This case involves a dispute between Jose Santos and Belo Medical Group over Santos' request to inspect corporate records. Belo Medical Group filed a complaint for interpleader, claiming the shares in Santos' name were held in trust for Belo. The court found this to be an intra-corporate controversy based on the relationship between Santos and Belo as named shareholders, and the nature of the dispute involving a shareholder's right to inspect records. While motions to dismiss are allowed in interpleader cases, the court also found the complaint for declaratory relief was improper.
This case involves a dispute between Jose Santos and Belo Medical Group over Santos' request to inspect corporate records. Belo Medical Group filed a complaint for interpleader, claiming the shares in Santos' name were held in trust for Belo. The court found this to be an intra-corporate controversy based on the relationship between Santos and Belo as named shareholders, and the nature of the dispute involving a shareholder's right to inspect records. While motions to dismiss are allowed in interpleader cases, the court also found the complaint for declaratory relief was improper.
This case involves a dispute between Jose Santos and Belo Medical Group over Santos' request to inspect corporate records. Belo Medical Group filed a complaint for interpleader, claiming the shares in Santos' name were held in trust for Belo. The court found this to be an intra-corporate controversy based on the relationship between Santos and Belo as named shareholders, and the nature of the dispute involving a shareholder's right to inspect records. While motions to dismiss are allowed in interpleader cases, the court also found the complaint for declaratory relief was improper.
This case involves a dispute between Jose Santos and Belo Medical Group over Santos' request to inspect corporate records. Belo Medical Group filed a complaint for interpleader, claiming the shares in Santos' name were held in trust for Belo. The court found this to be an intra-corporate controversy based on the relationship between Santos and Belo as named shareholders, and the nature of the dispute involving a shareholder's right to inspect records. While motions to dismiss are allowed in interpleader cases, the court also found the complaint for declaratory relief was improper.
FACTS: Belo Medical Group received a request from Jose Santos for the inspection of corporate records. Belo objected to this request and wrote Belo Medical Group to repudiate Santos co-ownership of her shares and his interest in the corporation, claiming that the 25 shares in his name were merely in trust for her, as she, and not Santos, paid for these shares.
Belo Medical Group then filed a Complaint for Interpleader to compel Belo and Santos to interplead and litigate their conflicting claims. Said complaints were raffled to the special commercial court, thus classifying them as intra- corporate.Belo prayed that the case be tried as a civil case and not as an intra- corporate controversy, arguing that intra-corporate controversies did not include special civil actions for interpleader and declaratory relief, and clarified that the issue of ownership of the shares of stock must first be resolved before the issue on inspection could even be considered ripe for determination.
Instead of filing an answer, Santos filed a Motion to Dismiss. Though a
motion to dismiss is a prohibited pleading under the Interim Rules of Procedure Governing Intra-Corporate Controversies, the trial court ruled that according to the Rules of Court, motions to dismiss are allowed in interpleader cases, while the complaint for Declaratory Relief was struck down as improper. Belo filed her Petition for Review before the CA, which was however, dismissed. Belo Medical Group, on the other hand, directly filed its Petition for Review with this Court.
ISSUE: Whether or not the present controversy is intra-corporate?
RULING: Yes, the case at bar is an intra-corporate controversy.
The Court held that to determine whether an intra-corporate dispute exists
and whether this case requires the application of the rules of procedure, this Court evaluated the relationship of the parties. The types of intra-corporate relationships, are as follows: a. between the corporation, partnership or association and the public; b. between the corporation, partnership or association and its stockholders, partners, members, or officers; c. between the corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned; and d. among the stockholders, partners or associates themselves. For as long as any of these intra-corporate relationships exist between the parties, the controversy would be characterized as intra-corporate. This is known as the “relationship test.”
Applying the relationship test, this Court notes that both Belo and Santos are named shareholders in Belo Medical Group’s Articles of Incorporation and General Information Sheet for 2007. The conflict is clearly intra-corporate as it involves two shareholders although the ownership of stocks of one stockholder is questioned. Applying the nature of the controversy test, this is still an intra-- corporate dispute. In the interpleader case, Belo Medical Group sought his disqualification from inspecting the corporate books based on bad faith. Therefore, the controversy shifts from a mere question of ownership over movable property to the exercise of a registered stockholder’s proprietary right to inspect corporate books. Petition is partially granted.
