G.R. No. 177549 June 18, 2009
Derivative Suit
Facts: The families of Yu and Yukayguan were all stockholders of Winchester Industrial Supply Inc. The Yukayguans accused the Yu’s of misappropriating the funds and properties of Winchester by understating the sales, charging their personal and family expenses to the corporation and withdrawing stocks for their personal use and without paying the same. For this reason, the Yukayguans filed a complaint for accounting, inspection of corporate books and damages through embezzlement and falsification of corporate records and accounts against the Yu’s. The said complaint was filed in their own behalf and as derivative suit on behalf of Winchester. The trial court dismissed the complaint on the ground that they did not comply with the essential requisites for filing a derivative suit. On appeal the CA upheld the decision but was later reversed and converted into a liquidation proceeding.
Issue: Whether the derivative suit is meritorious.
Held: No. Glaringly, a derivative suit is fundamentally distinct and independent from liquidation proceedings. They are neither part of each other nor the necessary consequence of the other. There is totally no justification for the Court of Appeals to convert what was supposedly a derivative suit instituted by respondents, on their own behalf and on behalf of Winchester, Inc. against petitioners, to a proceeding for the liquidation of Winchester, Inc.
Even assuming arguendo that the parties did submit a petition for the dissolution of Winchester, Inc. and the same was approved by the SEC, the Court of Appeals was still without jurisdiction to order the final settlement by the RTC of the remaining corporate concerns. It must be remembered that the Complaint filed by respondents before the RTC essentially prayed for the accounting and reimbursement by petitioners of the corporate funds and assets which they purportedly misappropriated for their personal use; surrender by the petitioners of the corporate books for the inspection of respondents; and payment by petitioners to respondents of damages. There was nothing in respondents Complaint which sought the dissolution and liquidation of Winchester, Inc. Hence, the supposed dissolution of Winchester, Inc. could not have resulted in the conversion of respondents derivative suit to a proceeding for the liquidation of said corporation, but only in the dismissal of the derivative suit based on either compromise agreement or mootness of the issues.
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