MEMBERS of the Go family, behind the establishment of Ever Gotesco shopping malls, are locked in legal battle over the sale to SM Prime Holdings Inc. of a 2.268-hectare property in Caloocan City, with an estimated value of P2 billion.
In a ruling penned by Associate Justice Stephen Cruz, the Court of Appeals (CA) granted the petition filed by siblings George and Vicente Go, chairman and vice president, respectively, of Gotesco Investments Inc.’s (GII) board of directors, seeking the reversal of the decision issued by the Regional Trial Court (RTC) in Manila on June 5, 2014, dismissing their complaint for intracorporate controversy and damages against their nephews
Joel T. Go, Jonathan T. Go and Johann T. Go, and several others, identified as Welson Yap, Eduardo C. Tan, Evelyn C. Go and Lourdes Ortiga.
“We find it necessary for the trial court [as a commercial court] to conduct a full-blown trial on the merits to ferret out the truth surrounding the intracorporate controversy that is involved in the instant case,” the CA ruled. George and Vicente alleged that they are stockholders, directors and officers of GII since its incorporation in February 1983 and that they continued to occupy the position in a holdover capacity.
However, the complainants discovered they were illegally retplaced as officers of the corporation based on the General Information Sheet (GIS) filed with the Securities and Exchange Commission in 2013.
The 2013 GIS reflected Joel, Jonathan and Johann as president, vice president and treasurer, respectively, of the GII; Yap, Tan and Evelyn as directors and Ortiga as corporate secretary.
The 2014 GIS of the corporation, however, showed the same set of stockholders, officers and directors were restored to where they were prior to undertaking the 2013 amendment.
Thus, the complainants asked the Manila RTC to direct their nephews and the other respondents to cease and desist from exercising powers and function over the corporation, including the rights of ownership of the subject property in Caloocan City.
They also asked the trial court to declare null and void the acts of the defendants, including the sale of
the 2.268-hectare property to SM Prime Holdings.
On June 5, the Manila RTC dismissed the complaint for lack of legal and factual basis and said the case was either a nuisance or harassment suit.
The court also gave weight to the claim of the defendants that they were not stockholders and directors of Gotesco based on the 2014 GIS.
The trial court held that the relief sought by the complainants was already mooted by the 2014 GIS.
This prompted the Go brothers to elevate the case against their nephews before the CA.
In their petition for review, the elder Go argued the trial court committed serious error when it held that the mere filing of the 2014 GIS rendered the claims of petitioners moot and academic.
They also said the trial court erred when it declared the brothers have no cause of action against their nephews.
They noted that the complaint before the Manila RTC revolved around the issue that none of them have assigned, transferred, or waived their rights of ownership over their shares of stock in favor of their nephews.
The petitioners claimed that the 2013 usurped their rights as directors and caused damage to their rights and those of the other corporate stockholders.
In an amended petition for review, brothers also claimed that their nephews sold the Caloocan lot, while the 2013 GIS was, in effect, thus, the sale should considered null and void pursuant to Section 40 of the Corporation Code.
The cited provision requires the concurrence of the stockholders, representing two-thirds of the outstanding capital stock of the corporation to attain validity.
The petitioners insisted the alleged falsified 2013 GIS facilitated the sale of the contested property.
According to the petitioners, the filing of the 2014 GIS to reflect once more the original set of officers did not render their claim moot and academic, as this did not correct the misrepresentations committed by their nephews.
Nevertheless, the nephews said their uncles assigned and transferred in favor of their father, Jose Go, all their rights and claims over the contested property by virtue of the memoranda of agreement shown in court. In ruling in favor of George and Vicente, the CA held that the case should be considered intra-corporate in nature, due to respondents alleged action of selling the corporate asset while they were exercising powers as stockholders and officers of GII.
The CA noted that the Supreme Court previously ruled it was necessary to show what are claimed to be fraudulent acts,if the complainant wishes to invoke the court’s special commercial jurisdiction.
It added that fraud in intra-corporate controversies must be based on devices and schemes employed by the board of directors, business associates, officers or partners, which may be detrimental to the interest of the public, stockholders or partners of any corporation. “The petitioners, having alleged that the sale of GII’s property was entered into by the respondents through the employment of devices and schemes tantamount to fraud, which has an effect detrimental to the interests of the corporation and its stockholders, the trial court should not have dismissed petitioners’ complaint as a nuisance suit but should have taken cognizance of the same,” the CA ruled. Concurring with the ruling were Associate Justices Fernanda Lampas-Peralta and Ramon Paul Hernando.