Villamor vs. Umale
Villamor vs. Umale
Villamor vs. Umale
*
ALFREDO L. VILLAMOR, JR., petitioner, vs. JOHN S.
UMALE, in substitution of HERNANDO F. BALMORES,
respondent.
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* SECOND DIVISION.
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corporation for the same act. While it is true that the basis for
allowing stockholders to file derivative suits on behalf of
corporations is based on equity, the above legal requisites for its
filing must necessarily be complied with for its institution.
Same; Same; Appraisal Right; An allegation that appraisal
rights were not available for the acts complained of is another
requisite for filing derivative suits under Rule 8, Section 1(3) of the
Interim Rules.—An allegation that appraisal rights were not
available for the acts complained of is another requisite for filing
derivative suits under Rule 8, Section 1(3) of the Interim Rules.
Section 81 of the Corporation Code provides the instances of
appraisal right: SEC. 81. Instances of appraisal right.—Any
stockholder of a corporation shall have the right to dissent and
demand payment of the fair value of his shares in the following
instances: 1. In case any amendment to the articles of
incorporation has the effect of changing or restricting the rights of
any stockholders or class of shares, or of authorizing preferences
in any respect superior to those of outstanding shares of any class,
or of extending or shortening the term of corporate existence; 2. In
case of sale, lease, exchange, transfer, mortgage, pledge or other
disposition of all or substantially all of the corporate property and
assets as provided in this Code; and 3. In case of merger or
consolidation. Section 82 of the Corporation Code provides that
the stockholder may exercise the right if he or she voted against
the proposed corporate action and if he made a written demand
for payment on the corporation within thirty (30) days after the
date of voting.
Same; Same; Individual suits are filed when the cause of
action belongs to the individual stockholder personally, and not to
the stockholders as a group or to the corporation, e.g., denial of
right to inspection and denial of dividends to a stockholder.—
Individual suits are filed when the cause of action belongs to the
individual stockholder personally, and not to the stockholders as a
group or to the corporation, e.g., denial of right to inspection and
denial of dividends to a stockholder. If the cause of action belongs
to a group of stockholders, such as when the rights violated belong
to preferred stockholders, a class or representative suit may be
filed to protect the stockholders in the group.
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LEONEN, J.:
Before us is a petition for review on certiorari1 under
Rule 45 of the Rules of Court, assailing the decision2 of the
Court of Appeals dated March 2, 2006 and its resolution3
dated May 29, 2006, denying petitioners’ motions for
reconsideration. The Court of Appeals placed Pasig
Printing Corporation (PPC) under receivership and
appointed an interim management committee for the
corporation.4
MC Home Depot occupied a prime property (Rockland
area) in Pasig. The property was part of the area owned by
Mid-Pasig Development Corporation (Mid-Pasig).5
On March 1, 2004, PPC obtained an option to lease
portions of Mid-Pasig’s property, including the Rockland
area.6
On November 11, 2004, PPC’s board of directors issued a
resolution7 waiving all its rights, interests, and
participation in the option to lease contract in favor of the
law firm of Atty.
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(1) Devices or schemes employed by, or any act of, the board of
directors, business associates, officers or partners, amounting to fraud or
misrepresentation which may be detrimental to the interest of the public
and/or of the stockholders, partners, or members of any corporation,
partnership, or association.
16 Rollo (G.R. No. 172881), p. 55.
17 Rollo (G.R. No. 172843), pp. 69-70.
18 Id., at p. 71.
19 Id., at p. 72.
20 Id., at pp. 72-73.
21 Id., at pp. 315-318.
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22 Id., at p. 318.
23 Id., at p. 316.
24 Id., at p. 317.
25 Id.
26 Id.
27 Id., at pp. 317-318.
28 Id., at p. 318.
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29 Id.
30 Id., at p. 39.
31 Id.
32 Id., at pp. 55-56.
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The Court of Appeals characterized the assailed
order/resolution of the trial court as an interlocutory order
that is not appealable.34 In reversing the trial court
order/resolution, the Court of Appeals considered the
danger of dissipation, wastage, and loss of PPC’s assets if
the review of the trial court’s judgment would be delayed.35
The Court of Appeals ruled that the case filed by
respondent Balmores with the trial court “[was] a
derivative suit because there were allegations of fraud or
ultra vires acts . . . by [PPC’s directors].”36
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33 Id.
34 Id., at pp. 43-44.
35 Id., at pp. 44-45.
36 Id., at p. 51.
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37 Id., at p. 47.
38 Id.
39 Id., at pp. 52-54.
40 Id., at pp. 53-55.
41 Id., at p. 59.
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45 Id., at p. 19.
46 Rollo (G.R. No. 172843), p. 15.
47 Id., at pp. 23-24.
48 Id., at p. 24.
49 Rollo (G.R. No. 172881), p. 526.
50 Id., at p. 537.
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I
Petition for review on certiorari under Rule 45 was
proper
First, we rule on the issue of whether petitioners
properly filed a petition for review on certiorari under Rule
45.
Respondent Balmores argued that the petition raises
questions of fact.
Under Rule 45, only questions of law may be raised.51
There is a question of law “when there is doubt or
controversy as to what the law is on a certain [set] of
facts.”52 The test is “whether the appellate court can
determine the issue raised without reviewing or evaluating
the evidence.”53 Meanwhile, there is a question of fact when
there is “doubt . . . as to the truth or falsehood of facts.”54
The question must involve the examination of probative
value of the evidence presented.
In this case, petitioners raise issues on the correctness of
the Court of Appeals’ conclusions.
Specifically, petitioners ask (1) whether respondent
Balmores’ failure to implead PPC in his action with the
trial court was fatal; (2) whether the Court of Appeals
correctly characterized respondent Balmores’ action as a
derivative suit; (3) whether the Court of Appeals’
appointment of a management committee was proper; and
(4) whether the Court of Appeals may exercise the power to
appoint a management committee.
These are questions of law that may be determined
without looking into the evidence presented. The question
of whether
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60 Bitong v. Court of Appeals, 354 Phil. 516, 545; 292 SCRA 503, 532
(1998) [Per J. Bellosillo, First Division].
61 Hi-Yield Realty, Incorporated v. Court of Appeals, supra note 56,
citing Filipinas Port Services, Inc. v. Go, 547 Phil. 360, 377; 518 SCRA
453, 471 (2007) [Per J. Garcia, First Division]. See also Asset Privatization
Trust v. Court of Appeals, supra note 59, citing Gamboa v. Victoriano, 179
Phil. 36, 43; 90 SCRA 40, 47 (1979) [Per J. Concepcion, Jr., Second
Division].
62 Cua, Jr. v. Tan, G.R. Nos. 181455-56 and 182008, December 4,
2009, 607 SCRA 645, 696 [Per J. Chico-Nazario, Third Division].
63 See also Filipinas Port Services, Inc. v. Go, supra, at p. 378; p. 472.
342
The fifth requisite for filing derivative suits, while not
included in the enumeration, is implied in the first
paragraph of Rule 8, Section 1 of the Interim Rules: The
action brought by the stockholder or member must be “in
the name of [the] corporation or association. . . .” This
requirement has already been settled in jurisprudence.
Thus, in Western Institute of Technology, Inc., et al. v.
Salas, et al.,64 this court said that “[a]mong the basic
requirements for a derivative suit to prosper is that the
minority shareholder who is suing for and on behalf of the
corporation must allege in his complaint before the proper
forum that he is suing on a derivative cause of action on
behalf of the corporation and all other shareholders
similarly situated who wish to join [him].”65 This principle
on derivative suits has been repeated in, among other
cases, Tam Wing Tak v. Hon.
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64 343 Phil. 742; 278 SCRA 216 (1997) [Per J. Hermosisima, Jr., First
Division].
65 Id., at p. 753; p. 225, citing A. F. Agbayani, Commentaries and
Jurisprudence on the Commercial Laws of the Philippines, Vol. III, p. 543
(1988).
343
The reasons given for not allowing direct individual suit are:
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66 403 Phil. 391; 350 SCRA 475 (2001) [Per J. Quisumbing, Second
Division].
67 485 Phil. 644; 443 SCRA 259 (2004) [Per J. Quisumbing, First
Division].
68 Hi-Yield Realty, Incorporated v. Court of Appeals, supra note 56.
69 Republic Bank v. Cuaderno, supra note 59 at p. 1084; p. 678.
70 Asset Privatization Trust v. Court of Appeals, supra note 59.
71 Id., at p. 805; p. 615, citing A. F. Agbayani, supra note 65 at p. 566,
citing Ballantine, pp. 366-367.
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74 See Filipinas Port Services, Inc. v. Go, supra note 61 at pp. 360, 377
and 379; p. 472.
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Rule 1, Section 1(a)(1) of the Interim Rules refers to acts
of the board, associates, and officers, amounting to fraud or
misrepresentation, which may be detrimental to the
interest of the stockholders. This is different from a
derivative suit.
While devices and schemes of the board of directors,
business associates, or officers amounting to fraud under
Rule 1, Section 1(a)(1) of the Interim Rules are causes of a
derivative suit, it is not always the case that derivative
suits are limited to such causes or that they are necessarily
derivative suits. Hence, they are separately enumerated in
Rule 1, Section 1(a) of the Interim Rules:
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III
Respondent Balmores has no cause of action that
would entitle him to the reliefs sought
Corporations have a personality that is separate and
distinct from their stockholders and directors. A wrong to
the corporation does not necessarily create an individual
cause of action. “A cause of action is the act or omission by
which a party violates the right of another.”80 A cause of
action must pertain to complainant if he or she is to be
entitled to the reliefs sought.
Thus, in Cua, Jr. v. Tan,81 this court emphasized:
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85 Sy Chim v. Sy Siy Ho & Sons, Inc., 516 Phil. 256, 282; 480 SCRA
465, 491 (2006) [Per J. Callejo, Sr., First Division].
86 Id., at p. 284; pp. 495-496.
87 Id., at p. 256; p. 465.
88 Id., at p. 284; pp. 496-497.
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