GR 142474; (August, 2005) (Digest)
G.R. No. 142474 . August 18, 2005
R.N. SYMACO TRADING CORPORATION and/or NORMA SYMACO, ESTATE OF MARIANO GUISON, Petitioners, vs. LUISITO T. SANTOS, for and in behalf of the MALABON FISH BROKERS ASSOCIATION, INC., Respondent.
FACTS
Respondent Malabon Fish Brokers Association, Inc. (MFBAI) leased property from Mariano Guison in 1980 to operate a fish market. After Guison’s death, his heirs and petitioner Norma Symaco, who was both a director of petitioner R.N. Symaco Trading Corporation and a member of the MFBAI Board, executed a new lease over the same property on April 30, 1990, in favor of Symaco Corporation. This new lease effectively displaced the MFBAI. Symaco Corporation subsequently evicted the market stallholders and secured a favorable judgment in a forcible entry case.
On October 29, 1990, respondent Luisito T. Santos filed a derivative suit on behalf of MFBAI against the petitioners, seeking to annul the 1990 lease contract. Santos alleged that Norma Symaco, as a corporate director of MFBAI, violated the doctrine of corporate opportunity under the Corporation Code by securing the lease for her own corporation, to the detriment of MFBAI. The Regional Trial Court dismissed the complaint, ruling that Santos lacked legal capacity to sue because he was not a legitimate member of MFBAI, a finding supported by a prior final SEC decision.
ISSUE
Whether respondent Luisito T. Santos had the legal capacity to institute a derivative suit on behalf of the MFBAI.
RULING
No, Santos lacked the legal capacity to sue. The Supreme Court affirmed the trial court’s dismissal. The legal logic hinges on the requirement that a plaintiff in a derivative suit must be a stockholder or member of the corporation at the time of the act or transaction complained of and must remain such throughout the litigation. A prior final and executory decision of the Securities and Exchange Commission (SEC) in SEC Case No. 2521 explicitly found that MFBAI had only 35 legitimate members from its incorporation, and Luisito T. Santos was not among them. This factual finding, which attained finality, is binding and conclusive. Consequently, Santos was not a member of MFBAI and therefore had no right to file a derivative action in its behalf. The Court clarified that while not all members are indispensable parties in a derivative suit, the filing member must legitimately belong to the corporation. Since Santos failed this fundamental requirement, the case was properly dismissed for lack of cause of action.