APPROPRIATE RTC HAS JURISDICTION OVER INTRA-CORPORATE CONTROVERSIES

ALDERITO Z. YUJUICO, BONIFACIO C. SUMBILLA, and DOLNEY S. SUMBILLA vs. CEZAR T. QUIAMBAO, et al.

Sandoval-Gutierrez, J.

Facts: Strategic Alliance Development Corporation (STRADEC) is a domestic corporation engaged in the business of
providing financial and investment advisory services and investing in projects through consortium or joint venture
information. Upon the approval of the amendment to its AOI, its principal office was transferred from Pasig City to
Bayambang, Pangasinan.

During STRADEC’s annual stockholders’ meeting held in its Pasig City office, he following were elected members of the
Board of Directors: Alderito Z. Yujuico, Bonifacio C. Sumbilla, Dolney S. Sumbilla (petitioners herein), Cesar T. Quiambao,
Jose M. Magno III and Ma. Christina Ferreros (respondents herein). Petitioners Alderito Yujuico was elected Chairman
and President, while Bonifacio Sumbilla was elected Treasurer. All of them then discharged the duties of their office.

After five (5) months, respondents filed with the RTC of Pangasinan a complaint against STRADEC, praying that: (1) the
March 1, 2004 election be nullified on the ground of improper venue, pursuant to Section 51 of the Corporation Code; (2)
all ensuing transactions conducted by the elected directors be likewise nullified; and (3) a special stockholders’ meeting
be held anew. An amended complaint was filed praying for the issuance of a TRO and/or writ of preliminary injunction to
enjoin petitioners from discharging their functions as STRADEC’s directors and officers.

As the controversy involves an intra-corporate dispute, the trial court issued an order transferring the case to RTC, Branch
48, Urdaneta City, being a designated Special Commercial Court. Having no presiding judge, Judge Meliton Emuslan
acted as pairing judge to take cognizance of the cases until the assumption to duty of a regular judge. Meanwhile, Judge
Aurelio Ralar, Jr. was appointed as presiding judge of Branch 48. Judge Emuslan still issused an order granting
respondents’ application for preliminary injunction, ordering the holding of a special stockholders’ meeting on 10
December 2004 in STRADEC’s principal office in Bayambang, Pangasinan.

The petitioners filed a Petition for Certiorari with the Court of Appeals, saying that it is the SEC, which has jurisdiction to
order the holding of a special stockholders’ meeting involving an intra-corporate controversy. The CA upheld the
jurisdiction of the RTC. Hence, this petition. With the petitioners maintaining the same argument, only adding that the RTC
has no power to call a special stockholders’ meeting involving an intra-corporate controversy as it is only the SEC which
may do so, the respondents counter that the power to hear and decide controversies involving intra-corporate disputes, as
well as to act on matters incidental and necessary thereto, have been transferred from the SEC to the RTCs designated
as Special Commercial Courts.

ISSUE: Does the RTC have the power to hear and decide intra-corporate disputes, as well as matters incidental and
necessary thereto?

HELD: YES. Upon the enactment of R.A. No. 8799, otherwise known as "The Securities Regulation Code" which took
effect on August 8, 2000, the jurisdiction of the SEC over intra-corporate controversies and other cases enumerated in
Section 5 of P.D. No. 902-A has been transferred to the courts of general jurisdiction, or the appropriate RTC. Section 5.2
of R.A. No. 8799 provides:

5.2. The Commission’s jurisdiction over all cases enumerated in Section 5 of Presidential Decree No. 902-A is hereby
transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court, Provided, That the Supreme Court
in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these
cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain
jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.

In Morato v. Court of Appeals, we held that pursuant to R.A. No. 8799 and the Interim Rules of Procedure Governing
Intra-Corporate Controversies, "among the powers and functions of the SEC which were transferred to the RTC include
the: (h) the exercise of such other powers as may be provided by law as well as those which may be implied from,
or which are necessary or incidental to the carrying out of, the express powers granted the Commission to
achieve the objectives and purposes of these laws."

Clearly, the RTC has the power to hear and decide the intra-corporate controversy of the parties herein. Concomitant to
said power is the authority to issue orders necessary or incidental to the carrying out of the powers expressly granted to it.
Thus, the RTC may, in appropriate cases, order the holding of a special meeting of stockholders or members of a
corporation involving an intra-corporate dispute under its supervision.
It is important to note that the CA itself ruled that respondents’ action before the RTC, Branch 48, is an election contest,
thus, the instant case is an intra-corporate controversy among the stockholders themselves relative to the election of
directors or officers of STRADEC, specifically between respondents on one hand, and petitioners on the other. If there is
still any doubt that the Special Corporate Court can call for a stockholders’ meeting, Rule 6 of the Interim Rules
completely puts to rest said issue.