Wise Holdings vs. Garcia (Digest)

WISE HOLDINGS, INC. vs. FRANCISCO GARCIA, ET AL.
Petitioners filed a manifestation, averring that the First

G.R. No. 199174 | June 10, 2019 Complaint was wrongly classified as an Intra-Corporate
Controversy and erroneously assigned to RTC Branch 211.
FACTS: According to petitioners, since the RTC Branch 211 can only
Petitioner Wise Holdings Inc. is the parent company of several exercise jurisdiction as a commercial court, the First Complaint
wholly-owned and majority owned subsidiaries in various should be reassigned or re-raffled to another branch acting as a
industries. One of its subsidiaries, Wise Choice Foods Inc. (Wise regular court.
Foods), is a company engaged primarily in the business of
manufacturing and supply of processed and raw food materials Respondents, in their prayer to dismiss complaint, argued
and ingredients. that the case should be dismissed outright for improper
venue because under the Interim Rules of Procedure for Intra-
 Petitioners Eduardo Jose Aliño and Vicente Campa are Corporate Controversies, the venue should be at the address of
members of the Board of Directors of Wise Holdings, and the corporation, which, in this case, is Makati City where the
officers of Wise Foods. office of Wise Holdings is located (and not Mandaluyong City).
 Respondents, on the other hand, are officers of Wise Foods.
The RTC Branch 211 applied the Interim Rules of Procedure
Petitioners averred that Wise Holdings, through Campa, for Intra-Corporate Controversies in its Order, dismissing
incorporated and organized Sunrich Manufacturing Corporation the First Complaint for being a nuisance suit and for lack of
(Sunrich), which took over Wise Foods, and transferred all of jurisdiction.
Wise Foods’ assets to Sunrich in an asset-for-share swap. In turn,
Sunrich was obligated to issue all its shares of stock to Wise Petitioners refiled the complaint (Second Complaint) with
Holdings as the sole stockholder of Wise Foods. the RTC of Mandaluyong City. It was raffled to Branch 212, a
court of general jurisdiction.
Allegedly, Wise Holdings caused the registration of Sunrich’s
subscribed shares under its trusted officers in Wise Foods, The RTC Branch 212 dismissed the Second Complaint, ruling
herein respondents. Wise Holdings claimed that respondents that it involved an intra-corporate matter. Hence, the RTC
are mere trustees, nominees, and/or representatives, who hold Branch 211's ruling is binding and applicable.
the stocks in their respective names for and in behalf of Wise
Holdings, which is the real beneficial owner of the shares. ISSUE:
Whether the cause of action of petitioners’ complaints refers to
However, respondent Francisco Garcia’s group transferred an Intra-Corporate Dispute which is under the jurisdiction of the
the shares entrusted to them by Wise Holdings to Special Commercial Court. – NO.
respondents Francisco Vicente Garcia and Michael Angelo
Garcia (who are not officers of Wise Foods), which resulted in RULING:
the change of composition in the shareholdings. The Court applied the “relationship test” and the “nature of
the controversy test” in order to determine whether or not the
Wise Holdings demanded from Francisco P. Garcia, in his cause of action of the petitioners involve an Intra-Corporate
own capacity and in behalf of the other respondents, the Matter.
conveyance of the ownership, interests and benefits
pertaining to the subject shares of stock, remittance and/or THE “RELATIONSHIP TEST”
accounting of all the income and/or dividends due to the shares,
recording of the foregoing stock subscriptions in the name of There is an Intra-Corporate Dispute where the controversy
Wise Holdings, and the issuance to the latter of the pertains to any of the following relationships:
corresponding certificates of stock.
a) between the corporation, partnership or association
and the public;
The Respondents refused to comply, which prompted the
b) between the corporation, partnership or association
Petitioners to file the First Complaint – application for a TRO,
and its stockholders, partners, members, or officers;
preliminary injunction, appointment of a receiver, and
c) between the corporation, partnership or association
preliminary attachment.
and the state in so far as its franchise, permit or license
to operate is concerned; and
The Clerk of Court of RTC of Mandaluyong City considered
d) among the stockholders, partners or associates
the First Complaint as involving an Intra-Corporate
themselves.
Controversy, and raffled it to RTC Branch 211, a Special
Commercial Court.
THE “NATURE OF THE CONTROVERSY TEST”
The RTC Branch 211, applying the Interim Rules of The nature of the controversy test requires that the issue in the
Procedure for Intra-Corporate Controversies, denied the complaint must refer to the enforcement of the parties'
application for TRO of petitioners. correlative rights and obligations under the Corporation Code
and the Internal and Intra-Corporate Regulatory Rules of the
Corporation.
APPLYING THE TWO TESTS IN THE PRESENT CASE
The Court ruled that the cause of action in petitioners'

complaints is an ordinary civil case and not an Intra-Corporate
Controversy.
(1) There is no corporate relationship between petitioners

and Sunrich, whose shares of stock are the subject of
the controversy.
While Wise Holdings is asserting real ownership of the shares of

stock in Sunrich, Wise Holdings acknowledges that such
ownership is not registered in Sunrich's books.
Even respondents, in their affirmative defenses, averred that they

are the registered owners in the stock and transfer book of
Sunrich, and petitioners were never recorded as owners of these
shares.
Since there is no issue as to the fact that petitioners are not

registered shareholders of Sunrich, the complaint should have
been automatically removed from the rules on Intra-Corporate
Controversies and the regular courts should have been granted
jurisdiction over it.
(2) The nature of the controversy in the present case does

not refer to an intra-corporate dispute.
The nature of an action, as well as which court or body has

jurisdiction over it, is determined based on the allegations
contained in the complaint of the plaintiff, irrespective of
whether or not the plaintiff is entitled to recover upon all or
some of the claims asserted therein.
Here, the allegations of the complaint show on their face that

the action is for reconveyance of property in recognition of trust.
Petitioners seek the return of all the shares of stock of Sunrich,
of which they are the real and beneficial owners. The allegations
assert the existence of a trust relationship, which petitioners
allege was created between the parties under the provisions of
the Civil Code on Implied Trust (Arts. 1453, 1455, & 1456).
 The applicable rule on venue, therefore, is not the

Interim Rules of Procedure for Intra-Corporate
Controversies, but Section 2, Rule 4 of the Rules of
Court, which reads:
Sec. 2. Venue of personal actions. – All other actions

may be commenced and tried where the plaintiff or any
of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides,
or in the case of a non-resident defendant where he
may be found, at the election of the plaintiff.
As alleged in the Second Complaint, Campa, one of the

petitioners, resides in Mandaluyong City. Thus, the RTC in
Mandaluyong City has jurisdiction over the case.

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WISE HOLDINGS, INC. vs. FRANCISCO GARCIA, ET AL.

Petitioners filed a manifestation, averring that the First

The Court ruled that the cause of action in petitioners'

(1) There is no corporate relationship between petitioners

While Wise Holdings is asserting real ownership of the shares of

Even respondents, in their affirmative defenses, averred that they

Since there is no issue as to the fact that petitioners are not

(2) The nature of the controversy in the present case does

The nature of an action, as well as which court or body has

Here, the allegations of the complaint show on their face that

 The applicable rule on venue, therefore, is not the

Sec. 2. Venue of personal actions. – All other actions

As alleged in the Second Complaint, Campa, one of the

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