CAPITAL The term capital in Section 11, Article XII of the 1987 Constitution refers only to shares of stock

entitled to vote in the election of directors, and thus in the present case only to common shares, and not to the total outstanding capital stock (common and non-voting preferred shares). Compliance with the required Filipino ownership of a corporation shall be determined on the basis of outstanding capital stock whether fully paid or not, but only such stocks which are generally entitled to vote are considered. For stocks to be deemed owned and held by Philippine citizens or Philippine nationals, mere legal title is not enough to meet the required Filipino equity. Full beneficial ownership of the stocks, coupled with appropriate voting rights is essential. Thus, stocks, the voting rights of which have been assigned or transferred to aliens cannot be considered held by Philippine citizens or Philippine nationals. Construing the term capital in Section 11, Article XII of the Constitution to include both voting and non-voting shares will result in the abject surrender of our telecommunications industry to foreigners, amounting to a clear abdication of the States constitutional duty to limit control of public utilities to Filipino citizens. Such an interpretation certainly runs counter to the constitutional provision reserving certain areas of investment to Filipino citizens, such as the exploitation of natural resources as well as the ownership of land, educational institutions and advertising businesses. The Court should never open to foreign control what the Constitution has expressly reserved to Filipinos for that would be a betrayal of the Constitution and of the national interest. The Court must perform its solemn duty to defend and uphold the intent and letter of the Constitution to ensure, in the words of the Constitution, a self-reliant and independent national economy effectively controlled by Filipinos. (WILSON GAMBOA VS. PCGG ET AL, G.R. No. 176579; June 28, 2011)

CORPORATE OFFICER Given Locsins status as a corporate officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with Nissan. A corporate officers dismissal from service is an intra-corporate dispute: that

a corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. SC has to give precedence to the merits of the case, and primacy to the element of jurisdiction. Jurisdiction is the power to hear and rule on a case and is the threshold element that must exist before any quasi-judicial officer can act. In the context of the present case, the Labor Arbiter does not have jurisdiction over the termination dispute Locsin brought, and should not be allowed to continue to act on the case after the absence of jurisdiction has become obvious, based on the records and the law. In more practical terms, a contrary ruling will only cause substantial delay and inconvenience as well as unnecessary expenses, to the point of injustice, to the parties. This conclusion, of course, does not go into the merits of termination of relationship and is without prejudice to the filing of an intra-corporate dispute on this point before the appropriate RTC. (ARSENIO Z. LOCSIN VS NISSAN LEASE PHILS. INC. AND LUIS BANSON; G.R. No. 185567; October 20, 2010)

DAMAGES IN INTRA-CORPORATE CASE Section 4, Rule 1 of the Interim Rules, provided that: 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. Acting on the Resolution dated September 5, 2006 of the Committee on the Revision of Rules of Court, the Court Resolved to AMEND Section 4, Rule 1 of The Interim Rules of Procedure Governing Intra-Corporate Controversies as follows: SEC. 4. Executory nature of decisions and orders. All decisions and orders issued under these Rules shall immediately be executory EXCEPT THE AWARDS FOR MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEYS FEES, IF ANY. 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. The amended provision expressly exempts awards for moral damages, exemplary damages, and attorneys fees from the rule that decisions and orders in cases

covered by the Interim Rules are immediately executory. As can be gleaned from the title of A.M. No. 01-2-04-SC, the amendment of Section 4, Rule 1 of the Interim Rules was crafted precisely to clarify the previous rule that decisions on intra-corporate disputes are immediately executory, by specifically providing for an exception. Thus, the prevailing rule now categorically provides that awards for moral damages, exemplary damages, and attorneys fees in intra-corporate controversies are not immediately executory. The amendment of Section 4, Rule 1 of the Interim Rules is procedural in character. Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that sense and to that extent. Procedural laws do not fall under the general rule against retroactive operation of statutes. Further, the retroactive application of procedural laws does not violate any personal rights because no vested right has yet attached or arisen from them. Clearly, the amended Section 4, Rule 1 of the Interim Rules must be applied retroactively to the present case. Therefore, the trial courts award of exemplary damages and attorneys fees in favor of private respondents is not immediately executory. The conclusion is certain in that the award of moral damages, exemplary damages and attorneys fees, awarded as an incident to an intra-corporate case, are exempt from the rule on immediate execution. (HEIRS OF SANTIAGO DIVINAGRACIA VS. BOMBO RADYO AND ROGELIO FLORETE SR.; G.R. No. 172508; January 12, 2011)

INTRA-CORPORATE CONTROVERSY; ILLEGAL DISMISSAL When petitioner sought for reinstatement, he wanted to recover his position as Manager, a position which SC has, however, earlier declared to be not a corporate position. He is not trying to recover a seat in the board of directors or to any appointive or elective corporate position which has been declared vacant by the board. Certainly, what SC has here is a case of termination of employment which is a labor controversy and not an intra-corporate dispute. In sum, SC hold that petitioners complaint likewise does not satisfy the nature of controversy test.

With the elements of intra-corporate controversy being absent in this case, we thus hold that petitioners complaint for illegal dismissal against respondents is not intra-corporate. Rather, it is a termination dispute and, consequently, falls under the jurisdiction of the Labor Arbiter pursuant to Section 217 of the Labor Code. (RENATO REAL VS. SANGU PHILIPPINES AND KIICHI ABE, GRN 168757; January 19, 2011)

INTRA-CORPORATE DISPUTE An intra-corporate dispute is understood as a suit arising from intra-corporate relations or between or among stockholders or between any or all of them and the corporation. Applying what has come to be known as the relationship test, it has been held that the types of actions embraced by the foregoing definition include the following suits: (a) between the corporation, partnership or association and the public; (b) between the corporation, partnership or association and its stockholders, partners, members, or officers; (c) between the corporation, partnership or association and the State insofar as its franchise, permit or license to operate is concerned; and, (d) among the stockholders, partners or associates themselves. As the definition is broad enough to cover all kinds of controversies between stockholders and corporations, the traditional interpretation was to the effect that the relationship test brooked no distinction, qualification or any exemption whatsoever. (STRATEGIC ALLIANCE DEVELOPMENT CORPORATION vs. STAR INFRASTRUCTURE DEVELOPMENT CORPORATION ET AL; G.R. No. 187872; November 17, 2010)

JURISDICTION OF RTC The Manila RTC has jurisdiction over FDCs complaint anchored on Sec. 19, Chapter II of BP 129, which grants the RTCs original exclusive jurisdiction over "all civil actions in which the subject of the litigation is incapable of pecuniary estimation." Evidently, a complaint for injunction or breach of contract is incapable of pecuniary estimation. Moreover, the RTCs shall exercise original jurisdiction "in the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction which may be enforced in any part of their respective regions" under Sec. 21 of BP 129.

(PAGCOR VS. FONTANA DEVELOPMENT CORPORATION; G.R. No. 187972; June 29, 2010)

JURISDICTION OF SEC The statements for which the petitioner is tried for perjury are the very grounds he relied upon in his petition for corporate dissolution. They refer to acts of the MFI directors which are allegedly fraudulent, illegal and prejudicial, and which would allegedly justify corporate dissolution under Section 105 of the Corporation Code. Evidently, these statements are material to his petition for involuntary dissolution. The element of materiality is therefore present. (ERIBERTO S. MASANGKAY vs. PEOPLE OF THE PHILIPPINES; G.R. No. 164443; June 18, 2010)

LICENSED TRADER/BROKER Doctrine dictates that a corporation is invested by law with a personality separate and distinct from those of the persons composing it, such that, save for certain exceptions, corporate officers who entered into contracts in behalf of the corporation cannot be held personally liable for the liabilities of the latter. Personal liability of a corporate director, trustee, or officer, along (although not necessarily) with the corporation, may validly attach, as a rule, only when (1) he assents to a patently unlawful act of the corporation, or when he is guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders, or other persons; (2) he consents to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto; (3) he agrees to hold himself personally and solidarily liable with the corporation; or (4) he is made by a specific provision of law personally answerable for his corporate action. [Petitioner] Romeo Lau, as president of [petitioner] QTCI, cannot feign innocence on the existence of these unlawful activities within the company, especially so that Collado, himself a ranking officer of QTCI, is involved in the unlawful execution of customers orders. [Petitioner] Lau, being the chief operating officer, cannot escape the fact that had he exercised a modicum of care and discretion in supervising the

operations of QTCI, he could have detected and prevented the unlawful acts of [petitioner] Collado and Mendoza. It is therefore safe to conclude that although Lau may not have participated nor been aware of the unlawful acts, he is however deemed to have been grossly negligence in directing the affairs of QTCI. (QUEENSLAND-TOKYO COMMODITIES, INC., ROMEO Y. LAU, and CHARLIE COLLADO VS. THOMAS GEORGE; G.R. No. 172727; September 8, 2010)

LIQUIDATORS FEE The compensation or fees of the MANCOM, receivers and liquidators shall be determined by the agreement between the parties and the MANCOM members, receiver or liquidator. This compensation/fees shall be of an amount which the corporation is willing and able to pay and the MANCOM members, receiver or liquidator is willing to accept as fee or compensation for the engagement of their/his service. In case of failure of agreement, the Commission shall determine the fees and/or compensation of MANCOM, receivers and liquidators in accordance with the guidelines set herein. To countenance petitioners posturing would be to unduly delimit the broad powers granted to the SEC under Presidential Decree No. 902-A, specifically the allencompassing provision in Section 3 that the SEC has "absolute jurisdiction, supervision and control" over all corporations who are the grantees of primary franchises and/or license or permit issued by the government to operate in the Philippines. There is no gainsaying, therefore, that the SEC is authorized to determine the fees of receivers and liquidators not only when there is "failure of agreement" between the parties but also in the absence thereof. A contrary ruling would give license to corporations under liquidation or receivership to refuse to participate in negotiations for the fixing of the compensation of their liquidators or receivers so as to evade their obligation to pay the same. (CATMON D. SALES INTERNATIONAL JR., AS CORPORATION, OF VS. ATTY. SALES MANUEL YNGSON, LIQUIDATOR CATMON

INTERNATIONAL CORPORATION; G.R. No. 179761; January 15, 2010)

RECEIVERSHIP It is well recognized that consolidation of cases avoids multiplicity of suits, guards against oppression and abuse, prevents delay, clears congested court dockets, simplifies the work of the courts and seeks to attain justice with the least expense and vexation to litigants. Generally, consolidation applies only to cases pending before the same judge and not to cases pending in different branches of the same court or in different courts. Yet in appropriate instances and in the interest of justice, cases pending in different branches of the court or in different courts may be consolidated, consistent with the rule in our jurisdiction that leans towards permitting consolidation of cases whenever possible and irrespective of the diversity of the issues for resolution. Hence, consolidation of cases is proper when the actions involve the same reliefs or the same parties and basically the same issues, or when there is real need to forestall the possibility of conflicting decisions being rendered in the cases, provided that the measure will not give one party an undue advantage over the other, or prejudice the substantial rights of any of the parties. (BANK OF COMMERCE VS. BANCAPITAL DEVT. CORPORATION AND EXCHANGE CAPITAL CORPORATION; G.R. No. 172393; October 20, 2010)

RECEIVERSHIP In light of supervening events that have emerged from the time the SEC approved the SARP and from the time the present petition was file, any determination by this Court as to whether the SARP should be revoked and the rehabilitation proceedings terminated, would be premature. Supervening events have substantially changed the factual backdrop of this case. The Court thus defers to the competence and expertise of the SEC to determine whether, given the supervening events in this case, the SARP is no longer capable of implementation and whether the rehabilitation case should be terminated as a consequence. (NESTLE PHILIPPINES VS. UNIWIDE SALES; G.R. No. 174674; October 20, 2010)

REHABILITATION; APPEAL Appeal is not a matter of right but a mere statutory privilege. The party who seeks to exercise the right to appeal must comply with the requirements of the rules, failing in which the right to appeal is lost. While the Court, in certain cases, applies the policy of liberal construction, it may be invoked only in situations where there is some excusable formal deficiency or error in a pleading, but not where its application subverts the essence of the proceeding or results in the utter disregard of the Rules of Court. BFB filed a motion for reconsideration of the 9 May 2006 Order of the RTC, Branch 138. Under Section 1, Rule 3 of the Interim Rules of Procedure on Corporate Rehabilitation, the proceedings shall be summary and non-adversarial in nature and a motion for new trial or reconsideration is a prohibited pleading. Hence, in view of the failure of BFB to perfect its appeal and its subsequent filing of a motion for reconsideration which is a prohibited pleading, the 10 October 2003 Order of the RTC, Branch 138, approving the rehabilitation plan had become final and executory. (BPI FAMILY SAVINGS BANK INC. VS. PRYCE GASES; G.R. NO. 188365; 29 JUNE 2011)

REHABILITATION The petitioner has not met all the conditions which are required or necessary to place it under rehabilitation. It has not been shown categorically and specifically by the petitioner that its stockholders had irrevocably approved and/or consented to all actions or matters necessary and desirable to rehabilitate it, such as amending its articles of incorporation and by-laws, increasing or decreasing its authorized capital stock, its issuing bonded indebtedness, alienating or encumbering its assets and modifying the rights of its shareholders. (CHINA BANKING CORPORATION VS. CEBU PRINTING AND PACKAGING CORPORATION; G.R. No. 172880; August 11, 2010)

STAY ORDER IN PETITION FOR REHABILITATION Section 6 of the Interim Rules of Procedure on Corporate Rehabilitation provides: If the court finds the petition to be sufficient in form and substance, it shall, not later

than five (5) days from the filing of the petition, issue an Order (a) appointing a Rehabilitation Receiver and fixing his bond; (b) staying enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor, its guarantors and sureties not solidarily liable with the debtor; (c) prohibiting the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (d) prohibiting the debtor from making any payment of its liabilities outstanding as of the date of filing of the petition; (e) prohibiting the debtors suppliers of goods or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and goods supplied after the issuance of the stay order; (f) directing the payment in full of all administrative expenses incurred after the issuance of the stay order; (g) fixing the initial hearing on the petition not earlier than forty five (45) days but not later than sixty (60) days from the filing thereof; (h) directing the petitioner to publish the Order in a newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks; (i) directing all creditors and all interested parties (including the Securities and Exchange Commission) to file and serve on the debtor a verified comment on or opposition to the petition, with supporting affidavits and documents, not later than ten (10) days before the date of the initial hearing and putting them on notice that their failure to do so will bar them from participating in the proceedings; and (j) directing the creditors and interested parties to secure from the court copies of the petition and its annexes within such time as to enable themselves to file their comment on or opposition to the petition and to prepare for the initial hearing of the petition. The suspension of the enforcement of all claims against the corporation is subject to the rule that it shall commence only from the time the Rehabilitation Receiver is appointed. Whenever a distressed corporation asks the SEC for rehabilitation and suspension of payments, preferred creditors may no longer assert such preference, but stand on equal footing with other creditors. Foreclosure shall be disallowed so as not to prejudice other creditors, or cause discrimination among them. If foreclosure is undertaken despite the fact that a petition for rehabilitation has been filed, the certificate of sale shall not be delivered pending rehabilitation. If this has already been done, no transfer certificate of title shall likewise be effected within the period of rehabilitation. The rationale behind PD 902-A, as amended, is to effect a feasible and viable rehabilitation. This cannot be achieved if one creditor is preferred over the

others. EQUITABLE PCI BANK VS. DNG REALTY AND DEVELOPMENT CORP.; GRN 168672; August 8, 2010)

SUSPENSION ORDER; COVERAGE The subject properties are not under the purview of the SEC Suspension Order. Pivotal to the resolution of the instant case is whether the subject properties owned by the spouses Lee were subject to the February 20, 1998 SEC Suspension Order. On the one hand, the CA held and found these to be subject to the Suspension Order. The RTC, on the other hand, found contrariwise in that the assailed REM and foreclosure sale did not violate the SEC Suspension Order. It is undisputed that the petition for suspension of payments was collectively filed by the five corporations owned by the Lee family. It is likewise undisputed that together with the consolidated petition is a list of properties, which included the subject Antipolo properties owned by Samuel and Pauline Lee. The fact, however, that the subject properties were included in the list submitted to the SEC does not confer jurisdiction on the SEC over such properties. It is apparent that even if the members of the Lee family are joined as co-petitioners with the five corporations, still, this could not confer jurisdiction on the SEC over the Lee family membersas private individuals nor could this affect their privately owned properties. (SAMUEL LEE VS. BANGKOK BANK PUBLIC COMPANY; G.R. No. 173349; February 9, 2011)