You are on page 1of 2

Ths dgest may not be

reproduced and dstrbuted


wthout the permsson of
the author.
CORP OUIMSON
UNDERGROUND CASE DIGESTS
REPUBLIC BANK V. CUADERNO G.R. # L-22399
FACTS
Perez, a stockhoder of the Repubc Bank (Bank), nsttuted a
dervatve sut for and n behaf of sad Bank, aganst Cuaderno,
Dzon, the BoD of the Bank, and the Monetary Board of the Centra
Bank of the Phppnes. The Compant expressy peaded the
foowng:
6. That the reator heren fed the present dervatve sut
wthout any further demand on the BoD of the Bank for the
reason that such forma demand to nsttute the present
compant woud be a fute formaty snce the members of
the board are personay chosen by defendant Roman
hmsef.
For a cause of acton pantff aeged that Perez had companed to
the Monetary Board of the Centra Bank aganst certan frauds
aegedy commtted by defendant Roman (charman of the BoD of
the Bank), and of ts Executve Loan Commttee.
o Roman had frauduenty granted or caused to be granted oans
amountng to amost P4M to fcttous persons and to ther
cose frends, reatves and/or empoyees, who were n reaty
ther dummes, on the bass of fcttous and nfated apprased
vaues of rea estate propertes;
o Actng upon the compant, then Centra Bank Governor
Cuaderno and the Monetary Board ordered an nvestgaton,
they reported that certan mortgage oans amountng to P2.3M
were granted n voaton of sectons 77, 78 and 88 of the
Genera Bankng Act;
o Actng on sad reports, the Monetary Board, ordered a new BoD
of the Bank to be eected, whch was done, and subsequenty
approved by the Monetary Board;
o On |anuary 5, 1960, the Monetary Board accepted Romans
offer to put up adequate securty for the questoned oans
made by the Bank, and such securty was made a condton for
the resumpton of the Bank's norma operatons;
o Subsequenty, the Centra Bank through ts Governor,
Cuaderno, referred to the DO| speca prosecutors the bankng
frauds and voatons of the Bankng Act, for nvestgaton and
prosecuton, but no nformaton was fed t Cuadernos
retrement n 1961;
o Other smar frauds were dscovered, and to neutraze the
mpendng acton aganst hm, Roman engaged Cuaderno as
technca consutant at a compensaton of P12.5K/mo. , and
seected Dzon as charman of the BoD of the Bank;
o The BoD seected and chosen by Roman, connved and
confederated n approvng the appontment and seecton of
Cuaderno and Dzon, ths was motvated by bad fath and
wthout ntenton to protect the nterest of the Repubc Bank
but were prompted to protect Roman from crmna
prosecuton;
o Cuadernos appontment and acceptance of the poston of
technca consutant are mmora, anomaous and ega, and
hs compensaton hghy unconsconabe, because court actons
nvovng the actuatons of Cuaderno as Governor and Member
or Charman of the Monetary Board are st pendng n court
o Dzon exercsed supervson over the Bank; hs appontment as
charman of the Board of the Bank after he was forced to
resgn from the presdency of the PNB and from membershp of
the Monetary Board and wthn one year thereafter s n
voaton of the Ant-Graft and Corrupt Practces Act;
o Both Cuaderno and Dzon were alter egos of Roman;
The compant prayed for a wrt of premnary n|uncton aganst
the Monetary Board to prevent
o ts confrmaton of the appontments of Dzon and Cuaderno;
o the BoD of the Bank from recognzng Cuaderno as technca
consutant and Dzon as Charman of the Board; and
o Roman from appontng or seectng offcers or drectors of the
Bank, and aganst the recognton of any such appontees unt
fna determnaton of the acton.
The Monetary Board fed ts answer wth denas, admssons and
affrmatve defenses; but the other defendants fed separate
motons to dsmss
The court dened the petton for a wrt of premnary n|uncton
and dsmssed the case. It suggested that the matter at ssue n
the case may be presented n any of the pendng 8cases by means
of amended and suppementa peadngs.
Pantff Perez thereupon appeaed to ths Court.
ISSUE
1. W/N the Court beow erred n dsmssng the compant? YES
2. W/N the corporaton tsef must be made party defendant? YES
HELD
Page 1 of 2 | ALBERTO ANBOCHI ATILLO AVILA CHUA GUERRERO DELA ROSA MIRANDA REVOTE REYES SALVADOR SUAREZ SULIT TAYAG
Ths dgest may not be
reproduced and dstrbuted
wthout the permsson of
the author.
CORP OUIMSON
UNDERGROUND CASE DIGESTS
1. Phppne |ursprudence s setted that an individa! "#$%&'$!d()
i" *()+i##(d #$ in"#i##( a d()iva#iv( $) )(*)("(n#a#iv( "i#
$n ,('a!- $- #'( %$)*$)a#i$n .'()(in '( '$!d" "#$%& in
$)d() #$ *)$#(%# $) vindi%a#( %$)*$)a#( )i/'#"0 .'(n(v()
#'( $--i%ia!" $- #'( %$)*$)a#i$n )(-"( #$ "(0 $) a)( #'(
$n(" #$ ,( "(d $) '$!d #'( %$n#)$! $- #'( %$)*$)a#i$n. In
such actons, #'( "in/ "#$%&'$!d() i" )(/a)d(d a" a n$+ina!
*a)#10 .i#' #'( %$)*$)a#i$n a" #'( )(a! *a)#1 in in#()("#
Perezs acton here s precsey n conformty, wth these
prncpes. He s nether aegng nor vndcatng hs own
ndvdua nterest or pre|udce, but the nterest of the Repubc
Bank and the damage caused to t. The acton he has brought
s a dervatve one, expressy manfested to be for and n
behaf of the Repubc Bank, because t was fute to demand
acton by the corporaton, snce ts Drectors were nomnees
and creatures of defendant Roman. The frauds charged by
pantff are frauds aganst the Bank that redounded to ts
pre|udce.
The compant expressy peads that the appontment of
Cuaderno and of Dzon, were made ony to shed Roman from
crmna prosecuton and not to further the nterests of the
Bank, and avers that both men are Roman's alter egos. There
s no denyng that the facts thus peaded n the compant
consttute a cause of acton for the bank: i- #'( 2("#i$n(d
a**$in#+(n#" .()( +ad( "$!(!1 #$ *)$#(%# R$+an -)$+
%)i+ina! *)$"(%#i$n0 ,1 a B$a)d %$+*$"(d ,1 R$+an3"
%)(a#)(" and n$+in(("0 #'(n #'( +$n(1" di",)"(d in
-av$) $- Cad()n$ and Di4$n .$!d ,( an n!a.-!
.a"#a/( $) div()"i$n $- %$)*$)a#( -nd"0 "in%( #'( Ban&
.$!d 'av( n$ in#()("# in "'i(!din/ R$+an. The drectors
n approvng the appontments woud be commttng a breach
of trust therefore the Bank coud sue to nufy the
appontments, en|on dsbursement of ts funds to pay them,
and recover those pad out for the purpose, as prayed for n
the compant n ths case.
Defendants urge that the acton s mproper because the
pantff was not authorzed by the corporaton to brng sut n
ts behaf. An1 "%' a#'$)i#1 %$!d n$# ,( (5*(%#(d a"
#'( "i# i" ai+(d #$ n!!i-1 #'( a%#i$n #a&(n ,1 #'(
+ana/() and #'( B$D $- #'( Ban&6 and an1 d(+and -$)
in#)a-%$)*$)a#( )(+(d1 .$!d ,( -#i!(0 a" (5*)(""!1
*!(ad(d in #'( %$+*!ain#. T'("( %i)%+"#an%(" *()+i# a
"#$%&'$!d() #$ ,)in/ a d()iva#iv( "i# .
That no other stockhoder has chosen to make common cause
wth pantff Perez s rreevant, snce #'( "+a!!n("" $-
*!ain#i--3" '$!din/" i" n$ /)$nd -$) d(n1in/ 'i+ )(!i(-.
At any rate, t s yet too eary n the proceedngs for the
absence of other stockhoders to be of any sgnfcance, no
ssues havng even been |oned.
2. The Engsh practce s to make the corporaton a party pantff,
whe n the Unted States, eans n favor of ts beng |oned as
party defendant. Ob|ectons can be rased aganst ether method.
A,"(n%( $- %$)*$)a#( a#'$)i#1 .$!d "((+ #$ +i!i#a#(
a/ain"# +a&in/ #'( %$)*$)a#i$n a *a)#1 *!ain#i--0 .'i!(
7$inin/ i# a" d(-(ndan# *!a%(" #'( (n#i#1 in #'( a.&.a)d
*$"i#i$n $- )("i"#in/ an a%#i$n in"#i##(d -$) i#" ,(n(-i#.
8'a# i" i+*$)#an# i" #'a# #'( %$)*$)a#i$n3 "'$!d ,( +ad( a
*a)#10 in $)d() #$ +a&( #'( C$)#3" 7d/+(n# ,indin/ *$n
i#0 and #'" ,a) -#)( )(!i#i/a#i$n $- #'( i""(". On what sde
the corporaton appears oses mportance when t s consdered
that t ay wthn the power of the tra court to drect the makng of
such amendments of the peadngs, by addng or droppng partes,
as may be requred n the nterest of |ustce (Revsed Rue 3, sec.
11). 9i"7$ind() $- *a)#i(" i" n$# a /)$nd #$ di"+i"" an
a%#i$n.
Page 2 of 2 | ALBERTO ANBOCHI ATILLO AVILA CHUA GUERRERO DELA ROSA MIRANDA REVOTE REYES SALVADOR SUAREZ SULIT TAYAG