METROPOLITAN BANK & TRUST COMPANY (METROBANK) VS.

SALAZAR REALTY
CORPORATION
G.R. NO. 218738

FACTS:

Petitioner Metrobank and respondent Salazar Realty Corporation (SARC) are both
corporations which is engaged in banking business and rea estate business
respectively. In the litigation, another corporation, Tacloban RAS Construction
Corporation (Tacloban RAS) was also involved. Tacloban RAS obtained a loan with a
total amount of 18,500,000.00 php and reflected in a promissory note executed between
Tacloban RAS and Metrobank which was signed by one Consuelo and Ralph, both
officers of SARC as member of its Board of Directors and Secretary respectively, at the
same time, officers of Tacloban RAS as President and Corporate Secretary,
respectively. To secure the loan, METROBANK and SARC entered into a mortgage
contract with Consuelo and Ralph still signing, covering a five parcels of land, all
registered in the name of SARC with the approval of it board. Thereafter, Tacloban RAS
defaulted on the loan, prompting Metrobank to initiate extrajudicial foreclosure
proceedings before RTC of Tacloban City, emerging the same as the winning bidder.
SARC’s certificate of title were cancelled and new ones were issued in favor of
Metrobank. In response, Ramon et al., incorporators and stockholders acting in behalf
of SARC registered an adverse claim on the new certificates of title that were issued to
Metrobank. In their contention, the loan agreement is void because Consuelo is not a
stockholder or officer of Tacloban RAS, and the mortgage agreement and the
foreclosure proceedings are void because TACLOBAN RAS has no authority to use
SARC’s properties as collateral. Before the RTC, Metrobank, however, filed a comment
with motion to dismiss arguing that Consuelo and Ralph had authority to enter into the
loan and mortgage agreements, and that the mortgaged properties were personally
owned by them, with the approval of both Tacloban RAS and SARC. Moreover, SARC
and its stockholders have no standing to seek the cancellation of the loan and mortgage
agreements since SARC is not a party thereto, and that the petition filed is in nature of a
derivative suit which must be directed against SARC’s officers, directors, or
stockholders, and since it is a derivative suit, it is in intra-corporate controversy over
which regular courts like Branch 9 of Tacloban City RTC have no jurisdiction. Thus,
Metrobank prayed that the petition be dismissed for lack of jurisdiction.

RTC however, denied the motion to dismiss. Metrobank filed another motion to dismiss
on the basis that SARC’s petition is a derivative suit and therefore an intra-corporate
controversy. Under A.M. No. 00-11-03-SC, special commercial court was created in the
Tacloban City RTC; however, Branch 9, a regular trial court, continued to exercise
jurisdiction over the case. The petition was instantly denied, the trial court ruling that
cases be filed with a special commercial court does not apply to the present case which
was filed before the A.M. No. 00-11-03-SC took effect on July 1, 2003. Moreover, the
court ruled that the case does not involve an intra-corporate controversy, because it
does not involve a dispute between corporation and its stockholders. Metrobank’s
motion for reconsideration was likewise denied.
With the firm belief that the case involves an intra-corporate controversy, Metrobank file
its recourse to the CA. However, it was dismissed also, because the appellate court
found that SARC’S petition does not pass the two-tier intra-controversy test, it does not
involve any of the intra-corporate relationships under PD 902-A and does not involve a
dispute which is intrinsically connected with the regulation of SARC or a dispute which
arises out of the intra-corporate relations within SARC.

Hence, the recourse.

ISSUE:

Whether or not RTC Branch 9 of Tacloban City, not being a special commercial court,
has jurisdiction over a derivative suit to annul a mortgage allegedly entered into by
corporate officers without proper authorization and where the defendants are third
parties with no relation to the suing corporation.

RULING:
NO. Special commercial courts were organized pursuant to the provisions of the
Sections 4.1 and 5.2 of Securities Regulations Code (SRC), also authorizing the
Supreme Court to designate certain RTCs to try intra-corporate disputes. Thus, the
highest court designated certain RTCs as special commercial courts and enacted the
2001 IRPIC to provide for the procedure to be observed in trying said disputes. The
express inclusion of derivative suits in the classes of cases governed by the 2001 IRPIC
implies that all derivative suits must now be tried by the special commercial courts.
Accordingly, in a derivative suti, it allows an unauthorized person to sue on behalf of a
corporation in order to remedy official or directorial mismanagement, the very act of
instituting a derivative suit implies the existence if an intra-corporate dispute. The
Supreme Court laid down in its guidelines for derivative suits by the special commercial
courts in Gonzales v. GJH Land. SARC’s suit is therefore a derivative suit which is
transferable to the relevant special commercial court in accordance with the Gonzales
guidelines, the rest of the petition/s allegations clearly reveal the crux of the dispute is
the illegal and ultra vires approval of the mortgage by the SARC board without the
consent of the suing shareholders. These allegations unmistakably show the existence
of a “controversy arising out of intra-corporate relations”. The suing shareholder’s cause
of action is ultimately rooted in the illegal and improper ratification and authorization of
the mortgage contract by Ralph and the SARC Board. Moreover, SARC’s petition lack
categorical statement that it is not a nuisance or harassment suit, that for an
unauthorized suit filed on behalf of the corporation, they must categorically declare that
th remedy is being sought for just and legitimate purposes and not as a form of
nuisance or harassment, for it so, it shall be dismissed.

The petition is granted.