G.R. No. 172843 & G.R. No. 172881, September 24, 2014
ALFREDO L. VILLAMOR, JR., Petitioner, vs. JOHN S. UMALE, in substitution of HERNANDO F. BALMORES, Respondent.

ODIVAL E. REYES, HANS M. PALMA and DOROTEO M. PANGILINAN, Petitioners, vs. HERNANDO F. BALMORES, Respondent.

FACTS

Pasig Printing Corporation (PPC) obtained an option to lease property from Mid-Pasig Development Corporation. On November 11, 2004, PPC’s board of directors issued a resolution waiving all its rights under this option contract in favor of the law firm of petitioner Alfredo L. Villamor, Jr., without any consideration. Subsequently, on November 22, 2004, PPC, represented by Villamor, entered into a Memorandum of Agreement (MOA) with MC Home Depot, making MC Home Depot a sublessee. MC Home Depot issued 20 post-dated checks for rental payments and goodwill money to Villamor, who did not turn them over to PPC upon encashment.
Respondent Hernando F. Balmores, a stockholder and director of PPC, demanded that the board (petitioners Odival E. Reyes, Hans M. Palma, and Doroteo M. Pangilinan) compel Villamor to account for and deliver the checks. Due to alleged inaction, Balmores filed an intra-corporate controversy complaint with the Regional Trial Court (RTC), alleging fraud and schemes detrimental to the corporation and its stockholders, and praying for the appointment of a receiver, an accounting, and the annulment of the board’s waiver resolution.
The RTC denied the prayer for a receiver or management committee, finding that PPC’s entitlement to the checks was doubtful due to the prima facie validity of the board resolution and a pending case by another claimant (Leonardo Umale) over the same checks. It also found no clear showing of asset dissipation and noted PPC’s other income sources. The RTC further held that the failure to implead PPC as an indispensable party was fatal.
Balmores filed a petition for certiorari with the Court of Appeals (CA). The CA reversed the RTC, characterizing Balmores’ suit as a derivative suit and placing PPC under receivership, appointing an interim management committee. It found that the board’s waiver without consideration and inaction over the unremitted checks created an imminent danger of dissipation, loss, or wastage of corporate assets. Petitioners’ motions for reconsideration were denied.

ISSUE

1. Whether the Court of Appeals correctly characterized respondent Balmores’ action as a derivative suit.
2. Whether the Court of Appeals properly placed PPC under receivership and created a receiver or management committee.

RULING

1. Yes, the Court of Appeals correctly characterized the action as a derivative suit. A derivative suit is filed by a stockholder on behalf of the corporation to redress wrongs committed against it, where the board refuses to sue. Balmores’ complaint alleged devices or schemes amounting to fraud or misrepresentation by the board and Villamor detrimental to PPC and its stockholders, specifically the waiver of corporate rights without consideration and the failure to account for and remit the rental checks. These are classic allegations justifying a derivative suit. The failure to implead PPC, while a procedural defect, does not change the essential nature of the action, which seeks to recover corporate assets.
2. Yes, the Court of Appeals properly placed PPC under receivership and appointed an interim management committee. Under the Interim Rules for Intra-Corporate Controversies, a receiver may be appointed when the corporation’s assets are in imminent danger of dissipation, loss, wastage, or spoliation. The facts establish such imminent danger: (a) PPC’s board waived valuable lease rights in favor of Villamor’s law firm for no consideration; (b) Villamor, acting for PPC, received substantial checks from MC Home Depot pursuant to the MOA and did not turn them over to the corporation; and (c) the board failed to take action to recover these assets despite demand. This combination of acts and omissions jeopardized corporate assets. The CA correctly exercised its certiorari jurisdiction to review the RTC’s interlocutory order denying receivership, as the RTC’s refusal, despite the evident risk, constituted a grave abuse of discretion. The appointment was a conservatory measure to preserve PPC’s assets pending litigation on the merits.
The petitions were denied. The Court of Appeals’ decision was affirmed.