,2004.

49. Contrary to the ruling of the Court of Appeals, plaintiffs

below were clearly estopped from questioning the stockholders

meeting held on March 1, 2004. Firstly, plaintiffs below never

objected to the venue of the stockholders meeting held on March 1,

2004. Secondly, they not only assented to the election of petitioners

CULLEN and B. CULLEN as ABC INCORPORATEDs

Chairman/President and Treasurer, respectively, but also

subsequently recognized them as de jure directors and officers of ABC

INCORPORATED. Thirdly, respondents LADY DEL ROSARIO and

XXXXXX likewise elected themselves as directors of ABC

INCORPORATED during said meeting. The same private

respondents then assumed their office and discharged their functions

as directors of ABC INCORPORATED.

50. Hence, plaintiffs below were clearly estopped fromquestioning the election of petitioners CULLEN and CULLEN, since

respondents LADY DEL ROSARIO and XXXXXX actively

participated in the election and thereafter accepted the result. It is a

settled principle in corporation law that (a) irregularities in either

time or place of a stockholders meeting may be waived or objections

thereto precluded; and (b) stockholders who were present andparticipated in the meeting are estopped from complaining that it


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was held at a place other than that prescribed.56 Thus, plaintiffs

below, by their presence and active participation in the stockholders

meeting of ABC INCORPORATED held at its Pasig office, were

precluded from questioning the regularity of said meeting.

51. Nonetheless, the Court of Appeals ruled that plaintiffs

below were not estopped from questioning the stockholders meeting

held on March 1, 2004 since the filing of Civil Case No. SCC 2874

with the RTC San Carlos could only mean that they asserted their

right to question the validity of the said meeting. Thus:

The essence of estoppel and laches is the failure or neglectfor an unreasonable and unexplained length of time to do thatwhich by exercising due diligence could or should have been doneearlier; it is the negligence or omission to assert a right within areasonable time warranting a presumption that the party entitled toit either has abandoned or declined to assert it. Delay is anindispensable requisite for a finding of estoppel by laches.

In the instant case, private respondents filed SEC-2874questioning the validity of the stockholders meeting and theelection of officers of ABC INCORPORATED on March 1, 2004before the RTC of BULACAN on August 16, 2004. This could onlymean that private respondents are asserting their right to questionthe validity of the stockholders meeting and the election of of ficersof the corporation on March 1, 2004, within a reasonable time, orwithout the principle of estoppel having set in. Besides, sinceestoppel operates to prevent showing the truth, and is more or lessin the nature of forfeiture, it has often been characterized as notfavored in the law.57

52. In ruling as it did, the Court of Appeals went beyond the

record and engaged in speculation. Although failure to act for an

unreasonable and unexplained length of time are essential requisites

of estoppel, it is established that there is no absolute rule with respect

to the determination of staleness of demand as each case should be

565 Fletcher Cyc Corp (Perm Ed) 2005, pp. 39-40 (1976).57Resolution, pp. 8-9.


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determined based on its particular circumstances. As held by this

Honorable Court in Rayos, et al. vs. Reyes, et al.,58

Moreover, we do not think that respondents causes of

action in Civil Case No. A-2032 are now barred by estoppel andlaches. The essence of estoppel and laches is the failure or neglectfor an unreasonable and unexplained length of time to do thatwhich by exercising due diligence could or should have been doneearlier; it is the negligence or omission to assert a right within areasonable time warranting a presumption that the party entitled toassert it either has abandoned or declined to assert it although thereis no absolute rule as to what constitutes staleness of demand as each caseis to be determined according to its particular circumstances.59

53. In this case, plaintiffs below not only acquiesced to the

holdings of the previous stockholders meetings in Pasig City, but

they also participated in it, received per diems, and recognized the

offices of the directors and officers who were elected. Otherwise

stated, the laches or estoppel of plaintiffs was based on positive acts

and declarations, which became conclusive and binding upon them.

Under Article 1431 of the Civil Code, repeated in Rule 131, Section 2

(a) of the Revised Rules of Evidence, respondents estoppel results in

an admission:

Through estoppel an admission or representation isrendered conclusive upon the person making it, and cannot bedenied or disproved as against the person relying thereon.

54. More importantly, as will be discussed below, plaintiffs

below were barred from filing Civil (SEC) Case No. U-14, the latter

being an election contest. This further confirms that plaintiffs below

slept on their rights.

Plaintiffs below were barred frominstituting Civil (SEC) Case No. U-

14 before the RTC XXXXXX.

58398 SCRA 24 (2003).59Id., at p. 35; emphasis supplied.


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55. One of the relief sought by respondents LADY DEL

ROSARIO, XXXXXX and XXXXXX was the nullification of the

election of the Board of Directors during the meeting on March 1,

2004. Hence, the case before the RTC XXXXXX was an election

contest that fell squarely under the Interim Rules. Under the Interim

Rules, an election contest refers to any controversy or dispute

involving title or claim to any elective office in a stock or non-stock

corporation, the validation of proxies, the manner of validation of

elections and the qualifications of candidates, including the

proclamation of winners, to the office of director.60

56. The Court of Appeals itself confirmed in its Resolution

that the case before the RTC XXXXXX was an election contest:

Likewise, as clearly provided in Section 1, Rule 1 of the(Interim Rules) under R.A. 8799, among the intra-corporate

controversies transferred to the special courts are:. . .

(3) Controversies in the election or appointment ofdirectors, trustees, officers, or managers of corporations,partnerships or associations;

. . .

Undoubtedly, therefore, the instant case is an intra-corporatecontroversy among the stockholders themselves relative to theelection of directors or officers of ABC INCORPORATED,

specifically between private respondents on one hand andpetitioners on the other.

. . .

If there is still any doubt that the Special Corporate Courtcan call for a stockholders meeting, Rule 6 of the (Interim Rules)completely puts to rest said issue.

RULE 6. ELECTION CONTESTS

Section 1. Cases covered. The provisions of this rule shallapply to election contests in stock and non-stock corporations.

. . .

60Interim Rules, Rule 6, Sec. 2.


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Clearly, therefore, said Rule empowers the special corporate courtsto decide election cases.61

57. Under the Interim Rules, an election protest must be

filed within 15 days from the date of election if the by-laws of the

corporation do not provide for a procedure for resolution of the

controversy by the corporation as provided in the by-laws of the

corporation.62 In the case below, it was patently obvious that Civil

(SEC) Case No. U-14 was filed beyond the 15-day prescriptive period

since the election was held on March 1, 2004, while the complaint was

filed only on June 21, 2004.

58. In addition to the fact that plaintiffs below were barred

from instituting Civil (SEC) Case No. U-14, the action should

likewise have been dismissed for failure to comply with the

requirements of the Interim Rules that the complaint must state the

following: (a) the fact that the case was filed within 15 days from the

date of the election if the by-laws of the corporation do not provide

for a procedure for a resolution of the controversy, or within 15 days

from the resolution of the controversy by the corporation as provided

in its by-laws; and (b) the fact that plaintiffs had exhausted all intra-

corporate remedies in election cases as provided in the by-laws.

Nowhere in their complaint did plaintiffs below state these

conditions precedent. The Court of Appeals, for reasons to be

explained later, chose to ignore these fatal defects in affirming the

unlawful acts of respondent Judge.

The issuance of a writ of preliminary

injunction/ preliminary mandatoryinjunction by the RTC XXXXXXwas not valid.

61Resolution, pp. 3-6; emphasis supplied.62Rule 6, Sec. 3, Interim Rules.


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59. It is settled that the sole purpose of an injunction is not to

correct a wrong of the past, in the sense of redress for injury already

sustained, but to prevent further or future injury. In First Global Realty

and Development Corporation vs. San Agustin,63 this Honorable Court

made this clear:

The purpose of a preliminary injunction, then, is to preventthreatened or continuous irremediable injury to some of the partiesbefore their claims can be thoroughly studied and adjudicated. Itssole aim is to preserve the status quo until the merits of the case can

be fully heard. Thus, it will be issued only upon a showing of aclear an unmistakable right that is violated. Moreover, an urgentand permanent necessity for its issuance must be shown by theapplicant.64

60. In this case, plaintiffs below failed to allege, much less

prove, that their application for the issuance of a temporary

restraining order and/or writ of preliminary injunction before the

RTC XXXXXX was of extreme urgency that they would suffer grave

or irreparable injury by petitioners CULLENs and B. CULLENs

continuance in office as directors and corporate officers. Instead, as

discussed above, the same respondents did not object to the venue of

the stockholders meeting held on March 1, 2004. Plaintiffs below not

only assented to the election of petitioners CULLEN and CULLEN

during the meeting held on March 1, 2004 but respondents LADY

DEL ROSARIO and XXXXXX likewise elected themselves as

directors of ABC INCORPORATED during the meeting.

61. Furthermore, respondent Judge committed grave abuse

of discretion when he granted plaintiffs application for a preliminarymandatory injunction in his Order dated November 25, 2004 and, at

63377 SCRA 341 (2002).64Id., at p. 349; emphasis supplied.


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the same time, directed the holding of a special stockholders meeting

in Bayambang, BULACAN on December 10, 2004. This ruling

effectively resolved, ahead of trial, the issue in the principal action of

whether the stockholders meeting held on March 1, 2004 at the Pasig

office of ABC INCORPORATED was valid.

62. Respondent Judges action ran counter to the established

principle in jurisprudence that the court should avoid issuing a writ

of preliminary injunction that would in effect dispose of the main

case without trial.65 When respondent Judge ordered the holding of

the stockholders meeting in Bayambang, BULACAN on December

10, 2004, he impliedly ruled that the earlier annual stockholders

meeting of March 1, 2004 at ABC INCORPORATEDs Pasig office

was void. By ordering the holding of a stockholders meeting at the

behest and within the control of plaintiffs below, respondent

Judge effectively set aside the outcome of the meeting and election on

March 1, 2004. It unavoidably resulted in respondent Judges virtual

affirmation of the merits of the claim of plaintiffs below.

63. Respondent Judge evidently forgot that the object of the

writ of preliminary injunction is to preserve the status quo, which is

the last actual peaceable uncontested status that preceded the

pending controversy.66 In this case, the last actual peaceable

uncontested status that preceded the controversy was the holding of

the annual stockholders meeting and the ensuing election of ABC

INCORPORATEDs officers on March 1, 2004. Thus, when

respondent Judge granted the writ of preliminary injunction and

65 Search Commodities Corp. v. Court of Appeals, 207 SCRA 622, 629-630 (1992), citing RivasSecurities and Exchange Commission, 190 SCRA 295 (1990); Government Service InsuranceSystem v. Florendo, 178 SCRA 76 (1989); and Ortigas & Co. Ltd. Partnership v. Court of Appeals,162 SCRA 165 (1988).66 Id., at 630, citing Rivas v. Securities and Exchange Commission, supra; Tengson v. Court ofAppeals, 161 SCRA 745 (1988); Rodulfa v. Alonzo, 76 Phil. 225 (1946).


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directed the holding of a special stockholders meeting, it disturbed,

instead of preserved, the status quo ante.

64. Although the courts are granted discretion when to issue

a writ of preliminary injunction, nevertheless, this authority is not

coupled with an unbridled exercise of discretion. Courts,

notwithstanding the discretion given to them, must avoid issuing a

writ of preliminary injunction which in effect disposes of the main

case without trial,67especially in this case where the distance of travel

between Metro Manila and Samar city and the short notice given to

petitioners practically deprived them of their day in court.

Respondent Judge violated theprinciple of judicial stability byissuing the Order dated November 25,2004.

65. Likewise, respondent Judge cannot and should not

interfere with another co-equal courts orders and processes issued

within the jurisdiction of the latter. In Philippine Commercial

International Bank vs. Court of Appeals,68this Honorable Court held:

The private respondents even brazenly violated the principleof judicial stability, which essentially states that the judgment ororder of a court of competent jurisdiction may not be interfered with byany court of concurrent jurisdiction for the simple reason that thepower to open, modify or vacate the said judgment or order is notonly possessed but is restricted to the court in which the judgment ororder is rendered or issued. Accordingly, no court has the power tointerfere by injunction with the judgment or decrees of a court ofconcurrent jurisdiction having the power to grant relief sought byinjunction. The various branches of the RTC having as they have

the same or equal authority and exercising as they do concurrentand coordinate jurisdiction should not, cannot and are notpermitted to intervene with their respective cases, much less with

67Central Bank of the Philippines v. Court of Appeals, 208 SCRA 652, 684. (1992).68406 SCRA 575 (2003).


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their orders or judgments. A contrary rule would lead to confusion,and seriously hamper the administration of justice.69

66. In Spouses Ching vs. Court of Appeals,70 this Tribunal

explained the history of this rule:

Beginning with the case of Orais v. Escao, down to thesubsequent cases of Nuez v. Low, Cabigao v. del Rosario , Hubahib v.Insular Drug Co., Inc., National Power Corp. v. De Veyra, Luciano v.Provincial Governor, De Leon v. Hon. Judge Salvador, Cojuangco v.Villegas, Darwin v. Tokonaga, we laid down the long standingdoctrine that no court has the power to interfere by injunction withthe judgments or decrees of a court of concurrent or coordinate

jurisdiction. The various trial courts of a province or city, havingthe same or equal authority, should not, cannot, and are notpermitted to interfere with their respective cases, much less withtheir orders or judgments. A contrary rule would obviously lead toconfusion and seriously hamper the administration of justice.71

67. The record shows that the RTC Pasig previously issued a

writof preliminary injunction as early as July 19, 200472enjoining the

defendants in Civil Case No. 70027, as well as all persons acting

under them, from registering/recording the sold shares of stocks in

the books of ABC INCORPORATED, or canceling them and issuing

new ones in favor of defendant CCCCC INC to enable it to exercise

the rights of ownership over said shares owned by plaintiff

(petitioner CULLEN) in violation of the latters rights. These shares

were the same shares claimed by respondent LADY DEL ROSARIO

to establish a quorum during the meeting ordered by respondent

Judge on December 10, 2004. The RTC Pasig further issued an Order

dated November 8, 200473nullifying the transferpendente lite of these

shares in favor of respondent LADY DEL ROSARIO, thereby barring

69Id., at p. 602; emphasis supplied.70398 SCRA 88, 92-93 (2003).71Emphasis ours.72Please see Annex G hereof.73A copy of the RTC Pasigs Order dated November 8, 2004 is attached as Annex CC hereof.


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Mr. LADY DEL ROSARIO from mustering a quorum in any

shareholders meeting of ABC INCORPORATED.

68. In violation of law and applicable decisions of this

Honorable Court, respondent Judge interfered with the proceedings

in Civil Case No. 70027 through his Order dated November 25, 2004

by authorizing the release of the STB to plaintiffs below. In turn, the

release of the STB to said respondents enabled respondent LADY

DEL ROSARIO to proceed with the void stockholders meeting on

December 10, 2004 by disregarding the RTC Pasigs nullification of

the transfer of the pledged shares to respondent LADY DEL

ROSARIO. By virtue of the preliminary injunction issued by

respondent Judge, respondent LADY DEL ROSARIO unlawfully

voted the pledged shares that pertained to petitioners. Had these

shares not been counted pursuant to the Order dated July 19, 2004 of

the RTC Pasig, which nullified the transferpendent lite to LADY DEL

ROSARIO, there would have been no quorum for the void meeting

called by RTC XXXXXX on December 10, 2004.

69. In its Resolution, the Court of Appeals disregarded

petitioners argument on the principle of judicial stability by

reversing the rule and stating that the court which has jurisdiction

over the intra-corporate case filed by private respondents is the

public respondent court to the exclusion of the Pasig Court.74 The

Court of Appeals was obviously misled into misapprehending the

facts, when it became confused by the realization that the action

pending before the RTC Pasig did not involve an intra-corporate

controversy.

74Resolution, p. 11.


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70. It is true that Civil Case No. 70027 does not involve an

intra-corporate dispute. What it involves is an action for injunction

to prevent the unlawful transfer of CULLENs shares to CCCCC INC

and then to LADY DEL ROSARIO on the ground that the foreclosure

of the pledged shares was improper and void. Petitioner CULLEN

sought to immediately restrain and preliminarily enjoin therein

defendants CCCCC INC, Atty. Nethercott and Atty. Mataban from

proceeding with the auction sale of the ABC INCORPORATED

shares pledged by petitioners to CCCCC INC. Petitioner CULLEN

also sought to enjoin defendants therein from (a) executing any

certificate of sale of such shares; (b) recording such shares in the

books of ABC INCORPORATED; (c) canceling the pledged shares

and issuing new ones in favor of defendants therein or any bidder; or

(d) exercising any rights of ownership over such shares. While

defendants CCCCC INC, Atty. Nethercott and Atty. Mataban are not

directors, stockholders or officers of ABC INCORPORATED, the

ownership of the pledged shares was the very lis mota of the case.

71. Since the RTC Pasig clearly has jurisdiction over Civil

Case No. 70027, the RTC XXXXXX cannot interfere with the writ of

preliminary injunction issued by the RTC Pasig by issuing the

conflicting Order dated November 25, 2004. The Order was per se

void and unenforceable.

Respondent Judge did not have theauthority to enjoin petitioners or toorder petitioner B. CULLEN to

surrender the duplicate key of thesafety deposit box where ABCINCORPORATEDs stock andtransfer book was deposited.


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72. Similarly, Respondent Judge had no authority to enjoin

petitioners from discharging their functions as directors and officers

of ABC INCORPORATED or to order petitioner B. CULLEN to

surrender the duplicate key of the safety deposit box where ABC

INCORPORATEDs original STB was kept, since petitioners reside

outside the First Judicial Region and respondent LADY DEL

ROSARIO himself conceded that the issue of the possession of the

STB was still pending before the RTC Pasig in Civil Case No. 70027.

Respondent Judge was aware of the facts of Civil Case No. 70027because petitioners summarized the case in their Answer with

Counterclaim dated October 28, 200475 that they filed with the RTC

XXXXXX on November 2, 2004, where petitioners averred:

9. Prior thereto on June 21, 2004, defendant Mr.CULLEN filed Civil Case No. 70027, entitled Aderito Z. CULLEN

vs. United Resources Asset Management, Inc., Atty. Richard J.Nethercott and Atty. Honorato R. Mataban, with the Regional TrialCourt in Pasig City, Branch 71. Mr. CULLEN sought to (a)immediately restrain and preliminarily enjoin defendants thereinfrom proceeding with the auction sale of the shares pledged byABC INCORPORATED to CCCCC INC; (b) enjoin defendants fromexecuting any certificate of sale of such shares, from recording suchshares in the books of ABC INCORPORATED, from canceling thepledged shares and issuing new ones in favor of defendants or anybidder, or from exercising any rights of ownership over such

shares; and (c) declare void defendants foreclosure of the pledgedshares, any auction sale, certificate of sale, registration of sale,cancellation of shares, issuance of new shares, transfer orassignment of new shares and the exercise of any rights ofownership over such pledged shares.

10. Before the RTC Pasig issued a TRO, the auction sale ofthe pledged shares proceeded and was conducted by Atty.Mataban, with CCCCC INC being the highest bidder for saidshares. On the same day, CCCCC INC sold the auctioned shares toone of the plaintiffs herein, Mr. LADY DEL ROSARIO. On June 30,2004, the RTC Pasig issued its TRO, stating that:

In the broader interest of justice and so as notto render moot and academic the issue on the grant or

75Please see Annex L hereof.


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not of the writ, let this Temporary Restraining Orderbe issued enjoining defendants, their officers, agentsand assigns from recording such sale in the books ofABC INCORPORATED or from canceling thepledged shares and issuing new ones in favor of

defendants or from exercising any rights ofownership over such shares in violation of plaintiffsrights. The Corporate Secretary of ABCINCORPORATED is directed to hold in abeyance thecancellation of the pledged shares and to restorethem, if cancelled, in the books of the corporationuntil further orders from this Court.

11. On June 30, 2004, upon getting wind of the issuanceof the TRO, Mr. LADY DEL ROSARIO and Atty. Nethercottcompelled ABC INCORPORATEDs corporate secretary, Atty.Joselito G. Blando, to immediately transfer the auctioned shares toCCCCC INC and then to transfer it again from CCCCC INC to Mr.LADY DEL ROSARIO. Mr. LADY DEL ROSARIO and Atty. DOE,conspiring with each other, refused to turn over the STB to Atty.Blando but demanded that he cancel the pledged shares and toissue new shares to CCCCC INC and Mr. LADY DEL ROSARIOonly in the latters presence in Atty. DOEs office inside the LandTransportation Office compound in Quezon City. The cancellationand transfer were made to beat the TRO that by then had been

issued by the RTC Pasig.

12. After Atty. Blando received the TRO on July 1, 2004and tried, but failed, to undo the cancellation and transfer of theshares due to Mr. LADY DEL ROSARIOs unlawful detention ofthe STB, ABC INCORPORATED declared the STB as lost andreconstituted its entries. The cancellation and transfer were thenreversed by ABC INCORPORATED in compliance with the TRO.

13. In the meantime on July 19, 2004, the RTC Pasig

issued a writof preliminary injunction stating that:

IT IS HEREBY ORDERED by the undersignedJudge of this Court, that until further orders, you, thesaid defendants United Resources AssetManagement, Inc. (CCCCC INC for short), Atty.Richard J. Nethercott, and Atty. Honorato R.Mataban, and all persons acting under them, to desistand refrain from further proceeding with the publicauction sale of the pledged shares of stocks by

registering/recording the sold shares of stocks in thebooks of ABC INCORPORATED, or canceling themand issuing new ones in favor of defendant CCCCCINC to enable it to exercise the rights of ownershipover said shares owned by plaintiff in violation of thelatters rights.


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SO ORDERED.

14. Thereafter, Mr. LADY DEL ROSARIO refused tocomply with t

96407449 Petition for Certiorari

Documents

Transcript of 96407449 Petition for Certiorari