Cua, Jr. vs. Tan

Facts:

Santiago Cua, Jr., Solomon S. Cua and Exequiel D. Robles v. Miguel Ocampo Tan et al., G.R. Nos. 181455-56 and Santiago Cua, Sr. v. Court of Appeals et al., G.R. No. 182008, December 04, 2009, Supreme Court Third Division, Chico‑Nazario, J., writing for the Court. Petitioners are several directors of Philippine Racing Club, Inc. (PRCI) (Santiago Cua, Jr., Solomon Cua, Exequiel Robles and Santiago Cua, Sr.). Respondents are minority stockholders Miguel Ocampo Tan, Jemie U. Tan and Atty. Brigido J. Dulay, with Judge Cesar Untalan of the Makati RTC and the Court of Appeals also named in the Rule 65 petition. The petitions challenged the Court of Appeals’ Decision (6 September 2007) and Resolution (22 January 2008) dismissing petitions that assailed RTC orders in Civil Case No. 07‑610. The two petitions before the Supreme Court were a Rule 45 petition (G.R. Nos. 181455‑56) and a Rule 65 petition (G.R. No. 182008).

PRCI, a publicly listed corporation holding a racetrack franchise, owned two major properties (Makati and Cavite). In 2006–2007 its board approved acquisition of JTH Davies Holdings, Inc. (JTH) and later an intra‑group plan to exchange PRCI’s Makati racetrack for JTH shares so that JTH would manage and develop the Makati property. The PRCI board resolutions of 26 September 2006 (authorizing acquisition of JTH and designating proxies) and 11 May 2007 (approving property‑for‑shares exchange) were adopted over the dissent of director Dulay. A special stockholders’ meeting on 7 November 2006 ratified the acquisition; later the 2008 annual meeting of PRCI ratified the contested acts.

On 10 July 2007 minority stockholders Miguel, Jemie and Dulay filed Civil Case No. 07‑610 in the Makati RTC as a derivative suit seeking injunctive relief and nullification of those board resolutions, alleging mismanagement, lack of disclosure and breach of fiduciary duty; they prayed for a TRO and preliminary injunction. RTC Branch 149 (Judge Untalan) granted a 20‑day TRO on 16 July 2007 and later, on 8 October 2007, a permanent injunction against presenting/discussing three agenda items at stockholders’ meetings. The RTC set hearings on the main injunction.

PRCI directors filed petitions with the Court of Appeals (consolidated CA‑G.R. SP Nos. 99769 & 99780) to annul the RTC TRO. The Court of Appeals dismissed those petitions for lack of merit, mootness and prematurity, holding that the TRO enjoined only three agenda items, that lack of quorum at the 17 July 2007 meeting was because petitioners themselves were absent, that the TRO had expired before resolution of the appeals, and that the matters were factual issues for the RTC to decide. Petitioners sought relief from the Supreme Court by Rule 45 (G.R. Nos. 181455‑56) and Rule 65 (G.R. No. 182008). The Supreme Court issued a TRO on 9 April 2008 enjoining execution of the RTC permanent injunction and required a bond; it consolidated the petitions on 23 April 2008.

While the cases proceeded, PRCI held its 18 June 2008 annual meeting (after other competing TROs and motions) at which stockholders representing over two‑thirds approved and ratified the contested minutes, the board acts and the property‑for‑shares exchange; PRCI and JTH executed a Deed of Transfer on 7 July 2008 but later rescinded it on 22 August 2008 after the BIR r...(Pro-only)

Issues:

• Should the Rule 65 petition of Santiago Cua, Sr. (G.R. No. 182008) be dismissed for procedural infirmities (forum‑shopping and wrong mode of appeal)?
• Should Civil Case No. 07‑610 (the derivative suit filed by Miguel Ocampo Tan et al.) be dismissed?
• Should Civil Case No. 08‑458 (filed by a different set of minority stockholders, Jalane Christie U. Tan et al.) be dismissed?
• Should Aris Prime Resources, Inc. (APRI)...(Pro-only)

Ruling:

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Ratio:

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Doctrine:

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