G.R. No. 142474 - R.N. Symaco Trading Corp. vs. Santos

R.N. Symaco Trading Corporation (petitioner) and Norma Symaco, together with the Estate of Mariano Guison, are engaged in a dispute with Luisito T. Santos, who filed a complaint on behalf of the Malabon Fish Brokers Association, Inc. (MFBAI).
MFBAI is a non-stock corporation established to erect and operate the Malabon Fish Brokers Association Fish Market for the economic welfare of its members involved in the fish trade.

On April 30, 1980, Mariano Guison, as lessor, and MFBAI, as lessee, executed a contract of lease covering five parcels of land in Malabon, Metro Manila, including an area occupied by Rudy Symaco along Estrella Street.
The contract provided for a ten-year lease (renewable under agreed terms with a ceiling on rental increases), with an advance rental of P28,000 covering four years and a monthly rental of P600 thereafter.
MFBAI constructed the fish market on the leased property where its members installed stalls.

On August 13, 1983, a faction of MFBAI members led by Marcos Valle, Jr. approved a set of By-Laws.
A second meeting on August 18, 1983, led by Lino Buhain, resulted in an amended set of By-Laws that was subsequently approved by the Securities and Exchange Commission (SEC) on September 7, 1983.
Dispute ensued when Valle, Jr. and other members petitioned the SEC for the nullification of the amended By-Laws, prompting SEC proceedings (SEC Case No. 2521) and a decision by a Hearing Officer on May 8, 1987, which dismissed the petition and directed an election for a new Board of Directors.

The SEC Hearing Officer determined that MFBAI had only 35 legitimate original members, and Santos was not among those listed initially.
Despite his attendance at certain later meetings and minimal payment of membership fees, his status as a bona fide member was contested.
Subsequent issues arose regarding whether statements by MFBAI officers or later claims (such as the disputed number of 42 members) could alter the established membership roster.

After the death of Mariano Guison, on April 30, 1990, the Heirs of Mariano Guison and Norma Symaco (then President and Chairman of the MFBAI Board) executed an unnotarized contract of lease over a portion of the previously leased property.
The new contract affected a market area hosting installed stalls, providing for a four-year lease term with advance rental payments and revised monthly rental obligations.
MFBAI members, including stallholders, were evicted from the market following the execution of this lease, leading MFBAI to file a complaint for forcible entry in the Metropolitan Trial Court (MTC) of Malabon.

The SEC decisions (including the dismissal of the petition in SEC Case No. 2521 and subsequent SEC-AC No. 205) and the CA’s May 8, 1987 judgment played a significant role in the dispute.
Respondent Santos filed a complaint in the Regional Trial Court (RTC) on October 29, 1990, seeking the annulment of the 1990 lease contract on the ground of corporate misconduct and alleged violation of the corporate opportunity doctrine by Norma Symaco.
Testimonies and documentary evidence were presented by parties, including evidence of membership dues, alleged non-compliance with quorum requirements in the 1983 meetings, and conflicting statements about the actual number of legitimate MFBAI members.
The RTC rendered a judgment in favor of the petitioners in September 1993, a decision which was later appealed to the Court of Appeals (CA).

The CA initially reversed the RTC decision on May 21, 1997, ordering Norma Symaco to render an accounting of profits acquired from the lease arrangement, basing its ruling on evidence of a corporate opportunity violation.
Subsequent motions for reconsideration were filed by the petitioners, raising issues on Santos’ membership status, procedural estoppel, and the proper interpretation of the corporate opportunity doctrine.
The CA’s decision underwent further modification on February 21, 2000, in its Amended Decision, which finally reversed and set aside the RTC decision, ordering accounting and imposing liability on Norma Symaco.

Whether Luisito T. Santos is a bona fide and legitimate member of MFBAI considering the conflicting evidences and SEC determinations.
Whether the petitioners are estopped from contesting Santos’ membership based on prior admissions and the binding nature of the SEC and RTC findings.

Whether Santos had the legal capacity and standing to file a derivative suit on behalf of MFBAI, given the requirements for stockholder/member status at the time of the action.
Whether the complaint was premature by not first seeking redress within the internal mechanisms of MFBAI prior to filing in court.

Whether Norma Symaco, acting in her dual capacity as corporate officer and lessee through Symaco Corporation, violated the doctrine of corporate opportunity by negotiating separate lease terms while MFBAI’s lease was still in effect.
Whether such conduct resulted in misappropriation of potential profits and harmed the interests of MFBAI’s legitimate members.

The impact of the alleged failure of the August 1983 membership meeting to achieve quorum on the validity of the adopted By-Laws.
Whether the subsequent evidence, including affidavits, documentary exhibits, and prior SEC findings, should be given overriding effect despite contrasting testimonies.