Case Digest (G.R. No. 210906)
Facts:
In Ago Realty & Development Corporation v. Ago, G.R. Nos. 210906 & 211203, decided on October 16, 2019, respondent Angelita F. Ago, a minority stockholder of Ago Realty & Development Corporation (ARDC), introduced improvements on corporate lots in Legazpi City without a board resolution. Petitioners Emmanuel F. Ago, Corazon Castañeda-Ago (his wife), and ARDC filed suit in the RTC, alleging unauthorized construction and encroachment, naming Angelita, her employee Maribel Amaro, and businesswoman Teresita Paloma-Apin as defendants. The RTC dismissed the complaint for lack of cause of action, held Emmanuel and Corazon liable for damages, and awarded moral damages to Angelita and Maribel as well as attorney’s fees. On appeal, the CA affirmed the dismissal of the complaint but deleted the awards of moral damages and litigation expenses. Both parties filed petitions before the Supreme Court.Issues:
- May majority shareholders sue derivatively on behalf of the corporation without a bo
Case Digest (G.R. No. 210906)
Facts:
- Corporate background and shareholders
- Ago Realty & Development Corporation (ARDC) is a close family corporation with authorized capital of ₱500,000 divided into 5,000 shares.
- Stockholdings per General Information Sheet:
- Emmanuel F. Ago – 2,498 shares (₱249,800)
- Corazon C. Ago – 1,000 shares (₱100,000)
- Emmanuel Victor C. Ago – 1 share (₱100)
- Arthur Emmanuel C. Ago – 1 share (₱100)
- Angelita F. Ago – 1,500 shares (₱150,000)
- Unauthorized improvements and initial suit
- Angelita, without a board resolution, introduced a semi-permanent structure and fence on Lots H-1, H-2, H-3 titled to ARDC, and allowed Teresita Paloma-Apin to operate “Kicks Resto Bar” thereon.
- On August 11, 2006, ARDC and the majority shareholders (Emmanuel, Corazon, Victor, Arthur) filed in RTC Branch 1, Legazpi City, Civil Case No. 10585, alleging connivance by Angelita, Teresita, Maribel Amaro, and local officials in unauthorized improvements and seeking damages and removal.
- Defendants’ answers:
- Teresita denied operating on ARDC property;
- Angelita admitted improvements but claimed she managed the properties in the 1960s, disputed board-authorization requirement, and alleged a forced buy-out demand;
- Maribel, as Angelita’s employee, disclaimed independent liability;
- All defendants stressed the absence of a board resolution authorizing the suit.
- Trial and appellate rulings
- RTC Decision (Sept. 20, 2012): dismissed complaint for lack of cause of action, holding plaintiffs had no corporate authority; awarded moral damages (₱100,000 each) and attorney’s fees (₱150,000/₱200,000) to defendants for baseless suit.
- CA Decision (Sept. 26, 2013): affirmed dismissal but deleted moral damages and attorney’s fees; classified action as a derivative suit requiring a board of directors’ resolution, not a stockholders’ vote.
- CA Resolution (Jan. 10, 2014) denied motions for reconsideration; ARDC, Emmanuel, Corazon and Angelita filed consolidated petitions (G.R. Nos. 210906 & 211203) to the Supreme Court.
Issues:
- (G.R. No. 210906) May majority shareholders sue on behalf of ARDC in a derivative suit absent a board of directors’ resolution sanctioning the institution of the case?
- (G.R. No. 211203) Was the award of moral damages and attorney’s fees to Angelita warranted as a matter of malicious prosecution?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)