G.R. No. 108552 ; October 2, 2000
ASSET PRIVATIZATION TRUST, petitioner, vs. SANDIGANBAYAN (SECOND DIVISION) and ROSARIO M. B. OLIVARES, respondents.

FACTS

The case originated from a dispute over the validity of two competing annual stockholders’ meetings of Philippine Journalists, Inc. (PJI) held on February 4, 1992. The Sandiganbayan, in Civil Case No. 0035, declared the meeting presided over by respondent Rosario Olivares as valid and the alternative “ramp” meeting presided over by a representative of petitioner Asset Privatization Trust (APT) as void. The court also ordered the APT and the Development Bank of the Philippines (DBP) to send representatives to vote the 67% voting rights assigned to them via a 1977 Deed of Assignment, under penalty of waiver.
The Deed of Assignment was executed by PJI’s principal stockholders, including Olivares, in favor of DBP as security for loan accommodations. It assigned 67% of PJI’s voting shares to DBP, with a provision that the assignors retained the proxy to vote the shares unless a specific event of default occurred. The deed stipulated that upon such default, the proxy would be ipso facto cancelled, and DBP (and later its successor-in-interest, APT) would automatically gain the right to vote the shares. The Sandiganbayan ruled that no event of default had occurred, thus the voting rights remained with the assignor-stockholders, including Olivares.

ISSUE

Whether the Sandiganbayan acted without or in excess of its jurisdiction or with grave abuse of discretion in resolving the intra-corporate dispute concerning the validity of the PJI stockholders’ meetings and the voting rights under the Deed of Assignment.

RULING

Yes. The Supreme Court granted the petition, reversed the Sandiganbayan’s resolution, and remanded the case for further proceedings. The Court held that the Sandiganbayan committed grave abuse of discretion by taking cognizance of and deciding a matter that was purely intra-corporate. The dispute between APT and Olivares centered on the proper interpretation of the Deed of Assignment and the consequent validity of corporate meetings and elections. This was a controversy arising from intra-corporate relations between and among stockholders.
The legal logic is grounded on jurisdictional boundaries. The Sandiganbayan is a special court with jurisdiction over cases involving public officials accused of graft and corruption, and over cases for the recovery of ill-gotten wealth under its charter. The dispute here, however, involved a disagreement between stockholders over corporate governance and voting rights based on a contractual deed of assignment. Citing San Miguel Corporation vs. Kahn, the Supreme Court reiterated that an intra-corporate dispute between stockholders, having no relevance to the ownership of sequestered assets or allegations of ill-gotten wealth, falls outside the Sandiganbayan’s jurisdiction. Such matter was, at the time, within the jurisdiction of the Securities and Exchange Commission (SEC). Therefore, the Sandiganbayan’s assumption of jurisdiction and its substantive ruling on the corporate dispute constituted an act in excess of its authority.