Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=51634:gr-150746-2008&amp;catid=1510&amp;Itemid=566
Timestamp: 2019-04-19 18:21:14+00:00

Document:
G.R. No. 150746 - SIMEON NICOLAS CHAN, ET AL. v. YOLANDA CHAN, ET AL.
SIMEON NICOLAS CHAN, LEROY CHAN, MELANIE MAE C. TORRES, Petitioners, v. YOLANDA CHAN, ROSALINA RIVERA, KATHLEEN RIVERA, ALVIN RIVERA, Respondents.
For review is the Court of Appeals (CA) Decision1 dated July 5, 2001 and its Resolution2 dated November 13, 2001 in CA-G.R. SP No. 64268.
Respondents Yolanda Chan (Yolanda), Rosalina Rivera (Rosalina), Alvin Rivera (Alvin), and Kathleen Rivera (Kathleen), as well as petitioners Simeon Nicolas Chan (Simeon Chan), Leroy Chan (Leroy) and Melanie Mae C. Torres (Melanie), were stockholders of Ambassador Hotel, Inc. (the Hotel).
On March 20, 2000, the SEC issued an Omnibus Order13 denying both the issuance of a writ of preliminary injunction and the creation of a management committee. It further directed the Hotel to call and hold a stockholder's meeting. In its order, the SEC concluded that the disputed shares should not be allowed to vote and be voted for pending the resolution on the merits as to who actually owns the shares.14 Aggrieved, Yolanda elevated the matter to the SEC en banc which dismissed the same for non-payment of appeal fee. On petition15 before the CA, the latter directed the SEC en banc to take cognizance of the appeal.16 The CA decision became final and executory.
On May 8, 2000 and on June 30, 2000, petitioners filed separate motions18 to declare the respondents Riveras and Yolanda Chan in default. On May 29, 2000, Yolanda filed a motion for the issuance of a writ of preliminary mandatory injunction.19 Petitioners then filed a motion to cite respondents' counsel in contempt of court and to expunge the above motion for preliminary mandatory injunction.
By virtue of the enactment and approval of the law transferring jurisdiction over intra-corporate controversies from the SEC to the regular courts designated as special (commercial) courts, the case was then transferred to the Regional Trial Court (RTC) of Manila, Branch 46, and was docketed as Civil Case No. 01-99677.
â€¢ Motion to deem conclusive the basis of shares entitled to vote as those listed in the original Articles of Incorporation and in the 1985 increase in subscription shares.
RESOLUTION: The Court resolves to deny the motion for the reason that the question of what shares is entitled to vote is not an issue in this case. This question should be resolved in another proceeding. Besides, it appears that on January 19, 1972[,] petitioner Simeon Nicolas Chan assigned 6,000 of his shares to Union Builders, Inc. which later on sold the shares to respondent Rosalina Rivera. On December 24, 1975[,] he donated 2,000 of his shares to respondent Yolanda Chan.
â€¢ Motion to declare respondents Riveras in default.
â€¢ Motion to declare respondent Yolanda Chan in default.
RESOLUTION: The Court resolves to deny both motions because the said defendants have already filed their answers.
â€¢ Motion to cite respondents' counsel (Atty. Laureano Galon) in contempt of court and to expunge motion for the issuance of a writ of preliminary mandatory injunction.
RESOLUTION: The Court resolves to deny the motion because it finds nothing in the motion for the issuance of a writ of preliminary mandatory injunction contemptuous or offensive to the dignity of the court or the litigants.
Unsatisfied, petitioners elevated the matter to the Court of Appeals in a special civil action for certiorari under Rule 65. In a Decision22 dated July 5, 2001, the appellate court dismissed the petition, ratiocinating that there was no clear showing of grave abuse of discretion.
1. THE COURT OF APPEALS DEPARTED FROM THE ACCEPTED COURSE OF JUDICIAL PROCEEDINGS AND SANCTIONED SUCH DEPARTURE BY THE LOWER COURT WHEN IT ADOPTED THE STATEMENT OF FACTS OF THE LOWER COURT'S ORDER, WHICH STATEMENT MISREPRESENTED AND MISCHARACTERIZED THE CASE.
i.) THE LOWER COURT'S ORDER MISSTATED AND MISCHARACTERIZED THE ISSUES OF THE CASE.
ii.) THE DENIAL BY THE LOWER COURT'S ORDER OF PETITIONERS' MOTION TO DEEM CONCLUSIVE THE BASIS OF SHARES ENTITLED TO VOTE WAS IN GRAVE ABUSE OF DISCRETION.
iii.) THE DENIAL BY THE LOWER COURT'S ORDER OF PETITIONERS' MOTION FOR DEFAULT WAS IN GRAVE ABUSE OF DISCRETION.
iv.) THE LOWER COURT'S ORDER IRREGULARLY GRANTED RESPONDENT'S RELIEFS IN HER MOTION FOR PRELIMINARY MANDATORY INJUNCTION, AND WRONGLY DENIED PETITIONERS' MOTION FOR CONTEMPT/ MOTION TO EXPUNGE.
B) THE DECISION, BY DISMISSING THE PETITION, IMPROPERLY DENIED PETITIONERS' INJUNCTIVE RELIEFS.
4. THE COURT OF APPEALS DID NOT DECIDE IN ACCORD WITH LAW, DEPARTED FROM THE ACCEPTED COURSE OF JUDICIAL PROCEEDINGS AND SANCTIONED SUCH DEPARTURE BY THE LOWER COURT, WHEN ITS DECISION MISCHARACTERIZED THE ERRORS OF THE LOWER COURT'S ORDER AND PETITIONERS' GROUNDS IN ASSAILING THE ORDER, DEFIED THE MEANING OF "GRAVE ABUSE OF DISCRETION", AND RENDERED ERRONEOUS CONCLUSIONS.
5. INJUSTICE WAS COMMITTED BY RESPONDENT COURT.
Essentially, the issues raised before us are the following: 1) whether a motion for reconsideration should have been filed by the petitioners before filing the Petition for Certiorari with the CA; 2) whether the CA erred in affirming the findings of fact of the RTC; and 3) whether the CA committed grave abuse of discretion in denying petitioners' motions to deem conclusive the basis of shares of stocks, to declare respondents in default, and to cite respondents' counsel in contempt of court.
We agree with the petitioners.
Sec. 4. Executory nature of decisions and orders. - All decisions and orders issued under these Rules shall immediately be executory. No appeal or petition taken therefrom shall stay the enforcement or implementation of the decision or order, unless restrained by an appellate court. Interlocutory orders shall not be subject to appeal.
Notwithstanding the strict requirement under the Rules of Court of a motion for reconsideration before the institution of a special civil action, petitioners were proscribed from filing the same by the express provision of the Interim Rules. Had they filed the same, it would have been considered pro forma; and it would not have tolled the running of the reglementary period to file a Petition for Certiorari.27 Consequently, the CA could have lost jurisdiction to entertain the petition and the petitioners would have been left without a remedy to assail the RTC order. In addition to the above proscription, because of the express declaration made by the RTC that the order was immediately executory, direct resort to the appellate court was the most, if not the only, remedy available to the petitioners. Thus, considering that there was no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, petitioners rightly filed a Petition for Certiorari before the CA.
We cannot, therefore, ascribe fault to the appellate court in adopting the findings of the trial court. Petitioners failed to offer any compelling reason why the RTC's narration of facts, as affirmed by the CA, should be substituted by their (petitioners') own allegations embodied in their supplemental petition. This Court's statement of facts shows that we only supplemented, but not superseded, the appellate and trial courts' findings of facts.
Lastly, petitioners claim that the CA erroneously affirmed the RTC's denial of petitioners' motions to deem conclusive the basis of shares of stocks entitled to vote; to declare the respondents in default; and to declare the respondents' counsel in contempt of court.
Again, we do not find any valid reason to depart from the appellate court's conclusion.
The Court notes that petitioners' motion to declare respondents in default was anchored on the latter's failure to file their answer to the former's supplemental petition.
As can be gleaned from the above provisions, the filing of an answer to the supplemental pleading is not mandatory because of the use of the word "may." This is bolstered by the express provision of the Rules that the answer to the original pleading shall serve as the answer to the supplemental pleading if no new or supplemental answer is filed. Thus, the Court cannot declare the respondents in default simply because the latter opted not to file their answer to the supplemental petition.
Petitioners likewise aver that respondent Yolanda and her counsel should be declared in contempt of court for repeatedly filing motions for preliminary injunction.
The Court observes that the parties had been employing all means and availing of various remedies that they deemed best to protect their respective interests. Petitioners have filed multiple pleadings and motions before the RTC, the CA and this Court. Respondents, in turn, filed their own pleadings in answer to those of the petitioners. If petitioners could file their own motions and pleadings for their own protection, there is no reason to deny the same right to the respondents herein. Availing of the remedies set forth by law or the Rules is not at all contumacious.
It bears stressing at this point that the power to punish for contempt must be exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of punishment. The courts must exercise the power to punish for contempt for purposes that are impersonal, because that power is intended as a safeguard not for the judges as persons but for the functions that they exercise.36 Undoubtedly, the CA correctly affirmed the denial of petitioners' motion to cite respondent Yolanda and her counsel in contempt of court.
Petitioners further claim that the invalidity of the shares of the respondents has already been established by the evidence presented by the former. As such, petitioners insist that the RTC gravely abused its discretion in denying their motion to deem conclusive the basis of shares entitled to vote.
In elevating the RTC order to the CA in a special civil action for certiorari, petitioners wanted the appellate court to review their evidence allegedly showing the nullity of respondents' shares of stocks, and to declare the corporation's articles of incorporation as the determinant of the shares entitled to vote.
The CA correctly dismissed the petition.
It is noteworthy that prior to the filing of the Motion to Deem Conclusive the Basis of Shares Entitled to Vote, petitioners initially filed a similar motion42 on which they based their supplemental petition.43 These motion and petition apparently contain similar allegations, arguments and reliefs prayed for. With the admission of the supplemental petition, the validity or invalidity of the respondents' shares has been put in issue in the main action. The resolution of this issue should, therefore, be embodied in a decision rendered by the RTC after the presentation of the parties' respective evidence. Prior to the submission of the case for decision, the trial court cannot make a definitive conclusion on any of the issues properly raised before it. The court is not expected to render a decision favorable to any of the parties, acting on a mere motion, with respect to the very issues raised in the petition.
Petitioners claim that in their motion to deem conclusive the basis of shares entitled to vote, they only wanted a preliminary ruling on the matter, for purposes of the election directed by the RTC in its Omnibus Order dated March 20, 2000. A perusal of their memorandum, however, reveals that petitioners want a final declaration that respondent Yolanda's shares are null and void, which this Court is not in a position, at this stage, to grant. Aside from the prematurity of such a declaration because both parties' evidence have yet to be assessed and weighed, the validity or invalidity of said shares has already been the subject of a separate petition44 in SEC Case No. 05-98-5984. Neither can we categorically pronounce that respondents Riveras' shares entitled to vote should only be those listed in the Articles of Incorporation because, to reiterate, the parties' evidence have yet to be evaluated by the RTC and the issue should properly be threshed out in the main petition. It must be recalled that the shares of stocks are evidenced by certificates of stocks and the shares and the transfers of ownership thereof are supposedly listed in corporate books and other corporate records. To use the articles of incorporation as the sole basis in determining which shares are entitled to vote would imply that the other corporate documents are invalid. Surely, it cannot be done in a special civil action for certiorari commenced before the CA since it would entail a comprehensive evaluation and analysis of the parties' documentary and testimonial evidence.
With this disquisition, petitioners are not unduly prejudiced. The validity or invalidity of the shares has been put in issue in their supplemental petition. Petitioners should wait for the final resolution of this issue in the main petition.
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals, dated July 5, 2001, and its Resolution dated November 13, 2001 in CA-G.R. SP No. 64268, are AFFIRMED.
* Designated additional member in lieu of Associate Justice Ma. Alicia Austria-Martinez per Raffle dated October 10, 2007.
1 Penned by Associate Justice Jose L. Sabio, Jr. with Associate Justices Ma. Alicia Austria-Martinez (now Associate Justice of the Court) and Hilarion L. Aquino, concurring; rollo, pp. 42-50.
15 The case was docketed as CA-G.R. SP No. 60545.
16 Penned by Associate Justice Romeo J. Callejo, Sr., with Associate Justices Renato C. Dacudao and Perlita J. Tria Tirona, concurring.
18 Id. at 225-228; 229-233.
27 Land Bank of the Philippines v. Ascot Holdings and Equities, Inc., G.R. No. 175163, October 19, 2007, 537 SCRA 396, 404-405.
29 Ong v. Ong, G.R. No. 153206, October 23, 2006, 505 SCRA 76, 87; Local Superior of the Servants of Charity (Guanellians), Inc. v. Jody King Construction & Development Corporation, G.R. No. 141715, October 12, 2005, 472 SCRA 445, 451.
30 Ong v. Ong, G.R. No. 153206, October 23, 2006, 505 SCRA 76, 87.
Section 7. Effect of failure to answer. - If the defendant fails to answer within the period above provided, he shall be considered in default. Upon motion or motu proprio, the court shall render judgment either dismissing the complaint or granting the relief prayed for as the records may warrant. In no case shall the court award a relief beyond or different from that prayed for.
Section 2. Suppletory application of the Rules of Court.' - The Rules of Court, in so far as they may be applicable and are not inconsistent with these Rules, are hereby adopted to form an integral part of these Rules.
35 Young v. Sy, G.R. No. 157745, September 26, 2006, 503 SCRA 151, 162; Planters Development Bank v. LZK Holdings and Development Corporation, G.R. No. 153777, April 15, 2005, 456 SCRA 366, 379.
36 The Senate Blue Ribbon Committee v. Hon. Majaducon, 455 Phil. 61, 75-76 (2003); Oclarit v. Paderanga, 403 Phil. 146, 153-154 (2001).
37 Deutsche Bank Manila v. Chua Yok See, G.R. No. 165606, February 6, 2006, 481 SCRA 672, 692.
38 Microsoft Corp. v. Best Deal Computer Center Corp., 438 Phil. 408, 413 (2002).
39 Macawiag v. Balindong, G.R. No. 159210, September 20, 2006, 502 SCRA 454, 468.
40 Microsoft Corp. v. Best Deal Computer Center Corp., supra note 37, at 415.
41 Deutsche Bank Manila v. Chua Yok See, supra note 36, at 692, citing Land Bank of the Philippines v. Court of Appeals, 409 SCRA 455, 481 (2003) and Bacelonia v. Court of Appeals, 445 Phil. 300, 307-308 (2003).
42 Motion to Declare Respondents' Shares as Invalid, Ineffectual and To Declare Respondent Rosalina Rivera's Shares as only Those Stated in the Articles of Incorporation; CA rollo, pp. 142-156.
43 Supplemental Petition for Declaration of Nullity of Special Meetings and the Matters Taken up Therein and For Declaration of Respondents' Shares as Invalid, Ineffectual, and for Declaration of Respondent Rosalina Rivera's Shares as Only Those Stated in the Articles of Incorporation; id. at 107-124.
44 CA rollo, pp. 312-320.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.