Gotesco owners in legal battle over P2-B sale of property

Ever Gotesco owners are now in legal battle over the P2-billion sale of their property to SM Prime Holdings Inc.

In a 13-page decision, the appeals court, through Associate Justice Stephen Cruz, reversed the decision of the Manila Regional Trial Court dismissing the complaint for intra-corporate controversy and damages filed by siblings George and Vicente Go, chair and vice president of Gotesco Investments Inc. (GII) board of directors, against their nephews Joel, Jonathan and Johann Go and Welson Yap, Eduardo Tan, Evelyn Go and Lourdes Ortiga.

In their complaint, George and Vicente said they were illegally replaced as officers of the corporation based on the General Information Sheet (GIS) filed with the Securities and Exchange Commission in 2013.

The 2013 GIS showed Joel, Jonathan and Johann as president, vice president and treasurer, respectively, of GII; Yap, Tan and Evelyn as directors and Ortiga as corporate secretary.

But the 2014 GIS showed that George and Vicente were reinstated as well as other stockholders, officers and directors.

Siblings George and Vicente urged the Manila court to order their nephews and the other respondents to cease and desist from exercising powers and function over the corporation, including the rights to ownership of the subject property in Caloocan City.

They also asked the trial court to nullify acts of the respondents including the sale of its 2.268-hectare property to SM Prime Holdings.

In June, however, the Manila court dismissed the case for lack of legal and factual basis and added that the relief they sought were already moot based on the 2014 GIS, prompting the brothers to take the case to the appeals court.

In their petition for review, the two argued that 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.

The two pointed out that they filed the complaint because 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 GIS usurped their rights as directors and caused damage to their rights and those of the other corporate stockholders.

Their amended petition for review also added that the sale of the Caloocan lot was void for noncompliance of Section 40 of the Corporation Code which required the concurrence of the stockholders representing two-thirds of the outstanding capital stock of the corporation for its validity.

The appeals court, in their ruling, said the lower court should conduct a full-blown trial.

“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 intra-corporate controversy that is involved in the instant case,” the appeals court said.

It added 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. RC