Strategic Alliance vs.

Radstock Securities
Facts
Construction Development Corporation of the Philippines (CDCP) was incorporated in 1966. It
was granted a franchise to construct, operate and maintain toll facilities in the North and South
Luzon Tollways and Metro Manila Expressway. CDCP Mining Corporation (CDCP Mining), an
affiliate of CDCP, obtained loans from Marubeni Corporation of Japan(Marubeni). A CDCP
official issued letters of guarantee for the loans although there was no CDCP Board Resolution
authorizing the issuance of such letters of guarantee. CDCP Mining secured the Marubeni loans
when CDCP and CDCP Mining were still privately owned and managed. In 1983, CDCPs name
was changed to Philippine National Construction Corporation (PNCC) in order to reflect that the
Government already owned 90.3% of PNCC and only 9.70% is under private ownership.
Meanwhile, the Marubeni loans to CDCP Mining remained unpaid.
On 20 October 2000 and 22 November 2000, the PNCC Board of Directors (PNCC Board)
passed Board Resolutions admitting PNCCs liability to Marubeni. Previously, for two decades
the PNCC Board consistently refused to admit any liability for the Marubeni loans. In January
2001, Marubeni assigned its entire credit to Radstock Securities Limited (Radstock), a foreign
corporation. Radstock immediately sent a notice and demand letter to PNCC.PNCC and
Radstock entered into a Compromise Agreement. Under this agreement, PNCC shall pay
Radstock the reduced amount of P6,185,000,000.00 in full settlement of PNCCs guarantee of
CDCP Minings debt allegedly totaling P17,040,843,968.00 (judgment debt as of 31 July 2006).
To satisfy its reduced obligation, PNCC undertakes to (1) "assign to a third party assignee to be
designated by Radstock all its rights and interests" to the listed real properties of PNCC; (2) issue
to Radstock or its assignee common shares of the capital stock of PNCC issued at par value
which shall comprise 20% of the outstanding capital stock of PNCC; and (3) assign to Radstock
or its assignee 50% of PNCCs 6% share, for the next 27 years, in the gross toll revenues of the
Manila North Tollways Corporation. Strategic Alliance Development Corporation
(STRADEC)moved for reconsideration. STRADEC alleged that it has a claim against PNCC as a
bidder of the National Governments shares, receivables, securities and interests in PNCC.
Sison, a stockholder and former PNCC President and Board Chairman, filed a Petition for
Annulment of Judgment Approving Compromise Agreement before the Court of Appeals. The
case was docketed as CA-G.R. SP No. 97982.
Issue : Whether or not Sison has standing to file the petition
Held
Sison has legal standing to challenge the Compromise Agreement. Although there was no
allegation that Sison filed the case as a derivative suit in the name of PNCC, it could be fairly
deduced that Sison was assailing the Compromise Agreement as a stockholder of PNCC. In such

a situation, a stockholder of PNCC can sue on behalf of PNCC to annul the Compromise
Agreement.
A derivative action is a suit by a stockholder to enforce a corporate cause of action. Under the
Corporation Code, where a corporation is an injured party, its power to sue is lodged with its
board of directors or trustees. However, an individual stockholder may file a derivative suit on
behalf of the corporation to protect or vindicate corporate rights whenever the officials of the
corporation refuse to sue, or are the ones to be sued, or hold control of the corporation.1[27]In such
actions, the corporation is the real party-in-interest while the suing stockholder, on behalf of the
corporation, is only a nominal party.
In this case, the PNCC Board cannot conceivably be expected to attack the validity of the
Compromise Agreement since the PNCC Board itself approved the Compromise Agreement. In
fact, the PNCC Board steadfastly defends the Compromise Agreement for allegedly being
advantageous to PNCC.