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ROBERTO L. ABAD v. PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION

FACTS:

This case involves a dispute between two factions vying for control of sequestered corporations, PHILCOMSAT and PHC. PHILCOMSAT owns 81% of the outstanding capital stock of PHC and is controlled by the seven families who own POTC. During the presidency of Gloria Macapagal-Arroyo, PCGG appointees aligned with the Nieto family and conducted annual stockholders' meetings for PHC, PHILCOMSAT, and POTC. However, the Africa-Bildner group also conducted separate elections, electing Victor Africa as director. Various legal steps were taken to gain legitimacy for their respective elections. One of the disputes involved the inspection of PHC's books and records, which PHILCOMSAT sought to enforce. There is also a jurisdictional dispute between the RTC and Sandiganbayan regarding the case. The RTC initially dismissed the case for lack of jurisdiction, but the CA reversed the order and remanded the case to the RTC. The Supreme Court ruled that the RTC has jurisdiction over intra-corporate disputes that are not sequestration-related. The jurisdiction of the SEC over these cases has been transferred to the RTC.

ISSUES:

  1. Whether the Regional Trial Court (RTC) in Makati has jurisdiction over the election contest in a stock corporation.

  2. Whether the Philippine Commission on Good Government (PCGG) has the exclusive and original jurisdiction over cases involving assets illegally acquired or misappropriated by the Marcoses and their associates.

  3. Whether the Securities and Exchange Commission (SEC) has jurisdiction over the dispute involving stockholders and directors of San Miguel Corporation (SMC) that may be detrimental to the interest of the stockholders.

  4. Whether the Sandiganbayan has jurisdiction over a case involving a sequestered company despite the majority of the board of directors being nominees of the Presidential Commission on Good Governance (PCGG).

  5. Whether the Sandiganbayan has jurisdiction over an ordinary civil case filed against a private corporation.

  6. Whether the majority control of the POTC is necessary to validly convene and hold stockholders' meetings and elections of officers

RULING:

  1. The RTC in Makati has jurisdiction over the election contest in a stock corporation. Pursuant to Republic Act No. 8799, the jurisdiction of the Securities and Exchange Commission (SEC) over intra-corporate controversies was transferred to the RTC. The Court designated certain branches of the RTC as special commercial courts to try and decide cases enumerated in Section 5 of Presidential Decree No. 902-A, which includes election contests in stock corporations. Thus, the RTC (Branch 138) in Makati has the authority to hear and decide the election contest between the parties.

  2. The PCGG does not have exclusive and original jurisdiction over cases involving assets illegally acquired or misappropriated by the Marcoses and their associates. The PCGG's jurisdiction under Section 2 of Executive Order No. 14 is limited to cases involving assets of ill-gotten wealth, which have yet to be determined. In this case, the subject matter is an intra-corporate controversy and does not involve any incidents related to the ill-gotten wealth cases. As such, the PCGG's jurisdiction does not apply here.

  3. The SEC has jurisdiction over the dispute between stockholders and directors of SMC that may be detrimental to the interest of the stockholders. The dispute concerns acts of the board of directors claimed to amount to fraud and misrepresentation and falls within the jurisdiction of the SEC.

  4. The Sandiganbayan does not have jurisdiction over a case involving a sequestered company, even if the majority of the board of directors are PCGG nominees. The Sandiganbayan's jurisdiction does not extend to cases involving sequestered companies and is limited to PCGG cases that pertain to the recovery of ill-gotten wealth.

  5. The Sandiganbayan does not have jurisdiction over an ordinary civil case filed against a private corporation. The Sandiganbayan's jurisdiction is limited to PCGG cases and cases filed to question or challenge the commission's acts or orders in such cases.

  6. The RTC (Branch 138) correctly concluded that the Nieto-PCGG Group, because it did not have the majority control of POTC, could not have validly convened and held the stockholders' meeting and election of POTC officers on August 5, 2004. Furthermore, the proxies used by Nieto, Jr. to elect himself as Chairman of PHILCOMSAT, and the proxies used by Nieto, Jr. in the PHC elections to elect himself as President and Acting Chairman were also invalid for not having the support of the majority shareholders of said corporations.

PRINCIPLES:

  • The transfer of jurisdiction over intra-corporate controversies from the SEC to the RTC was provided for under Republic Act No. 8799.

  • The designation of certain branches of the RTC as special commercial courts for intra-corporate cases was made by the Court to implement Republic Act No. 8799.

  • The jurisdiction conferred by law over the subject matter of an action cannot be altered or set aside by the courts or parties.

  • The PCGG's jurisdiction over cases involving assets of ill-gotten wealth is limited and does not extend to all types of cases.

  • The SEC has jurisdiction over disputes between stockholders and directors of a corporation that may be detrimental to the interest of the stockholders.

  • The jurisdiction of the Sandiganbayan does not extend to cases involving sequestered companies and is limited to PCGG cases related to the recovery of ill-gotten wealth.

  • The Sandiganbayan does not have jurisdiction over ordinary civil cases filed against private corporations.

  • Amicable settlements and compromises are not only allowed but actually encouraged in civil cases. (Republic vs. Sandiganbayan)

  • Authority of the PCGG to validly enter into a compromise agreement for the purpose of avoiding litigation or putting an end to one already commenced is indisputable. (Benedicto vs. Board of Administrators of Television Stations RPN, BBC, and IBC)

  • Compromise agreements with court approval have the force of res judicata between the parties and should be complied with in accordance with its terms. (Republic vs. Sandiganbayan)

  • Judicial decisions should be given a prospective effect, except when the ruling did not enunciate a new legal doctrine or change the interpretation of the law as to prejudice the parties and undo their situations established under an old doctrine or prior interpretation. (Republic vs. Sandiganbayan)