TEODORICO P. FERNANDEZ, PETITIONER, VS. HON. MARIA ROWENA MODESTO-SAN PEDRO, IN HER CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT (RTC) OF PASIG CITY, BRANCH 158, FRAN…
DICDICAN, J.:
The material and relevant facts of the case, as culled from the record, are as follows:
The instant case stemmed from a Complaint[4] for invalidation of corporate acts and resolutions that was filed by the herein petitioner against the private respondents in the trial court on November 28, 2013. In the said complaint, the petitioner averred that he was a proprietary member in good standing of VVCCI. He stated that, in the corporate By-laws[5] of VVCCI that was adopted and filed with the Securities and Exchange Commission (SEC) in the year 1975, the members thereof set the number of authorized membership certificates at not more than one thousand five hundred (1,500). Thereafter, during the meeting of the board of directors of VVCCI on June 22, 1979, a Resolution[6] was passed increasing the membership certificates by five hundred (500) or from one thousand five hundred (1,500) to two thousand (2,000). Consequently, the total number of members’ shares issued and outstanding was pegged at one thousand nine hundred thirty eight (1,938), inclusive of the members’ shares forming part of the increase.
On February 23, 2013, the annual members’ meeting was held by the VVCCI through its hold-over board of directors. However, the said annual members’ meeting was adjourned for lack of quorum. Meanwhile, herein private respondents proceeded with the said meeting by using the original 1,500 membership certificates as the basis for determining the presence of a quorum. Thus, a quorum was then declared based on the attendance, at the most, of only 790 or 793 members, in person or by proxy, and herein private respondents were constituted as the new members of the board of directors of VVCCI.
Subsequently, on October 18, 2013, the private respondents, as the new members of the board of directors of VVCCI, held a meeting where they found herein petitioner to be guilty of “less serious violations of the by-laws” and imposed upon the latter the penalty of suspension as a member of VVCCI for a period of six (6) months or from September 21, 2013 until March 21, 2014. Hence, on October 26, 2013, while herein petitioner was at the premises of VVCCI, a security guard in the employ of VVCCI prevented the captain waiter from serving food to the petitioner on the ground that the latter was listed among the suspended members of VVCCI.
The foregoing antecedents then prompted herein petitioner to file a commercial case for invalidation of corporate acts and resolutions in the trial court against herein private respondents praying that the claims of the private respondents to the office of director of VVCCI be invalidated. Moreover, the petitioner prayed for the nullification of the annual members’ meeting of VVCCI that was held on February 23, 2013, as well as the subsequent meetings of the board of directors that were held thereafter, including all the resolutions and measures that were approved thereat. Further, the petitioner prayed that a writ of preliminary injunction be issued enjoining all the private respondents from excluding him as a bona fide proprietary member of the VVCCI and from preventing him from exercising and using his rights as a member thereof.
For their part, the private respondents, in their Comment and Opposition[7], countered that, after the annual members’ meeting of VVCCI on February 23, 2013, the individual members organized themselves as the new board of directors and, thereafter, elected a new set of officers of VVCCI. Thereafter, the new members of the board of directors of VVCCI started to manage the affairs of VVCCI pending the peaceful turnover of the same by the hold-over board of directors. However, on March 1, 2013, the hold-over board of directors filed a case in the Regional Trail Court of Pasig (RTC of Pasig) questioning the election of the herein private respondents as members of board of directors of VVCCI. However, the said case was dismissed after the RTC of Pasig declared the case to be an election contest and for lack of cause of action. The dismissal of the said case was affirmed by this Court and, consequently, by the Supreme Court in G.R. No. 209120. Thus, the private respondents, being the new members of the board of directors of VVCCI, took over the management of VVCI.
On September 17, 2013, the members of the board of directors of VVCCI appointed some members of the VVCCI as part of its committee on discipline that would conduct an investigation as regards the hold-over board of directors of VVCCI for the past seventeen (17) years or from 1996 until 2013 for violation of Section 35 of the by-laws of VVCCI. In essence, the committee on discipline raised the issue that the petitioner, along with the other members of VVCCI, expelled some members of the board of directors of VVCCI who were purportedly critical of the abuses of its 17-year old holdover board of directors. Accordingly, an investigation was conducted on the matter where herein petitioner, along with the other members of VVCCI, were required to submit their written explanations on the charges against them. The petitioner, however, failed to file his answer to the aforesaid charges against him. Subsequently, the members of the board of directors of VVCCI found the petitioner to have committed acts which are inimical to VVCCI and voted to impose upon him the penalty of suspension in the club for six (6) months.
During the hearing in the trial court in connection with the prayer of the petitioner for the issuance of a writ of preliminary injunction, the public respondent judge expressed her opinion that the instant case was not an election contest within the purview of the Interim Rules Governing Intra-Corporate Controversies (“Interim Rules”) in that the case that was filed by the petitioner was filed way beyond the fifteen (15)-day period prescribed therein. Consequently, the public respondent judge ruled in the herein assailed Order dated January 28, 2014 that she would not allow any evidence touching on the election of the members of the board of directors during the annual members’ meeting of VVCCI that was held on February 23, 2013. The pertinent portion of the said assailed order reads:
“The parties are reminded that the Court shall not entertain any issue respecting the 23 February 2013 elections; otherwise, the mandatory period within which to file an Election Contest would be rendered nugatory. The Court cannot allow indirectly what is barred directly by the Rules. Accordingly, the only issue remaining is whether due process was observed in suspending the plaintiff.”
Likewise, during the said hearing on January 28, 2014, the private respondents agreed to provide the relief that was sought by the petitioner in his prayer for the issuance of a writ of preliminary injunction. Thus, the membership of the petitioner at VVCCI was immediately reinstated, thereby rendering his prayer for the issuance of a writ of preliminary injunction as moot and academic.
Meanwhile, on January 14, 2014, the petitioner also filed in the trial court an Urgent Motion or Request for Production/Copying of Documents[8] praying, among others, that VVCCI produce the following documents during the hearing in the trial court on his prayer for the issuance of a writ of preliminary injunction, to wit:
- The original copy of the stock and transfer book and all cancelled membership fee certificates of VVCCI;
- The original copy of the certificate of incorporation of VVCCI issued by the SEC on May 30, 1975;
- The original copy of the directors’ certificate to the bylaws of VVCCI dated August 24, 1975 that was filed with the SEC;
- The original copy of the by-laws of VVCCI dated June 30, 1975 that was filed with the SEC;
- The original copy of the certificate of filing of by-laws of the VVCCI that was issued by the SEC on October 20, 1976; and
- The original copy of the duly-signed resolution that was adopted and approved by the members of the board of directors of VVCCI on June 22, 1979 increasing the membership certificates of VVCCI from 1,500 to 2,000.
In the herein assailed resolution of the trial court dated February 3, 2014, the urgent motion for the production or copying of the aforementioned documents was likewise denied by the trial court. The relevant portion of the said assailed resolution states:
“Here, with the Court reiterating its position that the instant case is not an election contest since it was filed way beyond the reglementary period under the Interim Rules of Procedure Governing Intra-Corporate Controversies for election contests to be brought to Court, considering that the only issue that remains to be resolved in this case is merely with respect to whether due process was observed in suspending the plaintiff, the Court finds no meritorious reason to compel VVCCI to produce the original Stock and Transfer Book and all cancelled membership fee certificates since said documents do not appear to be material in the resolution of the remaining issue. Indeed, the actual number of membership in VVCCI, which is essential in the determination of quorum in meetings and elections and which would apparently be revealed in the Stock and Transfer Book if produced does not appear to be material in resolving the aforesaid factual controversy.”
Hence, the petitioner filed this petition for certiorari wherein the petitioner raised the following acts of grave abuse of discretion that were committed by the public respondent RTC judge:
I.
THE PUBLIC RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER AND RESOLUTION BY WRONGLY CHARACTERIZING AS AN ELECTION CONTEST THE CASE BEFORE THE LOWER COURT IN TOTAL DISREGARD OF THE TRUE CONCEPT OF AN ELECTION CONTEST AS BORNE OUT BY THE CLEAR TEXT OF ITS DEFINITION IN THE INTERIM RULES.
II.
THE PUBLIC RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER AND RESOLUTION BY DISREGARDING THE REALITY THAT PETITIONER’S CAUSE OF ACTION IS HIS ILLEGAL AND WRONGFUL SUSPENSION AS MEMBER OF VVCCI BY THE INDIVIDUAL PRIVATE RESPONDENTS.
III.
THE PUBLIC RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN MERELY NOTING OR PASSING UPON SUB SILENTIO PETITIONER’S ARGUMENT THAT THE RES JUDICATA DOCTRINE DOES NOT APPLY IN THE CASE BEFORE THE LOWER COURT.
In sum, the issues to be resolved by us in the instant petition are: first, whether or not the public respondent judge committed grave abuse of discretion when she treated the instant case as an election contest and disregarded the fact that the real cause of action herein was his purported illegal suspension as a member of VVCCI and, second, whether or not the public respondent judge committed grave abuse of discretion when she merely noted or passed upon the contention of the petitioner that the res judicata doctrine does not apply in the instant case. After a careful and judicious scrutiny of the whole matter, together with the applicable laws and jurisprudence in the premises, we find the instant petition to be impressed with merit.
In the instant petition, the petitioner averred that the instant case was not an election contest which is defined by the Interim Rules as a “controversy or dispute involving title or claim to any elective office in a stock or non-stock corporation”. According to the petitioner, the case which he filed in the lower court did not involve a claim or title to an elective office in VVCCI and that his objective was not to unseat the herein private respondents. On the contrary, the petitioner averred that the main cause of action in the case below was his wrongful suspension as a member of the VVCCI which was an event that was subsequent to and entirely different from the VVCCI members’ meeting that was held on February 23, 2013. However, the petitioner stressed that the occurrence of a supervening event (i.e. suspension as a member of VVCCI) also opened the door to question the authority of the private respondents, as members of the board of VVCCI, to effect the suspension against him.
For their part, herein private respondents pointed out that a simple reading of the relief that was stated in the complaint that was filed by the petitioner in the trial court would immediately reveal the nature thereof partly as an election contest. According to the private respondents, the invalidation of their claims to the office of director of VVCCI and the nullification of the annual members’ meeting on February 23, 2013, as well as the subsequent resolutions of the board of directors of VVCCI, were clearly within the meaning of an election contest under the law in that they would ultimately result in the ouster of the individual respondents from the office.
Moreover, the private respondents maintained that the real issue in the commercial case that was filed by the petitioner in the trial court was whether or not due process was observed in his suspension as a member of VVCCI. At any rate, the private respondents asseverated that, on April 5, 2014, the members of VVCCI had already conducted another election and voted for a new set of board of directors of VVCCI. Consequently, they submitted that the issue that was raised in the instant petition had already become moot and academic.
We do not agree with the contentions of the private respondents. As defined in Section 2 of Rule 2 of the Rules of Court, a cause of action is the act or omission by which a party violates the right of another. In relation to a complaint, it is a formal statement of the operative facts that give rise to a remedial right. The question of whether the complaint states a cause of action is determined by its averments regarding the acts committed by the defendant.[9] As applied in the instant case, the cause of action of the petitioner relates to the legality of his suspension as a member of VVCCI. A perusal of the averments in the complaint that was filed by the petitioner in the trial court shows an alleged right in favor of the petitioner as a member of VVCCI, an obligation on the part of the private respondents to respect said right and an alleged act or omission that was committed by the private respondents in violation of the right of the petitioner when the latter was suspended as a member of VVCCI. Clearly, the instant complaint sufficiently stated a cause of action relative to the purported violation of the petitioner’s rights as a member of VVCCI. Whether or not the aforesaid averments were true, however, would be threshed out during the trial of the case and after a full-blown trial on its merits in the trial court.
On the other hand, however, and in order to fully resolve the issue regarding the legality of the suspension of the petitioner from VVCCI, it was also necessary for the trial court to admit pieces of evidence which relate to the composition of the board of directors of the VVCCI during the time when the penalty of suspension from club membership was imposed upon the petitioner. This is especially true in that the petitioner was suspended as a member of VVCCI precisely for committing acts that were purportedly inimical to the interests of the club. The aforesaid acts, in turn, relate to the allegation that herein petitioner, along with the other members of VVCCI, caused the expulsion of herein private respondents as members of VVCCI on the ground that the latter were “critical of the abuses of the 17-year holdover board” of directors of VVCCI. In other words, the petitioner was suspended as a member of VVCCI on the ground that he and other club members had previously caused the expulsion of some of the members of VVCCI who, according to the petitioner, were illegally constituted as members of the board of directors of VVCCI. Consequently, the issue in the case below, while its primary aim is to declare the suspension of the petitioner from club membership as illegal, likewise necessarily relates to the legality or illegality of the election of the members of the board of directors of VVCCI during the annual members’ meeting that was conducted on February 23, 2013. This especially finds relevance in that it had been the position of the petitioner from the very beginning that herein private respondents were illegally constituted as members of the board of directors of VVCCI, thereby refusing to recognize the authority of the acts of the latter.
In the case of Yu v. Court of Appeals,[10] the Supreme Court declared that, while the trial courts have the discretion to admit or exclude evidence, such power is exercised only when the evidence had been formally offered. For a long time, the Supreme Court had recognized that, during the early stages of the development of proof, it is impossible for a trial court judge to know with certainty whether evidence is relevant or not and, thus, the practice of excluding evidence on doubtful objections to its materiality should be avoided. Citing the case of Prats & Co v. Phoenix Insurance, Co.,[11] the Supreme Court further elucidated:
“Moreover, it must be remembered that in the heat of the battle over which he presides a judge of first instance may possibly fall into error in judging of the relevancy of proof where a fair and logical connection is in fact shown. When such a mistake is made and the proof is erroneously ruled out, the Supreme Court, upon appeal, often finds itself embarrassed and possibly unable to correct the effects of the error without returning the case for a new trial, — a step which this court is always very loath to take. On the other hand, the admission of proof in a court of first instance, even if the question as to its form, materiality, or relevancy is doubtful, can never result in much harm to either litigant, because the trial judge is supposed to know the law; and it is its duty, upon final consideration of the case, to distinguish the relevant and material from the irrelevant and immaterial. If this course is followed and the cause is prosecuted to the Supreme Court upon appeal, this court then has all the material before it necessary to make a correct judgment.”
Lastly, anent the other matters that were raised by the petitioner in the instant petition, this Court is of the view that the said issues would be best threshed out in a full-blown trial of the case in the trial court. Notably, the allegations in the instant petition involved evidentiary matters which this Court could not pass upon at this point especially in that trial on the merits of the case had not yet been conducted by the trial court.
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the petition filed in this case. The Order that was issued by Branch 158 of the Regional Trial Court of the National Capital Judicial Region in Pasig City on January 28, 2014 in Commercial Case No. 13-202, insofar as it did not allow any evidence to be presented relating to the 23 February 2013 elections of the board of director of VVCCI, and the subsequent resolution of the said court dated February 3, 2014, are hereby ANNULLED and SET ASIDE. Consequently, the public respondent judge is DIRECTED to allow the presentation of evidence by the petitioner in connection with the election of the members of the board of directors of VVCCI that was conducted during its annual members’ meeting on February 23, 2013.
SO ORDERED.
Elbinias and Paredes, JJ., concur.
[1] Rollo, pages 3-32.
[2] Ibid, Annex “E”, pages 138-139.
[3] Ibid, Annex “G”, pages 153-155.
[4] Ibid, Annex “A”, pages 33-43.
[5] Ibid, Annex “J”, pages 158-180.
[6] Ibid, Annex “L”, pages 182-183.
[7] Ibid, Annex “F”, pages 140-151.
[8] Ibid, Annex “C”, pages 126-129.
[9] Philippine Daily Inquirer, et al. v. Alameda, et al., G.R. No. 160604, March 28, 2008.
[10] G.R. No. 154115, November 29, 2005.
[11] 52 Phil. 807, 816-817 (1929).