Bank of the Philippine Islands v. Bacalla
REITERATIONFacts
The Antecedents: This case originated from a petition for involuntary dissolution filed against Tibayan Group of Investment Companies, Inc. (TGICI) and related corporations. The Regional Trial Court (RTC) granted the petition, ordering the receiver, Atty. Marciano S. Bacalla, Jr., to liquidate the assets. Subsequently, Atty. Bacalla, along with TGICI investors, filed a civil case against Prudential Bank (now Bank of the Philippine Islands - BPI), JAMCOR Holdings Corp., and Cielo Azul Holdings Corp. They alleged that TGICI engaged in fraudulent inducements, deceit, and misrepresentations, diverting investments to JAMCOR Holdings and then to Cielo Azul, which used these funds to purchase shares of Prudential Bank. The core of the dispute involves the alleged fraudulent dissipation of TGICI assets through corporate layering and the diversion of investor funds. Procedural History: The civil case was filed by the receiver and investors. During pre-trial, BPI moved to declare the respondents non-suited, which the RTC denied, affirming Atty. Bacalla's authority as receiver and the investors' authorization. BPI then filed Requests for Admissions, which the RTC denied, refusing to apply the Interim Rules of Procedure for Intra-Corporate Controversies and stating that the matter had already been passed upon. BPI filed a Petition for Certiorari with the Court of Appeals (CA) regarding the denial of its motion to declare respondents non-suited and the denial of its Requests for Admission. The CA partially ruled in favor of BPI, holding that the Federation of Investors Tulungan, Inc. (FITI) was not suited, but BPI's petition was denied. Separately, BPI filed a motion for reconsideration regarding the applicability of the Interim Rules, which the RTC denied. This led to another Petition for Certiorari before the CA, which affirmed the RTC's denial, ruling that the case involved an intra-corporate dispute and that BPI was guilty of splitting its cause of action. This CA decision and resolution are now under review. The Petition: Bank of the Philippine Islands (BPI) filed this Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's decision and resolution. BPI argues that the CA committed a fundamental error in ruling that the Interim Rules of Procedure for Intra-Corporate Controversies apply to the case, contending that there is no intra-corporate controversy as defined by law and jurisprudence, failing both the relationship test and the nature of the controversy test. BPI also argues that the CA erred in ruling that its Petition for Certiorari was filed out of time and violated the rule against splitting a cause of action. BPI asserts that a Petition for Certiorari is not based on a cause of action but on grave abuse of discretion, and therefore, the rule against splitting causes of action does not apply to separate petitions for certiorari challenging distinct rulings or issues arising from different orders or motions for reconsideration.
Issue(s)
Whether the Interim Rules of Procedure for Intra-Corporate Controversies apply to the subject proceedings in the RTC. Whether BPI is guilty of violating the rule against splitting the cause of action.
Ruling
The petition is DENIED. The assailed July 27, 2015 Decision and March 4, 2016 Resolution of the Court of Appeals in CA-G.R. SP No. 129574 are AFFIRMED.
Ratio Decidendi
On the applicability of the Interim Rules: The Court affirmed the CA's ruling that the Interim Rules of Procedure for Intra-Corporate Controversies apply to the proceedings. The Court noted that the complaint was explicitly filed under PD No. 902-A and the Interim Rules. It further explained that the complaint contained specific allegations of corporate layering and manipulative devices by corporate officers, which met the standard of specificity required by Section 5(a) of PD No. 902-A and Section 1(a)(1), Rule 1 of the Interim Rules. The Court applied both the relationship test and the nature of the controversy test, finding that the allegations established a relationship between the parties concerning the recovery of assets of the dissolved TGICI and its subsidiaries, and that the controversy was intrinsically connected with the regulation of TGICI and its subsidiaries. The Court emphasized that even if third parties like Prudential Bank and the vendees were impleaded, their involvement was consequential to the violation of investors' rights, and the action was fundamentally about the violation of the Corporation Code and the defraudation of interested parties. Therefore, the CA did not err in affirming the denial of BPI's belated Requests for Admissions based on Section 1, Rule 3 of the Interim Rules. On the rule against splitting the cause of action: The Court agreed with BPI that the CA erred in applying the rule against splitting a cause of action to its Petitions for Certiorari. The Court clarified that a Petition for Certiorari under Rule 65 is not based on a cause of action but on the existence of grave abuse of discretion. It highlighted key differences: (1) parties in a certiorari petition are the petitioner and the tribunal, not plaintiff and defendant; (2) certiorari arises from grave abuse of discretion, not violation of a right; (3) certiorari results in annulment or modification of proceedings, while a cause of action leads to recovery of damages or other relief; and (4) certiorari is a special civil action available when no other adequate remedy exists, whereas a cause of action is the basis for an ordinary civil action. The Court found that BPI's first petition assailed the RTC's orders on the non-suited issue, while the second petition assailed the RTC's orders on the applicability of the Interim Rules, representing separate alleged instances of grave abuse of discretion. Furthermore, BPI properly filed a Motion for Reconsideration on the issue of the Interim Rules' applicability before filing the second certiorari petition, as required. Thus, the CA's application of the rule against splitting the cause of action was erroneous.
Main Doctrine
The Interim Rules of Procedure for Intra-Corporate Controversies apply to proceedings involving devices or schemes employed by corporate officers amounting to fraud and misrepresentation detrimental to the interest of the public and/or stockholders, even if third parties are impleaded, provided their participation is consequential to the violation of investors' rights. Furthermore, a Petition for Certiorari under Rule 65 is not based on a cause of action and therefore, the rule against splitting of causes of action does not apply to multiple certiorari petitions assailing different instances of grave abuse of discretion.