Bangko Sentral ng Pilipinas vs. Campa, Jr.

A complaint styled as a derivative suit is not a derivative suit where the injury alleged is personal to the stockholder and third-party mortgagors rather than to the corporation, and where the stockholder failed to exhaust intra-corporate remedies; when a case filed before a special commercial court is found not to involve an intra-corporate controversy, the proper remedy is re-raffling to all RTC branches of the place where the complaint was filed, not dismissal, pursuant to Gonzales vs. GJH Land.

Bangko Sentral ng Pilipinas (BSP) extended a Special Liquidity Facility (SLF) loan to Bankwise, Inc., secured by real estate mortgages over properties owned by third-party mortgagors, including Eduardo Aliño, Haru Gen Beach Resort and Hotel Corporation, and the Campa respondents. VR Holdings, a holding corporation, formerly owned 50.44% of Bankwise's shares of stock, with Wise Holdings owning the remaining 49.56%. Aliño was a 10% stockholder of VR Holdings. When Bankwise defaulted, BSP extrajudicially foreclosed all mortgaged properties and consolidated title in its name. The dispute arose from the third-party mortgagors' attempts to recover their foreclosed properties, premised on an alleged dacion en pago arrangement between BSP and Bankwise that, they claimed, extinguished the mortgages by novation.

Bankwise, Inc. applied for a Special Liquidity Facility (SLF) loan from the Bangko Sentral ng Pilipinas (BSP) sometime in 2000. BSP required Bankwise to submit mortgages over properties owned by third parties to secure its outstanding obligation. In compliance, Bankwise mortgaged several real properties belonging to third-party mortgagors: Eduardo Aliño and co-owners (TCT Nos. T-4685 and T-4686 in Marinduque), Haru Gen Beach Resort and Hotel Corporation (TCT Nos. 11849 and 11850 in Catanduanes), and the Campa respondents—Vicente Jose Campa, Jr., Miriam M. Campa, Maria Antonia C. Ortigas, Maria Teresa C. Arevalo, Maria Nieves C. Alvarez, Marian M. Campa, and Balbino Jose Campa (TCT Nos. 25849, 25850, 25851, and 9087 in Mandaluyong City). The third-party mortgagors allowed their properties to be used as collateral upon assurances from Bankwise and VR Holdings—a holding corporation that formerly owned 50.44% of Bankwise's shares—that the properties would be returned and that they would not be exposed to the risk of foreclosure.

When Bankwise failed to pay its obligations to BSP, the latter applied for extrajudicial foreclosure of the third-party mortgages. All mortgaged properties were sold at public auction to BSP as the highest bidder, and corresponding certificates of sale were registered, with titles consolidated in BSP's name. Aliño, a 10% stockholder of VR Holdings, alleged that BSP had assured him it would allow Bankwise to settle its outstanding obligation by way of dacion en pago, citing BSP letters dated October 13, 2004 and November 5, 2004 confirming the arrangement, and noting that BSP had already accepted no less than fifteen properties from Bankwise in partial settlement. Aliño claimed that the value of properties offered for dacion would be more than sufficient to cover Bankwise's obligation, and that BSP's foreclosure of his and other third-party mortgagors' properties was treacherous and confiscatory.

On April 18, 2006, Aliño filed a complaint for specific performance, novation of contracts, and damages with application for TRO and preliminary injunction against BSP and Bankwise, docketed as Commercial Case No. 06-114866 before the RTC of Manila, Branch 36. Aliño styled the action as a derivative suit on behalf of VR Holdings, seeking to enjoin BSP from consolidating titles, to declare the third-party real estate mortgages discharged by novation through the dacion en pago arrangement, and to compel the return of the mortgaged properties to their owners. Haru Gen Beach Resort filed a Motion for Leave of Court to Admit Complaint in Intervention, but the RTC denied the motion on October 23, 2003, on the ground that Haru Gen's cause of action was properly the subject of a separate proceeding. On January 3, 2007, the Campa respondents filed their own Motion for Leave to Intervene and Admit Complaint-in-Intervention, asserting legal interest as registered owners of mortgaged properties and repleading the causes of action set forth in Aliño's complaint. BSP opposed the motion, but the RTC, through Judge Emma S. Young, granted it on April 24, 2007.

BSP elevated the RTC order to the Court of Appeals via petition for certiorari, alleging grave abuse of discretion. The Court of Appeals affirmed on July 15, 2008, finding no grave abuse of discretion in the trial court's allowance of intervention. BSP's motion for reconsideration, arguing that respondents were not stockholders of VR Holdings and thus lacked legal interest in a derivative suit, was denied on January 9, 2009. BSP then filed the instant petition for review before the Supreme Court.

• Requisites for Intervention Not Met: BSP argued that the Campa respondents failed to satisfy the requisites for intervention under the Rules of Court.
• Derivative Suit Bars Non-Stockholder Intervention: BSP maintained that Commercial Case No. 06-114866 is a derivative suit initiated by Aliño as a stockholder of VR Holdings, and that respondents, not being stockholders of VR Holdings, cannot have an actual legal interest in the matter of litigation.
• Inconsistent Treatment of Similarly Situated Mortgagors: BSP urged the Court to apply the trial court's prior denial of Haru Gen's intervention, arguing there is no legal basis to treat the Campa respondents differently from Haru Gen, a third-party mortgagor similarly situated whose intervention had been denied with finality.
• Delay Tactic: BSP insisted that respondents' intervention was being sought to delay consolidation of title in the name of BSP and BSP's taking possession of the foreclosed properties, which are necessary consequences of foreclosure.
• Dismissible Complaint-in-Intervention: BSP contended that respondents' complaint-in-intervention and its supplement are dismissible for lack of cause of action, and that any cause of action is properly the subject of a separate proceeding.

• Legal Interest in the Litigation: Respondents asserted that they have a legal interest in the matter of litigation as registered owners of certain real properties subject of the mortgage, having allowed their properties to be used as security for Bankwise's SLF with BSP upon assurances that there was no risk of foreclosure.
• Repleading of Aliño's Causes of Action: Respondents repleaded the causes of action submitted by Aliño in his Complaint, including the assertion that the dacion en pago arrangement between BSP and Bankwise extinguished the third-party mortgages by novation.

• Nature of the Action: Whether the complaint filed by Aliño is a derivative suit, such that intervention by non-stockholders is effectively disallowed.
• Jurisdiction and Proper Remedy: Whether the case should be dismissed for lack of jurisdiction if it is not a derivative suit or intra-corporate controversy, or whether it should be re-raffled to all RTC branches.
• Propriety of Intervention: Whether the intervention by the Campa respondents is proper.

• Nature of the Action: No. The complaint is not a derivative suit because the injury alleged is personal to Aliño and the other third-party mortgagors, not to the corporation; Aliño also failed to exhaust intra-corporate remedies as required by the Interim Rules.
• Jurisdiction and Proper Remedy: Re-raffling, not dismissal. Following Gonzales vs. GJH Land, a case filed before a special commercial court that is found not to involve an intra-corporate controversy should be re-raffled to all RTC branches of the place where the complaint was filed, not dismissed.
• Propriety of Intervention: The complaint-in-intervention should be refiled in the court where the principal action is assigned after re-raffling, as intervention is merely ancillary and supplemental to the existing litigation and its jurisdiction is governed by the jurisdiction of the main action.

• Nature of the Action: A derivative suit is a suit by a shareholder to enforce a corporate cause of action, where the corporation is the real party-in-interest and the suing stockholder is only a nominal party. The requisites under Section 1, Rule 8 of the Interim Rules of Procedure Governing Intra-Corporate Controversies (A.M. No. 01-2-04-SC) require that: (1) the person filing suit be a stockholder at the time of the acts complained of and at the time the action is filed; (2) he must have exerted all reasonable efforts to exhaust all remedies available under the articles of incorporation, by-laws, laws, or rules governing the corporation; (3) no appraisal rights are available for the acts complained of; and (4) the suit is not a nuisance or harassment suit. The complaint failed on multiple grounds. First, the injury alleged pertained to the personal properties of Aliño and other third-party mortgagors, not to the corporation—a judgment in favor of the complainant would mean recovery of his personal property, not corporate assets. Second, Aliño failed to exhaust intra-corporate remedies: his demand letters were addressed to the President of Bankwise and VR Holdings, not to the Board of Directors, and consisted of only one letter per company, which was insufficient under Lopez Realty vs. Spouses Tanjangco. Third, the appraisal right requirement was inapplicable because the subject of the act complained of was private property, not corporate property. Fourth, the complaint constituted a harassment suit because the damage was not caused to the corporation. The Court concluded that the complaint "clearly is not for the benefit of the corporation."

• Jurisdiction and Proper Remedy: When Republic Act No. 8799 took effect, the SEC's jurisdiction over intra-corporate controversies was transferred to RTCs designated as special commercial courts. Because the Aliño complaint was not a derivative suit, the special commercial court lacked jurisdiction. Previously, the doctrine required dismissal of such cases, as illustrated in Reyes vs. RTC of Manila, Br. 142, Home Guaranty Corporation vs. R-II Builders, Inc., Ching vs. Subic Bay Golf and Country Club, Inc., and Ang vs. Ang. However, this doctrine was abandoned by Gonzales vs. GJH Land, which held that the designation of Special Commercial Courts is merely a procedural tool under the Court's internal rule-making authority and does not abdicate the RTC's general jurisdiction over ordinary civil cases under BP 129. Accordingly, re-raffling to all RTCs of the place where the complaint was filed is the proper remedy, not dismissal.

• Propriety of Intervention: Intervention is merely ancillary and supplemental to the existing litigation and never an independent action. Under Asian Terminals Inc. vs. Bautista-Ricafort, the dismissal of the principal action necessarily results in the dismissal of the complaint-in-intervention, and a court which has no jurisdiction over the principal action has no jurisdiction over a complaint-in-intervention. Because the RTC had already acquired jurisdiction upon filing of the complaint, and the re-raffling of the case is more administrative than judicial, the complaint-in-intervention should be refiled in the court where the principal action is assigned after re-raffling.

• Requisites of a Derivative Suit — A derivative suit requires that: (1) the person filing suit be a stockholder or member at the time the acts or transactions subject of the action occurred and at the time the action is filed; (2) he must have exerted all reasonable efforts to exhaust all remedies available under the articles of incorporation, by-laws, laws, or rules governing the corporation; (3) no appraisal rights are available for the act or acts complained of; and (4) the suit is not a nuisance or harassment suit. The corporation must be impleaded as an indispensable party because it is the corporation's cause of action that is being litigated and judgment must be res judicata against it. The Court applied these requisites and found that Aliño's complaint failed on all material grounds—the injury was personal, not corporate; intra-corporate remedies were not exhausted; and the suit constituted a harassment suit.

• Re-Raffling Doctrine (Gonzales vs. GJH Land) — When a case filed before a special commercial court is found not to involve an intra-corporate controversy, the proper remedy is re-raffling to all RTC branches of the place where the complaint was filed, not dismissal. The designation of Special Commercial Courts is merely a procedural tool under the Court's internal rule-making authority and does not abdicate the RTC's general jurisdiction over ordinary civil cases under BP 129. The Court applied this doctrine to direct re-docketing and re-raffling of the case.

• Intervention as Ancillary to the Main Action — Intervention is merely ancillary and supplemental to the existing litigation and never an independent action. The dismissal of the principal action necessarily results in the dismissal of the complaint-in-intervention. A court which has no jurisdiction over the principal action has no jurisdiction over a complaint-in-intervention. Jurisdiction of intervention is governed by the jurisdiction of the main action.

• "The suit clearly is not for the benefit of the corporation for a judgment in favor of the complainant would mean recovery of his personal property. There is no actual or threatened injury alleged to have been done to the corporation due to the foreclosure of the properties belonging to third-party mortgagors." — This passage articulates the ratio decidendi for the finding that the complaint is not a derivative suit, distinguishing personal injury from corporate injury as the defining characteristic of a derivative action.

• "[T]he re-raffling of an ordinary civil case in this instance to all courts is permissible due to the fact that a particular branch which has been designated as a Special Commercial Court does not shed the RTCs general jurisdiction over ordinary civil cases under the imprimatur of statutory law, i.e., Batas Pambansa Bilang (BP) 129." — This quotation from Gonzales vs. GJH Land states the doctrinal basis for re-raffling rather than dismissal when a case filed before a special commercial court is found not to involve an intra-corporate controversy.

• "intervention is merely ancillary and supplemental to the existing litigation and never an independent action, the dismissal of the principal action necessarily results in the dismissal of the complaint-in-intervention. Likewise, a court which has no jurisdiction over the principal action has no jurisdiction over a complaint-in-intervention." — This passage from Asian Terminals Inc. vs. Bautista-Ricafort defines the jurisdictional dependence of intervention on the main action, explaining why the complaint-in-intervention must be refiled in the court to which the principal action is reassigned.

• San Miguel Corporation vs. Kahn, 257 Phil. 459 (1989) — Articulated the jurisprudential requirements for derivative suits prior to the Interim Rules: stockholder status at the time of the act, exhaustion of intra-corporate remedies, and the cause of action devolving on the corporation. Followed as the foundational framework for derivative suit requisites.
• Asset Privatization Trust vs. Court of Appeals, 360 Phil. 768 (1998) — Established that the corporation is an indispensable party in a derivative suit because it is the corporation's cause of action being litigated and judgment must be res judicata against it. Cited to explain the rationale for impleading the corporation.
• Reyes vs. RTC of Manila, Br. 142, 583 Phil. 591 (2008) — Held that a complaint not amounting to a derivative suit should be dismissed for lack of jurisdiction. Distinguished and effectively abandoned by Gonzales vs. GJH Land insofar as dismissal is no longer the proper remedy.
• Gonzales vs. GJH Land, G.R. No. 202664, November 10, 2015 — Abandoned the prior doctrine of dismissal and established that re-raffling to all RTC branches is the proper remedy when a case filed before a special commercial court is found not to involve an intra-corporate controversy. Controlling precedent applied in this case.
• Asian Terminals Inc. vs. Bautista-Ricafort, 536 Phil. 614 (2006) — Held that intervention is merely ancillary and supplemental, and that jurisdiction over a complaint-in-intervention is governed by jurisdiction over the main action. Applied to determine the procedural treatment of the complaint-in-intervention upon re-raffling.
• Ching vs. Subic Bay Golf and Country Club, Inc., G.R. No. 174353, September 10, 2014 — Dismissed a derivative suit for failure to state with particularity the exhaustion of intra-corporate remedies. Cited as illustrative of the prior dismissal doctrine now superseded by Gonzales.
• Lopez Realty vs. Spouses Tanjangco, G.R. No. 154291, November 12, 2014 — Held that a demand made on the board of directors for appropriate relief constitutes compliance with the exhaustion requirement. Applied to show that Aliño's demand letters, addressed to the President rather than the Board, were insufficient.

• Section 1, Rule 8, A.M. No. 01-2-04-SC (Interim Rules of Procedure Governing Intra-Corporate Controversies) — Sets forth the four requisites for derivative suits: stockholder status at the time of the act and filing, exhaustion of intra-corporate remedies, unavailability of appraisal rights, and the suit not being a nuisance or harassment suit. The Court applied each requisite to Aliño's complaint and found it failed on all material grounds.
• Section 1(b), Rule I, Interim Rules of Procedure for Intra-Corporate Controversies — Provides guidelines for determining whether a suit is a nuisance or harassment suit, including the extent of shareholding, subject matter, legal and factual basis, availability of appraisal rights, and prejudice to the corporation. Applied to conclude that the complaint was a harassment suit because the damage was not caused to the corporation.
• Section 81, Corporation Code — Recognizes the right of appraisal in cases of amendment to articles of incorporation, disposition of substantially all corporate assets, and merger or consolidation. Cited to explain that appraisal rights do not apply when the subject of the act complained of is the private property of a stockholder, not corporate property.
• Republic Act No. 8799 — Transferred the SEC's exclusive and original jurisdiction over intra-corporate controversies to RTCs designated as special commercial courts. Cited as the statutory basis for the jurisdictional framework governing the case.
• Presidential Decree No. 902-A, Section 5 — Enumerated the cases over which the SEC had original and exclusive jurisdiction, including derivative suits. Cited as the predecessor jurisdictional framework transferred to the RTCs by R.A. No. 8799.
• Batas Pambansa Blg. 129 — Conferred general jurisdiction over ordinary civil cases on the RTCs. Cited in Gonzales vs. GJH Land as the statutory basis for the proposition that the designation of special commercial courts does not abdicate the RTC's general jurisdiction.

Velasco, Jr. (Chairperson), Peralta, Reyes, and Jardeleza, JJ., concurred.