FACTS:

This case involves Stronghold Insurance Company, Inc. appealing the decision that held them jointly and solidarily liable for damages to the Cuencas and Tayactac. Marañon filed a complaint against the Cuencas for collection of a sum of money and damages and applied for a writ of preliminary attachment. The RTC granted the application and Marañon posted a surety bond issued by Stronghold Insurance. The properties of Arc Cuisine, Inc. were levied upon to enforce the writ of preliminary attachment. The Cuencas and Tayactac filed a motion to dismiss and quash the writ of preliminary attachment based on jurisdictional grounds, but the RTC denied the motion. The CA then granted the petition of the Cuencas and Tayactac, dismissed the amended complaint for lack of jurisdiction, and remanded the case to the RTC for resolution on the claim for damages.

Furthermore, when the sheriff went to deliver the attached properties, they were missing, and there were indications that the properties were seen at a different location. As a result, the Cuencas and Tayactac filed a motion to require the sheriff to deliver the attached properties, to direct Stronghold Insurance to pay damages, and to hold Marañon personally liable for the missing properties.

In another part of the case, the Cuencas and Tayactac filed a complaint against Marañon and Stronghold Insurance for damages caused by the unlawful and wrongful issuance of a writ of attachment. Marañon argued that because he and his relatives owned 50% of Arc Cuisine, Inc., he should be entitled to 50% of the value of the missing attached properties. The trial court found Marañon and Stronghold Insurance jointly and solidarily liable for damages, ordering them to pay various amounts to the Cuencas and Tayactac. Only Stronghold Insurance appealed the decision to the CA, which affirmed the judgment of the trial court. Stronghold Insurance then filed a petition for review on certiorari before the Supreme Court, raising several issues. The Cuencas and Tayactac argued that Stronghold Insurance is barred by estoppel from raising new issues on appeal.

ISSUES:

1. Whether Stronghold can be held solidarily liable with Marañon for damages despite the limited liability stated in their surety bond.

2. Whether the Cuencas and Tayactac are the real parties in interest in claiming damages from the levy on attachment of properties of Arc Cuisine, Inc.

3. Whether the Cuencas and Tayactac have legal standing to claim damages for themselves as stockholders of Arc Cuisine, Inc.

4. Whether the plaintiff stockholders have a cause of action to claim damages and the value of their participation in the corporate assets for mismanagement.

5. Whether the action stated in the complaint can be converted into a derivative suit for the benefit of the corporation.

6. Whether the Cuencas and Tayactac have a right of action to recover damages resulting from the attachment.

7. Whether the action brought by the Cuencas and Tayactac is proper.

RULING:

1. The Court held that Stronghold could be held solidarily liable with Marañon for damages despite the limited liability stated in their surety bond. The Court reasoned that the writ of attachment issued and enforced against the respondents had been declared illegal, null and void, and both Marañon and Stronghold were jointly and severally liable for the damages sustained by the respondents due to the issuance and enforcement of the illegal writ of attachment.

2. No, the Cuencas and Tayactac are not the real parties in interest. Only Arc Cuisine, Inc. had the right under the substantive law to claim and recover damages from the levy on attachment of its properties. The damages prejudiced Arc Cuisine, Inc., not the Cuencas and Tayactac.

3. No, the Cuencas and Tayactac do not have legal standing to claim damages for themselves as stockholders of Arc Cuisine, Inc. Their stockholdings only represent their proportionate interest in the properties of the corporation, but do not vest in them any legal right or title to any specific properties of the corporation. They lack the legal personality to claim damages for themselves.

4. The plaintiff stockholders do not have a cause of action to claim damages and the value of their participation in the corporate assets for mismanagement because they brought the action for their own benefit, rather than for the benefit of the corporation. Section 16 of the Corporation Law prohibits the distribution of corporate assets to stockholders until after the payment of debts and termination of the corporation's existence.

5. The action stated in the complaint can be converted into a derivative suit for the benefit of the corporation by changing the prayer. However, since the complaint was filed in the wrong court, it has to be dismissed and cannot be amended.

6. The Cuencas and Tayactac do not have a right of action to recover damages resulting from the attachment because their custody of the affected properties was only incidental to the operation of the corporation. They would need to bring a proper action in the name of the corporation to recover such damages.

7. The action brought by the Cuencas and Tayactac in their own names is not proper. They should have brought the action in the name of the corporation.

PRINCIPLES:

• Courts should only resolve actual controversies involving rights that are legally demandable and enforceable.

• Every action must be prosecuted or defended in the name of the real party in interest, who is the one who stands to be benefited or injured by the judgment in the suit or is entitled to the avails of the suit.

• A real party in interest should appear to be the present real owner of the right sought to be enforced, with a present substantial interest, and not a mere expectancy or future, contingent, subordinate, or consequential interest.

• Lack of cause of action is a ground for dismissal when the plaintiff is not the real party in interest.

• Jurisdiction over a case requires the presence or impleading of the real party in interest.

• The requirement for the real party in interest ensures that the party with the legal right to sue brings the action, and this interest ends when a judgment involving the nominal plaintiff will protect the defendant from a subsequent identical action. The requirement benefits the defendant by protecting them from further suits regarding the same claim.

• The real party in interest need not be the person who will ultimately benefit from the successful prosecution of the action. What is important is that the party asserting the right is recognized as the real party in interest under the rules of procedure.

• Courts are established to afford reliefs to persons whose rights or property interests have been invaded or violated, and to give relief only at the instance of such persons. The jurisdiction of a court may not be invoked by or for an individual whose rights have not been breached.

• The remedial right or obligation is the person's interest in the controversy. Without the right, a person may not become a party plaintiff; without the obligation, a person may not be sued as a party defendant; without the violation, there may not be a suit. The controversy must be actual and exist between adversary parties for the court to have jurisdiction.

• Stockholders do not have standing to claim damages for themselves unless they do so in the name of the corporation itself. Any damages should be claimed by the corporation, not the stockholders, as the injury complained of is primarily to the corporation.

• Stockholders cannot directly claim damages for mismanagement on behalf of the corporation. Such damages can only be recovered for the benefit of the corporation after the payment of its debts and termination of its existence (Section 16 of the Corporation Law).

• A complaint can be converted into a derivative suit for the benefit of the corporation by changing the prayer, but this amendment is not possible if the complaint was filed in the wrong court.

• Incidental custody of corporate assets does not grant individuals the right of action to recover damages resulting from attachment. Such action should be brought in the name of the corporation.

• An action brought on behalf of the corporation should be filed in the name of the corporation, not in the individuals' names.