G.R. No. L-22399 - Republic Bank vs. Cuaderno

The plaintiff-appellant, Republic Bank, is represented by Damaso P. Perez, a stockholder who instituted a derivative suit on behalf of the bank.
The defendants include:

Miguel Cuaderno – alleged technical consultant with an allegedly unconscionable monthly compensation.
Bienvenido Dizon – alleged chairman of the Board of Directors.
Pablo Roman – alleged mastermind whose influence shaped the composition of the Board.
The Board of Directors of the Republic Bank.
The Monetary Board of the Central Bank of the Philippines.

It is alleged that during the period 1957 to 1959, Pablo Roman, as chairman of the Board and head of the Executive Loan Committee, exploited his fiduciary position.
The allegation includes the fraudulent granting of loans amounting approximately to 4 million pesos on the basis of fictitious or inflated appraised values of real estate properties.

Allegations claim that the appointments of Miguel Cuaderno as technical consultant (with a compensation of P12,500 per month) and of Bienvenido Dizon as chairman of the Board were motivated by a desire to shield Pablo Roman from criminal prosecution.
These appointments were characterized as being the result of corporate acts devoid of genuine concern for the bank’s best interests, essentially confirming that the appointees were Roman’s nominees or “alter egos.”

The complaint expressly states that the suit is a derivative one and that pursuing an intra-corporate remedy would be futile because the Board members were effectively nominees of Pablo Roman.
The injunctive prayer was aimed at preventing the confirmation of the controversial appointments and enjoining any further acts that could perpetuate the diversion or wastage of corporate funds.

Damaso Perez, acting on behalf of the Republic Bank, filed the derivative suit against the aforementioned defendants.
The complaint included detailed allegations of fraudulent acts, breach of fiduciary duties, and improper corporate governance designed to protect the interests of the bank.

The Court of First Instance of Manila dismissed the suit on the ground that it failed to state a valid cause of action.
The dismissal was influenced by multiple factors, including:

Motions to dismiss filed by defendants on the basis that no cause of action existed against them as individuals (invoking corporate acts as beyond a stockholder’s purview).
Reference to the pendency of eight other similar cases involving practically the same parties, suggesting that the issues might be amalgamated or raised in those actions.

The sole appeal to the Supreme Court is directed at whether dismissing the complaint was proper on the basis of its alleged failure to state a cause of action and procedural considerations regarding similar pending cases.
The appeal also challenges the contention that a stockholder lacks the capacity to sue on behalf of his corporation, emphasizing established principles permitting derivative suits when corporate officers are both part of the problem and unwilling to initiate litigation.

Whether the facts as pleaded in the complaint, particularly those alleging fraudulent loans and improper appointments, suffice to establish a valid cause of action on behalf of the Republic Bank.
Whether the allegations, taken as true, demonstrate that the corporate funds were unlawfully misdirected and that the appointments were made solely to shield Pablo Roman from prosecution.

Whether a stockholder, irrespective of the size of his holdings, may sue in a derivative capacity when the alleged acts are distinctly corporate in nature and the board is implicated in the wrongdoing.
Whether it is proper to allow the suit to proceed given that the corporation itself was not originally made a party defendant, and if misjoinder of parties may be remedied by subsequent amendments.

Whether dismissing the case based on the pendency of other similar lawsuits between practically the same parties is a legally sound ground for dismissal.
Whether the motions to dismiss should have been overruled in favor of allowing the trial to proceed on its merits.