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Philcomsat vs. Sandiganbayan Ruling

The Philippine Communications Satellite Corporation (PHILCOMSAT) filed a complaint against the Presidential Commission on Good Government (PCGG) to compel the PCGG to withdraw its opposition to the listing of an increase in PHILCOMSAT's capital stock in another company. The Sandiganbayan dismissed the case, ruling it lacked jurisdiction because the dispute was an intra-corporate matter between a corporation and its stockholder. The Supreme Court affirmed, finding that as the Republic of the Philippines owns shares in PHILCOMSAT's parent company, the PCGG was acting to protect the Republic's interests as a stockholder by asking for the suspension of the stock listing. The Court determined the case qualified as an intra-corporate dispute

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961 views2 pages

Philcomsat vs. Sandiganbayan Ruling

The Philippine Communications Satellite Corporation (PHILCOMSAT) filed a complaint against the Presidential Commission on Good Government (PCGG) to compel the PCGG to withdraw its opposition to the listing of an increase in PHILCOMSAT's capital stock in another company. The Sandiganbayan dismissed the case, ruling it lacked jurisdiction because the dispute was an intra-corporate matter between a corporation and its stockholder. The Supreme Court affirmed, finding that as the Republic of the Philippines owns shares in PHILCOMSAT's parent company, the PCGG was acting to protect the Republic's interests as a stockholder by asking for the suspension of the stock listing. The Court determined the case qualified as an intra-corporate dispute

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PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION AND

PHILCOMSAT HOLDINGS CORPORATION, Petitioners, v. SANDIGANBAYAN


5TH DIVISION AND PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT, Respondent.
G.R. No. 203023, June 17, 2015

DOCTRINE
Presidential Decree No. 902-A conferred original and exclusive jurisdiction over intra-corporate
disputes on the SEC. However, Section 5.2 of R.A. 8799, transferred the jurisdiction over such
cases to courts of general jurisdiction, or the appropriate RTC.

FACTS
PHC is a domestic corporation listed in the Philippine Stock Exchange (PSE). It was previously
known as Liberty Mines, Inc. (LMI). PHC then filed its application with the PSE for listing the
shares representing the increase in its capital stock. Included in this application were the PHC
shares owned by PHILCOMSAT.
The PCGG, through its then Chairman Camilo L. Sabio, made a written request to suspend the
listing of the increase in PHC's capital stock citing as reason the need to settle the conflicting
claims of the two sets of board of directors of the Philippine Overseas Telecommunication
Corporation (POTC) and PHILCOMSAT.
PHILCOMSAT filed a complaint before the Sandiganbayan against PCGG to compel the latter to
withdraw its opposition to the listing of the increase in PHC's capital stock.
The Sandiganbayan granted the PCGG’s motion to dismiss on the ground of lack of jurisdiction.
It ruled that the case was a "dispute among its directors," and thus, was an intra-corporate dispute.
Petitioners claim that, first, the cause of action in this case - to compel PCGG to withdraw its
objection to the listing of PHILCOMSAT's shares in PHC - is not an intra-corporate dispute, since
PCGG is not a stockholder, director, officer, member or even associate of the plaintiff corporation.
The PCGG posits that the acts complained of are in the nature of an intra- corporate controversy.
It avers that "the nature of petitioners' claim refers to the enforcement of the parties' rights under
the Corporation Code and internal rules of the corporation, particularly affecting the propriety of
publicly listing in the Philippine Stock Exchange (PSE) of the 790 million shares of
PHILCOMSAT with PHC.

ISSUE
WON the complaint involves intra-corporate dispute, and hence Sandiganbayan has no
jurisdiction.

RULING
Yes. To determine if a case involves an intra-corporate controversy, the courts have applied two
tests: the relationship test and the nature of the controversy test.
Under the relationship test, an intra-corporate controversy arises when the conflict is "between the
corporation, partnership or association and its stockholders, partners, members or officers."
In this case, through the PCGG, the Republic of the Philippines now owns 4,727 shares of POTC.
Under the nature of the controversy test, it dictates that "the controversy must not only be rooted
in the existence of an intra- corporate relationship, but must as well pertain to the enforcement of
the parties' correlative rights and obligations under the Corporation Code and the internal and intra-
corporate regulatory rules of the corporation."
In this case, The act of Chairman Sabio in asking the SEC to suspend the listing of PHC's shares
was done in pursuit of protecting the interest of the Republic of the Philippines, a legitimate
stockholder in PHC's controlling parent company, POTC. The PCGG, acting as representative of
the Republic, was exercising a duty of a stockholder to ensure the proper and lawful exercise of
corporate acts.
Cases over intra-corporate disputes are lodged with the appropriate RTC.

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