Casas v. Casas

[SEC-SICD * CASE NO. 04-94-4741. August 2, 1996.] VICENTE CASAS, ET AL. , petitioners , vs . SOCORRO G. CASAS, ET AL. , respondents . D E C I S I O N This has reference to the derivative suit filed by petitioners Vicente Casas and Carlos Casas in behalf of Socorro G. Casas Corporation for alleged illegal and irregular sale of the latters' sole property, a forty (40) hectare land located at Barangay Saluysoy, Meycauayan, Bulacan. Petitioners contend that the sale was prejudicial to the interest of the corporation, and therefore, they pray that the same be annulled, or, at least be enjoined, and respondents be made to account to the corporation for damages. Petitioners allege that they are heirs of the late Amador and Ricardo Casas, brothers of the respondents Socorro, Francisco, Severino and Pascual, all surnamed Casas, who, together with their another deceased brother Artemio, were the original incorporators and members of the Board of the petitioning corporation Socorro G. Casas (SGCC) when it was organized on November 12, 1985. By virtue of the aforementioned relation with their predecessors, petitioners now claim that they represent the minority stockholders of the corporation and they themselves have become directors of the corporation by virtue of their predecessors' death (p. 2, Petition). Thus, they are entitled to all the rights and privileges of stockholders and directors of the corporation including the right to question the alleged illegal acts of the corporation's Board of Directors and officers. Respondents, on the other hand, claim that petitioners have no personality to file the instant case since they are not real stockholders of the corporation. They entered the corporation by mere accommodation of the remaining directors. (pp. 1-2, Answer). Since they are not stockholders, they, too, could not become officers thereof. Therefore, respondents pray that this suit be dismissed with cost against petitioners. (p. 14, Answer) Records disclose that the present controversy stemmed from the following facts: that Socorro G. Casas corporation was established on November 12, 1985 for the single purpose of subdividing and selling its only asset, a 40-hectare piece of land located at Saluysoy, Meycauayan, Bulacan. On March 17, 1989, the corporation entered into an agreement with Costa Villa Realty and Development Corporation (CVRDC) for the development of the said property of the corporation in Barangay Saluysoy, into a residential subdivision (Annex "A", petition). Unfortunately, CVRDC failed to comply with its obligation under the agreement within the stipulated period, and it remained unaccomplished despite the several extensions granted by the corporation. In an effort to hasten the disposition of the property and push through with the project, the corporation was forced to avail of the services of other real estate brokers, and on September 8, 1993, Atty. Mario F. Santos, the counsel representing the respondents in the above-entitled case was appointed by the corporation to undertake the negotiation for a settlement with CVRDC and proceed with the sale of the property. (Exh. "H") Atty. Santos, as real estate broker, appears successful with such negotiation, and he was able to resolve the problem with CVRDC and in turn sold the property to herein respondent Primex Land, Inc. Petitioners questioned the appointment and the sale entered into by Atty. Mario F. Santos, as illegal and prejudicial to the corporation. On April 12, 1994, they filed the instant derivative suit with this Commission, alleging, among others, that the sale of the corporation's main asset was unlawful in the sense that the same was a product of meetings clandestinely conducted without notice to them as stockholders and directors, and the price was not commensurate with the actual commercial value of the property. Furthermore, they alleged that the sale was null and void since it did not comply with the requirement of at least two-thirds (2/3) votes of the outstanding capital stock. Moreover, since there was no meeting allegedly called for the purpose the sale was void and, therefore, rescissible. Finally, petitioners contend that Atty. Mario F. Santos was guilty of bad faith for not disclosing his alleged dual role as broker and counsel for the corporation. This allegedly constitutes a betrayal of the trust reposed on him by the corporation and, therefore, he is liable to the corporation. On November 21, 1994, Atty. Mario F. Santos filed a motion to drop him as party respondent on the ground that he is not an officer, director or agent of the corporation. And, since it is so, he cannot be a respondent in a derivative suit filed in the name of the corporation. The motion to drop was granted by this Commission per its Order dated January 30, 1995. On November 16, 1995, a Compromise Agreement (Exh. "4"), notarized by Atty. Virgilio G. Farcon, Jr. was submitted by petitioner Carlos T. Casas wherein the latter admitted that there was no fraud in the sale of the corporation's property and that he is withdrawing as one of the petitioners in this case, thereby leaving only Vicente Casas as the only remaining party-in-interest on the part of petitioners other than the corporation. After a careful study of all the facts and the evidence so adduced during the hearing, this Hearing Officer feels constrained, for reasons which will be shown below, to uphold respondents' position that petitioners have no personality and capacity to institute the present action. It is worthy to note that for a derivative suit to prosper, the following requisites should be present, to wit: 1) the wrongs complained of were committed against the corporation; (2) the party bringing the suit should be a stockholder as of the time of the act or transaction complained of, the number of shares not being material ; (3) he has tried to exhaust intra-corporate remedies; he has made a demand on the board of directors for the appropriate relief but the latter has failed or refused to heed his plea or if he has not taken such intra-corporate remedies, why it is impossible or useless to secure such redress; (4) 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 stockholder bringing the suit; and (5) the suit is brought in good faith and for the interest of the corporation (San Miguel Corporation v. Khan, G.R. No. 85339, August 11, 1989, emphasis supplied). llcd A close look at the records of the case would show that no evidence was ever presented to show that petitioners are stockholders of the corporation. Nothing has been submitted to substantiate their allegation that petitioners are stockholders of the corporation. No stock certificate, no formal document was forwarded to evince that petitioners are equipped with proper personality to institute the instant case. What appears on record is that their names were listed as officers and directors of the corporation. Thus, petitioner Vicente Casas during cross-examination admitted that the sole basis of his claim as stockholder was the minutes of the stockholders' meeting of 1988 and 1990. inclusive proof of stock ownership. While it may be argued that in the minutes of the stockholders' meeting, the names of petitioners appear, the same, however, do not conclusively presume that by virtue of said document they became such. Neither can it decisively be said that being the compulsory heirs of the late incorporators Amador and Ricardo Casas, petitioners automatically become as such stockholders. Thus, this Commission in a long list of opinions ruled that: "It is settled that on the death of a stockholder, his executor or administrator becomes vested with the legal title to the stock and entitled to vote the same at all meetings, and that until a settlement and division of the estate is effected, the stock of the decedent belongs to said administrator or executor as his personal representative. This rule is true even if the shares stand in the books of the corporation in the name of the decedent, or without a formal transfer of the stock in the books of the corporation. (Letter to Casino Espaol de Manila dated March 3, 1986). It is likewise advised that to transfer the shares of stock in favor of the heirs of the deceased stockholders, a judicial or extrajudicial partition of her estate is necessary if she died intestate or without a will otherwise it will be necessary to wait for the termination, of the testamentary proceedings and the final adjudication of the shares of stock in accordance with the will of the decedent." Mr. Antonio B. Ibaez, 12 May 1988) Prescinding from the above, further proof is needed to show these facts and absence of proof which will be expressive of petitioners being such a stockholders, this derivative suit losses any color of legality. And on this score alone, this petition must fall. That the sale of the corporation's main asset was unlawful in the sense that the same was a product of meetings clandestinely held without notice to petitioners as stockholders and directors, likewise appears not supported by the evidence on record. The legality of the sale of the corporation's property has been validated by events subsequent to its disposal. Since the Board did not anymore question the sale after it was conducted, it is presumed that they themselves deemed it valid and binding. This ratiocination becomes more cogent when we view the transaction in the light of the strong presumption in law as to its legality, there being no iota of proof to evince that there was fraud in the conduct of the sale. It is a settled rule that the voice of the majority of the stockholders is the law of the corporation, although there are exceptions to this rule. Notwithstanding these limitation upon the power of the majority of the stockholders, their resolutions, when passed in good faith and for just cause, deserve careful consideration and are generally binding upon the minority. The board's acquiescence and acceptance of the sale made by Atty. Santos, and the subsequent withdrawal of petitioner Carlos Casas in behalf of his co-heirs, lends credence to the fact that the sale was valid, and the same was not prejudicial to the corporation. Furthermore, the members of the board who ratified the same complied with the requirement of the Corporation Code as to the actual number of directors who should vote to approve the sale of the corporation's sole asset. Even granting for the sake of argument, that petitioners are indeed stockholders and directors of the corporation, their vote will not affect the voting scheme effected in the disposal. The directors who approved the sale are the very stockholders representing two-thirds of the outstanding capital stock of the corporation and their votes were enough to validate the sale. Petitioners' contention that they were not properly notified of the said sale of the corporation's asset runs counter to the evidence on hand. Per their letters addressed to the directors (Exhs. "9" and "10") signifying their intention to buy the latter's interest in the corporation, it can be gleaned that they were fully aware of the intention to sell and they wanted to participate in it as sellers. All told, no bad faith can be deduced from the acts of the respondents in selling the property and the same to us is a valid corporate act. WHEREFORE, the instant petition should be, as it is hereby DISMISSED for lack of merit. NO PRONOUNCEMENT AS TO COST. dctai SO ORDERED. (SGD.) ALBERTO P. ATAS Hearing Officer