Case Digest (G.R. No. 161886) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Filipinas Port Services, Inc. v. Go, G.R. No. 161886 (March 16, 2007), petitioner Filipinas Port Services, Inc. (“Filport”), represented by stockholder Eliodoro C. Cruz and co‐petitioner Mindanao Terminal and Brokerage Services, Inc. (“Minterbro”), assails the January 19, 2004 decision of the Court of Appeals (CA) in CA-G.R. CV No. 73827, which reversed the December 10, 2001 judgment of the Regional Trial Court (RTC) of Davao City, Branch 10, in Civil Case No. 28,552-2001 and dismissed a derivative suit filed by Cruz on behalf of Filport and its stockholders against respondents Victoriano S. Go, Arsenio L. Chua, Edgar C. Trinidad, Hermenegildo M. Trinidad, Jesus SyBico, Mary Jean D. Co, Henry Chua, Joselito S. Jayme, Ernesto S. Jayme, and Eliezer B. de Jesus. The suit originated on June 14, 1993 before the Securities and Exchange Commission (SEC), alleging mismanagement: creation of an executive committee, re‐creation of Assistant Vice‐President (AVP) and Special Assistant po Case Digest (G.R. No. 161886) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Corporate Background
- Petitioners
- Filipinas Port Services, Inc. (Filport), a domestic stevedoring corporation with principal office in Davao City
- Stockholders: Eliodoro C. Cruz (former president) and Mindanao Terminal and Brokerage Services, Inc. (Minterbro)
- Respondents
- Directors and officers of Filport: Victoriano S. Go, Arsenio Lopez Chua, Edgar C. Trinidad, Hermenegildo M. Trinidad, Jesus Sybico, Mary Jean D. Co, Henry Chua, Joselito S. Jayme, Ernesto S. Jayme, Eliezer B. de Jesus
- Underlying Dispute and Collateral Actions
- Letter of September 4, 1992
- Cruz questions board creation of six P13,050-per-month positions (AVPs and Special Assistants)
- Requests recovery of salaries from appointees
- Board Meeting of September 15, 1992
- Took up Cruz’s letter; no record of definitive action
- Cruz remained dissatisfied
- Derivative Suit Before the SEC
- Filing on June 14, 1993 (SEC Case No. 06-93-4491)
- Allegations of mismanagement: creation of an executive committee, salary increases for chairman, VP, treasurer, AGM, re-creation of AVP positions, creation of Special Assistants
- Prayer: joint and several liability of directors for corporate damages and recovery of increased salaries
- Respondents’ Answer with Counterclaim
- Denials: acts allowed by by-laws, increases reasonable, positions pre-existing or services rendered
- Affirmative defenses: lack of standing, failure to exhaust intra-corporate remedies, absence of nominal parties, bad faith of Cruz
- Transfer and Lower Court Decisions
- Hibernation at SEC until Republic Act No. 8799 (July 19, 2000) → Transfer to RTC-Manila, then to RTC-Davao City (Civil Case No. 28,552-2001)
- RTC-Davao Decision (Dec. 10, 2001)
- Recognized board powers to create positions and fix emoluments
- Ordered refund of salaries received by AVP for Corporate Planning, Special Assistants to President and Chairman
- Dismissed respondents’ counterclaim
- Court of Appeals Decision (Jan. 19, 2004)
- Reversed RTC: held board acted within powers; salary increases reasonable; no accommodation theory proven; no evidence of actual payment
- Dismissed derivative suit; corrected nunc pro tunc to state “appeal is impressed with merit”
Issues:
- Legality of Board Actions
- Whether Filport’s Board had authority under the Corporation Code and by-laws to create the executive committee, AVP and Special Assistant positions, and to increase emoluments of chairman, vice-president, treasurer, and assistant general manager
- Whether such positions and salary increases were reasonable and not illegal acts of mismanagement
- Evidence of Accommodation and Payment
- Whether the creation of three positions was merely for accommodation without corporate necessity
- Whether there is proof that the salaries/emoluments for those positions were actually paid and received
- Nature of Suit and Standing
- Whether the action instituted by Cruz is a derivative suit properly brought in behalf of Filport
- Whether Cruz and Minterbro have legal standing as nominal parties to maintain the suit
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)