San Miguel Corporation v.

Khan (85339, August 11, 1989)

Facts:

Fourteen corporations acquired shares of outstanding stock of San Miguel Corporation (SMC) and
constituted a Voting Trust thereon in favor of Soriano, Jr. When the latter died, Cojuanco was elected as
the substitute trustee, with the power to delegate the trusteeship in writing to Soriano III. However,
Cojuanco left the country after the 1986 Revolution. Subsequently, an agreement was entered into
between the 14 corporations and Soriano III, as an agent of several individuals, for the purchase of the
shares held by the former.

The buyer of the shares was actually Neptunia Corporation Ltd. (Neptunia), a foreign corporation and
wholly owned subsidiary of San Miguel International, which is wholly owned by SMC. Neptunia paid the
down payment from the proceeds of certain loans. PCGG then sequestered the shares subject of the sale,
as they belonged to Cojuanco, allegedly a dummy of former President Marcos. Because of this, SMC
suspended all the other installments of the price to the 14 corporations. The latter then sued for rescission
and damages.

Meanwhile, PCGG directed SMC to issue qualifying shares to seven individuals, including one de los
Angeles, from the sequestered shares for them to hold in trust. Then, the BOD of SMC passed a resolution
assuming the loans incurred by Neptunia for the down payment. De los Angeles assailed the resolution
alleging that it was not passed by the board aside from its harmful effects on the SMC’s interest. When
his efforts proved futile, Delos Angeles filed an action with the SEC for an injuction. Respondent directors
alleged that de los Angeles has no legal standing having been merely imposed by the PCGG to be a holder
of qualifying shares and that the 20 shares owned by him personally cannot fairly and adequately
represent the interest of the minority.

Issue:

Whether or not de los Angeles have legal personality to bring suit on behalf of the corporation

Held:

Yes. The requisites of a derivative suit are: (1) the party bringing the suit should be a stockholder as of the
time of the act or transactions complained of, the number of shares not being material; (2) exhaustion of
intra-corporate remedies (has made a demand on the board of directors for the appropriate relief but the
latter has failed or refused to heed his plea); and (3) the cause of action actually devolves on the
corporation and not to the particular stockholder bringing the suit.

The bona fide ownership of shares of stock by a stockholder in his own right suffices to invest him with
the standing to bring a derivative suit for the benefit of the corporation. The number of his shares is
immaterial since he is not suing in his own behalf, or for the protection or vindication of his own particular
right, or the redress of a wrong committed against him individually but in behalf and for the benefit of the
corporation. Thus, de los Angeles has the personality to file an action with the SEC in this case.