Facts:

Batjak 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. Batjak's indebtedness to some private banks and to the
PNB amounted to P11,915,000.00. Batjak applied to PNB for additional
financial assistance. On 5 October 1965, a Financial Agreement was
submitted by PNB to Batjak for acceptance. The terms and conditions of the
Financial Agreement were duly accepted by Batjak.
A Voting Trust Agreement was executed on 26 October 1965 in favor of
NIDC by the stockholders representing 60% of the outstanding paid-up and
subscribed shares of Batjak. This agreement was for a period of five (5)
years and, upon its expiration, was to be subject to negotiation between the
parties.
In July 1967, forced by the insolvency of Batjak, PNB and NIDC instituted
foreclosure proceedings to some of its properties. The same were acquired
by PNB-NIDC.
Legal counsel of private respondent Batjak, wrote a letter to NIDC inquiring
if the latter was still interested in negotiating the renewal of the Voting Trust
Agreement. NIDC replied, confirming the fact that it had no intention
whatsoever to comply with the demands of Batjak. 

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.

The acquisition by PNB-NIDC of the properties in question was not made or

effected under the capacity of a trustee but as a foreclosing creditor for the
purpose of recovering on a just and valid obligation of Batjak.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-34192 June 30, 1988

NATIONAL INVESTMENT AND DEVELOPMENT CORPORATION,
EUSEBIO VILLATUYA MARIO Y. CONSING and ROBERTO S.
BENEDICTO, petitioners,
vs.
HON. BENJAMIN AQUINO, in his official capacity as Presiding Judge
of Branch VIII of the Court of First Instance of Rizal, BATJAK INC.,
GRACIANO A. GARCIA and MARCELINO CALINAWAN JR., respondents.

G.R. No. L-34213 June 30, 1988

PHILIPPINE NATIONAL BANK, petitioner,

vs.
HON. BENJAMIN H. AQUINO, in his capacity as Presiding Judge of
the Court of First Instance of Rizal, Branch VIII and BATJAK
INCORPORATED, respondents.

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.

Reyes and Sundiam Law Office for respondent Batjak, Inc.

Duran, Chuanico Oebanda, Benemerito & Associates for private respondents

in G.R. Nos. 34192 & 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:

Republic Bank P 2,324,000.00

Philippine Commercial and

Industrial Bank 1,346,000.00

Manila Banking Corporation 2,000,000.00

Manufacturers Bank 440,000.00

Hongkong and Shanghai

Banking Corporation 250,000.00

Foreign Export Advances

(against immediate shipment) 555,000.00

PNB export advance line

(against immediate shipment) 5,000,000.00

TOTAL 11,915,000.00

As security for the payment of its obligations and advances against

shipments, Batjak mortgaged its three (3) coco-processing oil mills in Sasa,
Davao City, Jimenez, Misamis Occidental and Tanauan, Leyte to Manila
Banking Corporation (Manila Bank), Republic Bank (RB), and Philippine
Commercial and Industrial Bank (PCIB), respectively. In need for additional
operating capital to place the three (3) coco-processing mills at their
optimum capacity and maximum efficiency and to settle, pay or otherwise
liquidate pending financial obligations with the different private banks,
Batjak applied to PNB for additional financial assistance. On 5 October 1965,
a Financial Agreement was submitted by PNB to Batjak for acceptance. The
Financial Agreement reads:
 PHILIPPINE NATIONAL BANK

Manila, Philippines

International Department

Octob
er 5,
1965

BATJAK, INCORPORATED

3rd Floor, G. Puyat Bldg.

Escolta, Manila

Attn.: Mr. CIRIACO B. MENDOZA

Vice-President & General Manager

Gentlemen:

We are pleased to advise that our Board of Directors

approved for you the following:

1) That NIDC shall invest P6,722,500.00 in the form of preferred

shares of stocks at 9% cumulative, participating and convertible
within 5 years at par into common stocks to liquidate your
accounts with the Republic Bank, Manufacturers Bank & Trust
Company and the PCIB which, however, shall be applied to the
latter three (3) banks accounts with the Loans & Discounts Dept.
NIDC shall match your P 10 million subscription by an additional
investment of P3,277,500 within a period of one to two years at
NIDC's option;

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;

4) That you shall exercise (execute) a first mortgage on all your

properties located at Sasa, Davao City; Jimenez, Misamis
Occidental; and Tanauan, Leyte and assign leasehold rights on
the property on which your plant at Sasa, Davao City is erected
in favor of PNB;

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;

6) That this accomodation shall be secured by the joint and

several signatures of officers and directors;

7) That the number of the Board of Directors shall be increased

to seven (7), three (3) from your firm and the other four (4)
from the PNB-NIDC;

8) That a comptroller, at your expense, shall be appointed by

PNB-NIDC to supervise the financial management of your firm;

9) That the past due accounts of P 5 million with the

International Department of the PNB shall be transferred to the
Loans & Discount Department and to be treated as a Demand
Loan;

10) That any excess of NIDC investment as required in Condition

1 after payment of the obligations to three (3) Banks (RB, MBTC,
& PCIB) shall be applied to reduce the above Demand Loan of P
5 million;

11) That we shall grant you an export advance of P3 million to

be used for copra purchases, subject to the following conditions:

a) That the line shall expire on September 30, 1966

but revocable at the Bank(s) option;

b) That drawings against the line shall be allowed

only when an irrevocable export L/C for coconut
products has been established or assigned in your
favor and you shall assign to us all proceeds of
negotiations to be received from your letters of
credit;

c) That drawings against the line be limited to 60%

of the peso value of the export letters of credit
 computed at P3.50 per $1.00 but total drawings shall
not in any event exceed P3,000,000.00;

d) That release or releases against the line shall be

covered by promissory note or notes for 90 days but
not beyond the expiry dates of the coveting L/C and
proceeds of said L/C shall first be applied to the
correspondent drawings on the line;

e) That drawings against the line shall be charged

interest at the rate of 9% per annum and subject to
1/2% penalty charge on all drawings not paid or
extended on maturity date; and

f) That within 90 days from date of release against

the line, you shall negotiate with us on equivalent
amount in export bills, otherwise, the line shag be
temporarily suspended until the outstanding export
advance is fully liquidated.

We are writing the National Investment & Development

Corporation, the Republic Bank, the Philippine Commercial &
Industrial Bank and the Manufacturers Bank & Trust Company
and the Manila Banking Corporation regarding the above.

In connection with the above, kindly submit to us two (2) copies

of your board resolution certified to under oath by your
corporate secretary accepting the conditions enumerated above
authorizing the above transactions and the officer or officers to
sign on behalf of the corporation.

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.

As agreed, PNB also granted Batjak an export-advance line of P 3 million,

later increased to P 5million, and a standby letter of credit facility in the
amount of P5,850,000.00. As of 29 September 1966, the financial
accomodation that had been extended by PNB to Batjak amounted to a total
of P 14,207,859.51.

As likewise agreed, Batjak executed a first mortgage in favor of PNB on all

its properties located at Jimenez, Misamis Occidental and Tanauan, Leyte.
Batjak's plant in Sasa, Davao City was mortgaged to the Manila Bank which,
in 1967, instituted foreclosure proceedings against the same but which were
aborted by the payment by Batjak of the sum of P2,400,000.00 to Manila
Bank, and which amount was advanced to Batjak by NIDC, a wholly-owned
subsidiary of PNB. To secure the advance, Batjak mortgaged the oil mill in
Sasa, Davao City to NIDC. 4

Next, a Voting Trust Agreement was executed on 26 October 1965 in favor

of NIDC by the stockholders representing 60% of the outstanding paid-up
and subscribed shares of Batjak. This agreement was for a period of five (5)
years and, upon its expiration, was to be subject to negotiation between the
parties. The voting Trust Agreement reads:

VOTING TRUST AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This AGREEMENT made and executed by the undersigned

stockholders of BATJAK, INC., a corporation duly organized and
existing under the laws of the Philippines, whose names are
hereinbelow subscribed hereinafter caged the SUBSCRIBERS,
and the NATIONAL INVESTMENT AND DEVELOPMENT
CORPORATION, hereinafter referred to as the trustee.
WITNESSETH:

WHEREAS, the SUBSCRIBERS are owners respectively of the

capital stock of the BATJAK, INC. (hereinafter called the
CORPORATION) in the amounts represented by the number of
shares set fort opposite their respective names hereunder;

AND WHEREAS, with a view or establishing a safe and

competent management to operate the corporation for the best
interest of all the stockholders thereof, and as mutually agreed
between the SUBSCRIBERS and the TRUSTEE, this Voting Trust
Agreement has been executed under the following terms and
conditions.

NOW THEREFORE, the undersigned stockholders, in

consideration of the premises and of the mutual covenants and
agreements herein contained and to carry out the foregoing
purposes in order to vest in the TRUSTEE the voting rights of the
shares of stock held by the undersigned in the CORPORATION as
hereinafter stated it is mutually agreed as follows:

1. PERIOD OF DESIGNATION — For a period of five (5) years

from and after date hereof, without power of revocation on the
part of the SUBSCRIBERS, the TRUSTEE designated in the
manner herein provided is hereby made, constituted and
appointed as a VOTING TRUSTEE to act for and in the name of
the SUBSCRIBERS, it being understood, however, that this
Voting Trust Agreement shall, upon its expiration be subject to a
re-negotiation between the parties, as may be warranted by the
balance and attending circumstance of the loan investment of
the TRUSTEE or otherwise in the CORPORATION.

2. ASSIGNMENT OF STOCK CERTIFICATES UPON ISSUANCE —

The undersigned stockholders hereby transfer and assign their
common shares to the capital stock of the CORPORATION to the
extent shown hereunder:

JAMES A. KEISTER 21,500 shares

JOHNNY LIEUSON 20,300 shares

CBM FINANCE & INVESTMENT

CORP. (C.B. Mendoza, Pres.) 5,000 shares

ALEJANDRO G. BELTRAN 4,000 shares

ESPERANZA A. ZAMORA 3,000 shares

CIRIACO B. MENDOZA 2,000 shares

FIDELA DE GUZMAN 2,000 shares

LLOYD D. COMBS 2,000 shares

RENATO B. BEJAR 200 shares

TOTAL 60,000 shares

to the TRUSTEE by virtue of the provisions hereof and do hereby

authorize the Secretary of the CORPORATION to issue the
corresponding certificate directly in the name of the TRUSTEE
and on which certificates it shall appear that they have been
issued pursuant to this Voting Trust Agreement and the said
TRUSTEE shall hold in escrow all such certificates during the
term of the Agreement. In turn, the TRUSTEE shall deliver to the
undersigned stockholders the corresponding Voting Trust
certificates provided for in Sec. 36 of Act No. 1459.

3. VOTING POWER OF TRUSTEE — The TRUSTEE and its

successors in trust, if anym shall have the power and it shall be
its duty to vote the shares of the undersigned subject hereof and
covered by this Agreement at all annual, adjourned and special
meetings of the CORPORATION on all questions, motions,
resolutions and matters including the election of directors and
such matters on which the stockholders, by virtue of the by-laws
of the CORPORATION and of the existing legislations are entitled
to vote, which may be voted upon at any and all said meetings
and shall also have the power to execute and acknowledge any
agreements or documents that may be necessary in its opinion
to express the consent or assent of all or any of the stockholders
of the CORPORATION with respect to any matter or thing to
which any consent or assent of the stockholders may be
necessary, proper or convenient.

4. FILING of AGREEMENT — An executed copy of this Agreement

shall be filed with the CORPORATION at its office in the City of
Manila wherever it may be transfered therefrom and shall
constitute irrevocable authority and absolute direction of the
officers of the CORPORATION whose duty is to sign and deliver
stock certificates to make delivery only to said voting trustee of
the shares and certificates of stock subject to the provisions of
this Agreement as aforesaid. Such copy of this Agreement shall
at all times be open to inspection by any stockholder, as
provided by law.

5. DIVIDEND — the full and absolute beneficial interest in the

shares subject of this Agreement shall remain with the
stockholders executing the same and any all dividends which
may be declared by the CORPORATION shall belong and be paid
to them exclusively in accordance with their stockholdings after
deducting therefrom or applying the same to whatever liabilities
the stockholders may have in favor of the TRUSTEE by virtue of
any Agreement or Contract that may have been or will be
executed by and between the TRUSTEE and the CORPORATION
or between the former and the undersigned stockholders.

6 COMPENSATION; IMMUNITY — The TRUSTEE or its successor

in trust shall not receive any compensation for its serviceexcept
perhaps that which the CORPORATION may grant to the
TRUSTEE's authorized representative, if any. Expenses costs,
champs, and other liabilities incurred in the carrying out of the
but herein established or by reason thereof, shall be paid for
with the funds of the CORPORATION. The TRUSTEE or any of its
duly authorized representative shall incur no liability by reason
of any error of law or of any matter or thing done or omitted
under this Agreement, except for his own individual
malfeasance.

7. REPRESENTATION — The TRUSTEE, being a corporation and a

juridical person shall accomplish the foregoing objectives and
perform its functions under this Agreement as well as enjoy and
exercise the powers, privileges, rights and interests herein
established through its duly authorized and accredited re
resentatives . p with full authority under the specific
appointment or designation or Proxy.

8. IRREVOCABILITY — This Agreement shall during its 5-year

term or any extension thereof be binding upon and inure to the
benefit of the undersigned stockholders and their respective
legal representatives, pledges, transferees, and/or assigns and
shall be irrevocable during the said terms and/or its extension
pursuant to the provisions of paragraph 1 hereof. It is hereby
understood and the undersigned stockholders have bound as
they hereby bind themselves to make a condition of every
pledge, transfer of assignment of their interests in the
CORPORATION that the interests and participation so pledged,
transferred or assigned is evidenced by annotations in the
certificates of stocks or in the books of the corporation, shall be
subject to this Agreement and the same shall be binding upon
the pledgees, transferees and assigns while the trust herein
created still subsists.

9. TERMINATION — Upon termination of this Agreement as

heretofore provided, the certificates delivered to the TRUSTEE by
virtue hereof shall be returned and delivered to the undersigned
stockholders as the absolute owners thereof, upon surrender of
their respective voting trust certificates, and the duties of the
TRUSTEE shall cease and terminate.

10. ACCEPTANCE OF TRUST — The TRUSTEE hereby accepts the

trust created by this Agreement under the signature of its duly
authorized representative affixed hereinbelow and agrees to
perform the same in accordance with the term/s hereof.

IN WITNTESS HEREOF, the undersigned stockholders and the

TRUSTEE by its representatives, have hereunto affixed their
signatures this 26 day of October, 1965 in the City of Manila,
Philippines.

(SGD) JAMES A. KEISER (SGD) JOHNNY LIEUSON

Stockholder Stockholder

CBM FINANCE & INVESTMENT CORPORATION

By: (SGD) C.B. MENDOZA

President

ESPERANZA A. ZAMORA (SGD) ALEJANDRO G. BELTRAN

By: (SGD) MARIANO ZAMORA Stockholder

ESPERANZA A. ZAMORA

(SGD) FIDELA DE GUZMAN (SGD) CIRIACO B. MENDOZA

 Stockholder Stockholder

(SGD) RENATO B. BEJAR (SGD) LLOYD D. COMBS

Stockholder Stockholder

NATIONAL
INVESTMENT
AND

DEVELOPMENT
CORPORATION

By:

(SGD) IGNACIO
DEBUQUE JR.

Vice-
Presi
dent 5

In July 1967, forced by the insolvency of Batjak, PNB instituted extrajudicial

foreclosure proceedings against the oil mills of Batjak located in Tanauan,
Leyte and Jimenez, Misamis Occidental. The properties were sold to PNB as
the highest bidder. One year thereafter, or in September 1968, final
Certificates of Sale were issued by the provincial sheriffs of Leyte 6 and
Misamis Occidental 7 for the two (2) oil mills in Tanauan and Jimenez in favor
of PNB, after Batjak failed to exercise its right to redeem the foreclosed
properties within the allowable one year period of redemption. Subsequently,
PNB transferred the ownership of the two (2) oil mills to NIDC which, as
aforestated, was a wholly-owned PNB subsidiary.

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

Three (3) years thereafter, or on 31 August 1970, Batjak represented by

majority stockholders, through Atty. Amado Duran, legal counsel of private
respondent Batjak, wrote a letter to NIDC inquiring if the latter was still
interested in negotiating the renewal of the Voting Trust Agreement. 9 On 22
September 1970, legal counsel of Batjak wrote another letter to NIDC
informing the latter that Batjak would now safely assume that NIDC was no
longer interested in the renewal of said Voting Trust Agreement and, in view
thereof, requested for the turn-over and transfer of all Batjak assets,
properties, management and operations. 10

On 23 September 1970, legal counsel of Batjak sent stin another letter to

NIDC, this time asking for a complete accounting of the assets, properties,
management and operation of Batjak, preparatory to their turn-over and
transfer to the stockholders of Batjak. 11

NIDC replied, confirming the fact that it had no intention whatsoever to

comply with the demands of Batjak. 12

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

The order of 14 April 1971 was subsequently amended by respondent judge

upon an ex parte motion of private respondent Batjak so as to include the
premises of NIDC in Makati and those of PNB in Manila, as among the
premises which private respondent Batjak was authorized to enter in order
to conduct an inventory.

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.

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

On 8 May 1971., NIDC and PNB filed a motion to dismiss Batjak's

complaints. 18
On 16 August 1971, respondent judge issued the now assailed order denying
petitioners' motion to dismiss and appointing a set of three (3)
receivers. 19 NIDC moved for reconsideration of the aforesaid order. 20 On 30
September 1971, respondent judge denied the motion for reconsideration. 21

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.

1. On the denial of petitioners' motion to dismiss.

As a general rule, an order denying a motion to quash or to dismiss is

interlocutory and cannot be the subject of a petition for certiorari. The
remedy of the aggrieved party in a denied motion to dismiss is to file an
answer and interpose, as defense or defenses, the objection or objections
raised by him in said motion to dismiss, then proceed to trial and, in case of
adverse decision, to elevate the entire case by appeal in due course.
However, under certain situations, recourse to the extraordinary legal
remedies of certiorari, prohibition and mandamus to question the denial of a
motion to dismiss or quash is considered proper, in the interest of more
enlightened and substantial justice. As the court said in Pineda and Ampil
Manufacturing Co. vs. Bartolome, 95 Phil. 930,938

For analogous reasons it may be said that the petition for

certiorari interposed by the accused against the order of the
court a quo denying the motion to quash may be entertained,
not only because it was rendered in a criminal case, but because
it was rendered, as claimed, with grave abuse of discretion, as
found by the Court of Appeals. ..

and reiterated in Mead v. Argel  22 citing Yap v. Lutero (105 Phil. 1307):

However, were we to require adherence to this pretense, the

case at bar would have to be dismissed and petitioner required
to go through the inconvenience, not to say the mental agony
and torture, of submitting himself to trial on the merits in Case
No. 166443, apart from the expenses incidental thereto, despite
the fact that his trial and conviction therein would violate one of
this [sic] constitutional rights, and that, an appeal to this Court,
 we would, therefore, have to set aside the judgment of
conviction of the lower court. This would, obviously, be most
unfair and unjust. Under the circumstances obtaining the present
case, the flaw in the procedure followed by petitioner herein may
be overlooked, in the interest of a more enlightened and
substantial justice.

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:

1. This Honorable Court (the trial court) has no jurisdiction over

the subject of the action or suit;

2. The venue is improperly laid; and

3. Plaintiff has no legal capacity to sue.

In addition, PNB contended that the complaint states no cause of action

(Rule 16, Sec. 1, Par. a, c, d & g, Rules of Court).

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.

2. On the appointment of receiver.

A receiver of real or personal property, which is the subject of the action,

may be appointed by the court when it appears from the pleadings that the
party applying for the appointment of receiver has an interest in said
property. 25 The right, interest, or claim in property, to entitle one to a
receiver over it, must be present and existing.

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:

NOW THEREFORE, the undersigned stockholders, in

consideration of the premises and of the mutual covenants and
agreements herein contained and to carry out the foregoing
purposes in order to vest in the TRUSTEE the voting right.8 of
the shares of stock held by the undersigned in the
CORPORATION as hereinafter stated it is mutually agreed as
follows:
 1. PERIOD OF DESIGNATION — For a period of five (5) years
from and after date hereof, without power of revocation on the
part of the SUBSCRIBERS, the TRUSTEE designated in the
manner herein provided is hereby made, constituted and
appointed as a VOTING TRUSTEE to act for and in the name of
the SUBSCRIBERS, it being understood, however, that this
Voting Trust Agreement shall, upon its expiration be subject to a
re-negotiation between the parties, as may be warranted by the
balance and attending circumstance of the loan investment of
the TRUSTEE or otherwise in the CORPORATION.

and No. 3 thereof reads:

3. VOTING POWER OF TRUSTEE — The TRUSTEE and its

successors in trust, if any, shall have the power and it shall be
its duty to vote the shares of the undersigned subject hereof and
covered by this Agreement at all annual, adjourned and special
meetings of the CORPORATION on all questions, motions,
resolutions and matters including the election of directors and all
such matters on which the stockholders, by virtue of the by-laws
of the CORPORATION and of the existing legislations are entitled
to vote, which may be voted upon at any and all said meetings
and shall also have the power to execute and acknowledge any
agreements or documents that may be necessary in its opinion
to express the consent or assent of all or any of the stockholders
of the CORPORATION with respect to any matter or thing to
which any consent or assent of the stockholders may be
necessary, proper or convenient.

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:

9. TERMINATION — Upon termination of this Agreement as

heretofore provided, the certificates delivered to the TRUSTEE by
 virtue hereof shall be returned and delivered to the undersigned
stockholders as the absolute owners thereof, upon surrender of
their respective voting trust certificates, and the duties of the
TRUSTEE shall cease and terminate.-

Under the aforecited 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.

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:

Sec. 59. Voting Trusts — One or more stockholders of a stock

corporation may create a voting trust for the purpose of
confering upon a trustee or trusties the right to vote and other
rights pertaining to the shares for a period not exceeding five (5)
years at any one time: ... 26

The acquisition by PNB-NIDC of the properties in question was not made or

effected under the capacity of a trustee but as a foreclosing creditor for the
purpose of recovering on a just and valid obligation of Batjak.

Moreover, the prevention of imminent danger to property is the guiding

principle that governs courts in the matter of appointing receivers. Under
Sec. 1 (b), Rule 59 of the Rules of Court, it is necessary in granting the relief
of receivership that the property or fired be in danger of loss, removal or
material injury.

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.

WHEREFORE, the petitions are GRANTED. The orders of the respondent

judge, dated 16 August 1971 and 30 September 1971, are hereby
ANNULLED and SET ASIDE. The respondent judge and/or his successors are
ordered to desist from hearing and/or conducting any further proceedings in
Civil Case No. 14452, except to dismiss the same. With costs against private
respondents.
SO ORDERED.

Yap, C.J., Melencio-Herrera, Paras and Sarmiento, JJ., concur.

Footnotes

1 Annex B, p. 114, Rollo of G.R. No. 34192.

2 Annex C, p. 136, Rollo of G.R. No. 34192.

3 Annex E, p. 152, Rollo of G.R. No. 34192.

4 Annex G, p. 155, Rollo of G.R. No. 34192.

5 Annex 2, p. 469, Rollo of G.R. No. 34213.

6 Annex M, p. 177, Rollo of G.R. No. 34192.

7 Annex N, p. 195, Rollo of G.R. No. 34192.

8 Annex O, p. 265, Rollo of G.R. No. 34192.

9 Annex Q, p. 226, Rollo of G.R. No. 34192.

10 Annex R, p. 228, Rollo of G.R. No. 34192.

11 Annex S, p. 230, Rollo of G.R. No. 34192.

12 Annex T, p. 232, Rollo of G.R. No. 34192.

13 Annex P, p. 206, Rollo of G.R. No. 34192.

14 Annex Z, p. 264, Rollo of G.R. No. 34192.

15 Annex AA, p. 273, Rollo of G.R. No. 34192.

16 Annex H, p. 138, Rollo of G.R. No. 34213.

17 Annex FF, p. 323, Rollo of G.R. No. 34192 for PNB.

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

20 Annex LL, p. 416, Rollo of G.R. No. 34192.

21 Annex C, p. 136, Rollo of G.R. No. 34192.

22 G.R. No. L-41958, July 20, 1982, 115 SCRA 256,262.

23 Acosta vs. Alvendia, G.R. No. L-14598, Oct. 31, 1960;

Central Bank of the Philippines vs. Cajigal G.R. No. L-19278,
Dec. 29, 1962, 6 SCRA 1072, 1076.

23a (NOTE: Dagupan Electric vs. Pano, 95 SCRA 693, cannot be

applied since the principal offices of PNB and NIDC are in Manila)

24 Marcelo Steel Corporation vs. Import Central Board, 87 Phil.

375.

25 Sec. 1(b), Rule 59 of the Rules of Court.

26 Formerly Sec. 36 of the Corporation Law or Act. No. 1459.