G.R. No. L-23842 March 13, 1975
ALEJANDRO A. LICHAUCO, petitioner-appellant, vs. HON. COURT OF APPEALS, HON. LUIS B. REYES, Judge of the CFI of Manila, FEDERICO V. CEREZO and CIPRIANO SANTOS, respondents-appellees.

FACTS

Petitioner Alejandro Lichauco, a stockholder, filed a derivative suit on behalf of Republic Resources Development Corporation (REDECO) against its directors and controlling stockholders to annul stock options and oil royalty grants they had voted for themselves. The Court of First Instance of Manila ordered publication of notice, inviting other stockholders to intervene by October 3, 1960. The parties, except one, subsequently submitted a Joint Motion for a Compromise Agreement. This agreement, approved by the court on February 17, 1961, settled the main issues but reserved for future hearing the determination of a reasonable attorney’s fee for Lichauco, to be paid by REDECO. After a hearing, the court awarded Lichauco P27,500 as attorney’s fees. Subsequently, respondents Federico Cerezo and Cipriano Santos, also REDECO stockholders, moved to intervene to challenge this award, arguing it constituted a misappropriation of corporate funds for Lichauco’s personal benefit.

ISSUE

Whether the Court of First Instance committed grave abuse of discretion in granting the motions for intervention filed by respondents Cerezo and Santos after the court had already rendered judgment on the compromise agreement.

RULING

No, the trial court did not commit grave abuse of discretion. The Supreme Court affirmed the Court of Appeals’ decision, ruling that the intervention was timely and proper. While intervention is generally allowed before or during trial under the Rules of Court, the judgment rendered on February 17, 1961, was not a final judgment that terminated the case. It expressly reserved the issue of attorney’s fees for further proceedings. Consequently, the case remained pending on that specific issue. The cause of action for the intervenors-stockholders accrued only after Lichauco obtained the monetary award from corporate funds, which they sought to protect. The Court cited Otto Gmur, Inc. vs. Revilla, which held that a dispute over an attorney’s fee payable from a recovery arises only after that recovery is realized and is within the court’s custody. Therefore, intervention at that stage was permissible. Furthermore, Lichauco actively participated in the trial on the intervention by filing an answer and counterclaim, thereby waiving any objection to its timeliness. The trial court’s allowance of intervention to safeguard corporate assets from an allegedly improper disbursement was a sound exercise of discretion.