Perez, a stockhoider of the repubiic bank, instituted a derivative suit for and in behaif of said Bank, against Cuaderno, Dizon, the BoD of the Bank, and the Monetary Board of the Centrai Bank of the phiippines. The Compiaint expressiy pieaded the foiiowing: 6. That the reaitor herein fiied the present derivative suit without any further demand on the BoD of the
Perez, a stockhoider of the repubiic bank, instituted a derivative suit for and in behaif of said Bank, against Cuaderno, Dizon, the BoD of the Bank, and the Monetary Board of the Centrai Bank of the phiippines. The Compiaint expressiy pieaded the foiiowing: 6. That the reaitor herein fiied the present derivative suit without any further demand on the BoD of the
Perez, a stockhoider of the repubiic bank, instituted a derivative suit for and in behaif of said Bank, against Cuaderno, Dizon, the BoD of the Bank, and the Monetary Board of the Centrai Bank of the phiippines. The Compiaint expressiy pieaded the foiiowing: 6. That the reaitor herein fiied the present derivative suit without any further demand on the BoD of the
wthout the permsson of the author. CORP OUIMSON UNDERGROUND CASE DIGESTS REPUBLIC BANK V. CUADERNO G.R. # L-22399 FACTS Perez, a stockhoder of the Repubc Bank (Bank), nsttuted a dervatve sut for and n behaf of sad Bank, aganst Cuaderno, Dzon, the BoD of the Bank, and the Monetary Board of the Centra Bank of the Phppnes. The Compant expressy peaded the foowng: 6. That the reator heren fed the present dervatve sut wthout any further demand on the BoD of the Bank for the reason that such forma demand to nsttute the present compant woud be a fute formaty snce the members of the board are personay chosen by defendant Roman hmsef. For a cause of acton pantff aeged that Perez had companed to the Monetary Board of the Centra Bank aganst certan frauds aegedy commtted by defendant Roman (charman of the BoD of the Bank), and of ts Executve Loan Commttee. o Roman had frauduenty granted or caused to be granted oans amountng to amost P4M to fcttous persons and to ther cose frends, reatves and/or empoyees, who were n reaty ther dummes, on the bass of fcttous and nfated apprased vaues of rea estate propertes; o Actng upon the compant, then Centra Bank Governor Cuaderno and the Monetary Board ordered an nvestgaton, they reported that certan mortgage oans amountng to P2.3M were granted n voaton of sectons 77, 78 and 88 of the Genera Bankng Act; o Actng on sad reports, the Monetary Board, ordered a new BoD of the Bank to be eected, whch was done, and subsequenty approved by the Monetary Board; o On |anuary 5, 1960, the Monetary Board accepted Romans offer to put up adequate securty for the questoned oans made by the Bank, and such securty was made a condton for the resumpton of the Bank's norma operatons; o Subsequenty, the Centra Bank through ts Governor, Cuaderno, referred to the DO| speca prosecutors the bankng frauds and voatons of the Bankng Act, for nvestgaton and prosecuton, but no nformaton was fed t Cuadernos retrement n 1961; o Other smar frauds were dscovered, and to neutraze the mpendng acton aganst hm, Roman engaged Cuaderno as technca consutant at a compensaton of P12.5K/mo. , and seected Dzon as charman of the BoD of the Bank; o The BoD seected and chosen by Roman, connved and confederated n approvng the appontment and seecton of Cuaderno and Dzon, ths was motvated by bad fath and wthout ntenton to protect the nterest of the Repubc Bank but were prompted to protect Roman from crmna prosecuton; o Cuadernos appontment and acceptance of the poston of technca consutant are mmora, anomaous and ega, and hs compensaton hghy unconsconabe, because court actons nvovng the actuatons of Cuaderno as Governor and Member or Charman of the Monetary Board are st pendng n court o Dzon exercsed supervson over the Bank; hs appontment as charman of the Board of the Bank after he was forced to resgn from the presdency of the PNB and from membershp of the Monetary Board and wthn one year thereafter s n voaton of the Ant-Graft and Corrupt Practces Act; o Both Cuaderno and Dzon were alter egos of Roman; The compant prayed for a wrt of premnary n|uncton aganst the Monetary Board to prevent o ts confrmaton of the appontments of Dzon and Cuaderno; o the BoD of the Bank from recognzng Cuaderno as technca consutant and Dzon as Charman of the Board; and o Roman from appontng or seectng offcers or drectors of the Bank, and aganst the recognton of any such appontees unt fna determnaton of the acton. The Monetary Board fed ts answer wth denas, admssons and affrmatve defenses; but the other defendants fed separate motons to dsmss The court dened the petton for a wrt of premnary n|uncton and dsmssed the case. It suggested that the matter at ssue n the case may be presented n any of the pendng 8cases by means of amended and suppementa peadngs. Pantff Perez thereupon appeaed to ths Court. ISSUE 1. W/N the Court beow erred n dsmssng the compant? YES 2. W/N the corporaton tsef must be made party defendant? YES HELD Page 1 of 2 | ALBERTO ANBOCHI ATILLO AVILA CHUA GUERRERO DELA ROSA MIRANDA REVOTE REYES SALVADOR SUAREZ SULIT TAYAG Ths dgest may not be reproduced and dstrbuted wthout the permsson of the author. CORP OUIMSON UNDERGROUND CASE DIGESTS 1. Phppne |ursprudence s setted that an individa! "#$%&'$!d() i" *()+i##(d #$ in"#i##( a d()iva#iv( $) )(*)("(n#a#iv( "i# $n ,('a!- $- #'( %$)*$)a#i$n .'()(in '( '$!d" "#$%& in $)d() #$ *)$#(%# $) vindi%a#( %$)*$)a#( )i/'#"0 .'(n(v() #'( $--i%ia!" $- #'( %$)*$)a#i$n )(-"( #$ "(0 $) a)( #'( $n(" #$ ,( "(d $) '$!d #'( %$n#)$! $- #'( %$)*$)a#i$n. In such actons, #'( "in/ "#$%&'$!d() i" )(/a)d(d a" a n$+ina! *a)#10 .i#' #'( %$)*$)a#i$n a" #'( )(a! *a)#1 in in#()("# Perezs acton here s precsey n conformty, wth these prncpes. He s nether aegng nor vndcatng hs own ndvdua nterest or pre|udce, but the nterest of the Repubc Bank and the damage caused to t. The acton he has brought s a dervatve one, expressy manfested to be for and n behaf of the Repubc Bank, because t was fute to demand acton by the corporaton, snce ts Drectors were nomnees and creatures of defendant Roman. The frauds charged by pantff are frauds aganst the Bank that redounded to ts pre|udce. The compant expressy peads that the appontment of Cuaderno and of Dzon, were made ony to shed Roman from crmna prosecuton and not to further the nterests of the Bank, and avers that both men are Roman's alter egos. There s no denyng that the facts thus peaded n the compant consttute a cause of acton for the bank: i- #'( 2("#i$n(d a**$in#+(n#" .()( +ad( "$!(!1 #$ *)$#(%# R$+an -)$+ %)i+ina! *)$"(%#i$n0 ,1 a B$a)d %$+*$"(d ,1 R$+an3" %)(a#)(" and n$+in(("0 #'(n #'( +$n(1" di",)"(d in -av$) $- Cad()n$ and Di4$n .$!d ,( an n!a.-! .a"#a/( $) div()"i$n $- %$)*$)a#( -nd"0 "in%( #'( Ban& .$!d 'av( n$ in#()("# in "'i(!din/ R$+an. The drectors n approvng the appontments woud be commttng a breach of trust therefore the Bank coud sue to nufy the appontments, en|on dsbursement of ts funds to pay them, and recover those pad out for the purpose, as prayed for n the compant n ths case. Defendants urge that the acton s mproper because the pantff was not authorzed by the corporaton to brng sut n ts behaf. An1 "%' a#'$)i#1 %$!d n$# ,( (5*(%#(d a" #'( "i# i" ai+(d #$ n!!i-1 #'( a%#i$n #a&(n ,1 #'( +ana/() and #'( B$D $- #'( Ban&6 and an1 d(+and -$) in#)a-%$)*$)a#( )(+(d1 .$!d ,( -#i!(0 a" (5*)(""!1 *!(ad(d in #'( %$+*!ain#. T'("( %i)%+"#an%(" *()+i# a "#$%&'$!d() #$ ,)in/ a d()iva#iv( "i# . That no other stockhoder has chosen to make common cause wth pantff Perez s rreevant, snce #'( "+a!!n("" $- *!ain#i--3" '$!din/" i" n$ /)$nd -$) d(n1in/ 'i+ )(!i(-. At any rate, t s yet too eary n the proceedngs for the absence of other stockhoders to be of any sgnfcance, no ssues havng even been |oned. 2. The Engsh practce s to make the corporaton a party pantff, whe n the Unted States, eans n favor of ts beng |oned as party defendant. Ob|ectons can be rased aganst ether method. A,"(n%( $- %$)*$)a#( a#'$)i#1 .$!d "((+ #$ +i!i#a#( a/ain"# +a&in/ #'( %$)*$)a#i$n a *a)#1 *!ain#i--0 .'i!( 7$inin/ i# a" d(-(ndan# *!a%(" #'( (n#i#1 in #'( a.&.a)d *$"i#i$n $- )("i"#in/ an a%#i$n in"#i##(d -$) i#" ,(n(-i#. 8'a# i" i+*$)#an# i" #'a# #'( %$)*$)a#i$n3 "'$!d ,( +ad( a *a)#10 in $)d() #$ +a&( #'( C$)#3" 7d/+(n# ,indin/ *$n i#0 and #'" ,a) -#)( )(!i#i/a#i$n $- #'( i""(". On what sde the corporaton appears oses mportance when t s consdered that t ay wthn the power of the tra court to drect the makng of such amendments of the peadngs, by addng or droppng partes, as may be requred n the nterest of |ustce (Revsed Rue 3, sec. 11). 9i"7$ind() $- *a)#i(" i" n$# a /)$nd #$ di"+i"" an a%#i$n. Page 2 of 2 | ALBERTO ANBOCHI ATILLO AVILA CHUA GUERRERO DELA ROSA MIRANDA REVOTE REYES SALVADOR SUAREZ SULIT TAYAG