SANTIAGO CUA, JR. et. al. v. MIGUEL OCAMPO TAN, et. al. G.R. No. 181455-56, Dece!e" #$, %##&, 'Chico-Nazario, J) For a derivative suit to prosper, prosper, it is required that the minority stockholder suing for and on behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all other stockholders similarly situated who may wish to join him in the suit. It is a condition sine qua non that the corporation be impleaded as a party because not only is the corporation an indispensable party, but it is also the present rule that it must be served with process. PRCI is a corporation organized and established under Philippine laws. It holds a franchise granted under Republic Act No. 6632, as aended b! Republic Act No. "#$3, to operate a horse racetrac% and anage betting stations. &nder its franchise, PRCI a! operate onl! one racetrac%. In '### '###,, the Articles Articles of Incorp Incorpora oratio tion n of PRCI PRCI was aend aended ed to includ include e a second secondar! ar! purpose, purpose, of ac(uiring real properties and)or de*elop real properties. PRCI PRCI wished wished to con*er con*ertt its +a%at +a%atii prope propert! rt! fro fro a racetr racetrac% ac% to urban urban reside residenti ntial al and coercial use. i*en the location and size of its +a%ati propert!, PRCI belie*ed that said propert! was se*erel! under-utilized. ence, PRCI anageent decided to transfer its racetrac% fro +a%ati to Ca*ite. PRCI anageent decided that the +a%ati propert! should be anaged and de*eloped to a wholl! owned subsidiar!, subsidiar!, so that PRCI could continue to focus its e/orts on pursuing its core business copetence of horse racing. Instead of organizing and establishing a new corporation for the said purpose, PRCI anageent opted to ac(uire another doestic corporation, 01 a*ies oldings, Inc. 014. PRCI anageent deterined that PRCI could initiall! ac(uire 5',#2,2#7 5',#2,2#7 shares, or #$.$$8 of the the outs outsta tand ndin ing g capi capita tall stoc stoc% % of 01, 01, for for the the pric price e of P'7. P'7."' "' per per shar share, e, or for for a tota totall ofP55#,2$7,777.779 ofP55#,2$7,777.779 in this case, PRCI would be pa!ing a preiu of P52,5'7,5$7.77 for the said 01 shares. 1he PRCI :oard of irectors held a eeting on. After discussing and deliberating on the atter of the ac(uisition of 01 b! PRCI, all the directors present, e;cept respondent ula!, *oted a/irati*el! to pass and appro*e the resolutionto ac(uire up to one hundred percent '7784 of the coon shares of stoc% of 01 a*ies oldings, Inc. b! wa! of negotiated sale9 and authorizes its President, to sign and e;ecute an! purchase agreeents, eoranda, and such other deeds, and to deli*er an! docuents and papers, perfor an! acts, necessar! and incidental to ipleent the resolution, as well as to source the funds to ipleent the sae.
The The mino minorit rity y stock stockho holde lders rs fled fled beor beore e the RTC RTC a compl complai aint nt deno denomin minat ated ed as a erivative !"it #ith prayer or $ss"ance o TR%&'reliminary TR%&'reliminary $n("nction, aainst the rest o the directors o 'RC$ and&or JT*.1he! JT*.1he! asse*erates that< '4 the appro*al b! the a=orit! directors of PRCI of the :oard Resolutions with undue haste and deliberate speed, despite the absence of an! disclosure and inforation -- was not onl! anoalous and fraudulent, but also e;treel! pre=udicial and iniical to interest of PRCI, coitted in *iolation of their >duciar! dut! as directors of the said corporati corporation9 on9 24 responden respondentt ?oloon, ?oloon, as PRCI President, President, with the ac(uiesc ac(uiescence ence of the a=orit! a=orit! directors of PRCI, aliciousl! refused and resisted the re(uest of respondents +iguel, et al., for cople coplete te and ade(ua ade(uate te infor inforati ation on relati relati*e *e to the disput disputed ed :oard :oard Resol Resoluti utions ons,, braze brazenl! nl! and and unlawfull! *iolating the rights of the inorit! stoc%holders to inforation and to inspect corporate boo%s and records9 and 34 without being o/iciall! and forall! noinated, the a=orit! directors of PRCI illegall! and unlawfull! constituted thesel*es as ebers of the :oard of irectors and)or @;ecuti*e /icers /icers of 01, rendering all the actions the! ha*e ta%en as such null and *oid ab initio.
1he R1C 0udge 0udge issued issued a Resolution Resolution en=oining en=oining the efendants, efendants, their agents, agents, pro;ies pro;ies and representati*es representati*es to present to, discuss, uch ore to appro*e the Planned @;change of PRCIBs +a%ati
propert! for shares of stoc%. 1he Annual ?toc%holdersB +eeting of PRCI scheduled the ne;t da!, '" 0ul! 277", failed to push through for lac% of (uoru. ?antiago 0r., PRCI directors and representing the board of directors >led a Petition for Certiorari with the Court of Appeals. :oth petitions assailed the R1C Resolution, granting the issuance of a 1R, for being rendered with gra*e abuse of discretion aounting to lac% or e;cess of =urisdiction. 1he CA disissed the petitions for lac% of erit, ootness, and preaturit!. &pon the e;piration of the 1R issued b! the R1C in ci*il case, the Annual ?toc%holdersB +eeting of PRCI was again scheduled on '7 ctober 277". owe*er, 0udge &ntalan granted the issuance of peranent in=unction against the defendants until the case is >nall! resol*ed, sub=ect to the posting b! plainti/s of a P'77,777.77 bond, on condition that such bond shall answer to an! daage that the defendants a! sustain b! reason of the said in=unction if the court should >nall! decide that the applicants are not entitled thereto. ?antiago 0r., et al. >led in their +otion to Adit ?uppleental Petition for Certiorari with the attached ?uppleental Petition for Certiorari9 and petitioner ?antiago ?r. >led a ?uppleental Petition for Certiorari and Prohibition, to be followed shortl! thereafter b! a +otion to Adit ?uppleental Petition4. 1he! intended to additionall! assail in their suppleental petitions the resolution of the R1C granting the issuance of the peranent in=unction. In its Resolution, the CA denied the +otions for Reconsideration of petitioners and the +otion to Adit ?uppleental Petition for Certiorari of ?antiago 0r. In their +anifestation, petitioners ?antiago 0r., et al., aditted that the PRCI :oard of irectors had alread! called and set the Annual ?toc%holdersB +eeting on ' 0une 277, and aong the ites on the Agenda for con>ration and appro*al b! the stoc%holders was the propert!-forshares e;change between PRCI and 01. 1he Annual ?toc%holdersB +eeting of PRCI, held on ' 0une 277, was attended b! stoc%holders with a total of 5#3,7'",$7# shares or 6.$28 of the outstanding capital stoc% of PRCI, ore than the necessar! 2)3 to constitute a (uoru. iscussed in the eeting were the sae ites, whose presentation to the stoc%holders was sought to be en=oined b! respondents +iguel, et al., and b! 0alane, et al. At their annual eeting on ' 0une 277, the PRCI stoc%holders had alread! con>red and appro*ed the actions and resolutions of the PRCI :oard of irectors, which were to sub=ect atters of ci*il cases. Resultantl!, on " 0ul! 277, PRCI and 01 dul! signed and e;ecuted a eed of 1ransfer with ?ubscription Agreeent, co*ering the e;change of the +a%ati propert! of PRCI for shares of stoc% of 01. owe*er, the :IR re*ersed)re*o%ed its earlier ruling that the propert!-for-shares e;change between PRCI and 01 was a ta;-free transaction and sub=ected the e;change to *alue-added ta;. As a result, PRCI and 01 e;ecuted a isengageent Agreeent, b! *irtue of which, e/ecti*e iediatel!, PRCI and 01 would disengaged and would no longer ipleent the eed of 1ransfer with ?ubscription Agreeent. or all intents and purposes, the said eed of 1ransfer with ?ubscription Agreeent was rescinded. PRCI disclosed the isengageent Agreeent to the ?@C on 26 August 277. Ci*il Case No. 7-5$ was e*entuall! also assigned to the onl! coercial court of +a%ati Cit!, i.e., R1C, :ranch '5#, presided o*er b! 0udge &ntalan. Petitioners ?antiago 0r., et al. a*erred that 0udge &ntalan refused to disiss Ci*il Case No. 7-5$ on the ground of foru shopping, e*en when it was no di/erent fro Ci*il Case No. 7"-6'7. +iguel, et al., call attention to two procedural in>rities of the Petition for Certiorari of petitioner ?antiago ?r. in .R. No. '772< the failure to infor the Court of the pendenc! of the Petition in .R. No. ''5$$-$6, thus, *iolating the rule against foru-shopping. I(()e* '.
Dhether the ?antiagoBs failure to infor the Court of the pendenc! of the action *iolates the rule against foru shopping and cause for the disissal of the case.
2.
Dhether the case is disissible for failure to iplead the indispensable parties.
R)l+* No. oru shopping is present when, in two or ore cases pending, there is identity o +) parties +) rihts or ca"ses o action and relies prayed or, and +) the t#o precedin partic"lars, s"ch that any ("dment rendered in the other action #ill, reardless o #hich party is s"ccess"l, amo"nt to res ("dicata in the action "nder consideration. It is e*ident that ?antiago ?r., the petitioner in .R. No. '277, is not a part! to .R. No. ''5$$-$6. @*en though ?oloon is adittedl! a petitioner in .R. No. ''5$$-$6, he is onl! acting in .R. No. '277 as the attorne!-in-fact of ?antiago ?r., the actual petitioner in the latter case. 1hus, the *er! >rst eleent for foru shopping, identit! of parties, is lac%ing. Respondents +iguel, et al., cannot insist on identit! of interests between petitioner ?antiago ?r. in .R. No. '277 and petitioners ?antiago 0r., et al., in .R. No. ''5$$-$6, when the Coplaint itself of respondents +iguel, et al., before the R1C, doc%eted as Ci*il Case No. 7"-6'7, ipleads the petitioners ?antiago ?r. and ?antiago 0r., et al., as defendants a (uo in their indi*idual capacities as PRCI directors, and not collecti*el! as the PRCI :oard of irectors. /ach individ"al 'RC$ director, thereore, is not precl"ded rom hirin his o#n co"nsel, presentin his o#n ar"ments and deenses, and resortin to his o#n proced"ral remedies, apart and independent rom the other 'RC$ directors. 0ltho"h the s"bmission o a certifcate aainst or"m shoppin is deemed obliatory, it is not ("risdictional.*ence, in this case in #hich s"ch a certifcation #as in act s"bmitted 1 only, it #as deective -- the Co"rt may still re"se to dismiss and may, instead, ive d"e co"rse to the 'etition in liht o attendant e2ceptional circ"mstances. e(.&nder Rule 3, ?ection " of the Rules of Court, an indispensable part! is a part!-ininterest, without who there can be no >nal deterination of an action. The interests o s"ch indispensable party in the s"b(ect matter o the s"it and the relie are so bo"nd #ith those o the other parties that his leal presence as a party to the proceedin is an absol"te necessity. As a rule, an indispensable part!Bs interest in the sub=ect atter is such that a coplete and e/icient deterination of the e(uities and rights of the parties is not possible if he is not =oined. 1he a=orit! of the stoc%holders of PRCI are indispensable parties to ci*il case, for the! ha*e appro*ed and rati>ed, during the ?pecial ?toc%holdersB +eeting, the Resolution of the PRCI :oard of irectors. b*iousl!, no >nal deterination of the *alidit! of the ac(uisition b! PRCI of 01 or of the constitution of the 01 :oard of irectors can be had without consideration of the e/ect of the appro*al and rati>cation thereof b! the a=orit! stoc%holders. Respondents cannot sipl! assert that the a=orit! of the PRCI :oard of irectors naed as defendants in are also the PRCI a=orit! stoc%holders, beca"se respondents e2plicitly impleaded said deendants in their capacity as directors o 'RC$ and&or JT*, not as stockholders. An indi*idual stoc%holder is peritted to institute a deri*ati*e suit on behalf of the corporation wherein he holds stoc%s in order to protect or *indicate corporate rights, whene*er the o/icials of the corporation refuse to sue, or are the ones to be sued, or hold the control of the corporation. In such actions, the suing stoc%holder is regarded as a noinal part!, with the corporation as the real part! in interest. or a deri*ati*e suit to prosper, it is re3"ired that the minority stockholder s"in or and on behal o the corporation m"st allee in his complaint that he is s"in on a derivative ca"se o action on behal o the corporation and all other stockholders similarly sit"ated #ho may #ish to (oin him in the s"it. It is a condition sine (ua non that the corporation be ipleaded as a part! because not onl! is the corporation an indispensable part!, but it is also the present rule that it ust be ser*ed with process. 1he =udgent ust be ade binding upon the corporation in order that the corporation a! get the bene>t of the suit and a! not bring subse(uent suit against the sae defendants for the sae cause of action. $n other #ords, the corporation m"st be (oined as party beca"se it is its ca"se o action that is bein litiated and beca"se ("dment m"st be a res ("dicata aainst it.
As established, in a derivative s"it, it is the corporation that is the indispensable party, #hile the s"in stockholder is ("st a nominal party. &nder Rule ", ?ection 3 of the Rules of Court, an indispensable part! is a part!-in-interest, without who no >nal deterination can be had of an action without that part! being ipleaded. Indispensable parties are those with such an interest in the contro*ers! that a >nal decree would necessaril! a/ect their rights, so that the court cannot proceed without their presence. EInterest,E within the eaning of this rule, should be aterial, directl! in issue, and to be a/ected b! the decree, as distinguished fro a ere incidental interest in the (uestion in*ol*ed. n the other hand, a noinal or pro fora part! is one who is =oined as a plainti/ or defendant, not because such part! has an! real interest in the sub=ect atter or because an! relief is deanded, but erel! because the technical rules of pleadings re(uire the presence of such part! on the record. Dith the corporation as the real part!-in-interest and the indispensable part!, an! ruling in one of the deri*ati*e suits should alread! bind the corporation as res =udicata in the other. 0llo#in t#o di4erent minority stockholders to instit"te separate derivative s"its arisin rom the same act"al backro"nd, allein the same ca"ses o action, and prayin or the same relies, is tantamo"nt to allo#in the corporation, the real party-in-interest, to fle the same s"it t#ice, res"ltin in the violation o the r"les aainst a m"ltiplicity o s"its and even or"m-shoppin.$t is also in disreard o the separate-corporate-entity principle, beca"se it is to look beyond the corporation and to ive reconition to the di4erent identities o the stockholders instit"tin the derivative s"its.
