Capitol College of Iligan, Inc. v. Court of Appeals
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the claim of Spouses Gerardo and Felina Aranas for their share of investments and profits in Capitol College of Iligan, Inc. (CCII). The initial judgment in 1975 ordered CCII to deliver stock certificates corresponding to the Aranas' investments, to allow inspection of corporate books to determine profits, and to pay their share of profits and moral damages. This judgment underwent several modifications and appeals through various lower courts and the Supreme Court. 2. Procedural History: The case originated from a 1975 judgment by the Court of First Instance of Iligan City. This judgment was affirmed with modifications by the Court of Appeals and subsequently by the Supreme Court in G.R. No. 95067, which directed the Securities and Exchange Commission (SEC) to execute the final judgment. The SEC took cognizance and issued a writ of execution. However, disputes over the scope of execution led to further petitions before the Court of Appeals. The SEC En Banc confirmed a writ of execution, and the Aranas filed a petition for mandamus with the Court of Appeals. 3. The Petition: The instant petition for review on certiorari seeks to annul the December 20, 1996 decision of the Court of Appeals, which granted the Aranas' petition for mandamus. The Court of Appeals ordered CCII to issue stock certificates, submit all records from 1964 for profit determination, pay unrealized profits/dividends, and pay moral damages. The petitioner argues that the Court of Appeals erred in reviving the award of moral damages, ordering the issuance of stock certificates despite prior compliance, and in ordering the delivery of unrealized profits and/or dividends. The petition specifically questions the scope of the SEC's execution powers as interpreted by the Court of Appeals.
Issue(s)
Whether the respondent court erred in ordering the SEC to cause the issuance of certificates of stocks to private respondents corresponding to their cash investment. Whether the respondent court erred in ordering petitioners to pay the amount of P5,000.00 as moral damages. Whether the respondent court erred in ordering the petitioner to submit to the SEC for inspection all its records/books of account dating back in 1964 to the present, for the purpose of determining whether profits have been earned by petitioner and whether private respondents have been unjustly deprived of their share therein. Whether the respondent court erred in ordering the petitioner to deliver to private respondents their unrealized profits and/or dividends.
Ruling
The Supreme Court modified the decision of the Court of Appeals. It affirmed the order for the inspection of petitioner's books to determine unrealized profits and dividends, but deleted the award of moral damages and ruled that the stock certificates had already been issued.
Ratio Decidendi
On the issuance of stock certificates: The Court ruled that the respondent court erred in ordering the issuance of stock certificates because the petitioner had already complied with the writ of execution on July 3, 1987, by tendering 573 shares corresponding to the cash investment of P5,730.00, plus attorney's fees. This compliance was never disputed by the private respondents, thus negating any basis for a new order of issuance. The Court reiterated that the original judgment, as modified, included the issuance of stock certificates, but compliance had already been achieved. On the award of moral damages: The Court found that the respondent court erred in reviving the award of P5,000.00 as moral damages. The Court noted that the award of moral damages was previously deleted by the Court of Appeals in its resolution dated November 21, 1983, because bad faith was not clearly established. Therefore, the respondent court exceeded its jurisdiction by reinstating this deleted award. On the submission of records for inspection: The Court affirmed the respondent court's order for the inspection of petitioner's books of account from 1964 to the present. This was in line with the Supreme Court's decision in G.R. No. 95067, which mandated the SEC to cause the execution of the final judgment. The purpose of the inspection was explicitly stated to be for determining whether profits have been earned and whether the private respondents have been unjustly deprived of their share therein. This determination requires a factual examination of the corporation's financial records. On the delivery of unrealized profits and/or dividends: The Court found this order to be proper, as it merely complied with the Supreme Court's decision in G.R. No. 95067. The ruling clearly stated that the execution would include determining if profits were earned and if private respondents were deprived of their share. After the inspection and determination of profits by the board of directors, the private respondents could then avail themselves of proper legal remedies to demand their participation in declared dividends.
Main Doctrine
The Court modified the Court of Appeals' decision, affirming the order for inspection of petitioner's books to determine unrealized profits and dividends, but deleted the award of moral damages and ruled that stock certificates had already been issued.