G.R. No. 211389. October 06, 2021
EDGARDO C. DE LEON, PETITIONER, VS. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., RESPONDENT.
FACTS
Petitioner Edgardo C. De Leon owned 180 Subscribers Investment Plan 10% Cumulative Convertible Preferred Stock (Subscriber Investment Plan preferred shares) in respondent Philippine Long Distance Telephone Company, Inc. (PLDT), acquired on August 10, 1993. These shares were issued under the “telephone subscriber self-financing” concept mandated by Presidential Decree No. 217, which required that subscribers be guaranteed a fixed annual income and the option to convert preferred shares into common shares after a reasonable period. Following the Supreme Court’s ruling in Gamboa v. Teves regarding foreign ownership in public utilities, PLDT’s Board of Directors passed a resolution on September 23, 2011, authorizing the redemption of all outstanding Subscribers Investment Plan preferred shares effective January 19, 2012. PLDT mailed redemption notices to shareholders, offering them the option to claim redemption payments or convert their shares to common shares by January 9, 2012. PLDT deposited the redemption funds in a trust account and, by January 19, 2012, had redeemed over 403 million shares and converted approximately 3 million shares. De Leon, together with another shareholder, objected to the redemption and demanded its reversal, arguing it was a desperate attempt to comply with constitutional foreign ownership limits. When PLDT refused, De Leon filed a complaint before the Regional Trial Court (RTC) seeking to enjoin a special stockholders’ meeting and nullify the redemption, alleging violations of shareholders’ rights, the Constitution, and Presidential Decree No. 217. The RTC granted PLDT’s motion to declare the complaint a nuisance or harassment suit, noting De Leon had known since 1993 that his shares were redeemable, his holdings were minimal compared to the total redeemed, and nothing in Presidential Decree No. 217 prohibited redemption. The Court of Appeals affirmed the RTC’s decision.
ISSUE
Whether the Regional Trial Court correctly declared De Leon’s complaint a nuisance or harassment suit.
RULING
Yes, the Regional Trial Court correctly declared the complaint a nuisance or harassment suit. The Supreme Court affirmed the lower courts’ decisions. The terms and conditions for the redemption of the Subscriber Investment Plan preferred shares were explicitly stated on the dorsal portion of the stock certificates issued to De Leon, indicating they were redeemable at PLDT’s option after a fixed period. Presidential Decree No. 217 does not prohibit the redemption of such shares; it only requires that subscribers be assured a fixed annual income and the option to convert to common shares. The redemption was consistent with the terms approved by the then-Board of Communications (now National Telecommunications Commission). Furthermore, De Leon’s shareholding was insignificant (180 shares) compared to the total redeemed (over 403 million shares), and his complaint, filed after his shares were validly redeemed, presented patently flimsy legal and factual grounds aimed at harassing PLDT. The suit did not constitute a genuine intra-corporate controversy warranting judicial intervention.
