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Section 1. Petition for certiorari.

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a. sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46

THIS IS A RULE 45 CASE WALANG RULE 65 SO MODIFY NA LANG,

REPUBLIC OF THE PHILIPPINES SUPREME COURT MANILA Third Division ADERITO Z. CULLEN,

BONIFACIO C. CULLEN, and DOLNEY S. CULLEN, Petitioners, - versus MAUREEN, CEZAR T. LADY DEL ROSARIO, JOSE M. XXXXXX III , CHRISTINA F. XXXXXX, ANTHONY K. LADY DEL ROSARIO, SIMPLICIO T. LADY DEL ROSARIO, JR., ERIC C. DOE, RUSTIKOY M. XXXXXX, and REGIONAL TRIAL COURT, FIRST JUDICIAL REGION, BRANCH 48, SAMAR CITY Respondents. G.R. No. 168639
[CA-G.R. SP No. 87785, Court of Appeals, Eighth Div.; Civil (SEC) Case No. U-14 (SCC2874), RTC, Samar city, Branch 48] For: Review on Certiorari, with temporary restraining order and preliminary injunction.

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PETITION
Petitioners Aderito Z. CULLEN,1 Bonifacio C. CULLEN2 and Dolney S. CULLEN,3 by counsel, respectfully state: Introductory
Petitioners are before this Honorable Court to correct a patent injustice perpetrated by respondent Cezar T. LADY DEL ROSARIO and his counsel, Atty. JOHN G., who connived with respondent Judge Meliton G. ALEGRE, pairing judge of the Regional Trial Court, First Judicial Region, Branch 48 in Samar city, to remove petitioners as directors of AAACCCBDDDDevelopment Corporation4 through a preliminary injunction issued eight months after petitioners were elected in a valid stockholders meeting. In his Order dated November 25, 2004 granting the preliminary
Hereafter, CULLEN. Hereafter, B. Sumbilla. 3 Hereafter, D. Sumbilla.
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injunction, respondent Judge not only enjoined petitioners from performing acts as directors and officers of the corporation but also directed the holding of a special stockholders meeting in Bayambang, to elect the new directors and officers of the corporation, effectively disposing of the merits of the case ahead of trial.

Respondent Judge facilitated the removal of petitioners from office by acting on Mr. LADY DEL ROSARIOs election protest, which was filed beyond the statutory period to contest the election. He issued a temporary restraining order ex parte, in violation of circulars of this Honorable Court and applicable decisions, and set the hearings on the preliminary injunction on short notice so as to prevent the petitioners and their counsel from participating in the proceeding. Despite objections to his impartiality and to his jurisdiction, respondent Judge proceeded and allowed himself to be used as an instrument of injustice.

This case illustrates how legal knowledge may be abused by litigants to mislead the courts and to frustrate justice. Thus, Mr. LADY DEL ROSARIO and his counsel took full advantage of the articles of incorporation of ABC INCORPORATED, which states the principal office of the corporation in Bayambang, BULACAN, to file their action in Samar city despite the fact that the corporation never operated in that far-flung municipality nor held any meetings there. The distance of Samar city from Metro Manila, where petitioners and private respondents as well as their counsel reside and hold office, require at least six hours of travel by private transportation, thereby rendering it impracticable for petitioners to prove their defenses in a timely manner. At every opportunity, Mr. LADY DEL ROSARIO and Atty. ABUGADO invoked the summary nature of the Interim Rules of Procedure on Intra-Corporate Controversy to penalize petitioners.

Hereafter, XXXXX INC.

ADERITO CULLEN, ET AL. V. HON. JUDGE ALEGRE, ET AL. PETITION FOR CERTIORARI G.R. NO. 168639 04381.10.004

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This Honorable Court has recently held that the peoples confidence in the judicial system is founded not only on the magnitude of legal knowledge and the diligence of the members of the bench, but also on the highest standard of integrity and moral uprightness they are expected to possess.5 To be sure, this Honorable Court as the staunch guardian of the citizens righs and welfare - cannot and will not sanction an injustice so patent on its face, and allow itself to be an instrument in the perpetration thereof.6

Petitioners, by filing this appeal, seek to correct the patent injustice they suffered at the hands of Mr. LADY DEL ROSARIO, his counsel, respondent Judge, and only recently the Court of Appeals. They invoke the inherent power of this Honorable Court not only to pronounce what the law is in adjudicating every dispute but, more importantly, to level the playing field by rendering substantial justice to petitioners cause.

Parties Petitioners CULLEN, B. CULLEN and D. CULLEN are all of legal age. Mr. CULLEN is the President and Chairman of the Board of Directors of ABC INCORPORATED, a domestic corporation with principal office at the 24th Floor, One Magnificent Mile-Babuun INC Building, San Miguel Avenue, Ortigas Center, Pasig City, while B. CULLEN is ABC INCORPORATEDs Treasurer. Petitioners are all stockholders of ABC INCORPORATED. They may be served with notices and other processes of this Honorable Court through undersigned counsel.

5 6

Yu vs. Leanda, 349 SCRA 58, 64-65 (2001). EPG Construction Co. vs. Vigilar, 354 SCRA 566, 576 (2001).

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Respondent Meliton G. ALEGRE is the pairing Judge and presiding Judge of the Regional Trial Court, Samar city, Branches 48 and 47, respectively. He may be served with notices and other processes of this Honorable Court at his station at the Regional Trial Court, Samar city, Branch 48 located at the Hall of Justice, Samar city, BULACAN.

Private respondents Cezar T. LADY DEL ROSARIO, Jose M. XXXXXX III and Christina XXXXXX7 are all of legal age. They are impleaded as plaintiffs in Civil (SEC) Case No. U-14 and, hence, as necessary parties. They may be served with notices and other

processes of this Honorable Court through their counsel of record below, ABUGADO ABUGADO and XXXXXX Concepcion Law Offices at Unit 1112, Manila Astral Tower, 1330 Taft Avenue corner Padre Faura Street, Manila.

Private respondents Anthony K. LADY DEL ROSARIO, Simplicio T. LADY DEL ROSARIO, Jr., Eric C. DOE, and RUSTIKOY M. XXXXXX8 are impleaded as directors and officers unlawfully elected during the void stockholders meeting of ABC

INCORPORATED subject of this petition. They are impleaded as necessary parties and may be served with notices through respondent LADY DEL ROSARIOs counsel, ABUGADO ABUGADO and XXXXXX Concepcion Law Offices at Unit 1112, Manila Astral Tower, 1330 Taft Avenue corner Padre Faura Street, Manila.

Respondent Regional Trial Court, First Judicial Region, Branch 48, Samar city is a court created under Batas Pambansa Bldg. 129
7

Hereafter, plaintiffs below.

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(1981), as amended. It may be notified of the proceedings and served with processes of this Honorable Court at its official station at the Hall of Justice, Samar city, BULACAN.

Nature of the Petition This is a petition under Rule 45 of the 1997 Rules of Civil Procedure to review by certiorari the Court of Appeals Decision dated March 31, 20059 and Resolution dated June 29, 200510 in CAG.R. SP No. 87785, entitled Aderito A. CULLEN, et al. vs. Hon. Meliton G. ALEGRE, et al.

In its Decision, the Court of Appeals denied due course to the petition therein and erroneously dismissed it on grounds that (a) the Regional Trial Court, First Judicial Region, Branch 48 in Samar city,11 had authority to directly call a stockholders meeting of ABC INCORPORATED; (b) there was a valid notice of the stockholders meeting as shown by the letter dated December 1, 2004 of private respondents counsel, which was purportedly received by ABC INCORPORATEDs Corporate Secretary; and (c) private respondents did not engage in forum shopping. The appellate court refused to consider other grounds raised by petitioners.

In its Resolution, the Court of Appeals denied petitioners motion for reconsideration of the appellate courts Decision. Petitioners respectfully submit that the Court of Appeals Decision

Hereafter, respondent directors and officers. Hereafter, the Decision, a certified true copy of which is attached as Annex A hereof. 10 Hereafter, the Resolution, a certified true copy of which is attached as Annex B hereof. 11 Hereafter, the RTC XXXXXX.
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and Resolution were rendered in a way not in accord with law and the applicable decisions of this Honorable Court. petition. Timeliness of the Petition Hence, this

On April 11, 2005, petitioners received a copy of the Decision. They moved to reconsider the same in a Motion for

Reconsideration dated April 26, 2005, which petitioners filed on even date. However, petitioners motion for reconsideration was

denied by the appellate court in its Resolution, a copy of which they received on July 8, 2005. Under Rule 45, Section 1 of the Rules, petitioners had 15 days from July 8, 2005, or until July 23, 2005, within which to file a petition for review on certiorari with this Honorable Court.

On July 14, 2005, petitioners filed a Motion for Extension of Time to File Petition dated July 13, 2005 where they prayed for an extension of 30 days from July 23, 2005, or until August 22, 2005, within which to file their petition for review on certiorari with this Honorable Court. Statement of Facts and the Case

1.

On

July

27,

1998,

the

Securities

and

Exchange

Commission12 approved the amendment of ABC INCORPORATEDs articles of incorporation to authorize the establishment of its principal office from the 24th Floor of the One Magnificent MileBabuun INC Building in Ortigas Center, Pasig City to Bayambang,
12

Hereafter, SEC.

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BULACAN. The change in the location of ABC INCORPORATEDs principal office was made at the instance of its then President, respondent LADY DEL ROSARIO, to make it difficult for any claimant to sue ABC INCORPORATED and/or respondent LADY DEL ROSARIO in his hometown of Bayambang, BULACAN, and not for any bona fide purpose.

2.

ABC INCORPORATED never opened an office in

Bayambang, BULACAN, much less conducted any business activity or transaction in said municipality. Hence, the change in location of the principal office was never implemented, such that ABC INCORPORATED continued to hold its principal office on the 24th Floor, One Magnificent Mile-Babuun INC Building, San Miguel Avenue, Ortigas Center, Pasig City.13 The meetings of the stockholders and directors of ABC INCORPORATED were held at the Pasig office.

3.

On March 1, 2004, ABC INCORPORATED held its annual

stockholders meeting at the Pasig office, which was attended by all of its stockholders, in person and by proxy. Notices14 of the said meeting were sent to the stockholders by respondent Eric C. DOE,15 then the Corporate Secretary of ABC INCORPORATED, indicating that the meeting was to be held at ABC INCORPORATEDs Pasig office.

4.

None of the stockholders, plaintiffs below included,

objected to the venue of the meeting. In fact, respondents LADY DEL ROSARIO and XXXXXX attended the meeting, during which they
Hereafter, Pasig office. A copy of the Notice is attached as Annex C hereof. 15 Hereafter, Atty. Pilapil or respondent Pilapil.
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were elected as directors. Respondents LADY DEL ROSARIO and XXXXXX also assented to the election of petitioners CULLEN and B. CULLEN as ABC INCORPORATEDs Chairman/President and Treasurer, respectively.16

5.

Since then, ABC INCORPORATEDs business was

transacted through its Board of Directors composed of respondents LADY DEL ROSARIO and XXXXXX as well as petitioners, without any protest or objection on the part of plaintiffs below or any other stockholder of ABC INCORPORATED.17 Respondents LADY DEL ROSARIO and XXXXXX, at whose instigation the case a quo was filed, received per diems from ABC INCORPORATED as duly elected directors.

6.

As the corporate secretary of ABC INCORPORATED,

Atty. DOE kept all the corporate and business records of the corporation. However, upon his cessation from office on June 21, 2004, Atty. DOE failed and/or refused to turn over the said records to his successor. Hence, ABC INCORPORATEDs records were lost, misplaced or incomplete. Furthermore, respondent LADY DEL ROSARIO unlawfully took ABC INCORPORATEDs stock and transfer book18 and refused to deliver it to ABC INCORPORATED or to its new corporate secretary, Atty. Joselito G. Blando.

7.

On June 21, 2004, petitioner CULLEN filed Civil Case No.

70027, entitled Aderito Z. CULLEN vs. United Resources Asset Management, Inc., Atty. Richard J. Nethercott and Atty. Honorato R.
Please see the Minutes of the Organizational Meeting of the Board of Directors on March 1, 2004, a copy of which is attached as Annex D hereof. 17 Please see the Minutes of the Regular Meeting of the Board of Directors on June 14, 2004, a copy of which is attached as Annex E hereof. 18 Hereafter, STB.
16

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Mataban,19 which was raffled to the Regional Trial Court,20 Pasig City, Branch 71.21

8.

In Civil Case No. 70027, petitioner CULLEN sought to (a)

immediately restrain and preliminarily enjoin defendants therein from proceeding with the auction sale of the ABC

INCORPORATED shares pledged by petitioners to CCCCC INC; (b) enjoin defendants therein from [i] executing any certificate of sale of such shares; [ii] recording such shares in the books of ABC INCORPORATED; [iii] canceling the pledged shares and issuing new ones in favor of defendants therein or any bidder; or [iv] exercising any rights of ownership over such shares; and (c) declare void therein defendants foreclosure of the pledged shares, any auction sale, certificate of sale, registration of sale, cancellation of shares, issuance of new shares, transfer or assignment of new shares and the exercise of any rights of ownership over such pledged shares.

9.

Before the RTC Pasig could issue a temporary restraining

order,22 Atty. Mataban conducted the auction sale of the pledged shares in Bayambang, BULACAN, with CCCCC INC being the highest bidder for said shares. On the same day, before any

certificate of stock could be issued in its name, CCCCC INC sold the auctioned shares to respondent LADY DEL ROSARIO. On June 30, 2004, the RTC Pasig issued its TRO, stating that:
In the broader interest of justice and so as not to render moot and academic the issue on the grant or not of the writ, let this Temporary Restraining Order be issued enjoining defendants, their
Hereafter, URAMI, Atty. Nethercott and Atty. Mataban, respectively. Hereafter, RTC. 21 Hereafter, RTC Pasig. 22 Hereafter, TRO.
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officers, agents and assigns from recording such sale in the books of ABC INCORPORATED or from canceling the pledged shares and issuing new ones in favor of defendants or from exercising any rights of ownership over such shares in violation of plaintiffs rights. The Corporate Secretary of ABC INCORPORATED is directed to hold in abeyance the cancellation of the pledged shares and to restore them, if cancelled, in the books of the corporation until further orders from this Court.23

10.

On June 30, 2004, upon learning of the issuance of the

TRO, respondent LADY DEL ROSARIO and Atty. Nethercott rushed to ABC INCORPORATEDs corporate secretary, Atty. Blando, to ask him to record entries in the STB immediately transferring the auctioned shares to CCCCC INC and then to transfer them again from CCCCC INC to respondent LADY DEL ROSARIO. The

pressure exerted upon Atty. Blando was sweetened by payment of substantial sums of money to Atty. Blando. The cancellation and transfer of the shares were made in the STB without surrendering it to ABC INCORPORATED or Atty. Blando, to beat the TRO that by then had been issued by the RTC Pasig.

11.

While unlawfully holding on to the STB, respondent

LADY DEL ROSARIO and Atty. DOE demanded Atty. Blando to cancel the pledged shares and issue new shares to CCCCC INC and respondent LADY DEL ROSARIO. Respondent LADY DEL

ROSARIO and Atty. DOE likewise ordered Atty. Blando to perform the cancellation and issuance of the shares in Atty. DOEs office inside the Land Transportation Office compound in Quezon City, to be witnessed by respondent LADY DEL ROSARIO alone.

Respondent LADY DEL ROSARIO and Atty. DOE refused to allow the recording to be done by Atty. Blando outside of Atty. DOEs office.
23

A copy of the RTC Pasigs Order dated June 30, 2004 is attached as Annex F hereof.

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12.

After Atty. Blando received the TRO on July 1, 2004 and

tried, but failed, to undo the cancellation and transfer of the shares in the absence of the STB which was then unlawfully withheld by respondent LADY DEL ROSARIO, ABC INCORPORATED

authorized the reconstitution of the STB and its entries. The cancellation and transfer made at the instance of LADY DEL ROSARIO were then reversed by ABC INCORPORATED in the reconstituted STB to comply with the TRO.

13.

In the meantime, on July 19, 2004, the RTC Pasig issued a

writ of preliminary injunction24 against CCCCC INC and Attys. Nethercott and Mataban, as well as all persons acting under them, stating that:
IT IS HEREBY ORDERED by the undersigned Judge of this Court, that until further orders, you, the said defendants United Resources Asset Management, Inc. (CCCCC INC for short), Atty. Richard J. Nethercott, and Atty. Honorato R. Mataban, and all persons acting under them, to desist and refrain from further proceeding with the public auction sale of the pledged shares of stocks by registering/recording the sold shares of stocks in the books of ABC INCORPORATED, or canceling them and issuing new ones in favor of defendant CCCCC INC to enable it to exercise the rights of ownership over said shares owned by plaintiff in violation of the latters rights. SO ORDERED.

14.

Thereafter, respondent LADY DEL ROSARIO refused to

comply with the subpoena issued by the RTC Pasig to produce the STB in Civil Case No. 70027. He also rejected the demand of petitioner CULLENs counsel to surrender the STB within 24 hours, on the ground that the STBs possession was being litigated in that action:

24

A copy of the RTC Pasigs Writ of Preliminary Injunction is attached as Annex G hereof.

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As you are aware, the matter of possession of ABC INCORPORATEDs Stock and Transfer Book is currently being litigated in Civil Case No. 70027, entitled Aderito Z. CULLEN vs. United Resources Asset Management, Inc., Et Al., pending before the Regional Trial Court of Pasig City (Branch 71), where I am represented by Tan Acut & Lopez Law Offices, my counsel de parte.25

15.

Respondent LADY DEL ROSARIO, by way of special

appearance, then participated in Civil Case No. 70027 by filing motions and pleadings, examining witnesses, presenting evidence, and otherwise actively prosecuting and defending his claims therein as if he were a party in that case.26

16.

On August 16, 2004, plaintiffs below filed an election

protest before the RTC, San Carlos City, to (a) invalidate the March 1, 2004 election of ABC INCORPORATEDs directors and officers; and (b) enjoin petitioners from discharging their functions as directors and officers of ABC INCORPORATED. The case a quo was initially docketed as Civil Case No. SCC 2874 entitled Cezar T. LADY DEL ROSARIO, et al. vs. ABC INCORPORATED, et al., and was raffled to Branch 56 of the said court.27

17.

Plaintiffs below thereafter filed an Amended Complaint

dated September 2, 2004, further praying the RTC San Carlos to issue a TRO and/or writ of preliminary injunction based on the same facts alleged in their original complaint.

A copy of respondent Quiambaos letter dated September 6, 2004 is attached as Annex H hereof. 26 A sample pleading filed by respondent Quiambao in Civil Case No. 70027 is attached as Annex I hereof. 27 Hereafter, RTC San Carlos.
25

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18.

On September 22, 2004, plaintiffs below filed their first

Supplemental Complaint dated September 16, 200428 before the RTC San Carlos, praying the court a quo to (a) direct Export Industry Bank, respondent LADY DEL ROSARIO and petitioner B. CULLEN to

surrender to the custody of the court a quo the original and reconstituted STB and other relevant certified true copies of ABC INCORPORATEDs corporate documents; and (b) nullify the reconstituted STB and the reconveyance effected therein. However, the RTC San Carlos did not issue a TRO in favor of plaintiffs.

19.

Subsequently,

SUPER

LAND

CORPCorporation,29

through (a) Melvin Nazareno, as President of CAKELAND Infrastructure Development Corporation;30 and (b) petitioner

CULLEN, as Chairman and President of ABC INCORPORATED, with CAKELAND Infrastructure and ABC INCORPORATED being the owners of a majority of the shares of stock of CAKELAND Tollways, issued a notice of the Annual Stockholders Meeting of SUPER LAND CORPdated September 30, 2004, to be held on October 20, 2004, at 11:00 a.m. Said notice was duly served on and received by respondent LADY DEL ROSARIO. 20. Then, in an Order dated October 4, 2004, the RTC San

Carlos suddenly ordered the case transferred to the RTC, Samar city pursuant to Supreme Court Administrative Circular No. 08-2001, without the approval of the Executive Judge of the RTC, San Carlos City, and without prior leave of the Supreme Court. As a result, the case a quo was transferred to the RTC XXXXXX, which was then vacant, where it was docketed anew as Civil (SEC) Case No. U-14.
A copy of the Supplemental Complaint dated September 16, 2004 is attached as Annex J hereof. 29 Hereafter, CAKELAND Tollways.
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15

This was done despite the fact that none of the parties to the case were residents of the city and the municipalities over which RTC XXXXXX exercised its territorial jurisdiction. Respondent Judge then acted on the case as a pairing judge of the RTC XXXXXX. 21. In a Second Supplemental Complaint dated October 6,

2004, plaintiffs below prayed for reliefs similar to those sought in their Complaint, Amended Complaint and Supplemental Complaint. In an Order dated October 12, 2004, respondent Judge motu proprio admitted the two supplemental complaints filed by plaintiffs below.

22.

On Monday, October 18, 2004, respondent Judge issued

ex parte a TRO effective for a period of 72 hours, enjoining petitioners from acting as officers of ABC INCORPORATED and/or from committing further acts inimical to the interests of ABC

INCORPORATED and its stockholders, and directing respondent LADY DEL ROSARIO and petitioners to bring to RTC XXXXXX the original as well as the reconstituted STB of ABC INCORPORATED.31 The trial court then set the summary hearing of LADY DEL ROSARIOs application for TRO on October 20, 2004, which was a Wednesday. Considering the distance between Metro Manila, where petitioners and their counsel reside and held office, and the RTC XXXXXX, it was physically impossible for petitioners to prepare for and attend the hearing in a timely manner. 23. Thus, on October 20, 2004, petitioners filed a Motion to

Inhibit and to Quash Temporary Restraining Order dated October 19, 2004 before the RTC XXXXXX. Petitioners likewise moved to

Hereafter, CAKELAND Infrastructure. A copy of the RTC XXXXXXs Temporary Restraining Order dated October 18, 2004 is attached as Annex K to K-1 hereof.
30 31

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defer the hearing scheduled on October 20, 2004 because of the long distance required and the short notice for petitioners to prepare for the hearing. However, respondent Judge refused to defer the hearing. He proceeded with the hearing and received ex parte the testimonies of respondents LADY DEL ROSARIO and Jose M. XXXXXX III as well as Atty. DOE. Thereafter, plaintiffs below submitted their application for a TRO to respondent Judge, in the absence of petitioners and their counsel who were unable to attend the hearing. 24. On October 29, 2004, respondent Judge issued an order

holding in abeyance plaintiffs application for a TRO, pending the exchange of pleadings by the parties. Hence, on November 2, 2004, petitioners filed their Answer with Counterclaim dated October 28, 2004.32 In the meantime, on November 2, 2004, Hon. Aurelio R. Ralar assumed his offices as presiding judge of RTC XXXXXX, thereby divesting respondent Judge of further authority to act on Civil (SEC) Case No. U-14.

25.

On November 9, 2004, petitioners received a copy of

plaintiffs Manifestation with Motion for Early Resolution dated November 2, 2004, praying for the resolution of their application for preliminary injunction before the RTC XXXXXX. On the date their pleading was written, plaintiffs below were apparently aware of the appointment of Judge Ralar as presiding judge of the RTC XXXXXX.

26.

In an Order dated November 10, 2004, respondent Judge

set the reception of petitioners evidence, as defendants below, on Thursday, November 19, 2004 at 2:00 p.m., oblivious of the fact that Judge Ralar had assumed his office as presiding judge of the RTC

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XXXXXX. Petitioners, through undersigned

counsel,

received a

copy of the order on Tuesday, November 17, 2004, at 2:24 p.m. However, as none of the lawyers handling the case for petitioners was available to go to Samar city on short notice, petitioners again were not represented during the hearing. Upon LADY DEL

ROSARIOs motion, petitioners were deemed to have waived their right to present evidence and the application for preliminary injunction was ordered submitted for resolution.33

27.

On November 19, 2004, petitioners received a copy of

plaintiffs Answer to Counterclaim dated November 10, 2004. Unknown to petitioners, on November 25, 2004, respondent Judge had issued an Order granting plaintiffs application for preliminary injunction and ordering the holding of a special stockholders meeting in Bayambang, BULACAN on December 10, 2004, which Order practically disposed of the merits of the case. The dispositive portion of the Order read:
WHEREFORE, premises considered, let the Writ of Preliminary Injunction issue, upon posting of the requisite bond in the amount if Five Hundred Thousand Pesos (P500,000.00) to answer for whatever damages that the defendants would suffer on account of the issuance of the injunction writ, restraining defendants from acting as officers of the corporation and committing further acts inimical to the corporation. It is likewise ordered that a special stockholders meeting in the principal office of the corporation in Bayambang, BULACAN on December 10, 2004 be held. The Branch Clerk of this Court shall attend the said meeting to observe the proceedings and report his observations to this court. For this purpose, the defendant Bonifacio CULLEN is ordered to surrender to the court, not later than December 3, 2004 the duplicate key given to him by Export Industry Bank, Shaw Blvd., Pasig City, of the safety deposit box where he and plaintiff Cezar T. LADY DEL ROSARIO deposited
A copy of petitioners Answer with Counterclaim dated October 28, 2004 is attached as Annex L hereof. 33 A copy of the RTC XXXXXXs Order dated November 19, 2004 is attached as Annex M hereof.
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the Original Stock and Transfer Book of ABC INCORPORATED which shall be the basis in the determination of the corporate stockholding during the meeting scheduled on the abovementioned dated. SO ORDERED.34

28.

On December 6, 2004, petitioner B. CULLEN received by

registered mail a copy of an undated Notice of Special Annual Stockholders Meeting,35 issued by the Branch Clerk of Court of respondent Judge, informing B. CULLEN that pursuant to the Order dated November 25, 2004, a special annual stockholders meeting of ABC INCORPORATED would be held four days later on December 10, 2004, 9:00 a.m., at ABC INCORPORATEDs supposed office in Poblacion Sur, Bayambang, BULACAN. By this time, petitioners had not been notified of respondent Judges invalid Order dated November 25, 2004.

29.

On December 8, 2004, before petitioners received a copy

of the Order dated November 25, 2004, respondent LADY DEL ROSARIO, together with the Sheriff of the RTC XXXXXX, caused the opening of the safety deposit box in Export Industry Bank, Pasig City branch, on the basis of the Order, even if the bank was well outside the territorial jurisdiction of the RTC XXXXXX. Petitioners were not notified by the Export Industry Bank before it allowed the opening of the safety deposit box. Upon the opening of the safety deposit box, respondent LADY DEL ROSARIO took custody of ABC

INCORPORATEDs STB, which he placed there for safekeeping in his and B. CULLENs names instead of turning it over to ABC INCORPORATED or to Atty. Blando.

34 35

A copy of the RTC XXXXXXs Order dated November 25, 2004 is attached as Annex N hereof. Hereafter, Notice.

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30.

On December 10, 2004, petitioners were compelled to file

before the RTC XXXXXX an Urgent Motion to Set Aside Notice of Stockholders Meeting dated December 9, 2004.36 Despite

petitioners motion, however, the RTC XXXXXX refused to act on the motion and plaintiffs below proceeded to hold an invalid stockholders meeting of ABC INCORPORATED in Bayambang, BULACAN on December 10, 2004, on the basis of the unlawful Notice issued by the Branch Clerk of Court of respondent Judge. During this invalid meeting, which was presided by the Branch Clerk of Court of respondent Judge, the following respondents elected themselves as directors and officers of the corporation:
Directors: Cezar T. LADY DEL ROSARIO Anthony K. LADY DEL ROSARIO Simplicio T. LADY DEL ROSARIO, Jr. Corporate Officers: Cezar T. LADY DEL ROSARIO Chairman and President Anthony K. LADY DEL ROSARIO Treasurer Eric C. DOE Corporate Secretary RUSTIKOY M. XXXXXX Assistant Corp. Sec.37

31.

Petitioners immediately filed on December 10, 2004, a

petition for certiorari38 before the Court of Appeals and applied for a TRO and/or a writ of preliminary injunction to enjoin plaintiffs below from further implementing the Order dated November 25, 2004 and/or causing grave and irreparable damage to petitioners. The petition was docketed as CA-G.R. SP No. 87785 and assigned to

A copy of the Urgent Motion to Set Aside Notice of Stockholders Meeting dated December 9, 2004 is attached as Annex O hereof. 37 Copies of the Certification dated December 10, 2004 issued by the secretary of the invalid stockholders meeting of XXXXX INC, Jeffrey P. Punzalan, and the Notice of even date issued by the alleged Assistant Corporate Secretary of XXXXX INC, Albert M. Rasalan, are attached as Annexes P and Q hereof, respectively.
36

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Associate Justice Mariano C. del Castillo of the then Ninth Division of the appellate court.

32.

In a belated Resolution dated December 17, 2004, a copy

of which petitioners received only on December 28, 2004, eighteen days after the invalid stockholders meeting, the Court of Appeals directed plaintiffs below to file their comment on the Petition within 10 days from notice, without necessarily giving due course to the instant petition for certiorari with prayer for the issuance of temporary restraining order and/or writ of preliminary injunction.

33.

On December 29, 2004, petitioners, citing grave and

irreparable injury to themselves and to third parties dealing with plaintiffs below, filed a Motion for Partial Reconsideration dated December 28, 200439 of the Court of Appeals Resolution dated December 17, 2004 insofar as it did not address petitioners application for a TRO. Thereafter, private respondents therein filed (a) a Comment on the Petition dated January 6, 2005; and (b) an Opposition to Motion for Partial Reconsideration dated January 7, 2005.40

34.

On January 14, 2005, petitioners again filed with the

Court of Appeals an Urgent Ex-Parte Motion for Temporary Restraining Order and/or Writ of Preliminary Injunction dated January 14, 2005 in CA-G.R. SP No. 87785, to which private respondents therein filed an Opposition To Urgent Ex-Parte Motion
A copy of the Petition dated December 10, 2004, without the voluminous annexes, is attached as Annex R hereof. 39 A copy of the Motion for Partial Reconsideration dated December 28, 2004 is attached as Annex S hereof. 40 Copies of the Comment on the Petition dated January 6, 2005 and Opposition to Motion for Partial Reconsideration dated January 7, 2005 are attached as Annexes T and U hereof, respectively.
38

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for Temporary Restraining Order and/or Writ of Preliminary Injunction dated January 21, 2005.41

35.

In a Resolution dated January 27, 2005, a copy of which

petitioners received on February 1, 2005, the Court of Appeals (a) deferred action on petitioners Motion for Partial Reconsideration, which it ruled to resolve simultaneously with the main case; and (b) directed the parties to file their respective memoranda. The Court of Appeals did not act on petitioners Urgent Ex-Parte Motion for TRO and Preliminary Injunction.

36.

After the parties filed their respective memoranda, the

Court of Appeals issued the assailed Decision denying due course to the petition. On April 26, 2005, petitioners filed a Motion for Reconsideration dated April 26, 2005.42 On July 8, 2005, petitioners

received a copy of the Court of Appeals Resolution denying their motion for reconsideration of the appellate courts Decision.

37.

Thus, on July 14, 2005, petitioners filed with this

Honorable Court a Motion for Extension of Time to File Petition dated July 13, 2005 where they prayed for an extension of 30 days from July 23, 2005, or until August 22, 2005, to file their petition for review on certiorari with this Honorable Court.

Hence, this petition.

Copies of the Urgent Ex-Parte Motion for Temporary Restraining Order and/or Writ of Preliminary Injunction dated January 14, 2005 and Opposition To Urgent Ex-Parte Motion for Temporary Restraining Order and/or Writ of Preliminary Injunction dated January 21, 2005 are attached as Annexes V and W hereof, respectively.
41

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Grounds for the Petition Petitioners respectfully submit that the Court of Appeals Decision and Resolution are void and should be set aside for having been rendered contrary to law, procedural rules and applicable decisions of this Honorable Court, in that:

I.

THE APPELLATE COURT ERRED IN RULING THAT THE RTC XXXXXX HAD AUTHORITY TO DIRECTLY CALL A STOCKHOLDERS MEETING. THE APPELLATE COURT ERRED IN RULING THAT THERE WAS A VALID NOTICE OF THE PURPORTED STOCKHOLDERS MEETING HELD ON DECEMBER 10, 2004. THE APPELLATE COURT ERRED IN RULING THAT PLAINTIFFS BELOW WERE NOT GUILTY OF FORUM SHOPPING. THE APPELLATE COURT ERRED IN RULING THAT PLAINTIFFS BELOW WERE NOT ESTOPPED FROM QUESTIONING ABC INCORPORATEDS STOCKHOLDERS MEETING AND ELECTION OF OFFICERS HELD ON MARCH 1, 2004. THE APPELLATE COURT ERRED IN RULING THAT NO GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION COULD BE IMPUTED TO RESPONDENT JUDGE IN ISSUING THE ORDER DATED NOVEMBER 25, 2004. HON. MARIANO C. DEL CASTILLO IS DISQUALIFIED FROM ACTING IN CA-G.R. SP NO. 87785.

II.

III.

IV.

V.

VI.

A copy of the Motion for Reconsideration dated April 26, 2005 is attached as Annex X hereof.
42

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Arguments Respondent Judge did not have authority to act in Civil (SEC) Case No. U-14 upon the appointment of the regular Presiding Judge.

38.

The Order dated November 25, 2004 was issued by

respondent Judge, in his capacity as pairing judge of RTC XXXXXX, after the regular presiding Judge, Hon. Ralar, was appointed and assumed office on November 2, 2004. Pursuant to Supreme Court Circular No. 19-98, respondent Judge, as pairing judge of RTC XXXXXX, was only authorized to take cognizance of all the cases thereat as acting judge therein until the appointment and assumption to duty of the regular judge. Thus, after the appointment and assumption into office of the regular Judge of RTC XXXXXX, respondent Judge ceased to have any authority to issue the appealed Order. Consequently, all Orders of respondent Judge issued from November 2, 2004, including the questioned Order dated November 25, 2004, are void.

RTC XXXXXX did not have the authority to order the holding of a stockholders meeting. 39. Under Section 5 of the Securities Regulation Code,43 only

the SEC has the authority to compel officers of any registered corporation to call a stockholders meeting:
Powers and Functions of the Commission. --- 5.1 The Commission shall act with transparency and shall have the powers and functions provided by this Code, Presidential Decree No. 902A, the Corporation Code, the Investment Houses Law, the
43

Republic Act No. 8799 (2000).

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Financing Company Act and other existing laws. Pursuant thereto the Commission shall have, among others, the following powers and functions: ... (k) Compel the officer of any registered corporation or association to call meetings of stockholders or members thereof under its supervision;

...

40.

Furthermore, the functions that were transferred from the

SEC to the regular courts are limited to those enumerated under Section 5 of Presidential Decree44 No. 902-A (1976), as amended. This enumeration does not include the power to compel the holding of a stockholders meeting. Section 5.2 of the Securities Regulation Code limited the transfer only to those functions defined under Section 5 of P.D. 902-A, to wit:
5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 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. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.45

41.

On the other hand, Section 5 of P.D. No. 902-A states:

SECTION 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:

44 45

Hereafter, P.D. Emphasis supplied.

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(a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partnership, 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; (b) 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; (c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. (d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree. (As added by PD No. 1758.)

42.

Rule 1 of the Interim Rules of Procedure Governing Intra-

Corporate Controversies46 virtually restates the same enumeration in Section 5 of P.D. 902-A:

SECTION 1. (a) Cases covered These Rules shall govern the procedure to be observed in civil cases involving the following: (1) 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; (2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively;
46

Hereafter, the Interim Rules.

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(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations; (4) (5) Derivative suits; and Inspection of corporate books.

43.

Clearly, there is nothing in Section 5.2 of the Securities

Regulation Code, in relation to Section 5 of P.D. No. 902-A and Rule 1 of the Interim Rules, which shows that the regular courts were given the authority under the law to directly call a stockholders meeting of the corporation. Had the legislature intended to give the courts the power to compel the officers of a corporation to call a special meeting under Section 5.2 of the Securities Regulation Code, then it would have not given the SEC the same power under Section 5.1 of the statute. To be sure, the legislature could not have intended to give the SEC and the regular courts concurrent jurisdiction that could result in conflicting orders.

44.

Moreover, as clearly stated in Section 5.1 of the Securities

Regulation Code, while the SEC has the authority to compel the officers of the corporation to call a stockholders meeting under its supervision, it cannot, by itself, call such a meeting. In other words, the sending of notices, the conduct of the meeting, the recording of the minutes, and the resolution of any issues concerning quorum, proxies, and other related actions, are left to the officers of the corporation. However, respondent Judge, in issuing the Order dated November 25, 2004, not only usurped the power of the SEC but itself called the special meeting of the stockholders on December 10, 2004, contrary to the clear language of Section 5.1 of the Securities Regulation Code, and without any legal authority to do so.
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The notice of the special stockholders meeting issued by the Branch Clerk of Court was not valid. 45. In view of the foregoing provisions of the Securities

Regulation Code, P.D. No. 902-A and the Interim Rules, the notice of special annual stockholders meeting issued by the Branch Clerk of RTC XXXXXX is void for having no basis in law. In the first place, the Branch Clerk of Court of RTC XXXXXX should not have been ordered by the respondent Judge to oversee the special meeting of a private corporation as this was not a function germane to his office as a judicial officer. In Republic vs. Sandiganbayan,47 this Honorable Court discussed the rationale why clerks of court should be prohibited from supervising corporations:
The Clerk of Court, who is already saddled with judicial responsibilities, need not be burdened with the additional duties of a corporate secretary. Moreover, the Clerk of Court may not have the requisite knowledge and expertise to discharge the functions of a corporate secretary. ... The appointment of a sitting member of the Sandiganbayan is particularly unsound for, as the PCGG points out:
. . . . What then is the reason for him to attend and supervise the meeting? To observe so that he can later testify in the court where he himself sits in the court which will eventually decide any controversy which may arise from the meeting?

or

controlling

the

special

meetings

of

private

Obviously, under such situation, the justice so appointed would be compelled to inhibit himself from any judicial controversy arising from the stockholders meeting. Worse, if he were to preside at the meeting and rule upon the objections that may be raised by some stockholders, the Sandiganbayan would be faced with the "anomaly" of eventually reviewing the decisions rendered by a member of its court during the stockholders meeting.

47

402 SCRA 84 (2003).

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This Court appreciates the quandary that the Sandiganbayan faced when it ordered its Division Clerk of Court to call the meeting: ETPI has two sets of officers and, presumably, two corporate secretaries. And given the stakes involved, the stockholders meeting would be contentious, to say the least, hence, the need for an impartial referee to supervise and control the meeting. Happily, the case of Board of Directors and Election Committee of SMB Workers Savings and Loan Asso., Inc. v. Tan, etc., et al. provides a solution to the Sandiganbayan's dilemma. There, this Court upheld the creation of a committee empowered to call, conduct and supervise the election of the board of directors:
As regards the creation of a committee of three vested with the authority to call, conduct and supervise the election, and the appointment thereto of Candido C. Viernes as chairman and representative of the court and one representative each from the parties, the Court in the exercise of its equity jurisdiction may appoint such committee, it having been shown that the Election Committee that conducted the election annulled by the respondent court if allowed to act as such may jeopardize the rights of the respondents. In a proper proceeding a court of equity may direct the holding of a stockholders' meeting under the control of a special master, and the action taken at such a meeting will not be set aside because of a wrongful use of the court's interlocutory decree, where not brought to the attention of the court prior to the meeting. (18 C.J.S. 1270.) A court of equity may, on showing of good reason, appoint a master to conduct and supervise an election of directors when it appears that a fair election cannot otherwise be had. Such a court cannot make directions contrary to statute and public policy with respect to the conduct of such election. (19 C.J.S. 41)

This Court also approved a similar action by the Securities and Exchange Commission in Sales v. Securities and Exchange Commission. Such a committee composed of impartial persons knowledgeable in corporate proceedings would provide the needed expertise and objectivity in the calling and the holding of the meeting without compromising the Sandiganbayan or its officers. The appointment of the committee members and the delineation of the scope of the duties of the committee may be made pursuant to an agreement by the parties or in accordance with the provisions of Rule 9 (Management Committee) of the Interim Rules of Procedure for Intra-Corporate Controversies insofar as they are applicable.48

48

402 SCRA 84, 112 (2003).

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46.

Assuming arguendo that the RTC XXXXXXs Order dated

November 25, 2004 was valid, the Notice issued by the Branch Clerk of Court of the RTC XXXXXX was nevertheless defective since (a) the Branch Clerk of Court did not base the Notice on the STB, which was not in his possession; and (b) the Notice was sent to petitioners only on December 6, 2004, or in the same week of the scheduled stockholders meeting on December 10, 2004. This is in clear violation of Section 50 of the Corporation Code which partly states:
Special meetings of stockholders or members shall be held at any time deemed necessary or as provided in the by-laws: Provided, however, That at least one (1) week written notice shall be sent to all stockholders or members, unless otherwise provided in the bylaws.49

In view thereof, the special stockholders meeting held on December 10, 2004 was not valid. The notice of the special stockholders meeting sent by Atty. JOHN G. ABUGADO was not a valid notice of the stockholders meeting on December 10, 2004. 47. The Court of Appeals erred in finding that the letter

dated December 1, 2004 prepared by Atty. ABUGADO constituted a valid notice of the stockholders meeting.50 His letter dated December 1, 2004 addressed to ABC INCORPORATED cannot possibly constitute the notice contemplated under Section 50 of the Corporation Code since it is undisputed that: (a) it was addressed to ABC INCORPORATED, not to petitioners; (b) it was received by ABC INCORPORATEDs counsel and corporate secretary, Atty.
49 50

Emphasis supplied. Decision, p. 11.

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Milagros Cristobal Amar,51 not by petitioners; (c) this letter advised against the holding of the December 2, 2004 Board of Directors meeting of ABC INCORPORATED; and (d) Atty. ABUGADO was not authorized to send notices of stockholders meetings as he was not the corporate officer of ABC INCORPORATED authorized to send such a notice. As confirmed by the Court of Appeals:
It should be noted that the meeting of the Board of Directors of ABC INCORPORATED was originally scheduled on December 2, 2004. In view however, of the Order dated November 25, 2004 of the respondent court, private respondents, through counsel, in a letter dated December 1, 2004, requested for the deferment of the December 2, 2004 Meeting. Also, attached to the letter is a copy of the Order dated November 25, 2005, which ordered the holding of a special stockholders meeting to be held at ABC INCORPORATEDs principal place of business in Bayambang, BULACAN on December 10, 2004, which letter was received by then Corporate Secretary Milagros Isabel Cristobal Amar on December 2, 2004.52

48.

It is an established principle in corporation law that when

a special meeting is called, notice should be given to each stockholder of record of the corporation entitled to vote at the meeting53 and that generally, such notice must be served on the stockholders personally.54 Hence, petitioners should have been personally notified of the meeting. The letter sent by Atty. ABUGADO to ABC INCORPORATEDs corporate secretary was not the notice required by law and ABC INCORPORATEDs by-laws, which provide that:
Section 3. - Notice of meeting written or printed for every regular or special meeting of the stockholders shall be prepared and mailed to the registered post office address of each stockholder not less than ten (10) days prior to the date set for such meeting, and if for a special meeting, such notice shall state the object or objects of the same. No failure or irregularity of notice of any

Atty. XXXXr succeeded Atty. XXXafter the latter resigned as a result of his dealings with respondents XXX Atty. PXXXXil and Atty. NXXXXtt. 52 Decision, pp. 10-11; emphasis supplied. 53 5 Fletcher, Cyclopedia of the Law of Private Corporations 47 (1976). 54 Id., p. 49.
51

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meeting shall invalidate such meeting at which all the shareholders are present or represented by proxy and voting without protest.55

Thus, the special stockholders meeting called by respondent Judge on December 10, 2004 in Bayambang, BULACAN was clearly and plainly invalid due, among others, to the defective notice to ABC INCORPORATEDs stockholders, rendering the notice ineffective as if it was not issued at all.

Plaintiffs below are estopped from questioning the validity of the stockholders meeting of ABC INCORPORATED on March 1, 2004. 49. Contrary to the ruling of the Court of Appeals, plaintiffs below were clearly estopped from questioning the stockholders meeting held on March 1, 2004. Firstly, plaintiffs below never objected to the venue of the stockholders meeting held on March 1, 2004. Secondly, they not only assented to the election of petitioners CULLEN and B. CULLEN and as ABC INCORPORATEDs but also

Chairman/President

Treasurer,

respectively,

subsequently recognized them as de jure directors and officers of ABC INCORPORATED. Thirdly, respondents LADY DEL ROSARIO and XXXXXX likewise elected during themselves said as directors The same of ABC

INCORPORATED

meeting.

private

respondents then assumed their office and discharged their functions as directors of ABC INCORPORATED.

50.

Hence, plaintiffs below were clearly estopped from

questioning the election of petitioners CULLEN and CULLEN, since respondents LADY DEL ROSARIO and XXXXXX actively

55

A copy of XXXXX INCs By-Laws is attached as Annex BB hereof.

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participated in the election and thereafter accepted the result. It is a settled principle in corporation law that (a) irregularities in either time or place of a stockholders meeting may be waived or objections thereto precluded; and (b) stockholders who were present and participated in the meeting are estopped from complaining that it was held at a place other than that prescribed.56 Thus, plaintiffs below, by their presence and active participation in the stockholders meeting of ABC INCORPORATED held at its Pasig office, were precluded from questioning the regularity of said meeting.

51.

Nonetheless, the Court of Appeals ruled that plaintiffs

below were not estopped from questioning the stockholders meeting held on March 1, 2004 since the filing of Civil Case No. SCC 2874 with the RTC San Carlos could only mean that they asserted their right to question the validity of the said meeting. Thus:
The essence of estoppel and laches is the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence could or should have been done earlier; it is the negligence or omission to assert a right within a reasonable time warranting a presumption that the party entitled to it either has abandoned or declined to assert it. Delay is an indispensable requisite for a finding of estoppel by laches. In the instant case, private respondents filed SEC-2874 questioning the validity of the stockholders meeting and the election of officers of ABC INCORPORATED on March 1, 2004 before the RTC of BULACAN on August 16, 2004. This could only mean that private respondents are asserting their right to question the validity of the stockholders meeting and the election of officers of the corporation on March 1, 2004, within a reasonable time, or without the principle of estoppel having set in. Besides, since estoppel operates to prevent showing the truth, and is more or less in the nature of forfeiture, it has often been characterized as not favored in the law.57

56 57

5 Fletcher Cyc Corp (Perm Ed) 2005, pp. 39-40 (1976). Resolution, pp. 8-9.

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52.

In ruling as it did, the Court of Appeals went beyond the

record and engaged in speculation. Although failure to act for an unreasonable and unexplained length of time are essential requisites of estoppel, it is established that there is no absolute rule with respect to the determination of staleness of demand as each case should be determined based on its particular circumstances. As held by this Honorable Court in Rayos, et al. vs. Reyes, et al.,58
Moreover, we do not think that respondents causes of action in Civil Case No. A-2032 are now barred by estoppel and laches. The essence of estoppel and laches is the failure or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence could or should have been done earlier; it is the negligence or omission to assert a right within a reasonable time warranting a presumption that the party entitled to assert it either has abandoned or declined to assert it although there is no absolute rule as to what constitutes staleness of demand as each case is to be determined according to its particular circumstances.59

53.

In this case, plaintiffs below not only acquiesced to the

holdings of the previous stockholders meetings in Pasig City, but they also participated in it, received per diems, and recognized the offices of the directors and officers who were elected. Otherwise stated, the laches or estoppel of plaintiffs was based on positive acts and declarations, which became conclusive and binding upon them. Under Article 1431 of the Civil Code, repeated in Rule 131, Section 2 (a) of the Revised Rules of Evidence, respondents estoppel results in an admission:
Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.

54.

More importantly, as will be discussed below, plaintiffs

below were barred from filing Civil (SEC) Case No. U-14, the latter

58 59

398 SCRA 24 (2003). Id., at p. 35; emphasis supplied.

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being an election contest. This further confirms that plaintiffs below slept on their rights. Plaintiffs below were barred from instituting Civil (SEC) Case No. U14 before the RTC XXXXXX. 55. One of the relief sought by respondents LADY DEL

ROSARIO, XXXXXX and XXXXXX was the nullification of the election of the Board of Directors during the meeting on March 1, 2004. Hence, the case before the RTC XXXXXX was an election

contest that fell squarely under the Interim Rules. Under the Interim Rules, an election contest refers to any controversy or dispute involving title or claim to any elective office in a stock or non-stock corporation, the validation of proxies, the manner of validation of elections and the qualifications of candidates, including the proclamation of winners, to the office of director.60

56.

The Court of Appeals itself confirmed in its Resolution

that the case before the RTC XXXXXX was an election contest:
Likewise, as clearly provided in Section 1, Rule 1 of the (Interim Rules) under R.A. 8799, among the intra-corporate controversies transferred to the special courts are:
... (3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships or associations;

... Undoubtedly, therefore, the instant case is an intra-corporate controversy among the stockholders themselves relative to the election of directors or officers of ABC INCORPORATED, specifically between private respondents on one hand and petitioners on the other. ...

60

Interim Rules, Rule 6, Sec. 2.

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If there is still any doubt that the Special Corporate Court can call for a stockholders meeting, Rule 6 of the (Interim Rules) completely puts to rest said issue.
RULE 6. ELECTION CONTESTS Section 1. Cases covered. The provisions of this rule shall apply to election contests in stock and non-stock corporations.

... Clearly, therefore, said Rule empowers the special corporate courts to decide election cases.61

57.

Under the Interim Rules, an election protest must be

filed within 15 days from the date of election if the by-laws of the corporation do not provide for a procedure for resolution of the controversy by the corporation as provided in the by-laws of the corporation.62 In the case below, it was patently obvious that Civil (SEC) Case No. U-14 was filed beyond the 15-day prescriptive period since the election was held on March 1, 2004, while the complaint was filed only on June 21, 2004.

58.

In addition to the fact that plaintiffs below were barred should

from instituting Civil (SEC) Case No. U-14, the action

likewise have been dismissed for failure to comply with the requirements of the Interim Rules that the complaint must state the following: (a) the fact that the case was filed within 15 days from the date of the election if the by-laws of the corporation do not provide for a procedure for a resolution of the controversy, or within 15 days from the resolution of the controversy by the corporation as provided in its by-laws; and (b) the fact that plaintiffs had exhausted all intracorporate remedies in election cases as provided in the by-laws. Nowhere in their complaint did plaintiffs below state these conditions precedent.
61 62

The Court of Appeals, for reasons to be

Resolution, pp. 3-6; emphasis supplied. Rule 6, Sec. 3, Interim Rules.

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explained later, chose to ignore these fatal defects in affirming the unlawful acts of respondent Judge. The issuance of a writ of preliminary injunction/ preliminary mandatory injunction by the RTC XXXXXX was not valid. 59. It is settled that the sole purpose of an injunction is not to

correct a wrong of the past, in the sense of redress for injury already sustained, but to prevent further or future injury. In First Global Realty and Development Corporation vs. San Agustin,63 this Honorable Court made this clear:
The purpose of a preliminary injunction, then, is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated. Its sole aim is to preserve the status quo until the merits of the case can be fully heard. Thus, it will be issued only upon a showing of a clear an unmistakable right that is violated. Moreover, an urgent and permanent necessity for its issuance must be shown by the applicant.64

60.

In this case, plaintiffs below failed to allege, much less

prove, that their application for the issuance of a temporary restraining order and/or writ of preliminary injunction before the RTC XXXXXX was of extreme urgency that they would suffer grave or irreparable injury by petitioners CULLENs and B. CULLENs continuance in office as directors and corporate officers. Instead, as discussed above, the same respondents did not object to the venue of the stockholders meeting held on March 1, 2004. Plaintiffs below not only assented to the election of petitioners CULLEN and CULLEN during the meeting held on March 1, 2004 but respondents LADY

63 64

377 SCRA 341 (2002). Id., at p. 349; emphasis supplied.

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DEL ROSARIO and

XXXXXX likewise elected themselves as

directors of ABC INCORPORATED during the meeting.

61.

Furthermore, respondent Judge committed grave abuse

of discretion when he granted plaintiffs application for a preliminary mandatory injunction in his Order dated November 25, 2004 and, at the same time, directed the holding of a special stockholders meeting in Bayambang, BULACAN on December 10, 2004. This ruling

effectively resolved, ahead of trial, the issue in the principal action of whether the stockholders meeting held on March 1, 2004 at the Pasig office of ABC INCORPORATED was valid.

62.

Respondent Judges action ran counter to the established

principle in jurisprudence that the court should avoid issuing a writ of preliminary injunction that would in effect dispose of the main case without trial.65 When respondent Judge ordered the holding of the stockholders meeting in Bayambang, BULACAN on December 10, 2004, he impliedly ruled that the earlier annual stockholders meeting of March 1, 2004 at ABC INCORPORATEDs Pasig office was void. By ordering the holding of a stockholders meeting at the behest and within the control of plaintiffs below, respondent

Judge effectively set aside the outcome of the meeting and election on March 1, 2004. It unavoidably resulted in respondent Judges virtual affirmation of the merits of the claim of plaintiffs below.

63.

Respondent Judge evidently forgot that the object of the

writ of preliminary injunction is to preserve the status quo, which is the last actual peaceable uncontested status that preceded the

Search Commodities Corp. v. Court of Appeals, 207 SCRA 622, 629-630 (1992), citing Rivas Securities and Exchange Commission, 190 SCRA 295 (1990); Government Service Insurance
65

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pending controversy.66

In this case, the last actual peaceable

uncontested status that preceded the controversy was the holding of the annual stockholders meeting and the ensuing election of ABC INCORPORATEDs officers on March 1, 2004. Thus, when

respondent Judge granted the writ of preliminary injunction and directed the holding of a special stockholders meeting, it disturbed, instead of preserved, the status quo ante.

64.

Although the courts are granted discretion when to issue

a writ of preliminary injunction, nevertheless, this authority is not coupled with an unbridled exercise of discretion. Courts,

notwithstanding the discretion given to them, must avoid issuing a writ of preliminary injunction which in effect disposes of the main case without trial,67 especially in this case where the distance of travel between Metro Manila and Samar city and the short notice given to petitioners practically deprived them of their day in court.

Respondent Judge violated the principle of judicial stability by issuing the Order dated November 25, 2004.

65.

Likewise, respondent Judge cannot and should not

interfere with another co-equal courts orders and processes issued within the jurisdiction of the latter. In Philippine Commercial International Bank vs. Court of Appeals,68 this Honorable Court held:

System v. Florendo, 178 SCRA 76 (1989); and Ortigas & Co. Ltd. Partnership v. Court of Appeals, 162 SCRA 165 (1988). 66 Id., at 630, citing Rivas v. Securities and Exchange Commission, supra; Tengson v. Court of Appeals, 161 SCRA 745 (1988); Rodulfa v. Alonzo, 76 Phil. 225 (1946). 67 Central Bank of the Philippines v. Court of Appeals, 208 SCRA 652, 684. (1992). 68 406 SCRA 575 (2003).

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The private respondents even brazenly violated the principle of judicial stability, which essentially states that the judgment or order of a court of competent jurisdiction may not be interfered with by any court of concurrent jurisdiction for the simple reason that the power to open, modify or vacate the said judgment or order is not only possessed but is restricted to the court in which the judgment or order is rendered or issued. Accordingly, no court has the power to interfere by injunction with the judgment or decrees of a court of concurrent jurisdiction having the power to grant relief sought by injunction. The various branches of the RTC having as they have the same or equal authority and exercising as they do concurrent and coordinate jurisdiction should not, cannot and are not permitted to intervene with their respective cases, much less with their orders or judgments. A contrary rule would lead to confusion, and seriously hamper the administration of justice.69

66.

In Spouses Ching vs. Court of Appeals,70 this Tribunal

explained the history of this rule:


Beginning with the case of Orais v. Escao, down to the subsequent cases of Nuez v. Low, Cabigao v. del Rosario, Hubahib v. Insular Drug Co., Inc., National Power Corp. v. De Veyra, Luciano v. Provincial Governor, De Leon v. Hon. Judge Salvador, Cojuangco v. Villegas, Darwin v. Tokonaga, we laid down the long standing doctrine that no court has the power to interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction. The various trial courts of a province or city, having the same or equal authority, should not, cannot, and are not permitted to interfere with their respective cases, much less with their orders or judgments. A contrary rule would obviously lead to confusion and seriously hamper the administration of justice.71

67.

The record shows that the RTC Pasig previously issued a

writ of preliminary injunction as early as July 19, 200472 enjoining the defendants in Civil Case No. 70027, as well as all persons acting under them, from registering/recording the sold shares of stocks in the books of ABC INCORPORATED, or canceling them and issuing new ones in favor of defendant CCCCC INC to enable it to exercise the rights of ownership over said shares owned by plaintiff

Id., at p. 602; emphasis supplied. 398 SCRA 88, 92-93 (2003). 71 Emphasis ours. 72 Please see Annex G hereof.
69 70

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(petitioner CULLEN) in violation of the latters rights. These shares were the same shares claimed by respondent LADY DEL ROSARIO to establish a quorum during the meeting ordered by respondent Judge on December 10, 2004. The RTC Pasig further issued an Order dated November 8, 200473 nullifying the transfer pendente lite of these shares in favor of respondent LADY DEL ROSARIO, thereby barring Mr. LADY DEL ROSARIO from mustering a quorum in any shareholders meeting of ABC INCORPORATED.

68.

In violation of law and applicable decisions of this

Honorable Court, respondent Judge interfered with the proceedings in Civil Case No. 70027 through his Order dated November 25, 2004 by authorizing the release of the STB to plaintiffs below. In turn, the release of the STB to said respondents enabled respondent LADY DEL ROSARIO to proceed with the void stockholders meeting on December 10, 2004 by disregarding the RTC Pasigs nullification of the transfer of the pledged shares to respondent LADY DEL ROSARIO. By virtue of the preliminary injunction issued by

respondent Judge, respondent LADY DEL ROSARIO unlawfully voted the pledged shares that pertained to petitioners. Had these shares not been counted pursuant to the Order dated July 19, 2004 of the RTC Pasig, which nullified the transfer pendent lite to LADY DEL ROSARIO, there would have been no quorum for the void meeting called by RTC XXXXXX on December 10, 2004.

69.

In its Resolution, the Court of Appeals disregarded

petitioners argument on the principle of judicial stability by reversing the rule and stating that the court which has jurisdiction over the intra-corporate case filed by private respondents is the
73

A copy of the RTC Pasigs Order dated November 8, 2004 is attached as Annex CC hereof.

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public respondent court to the exclusion of the Pasig Court.74 The Court of Appeals was obviously misled into misapprehending the facts, when it became confused by the realization that the action pending before the RTC Pasig did not involve an intra-corporate controversy.

70.

It is true that Civil Case No. 70027 does not involve an

intra-corporate dispute. What it involves is an action for injunction to prevent the unlawful transfer of CULLENs shares to CCCCC INC and then to LADY DEL ROSARIO on the ground that the foreclosure of the pledged shares was improper and void. Petitioner CULLEN sought to immediately restrain and preliminarily enjoin therein defendants CCCCC INC, Atty. Nethercott and Atty. Mataban from proceeding with the auction sale of the ABC INCORPORATED shares pledged by petitioners to CCCCC INC. Petitioner CULLEN also sought to enjoin defendants therein from (a) executing any certificate of sale of such shares; (b) recording such shares in the books of ABC INCORPORATED; (c) canceling the pledged shares and issuing new ones in favor of defendants therein or any bidder; or (d) exercising any rights of ownership over such shares. While defendants CCCCC INC, Atty. Nethercott and Atty. Mataban are not directors, stockholders or officers of ABC INCORPORATED, the ownership of the pledged shares was the very lis mota of the case.

71.

Since the RTC Pasig clearly has jurisdiction over Civil

Case No. 70027, the RTC XXXXXX cannot interfere with the writ of preliminary injunction issued by the RTC Pasig by issuing the conflicting Order dated November 25, 2004. The Order was per se void and unenforceable.
74

Resolution, p. 11.

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Respondent Judge did not have the authority to enjoin petitioners or to order petitioner B. CULLEN to surrender the duplicate key of the safety deposit box where ABC INCORPORATEDs stock and transfer book was deposited. 72. Similarly, Respondent Judge had no authority to enjoin

petitioners from discharging their functions as directors and officers of ABC INCORPORATED or to order petitioner B. CULLEN to surrender the duplicate key of the safety deposit box where ABC INCORPORATEDs original STB was kept, since petitioners reside outside the First Judicial Region and respondent LADY DEL ROSARIO himself conceded that the issue of the possession of the STB was still pending before the RTC Pasig in Civil Case No. 70027. Respondent Judge was aware of the facts of Civil Case No. 70027 because petitioners summarized the case in their Answer with Counterclaim dated October 28, 200475 that they filed with the RTC XXXXXX on November 2, 2004, where petitioners averred:

9. Prior thereto on June 21, 2004, defendant Mr. CULLEN filed Civil Case No. 70027, entitled Aderito Z. CULLEN vs. United Resources Asset Management, Inc., Atty. Richard J. Nethercott and Atty. Honorato R. Mataban, with the Regional Trial Court in Pasig City, Branch 71. Mr. CULLEN sought to (a) immediately restrain and preliminarily enjoin defendants therein from proceeding with the auction sale of the shares pledged by ABC INCORPORATED to CCCCC INC; (b) enjoin defendants from executing any certificate of sale of such shares, from recording such shares in the books of ABC INCORPORATED, from canceling the pledged shares and issuing new ones in favor of defendants or any bidder, or from exercising any rights of ownership over such shares; and (c) declare void defendants foreclosure of the pledged shares, any auction sale, certificate of sale, registration of sale, cancellation of shares, issuance of new shares, transfer or
75

Please see Annex L hereof.

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assignment of new shares and the exercise of any rights of ownership over such pledged shares. 10. Before the RTC Pasig issued a TRO, the auction sale of the pledged shares proceeded and was conducted by Atty. Mataban, with CCCCC INC being the highest bidder for said shares. On the same day, CCCCC INC sold the auctioned shares to one of the plaintiffs herein, Mr. LADY DEL ROSARIO. On June 30, 2004, the RTC Pasig issued its TRO, stating that: In the broader interest of justice and so as not to render moot and academic the issue on the grant or not of the writ, let this Temporary Restraining Order be issued enjoining defendants, their officers, agents and assigns from recording such sale in the books of ABC INCORPORATED or from canceling the pledged shares and issuing new ones in favor of defendants or from exercising any rights of ownership over such shares in violation of plaintiffs rights. The Corporate Secretary of ABC INCORPORATED is directed to hold in abeyance the cancellation of the pledged shares and to restore them, if cancelled, in the books of the corporation until further orders from this Court.

11. On June 30, 2004, upon getting wind of the issuance of the TRO, Mr. LADY DEL ROSARIO and Atty. Nethercott compelled ABC INCORPORATEDs corporate secretary, Atty. Joselito G. Blando, to immediately transfer the auctioned shares to CCCCC INC and then to transfer it again from CCCCC INC to Mr. LADY DEL ROSARIO. Mr. LADY DEL ROSARIO and Atty. DOE, conspiring with each other, refused to turn over the STB to Atty. Blando but demanded that he cancel the pledged shares and to issue new shares to CCCCC INC and Mr. LADY DEL ROSARIO only in the latters presence in Atty. DOEs office inside the Land Transportation Office compound in Quezon City. The cancellation and transfer were made to beat the TRO that by then had been issued by the RTC Pasig. 12. After Atty. Blando received the TRO on July 1, 2004 and tried, but failed, to undo the cancellation and transfer of the shares due to Mr. LADY DEL ROSARIOs unlawful detention of the STB, ABC INCORPORATED declared the STB as lost and reconstituted its entries. The cancellation and transfer were then reversed by ABC INCORPORATED in compliance with the TRO. 13. In the meantime on July 19, 2004, the RTC Pasig issued a writ of preliminary injunction stating that: IT IS HEREBY ORDERED by the undersigned Judge of this Court, that until further orders, you, the
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said defendants United Resources Asset Management, Inc. (CCCCC INC for short), Atty. Richard J. Nethercott, and Atty. Honorato R. Mataban, and all persons acting under them, to desist and refrain from further proceeding with the public auction sale of the pledged shares of stocks by registering/recording the sold shares of stocks in the books of ABC INCORPORATED, or canceling them and issuing new ones in favor of defendant CCCCC INC to enable it to exercise the rights of ownership over said shares owned by plaintiff in violation of the latters rights. SO ORDERED. 14. Thereafter, Mr. LADY DEL ROSARIO refused to comply with the subpoena issued by the RTC Pasig to produce the STB in Civil Case No. 70027. He also rejected the demand of Mr. CULLENs counsel to surrender the STB within 24 hours, on the ground that the STBs possession is being litigated in that action: As you are aware, the matter of possession of ABC INCORPORATEDs Stock and Transfer Book is currently being litigated in Civil Case No. 70027, entitled Aderito Z. CULLEN vs. United Resources Asset Management, Inc., Et Al., pending before the Regional Trial Court of Pasig City (Branch 71), where I am represented by Tan Acut & Lopez Law Offices, my counsel de parte. 15. As of this writing, Mr. LADY DEL ROSARIO, by way of special appearance, continues to participate in Civil Case No. 70027 in RTC Pasig by filing motions and pleadings, examining witnesses, presenting evidence, and otherwise actively prosecuting and defending his claims therein as if he were a party in that case.

73.

More importantly, the RTC Pasig issued an Order dated

November 8, 200476 nullifying the transfer of the pledged shares in favor of respondent LADY DEL ROSARIO, thereby restoring petitioners foreclosed shares in the books of ABC INCORPORATED:

When LADY DEL ROSARIO acquired the shares of defendant CCCCC INC, he stepped into the shoes of CCCCC INC. He became bound by whatever imperfect title defendant CCCCC INC might have over the foreclosed shares. LADY DEL ROSARIO acquired defendant CCCCC INCs interest in the pledged shares subject to the claim of the plaintiff, as the stock and transfer book
76

Please see Annex CC hereof.

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contained an annotation made by Atty. Blando, corporate secretary, clearly referring to his action. LADY DEL ROSARIO is not entitled to the protection as an innocent purchaser for value. By the deplorable action he took on June 30, 2004, when the TRO was issued, he, together with defendant Atty. Nethercott, Atty. DOE who was replaced as corporate secretary by Atty. Blando, and one Atty. Matibag, for LADY DEL ROSARIO, anticipated the issuance of the temporary restraining order dated June 30, 2004 and tired to render it moot and academic by pressuring Atty. Blando to cancel the pledged shares in the stock and transfer book of ABC INCORPORATED. The prayer in plaintiffs omnibus motion dated July 20, 2004 to nullify the cancellation and transfer of the pledged shares to defendant CCCCC INC and LADY DEL ROSARIO being violative of the temporary restraining order dated June 30, 2004 and strengthened by a writ of preliminary injunction dated July 19, 2004 is allowed. The Corporate Secretary of ABC INCORPORATED is directed to restore the pledged shares in the stock and transfer book in the name of the pledgors and to cancel any and all certificates issued in the name of any transferee subsequent to the pledgors in accordance with the Order dated July 5, 2002 and the Amended Order dated July 19, 2004 granting the verified application for the issuance of a writ of preliminary injunction with the writ of preliminary injunction issued on July 19, 2004. It is obvious that the enjoined acts of canceling the pledged shares and issuing new ones in favor of the defendants precisely include the pledged shares transfer. Since the cancellation and transfer of the pledged shares to defendant CCCCC INC and to LADY DEL ROSARIO violate the Order dated June 30, 2004, and acts of canceling and transferring of the pledged shares are declared null and void. ... WHEREFORE, plaintiffs Omnibus Motion dated July 20, 2204, being impressed with merit, is GRANTED. The cancellation and transfer of the pledged shares to defendant CCCCC INC and LADY DEL ROSARIO are NULLIFIED. The defendants Omnibus Motion dated September 22, 2004 is hereby DENIED for lack of merit. LADY DEL ROSARIOs Motion for Leave to Recall Witness Bonifacio C. CULLEN dated October 11, 2004 is considered MOOT and ACADEMIC in view of the Order dated October 7, 2004. SO ORDERED.
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74.

Assuming hypothetically that the Order dated November

25, 2004 of respondent Judge was valid, respondent LADY DEL ROSARIO was not authorized to break open the safety deposit box in Pasig City on December 8, 2004, before petitioners received a copy of the Order dated November 25, 2004. The RTC could not have authorized respondent LADY DEL ROSARIO to break open the safety deposit box because it did not have jurisdiction over Export Industry Bank, Pasig City branch, where the subject safety deposit box was located. It is settled that the jurisdiction of Regional Trial Courts to issue injunctive writs is limited to acts committed or about to be committed within their judicial region.77 The territorial jurisdiction of the RTC XXXXXX is limited to the First Judicial Region and does not encompass the National Capital Judicial Region.

75.

Furthermore,

in

respondent

Judges

Order

dated

November 25, 2004, he merely directed petitioner B. CULLEN to surrender to the court the duplicate key given to him by Export Industry Bank. Respondent Judge did not authorize respondent LADY DEL ROSARIO to break open the safety deposit box.

By participating in Civil Case No. 70027 and filing the case a quo, respondent LADY DEL ROSARIO and his counsel engaged in forum shopping. 76. Respondent LADY DEL ROSARIO admitted in a letter

dated September 6, 2004,78 that the matter of possession of ABC INCORPORATEDs Stock and Transfer Book is currently being
Bangus Fry Fisherfolk vs. Lanzanas, 405 SCRA 530, 537 (2003). Please see Annex H hereof.

77 78

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litigated in Civil Case No. 70027. Yet, in his Supplemental Complaint dated September 16, 2004 in Civil (SEC) Case No. U-14 before the RTC XXXXXX, respondent LADY DEL ROSARIO prayed that defendant Bonifacio CULLEN and plaintiff Cezar T. LADY DEL ROSARIO (be ordered) to surrender to the custody of this

Honorable Court the original copies of the Stock and Transfer Books of the corporation.79 In other words, respondent LADY DEL ROSARIO asked two different courts to rule on the same legal issue.

77.

Thus,

while

the

matter

of

possession

of

ABC

INCORPORATEDs STB was being litigated in Civil Case No. 70027, respondent LADY DEL ROSARIO was able to secure in bad faith a writ of preliminary injunction before the RTC XXXXXX, which enabled him to take legal custody of ABC INCORPORATEDs STB, thereby pre-empting the RTC Pasig. In Viva Films Productions, Inc. vs. Court of Appeals,80 this Honorable Court held that there is a clear case of forum shopping if the ultimate objectives of two ostensibly different actions are the same:
Ordinarily, where a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief or reliefs is or are still pending, any one action may be dismissed on the ground of litis pendentia and a final judgment in any one case would constitute res judicata on the other. In either instance, there is a clear and undeniable case of forum shopping, another ground for the summary dismissal of both actions In First Philippine International Bank vs. Court of Appeals (252 SCRA 259 [1996]), this Court, through the same herein Division, per Justice Panganiban, found therein petitioner bank guilty of forum shopping because . . . the objective or the relief being sought, though worded differently, is the same, namely, to enable the petitioner Bank to escape from the obligation to sell the property to respondent. In Danville Maritime vs. Commission on Audit,
79 80

Please see Annex J hereof. 269 SCRA 664 (1997).

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this Court ruled that the filing by any party of two apparently different actions, but with the same objective, constituted forum shopping: "In the attempt to make the two actions appear to be different, petitioner impleaded different respondents therein PNOC in the case before the lower court and the COA in the case before this Court and sought what seems to be different reliefs. Petitioner asks this Court to set aside the questioned letter-directive of the COA dated October 10, 1988 and to direct said body to approve the Memorandum of Agreement entered into by and between the PNOC and petitioner, while in the complaint before the lower court petitioner seeks to enjoin the PNOC from conducting a rebidding and from selling to other parties the vessel "T/T Andres Bonifacio," and for an extension of time for it to comply with the paragraph 1 of the memorandum of agreement and damages. One can see that although the relief prayed for in the two (2) actions are ostensibly different, the ultimate objective in both actions is the same, that is, the approval of the sale of vessel in favor of petitioner, and to overturn the letter directive of the COA of October 10, 1988 disapproving the sale." In Palm Avenue Realty Development Corporation vs. PCGG (153 SCRA 579 [1987]), we have these words from then Justice, now Chief Justice Narvasa: . . . the filing by the petitioners of the instant special civil action for certiorari and prohibition in this Court despite the pendency of their action in the Makati Regional Trial Court, is a species of forum shopping. Both actions unquestionably involve the same transactions, the same essential facts and circumstances. The petitioners' claim of absence of identity simply because the PCGG had not been impleaded in the RTC suit, and the suit did not involve certain acts which transpired after its commencement, is specious. In the RTC action, as in the action before this Court, the validity of the contract to purchase and sell of September 1, 1986, i.e., whether or not it had been efficaciously rescinded, and the propriety of implementing the same . . . were the basic issues. So, too, the relief was the same: the prevention of such implementation and/or the restoration of the status quo ante. When the acts sought to be restrained took place anyway despite the issuance by the Trial Court of a temporary restraining order, the RTC suit did not become functus officio. It remained an effective vehicle for obtention of relief; and petitioners' remedy in the premises was plain and patent; the filing of an amended and supplemental pleading in the RTC suit, so as to include the PCGG as defendant and seek nullification of the acts sought to be enjoined but nonetheless done. The remedy
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was certainly not the institution of another action in another forum based on essentially the same facts. The adoption of this latter recourse renders the petitioner amenable to disciplinary action and both their actions, in this Court as well as in the Court a quo dismissible.81

78.

In the more recent case of Gochan vs. Gochan,82 this

Honorable Court held that:


The deplorable practice of forum-shopping is resorted to by litigants who, for the purpose of obtaining the same relief, resort to two different fora to increase his or her chances of obtaining a favorable judgment in either one. In the case of Golangco v. Court of Appeals, we laid down the following test to determine whether there is forumshopping: Ultimately, what is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and the parties-litigant by a person who asks different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues.83 ...

79.

In United Residents of Dominican Hill vs. Commission on the

Settlement of Land Problems,84 this Honorable Court likewise held:

In view of the foregoing, all that remains to be done is the imposition of the proper penalty. A partys willful and deliberate act of forum shopping is punishable by summary dismissal of the actions filed. The summary dismissal of both COSLAP Case No. 98-253 and Civil Case No. 3316-R is therefore warranted under the premises. We shall refrain from making any pronouncement on Civil Case No. 3382-R, the dismissal of which was elevated on appeal to the Court of Appeals where it is still pending.85

Id., at pp. 671-673; emphasis supplied. 372 SCRA 256 (2001). 83 Id., at 266. 84 353 SCRA 782 (2001). 85 Id., at pp. 803-804; emphasis supplied.
81 82

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80.

Furthermore, in Prubankers Association vs. Prudential Bank

& Trust Co.,86 this Honorable Court ordered the dismissal of the two subject actions upon a finding that petitioner committed forum shopping:
We sustain the respondent. The rule on forum-shopping was first included in Section 17 of the Interim Rules and Guidelines issued by this Court on January 11, 1983, which imposed a sanction in this wise: A violation of the rule shall constitute contempt of court and shall be a cause for the summary dismissal of both petitions, without prejudice to the taking of appropriate action against the counsel or party concerned. Thereafter, the Court restated the rule in Revised Circular No. 28-91 and Administrative Circular No. 0494. Ultimately, the rule was embodied in the 1997 amendments to the Rules of Court. As explained by this Court in First Philippine International Bank v. Court of Appeals, forum-shopping exists where the elements of litis pendentia are present, and where a final judgment in one case will amount to res judicata in the other. Thus, there is forumshopping when, between an action pending before this Court and another one, there exist: a) identity of parties, or at least such parties as represent the same interests in both actions, b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and c) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful amount to res judicata in the action under consideration; said requisites also constitutive of the requisites for auter action pendant or lis pendens. Another case elucidates the consequence of forum-shopping: [W]here a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest. The voluntary arbitration case involved the issue of whether the adoption by the Bank of regionalized hiring rates was valid and binding. On the other hand, the issue now on hand revolves around the existence of a wage distortion arising from the Bank's separate and regional implementation of the two Wage Orders in the affected branches. A closer look would show that, indeed, the requisites of forum-shopping are present. First, there is identity of parties. Both cases are between the Bank and the Association acting on behalf of all its members. Second, although the respective issues and reliefs prayed for in the two cases are stated differently, both actions boil down to one single issue: the
86

302 SCRA 71 (1999).

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validity of the Banks regionalization of its wage structure based on RA 6727. Even if the voluntary arbitration case calls for striking down the Banks regionalized hiring scheme while the instant petition calls for the correction of the alleged wage distortion caused by the regional implementation of Wage Order No. VII-03, the ultimate relief prayed for in both cases is the maintenance of the Bank's national wage structure. Hence, the final disposition of one would constitute res judicata in the other. Thus forum-shopping is deemed to exist and, on this basis, the summary dismissal of both actions is indeed warranted.87

81.

It is clear that the institution of Civil (SEC) Case No. U-14

amounts to forum shopping. Indeed, respondent LADY DEL ROSARIO actively participated in the proceedings for Civil Case No. 70027, where he contested petitioners right to possess ABC INCORPORATEDs stock and transfer book. Yet, he filed the action below where he secured the assailed Order that enabled him to take possession of ABC INCORPORATEDs STB. After respondent LADY DEL ROSARIO failed to obtain a favorable relief from the RTC Pasig, he sought and obtained the same relief from the RTC XXXXXX, through respondent Judge who was only too willing to accommodate respondent LADY DEL ROSARIO. Thus, the objective or the relief sought by respondent LADY DEL ROSARIO in both actions is the same, namely, to enable him, among others, to take possession of the corporations STB and thus, allow him to manipulate the shareholdings in ABC INCORPORATED and establish control over it, to petitioners damage and prejudice. Associate Justice Mariano del Castillo is disqualified from acting in CA-G.R. SP No. 87785. 82. Petitioners are informed that Associate Justice Mariano C. del Castillo, who penned the Decision, is married to Atty. Cynthia Roxas-del Castillo, a partner of the law firm of Romulo Mabanta
87

Id., at pp. 83-84; emphasis supplied.

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Buenaventura Sayoc and de los Angeles.88 RMBSA is Atty. Owen S. Carsi Cruz.

Another partner at

83.

RMBSA and Atty. Cruz represented respondent LADY

DEL ROSARIO in the bidding for the Machine-Readable Passport and Visa Project89 of the Department of Foreign Affairs. The Project was awarded by the DFA to BCA International, Inc.90 on September 29, 2000 under the Build-Operate-Transfer Law. BCAs three principal shareholders are petitioners CULLEN, B. CULLEN and respondent LADY DEL ROSARIO.

84.

While BCA is the party to the contract, it was respondent

LADY DEL ROSARIO who introduced BCA to Atty. Cruz. Consequently, most dealings, transactions, correspondence and communications between BCA and RMBSA were handled by respondent LADY DEL ROSARIO and Atty. Cruz. For instance, in an email dated September 2, 2003,91 Atty. Cruz addressed the request of a prospective investor to respondent LADY DEL ROSARIO alone, and not to BCA and the three principal shareholders. In another email dated August 5, 2003,92 Atty. Cruz again addressed to respondent LADY DEL ROSARIO alone the comment of a prospective investor on the Project. In an email dated August 6, 200393 of Atty. Cruz to a prospective investor regarding the inability of the principal shareholders of BCA to visit Singapore, Atty. Cruz blind copied respondent LADY DEL ROSARIO alone. Again, in an email dated August 27, 2003, Atty. Cruz forwarded to respondent

Hereafter, RMBSA. Hereafter, the Project. 90 Hereafter, BCA. 91 A copy of the email dated September 2, 2003 is attached as Annex X hereof. 92 A copy of the email dated August 5, 2003 is attached as Annex Y hereof. 93 A copy of the email dated August 6, 2003 is attached as Annex Z hereof.
88 89

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LADY DEL ROSARIO alone the prospective investors queries addressed to BCA.

85.

As a result of the dispute between respondent LADY DEL

ROSARIO and petitioners, RMBSA and Atty. Cruz have ceased to be counsel for petitioners. However, Atty. Cruz and his law firm

continue to act as counsel for respondent LADY DEL ROSARIO and to give him legal advice.

86. provides:

Canon 3, Rule 3.12 of the Code of Judicial Conduct

A judge shall take no part in a proceeding where the judges impartiality might reasonably be questioned. These cases include, among others, proceedings where: ... (d) the judge is related by consanguinity or affinity to a party litigant within the sixth degree or to counsel within the fourth degree;

87. provides:

Rule 137, Section 1 of the Revised Rules of Court similarly

No judge or judicial officer shall sit in any case in which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of the civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record. A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons other than those mentioned above.94

94

Emphasis supplied.

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88.

The first paragraph of the foregoing rule enumerates the

grounds under which a judge is compulsorily disqualified from hearing a case.95 In cases of compulsory disqualification, the law conclusively presumes that a judge cannot objectively or impartially sit in a case and, for that reason, prohibits him and strikes at his authority to hear and decide it. Citing Garcia vs. Dela Pea,96 this Honorable Court ruled in Sales vs. Calvan97 that:
The rule on compulsory disqualification of a judge to hear a case where, as in the instant case, the respondent judge is related to either party within the sixth degree of consanguinity or affinity rests on the salutary principle that no judge should preside in a case in which he is not wholly free, disinterested, impartial and independent. A judge has both the duty of rendering a just decision and the duty of doing it in a manner completely free from suspicion as to its fairness and as to his integrity. The law conclusively presumes that a judge cannot objectively or impartially sit in such a case and, for that reason, prohibits him and strikes at his authority to hear and decide it, in the absence of written consent of all parties concerned. The purpose is to preserve the peoples faith and confidence in the courts of justice.98

89.

The relationship between Associate Justice del Castillo

and Atty. Del Castillo is covered by the prohibition because as husband and wife, they are related by affinity within the first degree. It does not matter that Atty. Del Castillo herself was not personally involved in the representation of respondent LADY DEL ROSARIO in connection with the Project or with the cases below. The fact that RMBSA, through Atty. Cruz, acts as counsel for respondent LADY DEL ROSARIO is sufficient ground to disqualify Associate Justice del Castillo from presiding over this case, let alone writing the questioned Decision and Resolution.

Pimentel vs. Salanga, 21 SCRA 160, 166 (1967). 129 SCRA 767 (1994). 97 378 SCRA 1 (2002). 98 Id., at pp. 8-9; emphasis supplied.
95 96

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90.

In Paredes v. Gopengco,99 this Honorable Court held that

the prohibition applies as well to the relationship between a judge and a law firm, where a member of the law firm appeared as counsel for a party who was also a party in another case pending in another tribunal.

91.

In Hurtado v. Judalena,100 this Honorable Court set aside an

order issued by the judge of a trial court in a case where one of the litigants was his brother. In the same vein, considering that the questioned Decision and Resolution were rendered by a division of the appellate court where the writer of the opinion is married to a partner of a law firm who represents one of the respondents in this case, then said Decision and Resolution must be nullified and set aside.

92.

Furthermore, since Associate Justice del Castillos

disqualification is absolute and compulsory pursuant to Rule 137, Section 1 of the Rules of Court as well as the rulings of this Honorable Court, the assailed Decision and Resolution were a patent nullity for failure to comply with a mandatory provision of the Rules of Court.101 Consequently, the Decision and Resolution of the Court of Appeals must be struck down for violation of the Rules of Court and the Code of Judicial Conduct.102

Application for a Temporary Restraining Order and/or Preliminary Injunction Petitioners replead the foregoing and further state:
29 SCRA 688, 691 (1969). 84 SCRA 41, 44 (1978). 101 Lu Ym vs. Nabua, et al., 452 SCRA 298, 311 (2005). 102 Ibid.
99 100

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93.

Unless immediately restrained by this Honorable Court

upon receipt of this petition and until the matter can be heard on notice, respondents will continue to proceed in Civil (SEC) Case No. U-14 and enforce the invalid Order dated November 25, 2004 of respondent Judge. Respondent LADY DEL ROSARIO has enforced the questioned Order and is now in possession of ABC

INCORPORATEDs STB, even if he himself claims that the matter of its possession is still being litigated in Civil Case No. 70027. Only recently, he was able to obtain from the RTC XXXXXX, through the new presiding judge, an order authorizing him to record transactions in the STB.103 Hence, unless immediately restrained by this Honorable Court, the RTC XXXXXX will proceed to try the case a quo and continue to issue rulings and render judgment, which will not only conflict with the rulings and the judgment of the RTC Pasig in Civil Case No. 70027, but may also render the judgment as well as the proceedings in this case ineffectual. Petitioners will then suffer grave and irreparable injury, not to mention a failure of justice, since they would be made to suffer the consequences of the void orders and rulings of the RTC XXXXXX. 94. In fact, private respondents continue to hold invalid and board of directors meetings of ABC

stockholders

INCORPORATED. Atty. DOE, acting as ABC INCORPORATEDs inofficious Corporate Secretary, continues to issue notices of said meetings.104 Respondent LADY DEL ROSARIO continues to claim the existence of a quorum in the stockholders meetings based on his unlawful acquisition of the foreclosed shares that were pledged to

A copy of the Order dated July 20, 2005 of the RTC XXXXXX is attached as Annex DD hereof. 104 A copy of the Notice of the Annual Stockholders and Organizational Board of Directors Meetings of XXXXX INC, issued by Atty. Pilapil, is attached as Annex EE hereof.
103

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CCCCC INC, which transfer has been nullified by the RTC Pasig in its Order dated July 19, 2004. Respondent directors and officers who were unlawfully elected during the invalid December 10, 2004 stockholders meeting of ABC INCORPORATED have unlawfully represented themselves to be duly elected directors and officers of the Corporation.

95.

The unlawful takeover of ABC INCORPORATED was

also followed by a series of unauthorized actions on the part of private respondents, namely:

(a)

On December 17, 2004, undersigned counsel received a

letter105 of even date from respondent LADY DEL ROSARIO, who falsely represented himself to be the Chairman of the Board and the President and Chief Executive Officer of ABC INCORPORATED. In his letter, respondent LADY DEL ROSARIO informed

undersigned counsel that ABC INCORPORATED held a Special Annual Stockholders Meeting last December 10, 2004, to elect the members of the Board of Directors for the unexpired term of 20042005. Subsequently, thereafter, the newly elected Board of Directors duly elected the Corporate Officers for the unexpired term of 20042005.

(b)

In a letter dated December 17, 2004 addressed to ABC

INCORPORATEDs duly elected Corporate Secretary, Atty. Amar, respondent LADY DEL ROSARIO falsely represented himself to be the Chairman of the Board and the President and Chief Executive Officer of ABC INCORPORATED. Respondent LADY DEL

ROSARIO cited therein a board resolution arrived at by ABC


105

A copy of the letter dated December 17, 2004 is attached as Annex FF hereof.

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INCORPORATEDs bogus Board of Directors which purportedly terminated the services of Atty. Amar as Corporate Secretary, to wit:
RESOLVE FURTHER, as it is hereby resolved further, to terminate the services of Atty. Milagros Isabel Cristobal Am(a)r, and declare that she has no authority, by resolution or otherwise, to represent the Corporation and effectively confess judgment (in CULLEN, et al. v. ABC INCORPORATED, et al.); to direct Atty. Am(a)r to surrender case files to the Corporation through Cezar T. LADY DEL ROSARIO or counsel; and accordingly for the Corporation, through Cezar T. LADY DEL ROSARIO, to engage proper counsel to represent the Corporation in said case, as well as file appropriate criminal, civil and/or administrative actions against responsible persons.106

(c)

Respondent LADY DEL ROSARIO and his agents and/or

assignees, Messrs. Anthony K. LADY DEL ROSARIO and Simplicio T. LADY DEL ROSARIO, Jr., likewise unlawfully appointed themselves as the signatories to ABC INCORPORATEDs bank transactions.107

96.

As can be seen, private respondents have unlawfully

usurped the powers of the directors and officers of ABC INCORPORATED on the basis of the void Order dated November 25, 2004 of respondent Judge. caused grave and The acts of private respondents have injury to petitioners whose

irreparable

shareholdings in ABC INCORPORATED were partially usurped by respondent LADY DEL ROSARIO through the unlawful transfer of the foreclosed shares. likewise caused Private respondents unlawful acts have and irreparable injury to ABC

grave

INCORPORATEDs other innocent stockholders and creditors who may be (a) dealing with impostors such as respondents and their

A copy of Mr. Quiambaos letter dated December 17, 2004 is attached as Annex GG hereof. A copy of the Directors Certificate dated December 10, 2004 is attached as Annex HH hereof.
106 107

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agents; and (b) relying on void stockholders and board of directors resolutions.

97.

Thus, unless immediately restrained by this Honorable

Court and ordered to restore the status quo ante, private respondents will, by their illegal and arbitrary acts, continue to violate petitioners rights and render moot this petition and the proceedings in Civil Case No. 70027, to petitioners grave damage and prejudice.

98.

In support of their application for a temporary restraining

order and/or preliminary injunction, petitioners are willing to post a bond, in such amount as may be fixed by this Honorable Court, to pay to private respondents any damage which they may suffer by reason of the injunction, if this Honorable Court should finally decide that petitioners were not entitled thereto.

RELIEF
WHEREFORE, petitioners respectfully pray that this Honorable Court:

(a)

upon receipt of this petition, immediately

issue an order temporarily restraining (i) private respondents, their successors and assigns, from holding themselves out as and discharging the functions of directors and officers of AAACCCBDDDDevelopment Corporation (ABC INCORPORATED); and (ii)

respondents from further proceeding in Civil (SEC) Case No. U-14 and from enforcing the questioned Order dated

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November 25, 2004, until further orders from this Honorable Court;

(b)

after hearing, issue an order enjoining

respondents to maintain the status quo ante prior to the issuance of the questioned Order dated November 25, 2004, pending the determination of the merits of this case; and (c) give due course to the petition and, after

proceedings duly had, render judgment:

(i)

nullifying and setting aside the Court of

Appeals Decision dated March 31, 2005 and Resolution dated June 29, 2005 for being contrary to law, procedural rules and applicable decisions of this Honorable Court;

(ii)

nullifying respondent Judges Order

dated November 25, 2004 in Civil Case No. SCC 2874 (Civil [SEC] Case No. U-14) for having been rendered without jurisdiction or with grave abuse of discretion, amounting to lack or excess of jurisdiction, and dismissing Civil (SEC) Case No. U14, with prejudice; and

(iii) making the injunction permanent by requiring private respondents to restore the status quo ante prior to the issuance of the questioned Order dated November 25, 2004, which includes (1)
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the return by respondent LADY DEL ROSARIO of ABC INCORPORATEDs stock and transfer book to the Corporate Secretary of ABC INCORPORATED, Atty. Milagros Cristobal Amar, or her duly elected successor/s; and (2) the nullification of all meetings of ABC INCORPORATEDs stockholders and Directors held pursuant to the assailed Order dated November 25, 2004, including any and all actions taken during the said meetings; (3) the nullification of all acts performed by the directors and officers elected during the said meetings, including acts committed by private respondents.

Other reliefs, just or equitable, are also prayed for. Makati City, August 19, 2005.

and a. sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46

xxxxxxxxxxxxxxxxxxxxxxxx J Counsel for Petitioners , The Valero Tower Salcedo Village, Makati City By: xxxxxxxxxxxxxxxxxxx Roll of Attorneys No. 33736 PTR No. 12121207/01-03-05/Makati City IBP No. 122222/Lifetime/Quezon Province

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xxxxxxxxxxxxxxxxxxxxxx Roll of Attorneys No. xxxxx PTR No. 12121/01-03-05/Makati City IBP No. 1212122/01-04-05/Quezon City Chapter
COPY FURNISHED: xxxxxxx Counsel for Private Respondents xxxxxxxxxxxxxxxxxx Padre Faura Street, Manila HON. ALEGRE Regional Trial Court Branch 47, Samar city BULACAN REGIONAL TRIAL COURT First Judicial Region Branch 48

COURT OF APPEALS Eighth Division Manila CA-G.R. SP No. 87785

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