Case Digest (G.R. No. 277015)
Facts:
Alvin Clark Y. Teng v. Pearly Y. Teng, et al., G.R. No. 277015, February 17, 2025, Supreme Court Third Division, Inting, J., writing for the Court.Petitioner Alvin Clark Y. Teng (Alvin) sued respondents Pearly Y. Teng, Albert Y. Teng, Paul T. Teng, and Cheryl Ann T. Hao in an intra‑corporate action filed April 13, 2018 in Branch 93, Regional Trial Court (RTC), Quezon City (Civil Case No. R‑QZN‑18‑04068‑CV), seeking damages and injunctive relief (TRO/PI) to enjoin the termination of business operations of Mabuhay Educational Center, Inc. (MECI), to enjoin further board meetings, and to enjoin sale of MECI’s real property at No. 3 Agno Street, Quezon City (the subject property). Alvin alleged he had been a long‑time director and corporate secretary who managed MECI’s daily operations and that respondents had effected a “power grab” through a December 20, 2017 meeting that elected them as directors/officers, removed Alvin as signatory on the bank account, and short‑noticed an April 16, 2018 stockholders’ meeting that proposed closure and sale of assets.
Respondents denied fraud, asserting that MECI was a family corporation with concentrated shareholdings (respondents and two other Tengs together owning 68% while Alvin owned 2%), that Alvin had earlier asserted control and even offered to buy other shares and the property at undervalued prices, and that meetings held on December 20, 2017 (special stockholders’/organizational meeting), March 1, 2018 (special meeting to fill a vacancy), and April 16, 2018 (annual stockholders’ meeting) reflected valid corporate decisions. Respondents also pointed to irregularities in Alvin’s filings with the SEC (a purported Deed of Assignment with allegedly spurious notarization) and filed a counterclaim.
The RTC, in a Decision dated August 15, 2022, dismissed Alvin’s complaint and dismissed respondents’ counterclaim for lack of merit, finding Alvin failed to prove fraud by clear and convincing evidence, that he had waived objection to the December 20, 2017 meeting by participating in it, that MECI’s by‑laws did not forbid electing fewer than five directors, and that cessation of operations and sale of assets were within board discretion under the business judgment rule. Alvin appealed to the Court of Appeals (CA).
The CA, in a Decision dated February 26, 2024 (CA‑G.R. SP No. 175036), affirmed the RTC in toto, concluding Alvin was estopped from contesting the December 20, 2017 meeting, that any defect was voidable and was moot or ratified by subsequent corpora...(Pro-only)
Issues:
- Whether the CA erred in ruling that the December 20, 2017 special stockholders’ and organizational meeting was ratified at the March 1, 2018 special board meeting (and/or rendered moot by subsequent proceedings).
- Whether the CA erred in ruling that Alvin’s allegations of fraud were not supported by clear and convincing evidence.
- Whether the CA erred in denying Alvin’s pr...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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