Facts:

The case involves Juanito Ang, representing Sunrise Marketing (Bacolod), Inc. (SMBI), as the petitioner against spouses Roberto and Rachel Ang, the respondents. The dispute arose from a loan agreement made on July 31, 1995, where Nancy Ang and her husband Theodore Ang extended a loan of $1,000,000 to settle obligations of SMBI and other family-owned corporations. The loan was issued via a check made out to Juanito, Anecita, Roberto, and Rachel Ang, but no formal loan agreement was documented due to the familial relationship. Over time, Juanito alleged that the management of SMBI was taken over by Roberto and Rachel, who manipulated stock shares and increased the capital stock of SMBI without proper procedures, violating the Corporation Code.

In 2008, Nancy and Theodore sent a demand letter for repayment, which was met with refusal from Roberto and Rachel, claiming they had not personally contracted the loan. Subsequently, Juanito and Anecita executed a Deed of Acknowledgme...

Facts:

Parties and Corporate Ownership

• SMBI (Sunrise Marketing (Bacolod), Inc.) is a duly registered corporation owned by the Ang family.
• The stockholders and their respective shareholdings are:
• Juanito Ang – 8,750 shares
• Anecita Ang – 1,250 shares
• Jeannevie Ang – 2,500 shares
• Roberto Ang – 8,750 shares
• Rachel Ang – 3,750 shares
• Corporate officers include:
• Roberto Ang as President
• Juanito Ang as Vice President
• Rachel Ang as Corporate Secretary
• Anecita Ang as Corporate Treasurer

Loan Agreement and Transaction Details

• On 31 July 1995, Nancy Ang (a former stockholder) and her husband, Theodore Ang, extended a loan of $1,000,000 to settle the obligations of SMBI and other Ang family-owned corporations.
• The check was made payable to any of the following: Juanito Ang, Anecita Ang, Roberto Ang, and/or Rachel Ang.
• There was no written loan agreement due to the close family relationship.
• Part of the loan proceeds was used for purchasing real properties for SMBI as well as for personal acquisitions by some of the Ang siblings.

Increase of Capital Stock and Alleged Corporate Irregularities

• On 22 December 2005, SMBI increased its authorized capital stock to P10,000,000.00. The Certificate of Increase of Capital Stock was signed by Juanito, Anecita, Roberto, and Rachel as directors.
• Juanito alleged that this increase was contrary to the Corporation Code because:
• No valid board meeting or proper procedure was observed.
• The alleged action was a manipulation aimed at altering the stock control, particularly as Roberto and Rachel took over active management when Juanito and Anecita left for Canada.

Disputed Demand and Settlement Arrangements

• On 24 November 2008, Nancy and Theodore, through counsel, demanded payment of the principal plus interest (totaling $2,585,577.37) within ten days.
• Roberto and Rachel responded that they had not personally entered into a loan agreement with Nancy and Theodore.
• On 8 January 2009, Juanito and Anecita executed a Deed of Acknowledgment and Settlement Agreement (Settlement Agreement) and an Extra-Judicial Real Estate Mortgage stating that the loan was obtained by all four parties.
• The Mortgage secured the loan with several real properties and involved a signature by Kenneth C. Locsin, acting under a Special Power of Attorney for Nancy and Theodore.

Stockholder Derivative Suit and Pre-Enforcement Actions

• On 29 January 2009, Juanito filed a stockholder derivative suit before RTC Bacolod alleging:
• The intentional and malicious refusal of Roberto and Rachel to settle the 50% share of the obligation, which would endanger SMBI’s financial viability.
• His exclusion from active management and participation in SMBI, which he attributed to force, violence, and intimidation.
• Fraudulent actions, including the removal of Nancy as a stockholder from SEC records.
• Reliefs sought in the complaint included:
• Issuance of an ex-parte writ of attachment/garnishment and a break open order.
• Placement of SMBI under receivership.
• Enforcement of his right to manage SMBI.
• An accounting of the loan’s utilization and payment of 50% of the loan.
• Restoration of his rights and payment of attorney’s fees.

RTC Bacolod’s Order and Subsequent Motions

• On 29 January 2009, RTC Bacolod issued an order granting the ex-parte writ of attachment, break open order, and appointment of a receiver (Atty. Jerry Basiao).
• Later that day, Roberto and Rachel moved to quash the writ of attachment and related orders alleging violation of due process.
• In her Verified Answer, Rachel contended that the complaint was not a bona fide derivative suit but rather a disguised collection suit, as the primary interest appeared to be the recovery of a personal debt.

Further Pleadings and Allegations

• During cross-examination, Juanito admitted that no prior demand for an accounting or liquidation had been made, nor had any written objection to the capital stock increase been filed.
• Rachel argued that Juanito, as one of the biggest stockholders and a board director, failed to meet the requirement of exhausting all intra-corporate remedies as mandated by the Interim Rules for Intra-Corporate Controversies.
• Juanito also alleged that abnormal conduct occurred during the issuance of the writ of attachment, including allegations against counsel Atty. Filomeno Tan, Jr., leading to a subsequent contempt motion.

Decisions of the Lower Courts

• On 27 September 2010, RTC Bacolod ruled that the suit was a derivative suit, denying defendant motions to dismiss. The RTC based its ruling on:
• Evidence of fraudulent actions by Roberto and Rachel in issuing checks and modifying stock records.
• The finding that the requirement for exhaustion of intra-corporate remedies was inapplicable due to the complete control exercised by the defendants over SMBI.
• On 20 September 2011, CA-Cebu reversed the RTC decision, holding that:
• The complaint was not a derivative suit but rather a harassment suit aimed at collecting a personal debt.
• The loan in question was not a corporate obligation, and there was no demonstrable damage to SMBI.

Procedural Posturing in the Appellate Stage

• Juanito filed a Motion for Reconsideration with Prayer for Voluntary Inhibition on 28 October 2011, arguing that proper procedural steps were not followed by the opposing party.
• The motion was denied, which formed the basis of the petition for review before the Supreme Court.

Issue:

Whether the Complaint constitutes a derivative suit

• The central question is whether the case should be treated as a derivative suit brought by a stockholder on behalf of SMBI.
• Whether the legal requirements and formalities for a derivative suit, including the exhaustion of intra-corporate remedies, were met by Juanito.

Whether the complaint is an ordinary civil action in disguise

• The determination of whether the action is merely for the collection of a personal debt and is, in fact, a harassment suit.
• The implications of the naming of parties (i.e., the loan being in the names of the individual stockholders rather than SMBI).

The appropriateness of using evidence outside the four corners of the complaint

• Whether CA-Cebu erred in considering evidence not contained within the original pleading in determining the nature of the suit.

Due Process Concerns Related to Issuance of Writs

• Whether the issuance of the writ of attachment and break open order by RTC Bacolod violated the due process rights of Roberto and Rachel.

Jurisdictional and Procedural Issues

• Whether the Regional Trial Court had jurisdiction to exercise remedial powers in an ordinary civil action setting, independent of the derivative suit framework.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

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