BSP v. Campa Jr., G.R. No.

185979, March 16, 2016

Facts:
Bankwise applied for a Special Liquidity Facility (SLF) loan from BSP sometime in 2000.
BSP advised Bankwise to submit mortgages of properties owned by third parties to
secure its outstanding obligation to BSP. In compliance with the requirement, Bankwise
mortgaged some real properties belonging to third-party mortgagors, as follows:

When Bankwise failed to pay its obligations to BSP, the latter applied for extra-judicial
foreclosure of the third-party mortgages. All mortgaged properties were sold at public
auction to BSP being the highest bidder and corresponding certificates of sale were
registered.

On 18 April 2006, Eduardo Aliño (Aliño) filed a Complaint 5 for specific performance,
novation of contracts and damages with application for Temporary Restraining Order
(TRO)/writ of preliminary injunction against BSP and Bankwise. The case was docketed
as Commercial Case No. 06-114866. Aliño alleged that he is a stockholder of VR
Holdings, owning 10% of the outstanding shares of stock therein. Aliño averred that he
allowed his properties to be used by Bankwise as collateral for the SLF loan because
Bankwise and VR Holdings6 assured him that the properties will be returned to him and
that he will not be exposed to the risk of foreclosure. 7 According to Aliño, BSP
reassured him that it would allow Bankwise to settle its outstanding obligation by way
of dacion en pago, the details of which are outlined in a portion of the Complaint below:

Aliño claimed that BSP foreclosed his properties, among others, in callous disregard of
the fact that to date, it has in its hands no less than 11 original duplicate certificates of
title over various real properties offered by Bankwise for dacion. Aliño asserted that the
value of the lots offered for dacion would be more than sufficient to answer for the
obligation of Bankwise. Aliño also claimed that Bankwise refused to honor its
commitment to him; and that Bankwise and BSP have allied together to deny the return
to the third-party mortgagors of the foreclosed properties.

Issue:
There is no legal basis to treat Private Respondents differently from Ham Gen, a third-
party mortgagor similarly situated with Private Respondents, whose intervention had
been denied with finality.

While the primary issue relates to the propriety of an intervention, BSP's opposition is
anchored on the nature of a derivative suit which, according to it, effectively disallows
intervention by a non-stockholder.
Ruling:
A derivative action is a suit by a shareholder to enforce a corporate cause of action.
Under the Corporation Code, where a corporation is an injured party, its power to sue is
lodged with its board of directors or trustees. But an individual stockholder may be
permitted to institute a derivative suit on behalf of the corporation in order to protect or
vindicate corporate rights whenever the officials of the corporation refuse to sue, or are
the ones to be sued, or hold control of the corporation. In such actions, the corporation
is the real party-in-interest while the suing stockholder, on behalf of the corporation, is
only a nominal party.14

A stockholder's right to institute a derivative suit is not based on any express provision
of the Corporation Code, or even the Securities Regulation Code, but is impliedly
recognized when the said laws make corporate directors or officers liable for damages
suffered by the corporation and its stockholders for violation of their fiduciary duties. 15

Prior to the promulgation of the Interim Rules of Procedure Governing Intra-Corporate

Controversies, the requirements for derivative suits were encapsulated in San Miguel
Corporation v. Kahn,16 to wit:

1. the party bringing suit should be a shareholder as of the time of the act or
transaction complained of, the number of his shares not being material;

2. he has tried to exhaust intra-corporate remedies, i.e., has made a

demand on the board of directors for the appropriate relief but the latter
has failed or refused to heed his plea; and

3. the cause of action actually devolves on the corporation, the wrongdoing

or harm having been, or being caused to the corporation and not to the
particular stockholder bringing the suit.
4. These jurisprudential requirements were incorporated in Section 1, Rule 8 of
A.M. No. 01-2-04-SC, otherwise known as the Interim Rules of Procedure
Governing Intra-Corporate Controversies under Republic Act No. 8799. Section 1
reads:

5. (l) The person filing the suit must be a stockholder or member at the time
the acts or transactions subject of the action occurred and the time the
action was filed;

(2) He must have exerted all reasonable efforts, and alleges the same
with particularity in the complaint, to exhaust all remedies available under
the articles of incorporation, by-laws, laws or rules governing the
corporation or partnership to obtain the relief he desires;

(3) No appraisal rights are available for the act or acts complained of; and

(4) The suit is not a nuisance or harassment suit.

Even then, not every suit filed on behalf of the corporation is a derivative suit. For a
derivative suit to prosper, 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.18

It is a condition sine qua non that the corporation be impleaded as party in a derivative

suit.

At the outset, the rule on derivative suits presupposes that the corporation is the
injured party and the individual stockholder may file a derivative suit on behalf of the
corporation to protect or vindicate corporate rights whenever the officials of the
corporation refuse to sue, or are the ones to be sued, or hold control of the
corporation.21

The damage in this case does not really devolve on the corporation. The harm or injury
that Aliño sought to be prevented pertains to properties registered under Aliño and
other third-party mortgagors.

The following quoted portions of the Complaint show that the allegations pertain to
injury caused to Aliño alone and not to the corporation:
The suit clearly is not for the benefit of the corporation for a judgment in favor of the
complainant would mean recovery of his personal property. There is no actual or
threatened injury alleged to have been done to the corporation due to the foreclosure of
the properties belonging to third-party mortgagors.

A reading of the Interim Rules further demonstrates that the complaint could not be
considered a derivative suit.

First, Aliño failed to exhaust all remedies available to him as a stockholder of VR

Holdings. Alifio made the following allegations in his Complaint which we find lacking in
particulars:

The "supplications" referred to in the complaint are in the form of one demand letter
sent to each company, which does not suffice. Moreover, the letter was addressed to
the President of Bankwise and VR Holdings, and not to the Board of Directors. In Lopez
Realty v. Spouses Tanjangco,25 a demand made on the board of directors for the
appropriate relief is considered compliance with the requirement of exhaustion of
corporate remedies. Aliño failed to show that he exerted all reasonable efforts to
exhaust all remedies available under the articles of incorporation, by-laws, and laws or
rules governing the corporation to obtain the relief he desired.

Second, the unavailability of appraisal right as a requirement for derivative suits does
not apply in this case. A stockholder who dissents from certain corporate actions has
the right to demand payment of the fair value,of his or her shares. This right, known as
the right of appraisal, is expressly recognized in Section 81 of the Corporation Code, to
wit:
The appraisal right does not obtain in this case because the subject of the act
complained of is the private properties of a stockholder and not that of the corporation.

Third, the instant case is a harassment suit. In determining whether a complant is

considered a harassment suit, the following guidelines are provided in Section 1 (b),
Rule I of the Interim Rules of Procedure for Intra-Corporate Controversies, thus:

The guidelines basically summed up the three previous requisites of a derivative suit
and more importantly, it is highlighted that the damage must be caused to the
corporation.

When Republic Act No. 8799 took effect, the Securities and Exchange Commission's
(SEC) exclusive and original jurisdiction over cases enumerated in Section 5 of
Presidential Decree No. 902-A27 was transferred to the RTC designated as a special
commercial court.28 As long as the nature of the controversy is intra-corporate, the
designated RTCs have the authority to exercise jurisdiction over such cases.

Considering that the Aliño complaint is not a derivative suit, it would have been proper
to dismiss it the case for lack of jurisdiction.