Facts:
On 15 October 2002,
Joseph S. Yukayguan,
Nancy L. Yukayguan,
Jerald Nerwin L. Yukayguan, and
Jill Neslie L. Yukayguan (herein respondents) filed with the Regional Trial Court (RTC) of Cebu City a verified Complaint for Accounting, Inspection of Corporate Books and Damages through Embezzlement and Falsification of Corporate Records and Accounts against
Anthony S. Yu,
Rosita G. Yu, and
Jason G. Yu (herein petitioners) as a derivative suit on behalf of
Winchester Industrial Supply, Inc.. The complaint alleged that petitioners misappropriated corporate funds, charged personal expenses to the corporation, underreported sales and refused to surrender corporate books, and that petitioner Anthony held certain shares as trustee for respondent Joseph. Petitioners denied the allegations, alleged payment of capital and ownership, and pleaded defects in respondents’ compliance with conditions precedent, invoking Rule 16, Section 1(j). During proceedings the parties negotiated an amicable settlement that led to partial distribution of corporate assets and a corporate resolution dissolving Winchester, Inc. on 4 January 2003, but respondents later repudiated the settlement and sought pre-trial. On 26 August 2004 the RTC, upon the parties’ agreement, ordered judgment to be rendered on the pleadings and directed the filing of memoranda. The RTC dismissed the complaint in a Decision promulgated 10 November 2004 for failure to comply with the requisites for a derivative suit under the Interim Rules of Procedure Governing Intra-Corporate Controversies and for lack of proof, and it excluded evidence respondents appended belatedly to their memorandum. The Court of Appeals affirmed that Decision in a 15 February 2006 decision. Respondents filed a motion for reconsideration. The Court of Appeals, by Resolution dated 18 July 2006, granted reconsideration and remanded the case to the RTC for “final settlement” and liquidation of corporate concerns allegedly arising from the dissolution of Winchester, Inc., a remand repeated in a 19 April 2007 resolution denying petitioners’ motion for reconsideration. Petitioners then filed a Petition for Review under Rule 45 with the Supreme Court, which rendered judgment on 18 June 2009.
Issues:
Whether the Court of Appeals erred in granting respondents’ motion for reconsideration and remanding the derivative suit to the RTC for liquidation and final settlement of corporate assets.
Whether the remand converted a derivative suit into liquidation proceedings without jurisdiction or supporting proof.
Whether respondents complied with the mandatory requisites for instituting a
derivative suit under Section 1, Rule 8 of the Interim Rules of Procedure Governing Intra‑Corporate Controversies.
Whether respondent Joseph’s supplemental affidavit and documentary annexes, submitted only with the memorandum, were admissible.
Ruling:
Ratio:
Doctrine: