Lanuza vs. CA
GR No. 131394 | March 28, 2005
Facts:
·
Petitioners seek
to nullify the Court of Appeals’ Decision in CA–G.R. SP No. 414731 promulgated on 18 August 1997, affirming the SEC Order dated 20 June 1996, and the Resolution2 of the Court of Appeals dated 31 October 1997
which denied petitioners’ motion for reconsideration.
·
In 1952, the
Philippine Merchant Marine School, Inc. (PMMSI) was incorporated, with seven
hundred (700) founders’ shares and seventy-six (76) common shares as its
initial capital stock subscription reflected in the articles of incorporation
·
Onrubia et. al, who
were in control of PMMSI registered the company’s stock and transfer book for
the first time in 1978, recording thirty-three (33) common shares as the only
issued and outstanding shares of PMMSI.
·
In 1979, a
special stockholders’ meeting was called and held on the basis of what was
considered as a quorum of twenty-seven (27) common shares, representing more
than two-thirds (2/3) of the common shares issued and outstanding.
·
In 1982, Juan
Acayan, one of the heirs of the incorporators filed a petition for the
registration of their property rights was filed before the SEC over 120
founders’ shares and 12 common shares owned by their father
·
SEC Hearing
Officer: heirs of Acayan were entitled to the claimed shares and called for a
special stockholders’ meeting to elect a new set of officers.
·
SEC en banc:
affirmed the decision
·
As a result, the
shares of Acayan were recorded in the stock and transfer book.
·
On May 6, 1992, a
special stockholders’ meeting was held to elect a new set of directors
·
Onrubia et al
filed a petition with SEC questioning the validity of said meeting alleging that the quorum for the said
meeting should not be based on the 165 issued and outstanding shares as per the
stock and transfer book, but on the initial subscribed capital stock of seven
hundred seventy-six (776) shares, as reflected in the 1952 Articles of
Incorporation
·
Petition was dismissed
·
SC en banc:
shares of the deceased incorporators should be duly represented by their
respective administrators or heirs concerned. Called for a stockholders meeting
on the basis of the stockholdings reflected in the articles of incorporation
for the purpose of electing a new set of officers for the corporation
·
Lanuza, Acayan et
al, who are PMMSI stockholders, filed a petition for review with the CA,
raising the following issues:
1.
whether the basis
the outstanding capital stock and accordingly also for determining the quorum
at stockholders’ meetings it should be the 1978 stock and transfer book or if
it should be the 1952 articles of incorporation
(They contended that the basis is the stock
and transfer book, not articles of incorporation in computing the quorum)
2.
whether the
Espejo decision (decision of SEC en banc ordering the recording of the shares
of Jose Acayan in the stock and transfer book) is applicable to the benefit of
Onrubia et al
·
CA decision:
1.
For purposes of
transacting business, the quorum should be based on the outstanding capital
stock as found in the articles of incorporation
2.
To require a
separate judicial declaration to recognize the shares of the original
incorporators would entail unnecessary delay and expense. Besides. the
incorporators have already proved their stockholdings through the provisions of
the articles of incorporation.
·
Appeal was made
by Lanuza et al before the SC
·
Lanuza et al’
contention:
- 1992
stockholders’ meeting was valid and legal
- Reliance on
the 1952 articles of incorporation for determining the quorum negates the
existence and validity of the stock and transfer book Onrubia et al
prepared
- Onrubia et
al must show and prove entitlement to the founders and common shares in a
separate and independent action/proceeding in order to avail of the
benefits secured by the heirs of Acayan
·
Onrubia et al’s
contention, based on the Memorandum: petition should be dismissed on the ground
of res judicata
·
Another appeal
was made
·
Lanuza et al’s
contention: instant petition is
separate and distinct from G.R. No. 131315, there being no identity of parties,
and more importantly, the parties in the two petitions have their own distinct
rights and interests in relation to the subject matter in litigation
·
Onrubia et al’s
manifestation and motion: moved for the dismissal of the case
Issue: What should be the basis of quorum for a
stockholders’ meeting—the outstanding capital stock as indicated in the
articles of incorporation or that contained in the company’s stock and transfer
book?
Ruling:
·
Articles of Incorporation
-
Defines the
charter of the corporation and the contractual relationships between the State
and the corporation, the stockholders and the State, and between the
corporation and its stockholders.
-
Contents are binding, not only on the corporation, but also on its
shareholders.
·
Stock and transfer book
-
Book which
records the names and addresses of all stockholders arranged alphabetically,
the installments paid and unpaid on all stock for which subscription has been
made, and the date of payment thereof; a statement of every alienation, sale or
transfer of stock made, the date thereof and by and to whom made; and such
other entries as may be prescribed by law
-
necessary as a
measure of precaution, expediency and convenience since it provides the only
certain and accurate method of establishing the various corporate acts and
transactions and of showing the ownership of stock and like matters
-
Not public
record, and thus is not exclusive evidence of the matters and things which
ordinarily are or should be written therein
·
In this case, the articles of incorporation indicate that at the
time of incorporation, the incorporators were bona fide stockholders of 700 founders’ shares
and 76 common shares. Hence, at that time, the corporation had 776 issued and
outstanding shares.
·
According to Sec.
52 of the Corp Code, “a quorum shall consist of the stockholders representing a
majority of the outstanding capital stock.” As such, quorum is based on the
totality of the shares which have been subscribed and issued, whether it be
founders’ shares or common shares
·
To base the
computation of quorum solely on the obviously deficient, if not inaccurate
stock and transfer book, and completely disregarding the issued and outstanding
shares as indicated in the articles of incorporation would work injustice to
the owners and/or successors in interest of the said shares.
·
The stock and
transfer book of PMMSI cannot be used as the sole basis for determining the
quorum as it does not reflect the totality of shares which have been
subscribed, more so when the articles of incorporation show a significantly
larger amount of shares issued and outstanding as compared to that listed in
the stock and transfer book.
·
One who is
actually a stockholder cannot be denied his right to vote by the corporation
merely because the corporate officers failed to keep its records accurately.
A corporation’s records are not the only evidence of the ownership of
stock in a corporation.
·
It is no less
than the articles of incorporation that declare the incorporators to have in
their name the founders and several common shares. Thus, to disregard the
contents of the articles of incorporation would be to pretend that the basic
document which legally triggered the creation of the corporation does not exist
and accordingly to allow great injustice to be caused to the incorporators and
their heirs
