Majestic Plus Holdings International, Inc. vs. Bullion Investment and Development Corporation

A summary judgment is improper when the pleadings, affidavits, and exhibits present genuine issues of fact that necessitate a full-blown trial, such as conflicting claims on who violated a contract and the validity of its rescission.

The City of Manila leased a property to Bullion to construct a city hall extension and a commercial building (Meisic Mall). Bullion failed to finish the commercial building and sought investment from Majestic. The parties executed an MOA where Majestic would acquire 80% equity in Bullion and fund the mall's completion. Conflicts arose over unpaid subscriptions and operational control, culminating in Bullion extrajudicially rescinding the MOA and physically taking over the mall.

• Original Filing: RTC of Manila, Branch 24 (Commercial Court), Civil Case No. 05-113352 (Specific Performance, Injunction, Damages)
• Lower Court Decision (Branch 24): October 12, 2005 — Decision in favor of Majestic.
• CA First Ruling (CA-G.R. SP No. 91886 & CA-G.R. CV No. 86167): February 19, 2008 — Set aside Branch 24 decision; remanded to RTC to be tried as an ordinary specific performance case.
• Re-assignment: Branch 24 judge inhibited; case re-raffled to Branch 46 (also a commercial court).
• Lower Court Decision (Branch 46): July 28, 2011 — Summary judgment in favor of Majestic.
• Execution Pending Appeal: September 1, 2011 — RTC granted execution pending appeal; Writ implemented, Majestic took possession of the mall.
• CA Ruling on Execution (CA-G.R. SP No. 121072): November 2, 2011 — Annulled RTC orders granting execution pending appeal; restored possession to Bullion. (Subject of G.R. No. 201017)
• CA Ruling on Appeal (CA-G.R. CV No. 97537): October 23, 2013 — Reversed RTC summary judgment; recognized Bullion's right to possess; remanded to a non-commercial court. (Subject of G.R. No. 215289)
• SC Action: Consolidated G.R. No. 201017 and G.R. No. 215289 via Resolution dated January 28, 2015.

• The Lease Contract: City of Manila leased a property to Bullion for 25 years to build a city hall extension and a commercial building (Meisic Mall).
• The MOA: Bullion couldn't finish the mall, so it entered into a Memorandum of Agreement (MOA) with Majestic on September 7, 2004. Majestic agreed to acquire 80% equity in Bullion for P96,000,000.00, payable in installments, and infuse capital to complete the mall.
• Default and Rescission: Majestic paid P57,000,000.00 but issued P31,000,000.00 in checks that were dishonored due to "Stop Payment" orders. Bullion demanded payment, then notified Majestic on June 24, 2005 that it elected to rescind the MOA.
• Takeover and Suit: Majestic finished the mall and operated it. On June 25, 2005, Bullion, aided by police and security guards, took physical possession of Meisic Mall. Majestic filed a complaint for specific performance and injunction.
• Summary Judgment: Before Branch 46, the parties jointly moved for summary judgment. The RTC granted summary judgment favoring Majestic, ordering Bullion to implement the MOA, issue shares, and restore possession to Majestic.
• Execution Pending Appeal: RTC granted Majestic's motion for execution pending appeal; the Sheriff restored possession to Majestic. The CA annulled this execution and restored possession to Bullion.
• CA Reversal: The CA reversed the summary judgment, holding genuine issues of fact existed requiring trial, and recognized Bullion's right to possess the mall as the corporation's Board of Directors holds corporate powers, not the controlling stockholder.

• The CA erred in striking down the "good reasons" found by the RTC for execution pending appeal.
• The CA erred in ordering the restoration of possession and control of Meisic Mall to Bullion.
• The CA erred in reversing the RTC summary judgment.
• The RTC Branch 46 had jurisdiction over the case despite being a Special Commercial Court.
• The CA erred in accepting a defective verification and certification from Bullion.
• The CA erred in disregarding that Bullion's certiorari petition raised issues already subject of Bullion's appeal.

• Neither Branch 24 nor Branch 46 of the RTC of Manila had jurisdiction over the suit because, as designated Special Commercial Courts (SCCs), their jurisdiction is limited to trying and deciding special commercial cases only.
• (Implicit from CA ruling) Genuine issues of fact exist regarding who violated the MOA and the validity of its rescission, precluding summary judgment.

• Procedural Issues:
  • Whether the RTC, designated as a Special Commercial Court, has jurisdiction over an ordinary civil case for specific performance.
  • Whether summary judgment was proper given the existence of genuine factual disputes.
  • Whether execution pending appeal was proper.
• Substantive Issues:
  • Whether the extrajudicial rescission of the MOA by Bullion was valid without judicial intervention given Majestic's opposition.
  • Whether a controlling stockholder (Majestic) can take physical possession and operate the corporation's (Bullion) business to the exclusion of the Board of Directors.

• Procedural:
  • Jurisdiction of SCCs: The RTC designated as a Special Commercial Court retains its general jurisdiction over ordinary civil cases. Jurisdiction over the subject matter is conferred by law (BP 129), while the designation of SCCs is merely an internal SC rule for procedural streamlining and workload management. An internal rule cannot diminish jurisdiction conferred by statute.
  • Summary Judgment: The RTC erred in rendering summary judgment. Genuine issues of fact exist—specifically, who violated the MOA, the validity of the rescission, and whether Majestic actually incurred P134,522,803.22 in expenses. Conflicting allegations requiring evidence presentation preclude summary judgment. Furthermore, the RTC failed to conduct a hearing to determine if genuine issues existed before rendering the summary judgment.
  • Execution Pending Appeal: The issue of whether "good reasons" existed for execution pending appeal is moot and academic. Since the CA and SC reversed the RTC decision being executed, there is no longer any judgment to execute.
• Substantive:
  • Extrajudicial Rescission: Extrajudicial rescission has legal effect only when unopposed. Because Majestic strongly opposed the rescission and both parties claim the other violated the MOA, judicial determination is necessary.
  • Corporate Management: The business and affairs of a corporation are handled by the Board of Directors, not the controlling stockholder. Even assuming Majestic became the controlling stockholder, it cannot by itself take physical possession and operate the business of the Meisic Mall.

• Jurisdiction vs. Exercise of Jurisdiction — Jurisdiction over the subject matter is conferred by law and cannot be diminished by internal SC rules. The designation of RTCs as Special Commercial Courts is merely an incident related to the court's exercise of jurisdiction (procedural streamlining) and does not abdicate the RTC's general jurisdiction over ordinary civil cases.
• Summary Judgment — A procedural device to promptly dispose of cases where facts appear undisputed. It is proper only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The movant bears the burden of demonstrating the absence of genuine issues. Any doubt is resolved against the movant. A hearing must be conducted to determine the existence of genuine issues.
• Extrajudicial Rescission — Extrajudicial rescission has a legal effect where the other party does not oppose it. Where it is objected to, a judicial determination of the issue is still necessary.
• Board of Directors' Primacy — The business and affairs of a corporation are handled by the Board of Directors, not the controlling stockholder. All corporate powers are exercised, all business conducted, and all properties controlled by the Board of Directors.

• Section 5.2, R.A. No. 8799 (Securities Regulation Code) — Directs the SC to designate RTC branches that shall exercise jurisdiction over intra-corporate disputes. Applied to show that this designation is merely for streamlining workload and does not diminish the RTC's general jurisdiction.
• Rule 39, Rules of Court — Governs execution pending appeal. Applied to show that "good reasons" must exist for its issuance; however, the issue became moot when the main judgment was reversed.
• Batas Pambansa Blg. 129 (Judiciary Reorganization Act) — Confers general jurisdiction to RTCs. Applied to establish that SCC designation cannot override statutory grant of general jurisdiction.