MANILA, Philippines - The Court of Appeals (CA) has ordered a Pasig City trial court to proceed with the hearing of the derivative suit that sought to compel former Trade Minister Roberto Ongpin to return the P412 million in “short swing profits” he allegedly earned from Philex Mining Corporation.
In a ruling by the Third Division penned by Associate Justice Apolinario Bruselas, Jr., appellate court held that the Pasig Regional Trial Court (RTC) did not commit grave abuse of discretion in dismissing Ongpin’s motion to expunge the complaint following complainant Atty. Mario Ongkiko's failure to pay the corresponding filing fees. Ongkiko is a stockholder of Philex.
The complaint against Ongpin alleged that under Sec. 23.2 of the Securities Regulation Code, an incumbent company insider such as a director or officer is barred from profiting from trading in the same shares within a period of six months. The complaint also urged the appellate court to direct Ongpin and his firms, Deltaventure Resources, Inc. and Goldenmedia Corp., to return to Philex other short-swing profits, if any.
The short-swing profits of P412.5 million stemmed from Ongpin’s purchase of 50 million Philex shares from the Development Bank of the Philippines (DBP) at P12.75 per share on Nov. 5, 2009. He sold the same shares to business tycoon and Philex chairman Manuel V. Pangilinan's Two Rivers Pacific Holdings Corp. on December 7 of the same year at P21 per share.
Pasig City RTC Branch 158 Judge Maria Rowena San Pedro ruled that it is better for the correct amount of fees of more than P8.2 million be considered "a lien on the judgment to be rendered than to straightjacket minority shareholders from seeking corporate best practices."
In dismissing Ongpin's motion to expunge, the lower court held that said motion is like a motion to dismiss which is prohibited under the Interim Rules on Intra-Corporate Controversies.
Ongpin elevated his case before the appellate court. Apart from claiming Ongkiko failed to pay the filing fees due, he also claimed that the trial cost has no jurisdiction over the case since the complaint failed to alleged the amount of damages demanded.
The appellate court, however, pointed out that "the non-specification of the amounts of damages does not immediately divest the trial court of its jurisdiction over the case, provided there is no bad faith or intent to defraud the government on the part of the plaintiff."
The appellate court also affirmed the lower court on its ruling on Ongpin's motion to expunge.
"No grave abuse of discretion may be attributed to the RTC in disallowing such cleverly titled motion given the factual and legal milieu upon which the resolution was rendered," the ruling read.
A derivative suit is a lawsuit brought by a shareholder of a corporation on its behalf to enforce or defend a legal right or claim, which the corporation has failed to do.