Part 4 Basic Principles you need to know about Commercial Law Review

A corporation may be placed under receivership, or management committees may be created to preserve properties involved in a suit and to protect the rights of the parties under the control and supervision of the court. Management committees and receivers are appointed when the corporation is in imminent danger of “(1) [d]issipation, loss, wastage or

destruction of assets or other properties; and (2) [p]aralysation of its business operations that may be prejudicial to the interest of the minority stockholders, parties-litigants, or the general public.” Interim Rules, Rule 9, sec. 1. Thus, in Sy Chim v. Sy Siy Ho & Sons, Inc., this court said:

. . . the creation and appointment of a management committee and a receiver is an extraordinary and drastic remedy to be exercised with care and caution; and only when the requirements under the Interim Rules are shown. It is a drastic course for the benefit of the minority stockholders, the parties-litigants or the general public are allowed only under pressing circumstances and, when there is inadequacy, ineffectual or exhaustion of legal or other remedies . . . The power of the court to continue a business of a corporation . . . must be exercised with the greatest care and caution.

There should be a full consideration of all the attendant facts, including the interest of all the parties concerned.

The Regional Trial Court has original and

exclusive jurisdiction to hear and decide intra-corporate controversies, including incidents of such controversies. These incidents include applications for the appointment of receivers or management committees. Rep. Act No. 8799 (2000), otherwise known as The Securities Regulation Code.

Sec. 5.2. The Commission’s 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. 

See also Interim Rules, Rule 1, sec. 9. 

Sec. 9. Assignment of cases. - All cases filed under these Rules shall be tried by judges designated by the Supreme Court to hear and decide cases transferred from the Securities and Exchange Commission to the Regional Trial Courts and filed directly with said courts pursuant to Republic Act No. 8799, otherwise known as the Securities Regulation Code.

In this regard, you have to know what is meant by intra-corporate dispute. Stay tuned for Part 5.