Tumagan vs. Kairuz

A dispute between a corporation and its shareholder regarding the management of and access to corporate property constitutes an intra-corporate controversy falling under the exclusive jurisdiction of the Regional Trial Court designated as a commercial court, notwithstanding that the complaint is styled as one for forcible entry against the corporation's employees or agents; consequently, the corporation is an indispensable party whose absence renders any judgment null and void for want of authority.

Laurence Ramzy Kairuz and his sisters owned a 5.2-hectare property known as Kairuz Spring in Tadiangan, Tuba, Benguet. They entered into a Memorandum of Agreement (MOA) with Balibago Waterworks System Incorporated (BWSI) and PASUDECO to form Bali Irisan Resources, Inc. (BIRI), transferring the property to the new corporation in exchange for P115,000,000.00 and 30% equity. Respondent Mariam K. Kairuz, Laurence's widow, succeeded to his position on BIRI's Board of Directors and three-person Management Committee (ManCom). Under the MOA, the Kairuz family retained the right to operate a truck water business on the property. Conflicts arose when respondent allegedly acted against BIRI's interests, prompting the corporation to warn of MOA termination and authorize petitioners—John Cary Tumagan (BIRI branch manager), Alam Halil, and Bot Padilla (licensed geodetic engineers engaged by BIRI)—to secure the premises.

• The Corporate Structure and Property Transfer: The Kairuz family (Laurence and sisters) owned the subject property. They sold it to BIRI pursuant to an MOA with BWSI and PASUDECO. BIRI issued new certificates of title in its name. The Kairuzes held 30% of BIRI shares; BWSI/PASUDECO held 70%. Respondent succeeded her late husband's seat on the Board and ManCom.
• The Alleged Forcible Entry: On May 28, 2007, petitioners allegedly conspired to take possession of the property by force, intimidation, threat, and stealth, deploying armed men, padlocking gates, and excluding respondent.
• The Corporate Defense: Petitioners claimed they acted as BIRI employees/agents executing Board Resolutions authorizing the securing of corporate property against respondent, who was allegedly in default under the MOA. They asserted the action was intra-corporate.
• Lower Court Findings: The MCTC found respondent had prior physical possession but dismissed for failure to implead BIRI as indispensable party. The RTC affirmed, noting petitioners acted on behalf of BIRI.

• Indispensable Party: BIRI, as registered owner and the entity that ordered the property secured, is an indispensable party without whom no final determination can be had; the joinder is mandatory and the plaintiff's responsibility.
• Intra-corporate Jurisdiction: The dispute involves the management of corporate property and the relationship between BIRI (corporation) and respondent (shareholder), constituting an intra-corporate controversy under the Interim Rules of Procedure for Intra-Corporate Controversies, vesting jurisdiction in the RTC, not the MCTC.
• Nature of Possession: Respondent is not a co-owner of the property; shareholders do not own corporate assets. Her possession was merely by accommodation under the MOA, while petitioners possessed on behalf of the owner (BIRI).

• Ejectment Nature: The action is for forcible entry based on prior physical possession, a matter within the MCTC's jurisdiction.
• Co-ownership: As successor to her husband's 30% share and a shareholder, she is a co-owner entitled to possession under Article 487 of the Civil Code, allowing her to sue for ejectment without joining all co-owners.
• Indispensable Party Procedure: Non-joinder of BIRI is not a ground for dismissal under Rule 3, Section 11 of the Rules of Court; the court should have ordered its impleader rather than dismiss.

• Indispensable Party: Whether the dismissal for failure to implead BIRI was proper.
• Intra-corporate Jurisdiction: Whether the dispute constitutes an intra-corporate controversy falling under the jurisdiction of the RTC designated as a commercial court.
• Co-ownership and Possession: Whether respondent, as a shareholder, qualifies as a co-owner entitled to bring an ejectment action under Article 487 of the Civil Code.

• Indispensable Party: BIRI is an indispensable party, being the registered owner of the property and the principal for whom petitioners acted. The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent party but even as to those present. While Rule 3, Section 11 provides that non-joinder is not a ground for dismissal, the indispensable party must be impleaded before judgment; here, the Court of Appeals rendered judgment without BIRI's participation, making its decision void.
• Intra-corporate Jurisdiction: The dispute is intra-corporate. The status relationship (corporation vs. shareholder) and the nature of the question (management of corporate property—posting guards, denying access) satisfy the test in Matling Industrial and Commercial Corporation v. Coros. The MCTC never acquired jurisdiction.
• Co-ownership and Possession: Shareholders are not owners of corporate property, which belongs to the corporation as a distinct legal person. Respondent's interest is inchoate and expectant. Article 487 does not apply. Furthermore, the finding of prior possession was erroneous; respondent possessed by accommodation under the MOA, while petitioners possessed on behalf of the owner.

• Indispensable Party: Defined as a party in interest without whom no final determination can be had of an action. Joinder is mandatory and the responsibility rests upon the plaintiff. The absence of such party renders all subsequent court actions null and void for want of authority, not only as to the absent party but even as to those present.
• Intra-Corporate Controversy: Jurisdiction is determined by two concurrent factors: (a) the status or relationship of the parties (e.g., corporation-stockholder); and (b) the nature of the question subject of the controversy (e.g., management of corporate property). Not every conflict between a corporation and stockholder involves corporate matters.
• Separate Corporate Personality: Shareholders are in no legal sense the owners of corporate property, which is owned by the corporation as a distinct legal person. A shareholder's interest is purely inchoate—an expectancy of rights in management, profits, and assets upon dissolution after payment of debts.

• "An indispensable party is a party in interest without whom no final determination can be had of an action and who shall be joined either as plaintiffs or defendants. The presence of indispensable parties is necessary to vest the court with jurisdiction."
• "The joinder of indispensable parties is mandatory and the responsibility of impleading all the indispensable parties rests on the plaintiff."
• "The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act not only as to the absent party but even as to those present."
• "Shareholders are in no legal sense the owners of corporate property, which is owned by the corporation as a distinct legal person."
• "At most, Mariam's interest as a shareholder is purely inchoate, or in sheer expectancy of a right, in the management of the corporation and to share in its profits, and in its properties and assets on dissolution after payment of the corporate debts and obligations."

• Domingo v. Scheer, G.R. No. 154745 — Established that the absence of an indispensable party renders court actions null and void.
• Lotte Phil. Co., Inc. v. Dela Cruz, G.R. No. 166302 — Reiterated the mandatory nature of joinder of indispensable parties.
• Matling Industrial and Commercial Corporation v. Coros, G.R. No. 157802 — Provided the guidelines for determining intra-corporate controversies based on relationship of parties and nature of the question.
• Asia's Emerging Dragon Corporation v. Department of Transportation and Communications, G.R. Nos. 169914 & 174166 — Affirmed that shareholders are not owners of corporate property.

• Rule 3, Section 11, Rules of Court — Provides that neither misjoinder nor non-joinder of parties is a ground for dismissal of an action, but allows the court to order the impleading of an indispensable party at any stage.
• Article 487, Civil Code — Allows any one of the co-owners to bring an action for ejectment without necessarily joining all other co-owners.
• Interim Rules of Procedure for Intra-Corporate Controversies, A.M. No. 01-2-04-SC — Vests jurisdiction over intra-corporate disputes in the Regional Trial Court designated as a commercial court.

Leonardo-De Castro, C.J. (Chairperson), Bersamin, and Del Castillo, JJ.