Chua vs. CA, 443 SCRA 142 (2004) Digest

Civil Liability Arising from Felony

40. Chua vs. CA, 443 SCRA 142 (2004)

Student: G-one T. Paisones

Professor: Atty. Cisco Franz S. Maclang

Facts:

                On February 28, 1996, private respondent Lydia Hao, treasurer of Siena Realty Corporation, filed a complaint-affidavit with the City Prosecutor of Manila charging Francis Chua and his wife, Elsa Chua, of four counts of falsification of public documents pursuant to Article 172^[3] in relation to Article 171^[4] of the RPC.

Petitioner avers that a derivative suit is by nature peculiar only to intra-corporate proceedings and cannot be made part of a criminal action. He cites the case of Western Institute of Technology, Inc. v. Salas, where the court said that an appeal on the civil aspect of a criminal case cannot be treated as a derivative suit.  Petitioner asserts that in this case, the civil aspect of a criminal case cannot be treated as a derivative suit, considering that Siena Realty Corporation was not the private complainant.

Issue:

                WON Court of Appeals committed reversible errors IN RULING THAT LYDIA HAO’S FILING OF CRIMINAL CASE NO. 285721 WAS IN THE NATURE OF A DERIVATIVE SUIT

Held:

                No.

Ratio:

                Petitioner misapprehends our ruling in Western Institute. Under Section 36^[13] of the Corporation Code, read in relation to Section 23,^[14] where a corporation is an injured party, its power to sue is lodged with its board of directors or trustees.^[15] An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stocks 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.^[16]
                A derivative action is a suit by a shareholder to enforce a corporate cause of action. The corporation is a necessary party to the suit. And the relief which is granted is a judgment against a third person in favor of the corporation. Similarly, if a corporation has a defense to an action against it and is not asserting it, a stockholder may intervene and defend on behalf of the corporation.^[