National Development V Aquino
National Development V Aquino
On 24 February 1971, Batjak filed before the CFI-Rizal a special civil action
for mandamus with preliminary injunction against herein petitioners. On 14
April 1971, in said Civil Case No. 14452, Batjak filed an urgent ex
parte motion for the issuance of a writ of preliminary prohibitory and
mandatory injunction. 14 On the same day, respondent judge issued a
restraining order. On 24 April 1971, NIDC and PNB filed an opposition to
the ex parte application for the issuance of a writ of preliminary prohibitory
and mandatory injunction and a motion to set aside restraining order.
Private respondent Batjak filed on 3 May 1971 a petition for receivership as
alternative to writ of preliminary prohibitory and mandatory injunction. On 8
May 1971., NIDC and PNB filed a motion to dismiss Batjak's complaints. 18On
16 August 1971, respondent judge issued the now assailed order denying
petitioners' motion to dismiss and appointing a set of three (3) receivers.
Batjak premises its right to the possession of the three (3) off mills on the
Voting Trust Agreement, claiming that under said agreement, NIDC was
constituted as trustee of the assets, management and operations of Batjak,
that due to the expiration of the Voting Trust Agreement, on 26 October
1970, NIDC should tum over the assets of the three (3) oil mills to Batjak.
Issue:
Whether PNB-NIDC is entitled to the properties.
Ruling:
Yes.
It is clear that what was assigned to NIDC was the power to vote the shares
of stock of the stockholders of Batjak, representing 60% of Batjak's
outstanding shares, and who are the signatories to the agreement. The
power entrusted to NIDC also included the authority to execute any
agreement or document that may be necessary to express the consent or
assent to any matter, by the stockholders. Nowhere in the said provisions or
in any other part of the Voting Trust Agreement is mention made of any
transfer or assignment to NIDC of Batjak's assets, operations, and
management. NIDC was constituted as trustee only of the voting rights of
60% of the paid-up and outstanding shares of stock in Batjak.
From the agreement’s provision, what was to be returned by NIDC as
trustee to Batjak's stockholders, upon the termination of the agreement, are
the certificates of shares of stock belonging to Batjak's stockholders, not the
properties or assets of Batjak itself which were never delivered, in the first
place to NIDC, under the terms of said Voting Trust Agreement.
A voting trust transfers only voting or other rights pertaining to the shares
subject of the agreement or control over the stock.
SECOND DIVISION
Cruz, Palafox, Alfonso and Associates for petitioner NIDC in G.R. No. 34192.
The Chief Legal Counsel for petitioner PNB in G.R. No. 34213.
Tolentino, Garcia, Cruz & Reyes for movant in G.R. No. L-34192.
PADILLA, J.:
These two (2) separate petitions for certiorari and prohibition, with
preliminary injunction, seek to annul and set aside the orders of respondent
judge, dated 16 August 1971 and 30 September 1971, in Civil Case No.
14452 of the Court of First Instance of Rizal, entitled Batjak Inc. vs. NIDC et
al." The order of 16 August 1971 1 granted the alternative petition of private
respondent Batjak, Inc. Batjak for short) for the appointment of receiver and
denied petitioners' motion to dismiss the complaint of said private
respondent. The order dated 30 September 1971 2 denied petitioners'
motion for reconsideration of the order dated 16 August 1971.
The herein petitions likewise seek to prohibit the respondent judge from
hearing and/or conducting any further proceedings in Civil Case No. 14452
of said court.
Batjak, (Basic Agricultural Traders Jointly Administered Kasamahan) is a
Filipino-American corporation organized under the laws of the Philippines,
primarily engaged in the manufacture of coconut oil and copra cake for
export. In 1965, Batjak's financial condition deteriorated to the point of
bankruptcy. As of that year, Batjak's indebtedness to some private banks
and to the Philippine National Bank (PNB) amounted to P11,915,000.00,
shown as follows:
TOTAL 11,915,000.00
Manila, Philippines
International Department
Octob
er 5,
1965
BATJAK, INCORPORATED
Escolta, Manila
Gentlemen:
2) That NIDC will guaranty for five (5) years your account with
the Manila Banking Corporation;
3) That the above banks (Republic Bank, PCIB, MBTC and Manila
Banking Corp.) shall release in favor of PNB the first and any
mortgage they hold on your properties;
5) That a voting trust agreement for five (5) years over 60% of
the oustanding paid up and subscribed shares shall be executed
by your stockholders in favor of NIDC;
Thank you.
Very
truly
yours
,
(SGD
.)
JOSE
B.
SAMS
ON 3
The terms and conditions of the Financial Agreement were duly accepted by
Batjak. Under said Agreement, NIDC would, as it actually did, invest
P6,722,500.00 in Batjak in the form of preferred shares of stock convertible
within five (5) years at par into common stock, to liquidate Batjak's
obligations to Republic Bank (RB), Manufacturers Bank and Trust Company
(MBTC) and Philippine Commercial & Industrial Bank (PCIB), and the balance
of the investment was to be applied to Batjak's past due account of P 5
million with the PNB.
Upon receiving payment, RB, PCIB, and MBTC released in favor of PNB the
first and any mortgages they held on the properties of Batjak.
Stockholder Stockholder
President
ESPERANZA A. ZAMORA
Stockholder Stockholder
NATIONAL
INVESTMENT
AND
DEVELOPMENT
CORPORATION
By:
(SGD) IGNACIO
DEBUQUE JR.
Vice-
Presi
dent 5
As regards the oil mill located at Sasa, Davao City, the same was similarly
foreclosed extrajudicial by NIDC. It was sold to NIDC as the highest bidder.
After Batjak failed to redeem the property, NIDC consolidated its ownership
of the oil mill. 8
On 24 February 1971, Batjak filed before the Court of First Instance of Rizal
a special civil action for mandamus with preliminary injunction against herein
petitioners docketed as Civil Case No. 14452. 13
On 14 April 1971, in said Civil Case No. 14452, Batjak filed an urgent ex
parte motion for the issuance of a writ of preliminary prohibitory and
mandatory injunction. 14 On the same day, respondent judge issued a
restraining order "prohibiting defendants (herein petitioners) from removing
any record, books, commercial papers or cash, and leasing, renting out,
disposing of or otherwise transferring any or all of the properties,
machineries, raw materials and finished products and/or by-products thereof
now in the factory sites of the three (3) modem coco milling plants situated
in Jimenez, Misamis Occidental, Sasa, Davao City, and Tanauan, Leyte." 15
Before the court could act on the said motion, private respondent Batjak
filed on 3 May 1971 a petition for receivership as alternative to writ of
preliminary prohibitory and mandatory injunction. 16 This was opposed by
PNB and NIDC . 17
Hence, these two (2) petitions, which have been consolidated, as they
involve a resolution of the same issues. In their manifestation with motion
for early decision, dated 25 August 1986, private respondent, Batjak
contends that the NIDC has already been abolished or scrapped by its parent
company, the PNB.
After a careful study and examination of the records of the case, the Court
finds and holds for the petitioners.
Thus, where there is patent grave abuse of discretion, in denying the motion
to dismiss, as in the present case, this Court may entertain the petition for
certiorari interposed by the party against whom the said order is issued.
In their motion to dismiss Batjaks complaint, in Civil Case No. 14452, NIDC
and PNB raised common grounds for its allowance, to wit:
Anent the first ground, it is a well-settled rule that the jurisdiction of a Court
of First Instance to issue a writ of preliminary or permanent injunction is
confined within the boundaries of the province where the land in controversy
is situated. 23 The petition for mandamus of Batjak prayed that NIDC and
PNB be ordered to surrender, relinquish and turnover to Batjak the assets,
management and operation of Batjak particularly the three (3) oil mills
located in Sasa, Davao City, Jimenez, Misamis Occidental and Tanauan,
Leyte.
Clearly, what Batjak asked of respondent court was the exercise of power or
authority outside its jurisdiction.
On the matter of proper venue, Batjak's complaint should have been filed in
the provinces where said oil mills are located. Under Rule 4, Sec. 2,
paragraph A of the Rules of Court, "actions affecting title to, or for recovery
of possession, or for partition or condemnation of, or foreclosure of
mortgage on, real property, shall be commenced and tried in the province
where the property or any part thereof lies."
In support of the third ground of their motion to dismiss, PNB and NIDC
contend that Batjak's complaint for mandamus is based on its claim or right
to recovery of possession of the three (3) oil mills, on the ground of an
alleged breach of fiduciary relationship. Noteworthy is the fact that, in the
Voting Trust Agreement, the parties thereto were NIDC and certain
stockholders of Batjak. Batjak itself was not a signatory thereto. Under Sec.
2, Rule 3 of the Rules of Court, every action must be prosecuted and
defended in the name of the real party in interest. Applying the rule in the
present case, the action should have been filed by the stockholders of
Batjak, who executed the Voting Trust Agreement with NIDC, and not by
Batjak itself which is not a party to said agreement, and therefore, not the
real party in interest in the suit to enforce the same.
In addition, PNB claims that Batjak has no cause of action and prays that the
petition for mandamus be dismissed. A careful reading of the Voting Trust
Agreement shows that PNB was really not a party thereto. Hence,
mandamus will not lie against PNB.
Moreover, the action instituted by Batjak before the respondent court was a
special civil action for mandamus with prayer for preliminary mandatory
injunction. Generally, mandamus is not a writ of right and its allowance or
refusal is a matter of discretion to be exercised on equitable principles and in
accordance with well-settled rules of law, and that it should never be used to
effectuate an injustice, but only to prevent a failure of justice. 24 The writ
does not issue as a matter of course. It will issue only where there is a clear
legal right sought to be enforced. It will not issue to enforce a doubtful right.
A clear legal right within the meaning of Sec. 3, Rule 65 of the Rules of
Court means a right clearly founded in or granted by law, a right which is
enforceable as a matter of law.
Applying the above-cited principles of law in the present case, the Court
finds no clear right in Batjak to be entitled to the writ prayed for. It should
be noted that the petition for mandamus filed by it prayed that NIDC and
PNB be ordered to surrender, relinquish and turn-over to Batjak the assets,
management, and operation of Batjak particularly the three (3) oil mills and
to make the order permanent, after trial, and ordering NIDC and PNB to
submit a complete accounting of the assets, management and operation of
Batjak from 1965. In effect, what Batjak seeks to recover is title to, or
possession of, real property (the three (3) oil mills which really made up the
assets of Batjak) but which the records show already belong to NIDC. It is
not disputed that the mortgages on the three (3) oil mills were foreclosed by
PNB and NIDC and acquired by them as the highest bidder in the appropriate
foreclosure sales. Ownership thereto was subsequently consolidated by PNB
and NIDC, after Batjak failed to exercise its right of redemption. The three
(3) oil mills are now titled in the name of NIDC. From the foregoing, it is
evident that Batjak had no clear right to be entitled to the writ prayed for.
In Lamb vs. Philippines (22 Phil. 456) citing the case of Gonzales V. Salazar
vs. The Board of Pharmacy, 20 Phil. 367, the Court said that the writ of
mandamus will not issue to give to the applicant anything to which he is not
entitled by law.
As borne out by the records of the case, PNB acquired ownership of two (2)
of the three (3) oil mills by virtue of mortgage foreclosure sales. NIDC
acquired ownership of the third oil mill also under a mortgage foreclosure
sale. Certificates of title were issued to PNB and NIDC after the lapse of the
one (1) year redemption period. Subsequently, PNB transferred the
ownership of the two (2) oil mills to NIDC. There can be no doubt, therefore,
that NIDC not only has possession of, but also title to the three (3) oil mills
formerly owned by Batjak. The interest of Batjak over the three (3) oil mills
ceased upon the issuance of the certificates of title to PNB and NIDC
confirming their ownership over the said properties. More so, where Batjak
does not impugn the validity of the foreclosure proceedings. Neither Batjak
nor its stockholders have instituted any legal proceedings to annul the
mortgage foreclosure aforementioned.
Batjak premises its right to the possession of the three (3) off mills on the
Voting Trust Agreement, claiming that under said agreement, NIDC was
constituted as trustee of the assets, management and operations of Batjak,
that due to the expiration of the Voting Trust Agreement, on 26 October
1970, NIDC should tum over the assets of the three (3) oil mills to Batjak.
The relevant provisions of the Voting Trust Agreement, particularly
paragraph 4 & No. 1 thereof, are hereby reproduced:
From the foregoing provisions, it is clear that what was assigned to NIDC
was the power to vote the shares of stock of the stockholders of Batjak,
representing 60% of Batjak's outstanding shares, and who are the
signatories to the agreement. The power entrusted to NIDC also included the
authority to execute any agreement or document that may be necessary to
express the consent or assent to any matter, by the stockholders. Nowhere
in the said provisions or in any other part of the Voting Trust Agreement is
mention made of any transfer or assignment to NIDC of Batjak's assets,
operations, and management. NIDC was constituted as trustee only of the
voting rights of 60% of the paid-up and outstanding shares of stock in
Batjak. This is confirmed by paragraph No. 9 of the Voting Trust Agreement,
thus:
In any event, a voting trust transfers only voting or other rights pertaining
to the shares subject of the agreement or control over the stock. The law on
the matter is Section 59, Paragraph 1 of the Corporation Code (BP 68) which
provides:
In the case at bar, Batjak in its petition for receivership, or in its amended
petition therefor, failed to present any evidence, to establish the requisite
condition that the property is in danger of being lost, removed or materially
injured unless a receiver is appointed to guard and preserve it.
Footnotes
18 Annex GG, p. 331, Rollo of G.R. No. 34192 for NIDC; Annex
J, p 178, Rollo of G.R. No. 34213 for PNB.
19 Annex B, p. 114, Rollo of G.R. No. 34192