January 2007 - Philippine Supreme Court Resolutions
Philippine Supreme Court Resolutions
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[G.R. No. 140338 : January 24, 2007] REPUBLIC TELECOMMUNICATIONS HOLDINGS INC., REPRESENTED BY A2 TELECOMMUNICATIONS INTERNATIONAL HOLDING CO. PTE. LTD., AND BEAUTY FORTUNE INVESTMENTS LTD., HON. ROSITA R. GUERRERO, HON. MANOLITO S. SOLLER, AND HON. PAULINO Q. GALLEGOS IN THEIR CAPACITY AS MEMBERS OF THE SECURITIES, INVESTIGATION AND CLEARING DEPARTMENT OF THE SECURITIES AND EXCHANGE COMMISSION V. JOSE L. SANTIAGO, MARILYN E. SANTIAGO, ELEANOR M. SANTIAGO, JAMES B. LINDENBERG, CAESAR U. QUERUBIN, HYUNG SHIK KIM, INHO LEE, PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION AND PHILIPPINE WIRELESS, INC :
[G.R. No. 140338 : January 24, 2007]
REPUBLIC TELECOMMUNICATIONS HOLDINGS INC., REPRESENTED BY A2 TELECOMMUNICATIONS INTERNATIONAL HOLDING CO. PTE. LTD., AND BEAUTY FORTUNE INVESTMENTS LTD., HON. ROSITA R. GUERRERO, HON. MANOLITO S. SOLLER, AND HON. PAULINO Q. GALLEGOS IN THEIR CAPACITY AS MEMBERS OF THE SECURITIES, INVESTIGATION AND CLEARING DEPARTMENT OF THE SECURITIES AND EXCHANGE COMMISSION V. JOSE L. SANTIAGO, MARILYN E. SANTIAGO, ELEANOR M. SANTIAGO, JAMES B. LINDENBERG, CAESAR U. QUERUBIN, HYUNG SHIK KIM, INHO LEE, PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION AND PHILIPPINE WIRELESS, INC
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated 24 January 2007:
G.R. No. 140338 {Republic Telecommunications Holdings Inc., represented by A2 Telecommunications International Holding Co. Pte. Ltd., and Beauty Fortune Investments Ltd., Hon. Rosita R. Guerrero, Hon. Manolito S. Soller, and Hon. Paulino Q. Gallegos in their capacity as members of the Securities, Investigation and Clearing Department of the Securities and Exchange Commission v. Jose L. Santiago, Marilyn E. Santiago, Eleanor M. Santiago, James B. Lindenberg, Caesar U. Querubin, Hyung Shik Kim, Inho Lee, Philippine Telegraph & Telephone Corporation and Philippine Wireless, Inc.). � The instant petition for review on certiorari originated from a derivative suit filed by petitioners A2 Telecommunications International Holding Co. Pte. Ltd. and Beauty Fortune Investments Ltd. (hereinafter collectively referred to as the A2 Group) with the Securities Investigation and Clearing Department (SICD) of the Securities and Exchange Commission (SEC).
On 5 March 1998, the A2 Group, which owns 20% of the total stock issued and outstanding of Republic Telecommunications Holdings, Inc. (RETELCOM), filed a derivative suit against the directors of the RETELCOM Board, who are herein respondents, and two RETELCOM subsidiaries, Philippine Telegraph & Telecommunications (PT&T) and Philippine Wireless, Inc. (PWI).
The derivative suit, filed with the SICD of the SEC prayed for the nullification of three resolutions passed by the RETELCOM Board on 23 February 1998, namely Resolution Nos. 98-13, 98-14, and 98-15. In Resolution No. 98-13, the RETELCOM Board approved the Equipment Supply and Services Agreement (ESA) and the Credit Facility Agreement (CFA) between PT&T and Qualcomm, Inc. and endorsed the ESA and CFA to PT&T for the latter's approval. In Resolution No. 98-14, the RETELCOM Board ratified the Guarantee Agreement between RETELCOM, as guarantor, and Qualcomm, Inc., as lender, to secure PT&T's obligations under the CFA. The RETELCOM Board likewise authorized respondent Jos"e Luis Santiago to execute and deliver to Qualcomm, Inc. the Guarantee Agreement. In Resolution No. 98-15, the RETELCOM Board approved the Letter-Agreement for the purchase by PWI from Qualcomm, Inc. of personal communication system (PCS) equipment and facilities.
According to the A2 Group, the RETELCOM Board belatedly furnished it with copies of the agreements with Qualcomm, Inc., and that after perusal of the contracts, it found grossly disadvantageous provisions and false representations and warranties exposing RETELCOM and its stockholders to financial impact.
The SICD issued a TRO effective for 72 hours and extended it to 20 days. On 27 March 1998, the SlCD ordered the issuance of a writ of preliminary injunction enjoining the RETELCOM Board from executing and/or implementing the questioned agreements. The writ itself was issued on 30 March 1998.
The RETELCOM Board elevated the matter to the SEC en bane, which on 7 July 1998 affirmed the questioned orders of the SICD. It found no grave abuse of discretion on the part of the SICD in issuing the writ of injunction and upheld the SICD's prima facie finding that bad faith intervened during the negotiations of the contracts.
Herein respondents filed a petition for review with the Court of Appeals, docketed as CA-G.R. SP No. 48456, to appeal the 7 July 1998 Order of the SEC en banc, the three orders of the SICD and the writ of preliminary injunction dated 30 March 1998. In its 27 August 1998 Resolution, the Court of Appeals issued a TRO enjoining the implementation of the questioned orders of the SEC en banc and SICD, including the writ of preliminary injunction.
On 3 March 1999, the Court of Appeals rendered the assailed Decision in CA-G.R. SP No. 48456, the dispositive portion of which reads:
The A2 Group filed the instant petition for review on certiorari, assailing the Decision of the Court of Appeals. The A2 Group submits that the Court of Appeals had no jurisdiction to issue the assailed Decision in view of this Court's ruling-in G.R. No. 135074, which set aside the temporary restraining order issued by the Court of Appeals during the pendency of CA-G.R. SP No. 48456 to enjoin the implementation of the questioned orders of the SEC en banc and SICD, including the writ of preliminary injunction. The A2 Group likewise contends that the Court of Appeals erred in nullifying the writ of preliminary injunction issued by the SICD.
At the crux of the controversy are the various agreements between Qualcomm, Inc. and the RETELCOM Board. The A2 Group seeks the reinstatement of the writ of preliminary injunction to prevent the implementation of the agreements pending the resolution of the derivative suit filed before the SICD. However, the records reveal that the A2 Group submitted a Manifestation dated 15 November 1999,[2] stating that Qualcomm, Inc. had backed out of the deal. The A2 Group averred that Ericsson AB had acquired Qualcomm, Inc. and was no longer interested in ^pursuing Qualcomm, Inc.'s investment in RETELCOM. The newspaper clipping[3] annexed in support of the Manifestation reported about the search for a new investor that would infuse the needed equity in PT&T. Also attached to the Manifestation was RETELCOM's Assistant Corporate Secretary's Certificate,[4] attesting to the fact that during the RETELCOM Board of Directors meeting on 29 March 1999, Qualcomm, Inc.'s representative, Mr. Fickness, informed the RETELCOM Board that the deal between RETELCOM and Qualcomm, Inc. would not proceed as a result of the disposition of the entire Qualcomm, Inc. infrastructure Division to Ericsson.
In view of Qualcomm Inc.'s withdrawal from the deal, the execution and the enforcement of the contracts will not likely push through. Thus, the resolution of whether the implementation of said agreements should be enjoined appears to be no longer necessary.
WHEREFORE, the parties are DIRECTED within ten (10) days from receipt hereof to explain why the case shall not be considered academic by reason of the supervening event cited in petitioners' Manifestation dated 15 November 1999, and on the same basis, DISMISSED accordingly.
G.R. No. 140338 {Republic Telecommunications Holdings Inc., represented by A2 Telecommunications International Holding Co. Pte. Ltd., and Beauty Fortune Investments Ltd., Hon. Rosita R. Guerrero, Hon. Manolito S. Soller, and Hon. Paulino Q. Gallegos in their capacity as members of the Securities, Investigation and Clearing Department of the Securities and Exchange Commission v. Jose L. Santiago, Marilyn E. Santiago, Eleanor M. Santiago, James B. Lindenberg, Caesar U. Querubin, Hyung Shik Kim, Inho Lee, Philippine Telegraph & Telephone Corporation and Philippine Wireless, Inc.). � The instant petition for review on certiorari originated from a derivative suit filed by petitioners A2 Telecommunications International Holding Co. Pte. Ltd. and Beauty Fortune Investments Ltd. (hereinafter collectively referred to as the A2 Group) with the Securities Investigation and Clearing Department (SICD) of the Securities and Exchange Commission (SEC).
On 5 March 1998, the A2 Group, which owns 20% of the total stock issued and outstanding of Republic Telecommunications Holdings, Inc. (RETELCOM), filed a derivative suit against the directors of the RETELCOM Board, who are herein respondents, and two RETELCOM subsidiaries, Philippine Telegraph & Telecommunications (PT&T) and Philippine Wireless, Inc. (PWI).
The derivative suit, filed with the SICD of the SEC prayed for the nullification of three resolutions passed by the RETELCOM Board on 23 February 1998, namely Resolution Nos. 98-13, 98-14, and 98-15. In Resolution No. 98-13, the RETELCOM Board approved the Equipment Supply and Services Agreement (ESA) and the Credit Facility Agreement (CFA) between PT&T and Qualcomm, Inc. and endorsed the ESA and CFA to PT&T for the latter's approval. In Resolution No. 98-14, the RETELCOM Board ratified the Guarantee Agreement between RETELCOM, as guarantor, and Qualcomm, Inc., as lender, to secure PT&T's obligations under the CFA. The RETELCOM Board likewise authorized respondent Jos"e Luis Santiago to execute and deliver to Qualcomm, Inc. the Guarantee Agreement. In Resolution No. 98-15, the RETELCOM Board approved the Letter-Agreement for the purchase by PWI from Qualcomm, Inc. of personal communication system (PCS) equipment and facilities.
According to the A2 Group, the RETELCOM Board belatedly furnished it with copies of the agreements with Qualcomm, Inc., and that after perusal of the contracts, it found grossly disadvantageous provisions and false representations and warranties exposing RETELCOM and its stockholders to financial impact.
The SICD issued a TRO effective for 72 hours and extended it to 20 days. On 27 March 1998, the SlCD ordered the issuance of a writ of preliminary injunction enjoining the RETELCOM Board from executing and/or implementing the questioned agreements. The writ itself was issued on 30 March 1998.
The RETELCOM Board elevated the matter to the SEC en bane, which on 7 July 1998 affirmed the questioned orders of the SICD. It found no grave abuse of discretion on the part of the SICD in issuing the writ of injunction and upheld the SICD's prima facie finding that bad faith intervened during the negotiations of the contracts.
Herein respondents filed a petition for review with the Court of Appeals, docketed as CA-G.R. SP No. 48456, to appeal the 7 July 1998 Order of the SEC en banc, the three orders of the SICD and the writ of preliminary injunction dated 30 March 1998. In its 27 August 1998 Resolution, the Court of Appeals issued a TRO enjoining the implementation of the questioned orders of the SEC en banc and SICD, including the writ of preliminary injunction.
On 3 March 1999, the Court of Appeals rendered the assailed Decision in CA-G.R. SP No. 48456, the dispositive portion of which reads:
WHEREFORE, finding merit in the petition for review filed by the petitioners, the same is hereby granled. The questioned orders of the SEC en bane and the SICD as well as the writ of preliminary injunction are hereby nullified and set aside. The SICD is hereby directed to proceed with dispatch in hearing and resolving the merit of the main petition (SEC Case No. 03-98-�
5926) Filed by the A2 group against herein petitioners. (Annex"H", petition).
SO ORDERED.[1]
The A2 Group filed the instant petition for review on certiorari, assailing the Decision of the Court of Appeals. The A2 Group submits that the Court of Appeals had no jurisdiction to issue the assailed Decision in view of this Court's ruling-in G.R. No. 135074, which set aside the temporary restraining order issued by the Court of Appeals during the pendency of CA-G.R. SP No. 48456 to enjoin the implementation of the questioned orders of the SEC en banc and SICD, including the writ of preliminary injunction. The A2 Group likewise contends that the Court of Appeals erred in nullifying the writ of preliminary injunction issued by the SICD.
At the crux of the controversy are the various agreements between Qualcomm, Inc. and the RETELCOM Board. The A2 Group seeks the reinstatement of the writ of preliminary injunction to prevent the implementation of the agreements pending the resolution of the derivative suit filed before the SICD. However, the records reveal that the A2 Group submitted a Manifestation dated 15 November 1999,[2] stating that Qualcomm, Inc. had backed out of the deal. The A2 Group averred that Ericsson AB had acquired Qualcomm, Inc. and was no longer interested in ^pursuing Qualcomm, Inc.'s investment in RETELCOM. The newspaper clipping[3] annexed in support of the Manifestation reported about the search for a new investor that would infuse the needed equity in PT&T. Also attached to the Manifestation was RETELCOM's Assistant Corporate Secretary's Certificate,[4] attesting to the fact that during the RETELCOM Board of Directors meeting on 29 March 1999, Qualcomm, Inc.'s representative, Mr. Fickness, informed the RETELCOM Board that the deal between RETELCOM and Qualcomm, Inc. would not proceed as a result of the disposition of the entire Qualcomm, Inc. infrastructure Division to Ericsson.
In view of Qualcomm Inc.'s withdrawal from the deal, the execution and the enforcement of the contracts will not likely push through. Thus, the resolution of whether the implementation of said agreements should be enjoined appears to be no longer necessary.
WHEREFORE, the parties are DIRECTED within ten (10) days from receipt hereof to explain why the case shall not be considered academic by reason of the supervening event cited in petitioners' Manifestation dated 15 November 1999, and on the same basis, DISMISSED accordingly.
Very truly yours,
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court
Endnotes:
[1] Rollo, p.141
[2] Id. at 19.
[3] Id. at 27.
[4] Id. at 28.
