CASE DIGEST : METROPOLITAN BANK v. SALAZAR REALTY CORPORATION GR No. 218738 GAERLAN

 FACTS : The case involves Metrobank’s petition questioning the RTC’s refusal to dismiss a quieting of title and nullification of contracts case filed by SARC, which sought to annul loan, mortgage, and foreclosure transactions involving its properties. SARC claimed its properties were improperly mortgaged without proper corporate authority, leading to foreclosure and transfer of titles to Metrobank. Metrobank argued the case was an intra-corporate dispute or derivative suit, falling under the jurisdiction of special commercial courts, not regular courts. The RTC denied Metrobank’s motions, ruling that the case was properly within the jurisdiction of regular courts because it was filed before the rules assigning jurisdiction to commercial courts took effect, and because it involved a dispute between corporations, not an internal corporate conflict. On review, the CA affirmed, applying the two-tier test for intra-corporate controversies and holding that the case did not involve any intra-corporate relationship nor arise from internal corporate relations. Instead, it was an action to remove clouds on title against an external party, Metrobank, making it a civil case for regular courts. The CA upheld the RTC’s jurisdiction, leading to Metrobank’s present petition.

ISSUE : WON the RTC has jurisdiction over a derivative suit to annul a mortgage allegedly entered into by corporate officers without proper authorization and where the defendants are third parties with no relation to the suing corporation

FALSE : Metrobank argues that jurisdiction over derivative suits belongs to special commercial courts and claims that the Court of Appeals erred in using the two-tier test, which only determines if a case is an intra-corporate controversy, not whether it is a derivative suit; the latter is determined by a separate three-part test later superseded by the 2001 IRPIC which specifies five requisites including shareholder status, exhaustion of remedies, no appraisal rights, not a nuisance suit, and that it must be brought in the corporation’s name. The Securities Regulation Code transferred jurisdiction over intra-corporate disputes from the SEC to the Regional Trial Courts, with the Supreme Court designating special commercial courts to handle such cases, as reflected in both the SEC Reorganization Decree and the 2001 IRPIC, which expressly lists derivative suits as covered cases. A derivative suit, an equitable remedy allowing shareholders to sue on behalf of the corporation when its officers refuse to act, inherently implies an intra-corporate dispute due to its nature of challenging corporate mismanagement. Jurisprudence confirms that derivative suits qualify as intra-corporate controversies and must be heard by special commercial courts, as seen in cases like Western Institute, Forest Hills, Lisam, and Gonzales, which clarified the proper raffling and handling of commercial cases within the designated special commercial court branches.