Eduardo V. Romualdez, Jr., et al. vs. Manuel T. Frondoso, et al.

[SEC CASE NO. 2488. September 24, 1987.] EDUARDO V. ROMUALDEZ, JR., ET AL. , petitioners , vs . MANUEL T. FRONDOSO, ET AL. , respondents . [SEC CASE NO. 2494. September 24, 1987.] MANUEL T. FRONDOSO, ET AL. , petitioners , vs . SANTOS R. PELAEZ, ET AL. , respondents . O R D E R For resolution are the motion to disqualify Atty. Lantion as counsel, filed by the respondents in Case No. 2494 and petitioners in Case No. 2488 through counsel, (hereinafter referred to as the Pelaez group) and the motion to strike out the motion to disqualify Atty. Lantion as counsel, filed by the petitioners in Case No. 2494 and respondent in Case No. 2488 through counsel, (hereinafter referred to as the Frondoso-Mendoza group). acAESC On the motion to strike out the Pelaez group's motion to disqualify Atty. Lantion as counsel, the Frondoso-Mendoza group alleges such motion as a sham pleading. Considering, however, that the Pelaez group's motion is premise upon the lack of Board resolution specifically authorizing counsel to appear in its behalf, this Commission hereby liberally construes the said motion to refer to counsel Angara, Concepcion, Regala and Cruz whom Atty. Lantion really represents. WHEREFORE, the motion to strike out the Pelaez group's motion to disqualify Atty. Lantion as counsel is hereby DENIED for lack of merit. On the motion to disqualify Atty. Lantion as counsel, movants allege that Atty. Lantion has no resolution of the Board of Carmen Mindanao Mining Consolidated, Inc. specifically authorizing her to appear as their legal counsel. A perspicacious analysis of the records of the case indicates that this case is a derivative suit. If the alleged wrongful or fraudulent acts of respondent directors complained of, contribute a wrong to the corporation itself, then the cause of action belongs to the corporation and to the individual stockholders. The petitioning stockholders who allegedly own the majority stockholdings in the corporation are claiming damages for the irreparable injury and prejudice committed to Carmen Mindanao Mining Co. and to themselves as stockholders. This is clearly elucidated by Campos and Lopez-Campos, in their Corporation Code, Comments, Notes and Selected Cases , p. 573 wherein they state, "although in almost every case of wrong to the corporation, each stockholder is necessarily affected because the value of his interest therein would be impaired. . ." Thus, as a derivative suit, the complaining stockholders filed the suit for and in behalf of the corporation. No board resolution can be attained where there are allegations of unlawful acts of the director however. Thus, petitioners as stockholders can file a suit in behalf of the corporation and as such their legal counsel shall represent both the stockholders and the corporation. Both the complainant corporation and the stockholders have the right to sue in order not to violate the theory of separate entity and that of multiplicity of suits. WHEREFORE, the Motion to disqualify Atty. Lantion as counsel is hereby DENIED for lack of merit. AacCIT SO ORDERED. (SGD.) JOSEFINA L. PASAY-PAZ Hearing Officer