542 Phil. 236
SANDOVAL-GUTIERREZ, J.:
O R D E R
This resolves the application of plaintiffs for the issuance of writ of preliminary prohibitory injunction.In compliance with the above Order, the court sheriff (and respondent Cezar Quiambao, as claimed by petitioners) caused the opening of the safety deposit box of STRADEC in the Export Industry Bank, Shaw Boulevard Branch, Pasig City and took custody of its contents.
During the hearing on the application for Temporary Restraining Order/Injunction on October 20, 2004, plaintiffs presented as witnesses: Cezar T. Quiambao, Jose M. Magno III and Eric Gene Pilapil who testified in support of the material averments of the plaintiffs in their Amended Complaint and Supplemental Complaint. Specifically, plaintiff Quiambao testified, among other things, on the fact of the unlawful denial by defendant Yujuico of his request for the holding of a special stockholders’ meeting, the location of the principal place of office of the corporation, the deposit by him and defendant Sumbilla of the Stock and Transfer Book of the corporation in the Export Industry Bank in Pasig City, the illegal and unjustified reconstitution of said stock and transfer book, and the damages which he and the corporation sustained as a result of defendants’ unlawful acts including the unauthorized sale of corporate shares of stock.
Plaintiff Magno III testified that he did not attend the Annual Stockholders’ meeting held last March 1, 2004 and that he did not authorize anybody to appear for and in his behalf.
Lastly, witness Pilapil testified on the principal place of business of defendant corporation, the holding of the Annual Stockholders’ Meeting in a place outside the principal place of business of the corporation, and the fact that two (2) other stockholders, namely, Jose Magno III and Angel Umali were neither present nor represented in said meeting, contrary to what was alleged in defendants’ Answer with Counterclaim (see par. 50, Answer with Counterclaim).
x x x
After a careful evaluation of the records and all the pleadings extant in this case as well as the testimonies of the witnesses for the plaintiffs, this court is inclined to grant the plaintiffs’ application for the writs of preliminary prohibitory injunction in order to restrain the defendants from acting as officers of the corporation and committing further acts inimical to the corporation and to the rest of the stockholders thereof. It is also evident from the pleadings that defendants would not yield to the demand of plaintiffs for the maintenance of the status quo until after the resolution of the merits of the instant controversy.
x x x
The effect of the issuance of this Order would create a hiatus in the action of the board of directors of STRADEC, pending the determination of the merits of the case and after trial on the merits.
It would thus be for the best interest of the corporation as well as its stockholders that an election be undertaken of the members of the board and officers pursuant to STRADEC’S Articles of the corporation (sic) and the Corporation Code of the Philippines, under the supervision of the court.
This is to avoid discontinuity of the operations of the corporation, which may result to its damage and prejudice.
WHEREFORE, premises considered, let the Writ of Preliminary Injunction issue, upon posting of the requisite bond in the amount of Five Hundred Thousand Pesos (P500,000.00) to answer for whatever damages that the defendants would suffer on account of the issuance of the injunction writ, restraining defendants from acting as officers of the Corporation and committing further acts inimical to the corporation.
It is likewise ordered that a special stockholders’ meeting in the principal place of office of the corporation in Bayambang, Pangasinan on December 10, 2004 be held. The Branch Clerk of this court shall attend the said meeting to observe the proceedings and report his observations to this court. For this purpose, the defendant Bonifacio Sumbilla is ordered to surrender to the court, not later than December 3, 2004, the duplicate key given to him by Export Industry Bank, Shaw Blvd., Pasig City, of the safety deposit box where he and plaintiff Cezar T. Quiambao deposited the Original Stock and Transfer Book of STRADEC which shall be the basis in the determination of the corporate stockholding during the meeting scheduled on the above-mentioned date.
SO ORDERED.
(a) Devices or schemes employed by, or any act of, the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of associations registered with the Commission;Upon the enactment of R.A. No. 8799, otherwise known as “The Securities Regulation Code” which took effect on August 8, 2000,[17] the jurisdiction of the SEC over intra-corporate controversies and other cases enumerated in Section 5 of P.D. No. 902-A has been transferred to the courts of general jurisdiction, or the appropriate RTC. Section 5.2 of R.A. No. 8799 provides:
(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association and the State insofar as it concerns their individual franchise or right as such entity;
(c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations, partnership or associations;
(d) Petitioners of corporations, partnerships or associations to be declared in the state of suspension of payment in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities but is under the management of a rehabilitation receiver or management committee created pursuant to this Decree.[16] (Underscoring supplied)
5.2. The Commission’s jurisdiction over all cases enumerated in Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court, Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Underscoring supplied)Pursuant to R.A. No. 8799, the Court issued a Resolution dated November 21, 2000 in A.M. No. 00-11-03-SC designating certain branches of the RTC to try and decide cases enumerated in Section 5 of P.D. No. 902-A. Branch 48 of RTC, Urdaneta City, the court a quo, is among those designated as a Special Commercial Court. On March 13, 2001, the Court approved the Interim Rules of Procedure Governing Intra-Corporate Controversies under R.A. No. 8799 which took effect on April 1, 2001.[18] Sections 1 and 2, Rule 6 of the said Rules provide:
SEC. 1. Cases covered. – The provisions of this rule shall apply to election contests in stock and non-stock corporations.In Morato v. Court of Appeals,[19] we held that pursuant to R.A. No. 8799 and the Interim Rules of Procedure Governing Intra-Corporate Controversies, “among the powers and functions of the SEC which were transferred to the RTC include the following: (a) jurisdiction and supervision over all corporations, partnerships or associations which are the grantees of primary franchises and/or a license or permit issued by the Government; (b) the approval, rejection, suspension, revocation or requirement for registration statements, and registration and licensing applications; (c) the regulation, investigation, or supervision of the activities of persons to ensure compliance; (d) the supervision, monitoring, suspension or take over the activities of exchanges, clearing agencies, and other SROs; (e) the imposition of sanctions for the violation of laws and the rules, regulations and orders issued pursuant thereto; (f) the issuance of cease-and-desist orders to prevent fraud or injury to the investing public; (g) the compulsion of the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision; and (h) the exercise of such other powers as may be provided by law as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws.”
SEC. 2. Definition. – An election contest refers to any controversy or dispute involving title or claim to any elective office in a stock or non-stock corporation, the validation of proxies, the manner and validity of elections, and the qualifications of candidates, including the proclamation of winners, to the office of director, trustee or other officer directly elected by the stockholders in a close corporation or by members of a non-stock corporation where the articles of incorporation or by-laws so provide. (Underscoring supplied)
TO : ALL JUDGES OF THE REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS, AND MUNICIPAL CIRCUIT TRIAL COURTSThus, although the RTC, Branch 48, Urdaneta City is clothed with power to take cognizance of Civil (SEC) Case No. U-14, the exercise of such power is entirely a different matter. Verily, in Tolentino v. Leviste,[22] this Court, speaking through Justice (now Chief Justice) Reynato S. Puno, held:
SUBJECT : EXPANDED AUTHORITY OF PAIRING COURTS
In the interest of efficient administration of justice, the authority of the pairing judge under Circular No. 7 dated September 23, 1974 (Pairing System for Multiple Sala Stations) to act on incidental or interlocutory matters and those urgent matters requiring immediate action on cases pertaining to the paired court shall henceforth be expanded to include all other matters. Thus, whenever a vacancy occurs by reason of resignation, dismissal, suspension, retirement, death, or prolonged absence of the presiding judge in a multi-sala station, the judge of the paired court shall take cognizance of all cases thereat as acting judge therein UNTIL the APPOINTMENT and ASSUMPTION TO DUTY OF THE REGULAR JUDGE or the designation of an acting presiding judge or the return of the regular incumbent judge, or until further orders from this Court.
For this purpose, the provisions of Circular No.7, dated September 23, 1974, inconsistent with this Circular are hereby amended.
x x x. (Underscoring supplied)
x x x. Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, not the decision rendered therein. Where there is jurisdiction over the person and the subject matter, the decision on all other questions arising in the case is but an exercise of the jurisdiction. x x x. (Underscoring supplied)There are instances where a judge may commit errors. He may issue an order without authority. And if clothed with power, he may exercise it in excess of his authority or with grave abuse of discretion amounting to lack or excess of jurisdiction. Any of these acts may be struck down as a nullity through a petition for certiorari,[23] as what petitioners did before the Court of Appeals. It bears stressing that any act or order rendered by a judge without authority, such as the questioned November 25, 2004 Order, is no order at all. It is void. As such, it cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal force and effect.[24]
In the instant case, however, the trial court’s order of January 20, 1993 was, on its face, bereft of basis for the issuance of a writ of preliminary injunction. There were no findings of fact or law in the assailed order indicating that any of the elements essential for the grant of a preliminary injunction existed. The trial court alluded to hearings during which the parties marked their respective exhibits and the trial court heard the oral arguments of opposing counsels. However, it cannot be ascertained what evidence was formally offered and presented by the parties and given weight and credence by the trial court. The basis for the trial court’s conclusion that K Services was entitled to a writ of preliminary injunction is unclear.Furthermore, Judge Emuslan’s November 25, 2004 Order goes against the concept and objective of a writ of preliminary injunction. A writ of preliminary injunction is a provisional remedy, an adjunct to a main suit. It is also a preservative remedy, issued to preserve the status quo of the things subject of the action or the relations between the parties during the pendency of the suit. In Selegna Management and Development Corporation v. United Coconut Planters Bank,[29] we held:
In its order of August 5, 1993, the trial court stated that it issued the injunction to prevent irreparable loss that might be caused to K Services. Once more, however, the trial court neglected to mention what right in esse of K Services, if any, was in danger of being violated and required the protection of a preliminary injunction.
x x x.
x x x the possibility of irreparable damage without proof of actual existing right is not a ground for an injunction (Heirs of Asuncion v. Gervacio, Jr., 304 SCRA 322 [1999]). Where the complainant’s right is doubtful or disputed, injunction is not proper. Absent a clear legal right, the issuance of the injunctive relief constitutes grave abuse of discretion (Id.).[28]
x x x. Injunction is not designed to protect contingent or future rights. It is not proper when the complainant’s right is doubtful or disputed.In the same case of Manila International Airport Authority v. Court of Appeals,[30] we urged the courts to exercise extreme caution in issuing the writ, thus:
x x x, courts should avoid issuing this writ which in effect disposes of the main case without trial (F. Regalado, Remedial Law Compendium, Vol. I, 639 (7th revised ed., 1999). x x x. (Underscoring supplied)
x x x. We remind trial courts that while generally the grant of a writ of preliminary injunction rests on the sound discretion of the court taking cognizance of the case, extreme caution must be observed in the exercise of such discretion. The discretion of the court a quo to grant an injunctive writ must be exercised based on the grounds and in the manner provided by law. Thus, the Court declared in Garcia v. Burgos:To repeat, the purpose of the writ of preliminary injunction is to preserve the status quo until the court could hear the merits of the case.[31] The status quo is the last actual peaceable uncontested status that preceded the controversy[32] which, in the instant case, is the holding of the annual stockholders’ meeting on March 1, 2004 and the ensuing election of the directors and officers of STRADEC. But instead of preserving the status quo, Judge Emuslan’s Order messed it up when, in compliance therewith, a special stockholders’ meeting was held anew and a new set of directors and officers of STRADEC was elected. That effectively resolved respondents’ principal action without even a full-blown trial on the merits since the Order impliedly ruled that the March 1, 2004 annual stockholders’ meeting and election are void. Verily, the issuance of the questioned Order violates the established principle that courts should avoid granting a writ of preliminary injunction that would in effect dispose of the main case without trial.[33]It has been consistently held that there is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages.
Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law permits it and the emergency demands it [citations omitted]. (Underscoring supplied)
SEC. 1. Cases covered. – The provisions of this rule shall apply to election contests in stock and non-stock corporations.It is important to note that the Court of Appeals itself ruled that respondents’ action before the RTC, Branch 48, Urdaneta City is an election contest, thus:
SEC. 2. Definition. – An election contest refers to any controversy or dispute involving title or claim to any elective office in a stock or non-stock corporation, the validation of proxies, the manner and validity of elections, and the qualifications of candidates, including the proclamation of winners, to the office of director, trustee or other officer directly elected by the stockholders in a close corporation or by members of a non-stock corporation where the articles of incorporation or by-laws so provide. (Underscoring supplied)
Likewise, as clearly provided in Section 1, Rule 1 of the Interim Rules of Procedure Governing Intra-Corporate Controversies under R.A. No. 8799, among the intra-corporate controversies transferred to the special courts are:As pointed out by petitioners in their answer with counterclaim, under Section 3, Rule 6 of the Interim Rules of Procedure Governing Intra-Corporate Controversies under R.A. No. 8799, an election contest must be “filed within 15 days from the date of the election.”[36] It was only on August 16, 2004 that respondents instituted an action questioning the validity of the March 1, 2004 stockholders’ election, clearly beyond the 15-day prescriptive period.x x xUndoubtedly, therefore, the instant case is an intra-corporate controversy among the stockholders themselves relative to the election of directors or officers of STRADEC, specifically between respondents x x x on one hand and petitioners x x x on the other. x x x. If there is still any doubt that the Special Corporate Court can call for a stockholders’ meeting, Rule 6 (citing Sections 1 and 2) of the Interim Rules completely puts to rest said issue.
(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporation, partnerships or associations;
x x x
x x x
Clearly, therefore, said Rule empowers the special corporate courts to decide election cases x x x.[35] (Underscoring supplied)