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Annex D REPUBLIC OF THE PHILIPPINES COURT OF APPEALS M a n i I a
WILLARD A. BARRYMORE and/or SIERRA MADRE HOTEL, INC. Petitioners,
- versus -	CA G.R. _____________
THE HONORABLE MIA LOURDES Q. CUARESMA, PRESIDING JUDGE, BRANCH 123, REGIONAL TRIAL COURT OF MANILA, and DESMOND U. PRESLEY, Respondents.
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PETITION FOR CERTIORARI PETITIONERS, through counsel, unto this Honorable Court, most respectfully allege: I. PRELIMINARY STATEMENT This is a Petition for Certiorari, under Rule 65 of the 1997 New Rules of Civil Procedure, on the Orders dated 24 July 2004 and 26 October 2004 issued by the Regional Trial Court Branch 123 of Manila, presided by Honorable Judge Mia Lourdes Q. Cuaresma, in Civil Case No. 54321 entitled “DESMONS U. PRESLEY, Plaintif vs. WILLARD A. BARRYMORE and/or SIERRA MADRE HOTEL, INC., Defendants”. These assailed Orders are respectively described as follows: The Order dated 24 July 2004 [first assailed Order] DISMISSING the Motion to Dismiss filed by Petitioner Barrymore [then Defendant] on 21 April 2004. Said Motion to Dismiss raised the argument that RTC Branch 123 has no jurisdiction over the case for the reason that it partakes the nature of an intra-corporate controversy and therefore should be heard by an RTC Branch designated to hear said controversies, pursuant to RA 8799 and Supreme Court Resolution on AM No. 00-11-03 SC. Respondent Judge, through said first assailed Order, ruled that the Court has jurisdiction over the case; and The Order dated 26 October 2004 [second assailed Order] DISMISSING the Motions for (A) Voluntary Inhibition and (B) Reconsideration filed by Petitioner on 15 August 2004. The Motion for Voluntary Inhibition was anchored upon the argument that in his Order of 24 July 2004, Respondent Judge ruled that the jurisdiction of the Court is determined by the allegations in the Complaint but did not consider but totally ignored those allegations which would have definitely and perfectly shown that the Court has no jurisdiction to entertain the same, thus creating a well-grounded belief on the part of Petitioner that Respondent Judge was biased in favor of herein Private Respondent Presley [then plaintiff]. On the other hand, the Motion for Reconsideration raised arguments citing legal provisions and jurisprudence to show that the present case is an intra-corporate controversy. Respondent Judge, through said assailed Order, arbitrarily and summarily dismissed the twin Motions for “lack of merit”. Certified True Copies of the assailed Orders dated 24 July 2004 and 26 October 2004 are attached as Annexes “A” and “B”, respectively, to the original copy of this Petition and made integral parts hereof. II. TIMELINESS OF THE PETITION A copy of the assailed Order of 24 July 2004 [Annex “A” hereof], was received by Petitioner on 7 August 2004. On 15 August 2004, Petitioner filed his twin Motions for (A) Voluntary Inhibition and (B) Reconsideration dated 13 August 2004 but the same was denied by Respondent Judge through his Order of 26 October 2004 (Annex “B” hereof), a copy of which was received by the Petitioner on 5 November 2004. The instant Petition is therefore filed within the reglementary period within which to file with this Honorable Court the present Petition. III. NON AVAILABILITY OF OTHER PLAIN, SPEEDY AND ADEQUATE REMEDY Pursuant to the decision of the Honorable Supreme Court in Crisostomo vs. Endacia ¹ and Caro vs. Court of Appeals ², the relevant part of which is stated hereunder, the issue raised being the lack or excess of jurisdiction of Respondent Court to issue the assailed Orders, the present action has been brought on a Petition for Certiorari. “The remedy of certiorari may be successfully invoked both in cases wherein an appeal does not lie and in those wherein the right to appeal have been lost with or without the appellant’s negligence, where the court has no jurisdiction to issue the order or decision which is the subject matter of the remedy.” IV. THE PARTIES Petitioner WILLARD U. BARRYMORE [“Petitioner” for brevity] is of legal age, an American, with business address at the Sierra Peak Towers, 99 Kalamansi Road, Malate, Manila, Philippines where he may be served with orders and processes of this Honorable Court; Petitioner SIERRA MADRE HOTEL, INC. [“SIERRA MADRE” for brevity] is a corporation existing pursuant to the laws of the Republic of the Philippines, herein represented by Petitioner Prentice in his capacity as its President and Chief Executive Officer, and with business address at Sierra Peak Tower, 99 Kalamansi Road, Malate, Manila, Philippines, where it may be served with orders and processes of this Honorable Court; Respondent HONORABLE MIA LOURDES Q. CUARESMA [“Respondent Judge” for brevity] is the Presiding Judge of BRANCH 123, REGIONAL TRIAL COURT OF MANILA, with office at 2nd Floor, Hall of Justice Building, Manila Government Center, Intramuros, Manila, Philippines, where he may be served with orders and processes of this Honorable Court; Respondent DESMOND U. PRESLEY [“Private Respondent” for brevity] is of legal age, British citizen, single, with residence address at 88 Abaca Drive, Santa Mesa, Manila, Philippines, where he may be served with orders and processes of this Honorable Court, which may also be served upon his counsel, ATTY. MARIAN S. SANTISIMA, with business address at Suite 666, Jesuits Centre, Ayala Avenue, Makati City, Philippines. V. STATEMENT OF FACTS AND OF THE CASE Sierra Madre is a is a corporation duly registered with the Securities and Exchange Commission on 24 July 2001 to exist for a period of fifty [50] years, with Registration Number SEC A11223344, a copy of which is hereto attached as Annex “C”. Petitioner is its current President and Chief Executive Officer. It is engaged in the hotel, restaurant, and allied businesses. It is the builder and operator of the Cordillera Hotel in Pasig City, Philippines, and is currently undertaking the construction of a similar project. Sometime in August 2003, in order to attract investments in the corporation in exchange for shares of stock, Sierra Madre caused the publication of an advertisement in newspapers inviting prospective investors to acquire equities in the corporation and enjoy the benefits of stockholders in the facilities it will undertake to build and operate. A copy of said advertisement is hereto attached as Annex “D”. On 18 August 2003, Private Respondent purchased fifty [50] shares of stocks in Dreamland for the amount of Ten Thousand US Dollars [US$ 10,000.00]. An official receipt covering this purchase, dated the same date and duly signed by the corporate secretary of Sierra Madre, Ms. Karina S. Purisima, was issued to Private Respondent, a copy of which is hereto attached as Annex “E”. The corresponding certificate of ownership of fifty [50] shares of stock in the corporation, dated also on 18 August 2003 and duly signed by Petitioner and Ms. Purisima, was subsequently issued to Private Respondent, a copy of which is hereto attached as Annex “F”. Thereafter, Private Respondent, now a bona fide stockholder of Sierra Madre, was issued his copy of an Undertaking and Guarantee For and On Behalf of Sierra Madre Hotel, Inc. This is a standard document issued by the corporation to new stockholders which states the terms and conditions of their being shareholders as well as their privileges and benefits as such. A copy of said Undertaking is hereto attached as Annex “G”. Sierra Madre then duly communicated to Private Respondent and its other stockholders updates on the developments of the projects that it intended to pursue. On 24 September 2003, an email was sent to them regarding an application for a Wendy’s franchise and on 22 October 2003 another email was sent updating them of the developments regarding Sierra Madre’s Projects 1 and 2. Copies of printouts of said email are attached hereto as Annexes “H” and “I”. Several months later, Petitioner received a letter dated 19 March 2004 from Atty. Marian S. Purisima., the counsel of Private Respondent, demanding the return of the latter’s investment upon the claim that he was “defrauded” in an “absolutely fictitious investment scheme.” A copy of said demand letter is hereto attached as Annex “J”. Petitioner then advised Private Respondent that the amount which the latter used to purchase his shares of stock, now being a property of the corporation, could not just be withdrawn by him at will and at anytime as this would be violative of the provisions of the Corporation Code of the Philippines. Apparently piqued that his equity in Sierra Madre could not be refunded as he wished, Private Respondent then filed before the Regional Trial Court of Angeles City on 25 April 2004 a Complaint against Petitioner for “Specific Performance And/Or Recovery of Sum of Money With Damages” dated 18 April 2004. The Complaint was raffled to Branch 123, Regional Trial Court of Manila, presided by Respondent Judge, and docketed as Civil Case No. 54321. A copy of said Complaint with its annexes is attached hereto as Annex “K”. On 10 May 2004, Petitioner filed a Motion to Dismiss dated the same day arguing that Branch 123, being a regular court, has no jurisdiction over the case for the reason that the same partakes the nature of an intra-corporate controversy and therefore should be heard by an RTC Branch designated to hear said controversies, pursuant to RA 8799 and Supreme Court Resolution on AM No. 00-11-03 SC. A copy of said Motion to Dismiss is attached hereto as Annex “L”. Private Respondent then filed his Comment And/Or Opposition To The Motion to Dismiss dated 26 May 2004, a copy of which is attached hereto as Annex “M”. To this Petitioner responded with a Reply To Comment And/Or Opposition To The Motion to Dismiss dated 11 June 2004, a copy of which is attached hereto as Annex “N”. On 24 June 2004, the hearing on the Motion to Dismiss was conducted but since on that date Private Respondent [then plaintiff] has not yet received a copy of Petitioner’s [then defendant] Reply, the former was given ten [10] days to file his Rejoinder. In the course of the hearing, Respondent Judge, by way of preliminary questions, asked whether payments were made by then plaintiff to Sierra Madre and if receipts were issued therefor by the corporation, which questions were answered affirmatively by the counsel for then defendant. Respondent Judge also commented that the Motion could be “resolved easily as he had vast experience with the Securities and Exchange Commission, where he used to work.” With these comments of Respondent Judge, and trusting in his integrity that he would go over the pleadings submitted by the parties, the counsel for then defendant acceded to his suggestion that the Motion be resolved after the filing of the Rejoinder. Private Respondent then filed his Rejoinder dated 5 July 2004, a copy of which is hereto attached as Annex “O”. On 24 July 2004, Respondent Judge, through the first assailed Order, dismissed Petitioner’s Motion to Dismiss ruling that -- “After consideration of the arguments interposed by both parties, the Court believes that it has jurisdiction over the subject matter of the case. There is no showing that the dispute between the parties is intra-corporate. Settled is the rule that jurisdiction over the subject matter is determined by the allegations in the complaint regardless whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The defenses asserted in the motion to dismiss are not to be considered for this purpose, otherwise, the question would depend entirely upon the defendant.” In the same Order, Petitioner was given fifteen [15] days within which to file his responsive pleading. [Please refer to Annex “A” hereof] On 15 August 2004 Petitioner filed Motions for (A) Voluntary Inhibition and (B) Reconsideration. The Motion for Voluntary Inhibition was anchored upon the argument that in the first assailed Order, Respondent Judge merely ruled that the jurisdiction of the Court is determined by the allegations in the Complaint but very obviously did not peruse those allegations which would have definitely shown that the Court has no jurisdiction to entertain the same, thus creating a well-grounded belief on the part of Petitioner that Respondent Judge was biased in favor of Private Respondent [then Plaintiff]. On the other hand, the Motion for Reconsideration raised arguments citing legal provisions and jurisprudence to show that the present case is an intra-corporate controversy. A copy of said twin Motions is attached hereto as Annex “P”. Private Respondent thereafter filed his Comment And/Or Opposition to Defendant’s Motions for (A) Voluntary Inhibition; (B) Reconsideration dated 25 August 2004, a copy of which is hereto attached as Annex “Q”. To this Petitioner filed his Reply on 31 August 2004, a copy of which is hereto attached as Annex “R”. In compliance with the first assailed Order of Respondent Judge, Petitioner filed on 10 August 2004 a Precautionary Answer containing his defenses but expressing therein a reservation for appropriate remedies he may make afterwards, A copy of said pleading is hereto attached as Annex “S”. On 26 October 2004, Respondent Judge, through the second assailed Order, dismissed the twin Motions for “lack of merit”. A copy of said Order [Annex “B” hereof] was received by the Petitioner on 5 November 2004. Hence, this instant Petition for Certiorari before this Honorable Court. VI. GROUNDS IN SUPPORT OF THE PETITION This Petition presents for resolution the following grounds for the issuance of a Writ of Certiorari: I. RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE PRESENT CASE INVOLVES AN INTRA-CORPORATE CONTROVERSY. II. RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN SUMMARILY DISMISSING PETITIONER’S MOTION TO DISMISS. III. RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT GRANTING THE PETITIONER’S MOTION FOR [A] VOLUNTARY INHIBITION AND [B] RECONSIDERATION. VII. DISCUSSIONS
*FIRST, RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE PRESENT CASE INVOLVES AN INTRA-CORPORATE CONTROVERSY.* *SECOND, RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN SUMMARILY DISMISSING PETITIONER’S MOTION TO DISMISS.*
The first two grounds, being intimately intertwined, are hereby discussed jointly. In his second assailed Order, Respondent Judge made these curious observations -- “At first glance, one might innocently perceive that the case at bar is an intra-corporate dispute between two (2) parties – admittedly, the plaintiff who is a stockholder and defendant Willard A. Barrymore, the President and CEO of defendant corporation. However, the complaint filed was not addressed by the plaintiff as a stockholder of nor was the plaintiff questioning any corporate acts of the defendant. This criterion is important in determining whether or not the case is intra-corporate. It is not enough ingredient that the parties in a case is a stockholder or member of a corporation for a case to become intra-corporate or not [sic]. There must be showing of corporate acts by one of the party which the other party was not in agreement of [sic], thus, arising to an intra-corporate dispute. “In the case at bar, at least as alleged by the plaintiff in his complaint, his being a prospective investor precedes that of becoming a stockholder which is why he was suing as an investor who was allegedly enticed to later on become a stockholder in view of an alleged undertaking made by defendant Willard A. Barrymore. It is for this reason that court would want said plaintiff and also the defendant to present their evidence in a full-blown trial. “On the comment of the sitting Judge on his experience with the SEC having worked with said agency for about ten (10) years, he merely wants to impress to the parties that his experience in said agency would be of great help in settling disputes of the litigants. That he has sufficient background to determine what intra-corporate dispute is and how the same could come about.” [paragraphs 4, 5, and 6, Annex “B” hereof] Notwithstanding the gratuitous claim of Respondent Judge that he has “sufficient background to determine what [an] intra-corporate dispute is,” Petitioner, with all due respect, submits he gravely erred in not finding that the present controversy is clearly intra-corporate when viewed in the light of the submission of the parties, applicable legal provisions, and pertinent jurisprudence. From the submissions of the parties, its is indubitable that the following facts exist in the present controversy: First, Sierra Madre is an existing corporation; Second, Private Respondent is a stockholder of Sierra Madre; Third, he sued Sierra Madre as stockholder of the same; and Fourth, Petitioner and/or Sierra Madre were alleged to have defrauded Private Respondent as well as the public. Firstly, contrary to the rather reckless assertions of Private Respondent in his Complaint that Sierra Madre is an “alleged” corporation [paragraph 3, Annex “K” hereof], as well as in his Comment And/Ort Opposition To The Motion to Dismiss that the same is a “hoax” [paragraph 3, Annex “M” hereof], the simple fact remains that Sierra Madre is a legitimate corporation existing pursuant to the laws of the Philippines; As a lawyer, Private Respondent’s counsel should have known that the existence of a corporation is not dependent on what he or his client perceives it to be, but in on the following condition spelled under Section 19 of Batas Pambansa 68, otherwise known as The Corporation Code Of The Philippines, to wit: “Sec. 19. Commencement of corporate existence. - A private corporation formed or organized under this Code commences to have corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission issues a certificate of incorporation under its official seal; and thereupon the incorporators, stock-holders/members and their successors shall constitute a body politic and corporate under the name stated in the articles of incorporation for the period of time mentioned therein, unless said period is extended or the corporation is sooner dissolved in accordance with law.” [emphasis ours] A simple check with the Securities and Exchange Commission would have enlightened Private Respondent that Dreamland was registered with said agency on 24 July 2001 to exist for a period of fifty [50] years, under Registration Number SEC A11223344, and that its corporate existence has not been shortened since that time [Annex “C” hereof]. The Complaint itself unquestionably recognizes the existence of Sierra Madre by impleading it as a co-defendant of Petitioner. Why would Private Respondent sue an “inexisting” and “alleged” corporation and one which is a “hoax”? From this alone, he is estopped from impugning the legal existence of Sierra Madre. Secondly, that Private Respondent is a stockholder of Sierra Madre is also beyond cavil; this is borne out by the following pieces of evidence he attached to his Complaint [please refer to Annex “K” hereof]: Annex “A”, a copy of an official receipt dated 18 April 2003 issued by Sierra Madre showing that Desmond U. Presley paid ten thousand US dollars [US$10,000.00] for two percent [2%] equity equaling fifty [50] shares of stock [Annex “E” hereof]. Annex “B”, a copy of certificate of ownership of fifty shares of stock in Sierra Madre in the name of Desmond U. Presley, dated 18 April 2003 [Annex “F” hereof]. Annex “C”, a copy of an Undertaking and Guarantee For and On Behalf of Sierra Madre Hotel, Inc. which Sierra Madre regularly issues to its stockholders [Annex “G” hereof]. Annexes “E” and “F”, print-outs of email dated 24 May 2004 and 22 October 2004, respectively, from Sierra Madre to Desmond U. Presley on the subject “To All Dreamland Stockholders” updating them of the developments on the projects the corporation intended to pursue [Annexes “H” and “I” hereof, respectively] The Respondent Judge, in paragraphs 4 and 5 of his second assailed Order [Annex “B” hereof], also found Private Respondent to be indeed a stockholder of Sierra Madre [cited in paragraph 32 of this Petition]. Thirdly, despite Private Respondent’s claims to the contrary, it could be fairly deduced from his Complaint that it was filed against Petitioner and/or Sierra Madre not in a personal and private capacity but due to his being a stockholder of the corporation. It must be noted that from his demand letter to Petitioner [Annex “J” hereof], as well as from his Complaint [Annex “K” hereof], Private Respondent clearly wanted Petitioner and/or Sierra Madre to return to him the ten thousand US dollars [US$10,000.00] he paid to Sierra Madre as purchase price for two per cent [2%] equity in the corporation equaling fifty [50] shares of stock therein. Simply put, Private Respondent is NOT a non-stock holding investor wanting his money back due to on alleged failure of Petitioner and/or Sierra Madre to comply with their commitments. His demand was to recover an amount that unquestionably already belongs to Sierra Madre, it being an entity with a personality separate and distinct from those of its stockholders. Thus, Private Respondent may not have any legal basis to assert a claim pertaining to such amount without first putting himself in the standing of a stockholder, which he is, as previously established. Moreover, his impleading Sierra Madre in his Complaint does not only effectively show that he recognizes its existence as a corporation but also indicates that he was suing it as a stockholder. If indeed he was merely filing suit in a personal and private capacity against Petitioner, why did he also sue Sierra Madre other than to show that he is a stockholder therein and is suing it in that capacity? Fourthly, allegations were made by Private Respondent that Petitioner and/or Sierra Madre committed fraudulent acts not only against himself but the public as well. In his demand letter [Annex “J” hereof], his counsel stated that Petitioner was “defrauded” in an “absolutely fictitious investment scheme.” In paragraph 23 of his Complaint [Annex “K” hereof], Private Respondent repeated the claim that he is allegedly a “victim of fraud.” In paragraph 2 of his Comment And/Or Opposition To The Motion to Dismiss [Annex “N” hereof], Private Respondent again claimed of a “fraud and misrepresentation” allegedly committed by Petitioner against him. In the same paragraph, he likewise alleged a fraudulent and deceptive scheme of Petitioner involving Sierra Madre “to get money from his intended victims [not only the plaintiff],” suggesting that the alleged fraudulent scheme was directed to the public in general [emphasis ours]. Having established the foregoing critical facts, it would now be time to show why the present case is an intra-controversy well outside of the jurisdiction of Respondent Judge’s court, cases of such nature having been transferred to Regional Trial Court branches specially designated to hear them, pursuant to RA 8799 and Supreme Court Resolution on AM No. 00-11-03 SC. In *Magalad vs. Premiere Financing Corporation, ³ the Supreme Court enumerated certain relationships where controversies between them partake of an intra-corporate nature and which at that time belonged to the exclusive jurisdiction of the Securities and Exchange Commission pursuant to Presidential Decree No. 902-A. The High Court said -- “In order that SEC can take cognizance of a case, the controversy must pertain to any of the following relationships: (a) between the corporation, partnership or association and the public; (b) between the corporation, partnership or association and its stockholders, partners, members or officers;* (c) between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned; and (d) among the stockholders, partners or associates themselves.” [emphasis ours] From the foregoing, the complaint is clearly intra-corporate in character, it having been previously pointed out that it was instituted by Private Respondent against Petitioner and/or Sierra Madre is a dispute between a stockholder and a corporation. Even assuming, arguendo, that Private Respondent is correct in his obstinate assertions that he sued the Petitioner and/or Sierra Madre in his personal capacity for having committed fraud against him, it is submitted that the same is still an intra-corporate controversy, it having arisen out of the relationship of a corporation and a member of the public, as has been ruled in *Magalad* aforequoted. Having purchased shares of stock from Sierra Madre, Private Respondent cannot now claim for the return of the amount of money used for said purchase, for this did not put him in a similar situation as that in *Ramon Gil Abad, et. al. vs CFI of Pangasinan, et al.* ⁴ , which the Supreme Court ruled was not intra-corporate in character. Said the High Court -- “Reliance is placed on the leading case of Sunset View Condominium Corp. vs. Campos (104 SCRA 295) wherein the jurisdiction of the regular courts was upheld in a collection case as the same did not arise out of an intra-corporate controversy pursuant to Section 5(b) of P.D. No. 902-A. Likewise in Bañez vs. Dimensional Construction Trade & Development Corporation, 140 SCRA 249 (22 November 1985), this Court, in upholding the jurisdiction of the regular court over a controversy involving promissory notes issued by the private respondent herein, held that: In the promissory notes issued by private respondent corporation, it is clearly indicated therein that the sums of money received by private respondent were in the nature of investments of the petitioners, agreed upon by the parties to be returned by the corporation upon the maturity of said promissory notes. As the money received by private respondent do (sic) not constitute payment of subscription of shares, the petitioners herein did not become members of respondent Dimensional Trade and Development Corporation. In the case of Sunset View Condominium Corporation vs. Hon. Jose C. Campos, Jr., et al., 104 SCRA 295, it was ruled that where the stated party-litigants 'are not shareholders of the condominium corporation, the instant cases for collection cannot be "a controversy arising out of intra-corporate or partnership relations between and among stockholders, members or associates.'" [emphasis ours] Conversely, therefore, as Private Respondent is unquestionably a stockholder of Sierra Madre, his dispute with it and/or Petitioner over the return to him of the money he used to purchase his shares of stock is an intra-corporate matter. It bears stressing that intra-corporate controversies between a corporation and its stockholders, like the current dispute, cover a broad latitude and do not admit of any distinction, qualification, or exemption. This the Supreme Court declared in *Philex Mining Corporation vs. Hon. Domingo Coronel Reyes, et al.,⁵ where it was succinctly stated that -- “The issue is whether respondent Court of First Instance has jurisdiction over the present controversy, which Philex contends is an intra-corporate one, but which Huenefeld denies.* “Section 5 of Presidential Decree No. 902-A provides: “Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees; it shall have original and exclusive jurisdiction to hear and decide cases involving: “... “Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity. “Evident from the foregoing is that an intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations. The issue of whether or not a corporation is bound to replace a stockholder's lost certificate of stock is a matter purely between a stockholder and the corporation. It is a typical intra-corporate dispute. The question of damages raised is merely incidental to that main issue. Huenefeld's attempt to limit intra-corporate controversies thus: “The phrase 'controversies, arising out of intra-corporate relations' would seem to refer to controversies, cases or intramurals among or between stockholders and the corporation involving the exercise of stockholders' privileges, rights, benefits and their duties in a corporation, and the existence in law of a corporation. Like, for instance, an example of 'controversies arising out of an intra- corporate relation' are cases between stockholders in 1) contesting or vying for a seat in the Board of Directors, 2) questions on voting by proxy, 3) election and tenure of office and qualification of directors, 4) removal and resignation of Directors, 5) repeal and amendment of corporate charter and by-laws, 6) questions on corporation meetings and increase of capital stocks, etc. (pp. 70, 80, Rollo). “Is not well taken. The foregoing interpretation does not square with the intent of the law, which is to segregate from the general jurisdiction of regular Courts controversies involving corporations and their stockholders and to bring them to the SEC for exclusive resolution, in much the same way that labor disputes are now brought to the Ministry of Labor and Employment (MOLE) and the National Labor Relations Commission (NLRC), and not to the Courts. [emphasis ours] On the basis of this pronouncement, if a request for replacement of shareholder’s lost certificate of stock is a typical intra-corporate dispute, there should be no doubt that the demand of Private Respondent, a stockholder of Sierra Madre, for the corporation and/or its President to return to him the amount he used to purchase equity and shares of stock, and the refusal of the latter to accede to such demand since it would be violative of the law, constitutes an intra-corporate controversy plain and simple. And as in *Philex, the claims of Private Respondent for damages from Petitioner and/or Sierra Madre is only incidental to the main issue. Finally, the repeated allegations that fraud against Private Respondent as well as the public has been made by Petitioner and/or Sierra Madre, further bolsters the fact that indeed the present controversy is intra-corporate in nature. These can be seen from a reading of Presidential Decree No. 902-A, the pertinent portion of which reads as follows: “Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall original and exclusive jurisdiction to hear and decide cases involving: “Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder, partners, members of associations or organizations registered with the Commission.” [emphasis ours] Thus, in Bernardo, et. al. vs. Court of Appeals, et. al., ⁶ which bears strong resemblance to the current dispute as it did also involve a stockholder suing a corporation for alleged fraud and prayed for the return of his deposits plus damages, attorney’s fees, and the cost of the suit, it was ruled that the same was an intra-corporate controversy. The trial court dismissed the complaint for lack of jurisdiction, which on appeal was affirmed by the Court of Appeals. On further appeal to the Supreme Court, this ruling was likewise affirmed. The ponente, now Chief Justice Hilario G. Davide, Jr., quoted the following passages from the appellate court’s decision: “On appeal, the Court of Appeals (CA-G.R. CV No. 34168) affirmed the trial court and held:* “Plaintiff-appellant's claim that the fraud committed by defendant-appellee in the instant case is the fraud under Arts. 1330, 1338, and/or 1339 of the Civil Code and not those alluded to in Sec. 5a of P.D. 902-A has no merit. The "fraudulent schemes, machinations, imaginary transactions or other deceits" alleged in the instant case was committed by the defendant-appellee corporation and the alleged victim, although only Ramon Bernardo, Jr. in this case, could be anyone among the public who transact or transacted similar business or transaction with said corporation. The plaintiff-appellant himself was the one who used the terms "fraudulent schemes, machinations, imaginary transactions or other deceits" in his complaint. For that matter, plaintiff-appellant's allegation that "minor Ramon C. Bernardo, Jr. . . . with the assistance of his natural father Ramon J. Bernardo entered into a trading commodity agreement, captioned by defendant as Rules for Commodity Trading & Customer's Agreement with the defendant" (par. 2, Complaint) could only mean or imply that anyone, among the public, interested may just see or contact defendant-appellee or its representative and make an investment and he or she is a prospective if not yet sure and actual victim. This, in fact, is the gist of the following claim/arguments submitted by plaintiff-appellant: xxx xxx xxx “It must be well emphasized that the defendant-appellee is a corporation engaged in the trading commodities. The plaintiffs-appellants entered into a contract "a trading agreement" with said defendant-appellee, wherein they parted with their money in the nature of investment. They, plaintiffs-appellants expected to receive returns or profits from the money they invested. Unfortunately, they were the victims of the fraud and misrepresentation by the defendant-appellee, as they contended. It is precisely to check machinations like this that the Securities and Exchange Commission will come in to the picture. “The grant of jurisdiction to the SEC must be viewed in the light of the nature and function of the SEC under the law. Section 3 of Presidential Decree No. 902-A confers upon the latter ‘absolute jurisdiction, supervision and control over all corporations, partnerships or associations, who are grantees of primary franchise and/or license or permit issued by the government to operate in the Philippines.’ “The principal function of the SEC is the supervision and control over corporations, partnerships and associations with the end in view that investments in these entities may be encouraged and protected, and their activities pursued for the promotion of economic development. (Sales vs. Securities and Exchange Commission, G.R. 54330, 13 January 1988)”. [emphasis ours] In Orosa vs. Court of Appeals, ⁷ which also revolved on allegations of fraud against the respondent corporation, the Supreme Court very clearly expounded as follows: “Considering that petitioner’s complaints sufficiently alleged acts amounting to fraud or misrepresentation committed by respondent corporation, the SEC must be held to retain its original and exclusive jurisdictions over these cases notwithstanding the revocation by the Central Bank of respondent corporation’s license or permit to operate as a financing corporation and despite the fact that the suits involve collection of sums of money paid to said corporation, the recovery of which would normally fall within the jurisdiction of the regular courts. The fraud committed is detrimental to the interest of the public and therefore encompasses a category of relationship within the SEC jurisdiction.” [emphasis ours] In the light of these afore-quoted rulings, it should be recalled that Private Respondent admitted that Petitioner and/or Sierra Madre caused the publication of advertisements inviting the public to invest in Dreamland in exchange for shares of stock. He further alleged that such scheme was fraudulent and even suggested that there were other victims other than him. These claims squarely fall within the requirement of an intra-corporate controversy arising out of “Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder” defined under Section 5.a of PD 902-A. [emphasis ours] When the INTERIM RULES OF PROCEDURE FOR INTRA-CORPORATE CONTROVERSIES UNDER R. A. NO. 8799 were promulgated pursuant to Supreme Court Administrative Matter No. A.M. No. 01-2-04-SC, dated 13 March 2001, the same provision was lifted. Said Rules provide as follows: SECTION 1. (a) Cases covered. – These Rules shall govern the procedure to be observed in civil cases involving the following: Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association; [emphasis ours] Republic Act 8799, otherwise known as the Securities Regulation Code, clearly provides that – “Section 5.2. The Commission’s jurisdiction over all cases enumerated under section 5 of Presidential Decree 902-A is hereby transferred to the courts of general jurisdiction or the appropriate Regional Trial Court: Provided, that the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving-intra corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code.” Under Supreme Court Administrative Matter No. 00-11-03 SC dated 21 November 2000, certain Regional Trial Court branches were designated as special courts to exclusively hear intra-corporate cases and the sala of Respondent Judge was not among them. From all of the foregoing discussions, it is readily clear that Respondent Judge committed grave abuse of discretion amounting to lack of jurisdiction in issuing the two assailed Orders.
*THIRD, RESPONDENT JUDGE GRAVELY ABUSED HIS DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT GRANTING THE PETITIONER’S MOTION FOR [A] VOLUNTARY INHIBITION AND [B] RECONSIDERATION.*
At the very heart of this ground is the deportment of the Respondent Judge in issuing the assailed Orders. This reminds us of what the Honorable Supreme Court observed in a 1987 Administrative Matter ⁸ when it said that -- “The issue before us brings to mind the words of Eugen Ehrlich, philosopher, who stated: "There is no guaranty of justice except the personality of a judge." (Ehrlich, "Freedom of Decision", The Science of Legal Method, O Mod. Leg. Philos, Ser. 65, 1917 trans. by Bruncken). Indeed, judicial integrity is the first and highest qualification a judge must possess — integrity maintained especially in cognizance of the limits of man. In this wise, we cite the oft quoted example of a judge voluntarily inhibiting himself so as to preserve the prized ideal of "the cold neutrality of an impartial judge" implicit in the guarantee of due process (Mateo, Jr. v. Villaluz, 60 SCRA 18).” [emphasis ours] Before presenting his arguments, Petitioner wishes to emphasize the pronouncement of the High Tribunal in the very recent case of *Emilio O. Orola vs. Hon. Jose O. Alovera* ⁹ that once an impression of impartiality is engendered in the belief of litigants, whether well-grounded or not, the best action that a judge must take is to excuse himself from further proceeding with the case -- “[W]e take this occasion once more, to impress upon trial judges that they must at all times maintain and preserve the trust and faith of parties litigants in the court's impartiality, and that the slightest doubt in the actions of the judge, whether well grounded or not, will leave the judge no better alternative than to recuse himself as the ideal mode to preserve the image of the judiciary.” ‘ "We deem it important to point out that a judge must preserve the trust and faith reposed in him by the parties as an impartial and objective administrator of justice. When he exhibits actions that give rise, fairly or unfairly to perception of bias, such faith and confidence are eroded, and he has no choice but to inhibit himself voluntarily. It is basic that '[a] judge may not be legally prohibited from sitting in a litigation, but when circumstances appear that will induce doubt [on] his honest actuations and probity in favor of either party, or incite such state of mind, he should conduct a careful self-examination. He should exercise his discretion in a way that the people's faith in the courts of justice is not impaired. The better course for the judge is to disqualify himself."’ [emphasis ours] The reason for the requirement that a judge must not only be impartial but must also appear to be so was stated in *Evelio B. Javier vs. COMELEC and Arturo F. Pacificador,* ¹⁰ when the Supreme Court pointedly reminded us that -- “This Court has repeatedly and consistently demanded "the cold neutrality of an impartial judge" as the indispensable imperative of due process. To bolster that requirement we have held that the judge must not only be impartial but must also appear to be impartial as an added assurance to the parties that his decision will be just. The litigants are entitled to no less than that. They should be sure that when their rights are violated they can go to a judge who shall give them justice. They must trust the judge, otherwise they will not go to him at all. They must believe in his sense of fairness, otherwise they will not seek his judgment. Without such confidence, there would be no point in invoking his action for the justice they expect.” [emphasis ours] While it was a most difficult task, Petitioner, through his lawyer, was constrained to file his Motion for (A) Voluntary Inhibition and (B) Reconsideration on 15 July 2004 [Annex “P” hereof] for he has lost that perception of impartiality on the part of Respondent Judge. The request for Respondent Judge to recuse himself from the present case was anchored on the following points discussed in said motion, to wit: On 4 June 2004, the hearing on the Motion to Dismiss was conducted but since on that date Private Respondent [then plaintiff] has not yet received a copy of Petitioner’s [then defendant] Reply, the former was given ten [10] days to file his Rejoinder. In the course of this hearing, Respondent Judge, by way of preliminary questions, asked whether payments were made by then plaintiff to Sierra Madre and if receipts were issued therefor by the corporation, which questions were answered affirmatively by the counsel for then defendant. Respondent Judge even commented that the Motion could be resolved easily as he had vast experience with the Securities and Exchange Commission where he used to work. What he wanted to impart by commenting this way one can only guess. With these comments of Respondent Judge, and trusting in his integrity that he would go over the pleadings submitted by the parties, the counsel for then defendant acceded to his suggestion that the Motion be resolved after the filing of the Rejoinder. However, in resolving said motion, Respondent Judge issued the first assailed Order and ruled that – “After consideration of the arguments interposed by both parties, the Court believes that it has jurisdiction over the subject matter of the case. There is no showing that the dispute between the parties is intra-corporate. Settled is the rule that jurisdiction over the subject matter is determined by the allegations in the complaint regardless or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The defenses asserted in the motion to dismiss are not to be considered for this purpose, otherwise, the question would depend entirely upon the defendant.” [Annex “A” hereof] which practically is a lifting from paragraph 4 of the Comment And/Or Opposition To The Motion To Dismiss [Annex “Q” hereof] of plaintiff [now Respondent]. [emphasis ours] But even as he ruled that allegations in the complaint determine jurisdiction, it is very obvious that he did not consider the allegations of plaintiff, for if he did, the same would have unavoidably supported a finding that the controversy is intra-corporate, as more than amply established in the discussions in this instant Petition. [emphasis ours] That coming from someone who made the vaunted claim that he could easily resolve the question of jurisdiction on account of his about ten years work experience with the Securities and Exchange Commission, the first assailed Order or Respondent Judge unavoidably induced in the perception of Petitioner that the judge was not impartial. Respondent Judge could have regained the Petitioner’s trust and confidence through the latter’s Motion for Reconsideration. But when Respondent Judge issued his second assailed Order not only dismissing the same but also refusing to recuse himself, such opportunity was altogether lost. In issuing said Order, Respondent Judge highlighted the lament made by no less than the Honorable Supreme Court in the 2002 case of *Cirilo I. Mercado, et. al. vs. Judge Hector F. Dysangco, et. al.,* ¹¹ where it observed this wise: “It needs to be reiterated over and over again, until it sinks into the consciousness of every judge, that litigants are entitled to nothing less than the cold neutrality of an impartial judge. The other elements of due process, like notice and hearing, would become meaningless if the ultimate decision is rendered by a partial or biased judge. Judges must not only render just, correct and impartial decisions, but must do so in a manner free of any suspicion as to their fairness, impartiality and integrity. “The reminder applies all the more sternly to trial judges, like herein respondent, because they are the judicial front-liners. They have direct contact with the litigating parties. They are the intermediaries between conflicting interests and the embodiments of the people's sense of justice. Thus, their official conduct should be beyond reproach.” [emphasis ours] On the basis of the foregoing arguments, it is most humbly submitted that the dismissal by Respondent Judge of Petitioner’s Motion for (A) Voluntary Inhibition and (B) Reconsideration was a grave abuse of discretion amounting to lack of jurisdiction. VIII. PRAYER WHEREFORE, PREMISES CONSIDERED, it is most respectfully prayed that the present Petition be given due course, and judgment be rendered: Declaring as null and void ab initio the Orders of Respondent Court dated 24 July 2004 and 26 October 2004; and Ordering Respondent Judge to dismiss Civil Case No. 54321 entitled “DESMOND U. PRESLEY, Plaintif vs. WILLARD A. BARRYMORE and/or SIERRA MADRE HOTEL, INC., Defendants” pending before the Respondent Court. Petitioner prays for such other reliefs as may be just and equitable under the circumstances. San Juan, Metro Manila for Manila, 14 January 2005. SINIGUELAS ABSUELTO & SOLOMON Counsel for Petitioners Suite 777, Medalle Atrium 16 Ortigas Avenue, Greenhills, San Juan Metro Manila, Philippines By: ATTY. EDILBERT P. DE SARAPIN IBP OR No. 480001/ Quezon City / 7 January 200 PTR No. 65432 / San Juan / 7 January 2005 Roll of Attorneys No. 489900 COPY FURNISHED: THE HONORABLE MIA LOURDES Q. CUARESMA Presiding Judge REGIONAL TRIAL COURT BRANCH 123 Hall of Justice Building, Government Center Intramuros, Manila MR. DESMOND U. PRESLEY 88 Abaca Drive Santa Mesa, Manila ATTY. MARIAN S. SANTISIMA Counsel for Private Respondent Suite 666, Jesuits Centre Ayala Avenue, Makati City EXPLANATION The foregoing Petition for Certiorari, has been served on the Respondents and on the counsel for the Private Respondent, by registered mail due to lack of time and personnel to effect personal delivery.
	EDILBERT P. DE SARAPIN
VERIFICATION I, WILLARD CA. BARRYMORE, of legal age, American citizen, with business address at Sierra Tower, 99 Kalamansi Road, Malate Manila, Philippines, after having been duly sworn to in accordance with law hereby depose and say: That I am a Petitioner in the above-entitled case; That I am the President and Chief Executive Officer of my co-Petitioner, SIERRA MADRE HOTEL, INC., and that I am representing it in this Petition by virtue of a Resolution of its Board of Directors dated _______ 2005, a copy of which is hereto attached as Annex “T” hereof; That I have caused the preparation of foregoing Petition; That I have read the same, and that the contents thereof are true and correct of my own personal knowledge, and based on the authentic facts; and That I hereby certify that I have not commenced any other action or proceeding involving the same or similar issues, in the Supreme Court, the Court of Appeals, or in any other court, tribunals or agency, and to the best of my knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or in any other court, tribunal or agency; and if I should learn hereafter that a similar action or proceeding is pending or has been filed in the Supreme Court, the Court of Appeals, or any other court, tribunal or agency, - I hereby undertake to report that fact to the Court or agency, wherein the original pleading or the sworn certification herein contemplated, have been filed.
	WILLARD A. BARRYMORE Affiant
SUBSCRIBED AND SWORN to before me this ______ day of January 2005 , Affiant to me his Community Tax Certificate No. ________ issued on ___________ 2005 in ___________________.
	NOTARY PUBLIC
Doc. No. _____; Page No. _____; Book No. _____; Series of 2005. ¹ 66 Phil. 1, 8 ² 158 SCRA 270, 275 ³ [209 SCRA 260] ⁴ [G.R. Nos. 58507-08. February 26, 1992.] ⁵ G.R. No. L-57707 November 19, 1982 ⁶ G.R. No. 120730 October 28, 1996 ⁷ 193 SCRA 391 ⁸ Query of Executive Judge Estrella T. Estrada, Regional Trial Court of Malolos, Bulacan, on the conflicting views of Regional Trial Court Judges Masadao and Elizaga re: Criminal Case No. 4954-M [A.M. No. 87-9-3918-RTC. October 26, 1987.] ⁹ [G.R. No. 111074. July 14, 2000.] ¹⁰ [G.R. Nos. L-68379-81. September 22, 1986.] ¹¹ [A.M. No. MTJ-00-1301. July 30, 2002.]

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