Forest Hills v. Fil-Estate
Forest Hills v. Fil-Estate
Forest Hills v. Fil-Estate
G.R. No. 206649| 20 July 2016 •A derivative suit is a remedy designed by equity as a
principal defense of the minority shareholders against
Derivative Suits the abuses of the majority. Under the Corporation
DOCTRINE: The stockholder should have exerted all Code, the corporation's power to sue is lodged with its
reasonable efforts to exhaust all remedies available board of directors or trustees. However, when its
under the articles of incorporation, by-laws, laws officials refuse to sue or are the ones to be sued, or
or rules governing the corporation or partnership hold control of the corporation, an individual
to obtain the relief he desires with particularity in stockholder maybe permitted to institute a derivative
the complaint as one of the requirements of filing suit to enforce a corporate cause of action on behalf of
a derivative suit. a corporation in order to protect or vindicate its rights.
In such actions, the corporation is the real party in
FACTS: interest, while the stockholder suing on behalf of the
corporation is only a nominal party. Hence, the
•Kingsville Construction and Development derivative suit for specific performance against FEPI
Corporation (Kingsville) and Kings Properties and FEGDI falls under the jurisdiction of special
Corporation (KPC) entered into a project agreement commercial courts.
with Fil-Estate Properties, Inc. (FEPI)
•Here, the fact that FHGCCI denominated the
FEPI agreed to finance and cause the Complaint as a derivative suit for specific
development of several parcels of land performance is sufficient reason for the RTC to dismiss
owned by Kingsville into Forest Hills it for lack of jurisdiction, as the RTC where the
Residential Estates and Golf and Country Complaint was raffled is not a special commercial
Club (first-class residential area/golf- court.
course/commercial center)
•If the RTC has no internal branch designated as a
FEPI was tasked to incorporate Forest Hills Special Commercial Court, the proper recourse is to
Golf and Country Club, Inc. (FHGCCI) with an refer the case to the nearest RTC with a designated
authorized stock of 3,600 shares and to Special Commercial Court branch within the judicial
perform the development and construction region. Upon referral, the RTC to which the case was
work and other undertakings as full payment of referred to should re-docket the case as a
its subscription to the authorized capital stock commercial case. And if the said RTC has only
of the club.oThe remaining shares of the one branch designated as a Special Commercial
should be retained by Kingsville in exchange Court, it should assign the case to the sole special
for the parcels of land used for the golf course branch.
development.
ISSUE:
•FEPI assigned its rights and obligations over the
project to its related corporation Fil-Estate Golf Whether or not the complaint filed complies with the
Development, Inc. (FEGDI) requisites for a valid derivative suit.