GOCHAN et al vs Young (Celicia Gochan Uy, Mike Uy, et al) Nature: Petition for Review on Certiorari assailing the

Decision of the Court of Appeals FACTS: eli! Gochan " #ons Realty Corporation (Gochan Realty) is registere$ in #%C with eli! Gochan #r& " ' others as incorporators& (he $aughter of eli! Gochan #r& (" the )other of respon$ents), Alice, inherite$ '* shares of stock in Gochan Realty& +hen Alice $ie$, she left the '* shares to her hus,an$ -ohn .oung, #r& (he R(C a$/u$icate$ 0123 of these shares to the chil$ren of Alice& 4aving earne$ $ivi$en$s, these stocks nu),ere$ 256& -ohn .oung #r& re7ueste$ Gochan Realty to partition the shares of his late wife ,y cancelling the stock certificates in his na)e an$ issuing new stock certificates in the na)es of the chil$ren& Petitioner Gochan Realty refuse$, citing as reason, the right of first refusal grante$ to the re)aining stockhol$ers ,y the Articles of 8ncorporation& -ohn .oung, #r& $ie$ an$ left the shares to the respon$ents& *SEC: Respon$ents Cecilia Gochan Uy an$ Miguel Uy filed a complaint for issuance of shares of stock to the rightful owners, nullification of shares of stock, reconveyance of property i)presse$ with trust, accounting, re)oval of officers an$ $irectors an$ $a)ages against Petitioner Gochan Realty& Petitioners Gochan et al file$ a motion to dismiss the co)plaint alleging that9 (2) the #%C has no /uris$iction over the nature of the action: (;) the respon$ents were not the real parties<in<interest an$ ha$ no capacity to sue: an$ (=) respon$ents> causes of action were ,arre$ ,y the #tatute of ?i)itations& #%C 4earing @fficer granted t e motion to dismiss

Accor$ing to the #%C @r$er9 !"# 8t has ,een shown that t e complainant eirs of Alice an$ -ohn, suing in (4%8R @+A R8G4( to the stocks, ad never $een stoc% olders of recor$ of Gochan Realty to confer the) with the legal capacity to ,ring an$ )aintain their action& %ven though the heirs succee$e$ the estate, they $i$ not ,eco)e auto)atically the stockhol$ers of the corporation& #ince they are not yet stockhol$ers, the case cannot ,e consi$ere$ as an intra<corporate controversy& (outsi$e the /uris$iction of #%C)& !&# Due to the allege$ wrongful acts of the corporation an$ its $irectors constitute frau$ulent $evices or sche)es which )ay ,e $etri)ental to the stockhol$ers, t e complainants $roug t t is action as a 'E()*AT)*E S+)T on t eir $e alf and on $e alf of Goc an (ealt,& B#ection '& Derivative #uit < Ao action shall ,e ,rought ,y stockhol$er in the right of a corporation unless t e complainant -as a stoc% older at the ti)e the 7uestione$ transaction occurre$ as well as at the ti)e the action was file$ an$ re)ains a stockhol$er $uring the pen$ency of the action& ! ! !&> Accor$ing to /urispru$ence, a stockhol$er ,ringing a $erivative action )ust have ,een so (a stockhol$er) at the ti)e the transaction or act co)plaine$ of took place& (he failure to co)ply with the /uris$ictional re7uire)ent on $erivative action )ust result in the $is)issal of the instant co)plaint& <<<<<<<<<<<<<en$ of #%C or$er<<<<<<<<<<<<<<< Respon$ents file$ a motion for a reconsideration ,ut it was $enie$ for ,eing pro<for)a& Respon$ents appealed to t e SEC en $anc , conten$ing that the #%C has /uris$iction& Petitioners contend t at t e appeal -as ./ da,s late an$ ,eyon$ the =*<$ay perio$ for appeals& (he #%C en ,anc ruled for t e petitioners an$ hol$ing that the respon$ents> )otion for reconsi$eration $i$ not interrupt the =*<$ay

perio$ for appeal ,ecause sai$ )otion was pro<for)a& CCA: Respon$ents filed a 0etition for (evie- with the Court of Appeals& CA rule$ that the #%C ha$ no /uris$iction as far as the heirs of Alice Gochan were concerne$, ,ecause they were not yet stockhol$ers& 1+T it uphel$ the capacity of Respon$ents Cecilia Gochan Uy an$ Miguel Uy& 8t also uphel$ that the intestate %state of -ohn .oung #r& was an in$ispensa,le party& Moreover, it $eclare$ that respon$entsD Motion for Reconsi$eration ,efore the #%C was not pro for)a: thus, its filing tolle$ the appeal perio$& "2 Su$3)ssue9 +1A the #pouses Uy have the personality to file an action ,efore the #%C against Gochan Realty Corporation& E .%#F Held: Petitioners argue that #pouses Cecilia an$ Miguel ha$ no capacity to ,ring the suit since they were no longer stockhol$ers at the ti)e& Allege$ly, the corporation ha$ alrea$y purchase$ their stocks& Cecilia averre$ that the purchase contract of her stocks was null an$ voi$ which the court a$)itte$& (hus, Cecilia re)ains to ,e a stockhol$er of the corporation& Although she was no longer registere$ as a stockhol$er in the corporate records as of the filing of the case ,efore the #%C, the a$)itte$ allegations in the Co)plaint )a$e her still a ,ona fi$e stockhol$er of Gochan Realty, as ,etween sai$ parties& 4owever, petitioners conten$ that the statute of li)itations alrea$y ,ars the spousesD action ,eing voi$a,le& 4owever, the sale of the stock was not voi$a,le, ,ut was voi$ a, initio& (he contention that the action has prescri,e$ cannot ,e sustaine$& Prescription cannot ,e invoke$ as a groun$ if the contract is allege$ to ,e voi$ a, initio& &2 4ain )ssue: +1A the #pouses Uy coul$ ,ring a $erivative suit in the na)e of Gochan Realty to re$ress wrongs allege$ly co))itte$ against it for which the $irectors refuse$ to sue E .%#F Held: Petitioners conten$ that the action file$ ,y the #pouses was not a $erivative suit, ,ecause the spouses an$ not the corporation

were the in/ure$ parties& (he Court is not convince$F (he Co)plaint shows allegations of in/ury to the corporation itself9 (2) (here was conspiracy an$ frau$ in $epressing the value of the stock of the Corporation an$ to in$uce the )inority stockhol$ers to sell their shares of stock for an ina$e7uate consi$eration& Petitioner %ste,an Gochan et al unlawfully an$ frau$ulently appropriate$ for the)selves the fun$s of the Corporation ,y $rawing e!cessive a)ounts in the for) of salaries an$ cash a$vances an$ charging their purely personal e!penses to the Corporation& (;) (he pay)ent of P2,;**,*** ,y the Corporation to Respon$ent Cecilia for her shares of stock constitute$ an unlawful an$ partial li7ui$ation an$ $istri,ution of assets to a stockhol$er, resulting in the i)pair)ent of the capital of the Corporation an$ prevente$ it fro) otherwise utiliGing sai$ a)ount for its regular an$ lawful ,usiness, to the $a)age an$ pre/u$ice of the Corporation, its cre$itors, an$ of co)plainants as )inority stockhol$ers As early as 2622, this Court has recogniGe$ the right of a single stockhol$er to file $erivative suits& 8n its wor$s9 +here corporate $irectors have co))itte$ a ,reach of trust either ,y their frau$s, ultra vires acts, or negligence, an$ the corporation is una,le or unwilling to institute suit to re)e$y the wrong, a single stockhol$er )ay institute that suit, suing on ,ehalf of hi)self an$ other stockhol$ers an$ for the ,enefit of the corporation, to ,ring a,out a re$ress of the wrong $one $irectly to the corporation an$ in$irectly to the stockhol$ers& (he allegations of in/ury to the #pouses Uy can coe!ist with those pertaining to the corporation& (he personal in/ury suffere$ ,y the spouses cannot $is7ualify the) fro) filing a $erivative suit on ,ehalf of the corporation& 'octrine: (he fact that certain persons are not registere$ as stockhol$ers in the ,ooks of the corporation will not ,ar the) fro) filing a $erivative suit, if it is evi$ent fro) the allegations in the co)plaint that they are ,ona fi$e stockhol$ers

52 Su$3)ssue +1A the intestate estate of -ohn .oung #r& is an in$ispensa,le party in the #%C case consi$ering that the in$ivi$ual heirsD shares are still in the $ece$ent stockhol$erDs na)e& Held: Petitioners conten$ that the 8ntestate %state of -ohn D& .oung #r& is not an in$ispensa,le party, as it not ,enefite$ or in/ure$ ,y any court /u$g)ent& 8t woul$ ,e useful to point out that one of the causes of action state$ in the Co)plaint file$ with the #%C refers to the registration, in the na)e of the other heirs of Alice Gochan .oung, of 0123th of the shares still registere$ un$er the na)e of -ohn D& .oung #r& #ince all the shares that ,elonge$ to Alice are still in his na)e, no final $eter)ination can ,e ha$ without his estate ,eing i)plea$e$ in the suit& 4is estate is thus an in$ispensa,le party with respect to $ealing with the registration of the shares in the na)es of the heirs of Alice& 62 Su$3)ssue +hether or not the cancellation of notice of lis pen$ens was /ustifie$ consi$ering that the suit $i$ not involve real properties owne$ ,y Gochan Realty& << A@ Held: (he Court foun$ no reason to $istur, the ruling of the Court of Appeals& (here were allegations of ,reach of trust an$ confi$ence an$ usurpation of ,usiness opportunities in conflict with petitionersD fi$uciary $uties to the corporation, resulting in $a)age to the Corporation& Un$er these causes of action, respon$ents are asking for the $elivery to the Corporation of possession of the parcels of lan$ an$ their correspon$ing certificates of title . 4ence, the suit necessarily affects the title to or right of possession of the real property sought to ,e reconveye$& (he Rules of Court allows the annotation of a notice of lis pendens in actions affecting the title or right of possession of real property& (hus, the Court of Appeals was correct in reversing the #%C @r$er for the cancellation of the notice of lis pendens. Effect of (A 7/..: 8ntra<corporate controversies are now within the

/uris$iction of courts of general /uris$iction, no longer of the #ecurities an$ %!change Co))ission& ')S0OS)T)ON9 Petition D%A8%DF