Professional Documents
Culture Documents
Belo Medical Group Vs Santos and Belo
Belo Medical Group Vs Santos and Belo
SANTOS
AND VICTORIA G. BELO, RESPONDENTS. A second inspection was attempted through a written demand
G.R. No. 185894 | 2017-08-30 by Santos on May 15, 2008.[13] Again, he was unsuccessful.
DECISION
Belo wrote to Belo Medical Group on May 20, 2008 to reiterate
LEONEN, J.: her objections to Santos' attempts at inspecting corporate
books and his inquiry regarding a patient. Belo further
A conflict between two (2) stockholders of a corporation does manifested that she was exercising her right as a shareholder
not automatically render their dispute as intra-corporate. The to inspect the books herself to establish that the 25 shares
nature of the controversy must also be examined. [1] were not owned by Santos, and that he did not pay for these
shares.[14]
In this Petition for Review on Certiorari[2] under Rule 45 of the
Rules of Court, Belo Medical Group, Inc. (Belo Medical Group) Thus, Belo Medical Group filed a Complaint for
assails the Regional Trial Court December 8, 2008 Joint Interpleader[15] with Branch 149, Regional Trial Court, Makati
Resolution in Civil Case No. 08-397.[3] This Joint Resolution City on May 21, 2008. Belo Medical Group alleged that while
granted respondent Jose L. Santos' (Santos) Motion to Dismiss Santos appeared to be a registered stockholder, there was
and Belo Medical Group's Complaint for interpleader and nothing on the record to show that he had paid for the shares
Supplemental Complaint for Declaratory Relief against Santos under his name. The Complaint was filed "to protect its
and Victoria G. Belo (Belo), and declared all other pending interest and compel [Belo and Santos] to interplead and
incidents as moot.[4] litigate their conflicting claims of ownership of, as well as the
corresponding right of inspection arising from, the twenty-five
The controversy began on May 5, 2008[5] when Belo Medical (25) [Belo Medical Group] shares between themselves
Group received a request from Santos for the inspection of pursuant to Rule 62 of the 1997 Rules of Civil Procedure . .
corporate records.[6] Santos claimed that he was a registered ."[16] The following reliefs were prayed for:
shareholder and a co-owner of Belo's shares, as these were
acquired while they cohabited as husband and wife. [7] Santos (i) issue an Order summoning and requiring defendants Santos
sought advice on his probable removal as director of the and Belo to interplead with each other to resolve their
corporation considering that he was not notified of meetings conflicting claims of ownership of the 25 shares of stock of
where he could have been removed. He also inquired on the [Belo Medical Group], including their opposing claims of
election of Alfredo Henares (Henares) as Corporate Secretary exclusive entitlement to inspect [Belo Medical Group]
in 2007 when Santos had not been notified of a meeting for corporate records;
Henares' possible election. Finally, he sought explanation on
the corporation's failure to inform him of the 2007 annual (ii) after due proceedings render judgment in favor of the
meeting and the holding of an annual meeting in proper defendant; and
2008.[8]Santos' concern over the corporate operations arose
from the alleged death of a patient in one (1) of its clinics. [9] (iii) allow plaintiff [Belo Medical Group] to recover attorney's
fees and litigation expenses in the amount of at least
Santos was unsuccessful in inspecting the corporate books as Php1,000,000.00 jointly and solidarity against both defendants
Henares, the officer-in-charge of corporate records, was and for them to pay the costs of suit.[17]
travelling. Belo Medical Group asked for time in order for
Henares to accommodate Santos' request.[10] On the same day, Henares wrote Belo's and Santos' respective
counsels to inform them of the Complaint.[18]Despite receipt,
After the first attempt to inspect, Belo wrote Belo Medical Santos' counsel still proceeded to Belo Medical Group's Makati
Group on May 14, 2007 to repudiate Santos' co-ownership of office on May 22, 2008, where, again, they were unsuccessful
her shares and his interest in the corporation. She claimed that in inspecting the corporate books.[19]
Santos held the 25 shares in his name merely in trust for her,
as she, and not Santos, paid for these shares. She informed Santos, for the third time, sent a letter on May 22, 2008 to
Belo Medical Group that Santos already had a pending petition schedule an inspection of the corporate books and warned
with the Regional Trial Court to be declared as co-owner of her that continued rejection of his request exposed the
properties. She asserted that unless a decision was rendered corporation to criminal liability.[20] Nothing came out of this
in Santos' favor, he could not exercise ownership rights over last attempt as well.
her properties.[11]
Bela and Bela Medical Group wrote to Santos on May 27, 2008
Belo also informed Belo Medical Group that Santos had a to inform him that he was barred from accessing corporate
business in direct competition with it. She suspected that records because doing so would be inimical to Belo Medical
Santos' request to inspect the records of Belo Medical Group Group's interests.[21] Through another letter on May 28, 2008,
was a means to obtain a competitor's business information, Santos was reminded of his majority share in The Obagi Skin
and was, therefore, in bad faith.[12] Health, Inc. the owner and operator of the House of Obagi
(House of Obagi) clinics. He was likewise reminded of the determination.[36]
service of a notice of the 2007 special meeting of stockholders
to his address at Valero Street, Makati City, contrary to his Belo Medical Group later on moved that Santos be declared in
claim.[22] default.[37] Instead of filing an answer Santos filed a Motion to
Dismiss.[38]
On May 29, 2008, Belo Medical Group filed a Supplemental
Complaint[23] for declaratory relief under Rule 63 of the Rules Apart from procedural infirmities, Santos argued that Belo
of Court. In its Supplemental Complaint, Belo Medical Group Medical Group's Complaint and Supplemental Complaint must
relied on Section 74[24] of the Corporation Code to deny Santos' be dismissed "for its failure to state, and ultimately, lack of, a
request for inspection. It prayed that Santos be perpetually cause of action."[39] No ultimate facts were given to establish
barred from inspecting its books due to his business interest in the act or omission of Santos and Belo that violated Belo
a competitor.[25] Should the ruling for interpleader be in favor Medical Group's rights. There was simply no conflict on the
of Santos, Belo Medical Group prayed that the trial court: ownership of the 25 shares of stock under Santos' name. Based
on the corporation's 2007 Articles of Incorporation and
a. exercise its power under Rule 63 of the Revised Rules of Civil General Information Sheet, Santos was reflected as a
Procedure and give a proper construction of Sections 74 and stockholder and owner of the 25 shares of stock. No
75 of the Corporation Code in relation to the facts presented documentary evidence was submitted to prove that Belo
above, and declare that plaintiff can rightfully decline owned these shares and merely transferred them to Santos as
defendant Santos's request for inspection under those nominal shares.[40]
sections and related provisions and jurisprudence; and
Santos further argued that the filing of the complaints was an
b. allow plaintiff to recover attorney's fees and litigation afterthought to take attention away from Belo Medical
expenses from defendant Santos in the amount of at least Group's criminal liability when it refused Santos' demand to
PHP1,000,000.00 and the costs of suit.[26] inspect the records of the corporation. For years, neither Belo
Medica1 Group nor Belo questioned Santos' standing in the
Belo Medical Group's Complaint and Supplemental Complaint corporation. No change in ownership from Santos to another
were raffled to Branch 149 of the Regional Trial Court of person was reflected in the company's General Information
Makati, a special commercial court,[27] thus classifying them as Sheet.[41]
intra-corporate.[28]
Santos also invoked the doctrine of piercing the corporate veil
Belo filed her Answer Ad Cautelam with Cross-Claim to put on as Belo owned 90% of Belo Medical Group. Her claim over the
record her defenses that Santos had no right to inspect the 25 shares was a ploy to defeat Santos' right to inspect
books as he was not the owner of the 25 shares of stock in his corporate records. He asserts that the Complaint for
name and that he was acting in bad faith because he was a interpleader was an anticipatory move by the company to
majority owner of House of Obagi.[29] evade criminal liability upon its denial of Santos' requests.[42]
Belo further argued that the proceedings should not have been In addition, Santos argued that a prerequisite to filing these
classified as intra-corporate because while their right of cases is that the plaintiff has not yet incurred liability to any of
inspection as shareholders may be considered intra-corporate, the parties. Since Belo Medical Group had already incurred
"it ceases to be that and becomes a full-blown civil law criminal liability, it could no longer file a complaint for
question if competing rights of ownership are asserted as the interpleader or declaratory relief.[43]
basis for the right of inspection."[30]
Santos denied any conflict of interest because Belo Medical
Meanwhile, on several dates, the trial court sheriff attempted Group's products and services differed from House of
to personally serve Santos with summons.[31] After Obagi's[44] Belo Medical Group's primary purpose was the
unsuccessful attempts,[32] the sheriff resorted to substituted management and operation of skin clinics[45] while the House
service in Santos' Makati office condominium unit.[33] of Obagi's main purpose was the sale and distribution of high-
end facial products.[46]
On July 4, 2008, Belo Medical Group filed an Omnibus Motion
for Clarificatory Hearing and for Leave to File Consolidated On October 29, 2008, Belo Medical Group filed its
Reply,[34] praying that the case be tried as a civil case and not Opposition[47] and argued that the Motion to Dismiss was a
as an intra-corporate controversy. It argued that the Interim prohibited pleading under Section 8 of the Interim Rules of
Rules of Procedure Governing Intra-Corporate Procedure Governing Intra-Corporate Controversies.
Controversies[35] did not include special civil actions for
interpleader and declaratory relief found under the Rules of Belo Medical Group reiterated that Belo and Santos must
Court. Belo Medical Group clarified that the issue on litigate against each other to determine who rightfully owned
ownership of the shares of stock must first be resolved before the 25 shares. An accommodation of one of them, absent a
the issue on inspection could even be considered ripe for resolution to this issue, would make Belo Medical Group liable
to the other.[48] Though a motion to dismiss is a prohibited pleading under the
Interim Rules of Procedure Governing Intra-Corporate
On its supposed criminal liability when it refused Santos access Controversies, the trial court ruled that Section 2, Rule 1 of
to corporate records, Belo Medical Group explained that the these rules allowed for the Rules of Court to apply suppletorily.
independent liability necessary to defeat complaints for According to the Rules of Court, motions to dismiss are allowed
interpleader arose from a final judgment and not merely a in interpleader cases.[62]
cause of action that has accrued.[49]
Finally, the Complaint for Declaratory Relief was struck down
Finally, Belo Medical Group averred that substantiation must as improper because it sought an initial determination on
be done during trial. The dismissal of the case would be whether Santos was in bad faith and if he should be barred
premature.[50] from inspecting the books of the corporation. Only after
resolving these issues can the trial court determine his rights
Belo's Opposition dated October 29, 2008 raised the same under Sections 74 and 75 of the Corporation Code. The act of
arguments of Belo Medical Group.[51] resolving these issues is not within the province of the special
civil action as declaratory relief is limited to the construction
Santos filed his Reply to the Oppositions on November 18, and declaration of actual rights and does not include the
2008.[52] He agreed that the controversy was not intra- determination of issues.[63]
corporate but civil in nature, as it involved
ownership.[53] However, he stood firm on his arguments that From the Joint Resolution, Belo and Belo Medical Group
the case should be dismissed due to the Complaints' failure to pursued different remedies.
state a cause of action[54] and the trial court's failure to acquire
jurisdiction over his person.[55] Belo filed her Petition for Review before the Court of Appeals
docketed as CA G.R. No. 08-397.[64]
On December 8, 2008, the assailed Joint Resolution[56] was
issued by the trial court resolving the following incidents: Belo Belo Medical Group, on the other hand, directly filed its
Medical Group's Omnibus Motion for Clarificatory Hearing and Petition for Review with this Court, alleging that purely
for Leave to File Consolidated Reply and Motion to Declare questions of law are at issue.
Santos in Default, and Santos' Motion to Dismiss. The trial
court declared the case as an intra-corporate controversy but Belo Medical Group argues that it is enough that there are two
dismissed the Complaints.[57] (2) people who have adverse claims against each other and
who are in positions to make effective claims for interpleader
The trial court characterized the dispute as "intrinsically to be given due course.[65] Belo Medical Group cites Lim v.
connected with the regulation of the corporation as it involves Continental Development Corporation,[66] which allowed a
the right of inspection of corporate records."[58] Included in complaint for interpleader to continue because two (2) parties
Santos and Belo's conflict was a shareholder's exclusive right claimed ownership over the same shares of stock.[67]
to inspect corporate records. In addition, the issue on the
ownership of shares requires the application of laws and On January 30, 2009, Belo Medical Group filed a
principles regarding corporations.[59] Manifestation/Disclosure[68] informing this Court that on
January 28, 2009, it received Belo's Petition for Review filed
However, the Complaint could not flourish as Belo Medical before the Court of Appeals. On February 4, 2009, this Court
Group "failed to sufficiently allege conflicting claims of also received Belo's Manifestation[69] that she filed a Petition
ownership over the subject shares."[60] In justifying failure to for Review before the Court of Appeals, assailing the Joint
state a cause of action, the trial court reasoned: Resolution primarily because it dismissed her counterclaims.
She also furnished this Court a copy of her Manifestation filed
Plaintiff clearly admits in the complaint that defendant Santos with the Court of Appeals to inform it of Belo Medical Group's
is the registered stockholder of the subject shares albeit no Petition for Review before this Court.[70]
records show that he made any payments thereof. Also,
notwithstanding defendant Belo's claim that she is the true On April 15, 2009, Belo filed her Comment[71] and manifested
owner thereof, there was no allegation that defendant Santos that she agrees with the arguments raised by Belo Medical
is no longer the holder on record of the same or that it is now Group.
defendant Belo who is the registered stockholder thereof. In
fact, the complaint even alleges that defendant Santos holds On April 28, 2009, Santos filed his Comment.[72] He argues that
the 25 BMGI shares merely as nominal qualifying shares in the Petition filed by Belo Medical Group should be dismissed
trust for defendant Belo. Thus, the complaint failed to state a as the wrong mode of appeal. It should have filed an appeal
cause of action that would warrant the resort to an action for under Rule 43, pursuant to the Interim Rules on Intra-
interpleader.[61] Corporate Disputes.[73] He alleges that Belo Medical Group
committed forum shopping. It filed the present Petition for
Review after Belo had already filed an appeal under Rule 43
before the Court of Appeals. He asserts that Belo and Belo knowledge, no such other action or claim is pending therein;
Medical Group have the san1e interest. Belo, owner of 90% of (b) if there is such other per ding action or claim, a complete
the shares of stock of the corporation, dictates Belo Medical statement of the present status thereof; and (c) if he should
Group's actions, which were ultimately for Belo's benefit and thereafter learn that the same or similar action or claim has
interests.[74] been filed or is pending, he shall report that fact within five (5)
days therefrom to the court wherein his aforesaid complaint
Meanwhile, on July 31, 2009, the Court of Appeals dismissed or initiatory pleading has been filed.
Belo's Petition for Review and ruled that the pending case
before this Court was the more appropriate vehicle to Failure to comply with the foregoing requirements shall not be
determine the issues.[75] curable by mere amendment of the complaint or other
initiatory pleading but shall be cause for the dismissal of the
The issues for this Court's resolution are as follows: case without prejudice; unless otherwise provided, upon
motion and after hearing. The submission of a false
First, whether or not Belo Medical Group, Inc. committed certification or non-compliance with any of the undertakings
forum shopping; therein shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and criminal
Second, whether or not the present controversy is intra- actions. If the acts of the party or his counsel clearly constitute
corporate; Third, whether or not Belo Medical Group, Inc. willful and deliberate forum shopping, the same shall be
came to this Court using the correct mode of appeal; and ground for summary dismissal with prejudice and shall
constitute direct contempt, as well as a cause for
Finally, whether or not the trial court had basis in dismissing administrative sanctions.
Belo Medica] Group, Inc.'s Complaint for Declaratory Relief.
When willful and deliberate violation is clearly shown, it can be
I a ground for all pending cases' summary dismissal with
prejudice[81] and direct contempt [82]
Neither Belo nor the Belo Medical Group is guilty of forum
shopping. Belo Medical Group filed its Petition for Review on Certiorari
under Rule 45 before this Court to appeal against the Joint
Forum shopping exists when parties seek multiple judicial Resolution of the trial court. It did not file any other petition
remedies simultaneously or successively, involving the same related to the case, as indicated in it verification and
causes of action, facts, circumstances, and transactions, in the certification against forum shopping. It was Belo, a defendant
hopes of obtaining a favorable decision.[76] It may be in Belo Medical Groups Complaint, who filed a separate appeal
accomplished by a party defeated in one forum, in an attempt under Rule 43 with the Court of Appeals primarily to protect
to obtain a favorable outcome in another, "other than by her counterclaims. Belo and Belo Medical Group both filed
appeal or a special civil action for certiorari."[77] their respective Petitions for Review on January 28, 2009, the
lat day within the period allowed to do so.[83] The Court of
Forum shopping trivializes rulings of courts, abuses their Appeals already ruled that litis pendencia was present when
processes, cheapens the administration of justice, and clogs Belo and Belo Medical Group filed their respective petitions on
court dockets.[78] In Top Rate Construction & General Services, the same date before different fora. The two petitions involved
Inc. v. Paxton Development Corporation:[79] the same parties, rights and reliefs sought, and causes of
action.[84] This is a decision this Court can no longer disturb.
What is critical is the vexation brought upon the courts and the
litigants by a party who asks different courts to rule on the Neither Belo Medical Group nor Belo can be faulted for willful
same or related causes and grant the same or substantially the and deliberate violation of the rule against forum shopping.
same reliefs and in the process creates the possibility of Their prompt compliance of the certification against forum
conflicting decisions being rendered by the different fora upon shopping appended to their Petitions negates willful and
the same issues.[80] deliberate intent.
Rule 7, Section 5 of the Rules of Court contains the rule against Belo Medical Group was not remiss in its duty to inform this
forum shopping: Court of a similar action or proceeding related to its Petition. It
promptly manifested before this Court its receipt of Belo's
Section 5. Certification against forum shopping. - The plaintiff Petition before the Court of Appeals. Belo Medical Group and
or principal party shall certify under oath in the complaint or Belo manifested before this Court that Belo filed a Rule 43
other initiatory pleading asserting a claim for relief, or in a petition to protect her counterclaims and to question the same
sworn certification annexed thereto and simultaneously filed Joint Resolution issued by the trial court. Both did so within
therewith: (a) that he has not theretofore commenced any five (5) days from discovery, as they undertook in their
action or filed any claim involving the same issues in any court, respective certificates against forum shopping.
tribunal or quasi-judicial agency and, to the best of his
The issue of forum shopping has become moot. The appeal intent, except those filed due to clearly compelling reasons.
under Rule 43 filed by Belo has been dismissed by the Court of Such motion must be verified and under oath.
Appeals on the ground of litis pendencia.[85] The purpose of
proscribing forum shopping is the proliferation of To determine whether an intra-corporate dispute exists and
contradictory decisions on the same controversy.[86] This whether this case requires the application of these rules of
possibility no longer exists in this case. procedure, this Court evaluated the relationship of the parties.
The types of intra-corporate relationships were reviewed
II in Union Glass & Container Corporation v. Securities and
Exchange Commission:[88]
Belo Medical Group filed a case for interpleader, the
proceedings of which are covered by the Rules of Court. At its [a] between the corporation, partnership or association and
core, however, it is an intra-corporate controversy. the public;
A.M. No. 01-2-04-SC, or the Interim Rules of Procedure [b] between the corporation, partnership or association and its
Governing Intra-Corporate Controversies, enumerates the stockholders, partners, members, or officers;
cases where the rules will apply:
[c] between the corporation, partnership or association and
Section 1. (a) Cases Covered - These Rules shall govern the the state in so far as its franchise, permit or license to operate
procedure to be observed in civil cases involving the following: is concerned; and
1. Devices or schemes employed by, or any act of, the board of [d] among the stockholders, partners or associates
directors, business associates, officers or partners, amounting themselves.[89]
to fraud or misrepresentation which may be detrimental to the
interest of the public and/or of the stockholders, partners, or For as long as any of these intra-corporate relationships exist
members of any corporation, partnership, or association; between the parties, the controversy would be characterized
as intra-corporate.[90] This is known as the "relationship test."
2. Controversies arising out of intra-corporate, partnership, or
association relations, between and among stockholders, DMRC Enterprises v. Este del Sol Mountain Reserve,
members, or associates; and between, any or all of them and Inc.[91] employed what would later be called as the "nature of
the corporation, partnership, or association of which they are controversy test." It became another means to determine if
stockholders, members, or associates, respectively; the dispute should be considered as intra-corporate.
3. Controversies in the election or appointment of directors, In DMRC Enterprises, Este del Sol leased equipment from
trustees, officers, or managers of corporations, partnerships, DMRC Enterprises. Part of Este del Sol's payment was shares of
or associations; stock in the company. When Este del Sol defaulted, DMRC
Enterprises filed a collection case before the Regional Trial
4. Derivative suits; and Court. Este del Sol argued that it should have been filed before
the Securities and Exchange Commission as it involved an
5. Inspection of corporate books.[87] intra-corporate dispute where a corporation was being
compelled to issue its shares of stock to subscribers. This Court
The same rules prohibit the filing of a motion to dismiss: held that it was not just the relationship of the parties that
mattered but also the conflict between them:
Section 8. Prohibited Pleadings. -The following pleadings are
prohibited: The purpose and the wording of the law escapes the
respondent. Nowhere in said decree do we find even so much
(1) Motion to dismiss; as an intimidation that absolute jurisdiction and control is
vested in the Securities and Exchange Commission in all
(2) Motion for a bill of particulars; matters affecting corporations. To uphold the respondent's
argument would remove without legal imprimatur from the
(3) Motion for new trial or for reconsideration of judgment or regular courts all conflicts over matters involving or affecting
order, or for reopening of trial; corporations, regardless of the nature of the transactions
which give rise to such disputes. The courts would then be
(4) Motion for extension of time to file pleadings, affidavits or divested of jurisdiction not by reason of the nature of the
any other paper, except those filed due to clearly compelling dispute submitted to them for adjudication, but solely for the
reasons. Such motion must be verified and under oath; and reason that the dispute involves a corporation. This cannot be
done. To do so would not only be to encroach on the legislative
(5) Motion for postponement and other motions of similar prerogative to grant and revoke jurisdiction of the courts but
such a sweeping interpretation may suffer constitutional
infirmity. Neither can we reduce jurisdiction of the courts by for declaratory relief.
judicial fiat (Article X, Section 1, The Constitution).[92]
The circumstances of the case and the aims of the parties must
This Court now uses both the relationship test and the nature not be taken in isolation from one another. The totality of the
of the controversy test to determine if an intra-corporate controversy must be taken into account to improve upon the
controversy is present.[93] existing tests. This Court notes that Belo Medical Group used
its Complaint for interpleader as a subterfuge in order to stop
Applying the relationship test, this Court notes that both Belo Santos, a registered stockholder, from exercising his right to
and Santos are named shareholders in Belo Medical Group's inspect corporate books.
Articles of Incorporation[94] and General Information Sheet for
2007.[95] The conflict is clearly intra-corporate as it involves Belo made no claims to Santos' shares before he attempted to
two (2) shareholders although the ownership of stocks of one inspect corporate books, and inquired about the Henares'
stockholder is questioned. Unless Santos is adjudged as a election as corporate secretary and the conduct of
stranger to the corporation because he holds his shares only in stockholders' meetings. Even as she claimed Santos' shares as
trust for Belo, then both he and Belo, based on official records, hers, Belo proffered no initial proof that she had paid for these
are stockholders of the corporation. Belo Medical Group shares. She failed to produce any document except her bare
argues that the case should not have been characterized as allegation that she had done so. Even her Answer Ad
intra-corporate because it is not between two shareholders as Cautelam with Cross-Claim[96]contained bare allegations of
only Santos or Belo can be the rightful stockholder of the 25 ownership.
shares of stock. This may be true. But this finding can only be
made after trial where ownership of the shares of stock is According to its Complaint, although Belo Medical Group's
decided. records reflect Santos as the registered stockholder of the 25
shares, they did not show that Santos had made payments to
The trial court cannot classify the case based on potentialities. Belo Medical Group for these shares, "consistent with Bela's
The two defendants in that case are both stockholders on claim of ownership over them."[97] The absence of any
record. They continue to be stockholders until a decision is document to establish that Santos had paid for his shares does
rendered on the true ownership of the 25 shares of stock in not bolster Belo's claim of ownership of the same shares.
Santos' name. If Santos' subscription is declared fictitious and Santos remains a stockholder on record until the contrary is
he still insists on inspecting corporate books and exercising shown.
rights incidental to being a stockholder, then, and only then,
shall the case cease to be intra-corporate. Belo Medical Group cites Lim v. Continental Development
Corporation[98] as its basis for filing its Complaint for
Applying the nature of the controversy test, this is still an interpleader. In Lim, Benito Gervasio Tan (Tan) appeared as a
intra-corporate dispute. The Complaint for interpleader seeks stockholder of Continental Development Corporation. He
a determination of the true owner of the shares of stock repeatedly requested the corporation to issue certificates of
registered in Santos' name. Ultimately, however, the goal is to shares of stock in his name but Continental Development
stop Santos from inspecting corporate books. This goal is so Corporation could not do this due to the claims of Zoila Co Lim
apparent that, even if Santos is declared the true owner of the (Lim). Lim alleged that her mother, So Bi, was the actual owner
shares of stock upon completion of the interpleader case, Belo of the shares that were already registered in the corporate
Medical Group still seeks his disqualification from inspecting books as Lim's, and she delivered these in trust to Lim before
the corporate books based on bad faith. Therefore, the she died. Lim wanted to have the certificates of shares
controversy shifts from a mere question of ownership over cancelled and new ones re-issued in his name. This Court ruled
movable property to the exercise of a registered stockholder's that Continental Development Corporation was correct in
proprietary right to inspect corporate books. filing a case for interpleader:
Belo Medical Group argues that to include inspection of Since there is an active conflict of interests between the two
corporate books to the controversy is premature considering defendants, now herein respondent Benito Gervasio Tan and
that there is still no determination as to who, between Belo petitioner Zoila Co Lim, over the disputed shares of stock, the
and Santos, is the rightful owner of the 25 shares of stock. Its trial court gravely abused its discretion in dismissing the
actions belie its arguments. Belo Medical Group wants the trial complaint for interpleader, which practically decided
court not to prematurely characterize the dispute as intra- ownership of the shares of stock in favor of defendant Benito
corporate when, in the same breath, it prospectively seeks Gervasio Tan. The two defendants, now respondents in G.R.
Santos' perpetual disqualification from inspecting its books. No. L-41831, should be given full opportunity to litigate their
This case was never about putting into light the ownership of respective claims.
the shares of stock in Santos' name. If that was a concern at all,
it was merely secondary. The primary aim of Belo and Belo Rule 63, Section 1 of the New Rules of Court tells us when a
Medical Group was to defeat his right to inspect the corporate cause of action exists to support a complaint in interpleader:
books, as can be seen by the filing of a Supplemental Complaint
Whenever conflicting claims upon the same subject matter are Development Corporation to reasonably conclude that
or may be made against a person, who claims no interest controversy on ownership of the shares of stock existed.
whatever in the subject matter, or an interest which in whole
or in part is not disputed by the claimants, he may bring an Furthermore, the controversy in Lim was between a registered
action against the conflicting claimants to compel them to stockholder in the books of the corporation and a stranger who
interplead and litigate their several claims among themselves . claimed to be the rightful transferee of the shares of stock of
.. her mother. The relationship of the parties and the
circumstances of the case establish the civil nature of the
This provision only requires as an indispensable requisite: controversy, which was plainly, ownership of shares of stock.
Interpleader was not filed to evade or defeat a registered
that conflicting claims upon the same subject matter are or stockholder's right to inspect corporate books. It was borne by
may be made against the plaintiff-in-interpleader who claims the sincere desire of a corporation, not interested in the
no interest whatever in the subject matter or an interest which certificates of stock to be issued to either claimant, to
in whole or in part is not disputed by the claimants (Beltran vs. eliminate its liability should it favor one over the other.
People's Homesite and Housing Corporation, No. L-25138, 29
SCRA 145). On the other hand, based on the facts of this case and applying
the relationship and nature of the controversy tests, it was
This ruling, penned by Mr. Justice Teehankee, reiterated the understandable how the trial court could classify the
principle in Alvarez vs. Commonwealth (65 Phil. 302), that interpleader case as intra-corporate and dismiss it. There was
no ostensible debate on the ownership of the shares that
The action of interpleader, under section 120, is a remedy called for an interpleader case. The issues and remedies sought
whereby a person who has personal property in his have been muddled when, ultimately, at the front and center
possession. or an obligation to render wholly or partially, of the controversy is a registered stockholder's right to inspect
without claiming any right in both comes to court and asks corporate books.
that the persons who claim the said personal property or who
consider themselves entitled to demand compliance with the As an intra-corporate dispute, Santos should not have been
obligation. be required to litigate among themselves, in order allowed to file a Motion to Dismiss.[100] The trial court should
to determine finally who is entitled to one or the other thing. have continued on with the case as an intra-corporate dispute
The remedy is afforded not to protect a person against a considering that it called for the judgments on the relationship
double liability but to protect him against a double vexation in between a corporation and its two warring stockholders and
respect of one liability. the relationship of these two stockholders with each other.
IV SO ORDERED.
At the outset, this Court notes that two cases were filed by
Belo Medical Group: the Complaint for interpleader and the
Supplemental Complaint for Declaratory Relief. Under Rule 2,
Section 5 of the Rules of Court, a joinder of cause of action is
allowed, provided that it follows the conditions enumerated
below:
(a) The party joining the causes of action shall comply with the
rules on joinder of parties;
(b) The joinder shall not include special civil actions or actions
governed by special rules;
(c) Where the causes of action are between the same parties
but pertain to different venues or jurisdictions, the joinder may
be allowed in the Regional Trial Court provided one of the
causes of action falls within the jurisdiction of said court and
the venue lies therein; and
(d) Where the claims in all the causes of action are principally
for recovery of money, the aggregate amount claimed shall be
the test of jurisdiction. (Emphasis supplied)