CASE OF CUA

8/20/2019 CASE OF CUA

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G.R. No. 181455-56 December 4, 2009

SANTIAGO CUA, JR., SOLOON S. CUA !"# $%$&UI$L D. RO'L$S, (" )*e(r c!+!c() ! D(rec)or o/ILI//IN$ RACING CLU', INC., Petitioners,vs.IGU$L OCA/O TAN, J$I$ U. TAN !"# ATT. 'RIGIDO J. DULA, Respondents.

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G.R. No. 182008

SANTIAGO CUA, SR., (" *( c!+!c() ! D(rec)or o /ILI//IN$ RACING CLU', INC., Petitioner,vs.COURT O A//$ALS, IGU$L OCA/O TAN, J$I$ U. TAN, ATT. 'RIGIDO J. DULA, !"# ON. C$SARUNTALAN, /re(#("3 J#3e, !!)( Re3(o"! Tr(! Cor), 'r. 149, Respondents.

D E C I S I O N

CICO-NA7ARIO, J.:

Before this Court are two Petitions: !" a Petition for Review on Certiorari ! under Ru#e $% of the Ru#es of Court fi#ed&' petitioners Santia(o Cua, )r. Santia(o )r.", So#o*on S. Cua So#o*on", and Exe+uie# D. Ro&#es Ro&#es", intheir apait' as diretors of the Phi#ippine Rain( C#u&, In. PRCI", with i(ue# Oa*po an i(ue#", )e*ie /.an )e*ie" and 0tt'. Bri(ido ). Du#a' Du#a'" as respondents, do1eted as 2.R. No. !3!$%%-%45 and 6" a Petitionfor Certiorari and Prohi&ition6 under Ru#e 4% of the Ru#es of Court fi#ed &' petitioner Santia(o Cua, Sr. Santia(oSr.", a#so in his apait' as PRCI diretor, #i1ewise na*in( i(ue#, )e*ie, and Du#a' as respondents, to(ether withthe Court of 0ppea#s and Presidin( )ud(e Cesar /nta#an )ud(e /nta#an" of the Re(iona# ria# Court RC", Branh!$7 of a1ati Cit', do1eted as 2.R. No. !36883.

Both Petitions assai# the Deision9 dated 4 Septe*&er 688 and Reso#ution$ dated 66 )anuar' 6883 of the Court of 0ppea#s in the onso#idated ases C0-2.R. SP No. 7747 and No. 7738. In its 4 Septe*&er 688 Deision, theCourt of 0ppea#s dis*issed for #a1 of *erit, *ootness, and pre*aturit', the Petition for Certiorari of petitioners

Santia(o )r., So#o*on, and Ro&#es Santia(o )r., et a#."5 and the Petition for Certiorari and Prohi&ition of petitionerSantia(o Sr., whih sou(ht the nu##ifiation of the Reso#ution% dated !4 )u#' 688 of the RC in Civi# Case No. 8-4!8 (rantin( the e*porar' Restrainin( Order RO" pra'ed for &' respondents i(ue#, )e*ie, and Du#a' i(ue#,et a#.". In its 66 )anuar' 6883 Reso#ution, the appe##ate ourt denied the otions for Reonsideration of petitionersand the otion to 0d*it Supp#e*enta# Petition for Certiorari of petitioner Santia(o )r, et a#. he sa*e Reso#ution didnot onsider the Supp#e*enta# Petition for Certiorari and Prohi&ition fi#ed &' petitioner Santia(o Sr. for the #atter;sfai#ure to see1 #eave of ourt for its fi#in( and ad*ittane. Petitioners wou#d have wanted to ha##en(e in theirSupp#e*enta# Petitions the Reso#ution4 dated 3 Oto&er 688 of the RC in Civi# Case No. 8-4!8 (rantin( theissuane of a <per*anent in=untion< a(ainst petitioners and the other PRCI diretors unti# the said ase wasreso#ved.

I

>0C/0? 0ND PROCED/R0? 0NECEDENS

PRCI is a orporation or(ani@ed and esta&#ished under Phi#ippine #aws to: !" arr' on the &usiness of a rae oursein a## its &ranhes and, in partiu#ar, to ondut horse raes or raes of an' 1ind, to aept &ets on the resu#ts of theraes, and to onstrut (rand or other stands, &ooths, sta&#in(s, paddo1s, #u&houses, refresh*ent roo*s andother eretions, &ui#din(s, and onvenienes, and to ondut, ho#d and pro*ote rae *eetin(s and other shows andexhi&itions5 and 6" pro*ote the &reedin( of &etter horses in the Phi#ippines, #end a## possi&#e aid in the deve#op*entof sports, and upho#d the prinip#es of (ood sports*anship and fair p#a'. o pursue its avowed purposes, PRCIho#ds a franhise (ranted under Repu&#i 0t No. 4496, as a*ended &' Repu&#i 0t No. 7%9, to operate a horseraetra1 and *ana(e &ettin( stations. /nder its franhise, PRCI *a' operate on#' one raetra1.

In !777, the 0rti#es of Inorporation of PRCI was a*ended to in#ude a seondar' purpose, vi@:

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o a+uire rea# properties andAor deve#op rea# properties into *ix-use rea#t' pro=ets in#udin( &ut not #i*ited to#eisure, rereationa# and *e*oria# par1s and to own, operate, *ana(e andAor se## these rea# estate pro=ets.3

PRCI is pu&#i#' #isted with the Phi#ippine Sto1 Exhan(e PSE". In 6884, PRCI had an authori@ed apita# sto1ofP!,888,888,888.88 divided into !,888,888,888 shares, with a par va#ue of P!.88 eah5 of whih a tota#ofP%47,3%,$7.88, representin( %47,3%,$7 shares, had &een su&sri&ed and paid up.7

PRCI owns on#' two rea# properties, eah overed &' severa# transfer ertifiates of tit#e. One is 1nown as the Sta. 0na Raetra1, #oated a#on( 0. P. Re'es 0venue, a1ati Cit' a1ati propert'", *easurin( around 6!.6 hetares5

and the other is #oated in the towns of Nai and an@a in the provine of Cavite Cavite propert'".

>o##owin( the trend in the deve#op*ent of properties in the sa*e area,!8 PRCI wished to onvert its a1ati propert'fro* a raetra1 to ur&an residentia# and o**eria# use. 2iven the #oation and si@e of its a1ati propert', PRCI&e#ieved that said propert' was severe#' under-uti#i@ed. ene, PRCI *ana(e*ent deided to transfer its raetra1fro* a1ati to Cavite. PRCI &e(an deve#opin( its Cavite propert' as a raetra1, shedu#ed to &e o*p#eted &'

0pri# 6883.

Now as to its a1ati propert', PRCI *ana(e*ent deided that it was &est to spin off the *ana(e*ent anddeve#op*ent of the sa*e to a who##' owned su&sidiar', so that PRCI ou#d ontinue to fous its efforts on pursuin(its ore &usiness o*petene of horse rain(. Instead of or(ani@in( and esta&#ishin( a new orporation for the saidpurpose, PRCI *ana(e*ent opted to a+uire another do*esti orporation, ) Davies o#din(s, In. )".!!

) was then owned &' )ardine atheson Europe B.. )E".!6 It had an authori@ed apita# sto1ofP6%,888,888.88, divided into %8,888,888 o**on shares with a par va#ue of P8.%8 eah. ) was pu&#i#' #istedwith the PSE. Its tan(i&#e assets su&stantia##' onsisted of ash. o deter*ine the va#ue of ), PRCI en(a(ed theservies of the aountin( fir* S'ip 2orres e#a'o Co. S2" to ondut a due di#i(ene stud'.!9

/sin( the resu#ts of the S2 stud', PRCI *ana(e*ent deter*ined that PRCI ou#d initia##' a+uire $!,763,678shares, or 7%.%% of the outstandin( apita# sto1 of ), for the prie of P!8.! per share, or for a tota#ofP$$7,6%8,888.885 in this ase, PRCI wou#d &e pa'in( a pre*iu* of P$6,$!8,$%8.88 for the said ) shares,o*puted as fo##ows:

ota# prie for a## of the issued and su&sri&ed )

shares at P!8.!Ashare" P $8,$!3,3$3.88

?ess: /naudited net worth of ) pure#' ash" - $64,8!8,888.88

ota# pre*iu* for !88 of ) $$,$83,3$3.88

u#tip#': Interest in ) to &e initia##' a+uired &'

PRCI 7%.%" x 8.7%%

Pre*iu* for the 7%.% interest in ) to &e a+uired

&' PRCI P $6,$!8,$%8.88















he PRCI Board of Diretors he#d a *eetin( on 64 Septe*&er 6884. 0*on( the diretors present were petitionersSantia(o Sr., Santia(o )r., and So#o*on, as we## as respondent Du#a'. 0fter disussin( and de#i&eratin( on the*atter of the a+uisition of ) &' PRCI, a## the diretors present, exept respondent Du#a', voted affir*ative#' topass and approve the fo##owin( reso#utions:

!. De#aration of Intention to 0+uire and Purhase Shares of Sto1 of 0nother Co*pan' -

RESO?ED, as it is here&' reso#ved, that the Corporation intends to a+uire up to one hundredperent !88" of the o**on shares of sto1 of ) Davies o#din(s, In. &' wa' of ne(otiatedsa#e5

RESO?ED >/RER, hat ana(e*ent and the Corporate Seretar' sha## prepare and su&*itthe ender Offer, as we## as, to fi#e a## the neessar' dis#osures and noties in o*p#iane with theSeurities Re(u#ation Code, its i*p#e*entin( ru#es, and other prevai#in( re(u#ations5

RESO?ED >/RERORE, hat the Corporation authori@es its President, r. So#o*on S. Cua,to si(n and exeute an' purhase a(ree*ents, *e*oranda, and suh other deeds, and to de#iveran' dou*ents and papers, perfor* an' ats, neessar' and inidenta# to i*p#e*ent the fore(oin(,as we## as to soure the funds to i*p#e*ent the sa*e.

6. Speia# Sto1ho#ders; eetin( -

RESO?ED, hat a Speia# Sto1ho#ders; eetin( of PRCI sha## &e he#d on Oto&er 64, 6884 at!8:88 0.., or at suh #ater date as *a' &e pratia&#e under the iru*stanes, in the prinipa#p#ae of &usiness of PRCI at Santa 0na Par1, 0.P. Re'es 0venue, a1ati Cit'5

RESO?ED >/RER, hat on#' those sto1ho#ders of reord as of end of &usiness da' of Oto&er!!, 6884 sha## &e entit#ed to notie, to vote andAor to &e voted upon, in aordane with the #aws,re(u#ations and &'-#aws of PRCI5

RESO?ED >/RERORE, hat the Corporate Seretar' sha## &e authori@ed to issue there+uired noties, set the ti*e for the su&*ission of, and to reeive and va#idate proxies, as we## as,to order pu&#iation of noties and underta1e suh appropriate and neessar' steps, in#udin( thefi#in( of the re+uired dis#osures to the re(u#atin( a(enies, to effet the fore(oin(.

9. 0uthori@ed 0ttorne'-In->at and Prox' -

In the event of a suessfu# a+uisition of the shares of ) Davies o#din(s, In., the Board passed andapproved the fo##owin( reso#utions:

RESO?ED, that the Corporation sha## here&' authori@e S0NI02O C/0, or in his a&sene,EFEG/IE? ROB?ES, or in his a&sene, SO?OON S. C/0, or in his a&sene, S0NI02O C/0,)R., or in his a&sene, D0/H S/RIN /P0HOON, or in his a&sene, ?aurene ?i* Swee ?i*, or inhis a&sene, ?I EON2 ?EON2, to at as its attorne'-in-fatAprox' and to vote a## shares as *a'&e re(istered in the na*e of the CorporationA#od(ed with the PCD S'ste*, and to exerise a## ri(htsappurtenant thereto durin( the 0nnua# Sto1ho#ders; eetin(As and a## re(u#arAspeia# *eetin(As of) D0IES O?DIN2S, INC. for*er#' )0RDINE D0IES, INC."5

RESO?ED >/RER, hat these Diretors, in the said order of priorit', sha## have fu## power andauthorit' and disretion to no*inate, appoint, andAor vote into offie suh diretors andAor offiersdurin( the said 0nnua# Sto1ho#ders; eetin(As and re(u#arAspeia# *eetin(As of ) O?DIN2S,INC. for*er#' )0RDINE D0IES, INC."5



RESO?ED >IN0??, hat these Diretors &e, as the' are here&' (ranted fu## power and authorit'whatsoever re+uisite or neessar' or proper to &e done in these *atters.!$

he next da', 6 Septe*&er 6884, PRCI entered into a Sa#e and Purhase 0(ree*ent for the a+uisition fro* )Eof $!,763,678 o**on shares or 7%.%% of the outstandin( apita# sto1 of ). 0*on( the prinipa# ter*s of theSa#e and Purhase 0(ree*ent were:

a" he onsideration for the a+uisition was P!8.! per share or P$$7,6%8,888.885

&" /pon the si(nin( of the J0K(ree*ent, the JPRCIK sha## pa' P68 i##ion to an Esrow 0(ent as deposit5and

" he sa#e and purhase transation onte*p#ated in the 0(ree*ent sha## &e onsu**ated at a #osin(not #ater than Nove*&er 98, 6884 or the %8th da' fro* the start of the ) Offer or suh date whih sha## inno ase &e #ater than Dee*&er !!, 6884.!%

PRCI a#so *ade a tender offer for the re*ainin( $.$% or !,7%$,339 issued and outstandin( o**on shares of) at P!8.! eah.

In the Speia# Sto1ho#ders; eetin( he#d on Nove*&er 6884, attended &' sto1ho#ders with $3!,8$%,33 sharesor 3$.$6 of the outstandin( apita# sto1 of PRCI, the a+uisition &' PRCI of ) was presented for approva#. he

events durin( said *eetin( were du#' reorded in the inutes, to wit:

. 0PPRO0? O> E 0CG/ISIION O> E S0RES O> SOCH O> ) D0IES O?DIN2S, INC.

hereafter, the Corporate Seretar' infor*ed that the President wi## present to the sto1ho#ders the rationa#e for thea+uisition of the shares of ) Davies o#din(s, In.

0ordin( to the President PRCI is intendin( to a+uire up to !88 of the shares of ) Davies o#din(s, In.another #isted o*pan' in the PSE. >or referene, the President infor*ed that the #atest 0nnua# Report of ) has&een appended to the Infor*ation State*ent for (uidane. 0#so opies of the Board;s reso#ution presented forapprova# and ratifiation &' the sto1ho#ders has &een posted in the roo* for onvenient readin( of thesto1ho#ders.

he President exp#ained that ) is one of the o#dest ho#din(s o*pan' and the na*e ) Davies is aninternationa##' a#ai*ed na*e with a reputation for so#id and sound finania# standin(. Lith PRCI;s a+uisition of), it (ives PRCI the neessar' vehi#e within whih to en#ar(e and &roaden the &usiness and operationa#a#ternatives or options of our o*pan'. PRCI &e#ieves that this ) wi## o*p#e*ent the diretion of PRCI in fasttra1in( the deve#op*ent of PRCI;s p#ans and provide it invest*ent opportunities. It is for this reason that we a##this speia# *eetin( so 'ou *a' 1now soonest the present opportunit' faed &' PRCI without need for 'ou to waitunti# next 'ear;s annua# *eetin(.

he ie-Chair*an then infor*ed that the reso#ution approvin( the purhase of ) Davies o#din(s, In. aspresented in the Infor*ation State*ent whih were furnished to the sto1ho#ders is presented for approva# to the&od'. 0 sto1ho#der thereafter *oved that the the si" reso#ution &e approved whih was du#' seonded &' another

sto1ho#der. he ie-Chair*an de#ared the reso#ution approved. hereafter, 0tt'. Pa(unsan too1 the f#oor andinfor*ed that he is the prox' of various sto1ho#ders !8" and wou#d #i1e to *anifest his vote as <NO< whih theie-Chair*an du#' noted. Notwithstandin( the o&=etion of 0tt'. Pa(unsan, onsiderin( the *ore than 6A9 of theoutstandin( apita# sto1 of PRCI has approved and ratified the reso#ution, $" the Corporate Seretar' de#aredthe reso#ution as du#' approved and ratified.

hereafter, another sto1ho#der, r. N(o, as1ed the President what are the p#ans of PRCI on the assets of ). hePresident infor*ed that as of now, ) has no *ateria# hard assets other than its retained earnin(s. r. N(o as1eda(ain what wi## &e the diretion of PRCI on the su&stantia# retained earnin(s of ) to whih the President rep#iedthat there are severa# options &ein( onsidered one the purhase is o*p#ete one of whih is the de#aration ofash dividend.







0nother sto1ho#der too1 the f#oor and infor*ed the ana(e*ent that he is happ' with the transation of PRCI andthe purhase &' PRCI of the ) shares is a (ood dea# sine the va#ue of the (oodwi## of ) is su&stantia# &' hisesti*ate. e proeeded to than1 the President and shoo1 hands with hi*.!4

B' 66 Nove*&er 6884, PRCI was a&#e to additiona##' a+uire !,!48,!9 o**on shares of ) fro* the *inorit'sto1ho#ders of the #atter, (ivin( PRCI ownership of 73.!7 of the outstandin( apita# sto1 of ).

PRCI prepared onso#idated finania# state*ents for itse#f and for ) for the fisa# 'ear endin( 9! Dee*&er 6884.he finania# state*ents were audited &' the aountin( fir* Punon(&a'an 0rau##o whih (ave the fo##owin(

un+ua#ified opinion of the sa*e: <In our opinion, &ased on our audit and the report of other auditors, theonso#idated finania# state*ents present fair#', in a## *ateria# respets, the onso#idated finania# position of thePhi#ippine Rain( C#u&, In. and Su&sidiar' as of Dee*&er 9!, 6884, and their onso#idated finania# perfor*aneand their ash f#ows for the 'ear then ended in aordane with Phi#ippine >inania# Reportin( Standards.< heaudited finania# state*ents of PRCI and ) for 6884 were presented to the sto1ho#ders of PRCI and su&*ittedto the Seurities and Exhan(e Co**ission SEC", the Bureau of Interna# Revenue BIR", and the Phi#ippine Sto1Exhan(e PSE".

hereafter, PRCI a(ain en(a(ed the assistane of S2 in exeutin( its intended spin-off to ) of the *ana(e*entand deve#op*ent of PRCI;s a1ati propert'. It was then deter*ined that the a1ati propert', with a tota# @ona# va#ueof P9,3!,6$6,888.88, ou#d &e transferred to ) in exhan(e for the unissued portion of the #atter;s reent#'inrease authori@ed apita# sto1,! a*ountin( to P97,783,37$.%8, divided into 7%,3!,37 shares with a par va#ue

of P8.%8 per share. he differene of P9,$!7,999,!8%.%8 &etween the tota# @ona# va#ue of the a1ati propert' andthe a((re(ate par va#ue of the ) shares to &e issued in exhan(e for the sa*e, wou#d &e ref#eted as additiona#paid-in apita# of PRCI in ).

he *atter of the proposed exhan(e was ta1en up and approved &' the PRCI Board of Diretors in its *eetin(he#d on !! a' 688, a(ain with the #one dissent of respondent Du#a'. 0ordin( to the inutes of the said *eetin(,the fo##owin( ourred:

0. Exhan(e of the Corporation;s a1ati Propert' with Shares of ) Davies o#din(s, In.

President Cua reported on ertain essentia# *atters re(ardin( the Corporation;s a1ati Propert'. 0fter doin( so,President Cua proposed the exhan(e of this Propert' with shares of ) Davies o#din(s, In. e then presented

to the Board finania# fats and fi(ures heavi#' favorin( the transation.

0fter due disussion and de#i&eration, a## the Diretors present approved and passed the fo##owin( reso#ution, exeptDiretor Bri(ido Du#a' who re(istered a ne(ative vote:

RESO?ED, hat the Corporation here&' approves and authori@es the exhan(e of its a1ati propert' with sharesof ) Davies o#din(s, In.5

RESO?ED >/RER, hat, for this purpose, the Corporation here&' authori@es its Exeutive Co**ittee todeter*ine and approve the ter*s and onditions (overnin( the exhan(e as it sha## onsider for the &est interest ofthe Corporation su&=et to approva# &' the sto1ho#ders in o*p#iane with the Corporation Code5

RESO?ED >/RER, hat the Exeutive Co**ittee, &e, as it is here&' (ranted fu## power and authorit'whatsoever re+uisite or neessar' or proper to ao*p#ish these5

RESO?ED >IN0??, hat SO?OON C/0, President CEO, &e, as he is here&' authori@ed to ne(otiate with) Davies o#din(s, In. and to exeute, si(n, andAor de#iver an' and a## dou*ents overin( the exhan(e inaordane with the ter*s and onditions of the Exeutive Co**ittee.!3

Su&se+uent#', the 0nnua# Sto1ho#ders; eetin( of PRCI was shedu#ed on ! )u#' 688, the 0(enda for whih isreprodued &e#ow:

I. Ca## to Order5









II. Proof of Notie5

III. Certifiation of Guoru*5

I. 0pprova# of the inutes of the 0nnua# Sto1ho#ders; eetin( he#d #ast )une !7, 6884 and of the Speia#Sto1ho#ders; eetin( he#d #ast Nove*&er , 68845

. Report of the President5

I. 0pprova# of the 0udited >inania# State*ent for the 'ear ended Dee*&er 9!, 68845

II. 0pprova# and Ratifiation of the ats of the Board of Diretors, the Exeutive Co**ittee and theana(e*ent of the Corporation for the >isa# ear 68845

III. 0pprova# of the P#anned Exhan(e of PRCI;s a1ati propert' for shares of sto15

IF. 0pprova# of the 0*end*ents of the B'-?aws to onfor* with the anua# of Corporate 2overnane5

F. E#etion of the *e*&ers of the Board of Diretors5

FI. 0ppoint*ent of Independent Externa# 0uditors5

FII. Other atters5

FIII. 0d=ourn*ent.!7

he !! a' 688 Reso#ution of the PRCI Board of Diretors on the propert'-for-shares exhan(e &etween PRCIand ) was supposed to &e presented for approva# &' the sto1ho#ders under the afore-+uoted Ite*s No. II andNo. III of the 0(enda.

owever, on !8 )u#' 688, respondents i(ue#, et a#., as *inorit' sto1ho#ders of PRCI, with the fo##owin(shareho#din(s:

Sto1ho#der No. of Shares Perenta(e

i(ue# Oa*po-an !4,938,888 6.3

)e*ie /. an !%,76,68 6.38

0tt'. Bri(ido ). Du#a'68

! 8.88

ota# 96,9%6,6! %.4

fi#ed &efore the RC a Co*p#aint, deno*inated as a Derivative Suit with pra'er for Issuane of ROAPre#i*inar'In=untion, a(ainst the rest of the diretors of PRCI andAor ). he Co*p#aint was do1eted as Civi# Case No. 8-4!8.








he Co*p#aint was &ased on three auses of ation: !" the approva# &' the *a=orit' diretors of PRCI of the BoardReso#utions dated 64 Septe*&er 6884 and !! a' 688 -- with undue haste and de#i&erate speed, despite thea&sene of an' dis#osure and infor*ation -- was not on#' ano*a#ous and fraudu#ent, &ut a#so extre*e#' pre=udiia#and ini*ia# to interest of PRCI, o**itted in vio#ation of their fiduiar' dut' as diretors of the said orporation5 6"respondent So#o*on, as PRCI President, with the a+uiesene of the *a=orit' diretors of PRCI, *a#iious#'refused and resisted the re+uest of respondents i(ue#, et a#., for o*p#ete and ade+uate infor*ation re#ative to thedisputed Board Reso#utions, &ra@en#' and un#awfu##' vio#atin( the ri(hts of the *inorit' sto1ho#ders to infor*ationand to inspet orporate &oo1s and reords5 and 9" without &ein( offiia##' and for*a##' no*inated, the *a=orit'diretors of PRCI i##e(a##' and un#awfu##' onstituted the*se#ves as *e*&ers of the Board of Diretors andAor

Exeutive Offiers of ), renderin( a## the ations the' have ta1en as suh nu## and void a& initio. In the end,respondents i(ue#, et a#., pra'ed to the RC, after notie and hearin(, that:

!. 0 te*porar' restrainin( order andAor writ of pre#i*inar' in=untion &e issued restrainin( and en=oinin( theho#din( of the 0nnua# Sto1ho#ders; eetin( shedu#ed on ! )u#' 688 and restrainin( and en=oinin( thedefendants JPRCI diretorsK fro* enforin(, i*p#e*entin(, <rai#roadin(<, or ta1in( an' further ation inre#iane upon or in su&stitution or in furtherane of the Disputed Reso#utions, whih wou#d inf#it (rave andirrepara&#e in=ur' in fraud of the Corporation.

6. 0 reeiver andAor *ana(e*ent o**ittee &e onstituted and appointed to underta1e the *ana(e*entand operations of the Corporation and to ta1e over its assets to prevent its further #oss, wasta(e anddissipation.

9. o o*pe# the defendant a=orit' Diretors to render a o*p#ete and ade+uate dis#osure of a##dou*ents and infor*ation re#atin( to the su&=et *atter of the Disputed Reso#utions as we## as the&usiness and affairs of the Corporation and its who##'-owned su&sidiar' fro* the ti*e of the #atter;sa+uisition unti# fina# =ud(*ent.

$. 0fter tria# on the *erits, that =ud(*ent &e rendered in favor of the p#aintiffs and a(ainst the defendants, asfo##ows:

a" Per*anent#' en=oinin( and prohi&itin( defendants fro* enforin(, i*p#e*entin(, or ta1in( an'ation in re#iane upon the Disputed Reso#utions.

&" De#arin( the Disputed Reso#utions dated 64 Septe*&er 6884 and !! a' 688 and theapprova# &' the Exeutive Co**ittee of the exhan(e of the Corporation;s a1ati Propert' for )shares, as we## as an' and a## ations ta1en in re#iane upon or pursuant to or in furtherane of theDisputed Reso#utions andAor approva# of the Exeutive Co**ittee, as nu## and void a& initio.

" De#arin( the assu*ption &' defendant a=orit' Diretors as Diretors andAor offiers of ),in#udin( a## ats done &' defendant a=orit' Diretors as suh Diretors andAor offiers of ), asnu## and void a& initio.

d" Orderin( defendants to pa' p#aintiffs the su* of P%88,888.88, and &' wa' of attorne';s fees,p#usP!8,888.88 per ourt appearane, p#us osts of suit.

Other re#iefs =ust and e+uita&#e under the pre*ises are #i1ewise pra'ed for .6!

0fter ondutin( hearin(s on the pra'er for the issuane of a RO, RC )ud(e /nta#an issued a Reso#ution on !4)u#' 688, the dispositive portion of whih reads:

LERE>ORE, pre*ises onsidered, this ourt here&' partia##' (rants the pra'er of PRCI for the issuane ofe*porar' Restrainin( Order upon the herein defendants su&=et to the postin( of Php!88,888.88 &ond onondition that suh &ond sha## answer to an' da*a(e that the Defendants *a' sustain &' reason of this RO if theourt shou#d fina##' deide that the app#iants are not entit#ed thereto. his RO sha## &e effetive for LEN 68"D0S on#' fro* servie of the sa*e upon the Defendants after postin( of the &ond.






herefore, the Defendants, their a(ents, proxies and representatives are here&' en=oined, prohi&ited and for&iddento present to, disuss, *uh *ore to approve the sa*e, at the 688 0nnua# Sto1ho#ders; eetin( of PRCI to &ehe#d on )u#' !, 688 at 3:88 0.. at the IP Roo*, Santa 0na Par1, 0.P. Re'es 0ve., a1ati Cit', the fo##owin(

0(enda in#uded in the Notie of said sto1ho#ders; *eetin(:

!. 0(enda Ro*an No. I M 0pprova# of the inutes of the 0nnua# Sto1ho#ders; eetin( he#d #ast )une !7,6884 and the Speia# Sto1ho#ders; *eetin( he#d #ast Nove*&er , 6884.

6. 0(enda Ro*an No. II M 0pprova# and Ratifiation of the ats of the Board of Diretors, the Exeutive

Co**ittee and the ana(e*ent of the Corporation for the >isa# ear 6884.

9. 0(enda Ro*an No. III M 0pprova# of the P#anned Exhan(e of PRCI;s a1ati propert' for shares ofsto1.

hus, in order that these su&=et *atters and ite*s of the 0(enda of the aforesaid Sto1ho#ders; eetin( sha## not&e ta1en up, the herein Defendants, their a(ents, proxies and representatives, =oint#' and severa##', are here&'ordered to de#ete and re*ove fro* the 0(enda said three 9" a&ove stated ite*s of the 0(enda &efore the start andondut of the said sto1ho#ders; *eetin(. herefore, in ase herein Defendants, their a(ents, proxies andrepresentatives def' and diso&e' this *andate, the' have o**itted a#read' four $" distint onte*ptuous ats:de#ete, present, disuss and approve.

his Court appea#ed to the Corporate Seretar' as Offier of the Court, to p#ease *a1e sure that this *andate iso&e'ed and o&served &' the Defendants, their a(ents, proxies and representatives, &efore and durin( the ondutof said sto1ho#ders; *eetin(.

?et the hearin( of the *ain in=untion &e set on )u#' 69 and 6$, 688 and 0u(ust 6, 688, a## at two o;#o1 in theafternoon.66

he 0nnua# Sto1ho#ders; eetin( of PRCI shedu#ed the next da', ! )u#' 688, fai#ed to push throu(h for #a1 of+uoru*.

On !7 )u#' 688, petitioners Santia(o )r., et a#., as PRCI diretors fi#ed a Petition for Certiorari with the Court of 0ppea#s, do1eted as C0-2.R. SP No. 7747. On 68 )u#' 688, Santia(o Sr., a#so as PRCI diretor, fi#ed his own

Petition for Certiorari and Prohi&ition, do1eted as C0-2.R. SP No. 7738. Both Petitions assai#ed the RCReso#ution dated !4 )u#' 688, (rantin( the issuane of a RO, for &ein( rendered with (rave a&use of disretiona*ountin( to #a1 or exess of =urisdition. C0-2.R. SP No. 7747 and No. 7738 were su&se+uent#' onso#idated.

he Court of 0ppea#s pro*u#(ated its Deision on 4 Septe*&er 688 dis*issin( the Petitions in C0-2.R. SP No.7747 and No. 7738 for #a1 of *erit, *ootness, and pre*aturit'.

0ordin( to the Court of 0ppea#s, the RO issued &' the RC en=oined the presentation, disussion, and approva#of on#' three of the !9 ite*s on the 0(enda of the 688 0nnua# Sto1ho#ders; eetin(. here is no evidene that theRO issued &' the RC #e(a##' i*paired the ho#din( of the shedu#ed sto1ho#ders; *eetin(. Indeed, the #a1 of+uoru* durin( the said *eetin( was due to the a&sene of petitioners the*se#ves who o*prised the *a=orit'interest in PRCI. Conse+uent#', the appe##ate ourt found no (rave a&use of disretion in the issuane &' the RC of

the RO.

he Court of 0ppea#s a#so noted that the Petitions in C0-2.R. SP No. 7747 and No. 7738 as re(ards the issuaneof the RO a#read' &ea*e *oot when the 68-da' period of effetivit' of said restrainin( order expired on % 0u(ust688, even &efore the Petitions were su&*itted for reso#ution.

?ast#', the Court of 0ppea#s he#d that the issues raised &' petitioners were fatua# and evidentiar' in nature whih*ust &e threshed out &efore the RC as the desi(nated o**eria# ourt in a1ati. he appe##ate ourt wou#d notinterfere with the proeedin(s a +uo onsiderin( that Civi# Case No. 8-4!8 had not 'et (one to tria# and had not 'et&een reso#ved or ter*inated &' the RC. herefore, for &ein( pre*ature, the Court of 0ppea#s ou#d not prohi&it theontinuane of the RC proeedin(s in Civi# Case No. 8-4!8.





he Court of 0ppea#s ru#ed that there was no reason to dis*iss the Co*p#aint in Civi# Case No. 8-4!8. 0#thou(hthe Co*p#aint ontained *ere a##e(ations, whih had 'et to &e supported &' evidene, it was suffiient in for* andsu&stane, and the RC proper#' too1 o(ni@ane of the sa*e. he Court of 0ppea#s reasoned that:

Ru#e 3, Setion ! of the Interi* Ru#es of Proedure for Intra-Corporate Controversies Interi* Ru#es" provides:

<SECION !. Derivative ation. M 0 sto1ho#der or *e*&er *a' &rin( an ation in the na*e of a orporation orassoiation, as the ase *a' &e, provided, that:

!" e was a sto1ho#der or *e*&er at the ti*e the ats or transations su&=et of the ation ourred andat the ti*e the ation was fi#ed5

6" e exerted a## reasona&#e efforts, and a##e(es the sa*e with partiu#arit' in the o*p#aint, to exhaust a##re*edies avai#a&#e under the arti#es of inorporation, &'-#aws, #aws or ru#es (overnin( the orporation orpartnership to o&tain the re#ief he desires5

9" No appraisa# ri(hts are avai#a&#e for the at or ats o*p#ained of5 and

$" he suit is not a nuisane or harass*ent suit.

In ase of nuisane or harass*ent suit, the ourt sha## forthwith dis*iss the ase.<

0 readin( of the Co*p#aint revea#s that the sa*e suffiient#' a##e(es the fore(oin( re+uire*ents. Co*p#ainantsessentia##' a##e(e that the' are PRCI sto1ho#ders, that the' have opposed the issuane and approva# of the+uestioned reso#utions durin( the &oard sto1ho#ders; si" *eetin(s, that prior resort to intra-orporate re*ediesare futi#e, that neverthe#ess, the' have as1ed for opies of the pertinent dou*ents pertainin( to the +uestionedtransations whih the &oard has de#ined to furnish, that the' have instituted the derivative suit in the na*e of theorporation, that the' are +uestionin( the ats of the *a=orit' of the &oard of diretors &e#ievin( that the hereinpetitioners have o**itted a wron( a(ainst the orporation and see1in( a nu##ifiation of the +uestioned &oardreso#utions on the (round of wasta(e of the orporate assets.

hus, ontrar' to petitioners; aver*ent, the Co*p#aint does state a ause of ation.69

Petitioners in C0-2.R. SP No. 7747 and No. 7738 fi#ed their respetive otions for Reonsideration of thefore(oin( Deision of the Court of 0ppea#s.

In the *eanti*e, upon the expiration of the RO issued &' RC )ud(e /nta#an in Civi# Case No. 8-4!8, the 0nnua#Sto1ho#ders; eetin( of PRCI was a(ain shedu#ed on !8 Oto&er 688. owever, )ud(e /nta#an issued on 3Oto&er 688 a Reso#ution with the fo##owin( deree:

LERE>ORE, pre*ises onsidered, this ourt here&' 2R0NS the issuane of PER0NEN IN)/NCIONa(ainst the defendants unti# the instant ase is fina##' reso#ved, su&=et to the postin( &' p#aintiffs of a Php!88,888.88 &ond, on ondition that suh &ond sha## answer to an' da*a(e that the Defendants *a' sustain &'reason of this in=untion if the ourt shou#d fina##' deide that the app#iants are not entit#ed thereto. his in=untionsha## &e effetive fro* servie of the sa*e upon the Defendants after postin( of the &ond.

herefore, the Defendants, their a(ents, proxies and representatives are here&' en=oined, prohi&ited and for&iddento present to, disuss, *uh *ore to approve the sa*e, at an' sto1ho#ders; *eetin(, whatsoever 1ind and nature,of PRCI of the fo##owin( 0(enda:

!. 0pprova# of the inutes of the 0nnua# Sto1ho#ders; eetin( he#d #ast )une !7, 6884 and the Speia#Sto1ho#ders; *eetin( he#d #ast Nove*&er , 6884 of PRCI.

6. 0pprova# and Ratifiation of the ats of the Board of Diretors, the Exeutive Co**ittee and theana(e*ent of PRCI for the >isa# ear 6884, as far as the a+uisition of ) and the p#anned exhan(e ofPRCI;s a1ati propert' for shares of sto1 of ) are onerned.





9. 0pprova# of the P#anned Exhan(e of PRCI;s a1ati propert' for shares of sto1 of ).6$

0s a resu#t, the 0nnua# Sto1ho#ders; eetin( of PRCI proeeded as shedu#ed on !8 Oto&er 688 without ta1in(up the *atters overed &' the per*anent in=untion issued &' the RC.

Petitioners Santia(o )r., et a#. fi#ed in C0-2.R. SP No. 7747 their otion to 0d*it Supp#e*enta# Petition forCertiorari with the attahed Supp#e*enta# Petition for Certiorari56% and petitioner Santia(o Sr. fi#ed in C0-2.R. SPNo. 7738 a Supp#e*enta# Petition for Certiorari and Prohi&ition,64 to &e fo##owed short#' thereafter &' a otion to

0d*it Supp#e*enta# Petition".6 Petitioners intended to additiona##' assai# in their Supp#e*enta# Petitions the 3

Oto&er 688 Reso#ution of the RC (rantin( the issuane of the per*anent in=untion.

In its Reso#ution dated 66 )anuar' 6883, the Court of 0ppea#s denied the otions for Reonsideration of petitionersand the otion to 0d*it Supp#e*enta# Petition for Certiorari of petitioners Santia(o )r., et a#.

he Court of 0ppea#s found that petitioners; otions for Reonsideration *ere#' reiterated the issues andar(u*ents whih were raised in the Petitions andAor whih the appe##ate ourt a#read' disussed and passed upon.he Court of 0ppea#s reiterated its ru#in( that it was pre*ature to prohi&it the ontinuane of the proeedin(s in Civi#Case No. 8-4!8 &efore the RC5 and that the Co*p#aint therein suffiient#' stated a ause of ation.

he Court of 0ppea#s #i1ewise refused to ad*it petitioners; Supp#e*enta# Petitions for Certiorari. It noted thatSantia(o Sr. fi#ed his Supp#e*enta# Petition without as1in( for #eave to fi#e the sa*e. 0pparent#', the appe##ate ourt

disre(arded the otion to 0d*it Supp#e*enta# Petition" whih petitioner Santia(o fi#ed separate#' fro* and at a#ater date than his Supp#e*enta# Petition. In addition, the Court of 0ppea#s ad=ud(ed that the Supp#e*enta# Petitionswhih petitioners hoped to &e ad*itted invo#ved a su&=et *atter not overed in their ori(ina# Petitions. 0#thou(h theRO and the per*anent in=untion were &oth issued &' the RC in Civi# Case No. 8-4!8, the two issuanes wereindependent of eah other, and on#' the RO was the su&=et of the ori(ina# Petitions. ene, the Supp#e*enta#Petitions assai#in( the per*anent in=untion (ranted &' the RC ou#d not &e onsidered as *ere#' au(*entin( the*atters, issues, and auses of ation of the ori(ina# Petitions5 and shou#d &e ha##en(ed in a separate petition forertiorari.

>ai#in( to o&tain an' re#ief fro* the Court of 0ppea#s, petitioners turned to this Court.

Petitioners Santia(o )r., et a#., fi#ed a Petition for Review on Certiorari under Ru#e $% of the Ru#es of Court, do1eted

as 2.R. No. !3!$%%-%45 whi#e petitioner Santia(o Sr. fi#ed a Petition for Certiorari under Ru#e 4% of the Ru#es ofCourt, do1eted as 2.R. No. !36883. 0ordin( to petitioners, the appe##ate ourt o**itted reversi&#e errors of #awand (rave a&use of disretion in its Deision dated 4 Septe*&er 688 and Reso#ution dated 66 )anuar' 6883 in C0-2.R. SP No. 7747 and No. 7738.

Petitioners insisted that Civi# Case No. 8-4!8 pendin( &efore the RC did not onstitute a va#id derivative suit.Respondents i(ue#, et a#., fai#ed to a##e(e in their Co*p#aint that the' had no appraisa# ri(hts for the ats the' wereo*p#ainin( of. In fat, the ver' a##e(ations *ade &' respondents i(ue#, et a#. in their Co*p#aint supported theavai#a&i#it' of appraisa# ri(hts to the*. he Co*p#aint in Civi# Case No. 8-4!8 was nothin( *ore than a nuisane or harass*ent suit a(ainst petitioners and the other PRCI diretors.

Petitioners averred that, &' findin( no (rave a&use of disretion on the part of the RC in issuin( the RO a(ainstpetitioners and the other PRCI diretors, the Court of 0ppea#s su&stituted its own =ud(*ent for that of the PRCIBoard of Diretors, ar&itrari#' and apriious#' disre(ardin( the &usiness =ud(*ent *ade &' the said Board andapproved &' PRCI sto1ho#ders. he RO issued &' the RC was not for the &enefit of the PRCI sto1ho#ders.>urther*ore, the expiration of the 68-da' RO did not *a1e their Petitions for Certiorari in C0-2R SP No. 7747and No. 7738 *oot. Said Petitions in#uded the pra'er that the RC &e restrained fro* proeedin( with Civi# CaseNo. 8-4!8 in view of the fata##' defetive Co*p#aint, the (rant or denia# of whih the appe##ate ourt shou#d havesti## deter*ined despite the expiration of the RO.

Petitioners a#so ha##en(ed the refusa# &' the Court of 0ppea#s to ad*it their Supp#e*enta# Petitions in C0-2R SPNo. 7747 and No. 7738. he' asserted that the issues in their Supp#e*enta# Petitions were #ose#' intertwinedwith those in their ori(ina# Petitions.












he pra'er of petitioners Santia(o )r., et a#., in their Petition in 2.R. No. !3!$%%-%4 reads:

PR0ER

LERE>ORE, in view of the fore(oin( and in the interest of =ustie, it is *ost respetfu##' pra'ed of the onora&#eSupre*e Court that:

0. he Deision of the Court of 0ppea#s dated 84 Septe*&er 688 0nnex <I<" and the Reso#ution of theCourt of 0ppea#s dated 66 )anuar' 6883 0nnex <<" &e N/??I>IED, REERSED and SE 0SIDE forhavin( &een issued on the &asis of reversi&#e error of #aw and with (rave a&use of disretion a*ountin( to#a1 of =urisdition.

B. he Reso#utions of )ud(e Cesar /nta#an of a1ati Re(iona# ria# Court, Branh !$7 dated !4 )u#' 6880nnex <><" and 83 Oto&er 688 0nnex <2<" &e aordin(#' N/??I>IED, REERSED and SE 0SIDE forhavin( &een issued with (rave a&use of disretion a*ountin( to #a1 of =urisdition.

C. he o*p#aint of Respondents &e DISISSED outri(ht for #a1 of =urisdition and ause of ation.

D. Suh further re#iefs =ust and e+uita&#e under the iru*stanes &e 2R0NED.63

Petitioners Santia(o )r., et a#., su&se+uent#' fi#ed in 2.R. No. !3!$%%-%4 an /r(ent otion for Issuane of ae*porar' Restrainin( Order Status Guo 0nte" andAor Lrit of Pre#i*inar' In=untion, in whih the' additiona##'as1ed the Court that <a e*porar' Restrainin( Order Status Guo 0nte" andAor Lrit of Pre#i*inar' In=untion &ei**ediate#' issued restrainin( the i*p#e*entation si" )ud(e Cesar /nta#an;s Reso#utions dated !4 )u#' 688 and83 Oto&er 688 so as not to render inuti#e this ost onora&#e Court;s exerise of =urisdition over this ation andto prevent the deision on this ase fro* &ein( rendered ineffetua# and aade*i.<67

eanwhi#e, petitioner Santia(o Sr. sou(ht the fo##owin( re#iefs fro* this Court in his Petition in 2.R. No. !36883:

PR0ER

LERE>ORE, pre*ises onsidered, it is respetfu##' pra'ed that the petition &e (iven due ourse, and that:

!. /pon the fi#in( of this petition, a te*porar' restrainin( order andAor writ of pre#i*inar' in=untion &ei**ediate#' issued restrainin( and en=oinin( the enfore*ent or exeution of the assai#ed Court of 0ppea#s;Deision and Reso#ution, and the assai#ed tria# ourt;s reso#utions, partiu#ar#' that whih *andates theontinued enfore*ent of the Lrit of PER0NEN In=untion issued &' the tria#, whih prevents thesto1ho#ders of the orporation fro* atin( on *atters that have to &e su&*itted to the* for approva#andAratifiation at the re(u#ar annua# sto1ho#ders; *eetin(s.

6. hereafter, a writ of prohi&ition &e issued andAor the pre#i*inar' in=untion &e *ade per*anent andontinuin(, durin( the penden' of the instant ase &efore the onora&#e ourt.

9. 0fter due hearin(, that the onora&#e Court:

a" De#are nu## and void the onora&#e Court of 0ppea#s; 84 Septe*&er 688 Deision and 66)anuar' 6883 Reso#ution, in C0-2.R. SP No. 7738, as we## as the ria# Court;s !4 )u#' 688 and 3Oto&er 688 Reso#utions in Civi# Case No. 8-4!8 of the a1ati Re(iona# ria# Court, and

&" Order the dis*issa# of the Co*p#aint fi#ed &' the private respondents a(ainst petitioner, et a#.,do1eted as Civi# Case No. 8-4!8 of the RC of a1ati Cit'.

Other re#iefs =ust and e+uita&#e in the pre*ises are #i1ewise pra'ed for.98

In a Reso#ution dated 7 0pri# 6883 in 2.R. No. !36883, the Court (ranted petitioner Santia(o Sr.;s pra'er for theissuane of a RO, to wit:









0tin( on the pra'er for the issuane of a te*porar' restrainin( order andAor a writ of pre#i*inar' in=untion dated 6$arh 6883, the Court #i1ewise reso#ves to ISS/E a EPOR0R RESR0ININ2 ORDER en=oinin( respondentsfro* enforin( or exeutin( the assai#ed Court of 0ppea#s; deision and reso#ution and the assai#ed tria# ourt;sreso#utions partiu#ar#' that whih *andates the ontinued enfore*ent of the writ of per*anent in=untion issued &'the tria# ourt, unti# further orders fro* this Court, and to re+uire petitioner to POS a C0S BOND or a S/REBOND fro* a reputa&#e &ondin( o*pan' of indu&ita&#e so#ven' with ter*s and onditions aepta&#e to theCourt, in the a*ount of LO /NDRED O/S0ND PESOS P688,888.88", within five %" da's fro* notie,otherwise, the te*porar' restrainin( order herein issued sha## auto*atia##' &e #ifted. /n#ess and unti# the Courtdirets otherwise, the &ond sha## &e effetive fro* its approva# &' the Court unti# this ase is fina##' deided, reso#ved

or ter*inated.9!

0ordin(#', the Court issued the RO96 on even date, direted a(ainst the respondents of 2.R. No. !36883,na*e#', respondents i(ue#, et a#., and )ud(e /nta#an.

On 6! 0pri# 6883, respondents i(ue#, et a#. fi#ed with the Court their Co**ent with Pra'er for the I**ediate ?iftin(or Disso#ution of the e*porar' Restrainin( Order in 2.R. No. !36883.

Respondents i(ue#, et a#., ar(ued that the Petition for Certiorari in 2.R. No. !36883 was dis*issi&#e due to severa#proedura# errors. Petitioner So#o*on, who si(ned the Petition in 2.R. No. !36883 on &eha#f of Santia(o Sr., was(ui#t' of foru* shoppin( for fai#in( to infor* the Court of the Petition for Review in 2.R. No. !3!$%%-%4, of whih hewas one of the petitioners. Both Petitions invo#ved the sa*e transations, essentia# fats, and iru*stanes, as

we## as identia# auses of ation, su&=et *atter, and issues. he Petition for Certiorari in 2.R. No. !36883 was a#sonot persona##' verified &' petitioner Santia(o Sr. as re+uired &' ru#es and =urisprudene. oreover, the Petition forCertiorari was not a proper re*ed', sine it was on#' proper when there was no other p#ain, speed', and ade+uatere*ed' in the ordinar' ourse of #aw. Petitioner Cua hi*se#f ad*itted the avai#a&i#it' of other re*edies, exept thathe was <avoidin( the tortuous *anner offered &' other re*edies.< In fat, petitioners Santia(o )r., et a#., fi#ed aPetition for Review in 2.R. No. !3!$%%-%4. ?ast#', errors of =ud(*ent ou#d not &e re*edied &' a Petition forCertiorari. Petitioner Santia(o Sr.;s Petition in 2.R. No. !36883 raised issues that were fatua# and evidentiar' innature, on whih the RC has 'et to *a1e findin(.

On su&stantia# (rounds, respondents i(ue#, et a#., exp#ained that their Co*p#aint in Civi# Case No. 8-4!8 waso*prised of severa# auses of ation. It was not *ere#' a derivative suit, &ut was a#so an intra-orporate ationarisin( fro* devies or she*es e*p#o'ed &' the PRCI Board of Diretors a*ountin( to fraud or *isrepresentationand were detri*enta# to the interest of the PRCI sto1ho#ders. 0dditiona##', the fraudu#ent ats and &reah of

fiduiar' duties &' the PRCI diretors had a#read' &een esta&#ished &' pri*a faie fatua# evidene, whihwarranted the ontinuation of the proeedin(s in Civi# Case No. 8-4!8 &efore the RC for ad=udiation on the*erits. It was a#so esta&#ished that there were no appraisa# ri(hts avai#a&#e for the ats o*p#ained of, sine !" thePRCI diretors were &ein( har(ed with *is*ana(e*ent, *isrepresentation, fraud, and &reah of fiduiar' duties,whih were not su&=et to appraisa# ri(hts5 6" appraisa# ri(hts wou#d on#' o&tain for ats of the Board of Diretors in(ood faith5 and 9" appraisa# ri(hts *a' &e exerised &' a sto1ho#der who had voted a(ainst the proposedorporate ation, and no orporate ation had 'et &een ta1en herein &' PRCI sto1ho#ders, who sti## had not votedon the intended propert'-for-shares exhan(e &etween PRCI and ). >urther*ore, the Court of 0ppea#s orret#'denied ad*ission of the Supp#e*enta# Petitions in C0-2R SP No. 7747 and No. 7738. 0 new and independentause of ation ou#d not &e set &' supp#e*enta# o*p#aint. he issues raised in the ori(ina# Petitions pertain to the(rave a&use of disretion o**itted &' the RC in issuin( the RO and in ta1in( o(ni@ane of Civi# Case No. 8-4!8, &' settin( the sa*e for hearin( on the *ain in=untion5 in ontrast, the issues in the Supp#e*enta# Petitions

referred to the issuane of the Lrit of Pre#i*inar' In=untion.

In support of their pra'er for the i**ediate #iftin( or disso#ution of the RO issued &' this Court, respondentsi(ue#, et a#., ontended that:

I

he e*porar' Restrainin( Order issued &' this onora&#e Court has i*pe##ed herein petitioner and his o-*a=orit' diretors to shedu#e a sto1ho#ders; *eetin( with the view O RENDER OO 0ND 0C0DEICthe ation and proeedin(s &efore the Re(iona# ria# Court of a1ati, Branh !$7.

II







he Petitioner herein, havin( &een i*p#eaded as diretor and fiduiar' of PRCI, does NO stand to sufferan' irrepara&#e in=ur'.

III

o the ontrar', it is PRCI who stand to suffer (rave and irrepara&#e in=ur' if the RO is not #ifted andAordisso#ved.

I

he petitioner herein has fai#ed to esta&#ish an' #ear #e(a# ri(ht that entit#es hi* to the issuane of a ROandAor Lrit of pre#i*inar' in=untion.

he RO was i*proper#' issued as petitioner has fai#ed to show an' extre*e ur(en' to neessitate theissuane thereof.99

In the end, respondents i(ue#, et a#., pra'ed:

PR0ER

LERE>ORE, pre*ises onsidered, it is respetfu##' pra'ed of this onora&#e Supre*e Court that the e*porar'Restrainin( Order &e ?I>ED or DISSO?ED IEDI0E?, and that the instant Petition &e DISISSED.

Other =ust and e+uita&#e re#iefs are #i1ewise pra'ed for.9$

On#' two da's #ater, on 69 0pri# 6883, respondents i(ue#, et a#., a(ain ur(ent#' *oved9% for the #iftin( andAordisso#ution of the RO issued &' this Court. he' infor*ed the Court that the PRCI Board of Diretors passed andapproved on 66 0pri# 6883 a Reso#ution settin( the 0nnua# Sto1ho#ders; eetin( of PRCI on !3 )une 6883,in#udin( in the proposed 0(enda therefor the fo##owin( ite*s:

d" 0pprova# of the inutes of the Speia# Sto1ho#ders; eetin( he#d on Nove*&er 6884, and the inutes of the 0nnua# Sto1ho#ders; eetin( he#d on !8 Oto&er 6885

x x x x

(" 0pprova# and ratifiation of the ats of the Board of Diretors, the Exeutive Co**ittee, and ana(e*ent of theCorporation for >isa# ears 6884 and 6885

h" 0pprova# of the P#anned Exhan(e of PRCI;s a1ati Propert' for shares of sto1 of ) Davies o#din(s, In.94

On the sa*e da', 69 0pri# 6883, the Court issued a Reso#ution9 onso#idatin( 2.R. No. !3!$%%-%4 and No. !36883.

hereafter, on !4 )une 6883, 0ris Pri*e Resoures, In. 0PRI", a *inorit' sto1ho#der of PRCI M with %,888,888.88shares or 8.33 of the outstandin( apita# sto1 of PRCI M fi#ed a er' Respetfu# otion for ?eave to Intervene asCo-Respondent in the Petition with the attahed er' Respetfu# /r(ent otion to ?ift Restrainin( Order.93 It re#a'edto the Court that it reeived Notie of the 0nnua# Sto1ho#ders; eetin( of PRCI set on !3 )une 6883, where theite*s on the propert'-for-shares exhan(e &etween PRCI and ) were in#uded in the 0(enda.

Considerin( that the va#idit' of the ats of the PRCI Board of Diretors onernin( the propert'-for-shares exhan(eare the ver' issues raised in the Petitions present#' &efore the Court, whi#e the fatua# issues re#atin( to the sa*eare sti## &ein( #iti(ated &efore the RC in Civi# Case No. 8-4!8, the su&*ission of the exhan(e to the PRCIsto1ho#ders for their approva# wi## render the afore*entioned proeedin(s &efore this Court and the RC *oot andaade*i. It wi## a*ount to a denia# of the ri(ht of 0PRI and of respondents i(ue#, et a#., to &e heard &efore theRC where the' are sti## to present their evidene on the fatua# issues. It wi## #i1ewise undu#' pave the wa' for the
















va#idation of the a&use o**itted &' the *a=orit' diretors of PRCI in den'in( the ri(ht of the *inorit' diretors andsto1ho#ders of the orporation to infor*ation, and for the santion of the &#atant disre(ard &' the *a=orit' diretorsof their duties of fide#it' and transparen'. /n#ess the RO is #ifted forthwith, 0PRI, respondents i(ue#, et a#., anda## other *inorit' sto1ho#ders stand to suffer pre=udie. Expeted#', petitioners see1 the dis*issa#, whi#erespondents i(ue#, et a#., pra' for the (rant of the *otion to intervene of 0PRI.

Pendin( ation on the fore(oin( inidents, petitioners Santia(o )r., et a#., fi#ed &efore the Court a anifestation andotion to Set Case for Ora# 0r(u*ents.97

In their anifestation, petitioners Santia(o )r., et a#., ad*itted that the PRCI Board of Diretors had a#read' a##edand set the 0nnua# Sto1ho#ders; eetin( on !3 )une 6883, and a*on( the ite*s on the 0(enda for onfir*ationand approva# &' the sto1ho#ders was the propert'-for-shares exhan(e &etween PRCI and ).

Petitioners Santia(o )r., et a#., &rou(ht to the attention of the Court the fat that on % )une 6883, another set of*inorit' sto1ho#ders of PRCI, na*e#', )a#ane Christie /. an, ari#ou /. Pua, 0risteo 2. Pu'at, and Riardo S.Parreno )a#ane, et a#." fi#ed with the RC of a1ati a Co*p#aint a(ainst petitioners and the other diretors of PRCIandAor ), do1eted as Civi# Case No. 83-$%3. )a#ane, et a#., have the fo##owin( shareho#din(s in PRCI:

Sto1ho#der No. of Shares Perenta(e

)a#ane Christie /. an !4,76,%48 6.7

ari#ou /. Pua 9,33$,$88 8.43

0rtisteo 2. Pu'at !,499,444 8.67

Riardo S. Pareo %,3%8 8.88

ota# 66,$%!,$4 9.7$

)a#ane, et a#., #ai*ed in their Co*p#aint in Civi# Case No. 83-$%3 that <JaKpart fro* &ein( a derivative suit, this suit isa#so fi#ed &ased on devies or she*es e*p#o'ed &' the Board of Diretors a*ountin( to fraud or

*isrepresentation whih is detri*enta# to the interest of the orporation, the pu&#i andAor sto1ho#ders as providedfor under Setion !a"!" of the Interi* Ru#es of Proedure for Intra-Corporate Controversies 0.. No. 8!-6-8$-SC".<$8 he Co*p#aint was &ased on four auses of ation: !" the a+uisition of ) &' PRCI5 6" sa#e of 67.76 of) shares &' PRCI5$! 9" exhan(e of the a1ati propert' of PRCI for ) shares5 and $" inter#o1in( of Diretorsof PRCI and ). he Co*p#aint of )a#ane, et a#., ontained the fo##owin( pra'er:

PR0ER

LERE>ORE, it is respetfu##' pra'ed of this onora&#e Court, after due notie and hearin(, that:










Ite* I as we## as the rest of the ite*s to &e ta1en up sine the RO of the a1ati RC is defetive and shou#d notprevai# over the RO of the Supre*e Court.

0tt'. Santos added that the ase reent#' fi#ed &' the a&ove*entioned *inorit' shareho#ders is a dup#iate ofanother pendin( ase fi#ed &' other *inorit' shareho#ders a#so in the a1ati RC. It was pointed out that theshareho#ders in the reent ase are (ui#t' of foru* shoppin( sine the' pri*ari#' have the sa*e interests as thosewho had ear#ier fi#ed a suit a(ainst PRCI. 0tt'. Santos #arified that the pendin( ase is urrent#' the su&=et of aPetition to the Supre*e Court wherein the afore*entioned RO was issued. Lith this Co**ent, the CorporateSeretar' too1 note of the Petition fi#ed with the Supre*e Court and the RO issued &' the Supre*e Court.

x x x x

x x x Lith a## the fore(oin( o**ents, 0tt'. Santos *oved that the sto1ho#ders proeed with the *eetin( and thatthe ite* under 0(enda I &e approved, whih are the fo##owin(: the inutes of the 0nnua# Sto1ho#ders; eetin(he#d on )une !7, 6884, the inutes of the Speia# Sto1ho#ders; eetin( he#d on Nove*&er , 6884 and theinutes of the 0nnua# Sto1ho#ders; eetin( he#d on Oto&er !8, 688.

hereafter, 0tt'. 0#exander Carandan( as1ed to &e (iven per*ission to spea1. he Chair*an as1ed 0tt'.Carandan( his na*e and authorit' to spea1, to whih, he answered his na*e and said he was sto1ho#der of reordand a prox' of 0risteo Pu'at and )ose ?. Santos. 0fter 0tt'. Carandan( was reo(ni@ed, he stated that, ontrar' to

0tt'. Santos; ear#ier atuations, the reent o*p#aint fi#ed is different fro* the o*p#aint ear#ier fi#ed &' the Du#a'

(roup. e a#so *entioned that the ase whih Pu'at ear#ier fi#ed is different &eause it is a ase for inspetion andphotoop'in( of PRCI dou*ents. e thereafter warned a(ainst the ta1#in( of 0(enda Ite* No. $.

0tt'. Bri(ido Du#a', as a sto1ho#der and prox' to the an (roup i(ue# Oa*po an, )e*ie /. an, )/ o#din(s,In., )a#ane Christie /. an, et." #i1ewise too1 the f#oor to *anifest his ontinuin( o&=etion to the proeedin(s.

0tt'. 0*ado Pao#o Di*a'u(a a#so too1 the f#oor as a prox' to ari#ou Pua and *anifested that the o*p#ainants inthe reent ase fi#ed are not (ui#t' of foru* shoppin( and a#so *anifested his o&=etion to the ta1in( up of Ite* I inthe a(enda and the ontinuane of the proeedin(s in the sto1ho#ders; *eetin(. 0tt'. Pe#a(io Ria#de a#so too1 thef#oor as prox' for 0ries Pri*e Resoures, In. and a#so *anifested o&=etion to the proeedin(s. Both 0tt'.Di*a'u(a and 0tt'. Ria#de *anifested ontinuin( o&=etions.

0tt'. Di*a'u(a a#so *entioned that he reeived word that a otion to ?ift was =ust fi#ed &' the PRCI Diretorsre(ardin( the reent RO issued &' the a1ati RC. 0s a rep#', the Corporate Seretar' as1ed that the ounse# forthe PRCI diretors &e a##owed to exp#ain suh a##e(ations. 0tt'. 2ar&rie# G. Enri+ue@, the ounse# for PRCI DiretorsCua, Cua, )r., De i##a and Ro&#es infor*ed the sto1ho#ders of the wron( infor*ation &ein( (iven &' 0tt'.Di*a'u(a. he' had fi#ed a *anifestation &efore the Exeutive )ud(e of the RC whih issued the RO andinfor*ed hi* of the fats *entioned &' 0tt'. Santos. he Exeutive )ud(e said that toda';s *eetin( shou#d proeed&eause the p#aintiffs therein suppressed the existin( RO in the Supre*e Court, and the RO of the RC annotrise a&ove the Supre*e Court RO. here is therefore no #e(a# o&sta#e to ho#din( the 0nnua# Sto1ho#ders;eetin(, whih shou#d proeed so as not to pre=udie the sto1ho#ders.

he Corporate Seretar' stated that a## the o&=etions are du#' noted. here &ein( an ear#ier *otion for the approva#of the inutes, a sto1ho#der seonded said *otion. he *otion havin( &een du#' seonded, the Chair*ande#ared a## the *inutes for approva# as du#' approved.

x x x x

I. R0I>IC0ION O> E 0CS O> E BO0RD O> DIRECORS, E EFEC/IE COIEE 0ND E0N02EEN O> E CORPOR0ION >OR >ISC0? E0RS 6884 0ND 688

he Chair*an then proeeded &' statin( that the next ite* on the a(enda is the ratifiation &' the Sto1ho#ders ofthe ats of the Board of Diretors, the Exeutive Co**ittee, and the ana(e*ent durin( the #ast fisa# 'ears 6884and 688. he Chair*an then exp#ained that as to a## other *atters and ation affetin( the operations, finania#perfor*ane and strate(i posture of the Corporation, a## have &een su&su*ed and disussed in the 0nnua# Report



of the President and #i1ewise ref#eted in the Infor*ation State*ent sent to a## sto1ho#ders of reord and to theSEC.

One *ore, 0tt'. Du#a', 0tt'. Carandan(, 0tt'. Di*a'u(a and 0tt'. Ria#de a## too1 the f#oor suessive#' ando&=eted to this ite* in the a(enda and the Corporate Seretar' du#' noted these o&=etions.

0 sto1ho#der #ater *oved that a## the ats of the Board of Diretors, the Exeutive Co**ittee, and the orporate*ana(e*ent &e onfir*ed, ratified and approved &' the sto1ho#ders. he said *otion was du#' seonded, thus,the sto1ho#ders thereafter approved and ratified a## the said ats.

0t this =unture, 0tt'. Du#a' re+uested that the sto1ho#ders who *oved and seonded the afore*entioned ats &ena*ed and their authorit' to spea1 &e *ade 1nown. 0tt'. Carandan( #i1ewise in+uired a&out the sa*e infor*ationa&out a #ad' sto1ho#der who ear#ier seonded the *otion. Lith this, 0tt'. )ose i(ue# ana#o stated his na*e andsaid he was a sto1ho#der of reord. he other sto1ho#ders stated that the' were proxies of r. Santia(o Cua#opin(III.

II. 0PPRO0? O> E EFC0N2E O> PRCI;S 0H0I PROPER >OR S0RES O> SOCH O> )D0IES O?DIN2S, INC.

Lhen as1ed &' the Chair*an as to the next ite* in the a(enda, the Corporate Seretar' infor*ed a## present thatthe next ite* is the approva# of the exhan(e of PRCI;s a1ati propert' for shares of sto1 of ) Davies o#din(s

whih was du#' approved &' the Board of Diretors durin( its !! a' 688 *eetin(. he exhan(e was du#'reported and dis#osed to the SEC and the infor*ation thereof was in#uded in the Infor*ation State*ents *ai#ed toa## sto1ho#ders of PRCI.

et a(ain, 0tt'. Du#a', 0tt'. Carandan(, 0tt'. Di*a'u(a and 0tt'. Ria#de a## too1 the f#oor suessive#' and o&=etedto this ite* in the a(enda whih were du#' noted &' the Corporate Seretar'.

he Chair*an then a##ed the President of PRCI, r. So#o*on Cua to offiiate on this *atter. 0t this point, onesto1ho#der *oved that the exhan(e of PRCI;s a1ati propert' for ) shares &e approved &' the sto1ho#ders,whih was du#' seonded &' another sto1ho#der. President Cua then as1ed that the tota# perenta(e of those whoare in favor of the exhan(e &e ta1en. r. Santia(o Cua, )r., a sto1ho#der and a prox' of approxi*ate#' 9!.97 ofthe shareho#din(s voted in favor of the exhan(e. hen, r. ?awrene ?i* Swee ?in, representin( a(nu*

Invest*ent ?td. and ?eisure ana(e*ent ?td. who own 97.!% of the shareho#din(s, a#so voted in favor of theexhan(e. r. Exe+uie# D. Ro&#es a#so voted in favor of the exhan(e, as prox' of Sta. ?uia Rea#t' Deve#op*ent, In. ownin( $.!7 of the shares. ?ast#', 0tt'. Santos a#so wanted his vote of approva# &e ounted whihis shares of sto1 of !! shares.

Lith %.69 of the outstandin( apita# sto1 of PRCI votin( in favor of the exhan(e of its a1ati propert' forshares of sto1 of ) Davies, the Chair*an then de#ared said *otion as arried and approved.$9

ene, at their annua# *eetin( on !3 )une 6883, the PRCI sto1ho#ders had a#read' onfir*ed and approved theations and reso#utions of the PRCI Board of Diretors, whih were to su&=et *atters of Civi# Cases No. 8-4!8 andNo. 83-$%3. Resu#tant#', on )u#' 6883, PRCI and ) du#' si(ned and exeuted a Deed of ransfer withSu&sription 0(ree*ent, overin( the exhan(e of the a1ati propert' of PRCI for shares of sto1 of ).Para(raph $ of said Deed express#' provides:

$. he parties understand, a1now#ed(e and a(ree that this Deed is exeuted with the intention of avai#in( of the&enefits of Setions $8C"6" of the Nationa# Interna# Revenue Code of !77 NIRC", as a*ended, where, uponsu&sription of shares hereunder, the Su&sri&er sha## (ain further ontro# of the Co*pan'. he parties o&tained aru#in( fro* the Bureau of Interna# Revenue to the effet that no (ain or #oss wi## &e reo(ni@ed on the part of eah ofthe parties, pursuant to this Deed, in aordane with Setions $8C"6" of the NIRC, as a*ended. he ru#in(onfir*ed that the transfer of the Su&sri&er;s pare#s of #and to the Co*pan' in exhan(e for the shares of sto1 ofthe #atter is not su&=et to ino*e tax, apita# (ains tax, donor;s tax, va#ue-added tax and dou*entar' sta*p tax,exept for dou*entar' sta*p tax on the ori(ina# issuane of the Co*pan';s shares of sto1 to theSu&sri&er. $$ E*phases ours."









owever, in a #etter dated !% )u#' 6883, the BIR reversedArevo1ed its ear#ier ru#in( that the propert'-for-sharesexhan(e &etween PRCI and ) was a tax-free transation under Setion $8C"6" of the Nationa# Interna#Revenue Code of !775 and su&=eted the exhan(e to va#ue-added tax. 0s a resu#t, PRCI and ) exeuted on 66

0u(ust 6883 a Disen(a(e*ent 0(ree*ent,$% &' virtue of whih, effetive i**ediate#', PRCI and ) wou#ddisen(a(ed and wou#d no #on(er i*p#e*ent the Deed of ransfer with Su&sription 0(ree*ent dated )u#' 6883.>or a## intents and purposes, the said Deed of ransfer with Su&sription 0(ree*ent was resinded. PRCI dis#osedthe Disen(a(e*ent 0(ree*ent to the SEC on 64 0u(ust 6883.

Civi# Case No. 83-$%3 was eventua##' a#so assi(ned to the on#' o**eria# ourt of a1ati Cit', i.e., RC, Branh

!$7, presided over &' )ud(e /nta#an. Petitioners Santia(o )r., et a#. averred that )ud(e /nta#an refused to dis*issCivi# Case No. 83-$%3 on the (round of foru* shoppin(, even when it was no different fro* Civi# Case No. 8-4!8.he' further asserted that )ud(e /nta#an showed evident partia#it' in favor of )a#ane, et a#., durin( the hearin(s inCivi# Case No. 83-$%3, open#' *a1in( hast' on#usions as to ertain *ar1ed exhi&its and de*onstratin( his pre-

=ud(*ent of the ase. On 6% Septe*&er 6883 and 98 Septe*&er 6883, the PRCI diretors fi#ed &efore the RC aotion to Inhi&it$4 and a Supp#e*enta# otion to Inhi&it,$ respetive#', ur(in( )ud(e /nta#an to inhi&it hi*se#f fro*Civi# Case No. 83-$%3, sine he had revea#ed in severa# instanes his utter &ias and pre=udie a(ainst the PRCIdiretors and ad*itted his &ein( a re#ative &' affinit' of 0tt'. 0*ado Pau#o Di*a'u(a,$3 the initia# ounse# of )a#ane,et a#. )ud(e /nta#an has 'et to at on suh *otions.

0t the end of their anifestation, petitioners Santia(o )r., et a#., as1ed that this Court (rant the* the fo##owin( re#iefs

PR0ER

LERE>ORE, it is respetfu##' pra'ed that the fore(oin( anifestation &e noted, and that the >irst Suit JCivi# CaseNo. 8-4!8K as we## as the Seond Suit JCivi# Case No. 83-$%3K shou#d now &e dis*issed for &ein( *oot andaade*i, without need of re*and to the tria# si" Court for further proeedin(s.

It is further respetfu##' pra'ed that shou#d the onora&#e Court find it proper and neessar', the instant ases &eset for ora# ar(u*ents on suh date and ti*e as it *a' dee* onvenient to its a#endar.

erein petitioners further*ore pra' for suh other re#iefs as *a' &e =ust and e+uita&#e in the pre*ises.$7

Petitioner Santia(o Sr. a#so fi#ed his own anifestation o /pdate the onora&#e Court on Re#evant Supervenin(

Proeedin(s and Inidents" with otion to Reso#ve erits of Petition and of the Case in the ?ower Court In iew ofSupervenin( Proeedin(s and Inidents",%8 essentia##' reountin( the sa*e events in the anifestation of petitionersSantia(o )r., et a#. he pra'er of Santia(o Sr. in his anifestation and otion reads:

P R 0 E R

LERE>ORE, it is respetfu##' pra'ed that the onora&#e Court:

!. 0HE CO2NI0NCE of the instant anifestation on re#evant supervenin( proeedin(s and inidents inthis ase, espeia##' and speifia##', after the issuane &' the onora&#e Court on 87 0pri# 6883 of ate*porar' restrainin( order, addressed to the Court of 0ppea#s, the presidin( =ud(e of the Re(iona# ria#Court, Branh !$7, a1ati Cit', and the private respondents, and their a(ents, representatives andAor an'

person or persons atin( upon their orders or in their p#ae of stead, who are:

<EN)OINED fro* enforin( or exeutin( the assai#ed Court of 0ppea#s; deision and reso#ution, and theassai#ed tria# ourt;s reso#utions partiu#ar#' that whih *andates the ontinued enfore*ent of the writ ofper*anent in=untion issued &' the tria# ourt, unti# further orders fro* this Court.<

6. ORDER the dis*issa# of the o*p#aint &e#ow on the (round that the sa*e is not a #e(iti*ate and va#idderivative suit.

9. ORDER the dis*issa# of the o*p#aint &e#ow, in an' ase, on the (round that the issues raised in theo*p#aint, speifia##' with respet to the so-a##ed <disputed< reso#utions, have &een *ooted andAor no#on(er su&sist.















$. ORDER the private respondents to exp#ain wh' the' shou#d not &e ited for onte*pt of ourt for vio#ationof the te*porar' restrainin( order issued &' the Court on 87 0pri# 6883.

%. ORDER the private respondents to exp#ain wh' the' shou#d not &e ited for onte*pt of ourt foren(a(in( in foru*-shoppin(.

4. ORDER that the te*porar' restrainin( order issued &' the Court on 87 0pri# 6883 &e *ade PER0NEN

Other re#iefs =ust and e+uita&#e in the pre*ises are #i1ewise pra'ed for.%!

IIISS/ES

he Court identifies the fo##owin( funda*enta# issues for its reso#ution in the Petitions at &ar:

!" Lhether the Petition of Santia(o Sr. in 2.R. No. !38863 shou#d &e dis*issed for its proedura#infir*ities

6" Lhether Civi# Case No. 8-4!8 instituted &' respondents i(ue#, et a#. &efore the RC shou#d &eordered dis*issed

IIIR/?IN2 O> E CO/R

Der(!)(e (), (" 3e"er!

0 orporation, suh as PRCI, is &ut an assoiation of individua#s, a##owed to transat under an assu*ed orporatena*e, and with a distint #e(a# persona#it'. In or(ani@in( itse#f as a o##etive &od', it waives no onstitutiona#i**unities and per+uisites appropriate to suh &od'. 0s to its orporate and *ana(e*ent deisions, therefore, theState wi## (enera##' not interfere with the sa*e. Guestions of po#i' and of *ana(e*ent are #eft to the honestdeision of the offiers and diretors of a orporation, and the ourts are without authorit' to su&stitute their

=ud(*ent for the =ud(*ent of the &oard of diretors. he &oard is the &usiness *ana(er of the orporation, and so#on( as it ats in (ood faith, its orders are not reviewa&#e &' the ourts.4!

he (overnin( &od' of a orporation is its &oard of diretors. Setion 69 of the Corporation Code provides that<JuKn#ess otherwise provided in this Code, the orporate powers of a## orporations for*ed under this Code sha## &eexerised, a## &usiness onduted and a## propert' of suh orporations ontro##ed and he#d &' the &oard of diretorsor trustees x x x.< he onentration in the &oard of the powers of ontro# of orporate &usiness and of appoint*entof orporate offiers and *ana(ers is neessar' for effiien' in an' #ar(e or(ani@ation. Sto1ho#ders are toonu*erous, sattered and unfa*i#iar with the &usiness of a orporation to ondut its &usiness diret#'. 0nd so thep#an of orporate or(ani@ation is for the sto1ho#ders to hoose the diretors who sha## ontro# and supervise theondut of orporate &usiness.46

he fo##owin( disourse on the orporate powers of the &oard of diretors under Setion 69 of the Corporation Codeesta&#ishes the extent thereof:

/nder the a&ove provision, it is +uite #ear that, exept in the instanes where the Code express#' (rants a speifipower to the sto1ho#ders or *e*&er, the &oard has the so#e power and responsi&i#it' to deide whether aorporation shou#d sue, purhase and se## propert', enter into an' ontrat, or perfor* an' at. Sto1ho#ders; or*e*&ers; reso#utions dea#in( with *atters other than the exeptions are not #e(a##' effetive nor &indin( on the&oard, and *a' &e treated &' it as *ere#' advisor', or *a' even &e o*p#ete#' disre(arded. Sine the #aw hasvested the responsi&i#it' of *ana(in( the orporate affairs on the &oard, the sto1ho#ders *ust a&ide &' itsdeisions. If the' do not a(ree with the po#iies of the &oard, their re*ed' is to wait for the next e#etion of thediretors and hoose new ones to ta1e their p#ae. he theor' of the #aw is that a#thou(h sto1ho#ders are to have a#the profit, the o*p#ete *ana(e*ent of the enterprise sha## &e with the &oard.49











he &oard of diretors of a orporation is a reation of the sto1ho#ders. he &oard of diretors, or the *a=orit'thereof, ontro#s and direts the affairs of the orporation5 &ut in drawin( to itse#f the power of the orporation, itoupies a position of trusteeship in re#ation to the *inorit' of the sto1. he &oard sha## exerise (ood faith, are,and di#i(ene in the ad*inistration of the affairs of the orporation, and protet not on#' the interest of the *a=orit'&ut a#so that of the *inorit' of the sto1. Lhere the *a=orit' of the &oard of diretors wastes or dissipates the fundsof the orporation or fraudu#ent#' disposes of its properties, or perfor*s ultra vires ats, the ourt, in the exerise ofits e+uit' =urisdition, and upon showin( that intraorporate re*ed' is unavai#in(, wi## entertain a suit fi#ed &' the*inorit' *e*&ers of the &oard of diretors, for and in &eha#f of the orporation, to prevent waste and dissipation andthe o**ission of i##e(a# ats and otherwise redress the in=uries of the *inorit' sto1ho#ders a(ainst the wron(doin(

of the *a=orit'. he ation in suh a ase is said to &e &rou(ht derivative#' in &eha#f of the orporation to protet theri(hts of the *inorit' sto1ho#ders thereof.4$

It is we## sett#ed in this =urisdition that where orporate diretors are (ui#t' of a &reah of trust Q not of *ere error of =ud(*ent or a&use of disretion Q and intraorporate re*ed' is futi#e or use#ess, a sto1ho#der *a' institute a suitin &eha#f of hi*se#f and other sto1ho#ders and for the &enefit of the orporation, to &rin( a&out a redress of thewron( inf#ited diret#' upon the orporation and indiret#' upon the sto1ho#ders.4%

0 derivative suit *ust &e differentiated fro* individua# and representative or #ass suits, thus:

Suits &' sto1ho#ders or *e*&ers of a orporation &ased on wron(fu# or fraudu#ent ats of diretors or otherpersons *a' &e #assified into individua# suits, #ass suits, and derivative suits. Lhere a sto1ho#der or *e*&er is

denied the ri(ht of inspetion, his suit wou#d &e individua# &eause the wron( is done to hi* persona##' and not tothe other sto1ho#ders or the orporation. Lhere the wron( is done to a (roup of sto1ho#ders, as where preferredsto1ho#ders; ri(hts are vio#ated, a #ass or representative suit wi## &e proper for the protetion of a## sto1ho#ders&e#on(in( to the sa*e (roup. But where the ats o*p#ained of onstitute a wron( to the orporation itse#f, theause of ation &e#on(s to the orporation and not to the individua# sto1ho#der or *e*&er. 0#thou(h in *ost ever'ase of wron( to the orporation, eah sto1ho#der is neessari#' affeted &eause the va#ue of his interest thereinwou#d &e i*paired, this fat of itse#f is not suffiient to (ive hi* an individua# ause of ation sine the orporation isa person distint and separate fro* hi*, and an and shou#d itse#f sue the wron(doer. Otherwise, not on#' wou#d thetheor' of separate entit' &e vio#ated, &ut there wou#d &e *u#tip#iit' of suits as we## as a vio#ation of the priorit' ri(htsof reditors. >urther*ore, there is the diffiu#t' of deter*inin( the a*ount of da*a(es that shou#d &e paid to eahindividua# sto1ho#der.

owever, in ases of *is*ana(e*ent where the wron(fu# ats are o**itted &' the diretors or trustees

the*se#ves, a sto1ho#der or *e*&er *a' find that he has no redress &eause the for*er are vested &' #aw withthe ri(ht to deide whether or not the orporation shou#d sue, and the' wi## never &e wi##in( to sue the*se#ves. heorporation wou#d thus &e he#p#ess to see1 re*ed'. Beause of the fre+uent ourrene of suh a situation, theo**on #aw (radua##' reo(ni@ed the ri(ht of a sto1ho#der to sue on &eha#f of a orporation in what eventua##'&ea*e 1nown as a <derivative suit.< It has &een proven to &e an effetive re*ed' of the *inorit' a(ainst thea&uses of *ana(e*ent. hus, an individua# sto1ho#der is per*itted to institute a derivative suit on &eha#f of theorporation wherein he ho#ds sto1 in order to protet or vindiate orporate ri(hts, whenever offiia#s of theorporation refuse to sue or are the ones to &e sued or ho#d the ontro# of the orporation. In suh ations, the suin(sto1ho#der is re(arded as the no*ina# part', with the orporation as the part' in interest.44

he afore-+uoted exposition is re#evant onsiderin( the #ai* of respondents i(ue#, et a#., that its Co*p#aint in Civi#Case No. 8-4!8 is not =ust a derivative suit, &ut a#so an intraorporate ation arisin( fro* devies or she*es

e*p#o'ed &' the PRCI Board of Diretors a*ountin( to fraud or *isrepresentation.4

0 thorou(h stud' of the saidCo*p#aint, however, revea#s that the distintion is deeptive. he supposed devies and she*es e*p#o'ed &' thePRCI Board of Diretors a*ountin( to fraud or *isrepresentation are the ver' sa*e &ases for the derivative suit.he' are the ver' sa*e ats of the PRCI Board of Diretors that have supposed#' aused in=ur' to the orporation.>ro* the ver' &e(innin( of their Co*p#aint, respondents have a##e(ed that the' are fi#in( the sa*e <asshareho#ders, for and in &eha#f of the Corporation, in order to redress the wron(s o**itted a(ainst the Corporationand to protet or vindiate orporate ri(hts, and to prevent wasta(e and dissipation of orporate funds and assetsand the further o**ission of i##e(a# ats &' the Board of Diretors.< 0#thou(h respondents i(ue#, et a#., a#so averthat the' are see1in( <redress for the in=uries of the *inorit' sto1ho#ders a(ainst the wron(doin(s of the *a=orit',<the rest of the Co*p#aint does not &ear this out, and is utter#' #a1in( an' a##e(ation of in=ur' persona# to the* or aertain #ass of sto1ho#ders to whih the' &e#on(.43













Indeed, the Court notes 0*erian =urisprudene to the effet that a derivative suit, on one hand, and individua# and#ass suits, on the other, are *utua##' ex#usive, vi@:

0s the Supre*e Court has exp#ained: <0 shareho#ders derivative suit see1s to reover for the &enefit of theorporation and its who#e &od' of shareho#ders when in=ur' is aused to the orporation that *a' not otherwise &eredressed &eause of fai#ure of the orporation to at. hus, the ation is derivative, i.e., in the orporate ri(ht, if the(rava*en of the o*p#aint is in=ur' to the orporation, or to the who#e &od' of its sto1 and propert' without an'severane or distri&ution a*on( individua# ho#ders, or it see1s to reover assets for the orporation or to prevent thedissipation of its assets.; JCitations.K< )ones, supra, ! Ca#.9d 79, !84, 3! Ca#.Rptr. %76, $48 P.6d $4$." In ontrast,

<a direct ation Jis oneK fi#ed &' the shareho#der individua##' or on &eha#f of a class of shareho#ders to whih he orshe &e#on(s" for in=ur' to his or her interest as a shareholder. ... JTK ... JKhe two ations are *utua##' ex#usive: i.e.,the ri(ht of ation and reover' &e#on(s to either the shareholders diret ation" U4%! or thecorporation derivativeation".< >ried*an, Ca#. Pratie 2uide: Corporations, supra, T 4:%73, p. 4-!6."

hus, in Ne#son v. 0nderson !777" 6 Ca#.0pp.$th !!!, 3$ Ca#.Rptr.6d %9, the UU637 *inorit' shareho#der a##e(edthat the other shareho#der of the orporation ne(#i(ent#' *ana(ed the &usiness, resu#tin( in its tota# fai#ure. Id. at p.!6%, 3$ Ca#.Rptr.6d %9" he appe##ate ourt on#uded that the p#aintiff ou#d not *aintain the suit as a diretation: <Beause the (rava*en of the o*p#aint is in=ur' to the who#e &od' of its sto1ho#ders, it was for theorporation to institute and *aintain a re*edia# ation. JCitation.K 0 derivative ation wou#d have &een appropriate ifits responsi&#e offiia#s had refused or fai#ed to at.< Id. at pp. !6%-!64, 3$ Ca#.Rptr.6d %9" he ourt went on tonote that the da*a(es shown at tria# were the #oss of orporate profits. Id. at p. !64, 3$ Ca#.Rptr.6d %9" Sine

<JsKhareho#ders own neither the propert' nor the earnin(s of the orporation,< an' da*a(es that the p#aintiff a##e(edthat resu#ted fro* suh #oss of orporate profits <were inidenta# to the in=ur' to the orporation.<47

Based on a##e(ations in the Co*p#aint of i(ue#, et a#., in Civi# Case No. 8-4!8, the Court deter*ines that there ison#' a derivative suit, &ased on the devies and she*es e*p#o'ed &' the PRCI Board of Diretors that a*ounts to*is*ana(e*ent, *isrepresentation, fraud, and &ad faith.

0t the rux of the Co*p#aint of respondents i(ue#, et a#., in Civi# Case No. 8-4!8 is their dissent fro* the passa(e&' the *a=orit' of the PRCI Board of Diretors of the <disputed reso#utions,< partiu#ar#': !" the Reso#ution dated 64Septe*&er 6884, authori@in( the a+uisition &' PRCI of up to !88 of the o**on shares of )5 and 6" theReso#ution dated !! a' 688, approvin( the propert'-for-shares exhan(e &etween PRCI and ).

Der(!)(e () re: !c;(()(o" o JT<

It is i*portant for the Court to *ention that the 64 Septe*&er 6884 Reso#ution of the PRCI Board of Diretors noton#' authori@ed the a+uisition &' PRCI of up to !88 of the o**on sto1 of ), &ut it a#so speifia##' appointedpetitioner Santia(o Sr .8 to at as attorne'-in-fat and prox' who ou#d vote a## the shares of PRCI in ), as we## asno*inate, appoint, and vote into offie diretors andAor offiers durin( re(u#ar and speia# sto1ho#ders; *eetin(s of). It was &' this authorit' that PRCI diretors were a&#e to onstitute the ) Board of Diretors. hus, theprotest of respondents i(ue#, et a#., a(ainst the inter#o1in( diretors of PRCI and ) is a#so rooted in the 64Septe*&er 6884 Reso#ution of the PRCI Board of Diretors.

0fter a arefu# stud' of the a##e(ations onernin( this derivative suit, the Court ru#es that it is dis*issi&#e for &ein(*oot and aade*i.

hat a ourt wi## not sit for the purpose of tr'in( *oot ases and spend its ti*e in deidin( +uestions, the reso#utionof whih annot in an' wa' affet the ri(hts of the person or persons presentin( the*, is we## sett#ed. Lhere theissues have &eo*e *oot and aade*i, there is no =ustiia&#e ontrovers', there&' renderin( the reso#ution of thesa*e of no pratia# use or va#ue.!

he Reso#ution dated 64 Septe*&er 6884 of the PRCI Board of Diretors was approved and ratified &' thesto1ho#ders, ho#din( $ of the outstandin( apita# sto1 in PRCI, durin( the Speia# Sto1ho#ders; eetin( he#don Nove*&er 6884.6

Respondents i(ue#, et a#., instituted Civi# Case No. 8-4!8 on#' on !8 )u#' 688, a(ainst herein petitionersSantia(o Sr., Santia(o )r., So#o*on, and Ro&#es, to(ether with Renato de i##a, ?i* eon( ?eon(, ?awrene ?i*












$" he suit is not a nuisane or harass*ent suit. E*phasis ours."

In their Co*p#aint &efore the RC in Civi# Case No. 8-4!8, respondents i(ue#, et a#., *ade no *ention at a## ofappraisa# ri(hts, whih ou#d or ou#d not have &een avai#a&#e to the*. In their Co**ent on the Petitions at &ar,respondents i(ue#, et a#., ontend that there are no appraisa# ri(hts avai#a&#e for the ats o*p#ained of, sine !"the PRCI diretors are &ein( har(ed with *is*ana(e*ent, *isrepresentation, fraud, and &reah of fiduiar'duties, whih are not su&=et to appraisa# ri(hts5 6" appraisa# ri(hts wi## on#' o&tain for ats of the Board of Diretorsin (ood faith5 and 9" appraisa# ri(hts *a' &e exerised &' a sto1ho#der who sha## have voted a(ainst the proposedorporate ation, and no orporate ation has 'et &een ta1en herein &' PRCI sto1ho#ders, who sti## have not voted

on the intended propert'-for-shares exhan(e &etween PRCI and ).

he Court disa(rees.

It &ears to point out that ever' derivative suit is neessari#' (rounded on an a##e(ed vio#ation &' the &oard ofdiretors of its fiduiar' duties, o**itted &' *is*ana(e*ent, *isrepresentation, or fraud, with the #atter twosituations a#read' i*p#'in( &ad faith. If the Court upho#ds the position of respondents i(ue#, et a#. M that theexistene of *is*ana(e*ent, *isrepresentation, fraud, andAor &ad faith renders the ri(ht of appraisa# unavai#a&#e Mit wou#d (ive rise to an a&surd situation. Inevita&#', appraisa# ri(hts wou#d &e unavai#a&#e in an' derivative suit. hisrenders the re+uire*ent in Ru#e 3, Setion !9" of the IPRICC superf#uous and effetive#' inoperative5 and inontravention of an e#e*entar' ru#e of #e(a# her*eneutis that effet *ust &e (iven to ever' word, #ause, andsentene of the statute, and that a statute shou#d &e so interpreted that no part thereof &eo*es inoperative or

superf#uous.4

he i*port of esta&#ishin( the avai#a&i#it' or unavai#a&i#it' of appraisa# ri(hts to the *inorit' sto1ho#der is furtherhi(h#i(hted &' the fat that it is one of the fators in deter*inin( whether or not a o*p#aint invo#vin( an intra-orporate ontrovers' is a nuisane and harass*ent suit. Setion !&", Ru#e ! of IRPICC provides:

&" Prohibition against nuisance and harassment suits. - Nuisane and harass*ent suits are prohi&ited. Indeter*inin( whether a suit is a nuisane or harass*ent suit, the ourt sha## onsider, a*on( others, the fo##owin(:

!" he extent of the shareho#din( or interest of the initiatin( sto1ho#der or *e*&er5

6" Su&=et *atter of the suit5

9" ?e(a# and fatua# &asis of the o*p#aint5

$" 0vai#a&i#it' of appraisa# ri(hts for the at or ats o*p#ained of5 and

%" Pre=udie or da*a(e to the orporation, partnership, or assoiation in re#ation to the re#ief sou(ht.JE*phasis ours.K

In ase of nuisane or harass*ent suits, the ourt *a', motu proprio or upon *otion, forthwith dis*iss the ase.

he avai#a&i#it' or unavai#a&i#it' of appraisa# ri(hts shou#d &e o&=etive#' &ased on the su&=et *atter of theo*p#aint, i.e., the speifi at or ats perfor*ed &' the &oard of diretors, without re(ard to the su&=etive

on#usion of the *inorit' sto1ho#der institutin( the derivative suit that suh at onstituted *is*ana(e*ent,*isrepresentation, fraud, or &ad faith.

he raison d;etre for the (rant of appraisa# ri(hts to *inorit' sto1ho#ders has &een exp#ained thus:

x x x J0ppraisa# ri(htK *eans that a sto1ho#der who dissented and voted a(ainst the proposed orporate ation,*a' hoose to (et out of the orporation &' de*andin( pa'*ent of the fair *ar1et va#ue of his shares. Lhen aperson invests in the sto1s of a orporation, he su&=ets his invest*ent to a## the ris1s of the &usiness and annot

=ust pu## out suh invest*ent shou#d the &usiness not o*e out as he expeted. e wi## have to wait unti# theorporation is fina##' disso#ved &efore he an (et &a1 his invest*ent, and even then, on#' if suffiient assets are #eftafter pa'in( a## orporate reditors. is on#' wa' out &efore disso#ution is to se## his shares shou#d he find a wi##in(&u'er. If there is no &u'er, then he has no reourse &ut to sta' with the orporation. owever, in ertain speified





instanes, the Code (rants the sto1ho#der the ri(ht to (et out of the orporation even &efore its disso#ution &eausethere has &een a *a=or han(e in his ontrat of invest*ent with whih he does not a(ree and whih the #awpresu*es he did not foresee when he &ou(ht his shares. Sine the wi## of two-thirds of the sto1s wi## have to prevaiover his o&=etions, the #aw onsiders it on#' fair to a##ow hi* to (et &a1 his invest*ent and withdraw fro* theorporation. x x x, E*phasis ours."

he Corporation Code express#' *ade appraisa# ri(hts avai#a&#e to the dissentin( sto1ho#der in the fo##owin(instanes:

Se. $6. Power to invest orporate funds in another orporation or &usiness or for an' other purpose. M Su&=et tothe provisions of this Code, a private orporation *a' invest its funds in an' other orporation or &usiness or for an'purpose other than the pri*ar' purpose for whih it was or(ani@ed when approved &' a *a=orit' of the &oard ofdiretors or trustees and ratified &' the sto1ho#ders representin( at #east two-thirds 6A9" of the outstandin( apita#sto1, or &' at #east two-thirds 6A9" of the *e*&ers in ase of non-sto1 orporations, at a sto1ho#ders; or*e*&ers; *eetin( du#' a##ed for the purpose. Lritten notie of the proposed invest*ent and the ti*e and p#ae ofthe *eetin( sha## &e addressed to eah sto1ho#der or *e*&er at his p#ae of residene as shown on the &oo1s ofthe orporation and deposited to the addressee in the post offie with posta(e prepaid, or served persona##'5Provided, hat an' dissentin( sto1ho#der sha## have appraisa# ri(ht as provided in this Code: Provided, however,hat where the invest*ent &' the orporation is reasona&#' neessar' to ao*p#ish its pri*ar' purpose as statedin the arti#es of inorporation, the approva# of the sto1ho#ders or *e*&ers sha## not &e neessar'.

Se. 3!. Instanes of appraisa# ri(ht. M 0n' sto1ho#der of a orporation sha## have the ri(ht to dissent and de*andpa'*ent of the fair va#ue of his shares in the fo##owin( instanes:

!. In ase an' a*end*ent to the arti#es of inorporation has the effet of han(in( or restritin( the ri(htsof an' sto1ho#ders or #ass of shares, or of authori@in( preferenes in an' respet superior to those ofoutstandin( shares of an' #ass, or of extendin( or shortenin( the ter* of orporate existene5

6. In ase of sa#e, #ease, exhan(e, transfer, *ort(a(e, p#ed(e or other disposition of a## or su&stantia##' a##of the orporate propert' and assets as provided in this Code5 and

9. In ase of *er(er or onso#idation. E*phasis ours."

Respondents i(ue#, et a#., the*se#ves ad*itted that the propert'-for-shares exhan(e &etween PRCI and ),approved &' *a=orit' of the PRCI Board of Diretors in the Reso#ution dated !! a' 688, invo#ved a## orsu&stantia##' a## of the properties and assets of PRCI. he' a##e(ed in their Co*p#aint in Civi# Case No. 8-4!8 that:

$7. he Corporation;s a1ati Propert', onsistin( of pri*e propert' in the heart of a1ati Cit' worth &i##ions of pesosin its urrent va#ue onstitutes su&stantia##' a## of the assets of the Corporation and is the so#e and ex#usive #oationon whih it onduts its &usiness of a rae ourse.

%8. he exhan(e of the Corporation;s propert' for ) shares wou#d therefore onstitute a sa#e of su&stantia##' a##of the assets of the orporation. E*phasis ours."

Irrefra(a&#', the propert'-for-shares exhan(e &etween PRCI and ), invo#vin( as it did su&stantia##' a## of the

properties and assets of PRCI, +ua#ified as one of the instanes when dissentin( sto1ho#ders, suh as respondentsi(ue#, et a#., ou#d have exerised their appraisa# ri(hts.

he Court finds speious the aver*ent of respondents i(ue#, et a#., that appraisa# ri(hts were not avai#a&#e tothe*, &eause appraisa# ri(hts *a' on#' &e exerised &' sto1ho#ders who had voted a(ainst the proposedorporate ation5 and that at the ti*e respondents i(ue#, et a#., instituted Civi# Case No. 8-4!8, PRCI sto1ho#dershad 'et to vote on the intended propert'-for-shares exhan(e &etween PRCI and ). Respondents i(ue#, et a#.,the*se#ves aused the unavai#a&i#it' of appraisa# ri(hts &' fi#in( the Co*p#aint in Civi# Case No. 8-4!8, in whihthe' pra'ed that the !! a' 688 Reso#ution of the Board of Diretors approvin( the propert'-for-shares exhan(e&etween PRCI and ) &e de#ared nu## and void, even &efore the said Reso#ution ou#d &e presented to the PRCIsto1ho#ders for approva# or re=etion. ore than an'thin(, the ar(u*ent of respondents i(ue#, et a#., raises+uestions of whether their derivative suit was pre*ature#' fi#ed for the' had fai#ed to exert a## reasona&#e efforts to





exhaust a## other re*edies avai#a&#e under the arti#es of inorporation, &'-#aws, #aws, or ru#es (overnin( theorporation or partnership, as re+uired &' Ru#e 3, Setion !6" of the IRPICC. he o&vious intent &ehind the ru#e isto *a1e the derivative suit the fina# reourse of the sto1ho#der, after a## other re*edies to o&tain the re#ief sou(hthave fai#ed.3

Supervenin( events

Durin( the penden' of the ases at &ar, supervenin( events too1 p#ae that further =ustified the dis*issa# of Civi#Case No. 8-4!8 for a#read' &ein( *oot and aade*i.

>irst, durin( the 6883 0nnua# Sto1ho#ders; eetin( of PRCI, he#d on !3 )une 6883, the fo##owin( a(enda ite*swere fina##' presented to the sto1ho#ders, who approved and ratified the sa*e &' a *a=orit' vote: !" the inutes ofthe Speia# Sto1ho#ders; eetin( dated Nove*&er 6884, durin( whih the *a=orit' of the sto1ho#ders approvedand ratified the a+uisition of ) &' PRCI5 6" the ats of the Board of Diretors, the Exeutive Co**ittee, and theana(e*ent of PRCI for 6884, whih in#uded the a+uisition of ) &' PRCI5 and 9" the p#anned propert'-for-shares exhan(e &etween PRCI and ). Even respondents i(ue#, et al ., the*se#ves ad*itted in their Co**entwith Pra'er for the I**ediate ?iftin( or Disso#ution of the e*porar' Restrainin( Order in 2.R. No. !36883 that:

!6. Indeed, the approva# andAor ratifiation of the transfer of PRCI;s Sta. 0na raetra1 propert' to ) durin( theupo*in( sto1ho#ders; *eetin( wou#d render nu(ator', *oot and aade*i the ation and proeedin(s &efore theRe(iona# ria# Court of a1ati, Branh !$7, inas*uh as the ats assai#ed &' private respondents wou#d have

a#read' &een onsu**ated &' suh approva# andAor ratifiation.

!9. In the sa*e vein, suh approva# andAor ratifiation durin( the fortho*in( PRCI sto1ho#der;s si" *eetin(wou#d #i1ewise render *oot and aade*i the proeedin(s &efore this onora&#e Court in that it wou#d haveeffetive#' (ranted the re#iefs sou(ht &' herein petitioner even &efore this onora&#e Court ou#d fina##' ru#e on thepropriet' of the Court of 0ppea#s; DeisionAReso#ution &' herein petitioners.36

Seond, a#thou(h a#read' approved and ratified &' *a=orit' vote of the PRCI sto1ho#ders, and PRCI and )exeuted a Deed of ransfer with Su&sription 0(ree*ent on )u#' 6883 to effet the propert'-for-shares exhan(e&etween the two orporations, the ontroversia# transation wi## no #on(er push throu(h. 0 *a=or onsideration forthe exhan(e is that it wi## &e tax-free5 &ut the BIR ru#ed that suh transation sha## &e su&=et to 0. Resu#tant#',PRCI and ) exeuted on 66 0u(ust 6883 a Disen(a(e*ent 0(ree*ent, &' virtue of whih, &oth orporations

resinded the Deed of ransfer with Su&sription 0(ree*ent dated )u#' 6883 and i**ediate#' disen(a(ed fro*i*p#e*entin( the said Deed.

LERE>ORE, the Court 2R0NS





CASE OF CUA

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