RUBEN SAW V. CA action in behalf of the corporation. In the case at bar, it was Freeman, Inc.

G.R. No. 90580 | April 8, 1991 | J. Cruz that was being sued by the creditor bank.
• The subject matter of the intervention falls properly within the original and
PETITIONERS: RUBEN SAW, DIONISIO SAW, LINA S. CHUA, LUCILA S. RUSTE exclusive jurisdiction of the Securities and Exchange Commission under
AND EVELYN SAW P.D. No. 902-A. In fact, at the time the motion for intervention was filed,
RESPONDENTS: FREEMAN MANAGEMENT AND DEVELOPMENT there was pending between Freeman, Inc. and the petitioners SEC Case
CORPORATION, EQUITABLE BANKING CORPORATION, FREEMAN No. 03577 entitled "Dissolution, Accounting, Cancellation of Certificate of
INCORPORATED, SAW CHIAO LIAN, THE REGISTER OF DEEDS OF Registration with Restraining Order or Preliminary Injunction and
CALOOCAN CITY, and DEPUTY SHERIFF ROSALIO G. SIGUA Appointment of Receiver."

FACTS: ISSUES:
• A collection suit with preliminary attachment was filed by Equitable Banking (1) W/N the motion for intervention was properly denied? YES.
Corporation against Freeman, Inc. and Saw Chiao Lian, its President and (2) W/N the notice of appeal concerned the whole case? NO. It only
General Manager. concerned the denial of the motion for intervention.
• Petitioners moved to intervene, alleging that (1) the loan transactions
between Saw Chiao Lian and Equitable Banking Corp. were not approved RULING:
by the stockholders representing at least 2/3 of corporate capital; (2) Saw • The Court finds that the respondent court committed no reversible error in
Chiao Lian had no authority to contract such loans; and (3) there was sustaining the denial by the trial court of the petitioners' motion for intervention.
collusion between the officials of Freeman, Inc. and Equitable Banking • "As clearly stated in Section 2 of Rule 12 of the Rules of Court, to be permitted to
Corp. in securing the loans intervene in a pending action, the party must have a legal interest in the matter in
• The motion was denied. litigation, or in the success of either of the parties or an interest against both, or
• They appealed to the Court of Appeals. he must be so situated as to be adversely affected by a distribution or other
• Meanwhile, Equitable and Saw Chiao Lian entered into a compromise agreement disposition of the property in the custody of the court or an officer thereof."
which they submitted to and was approved by the lower court. • To allow intervention, [a] it must be shown that the movant has legal interest in
• However, the same was not complied with. Because it was not complied the matter in litigation, or otherwise qualified; and [b] consideration must be given
with, Equitable secured a writ of execution, and two lots owned by as to whether the adjudication of the rights of the original parties may be delayed
Freeman, Inc. were levied upon and sold at public auction to Freeman or prejudiced, or whether the intervenor's rights may be protected in a separate
Management and Development Corp. proceeding or not.
• The Court of Appeals sustained the denial of the petitioners' motion for • The interest which entitles a person to intervene in a suit between other
intervention, holding that  "the compromise agreement between Freeman, Inc., parties must be in the matter in litigation and of such direct and immediate
through its President, and Equitable Banking Corp. will not necessarily prejudice character that the intervenor will either gain or lose by the direct legal
petitioners whose rights to corporate assets are at most inchoate, prior to the operation and effect of the judgment.
dissolution of Freeman, Inc.” • Otherwise, if persons not parties of the action could be allowed to
• The petitioners base their right to intervene for the protection of their interests as intervene, proceedings will become unnecessarily complicated, expensive
stockholders on Everett v. Asia Banking Corp: and interminable. And this is not the policy of the law.
• “The well-known rule that shareholders cannot ordinarily sue in equity to • The words "an interest in the subject" mean a direct interest in the cause
redress wrongs done to the corporation, but that the action must be of action as pleaded, and which would put the intervenor in a legal
brought by the Board of Directors, x x x has its exceptions. position to litigate a fact alleged in the complaint, without the
• If the corporation were under the complete control of the principal establishment of which plaintiff could not recover.
defendants, it is obvious that a demand upon the Board to institute an • Here, the interest, if it exists at all, of petitioners-movants is indirect, contingent,
action would be useless, and the law does not require litigants to perform remote, conjectural, consequential and collateral.
useless acts.” • At the very least, their interest is purely inchoate, or in sheer
• Equitable’s contentions: expectancy of a right in the management of the corporation and to
• The collection suit against Freeman, Inc. and Saw Chiao Lian is share in the profits thereof and in the properties and assets thereof on
essentially in personam and, as an action against defendants in their dissolution, after payment of the corporate debts and obligations.
personal capacities, will not prejudice the petitioners as stockholders of • While a share of stock represents a proportionate or aliquot interest in the
the corporation. property of the corporation, it does not vest the owner thereof with any
• The Everett case is not applicable because it involved an action filed by legal right or title to any of the property, his interest in the corporate
the minority stockholders where the board of directors refused to bring an property being equitable or beneficial in nature.
 • Shareholders are in no legal sense the owners of corporate property,
which is owned by the corporation as a distinct legal person.
• In the case at bar, there is no more principal action to be resolved as a writ of
execution had already been issued by the lower court and the claim of Equitable
had already been satisfied. The decision of the lower court had already become
final and in fact had already been enforced. There is therefore no more principal
proceeding in which the petitioners may intervene.

PETITION DENIED.