G.R. No. 175936 September 3, 2007
Chan Cuan and Chien-Yin Shao a.k.a. Henry Shao, petitioners, vs. Chiang Kai Shek College, Inc. and Santiago Cua, respondents.

FACTS

Chiang Kai Shek College, Inc., a non-stock corporation, and Santiago Cua, a trustee, filed a derivative suit against Chan Cuan (Chairman) and Chien-Yin Shao. They alleged that Chan Cuan and Shao conspired to violate corporate by-laws by proceeding with an election of board trustees on July 7, 2006, without first ensuring Shao’s proper admission as a corporate member, a prerequisite under the by-laws. The RTC issued a TRO and later an order directing that the July 7 meeting proceed but only for the election of trustees and only duly admitted members could vote. At the meeting, Chan Cuan included Shao’s name on the official voter list. Despite protests from Cua, Shao voted and was elected as a trustee. Chan Cuan then scheduled an election for corporate officers.
Respondents filed a supplemental complaint seeking to nullify the July 7 election and enjoin Shao from participating further until his membership status was resolved. The RTC, in an Order dated July 27, 2006, denied the application for a writ of preliminary injunction. It found that the derivative suit was improperly instituted because the required verification and certification against forum shopping were signed only by the corporate secretary, not by the complaining stockholders themselves. The RTC held this defect was fatal. The Court of Appeals reversed this order, prompting this petition.

ISSUE

Whether the Court of Appeals erred in nullifying the RTC Order that denied the writ of preliminary injunction based on a defective verification and certification against forum shopping in the derivative suit.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic is that the verification and certification requirements are intended to secure an assurance that the allegations are true and correct and that the plaintiff has not commenced any other action involving the same issues. In a derivative suit, the corporation is the real party in interest, and the stockholder filing it is a mere nominal party. Consequently, the verification and certification may be signed by the corporation’s representative or officer who has personal knowledge of the facts alleged in the complaint. The corporate secretary, who signed the verification and certification in this case, possessed such knowledge by virtue of her official duty to record corporate proceedings and acts. The RTC therefore committed a grave abuse of discretion in treating the corporate secretary’s signature as a fatal defect. The requirement was substantially complied with, and the derivative suit was properly instituted. The denial of the preliminary injunction based solely on this formalistic ground was incorrect. The case was remanded to the RTC for further proceedings on the merits of the injunction and the main case.