Chan v. Chan
MODIFICATIONFacts
The Antecedents: Respondents Yolanda Chan, Rosalina Rivera, Alvin Rivera, and Kathleen Rivera, along with petitioners Simeon Nicolas Chan, Leroy Chan, and Melanie Mae C. Torres, were stockholders of Ambassador Hotel, Inc. The dispute arose when respondents, as members of the Board of Directors, called and held special meetings on March 2, 1998, and April 25, 1998, to approve resolutions aimed at addressing alleged mismanagement and safeguarding the Hotel's assets. These resolutions included electing new officers, with Yolanda Chan replacing Simeon Chan as President and Rosalina Rivera becoming Chairman of the Board. Simeon Chan refused to recognize these meetings and their outcomes, asserting his sole authority as President to call special meetings according to the Hotel's By-Laws. Procedural History: Petitioners initiated the legal battle by filing a Petition for Declaration of Nullity of Special Meetings and the Matters Taken Up Therein before the Securities and Exchange Commission (SEC). They also sought a preliminary injunction, which was initially denied. A supplemental petition was later filed, challenging the validity of respondents' shares. The SEC denied a subsequent motion for preliminary injunction and a motion for the creation of a management committee, directing the Hotel to hold a stockholder's meeting and stating that disputed shares could not vote pending resolution. After an appeal to the SEC en banc was dismissed for non-payment of fees, the Court of Appeals (CA) ordered the SEC en banc to take cognizance of the appeal. Subsequently, due to the transfer of jurisdiction over intra-corporate controversies, the case moved to the Regional Trial Court (RTC) of Manila, Branch 46. The RTC denied various motions from both parties, including petitioners' motion to deem conclusive the basis of shares entitled to vote and motions for default and contempt. Petitioners then filed a special civil action for certiorari with the CA, which dismissed their petition, finding no grave abuse of discretion. The Petition: Petitioners seek review of the CA's decision and resolution, arguing that the CA erred in affirming the RTC's order and in dismissing their petition for certiorari. They contend that the CA departed from accepted judicial proceedings by adopting the RTC's statement of facts, which they claim misrepresented the case. Petitioners also argue that the CA erred in ruling that a motion for reconsideration was necessary before filing the certiorari petition, asserting that the Interim Rules of Procedure Governing Intra-Corporate Controversies prohibited such a motion and that the RTC's order was immediately executory. Furthermore, they claim the CA ignored the RTC's grave abuse of discretion in misstating issues, denying their motion to deem conclusive the basis of shares entitled to vote, denying their motion for default, and irregularly granting reliefs to respondents while denying their motion for contempt. Petitioners assert that the CA's decision improperly denied their injunctive reliefs and that injustice was committed, effectively curing defects in the respondents' positions.
Issue(s)
Whether a motion for reconsideration was a prerequisite to filing a petition for certiorari with the Court of Appeals, considering the Interim Rules of Procedure Governing Intra-Corporate Controversies. Whether the Court of Appeals erred in affirming the findings of fact of the Regional Trial Court. Whether the Court of Appeals committed grave abuse of discretion in affirming the Regional Trial Court's denial of petitioners' motions to deem conclusive the basis of shares entitled to vote, to declare respondents in default, and to cite respondents' counsel in contempt of court.
Ruling
The petition is denied. The Decision of the Court of Appeals, dated July 5, 2001, and its Resolution dated November 13, 2001 in CA-G.R. SP No. 64268, are affirmed.
Ratio Decidendi
On the requirement of a motion for reconsideration before filing a petition for certiorari: The Supreme Court agreed with the petitioners that a motion for reconsideration was not a prerequisite in this case. The Court clarified that while Rule 65 of the Rules of Court generally requires such a motion, it is inapplicable to intra-corporate disputes governed by the Interim Rules of Procedure for Intra-Corporate Controversies. Specifically, Section 8, Rule 1 of the Interim Rules prohibits motions for reconsideration, and Section 4 thereof states that all decisions and orders are immediately executory. Given that the RTC declared its order immediately executory, direct resort to the appellate court via certiorari was the most, if not the only, available remedy, as there was no other plain, speedy, and adequate remedy in the ordinary course of law. Filing a motion for reconsideration would have been considered pro forma and would not have tolled the reglementary period for filing the certiorari petition. On affirming the findings of fact of the Regional Trial Court: The Court disagreed with the petitioners' contention that the CA erred in adopting the RTC's findings of fact. The Court reiterated the hornbook doctrine that findings of fact of trial courts are entitled to great weight and should not be disturbed except for strong and valid reasons, as the trial court is in a better position to examine the demeanor of witnesses. Petitioners failed to offer any compelling reason why the RTC's narration of facts, as affirmed by the CA, should be substituted by their own allegations. The Supreme Court's own statement of facts only supplemented, but did not supersede, the appellate and trial courts' findings. On the alleged grave abuse of discretion in denying petitioners' motions: The Court found no valid reason to depart from the CA's conclusion affirming the RTC's denial of petitioners' motions. Regarding the motion to declare respondents in default, the Court noted that the Interim Rules govern the filing of answers to complaints, but not supplemental pleadings. Applying the Rules of Court suppletorily, the filing of an answer to a supplemental pleading is not mandatory, as indicated by the word "may." Furthermore, the answer to the original complaint serves as the answer to the supplemental complaint if no new answer is filed. Thus, respondents could not be declared in default for not filing a new answer to the supplemental petition. Concerning the motion to cite respondents' counsel in contempt, the Court observed that parties are entitled to avail of remedies to protect their interests, and availing of legal remedies is not contumacious. The power to punish for contempt is preservative and corrective, not vindictive. The CA correctly affirmed the denial of this motion. Finally, regarding the motion to deem conclusive the basis of shares entitled to vote, the Court held that the RTC did not gravely abuse its discretion. The validity of the shares was an issue to be resolved on the merits of the main case after presentation of evidence, not through a motion prior to decision. A definitive conclusion on such an issue could not be made based on a mere motion, especially since it would entail a comprehensive evaluation of evidence, which is beyond the scope of a certiorari proceeding. The RTC's denial was not capricious or arbitrary, and the issue of share validity was properly pending resolution in the main action.
Main Doctrine
A petition for certiorari under Rule 65 is applicable to intra-corporate disputes governed by the Interim Rules of Procedure for Intra-Corporate Controversies, even without a prior motion for reconsideration, if the order assailed is immediately executory and there is no other plain, speedy, and adequate remedy. The denial of a motion to deem conclusive the basis of shares entitled to vote, or motions for default, or motions to cite counsel in contempt, does not constitute grave abuse of discretion if the issues raised are matters of evidence and judgment properly belonging to the trial court's determination on the merits of the main case.