San Miguel Corporation vs Khan

San Miguel Corporation vs. Khan G.R. No. 85339; August 11, 1989 FACTS: Fourteen corporations initially acquired shares of outstanding capital stock of SMC and constituted a Voting Trust thereon in favor of Andres Soriano, Jr. When the latter died Eduardo Cojuanco was elected as the substitute trustee. However, after the EDSA revolution, Cojuanco fled out of the country, and subsequently an agreement was entered into between the 14 corporations and Andres Soriano III (as an agent of several persons) for the purchase of the shares held by the former. Actually the buyer of the shares was Neptunia Corporation, a foreign corporation and wholly-owned subsidiary of another subsidiary wholly owned by SMC. Neptunia paid the downpayment from the proceeds of certain loans. PCGG then sequestered the shares subject of the sale so SMC suspended all the other installments of the price to the sellers. The 14 corporations then sued for rescission and damages. Meanwhile, PCGG directed SMC to issue qualifying shares to seven (7) individuals including Eduardo de los Angeles from the sequestered shares for them to hold in trust. Then, the SMC’s board of directors passed a resolution assuming the loans incurred by Neptunia for the downpayment. De los Angeles assailed the resolution alleging that it was not passed by the board aside from its deleterious effects on the corporation’s interest. When his efforts to obtain relief within the corporation proved futile, he filed this action with the SEC. Respondent directors alleged that de los Angeles has no legal standing having been merely “imposed” by the PCGG and that the twenty (20) shares owned by him personally cannot fairly and adequately represent the interest of the minority. ISSUE: HELD:

WON de los Angeles have the legal standing to sue. (Derivative suit)

YES. The bona fide ownership 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. 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.