G.R. No. 193572 - Tsuneishi Heavy Industries , Inc. vs. MIS Maritime Corp.

The consolidated cases involve a familial dispute concerning the validity of the transfer of certain shares of stock in Phil-Ville Development and Housing Corporation (“Phil-Ville”).
Petitioners Cecilia Que Yabut, Eumir Carlo Que Camara, and Ma. Corazon Que Garcia face respondents Carolina Que Villongco, Ana Maria Que Tan, Angelica Que Gonzales (now deceased and substituted by her heir, Rosa Maria Que Gonzales), Elaine Victoria Que Tan, and Edison Williams Que Tan.

Phil-Ville is a family corporation founded by Geronima Gallego Que for engaging in the real estate business.
Its authorized capital is PHP 20,000,000.00 divided into 200,000 shares, with Geronima personally holding 3,140 shares and the remaining 196,860 shares equally distributed among her six children.

Two years prior to Geronima’s death (August 31, 2007), a document titled “Sale of Shares of Stocks” dated June 11, 2005 purportedly transferred Geronima’s 3,140 shares.
Cecilia acted as Geronima’s attorney-in-fact in executing the instrument, which apportioned shares among various heirs:

This apportionment resulted in the formation of two groups: the Villongco Group (Carolina, Ana Maria, and Angelica or their heirs) and the Yabut Group (Cecilia, Corazon, and Luisa or their heirs).

Members of the Villongco Group filed a complaint (Civil Case No. CV-940-MN) challenging the validity of the share transfer, alleging simulation and problematic fractional shares that could not be voted.
Contention arose over the disputed 3,140 (or 3,142 when including fractional shares) shares being used in determining voting rights and assembling a quorum in meetings.

Petitioners convened successive annual stockholders’ meetings—in 2014, 2015, and 2017—with attendance limited mostly to the Yabut Group.
At these meetings, petitioners were elected as directors and officers of Phil-Ville.
Respondents, contesting the election results, filed election protests and corresponding complaints before Branch 74 of the RTC of Malabon City (e.g., SEC Case Nos. SEC-14-001-MN, SEC-15-001-MN, and SEC-17-001-MN).

The RTC ruled on election contests, declaring the meetings and resulting elections void due to the lack of a required quorum and erroneous inclusion of disputed shares.
On appeal, the Court of Appeals (CA) set aside the RTC orders citing failure to clearly and distinctly state the facts and the applicable law pursuant to Section 1, Rule 36 of the Rules of Court.
In separate rulings in G.R. Nos. 242353 and 253530, the CA and subsequently this Court addressed issues including the valid computation of quorum and the impact of pending litigation on share voting rights.

The CA committed reversible error in its decisions by excluding disputed shares from quorum computations.
The election contests should not be rendered moot by subsequent meetings and that the disputed shares should still confer voting rights.
The CA’s orders failed to comply with the clear and distinct statement requirements as mandated by the Rules of Court.

The CA’s rulings are supported by established jurisprudence, specifically referencing the case of Villongco v. Yabut.
The methodologies of holding the meetings, the validation of proxies, and the overall conduct of elections are flawed.

Whether the 2015 and 2017 Election Contest Orders are void for failing to comply with Section 1, Rule 36 of the Rules of Court by not clearly and distinctly stating the factual and legal bases for their rulings.

Whether the conduct of the subsequent 2018 Phil-Ville stockholders’ meeting and election renders the issues raised in the 2017 election contest moot and academic.

Whether the elements of litis pendentia exist between the election contests (2015 and 2017) and the Civil Case No. CV-940-MN concerning the disputed shares.

Whether Phil-Ville’s shares of stock, including the disputed 3,140 (or 3,142) shares, should be included in computing the required quorum and whether these shares may be validly voted despite ongoing litigation.