RICARDO L. GAMBOA, LYDIA R. GAMBOA, HONORIO DE LA RAMA, EDUARDO DE LA RAMA, AND THE HEIRS OF MERCEDES DE LA RAMA­-BORROMEO, PETITIONERS, VS. HON. OSCAR R. VICTORIANO AS PRESIDIN…

Petition for certiorari to review the order of the respondent
judge, dated January 2, 1975, denying the petitioners’ motion to dismiss the
complaint filed in Civil Case No. 10257 of the Court of First Instance of Negros Occidental, entitled, “Benjamin Lopue, Sr., et al., plaintiffs, versus Ricardo Gamboa, et al., defendants,” as well as the order
dated April 4, 1975, denying the motion for the reconsideration of said order.

In the aforementioned Civil Case No. 10257 of the Court of First
Instance of Negros Occidental, the herein
petitioners, Ricardo L. Gamboa, Lydia R. Gamboa, Honorio de la Rama, Eduardo de la Rama, and the
late Mercedes de la Rama-Borromeo, now represented by
her heirs, as well as Ramon de la Rama, Paz de la Rama-Battistuzzi, and Enzo Battistuzzi, were sued by the herein private respondents,
Benjamin Lopue, Sr., Benjamin Lopue,
Jr., Leonito Lopue, and
Luisa U. Dacles, to nullify the issuance of 823
shares of stock of the Inocentes de la Rama, Inc. in favor of the said defendants.  The gist of the complaint, filed on April 4,
1972, is that the plaintiffs, with the exception of Anastacio
Dacles, who was joined as a formal party, are the
owners of 1,328 shares of stock of the Inocentes de
la Rama, Inc., a domestic corpora­tion, with an
authorized capital stock of 3,000 shares, with a par value of P100.00 per
share, 2,177 of which were subscribed and issued, thus leaving 823 shares unissued; that upon the plaintiffs’ acquisition of the
shares of stock held by Rafael Ledesma and Jose Sicangco, Jr., then President and Vice-President of the
corporation, respectively, the defendants Mercedes R. Borromeo,
Honorio de la Rama, and
Ricardo Gamboa, remaining members of the board of
directors of the corporation, in order to forestall the takeover by the
plaintiffs of the afore-named corporation, surreptitiously met and elected
Ricardo L. Gamboa and Honorio
de la Rama as president and vice-president of the
corporation, respectively, and thereafter passed a resolution authorizing the
sale of the 823 unissued shares of the corporation to
the defendants, Ricardo L. Gamboa, Lydia R. Gamboa, Honorio de la Rama, Ramon de la Rama, Paz R. Battistuzzi, Eduardo de la Rama,
and Mercedes R. Borromeo, at par value, after which
the defendants Honorio de la Rama,
Lydia de la Rama-Gamboa, and Enzo
Battistuzzi were elected to the board of directors of
the corporation; that the sale of the unissued 823
shares of stock of the corporation was in violation of the plaintiffs’ and
pre-emptive rights and made without the approval of the board of directors
representing 2/3 of the outstanding capital stock, and is in disregard of the
strictest relation of trust existing between the defendants, as stockholders
thereof; and that the defendants Lydia de la Rama-Gamboa,
Honorio de la Rama, and Enzo Battistuzzi were not legally
elected to the board of directors of the said corporation and has unlawfully
usurped or intruded into said office to the prejudice of the plaintiffs.  Wherefore, they prayed that a writ of pre­liminary
injunction be issued restraining the defendants from committing, or continuing
the performance of an act tending to prejudice, diminish or otherwise injure
the plaintiffs’ rights in the corporate properties and funds of the corpora­tion,
and from disposing, transferring, selling, or otherwise impairing the value of
the 823 shares of stock illegally issued by the defendants; that a receiver be
appointed to preserve and administer the property and funds of the corporation;
that defendants Lydia de la Rama-Gamboa, Honorio de la Rama, and Enzo Battistuzzi be declared as
usurpers or intruders into the office of director in the corporation and,
consequently, ousting them therefrom and declare
Luisa U. Dacles as a legally elected director of the
corporation; that the sale of 823 shares of stock of the corporation be
declared null and void; and that the defendants be ordered to pay damages and
attorney’s fees, as well as the costs of suit.^[1]

Acting upon the complaint, the respondent judge, after proper
hearing, directed the clerk of court “to issue the corresponding writ of
preliminary injunction restraining the defendants and/or their representatives,
agents, or persons acting in their behalf from the commission or continuance of
any act tending in any way to prejudice, diminish or otherwise injure
plaintiffs’ rights in the corporate properties and funds of the corporation ‘Inocentes de la Rama, Inc.’ and
from disposing, transferring, selling or otherwise impairing the value of the
certificates of stock allegedly issued illegally in their names on February 11,
1972, or at any date thereafter, and ordering them to deposit with the Clerk of
Court the corresponding certificates of stock for the 823 shares issued to said
defendants on February 11, 1972, upon plaintiffs’ posting a bond in the sum of
P50,000.00, to answer for any damages and costs that may be sustained by the
defendants by reason of the issuance of the writ, copy of the bond to be
furnished to the defendants.”^[2]
Pursuant thereto, the defendants deposited with the clerk of court the
corporation’s certificates of stock Nos. 80 to 86, inclusive, representing the
disputed 823 shares of stock of the corporation.^[3]

On October 31, 1972, the plaintiffs therein, now private
respondents, entered into a compromise agreement with the defendants Ramon de
la Rama, Paz de la Rama-Battistuzzi,
and Enzo Battistuzzi,^[4]
whereby the contracting parties withdrew their respective claims against each
other and the afore-named defendants waived and transferred their rights and interests
over the questioned 823 shares of stock in favor of the plaintiffs, as follows:

“3.  That the defendants Ramon L. de la Rama, Paz de la Rama Battistuzzi and Enzo Battistuzzi will waive, cede, transfer or otherwise convey,
as they hereby waive, cede, transfer and convey, free from all liens and
encumbrances unto the plaintiffs, in such proportion as the plaintiffs may
among themselves determine, all of the rights, interests, participations or
title that the defendants Ramon L. de la Rama, Paz de
la Rama Battistuzzi, Enzo Battistuzzi now have or may
have in the eight hundred twenty-three (823) shares in the capi­tal stock of
the corporation ‘INOCENTES DELA
RAMA, INC.’ which were issued in the names of the
defendants in the above-entitled case on or about February 11, 1972, or at any
date thereafter and which shares are the subject-matter of the present
suit.”

The compromise agreement was approved by
the trial court on December 4, 1972.^[5]

As a result, the defendants filed a motion to dismiss the
complaint, on November 19, 1974, upon the grounds:  (1) that the plaintiffs’ cause of action had
been waived or abandoned; and (2) that they were estopped
from further prosecuting the case since they have, in effect, acknowledged the
validity of the issuance of the disputed 823 shares of stock.  The motion was denied on January 2, 1975.^[6]

The defendants also filed a motion to declare the defendants
Ramon L. de la Rama, Paz de la Rama-Battistuzzi,
and Enzo Battistuzzi in
contempt of court, for having violated the writ of preliminary injunction when
they entered into the afore­said compromise agreement with the plaintiffs, but
the respondent judge denied the said motion for lack of merit.^[7]

On February 10, 1975, the defendants filed a motion for the
reconsideration of the order denying their motion to dismiss the complaint,^[8]
and subsequently, an Addendum thereto, claiming that the respondent court has
no jurisdiction to interfere with the management of the corporation by the
board of directors, and the enactment of a resolution by the defendants, as
members of the board of directors of the corporation, allowing the sale of the
823 shares of stock to the defendants was purely a management concern which the
courts could not interfere with.^[9]
When the trial court denied said motion and its addendum, the defendants filed
the instant petition for certiorari for the review of said orders.

The petition is without merit. 
The questioned order denying the petitioners’ motion to dismiss the
complaint is merely interlocutory and cannot be the subject of a petition for
certiorari.  The proper procedure to be
followed in such a case is to continue with the trial of the case on the merits
and, if the decision is adverse, to reiterate the issue on appeal.  It would be a breach of orderly procedure to
allow a party to come before this Court every time an order is issued with
which he does not agree.

Besides, the order denying the petitioners’ motion to dismiss the
complaint was not capriciously, arbitrarily, or whimsically issued, or that the
respondent court lacked jurisdiction over the cause as to warrant the issuance
of the writ prayed for.  As found by the
respondent judge, the petitioners have not waived their cause of action against
the petitioners by entering into a compromise agreement with the other defendants
in view of the express provision of the compromise agree­ment that the same
“shall not in any way constitute or be considered a waiver or abandonment
of any claim or cause of action against the other defendants.” There is
also no estoppel because there is nothing in the
agreement which could be construed as an affirmative admission by the plaintiff
of the validity of the resolution of the defendants which is now sought to be
judicially declared null and void.  The foregoing
circumstances and the fact that no consideration was mentioned in the agreement
for the transfer of rights to the said shares of stock to the plaintiffs are
sufficient to show that the agreement was merely an admission by the defendants
Ramon de la Rama, Paz de la Rama-Battistuzzi,
and Enzo Battistuzzi of the
validity of the claim of the plaintiffs.

The claim of the petitioners, in their Addendum to the motion for
reconsideration of the order denying the motion to dismiss the complaint,
questioning the trial court’s jurisdiction on matters affecting the management
of the corporation, is without merit. 
The well-known rule is that courts cannot undertake to control the
discretion of the board of directors about administrative matters as to which they
have legitimate power of action,^[10]
and contracts intra vires entered into
by the board of directors are binding upon the corporation and courts will not
interfere unless such contracts are so un­conscionable and oppressive as to
amount to a wanton destruction of the rights of the minority.^[11]
In the instant case, the plaintiffs aver that the defendants have concluded a
transaction among themselves as will result to serious injury to the interests
of the plaintiffs, so that the trial court has jurisdiction over the case.

The petitioners further contend that the proper remedy of the
plaintiffs would be to institute a derivative suit against the petitioners in
the name of the corporation in order to secure a binding relief after
exhausting all the possible remedies available within the corporation.

An individual stockholder is permitted to institute a derivative
suit on behalf of the corporation wherein he holds stock in order to protect or
vindicate corporate rights, whenever the officials of the corporation refuse to
sue, or are the ones to be sued or hold the control of the corporation.  In such actions, the suing stockholder is
regarded as a nominal party, with the corporation as the real party in
interest.^[12]
In the case at bar, however, the plaintiffs are alleging and vindicating their
own individual interests or prejudice, and not that of the corporation.  At any rate, it is yet too early in the
proceedings since the issues have not been joined.  Besides, misjoinder
of parties is not a ground to dismiss an action.^[13]

WHEREFORE, the petition should be, as it is hereby
DISMISSED for lack of merit.  With costs
against the petitioners.

SO ORDERED.

Antonio, (Actg. Chairman), Aquino, Santos,
and Abad
Santos, JJ., concur.

Barredo, J., on leave.

^[1] Rollo, p. 48.

^[2] Id.,
p. 10.

^[3] Id.,
p. 102.

^[4] Id.,
p. 63.

^[5] Id.,
p. 12.

^[6] Id.,
p. 15.

^[7] Id.,
p. 99.

^[8] Id.,
p. 4, par. VII of the Petition.

^[9] Id.,
p. 147, p. 2 of Memorandum for the Respondents.

^[10]
Govt. vs. El Hogar Filipino, 50 Phil. 399.

^[11] Ingersoll vs. Malabon
Sugar Co., 53 Phil. 745.

^[12]
Republic Bank vs. Cuaderno, L-22399, March 30, 1967, 19 SCRA 671 and cases cited therein.

^[13]
Sec. 11, Rule 3, Revised Rules of Court.