Tuesday, March 1, 2016

OSCAR C. REYES, vs. HON. REGIONAL TRIAL COURT OF MAKATI, ZENITH INSURANCE CORPORATION and RODRIGO C. REYES



FACTS:
Petitioner and private respondent were siblings together with two others, namely Pedro and Anastacia, in a family business established as Zenith Insurance Corporation (Zenith), from which they owned shares of stocks. The Pedro and Anastacia subsequently died. The former had his estate judicially partitioned among his heirs, but the latter had not made the same in her shareholding in Zenith. Zenith and Rodrigo filed a complaint with the Securities and Exchange Commission (SEC) against petitioner (1) a derivative suit to obtain accounting of funds and assets of Zenith, and (2) to determine the shares of stock of deceased Pedro and Anastacia that were arbitrarily and fraudulently appropriated [by Oscar, and were unaccounted for].

 In his answer with counterclaim, petitioner denied the illegality of the acquisition of shares of Anastacia and questioned the jurisdiction of SEC to entertain the complaint because it pertains to settlement of [Anastacia’s] estate. The case was transferred to. Petitioner filed Motion to Declare Complaint as Nuisance or Harassment Suit and must be dismissed. RTC denied the motion. The motion was elevated to the Court of Appeals by way of petition for certiorari, prohibition and mandamus, but was again denied.

Issue :Whether or not the complaint is a derivative suit within the jurisdiction of the RTC acting as a special commercial court.

Held :
No. The allegations of the present complaint do not amount to a derivative suit. First, as already discussed above, Rodrigo is not a shareholder with respect to the shareholdings originally belonging to Anastacia; he only stands as a transferee-heir whose rights to the share are inchoate and unrecorded. Second, in order that a stockholder may show a right to sue on behalf of the corporation, he must allege with some particularity in his complaint that he has exhausted his remedies within the corporation by making a sufficient demand upon the directors or other officers for appropriate relief with the expressed intent to sue if relief is denied. Lastly, Court found no injury, actual or threatened, alleged to have been done to the corporation due to Oscar’s acts.  If indeed he illegally and fraudulently transferred Anastacia’s shares in his own name, then the damage is not to the corporation but to his co-heirs; the wrongful transfer did not affect the capital stock or the assets of Zenith.

In summary, whether as an individual or as a derivative suit, the RTC – sitting as special commercial court – has no jurisdiction to hear Rodrigo’s complaint since what is involved is the determination and distribution of successional rights to the shareholdings of Anastacia Reyes.  Rodrigo’s proper remedy, under the circumstances, is to institute a special proceeding for the settlement of the estate of the deceased Anastacia Reyes, a move that is not foreclosed by the dismissal of his present complaint.

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