THIRD DIVISION
[G.R. No. 225943. February 22, 2017.]
PHILIPPINE NATIONAL CONSTRUCTION COMPANY, REPRESENTED BY THE GOVERNMENT SERVICE INSURANCE SYSTEM THROUGH ITS MEMBERS, NAMELY: LEA FAITH B. DAVID, ANNE ROSALIE V. BESIN, and LESSLEY C. BEAÑO, petitioners,vs. THE MEMBERS OF THE BOARD OF DIRECTORS OF THE PHILIPPINE NATIONAL CONSTRUCTION COMPANY, THE MEMBERS OF THE BOARD OF TRUSTEES OF THE GOVERNMENT SERVICE INSURANCE SYSTEM, and THE GOVERNMENT COMMISSION FOR GOVERNMENT-OWNED OR — CONTROLLED CORPORATIONS, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedFebruary 22, 2017, which reads as follows:
"G.R. No. 225943 — PHILIPPINE NATIONAL CONSTRUCTION COMPANY, REPRESENTED BY THE GOVERNMENT SERVICE INSURANCE SYSTEM THROUGH ITS MEMBERS, NAMELY: LEA FAITH B. DAVID, ANNE ROSALIE V. BESIN, and LESSLEY C. BEAÑO, Petitioners v. THE MEMBERS OF THE BOARD OF DIRECTORS OF THE PHILIPPINE NATIONAL CONSTRUCTION COMPANY, THE MEMBERS OFTHE BOARD OF TRUSTEES OF THE GOVERNMENT SERVICE INSURANCE SYSTEM, and THE GOVERNMENT COMMISSION FOR GOVERNMENT-OWNED OR — CONTROLLED CORPORATIONS, Respondents. — Petitioner's motion for an extension of thirty (30) days within which to file a petition for review on certiorari is GRANTED, counted from the expiration of the reglementary period.
Public school teachers Lea Faith B. David, Anne Rosalie V. Besin, and Lessley C. Beaño (petitioners) — claiming themselves to be members of the Government Service Insurance System (GSIS) — directly came to the Court by petition for review on certiorari to appeal the order issued on July 12, 2016 in Civil Case No. 2016-04 by the Regional Trial Court (RTC), Branch 258, in Parañaque City dismissing their suit for and in behalf of the GSIS as a stockholder of the Philippine National Construction Corporation (PNCC) "for being a nuisance or harassment suit." 1 HTcADC
The antecedents follow.
PNCC, through its Board of Directors (BOD), entered into a Performance Agreement with the Government Commission for Government-Owned or — Controlled Corporations (GCGOCC). 2 According to the petitioners, the disposition undertaken by the PNCC BOD, would result in the disposal of substantially all of the properties of the PNCC. 3 Allegedly, the GSIS owned 47,490,383 shares of PNCC, translating to 27.22% stake in the latter. The petitioners argued that they had a direct interest in PNCC's affairs as members of the GSIS, and, as such, they would be directly and adversely affected by the implementation of the Performance Agreement. 4
The petitioners wrote to the GSIS Board of Trustees (BOT) demanding that the GSIS should bring an action against the PNCC upon the matter, but the GSIS BOT refused to accede to their demand opining that the petitioners' fear regarding the financial viability of the GSIS to provide retirement pay and pension to its members was unfounded. Accordingly, they instituted their complaint for the declaration of nullity of contract. 5
As stated, the RTC issued the assailed order on July 12, 2016 dismissing the case "for being a nuisance or harassment suit." 6
Hence, this direct appeal to the Court, with the petitioners asserting that the RTC thereby committed reversible error. CAIHTE
Ruling of the Court
The Court RESOLVES TO DENY the petition for review on certiorari for failure of the petition to show any reversible error committed by the RTC in dismissing the complaint.
Civil Case No. 2016-04 is unquestionably a derivative action because it was initiated by the petitioners as supposed members of the GSIS, a shareholder of the PNCC, in order to enforce a corporate cause of action. 7 Under the Corporation Code, where a corporation is an injured party, its power to sue is lodged in its board of directors or board of 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. 8 In a derivative suit, the corporation is the real party-in-interest; the suing stockholder, on behalf of the corporation, is only a nominal party. 9
We uphold the dismissal of the suit by the RTC.
Section 1, Rule 8 of the Interim Rules of Procedure for Intra-Corporate Controversies (A.M. No. 01-2-04-SC, March 13, 2001), which enumerates the requisites for a proper derivative suit, provides:
Section 1. Derivative Action. — A stockholder or member may bring an action in the name of a corporation or association, as the case may be, provided that:
(1) He was a stockholder or member at the time the acts or transactions subject of the action occurred and at the time the action was filed;
(2) He 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; aScITE
(3) No appraisal rights are available for the act or acts complained of; and
(4) The suit is not a nuisance or harassment suit.
In case of nuisance or harassment suit, the court shall forthwith dismiss the case.
The fact alone that the petitioners were not themselves stockholders of the PNCC clearly indicated their lack of legal standing to initiate the action as a derivative suit on behalf of the PNCC. As correctly emphasized by the RTC, the derivative suit could not prosper without the petitioners first complying with the legal requisites for its institution.
WHEREFORE, the Court AFFIRMS the order issued on July 12, 2016 in Civil Case No. 2016-04 by the Regional Trial Court, Branch 258, in Parañaque City, without pronouncement on costs of suit.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 7-15.
2.Id. at 23.
3.Id. at 25.
4.Id. at 8.
5.Id. at 27-28.
6.Supra, note 1.
7.R.N. Symaco Trading Corporation v. Santos, G.R. No. 142474, August 18, 2005, 467 SCRA 312, 329.
8.Hi-Yield Realty, Inc. v. Court of Appeals, G.R. No. 168863, June 23, 2009, 590 SCRA 548, 557.
9.Filipinas Port Services, Inc. v. Go, G.R. No. 161886, March 16, 2007, 518 SCRA 453, 471.