G.R. No. 277015 - Clark vs. Teng

Alvin Clark Y. Teng (Alvin) filed an intra-corporate dispute concerning Mabuhay Educational Center, Inc. (MECI).
Respondents were Pearly Y. Teng, Albert Y. Teng, Paul T. Teng, and Cheryl Ann T. Hao, members of MECI’s Board of Directors (BOD).

Alvin was a former BOD member and corporate secretary of MECI and managed its daily operations from 2002 until 2017.
Alvin alleged that respondents held a special stockholders' meeting on December 20, 2017, where they elected themselves as officers/directors, in violation of MECI's bylaws which prescribe five directors but only four were elected.
Alvin’s mother, Elena Y. Teng, nominated by Alvin, was not elected, and Alvin was removed as signatory to MECI’s bank account.
Alvin received a short notice for an April 16, 2018 stockholders’ meeting where MECI's closure and sale of property was an agenda, which he claimed was a surprise and detrimental, citing substantial business income.
Alvin alleged fraudulent schemes: removal as corporate secretary, gradual termination of MECI’s operations, and bad faith negotiations regarding income and assets.

MECI was a family corporation where founders held majority shares (three founders owning 30% each, and the rest owning minor shares including Alvin at 2%).
Alvin unilaterally declared himself president in August 2017 and ordered pre-signed blank checks, temporarily accepted by respondents for continuity.
Alvin openly offered to purchase shares and the property at undervalued prices, which were rejected by respondents as insufficient.
Respondents scheduled meetings to elect new BOD members and requested Alvin turn over corporate documents, which he refused.
Alvin filed a General Information Sheet (GIS) claiming share transfers supported by a spurious notarized deed.
Respondents submitted a GIS with actual shareholdings and denied alleged share transfers with affidavits.

The Regional Trial Court (RTC) dismissed Alvin’s complaint and respondents’ counterclaims for lack of merit, ruling Alvin failed to prove fraud.
The RTC found Alvin waived the right to question the December 20, 2017 meeting by participating in it.
It ruled MECI’s bylaws do not prohibit electing fewer than five directors.
The RTC ruled short notice of April meeting did not constitute fraud.
The sale and cessation of MECI’s operations were within the authority of the BOD as per the Corporation Code and Business Judgment Rule.
The Court of Appeals (CA) affirmed the RTC decision, finding Alvin’s fraud allegations unsupported; held the December 20, 2017 meeting voidable but ratified; ruled all respondents’ actions valid under the Corporation Code.
Alvin’s motion for reconsideration was denied by the CA.

Alleged fraud in December 20, 2017 meeting due to lack of notice.
CA erroneously ruled that December 20 meeting was ratified by a March 1, 2018 board meeting which Alvin claims only stockholders can ratify.
Alleged improper dissolution or cessation of MECI without proper vote and notice under Section 118 of the Corporation Code.

Did the CA err in ruling that the December 20, 2017 stockholders’ and organizational meeting was ratified at a March 1, 2018 special board meeting?
Did the CA err in finding the allegations of fraud by Alvin unsupported by clear and convincing evidence?
Did the CA err in denying Alvin's prayer for a permanent injunction?