December 2009 - Philippine Supreme Court Decisions/Resolutions

Philippine Supreme Court Jurisprudence

G.R. No. 181455 and G.R. No. 182008 - Santiago Cua, Jr., et al. v. Miguel Ocampo Tan, et al.

THIRD DIVISION

[G.R. NO. 181455-56 : December 4, 2009]

SANTIAGO CUA, JR., SOLOMON S. CUA and EXEQUIEL D. ROBLES, in their capacity as Directors of PHILIPPINE RACING CLUB, INC., Petitioners, v. MIGUEL OCAMPO TAN, JEMIE U. TAN and ATTY. BRIGIDO J. DULAY, Respondents.

[G.R. NO. 182008]

SANTIAGO CUA, SR., in his capacity as Director of PHILIPPINE RACING CLUB, INC., Petitioner, v. COURT OF APPEALS, MIGUEL OCAMPO TAN, JEMIE U. TAN, ATTY. BRIGIDO J. DULAY, and HON. CESAR UNTALAN, Presiding Judge, Makati Regional Trial Court, Br. 149, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Before this Court are two Petitions: (1) a Petition for Review on Certiorari ¹ under Rule 45 of the Rules of Court filed by petitioners Santiago Cua, Jr. (Santiago Jr.), Solomon S. Cua (Solomon), and Exequiel D. Robles (Robles), in their capacity as directors of the Philippine Racing Club, Inc. (PRCI), with Miguel Ocampo Tan (Miguel), Jemie U. Tan (Jemie) and Atty. Brigido J. Dulay (Dulay) as respondents, docketed as G.R. No. 181455-56; and (2) a Petition for Certiorari and Prohibition² under Rule 65 of the Rules of Court filed by petitioner Santiago Cua, Sr. (Santiago Sr.), also in his capacity as PRCI director, likewise naming Miguel, Jemie, and Dulay as respondents, together with the Court of Appeals and Presiding Judge Cesar Untalan (Judge Untalan) of the Regional Trial Court (RTC), Branch 149 of Makati City, docketed as G.R. No. 182008.

Both Petitions assail the Decision³ dated 6 September 2007 and Resolution⁴ dated 22 January 2008 of the Court of Appeals in the consolidated cases CA-G.R. SP No. 99769 and No. 99780. In its 6 September 2007 Decision, the Court of Appeals dismissed for lack of merit, mootness, and prematurity, the Petition for Certiorari of petitioners Santiago Jr., Solomon, and Robles (Santiago Jr., et al.); and the Petition for Certiorari and Prohibition of petitioner Santiago Sr., which sought the nullification of the Resolution⁵ dated 16 July 2007 of the RTC in Civil Case No. 07-610 granting the Temporary Restraining Order (TRO) prayed for by respondents Miguel, Jemie, and Dulay (Miguel, et al.). In its 22 January 2008 Resolution, the appellate court denied the Motions for Reconsideration of petitioners and the Motion to Admit Supplemental Petition for Certiorari of petitioner Santiago Jr, et al. The same Resolution did not consider the Supplemental Petition for Certiorari and Prohibition filed by petitioner Santiago Sr. for the latter's failure to seek leave of court for its filing and admittance. Petitioners would have wanted to challenge in their Supplemental Petitions the Resolution⁶ dated 8 October 2007 of the RTC in Civil Case No. 07-610 granting the issuance of a "permanent injunction" against petitioners and the other PRCI directors until the said case was resolved.

I
FACTUAL AND PROCEDURAL ANTECEDENTS

PRCI is a corporation organized and established under Philippine laws to: (1) carry on the business of a race course in all its branches and, in particular, to conduct horse races or races of any kind, to accept bets on the results of the races, and to construct grand or other stands, booths, stablings, paddocks, clubhouses, refreshment rooms and other erections, buildings, and conveniences, and to conduct, hold and promote race meetings and other shows and exhibitions; and (2) promote the breeding of better horses in the Philippines, lend all possible aid in the development of sports, and uphold the principles of good sportsmanship and fair play.⁷ To pursue its avowed purposes, PRCI holds a franchise granted under Republic Act No. 6632, as amended by Republic Act No. 7953, to operate a horse racetrack and manage betting stations. Under its franchise, PRCI may operate only one racetrack.

In 1999, the Articles of Incorporation of PRCI was amended to include a secondary purpose, viz:

To acquire real properties and/or develop real properties into mix-use realty projects including but not limited to leisure, recreational and memorial parks and to own, operate, manage and/or sell these real estate projects.⁸

PRCI is publicly listed with the Philippine Stock Exchange (PSE). In 2006, PRCI had an authorized capital stock of P1,000,000,000.00 divided into 1,000,000,000 shares, with a par value of P1.00 each; of which a total of P569,857,749.00, representing 569,857,749 shares, had been subscribed and paid up.⁹

PRCI owns only two real properties, each covered by several transfer certificates of title. One is known as the Sta. Ana Racetrack, located along A. P. Reyes Avenue, Makati City (Makati property), measuring around 21.2 hectares; and the other is located in the towns of Naic and Tanza in the province of Cavite (Cavite property).

Following the trend in the development of properties in the same area,¹⁰ PRCI wished to convert its Makati property from a racetrack to urban residential and commercial use. Given the location and size of its Makati property, PRCI believed that said property was severely under-utilized. Hence, PRCI management decided to transfer its racetrack from Makati to Cavite. PRCI began developing its Cavite property as a racetrack, scheduled to be completed by April 2008.

Now as to its Makati property, PRCI management decided that it was best to spin off the management and development of the same to a wholly owned subsidiary, so that PRCI could continue to focus its efforts on pursuing its core business competence of horse racing. Instead of organizing and establishing a new corporation for the said purpose, PRCI management opted to acquire another domestic corporation, JTH Davies Holdings, Inc. (JTH).¹¹

JTH was then owned by Jardine Matheson Europe B.V. (JME).¹² It had an authorized capital stock of P25,000,000.00, divided into 50,000,000 common shares with a par value of P0.50 each. JTH was publicly listed with the PSE. Its tangible assets substantially consisted of cash. To determine the value of JTH, PRCI engaged the services of the accounting firm Sycip Gorres Velayo & Co. (SGV) to conduct a due diligence study.¹³

Using the results of the SGV study, PRCI management determined that PRCI could initially acquire 41,928,290 shares, or 95.55% of the outstanding capital stock of JTH, for the price of P10.71 per share, or for a total of P449,250,000.00; in this case, PRCI would be paying a premium of P42,410,450.00 for the said JTH shares, computed as follows:

Total price for all of the issued and subscribed JTH
	shares (at P10.71/share)	P 470,418,848.00
Less: Unaudited net worth of JTH (purely cash)		- 426,010,000.00
Total premium for 100% of JTH		44,408,848.00
Multiply: Interest in JTH to be initially acquired by
	PRCI (95.5%)	x 0.955
Premium for the 95.5% interest in JTH to be acquired
	by PRCI	P 42,410,450.00

The PRCI Board of Directors held a meeting on 26 September 2006. Among the directors present were petitioners Santiago Sr., Santiago Jr., and Solomon, as well as respondent Dulay. After discussing and deliberating on the matter of the acquisition of JTH by PRCI, all the directors present, except respondent Dulay, voted affirmatively to pass and approve the following resolutions:

1. Declaration of Intention to Acquire and Purchase Shares of Stock of Another Company -

RESOLVED, as it is hereby resolved, that the Corporation intends to acquire up to one hundred percent (100%) of the common shares of stock of JTH Davies Holdings, Inc. by way of negotiated sale;

RESOLVED FURTHER, That Management and the Corporate Secretary shall prepare and submit the Tender Offer, as well as, to file all the necessary disclosures and notices in compliance with the Securities Regulation Code, its implementing rules, and other prevailing regulations;

RESOLVED FURTHERMORE, That the Corporation authorizes its President, Mr. Solomon S. Cua, to sign and execute any purchase agreements, memoranda, and such other deeds, and to deliver any documents and papers, perform any acts, necessary and incidental to implement the foregoing, as well as to source the funds to implement the same.

2. Special Stockholders' Meeting -

RESOLVED, That a Special Stockholders' Meeting of PRCI shall be held on October 26, 2006 at 10:00 A.M., or at such later date as may be practicable under the circumstances, in the principal place of business of PRCI at Santa Ana Park, A.P. Reyes Avenue, Makati City;

RESOLVED FURTHER, That only those stockholders of record as of end of business day of October 11, 2006 shall be entitled to notice, to vote and/or to be voted upon, in accordance with the laws, regulations and by-laws of PRCI;

RESOLVED FURTHERMORE, That the Corporate Secretary shall be authorized to issue the required notices, set the time for the submission of, and to receive and validate proxies, as well as, to order publication of notices and undertake such appropriate and necessary steps, including the filing of the required disclosures to the regulating agencies, to effect the foregoing.

3. Authorized Attorney-In-Fact and Proxy -

In the event of a successful acquisition of the shares of JTH Davies Holdings, Inc., the Board passed and approved the following resolutions:

RESOLVED, that the Corporation shall hereby authorize SANTIAGO CUA, or in his absence, EXEQUIEL ROBLES, or in his absence, SOLOMON S. CUA, or in his absence, SANTIAGO CUA, JR., or in his absence, DATUK SURIN UPATKOON, or in his absence, Laurence Lim Swee Lim, or in his absence, LIM TEONG LEONG, to act as its attorney-in-fact/proxy and to vote all shares as may be registered in the name of the Corporation/lodged with the PCD System, and to exercise all rights appurtenant thereto during the Annual Stockholders' Meeting/s and all regular/special meeting/s of JTH DAVIES HOLDINGS, INC. (formerly JARDINE DAVIES, INC.);

RESOLVED FURTHER, That these Directors, in the said order of priority, shall have full power and authority and discretion to nominate, appoint, and/or vote into office such directors and/or officers during the said Annual Stockholders' Meeting/s and regular/special meeting/s of JTH HOLDINGS, INC. (formerly JARDINE DAVIES, INC.);

RESOLVED FINALLY, That these Directors be, as they are hereby granted full power and authority whatsoever requisite or necessary or proper to be done in these matters.¹⁴

The next day, 27 September 2006, PRCI entered into a Sale and Purchase Agreement for the acquisition from JME of 41,928,290 common shares or 95.55% of the outstanding capital stock of JTH. Among the principal terms of the Sale and Purchase Agreement were:

(a) The consideration for the acquisition was P10.71 per share or P449,250,000.00;

(b) Upon the signing of the [A]greement, the [PRCI] shall pay P20 Million to an Escrow Agent as deposit; andcralawlibrary

(c) The sale and purchase transaction contemplated in the Agreement shall be consummated at a closing not later than November 30, 2006 or the 50th day from the start of the JTH Offer or such date which shall in no case be later than December 11, 2006.¹⁵

PRCI also made a tender offer for the remaining 4.45% or 1,954,883 issued and outstanding common shares of JTH at P10.71 each.

In the Special Stockholders' Meeting held on 7 November 2006, attended by stockholders with 481,045,887 shares or 84.42% of the outstanding capital stock of PRCI, the acquisition by PRCI of JTH was presented for approval. The events during said meeting were duly recorded in the Minutes, to wit:

V. APPROVAL OF THE ACQUISITION OF THE SHARES OF STOCK OF JTH DAVIES HOLDINGS, INC.

Thereafter, the Corporate Secretary informed that the President will present to the stockholders the rationale for the acquisition of the shares of JTH Davies Holdings, Inc.

According to the President PRCI is intending to acquire up to 100% of the shares of JTH Davies Holdings, Inc. another listed company in the PSE. For reference, the President informed that the latest Annual Report of JTH has been appended to the Information Statement for guidance. Also copies of the Board's resolution presented for approval and ratification by the stockholders has been posted in the room for convenient reading of the stockholders.

The President explained that JTH is one of the oldest holdings company and the name JTH Davies is an internationally acclaimed name with a reputation for solid and sound financial standing. With PRCI's acquisition of JTH, it gives PRCI the necessary vehicle within which to enlarge and broaden the business and operational alternatives or options of our company. PRCI believes that this JTH will complement the direction of PRCI in fast tracking the development of PRCI's plans and provide it investment opportunities. It is for this reason that we call this special meeting so you may know soonest the present opportunity faced by PRCI without need for you to wait until next year's annual meeting.

The Vice-Chairman then informed that the resolution approving the purchase of JTH Davies Holdings, Inc. as presented in the Information Statement which were furnished to the stockholders is presented for approval to the body. A stockholder thereafter moved that the the (sic) resolution be approved which was duly seconded by another stockholder. The Vice-Chairman declared the resolution approved. Thereafter, Atty. Pagunsan took the floor and informed that he is the proxy of various stockholders (10%) and would like to manifest his vote as "NO" which the Vice-Chairman duly noted. Notwithstanding the objection of Atty. Pagunsan, considering the more than 2/3 of the outstanding capital stock of PRCI has approved and ratified the resolution, (74%) the Corporate Secretary declared the resolution as duly approved and ratified.

Thereafter, another stockholder, Mr. Ngo, asked the President what are the plans of PRCI on the assets of JTH. The President informed that as of now, JTH has no material hard assets other than its retained earnings. Mr. Ngo asked again what will be the direction of PRCI on the substantial retained earnings of JTH to which the President replied that there are several options being considered once the purchase is complete one of which is the declaration of cash dividend.

Another stockholder took the floor and informed the Management that he is happy with the transaction of PRCI and the purchase by PRCI of the JTH shares is a good deal since the value of the goodwill of JTH is substantial by his estimate. He proceeded to thank the President and shook hands with him.¹⁶

By 22 November 2006, PRCI was able to additionally acquire 1,160,137 common shares of JTH from the minority stockholders of the latter, giving PRCI ownership of 98.19% of the outstanding capital stock of JTH.

PRCI prepared consolidated financial statements for itself and for JTH for the fiscal year ending 31 December 2006. The financial statements were audited by the accounting firm Punongbayan & Araullo which gave the following unqualified opinion of the same: "In our opinion, based on our audit and the report of other auditors, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Philippine Racing Club, Inc. and Subsidiary as of December 31, 2006, and their consolidated financial performance and their cash flows for the year then ended in accordance with Philippine Financial Reporting Standards." The audited financial statements of PRCI and JTH for 2006 were presented to the stockholders of PRCI and submitted to the Securities and Exchange Commission (SEC), the Bureau of Internal Revenue (BIR), and the Philippine Stock Exchange (PSE).

Thereafter, PRCI again engaged the assistance of SGV in executing its intended spin-off to JTH of the management and development of PRCI's Makati property. It was then determined that the Makati property, with a total zonal value of P3,817,242,000.00, could be transferred to JTH in exchange for the unissued portion of the latter's recently increase authorized capital stock,¹⁷ amounting to P397,908,894.50, divided into 795,817,789 shares with a par value of P0.50 per share. The difference of P3,419,333,105.50 between the total zonal value of the Makati property and the aggregate par value of the JTH shares to be issued in exchange for the same, would be reflected as additional paid-in capital of PRCI in JTH.

The matter of the proposed exchange was taken up and approved by the PRCI Board of Directors in its meeting held on 11 May 2007, again with the lone dissent of respondent Dulay. According to the Minutes of the said meeting, the following occurred:

A. Exchange of the Corporation's Makati Property with Shares of JTH Davies Holdings, Inc.

President Cua reported on certain essential matters regarding the Corporation's Makati Property. After doing so, President Cua proposed the exchange of this Property with shares of JTH Davies Holdings, Inc. He then presented to the Board financial facts and figures heavily favoring the transaction.

After due discussion and deliberation, all the Directors present approved and passed the following resolution, except Director Brigido Dulay who registered a negative vote:

RESOLVED, That the Corporation hereby approves and authorizes the exchange of its Makati property with shares of JTH Davies Holdings, Inc.;

RESOLVED FURTHER, That, for this purpose, the Corporation hereby authorizes its Executive Committee to determine and approve the terms and conditions governing the exchange as it shall consider for the best interest of the Corporation subject to approval by the stockholders in compliance with the Corporation Code;

RESOLVED FURTHER, That the Executive Committee, be, as it is hereby granted full power and authority whatsoever requisite or necessary or proper to accomplish these;

RESOLVED FINALLY, That SOLOMON CUA, President & CEO, be, as he is hereby authorized to negotiate with JTH Davies Holdings, Inc. and to execute, sign, and/or deliver any and all documents covering the exchange in accordance with the terms and conditions of the Executive Committee.¹⁸

Subsequently, the Annual Stockholders' Meeting of PRCI was scheduled on 17 July 2007, the Agenda for which is reproduced below:

I. Call to Order;

II. Proof of Notice;

III. Certification of Quorum;

IV. Approval of the Minutes of the Annual Stockholders' Meeting held last June 19, 2006 and of the Special Stockholders' Meeting held last November 7, 2006;

V. Report of the President;

VI. Approval of the Audited Financial Statement for the year ended December 31, 2006;

VII. Approval and Ratification of the acts of the Board of Directors, the Executive Committee and the Management of the Corporation for the Fiscal Year 2006;

VIII. Approval of the Planned Exchange of PRCI's Makati property for shares of stock;

IX. Approval of the Amendments of the By-Laws to conform with the Manual of Corporate Governance;

X. Election of the members of the Board of Directors;

XI. Appointment of Independent External Auditors;

XII. Other Matters;

XIII. Adjournment.¹⁹

The 11 May 2007 Resolution of the PRCI Board of Directors on the property-for-shares exchange between PRCI and JTH was supposed to be presented for approval by the stockholders under the afore-quoted Items No. VII and No. VIII of the Agenda.

However, on 10 July 2007, respondents Miguel, et al., as minority stockholders of PRCI, with the following shareholdings:

Stockholder	No. of Shares	Percentage
Miguel Ocampo-Tan	16,380,000	2.87
Jemie U. Tan	15,972,720	2.80
Atty. Brigido J. Dulay20	1	0.00
Total	32,352,721	5.67

filed before the RTC a Complaint, denominated as a Derivative Suit with prayer for Issuance of TRO/Preliminary Injunction, against the rest of the directors of PRCI and/or JTH. The Complaint was docketed as Civil Case No. 07-610.

The Complaint was based on three causes of action: (1) the approval by the majority directors of PRCI of the Board Resolutions dated 26 September 2006 and 11 May 2007 - - with undue haste and deliberate speed, despite the absence of any disclosure and information - - was not only anomalous and fraudulent, but also extremely prejudicial and inimical to interest of PRCI, committed in violation of their fiduciary duty as directors of the said corporation; (2) respondent Solomon, as PRCI President, with the acquiescence of the majority directors of PRCI, maliciously refused and resisted the request of respondents Miguel, et al., for complete and adequate information relative to the disputed Board Resolutions, brazenly and unlawfully violating the rights of the minority stockholders to information and to inspect corporate books and records; and (3) without being officially and formally nominated, the majority directors of PRCI illegally and unlawfully constituted themselves as members of the Board of Directors and/or Executive Officers of JTH, rendering all the actions they have taken as such null and void ab initio. In the end, respondents Miguel, et al., prayed to the RTC, after notice and hearing, that:

1. A temporary restraining order and/or writ of preliminary injunction be issued restraining and enjoining the holding of the Annual Stockholders' Meeting scheduled on 17 July 2007 and restraining and enjoining the defendants [PRCI directors] from enforcing, implementing, "railroading", or taking any further action in reliance upon or in substitution or in furtherance of the Disputed Resolutions, which would inflict grave and irreparable injury in fraud of the Corporation.

2. A receiver and/or management committee be constituted and appointed to undertake the management and operations of the Corporation and to take over its assets to prevent its further loss, wastage and dissipation.

3. To compel the defendant Majority Directors to render a complete and adequate disclosure of all documents and information relating to the subject matter of the Disputed Resolutions as well as the business and affairs of the Corporation and its wholly-owned subsidiary from the time of the latter's acquisition until final judgment.

4. After trial on the merits, that judgment be rendered in favor of the plaintiffs and against the defendants, as follows:

(a) Permanently enjoining and prohibiting defendants from enforcing, implementing, or taking any action in reliance upon the Disputed Resolutions.

(b) Declaring the Disputed Resolutions dated 26 September 2006 and 11 May 2007 and the approval by the Executive Committee of the exchange of the Corporation's Makati Property for JTH shares, as well as any and all actions taken in reliance upon or pursuant to or in furtherance of the Disputed Resolutions and/or approval of the Executive Committee, as null and void ab initio.

(c) Declaring the assumption by defendant Majority Directors as Directors and/or officers of JTH, including all acts done by defendant Majority Directors as such Directors and/or officers of JTH, as null and void ab initio.

(d) Ordering defendants to pay plaintiffs the sum of P500,000.00, and by way of attorney's fees, plus P10,000.00 per court appearance, plus costs of suit.

Other reliefs just and equitable under the premises are likewise prayed for.²¹

After conducting hearings on the prayer for the issuance of a TRO, RTC Judge Untalan issued a Resolution on 16 July 2007, the dispositive portion of which reads:

WHEREFORE, premises considered, this court hereby partially grants the prayer of PRCI for the issuance of Temporary Restraining Order upon the herein defendants subject to the posting of Php100,000.00 bond on condition that such bond shall answer to any damage that the Defendants may sustain by reason of this TRO if the court should finally decide that the applicants are not entitled thereto. This TRO shall be effective for TWENTY (20) DAYS only from service of the same upon the Defendants after posting of the bond.

Therefore, the Defendants, their agents, proxies and representatives are hereby enjoined, prohibited and forbidden to present to, discuss, much more to approve the same, at the 2007 Annual Stockholders' Meeting of PRCI to be held on July 17, 2007 at 8:00 A.M. at the VIP Room, Santa Ana Park, A.P. Reyes Ave., Makati City, the following Agenda included in the Notice of said stockholders' meeting:

1. Agenda Roman No. IV - Approval of the Minutes of the Annual Stockholders' Meeting held last June 19, 2006 and the Special Stockholders' meeting held last November 7, 2006.

2. Agenda Roman No. VII - Approval and Ratification of the acts of the Board of Directors, the Executive Committee and the Management of the Corporation for the Fiscal Year 2006.

3. Agenda Roman No. VIII - Approval of the Planned Exchange of PRCI's Makati property for shares of stock.

Thus, in order that these subject matters and items of the Agenda of the aforesaid Stockholders' Meeting shall not be taken up, the herein Defendants, their agents, proxies and representatives, jointly and severally, are hereby ordered to delete and remove from the Agenda said three (3) above stated items of the Agenda before the start and conduct of the said stockholders' meeting. Therefore, in case herein Defendants, their agents, proxies and representatives defy and disobey this mandate, they have committed already four (4) distinct contemptuous acts: delete, present, discuss and approve.

This Court appealed to the Corporate Secretary as Officer of the Court, to please make sure that this mandate is obeyed and observed by the Defendants, their agents, proxies and representatives, before and during the conduct of said stockholders' meeting.

Let the hearing of the main injunction be set on July 23 and 24, 2007 and August 2, 2007, all at two o'clock in the afternoon.²²

The Annual Stockholders' Meeting of PRCI scheduled the next day, 17 July 2007, failed to push through for lack of quorum.

On 19 July 2007, petitioners Santiago Jr., et al., as PRCI directors filed a Petition for Certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 99769. On 20 July 2007, Santiago Sr., also as PRCI director, filed his own Petition for Certiorari and Prohibition, docketed as CA-G.R. SP No. 99780. Both Petitions assailed the RTC Resolution dated 16 July 2007, granting the issuance of a TRO, for being rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. CA-G.R. SP No. 99769 and No. 99780 were subsequently consolidated.

The Court of Appeals promulgated its Decision on 6 September 2007 dismissing the Petitions in CA-G.R. SP No. 99769 and No. 99780 for lack of merit, mootness, and prematurity.

According to the Court of Appeals, the TRO issued by the RTC enjoined the presentation, discussion, and approval of only three of the 13 items on the Agenda of the 2007 Annual Stockholders' Meeting. There is no evidence that the TRO issued by the RTC legally impaired the holding of the scheduled stockholders' meeting. Indeed, the lack of quorum during the said meeting was due to the absence of petitioners themselves who comprised the majority interest in PRCI. Consequently, the appellate court found no grave abuse of discretion in the issuance by the RTC of the TRO.

The Court of Appeals also noted that the Petitions in CA-G.R. SP No. 99769 and No. 99780 as regards the issuance of the TRO already became moot when the 20-day period of effectivity of said restraining order expired on 5 August 2007, even before the Petitions were submitted for resolution.

Lastly, the Court of Appeals held that the issues raised by petitioners were factual and evidentiary in nature which must be threshed out before the RTC as the designated commercial court in Makati. The appellate court would not interfere with the proceedings a quo considering that Civil Case No. 07-610 had not yet gone to trial and had not yet been resolved or terminated by the RTC. Therefore, for being premature, the Court of Appeals could not prohibit the continuance of the RTC proceedings in Civil Case No. 07-610.

The Court of Appeals ruled that there was no reason to dismiss the Complaint in Civil Case No. 07-610. Although the Complaint contained mere allegations, which had yet to be supported by evidence, it was sufficient in form and substance, and the RTC properly took cognizance of the same. The Court of Appeals reasoned that:

Rule 8, Section 1 of the Interim Rules of Procedure for Intra-Corporate Controversies (Interim Rules) provides:

"SECTION 1. Derivative action. - A stockholder or member may bring an action in the name of a corporation or association, as the case may be, provided, that:

(1) He was a stockholder or member at the time the acts or transactions subject of the action occurred and at the time the action was filed;

(2) He exerted all reasonable efforts, and alleges the same with particularity in the complaint, to exhaust all remedies available under the articles of incorporation, by-laws, laws or rules governing the corporation or partnership to obtain the relief he desires;

(3) No appraisal rights are available for the act or acts complained of; andcralawlibrary

(4) The suit is not a nuisance or harassment suit.

In case of nuisance or harassment suit, the court shall forthwith dismiss the case."

A reading of the Complaint reveals that the same sufficiently alleges the foregoing requirements. Complainants essentially allege that they are PRCI stockholders, that they have opposed the issuance and approval of the questioned resolutions during the board stockholders' (sic) meetings, that prior resort to intra-corporate remedies are futile, that nevertheless, they have asked for copies of the pertinent documents pertaining to the questioned transactions which the board has declined to furnish, that they have instituted the derivative suit in the name of the corporation, that they are questioning the acts of the majority of the board of directors believing that the herein petitioners have committed a wrong against the corporation and seeking a nullification of the questioned board resolutions on the ground of wastage of the corporate assets.

Thus, contrary to petitioners' averment, the Complaint does state a cause of action.²³

Petitioners in CA-G.R. SP No. 99769 and No. 99780 filed their respective Motions for Reconsideration of the foregoing Decision of the Court of Appeals.

In the meantime, upon the expiration of the TRO issued by RTC Judge Untalan in Civil Case No. 07-610, the Annual Stockholders' Meeting of PRCI was again scheduled on 10 October 2007. However, Judge Untalan issued on 8 October 2007 a Resolution with the following decree:

WHEREFORE, premises considered, this court hereby GRANTS the issuance of PERMANENT INJUNCTION against the defendants until the instant case is finally resolved, subject to the posting by plaintiffs of a Php 100,000.00 bond, on condition that such bond shall answer to any damage that the Defendants may sustain by reason of this injunction if the court should finally decide that the applicants are not entitled thereto. This injunction shall be effective from service of the same upon the Defendants after posting of the bond.

Therefore, the Defendants, their agents, proxies and representatives are hereby enjoined, prohibited and forbidden to present to, discuss, much more to approve the same, at any stockholders' meeting, whatsoever kind and nature, of PRCI of the following Agenda:

1. Approval of the Minutes of the Annual Stockholders' Meeting held last June 19, 2006 and the Special Stockholders' meeting held last November 7, 2006 of PRCI.

2. Approval and Ratification of the acts of the Board of Directors, the Executive Committee and the Management of PRCI for the Fiscal Year 2006, as far as the acquisition of JTH and the planned exchange of PRCI's Makati property for shares of stock of JTH are concerned.

3. Approval of the Planned Exchange of PRCI's Makati property for shares of stock of JTH.²⁴

As a result, the Annual Stockholders' Meeting of PRCI proceeded as scheduled on 10 October 2007 without taking up the matters covered by the permanent injunction issued by the RTC.

Petitioners Santiago Jr., et al. filed in CA-G.R. SP No. 99769 their Motion to Admit Supplemental Petition for Certiorari with the attached Supplemental Petition for Certiorari;²⁵ and petitioner Santiago Sr. filed in CA-G.R. SP No. 99780 a Supplemental Petition for Certiorari and Prohibition,²⁶ to be followed shortly thereafter by a Motion to Admit (Supplemental Petition).²⁷ Petitioners intended to additionally assail in their Supplemental Petitions the 8 October 2007 Resolution of the RTC granting the issuance of the permanent injunction.

In its Resolution dated 22 January 2008, the Court of Appeals denied the Motions for Reconsideration of petitioners and the Motion to Admit Supplemental Petition for Certiorari of petitioners Santiago Jr., et al.

The Court of Appeals found that petitioners' Motions for Reconsideration merely reiterated the issues and arguments which were raised in the Petitions and/or which the appellate court already discussed and passed upon. The Court of Appeals reiterated its ruling that it was premature to prohibit the continuance of the proceedings in Civil Case No. 07-610 before the RTC; and that the Complaint therein sufficiently stated a cause of action.

The Court of Appeals likewise refused to admit petitioners' Supplemental Petitions for Certiorari. It noted that Santiago Sr. filed his Supplemental Petition without asking for leave to file the same. Apparently, the appellate court disregarded the Motion to Admit (Supplemental Petition) which petitioner Santiago filed separately from and at a later date than his Supplemental Petition. In addition, the Court of Appeals adjudged that the Supplemental Petitions which petitioners hoped to be admitted involved a subject matter not covered in their original Petitions. Although the TRO and the permanent injunction were both issued by the RTC in Civil Case No. 07-610, the two issuances were independent of each other, and only the TRO was the subject of the original Petitions. Hence, the Supplemental Petitions assailing the permanent injunction granted by the RTC could not be considered as merely augmenting the matters, issues, and causes of action of the original Petitions; and should be challenged in a separate petition for certiorari .

Failing to obtain any relief from the Court of Appeals, petitioners turned to this Court.

Petitioners Santiago Jr., et al., filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, docketed as G.R. No. 181455-56; while petitioner Santiago Sr. filed a Petition for Certiorari under Rule 65 of the Rules of Court, docketed as G.R. No. 182008. According to petitioners, the appellate court committed reversible errors of law and grave abuse of discretion in its Decision dated 6 September 2007 and Resolution dated 22 January 2008 in CA-G.R. SP No. 99769 and No. 99780.

Petitioners insisted that Civil Case No. 07-610 pending before the RTC did not constitute a valid derivative suit. Respondents Miguel, et al., failed to allege in their Complaint that they had no appraisal rights for the acts they were complaining of. In fact, the very allegations made by respondents Miguel, et al. in their Complaint supported the availability of appraisal rights to them. The Complaint in Civil Case No. 07-610 was nothing more than a nuisance or harassment suit against petitioners and the other PRCI directors.

Petitioners averred that, by finding no grave abuse of discretion on the part of the RTC in issuing the TRO against petitioners and the other PRCI directors, the Court of Appeals substituted its own judgment for that of the PRCI Board of Directors, arbitrarily and capriciously disregarding the business judgment made by the said Board and approved by PRCI stockholders. The TRO issued by the RTC was not for the benefit of the PRCI stockholders. Furthermore, the expiration of the 20-day TRO did not make their Petitions for Certiorari in CA-GR SP No. 99769 and No. 99780 moot. Said Petitions included the prayer that the RTC be restrained from proceeding with Civil Case No. 07-610 in view of the fatally defective Complaint, the grant or denial of which the appellate court should have still determined despite the expiration of the TRO.

Petitioners also challenged the refusal by the Court of Appeals to admit their Supplemental Petitions in CA-GR SP No. 99769 and No. 99780. They asserted that the issues in their Supplemental Petitions were closely intertwined with those in their original Petitions.

The prayer of petitioners Santiago Jr., et al., in their Petition in G.R. No. 181455-56 reads:

PRAYER

WHEREFORE, in view of the foregoing and in the interest of justice, it is most respectfully prayed of the Honorable Supreme Court that:

A. The Decision of the Court of Appeals dated 06 September 2007 (Annex "I") and the Resolution of the Court of Appeals dated 22 January 2008 (Annex "M") be NULLIFIED, REVERSED and SET ASIDE for having been issued on the basis of reversible error of law and with grave abuse of discretion amounting to lack of jurisdiction.

B. The Resolutions of Judge Cesar Untalan of Makati Regional Trial Court, Branch 149 dated 16 July 2007 (Annex "F") and 08 October 2007 (Annex "G") be accordingly NULLIFIED, REVERSED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack of jurisdiction.

C. The complaint of Respondents be DISMISSED outright for lack of jurisdiction and cause of action.

D. Such further reliefs just and equitable under the circumstances be GRANTED.²⁸

Petitioners Santiago Jr., et al., subsequently filed in G.R. No. 181455-56 an Urgent Motion for Issuance of a Temporary Restraining Order (Status Quo Ante) and/or Writ of Preliminary Injunction, in which they additionally asked the Court that "a Temporary Restraining Order (Status Quo Ante) and/or Writ of Preliminary Injunction be immediately issued restraining the implementation (sic) Judge Cesar Untalan's Resolutions dated 16 July 2007 and 08 October 2007 so as not to render inutile this Most Honorable Court's exercise of jurisdiction over this action and to prevent the decision on this case from being rendered ineffectual and academic."²⁹

Meanwhile, petitioner Santiago Sr. sought the following reliefs from this Court in his Petition in G.R. No. 182008:

PRAYER

WHEREFORE, premises considered, it is respectfully prayed that the petition be given due course, and that:

1. Upon the filing of this petition, a temporary restraining order and/or writ of preliminary injunction be immediately issued restraining and enjoining the enforcement or execution of the assailed Court of Appeals' Decision and Resolution, and the assailed trial court's resolutions, particularly that which mandates the continued enforcement of the Writ of PERMANENT Injunction issued by the trial, which prevents the stockholders of the corporation from acting on matters that have to be submitted to them for approval and/ratification at the regular annual stockholders' meetings.

2. Thereafter, a writ of prohibition be issued and/or the preliminary injunction be made permanent and continuing, during the pendency of the instant case before the Honorable court.

3. After due hearing, that the Honorable Court:

(a) Declare null and void the Honorable Court of Appeals' 06 September 2007 Decision and 22 January 2008 Resolution, in CA-G.R. SP No. 99780, as well as the Trial Court's 16 July 2007 and 8 October 2007 Resolutions in Civil Case No. 07-610 of the Makati Regional Trial Court, and

(b) Order the dismissal of the Complaint filed by the private respondents against petitioner, et al., docketed as Civil Case No. 07-610 of the RTC of Makati City.

Other reliefs just and equitable in the premises are likewise prayed for.³⁰

In a Resolution dated 9 April 2008 in G.R. No. 182008, the Court granted petitioner Santiago Sr.'s prayer for the issuance of a TRO, to wit:

Acting on the prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction dated 24 March 2008, the Court likewise resolves to ISSUE a TEMPORARY RESTRAINING ORDER enjoining respondents from enforcing or executing the assailed Court of Appeals' decision and resolution and the assailed trial court's resolutions particularly that which mandates the continued enforcement of the writ of permanent injunction issued by the trial court, until further orders from this Court, and to require petitioner to POST a CASH BOND or a SURETY BOND from a reputable bonding company of indubitable solvency with terms and conditions acceptable to the Court, in the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00), within five (5) days from notice, otherwise, the temporary restraining order herein issued shall automatically be lifted. Unless and until the Court directs otherwise, the bond shall be effective from its approval by the Court until this case is finally decided, resolved or terminated.³¹

Accordingly, the Court issued the TRO³² on even date, directed against the respondents of G.R. No. 182008, namely, respondents Miguel, et al., and Judge Untalan.

On 21 April 2008, respondents Miguel, et al. filed with the Court their Comment with Prayer for the Immediate Lifting or Dissolution of the Temporary Restraining Order in G.R. No. 182008.

Respondents Miguel, et al., argued that the Petition for Certiorari in G.R. No. 182008 was dismissible due to several procedural errors. Petitioner Solomon, who signed the Petition in G.R. No. 182008 on behalf of Santiago Sr., was guilty of forum shopping for failing to inform the Court of the Petition for Review in G.R. No. 181455-56, of which he was one of the petitioners. Both Petitions involved the same transactions, essential facts, and circumstances, as well as identical causes of action, subject matter, and issues. The Petition for Certiorari in G.R. No. 182008 was also not personally verified by petitioner Santiago Sr. as required by rules and jurisprudence. Moreover, the Petition for Certiorari was not a proper remedy, since it was only proper when there was no other plain, speedy, and adequate remedy in the ordinary course of law. Petitioner Cua himself admitted the availability of other remedies, except that he was "avoiding the tortuous manner offered by other remedies." In fact, petitioners Santiago Jr., et al., filed a Petition for Review in G.R. No. 181455-56. Lastly, errors of judgment could not be remedied by a Petition for Certiorari. Petitioner Santiago Sr.'s Petition in G.R. No. 182008 raised issues that were factual and evidentiary in nature, on which the RTC has yet to make finding.

On substantial grounds, respondents Miguel, et al., explained that their Complaint in Civil Case No. 07-610 was comprised of several causes of action. It was not merely a derivative suit, but was also an intra-corporate action arising from devices or schemes employed by the PRCI Board of Directors amounting to fraud or misrepresentation and were detrimental to the interest of the PRCI stockholders. Additionally, the fraudulent acts and breach of fiduciary duties by the PRCI directors had already been established by prima facie factual evidence, which warranted the continuation of the proceedings in Civil Case No. 07-610 before the RTC for adjudication on the merits. It was also established that there were no appraisal rights available for the acts complained of, since (1) the PRCI directors were being charged with mismanagement, misrepresentation, fraud, and breach of fiduciary duties, which were not subject to appraisal rights; (2) appraisal rights would only obtain for acts of the Board of Directors in good faith; and (3) appraisal rights may be exercised by a stockholder who had voted against the proposed corporate action, and no corporate action had yet been taken herein by PRCI stockholders, who still had not voted on the intended property-for-shares exchange between PRCI and JTH. Furthermore, the Court of Appeals correctly denied admission of the Supplemental Petitions in CA-GR SP No. 99769 and No. 99780. A new and independent cause of action could not be set by supplemental complaint. The issues raised in the original Petitions pertain to the grave abuse of discretion committed by the RTC in issuing the TRO and in taking cognizance of Civil Case No. 07-610, by setting the same for hearing on the main injunction; in contrast, the issues in the Supplemental Petitions referred to the issuance of the Writ of Preliminary Injunction.

In support of their prayer for the immediate lifting or dissolution of the TRO issued by this Court, respondents Miguel, et al., contended that:

I

The Temporary Restraining Order issued by this Honorable Court has impelled herein petitioner and his co-majority directors to schedule a stockholders' meeting with the view TO RENDER MOOT AND ACADEMIC the action and proceedings before the Regional Trial Court of Makati, Branch 149.

II

The Petitioner herein, having been impleaded as director and fiduciary of PRCI, does NOT stand to suffer any irreparable injury.

III

To the contrary, it is PRCI who stand to suffer grave and irreparable injury if the TRO is not lifted and/or dissolved.

IV

The petitioner herein has failed to establish any clear legal right that entitles him to the issuance of a TRO and/or Writ of preliminary injunction.

V

The TRO was improperly issued as petitioner has failed to show any extreme urgency to necessitate the issuance thereof.³³

In the end, respondents Miguel, et al., prayed:

PRAYER

WHEREFORE, premises considered, it is respectfully prayed of this Honorable Supreme Court that the Temporary Restraining Order be LIFTED or DISSOLVED IMMEDIATELY, and that the instant Petition be DISMISSED.

Other just and equitable reliefs are likewise prayed for.³⁴

Only two days later, on 23 April 2008, respondents Miguel, et al., again urgently moved³⁵ for the lifting and/or dissolution of the TRO issued by this Court. They informed the Court that the PRCI Board of Directors passed and approved on 22 April 2008 a Resolution setting the Annual Stockholders' Meeting of PRCI on 18 June 2008, including in the proposed Agenda therefor the following items:

(d) Approval of the Minutes of the Special Stockholders' Meeting held on 7 November 2006, and the Minutes of the Annual Stockholders' Meeting held on 10 October 2007;

x x x

(g) Approval and ratification of the acts of the Board of Directors, the Executive Committee, and Management of the Corporation for Fiscal Years 2006 and 2007;

(h) Approval of the Planned Exchange of PRCI's Makati Property for shares of stock of JTH Davies Holdings, Inc.³⁶

On the same day, 23 April 2008, the Court issued a Resolution³⁷ consolidating G.R. No. 181455-56 and No. 182008.

Thereafter, on 16 June 2008, Aris Prime Resources, Inc. (APRI), a minority stockholder of PRCI - with 5,000,000.00 shares or 0.88% of the outstanding capital stock of PRCI - filed a Very Respectful Motion for Leave to Intervene as Co-Respondent in the Petition with the attached Very Respectful Urgent Motion to Lift Restraining Order.³⁸ It relayed to the Court that it received Notice of the Annual Stockholders' Meeting of PRCI set on 18 June 2008, where the items on the property-for-shares exchange between PRCI and JTH were included in the Agenda.

Considering that the validity of the acts of the PRCI Board of Directors concerning the property-for-shares exchange are the very issues raised in the Petitions presently before the Court, while the factual issues relating to the same are still being litigated before the RTC in Civil Case No. 07-610, the submission of the exchange to the PRCI stockholders for their approval will render the aforementioned proceedings before this Court and the RTC moot and academic. It will amount to a denial of the right of APRI and of respondents Miguel, et al., to be heard before the RTC where they are still to present their evidence on the factual issues. It will likewise unduly pave the way for the validation of the abuse committed by the majority directors of PRCI in denying the right of the minority directors and stockholders of the corporation to information, and for the sanction of the blatant disregard by the majority directors of their duties of fidelity and transparency. Unless the TRO is lifted forthwith, APRI, respondents Miguel, et al., and all other minority stockholders stand to suffer prejudice. Expectedly, petitioners seek the dismissal, while respondents Miguel, et al., pray for the grant of the motion to intervene of APRI.

Pending action on the foregoing incidents, petitioners Santiago Jr., et al., filed before the Court a Manifestation and Motion to Set Case for Oral Arguments.³⁹

In their Manifestation, petitioners Santiago Jr., et al., admitted that the PRCI Board of Directors had already called and set the Annual Stockholders' Meeting on 18 June 2008, and among the items on the Agenda for confirmation and approval by the stockholders was the property-for-shares exchange between PRCI and JTH.

Petitioners Santiago Jr., et al., brought to the attention of the Court the fact that on 5 June 2008, another set of minority stockholders of PRCI, namely, Jalane Christie U. Tan, Marilou U. Pua, Aristeo G. Puyat, and Ricardo S. Parreno (Jalane, et al.) filed with the RTC of Makati a Complaint against petitioners and the other directors of PRCI and/or JTH, docketed as Civil Case No. 08-458. Jalane, et al., have the following shareholdings in PRCI:

Stockholder	No. of Shares	Percentage
Jalane Christie U. Tan	16,927,560	2.97
Marilou U. Pua	3,884,400	0.68
Artisteo G. Puyat	1,633,666	0.29
Ricardo S. Pare�o	5,850	0.00
Total	22,451,476	3.94

Jalane, et al., claimed in their Complaint in Civil Case No. 08-458 that "[a]part from being a derivative suit, this suit is also filed based on devices or schemes employed by the Board of Directors amounting to fraud or misrepresentation which is detrimental to the interest of the corporation, the public and/or stockholders as provided for under Section 1(a)(1) of the Interim Rules of Procedure for Intra-Corporate Controversies (A.M. No. 01-2-04-SC)."⁴⁰ The Complaint was based on four causes of action: (1) the acquisition of JTH by PRCI; (2) sale of 29.92% of JTH shares by PRCI;⁴¹ (3) exchange of the Makati property of PRCI for JTH shares; and (4) interlocking of Directors of PRCI and JTH. The Complaint of Jalane, et al., contained the following prayer:

PRAYER

WHEREFORE, it is respectfully prayed of this Honorable Court, after due notice and hearing, that:

1. A Temporary Restraining Order and/or Writ of Preliminary Mandatory Injunction be issued enjoining the presentation, discussion and ratification of portions of the Agenda of the Annual Stockholders Meeting of PRCI scheduled on June 18, 2008, particularly items IV, VII and VIII;

2. An order be issued nullifying the Sale and Purchase Agreement dated September 27, 2006 for the acquisition of JTH Davies Holdings, Inc.

3. An order be issued nullifying the sale of PRCI shares in JTH in April 2007 and May 7, 2007;

[Paragraph crossed-out.]

5. An order be issued directing defendants to pay plaintiffs the sum of P500,000.00 as and by way of attorney's fees, plus cost of suit.

Other reliefs, just and equitable under the premises are likewise prayed for.⁴²

Acting on the Complaint of Jalane, et al. in Civil Case No. 08-458, Executive Judge Winlove Dumayas (Executive Judge Dumayas) of the Makati City RTC issued a 72-hour TRO, enjoining PRCI directors from presenting, discussing, and ratifying the items in the Agenda for the Annual Stockholders' Meeting set on 18 June 2008 related to the property-for-shares exchange between PRCI and JTH. However, upon being apprised of the TRO issued by this Court on 9 April 2008 in G.R. No. 182008, in relation to Civil Case No. 07-610 pending before the Makati City RTC, Branch 149, Executive Judge Dumayas gave verbal advice that the Annual Stockholders' Meeting of PRCI should proceed on 18 June 2008 as if the 72-hour TRO had not been issued. Consequently, the Annual Stockholders' Meeting of PRCI proceeded on 18 June 2008.???�r?bl?� ??r

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