Case Summary (G.R. No. 184068)
Applicable Law and Procedural History
The case was decided under the 1987 Philippine Constitution and primarily involved the interpretation and application of the Corporation Code of the Philippines (Batas Pambansa Blg. 68), specifically Sections 25, 50, and 63, alongside the corporation’s by-laws. The Regional Trial Court (RTC) of Manila, Manila Branch 24, initially upheld the validity of the meeting; the Court of Appeals (CA) affirmed this decision, which was subsequently questioned via a Petition for Review on Certiorari before the Supreme Court.
Notice of Meeting and Compliance with the Corporation Code and By-Laws
Section 50 of the Corporation Code requires that written notice of special stockholders’ meetings must be sent to all stockholders at least one week prior to the meeting unless a different period is provided in the by-laws. The by-laws of GCI required a notice mailed at least five days prior to the meeting’s date. Respondent Gilbert G. Guy, as acting President, sent the notice on September 2, 2004, for the meeting scheduled on September 7, 2004, complying with the by-laws’ timeline.
Actual Receipt of Notice Versus Sending of Notice
Petitioner alleged he received the notice only on September 22, 2004, after the meeting date, arguing that actual receipt before the meeting is mandatory. The courts, however, distinguished between “sending” and “receipt” of notice. The Corporation Code and GCI’s by-laws require the sending of notice, not actual receipt. The Supreme Court reiterated the plain meaning rule of statutory construction, emphasizing that where a statute is clear and unambiguous, the courts must give it literal effect. The Court held that “sending” means properly mailing or delivering the notice with postage prepaid and correctly addressed, regardless of when the addressee actually receives it, unless received within the usual course of transmission.
Authority to Call the Stockholders’ Meeting
Petitioner contended the meeting was not called by the proper person. The Corporation Code and GCI’s by-laws provide that a special meeting may be called by the President or upon the written request of stockholders owning at least one-third of the outstanding stock. The evidence established:
- The then-incumbent President was incapacitated due to Alzheimer’s disease.
- Gilbert G. Guy was the duly elected Vice-President, who according to the by-laws, shall perform the President’s duties in the President’s absence or disability, provided he is qualified (which requires him to be a director).
- Gilbert owned approximately 79.99% of the outstanding stock, exceeding the one-third ownership requirement to call a special meeting.
Thus, Gilbert was qualified and duly authorized to call the special meeting.
Status of Grace Guy Cheu and Right to Notice
Petitioner argued Grace Guy Cheu was entitled to notice as a stockholder of record. The courts rejected this claim, applying Section 63 of the Corporation Code, which requires that stock transfers be recorded in the corporation’s books to be effective against the corporation. Merely possessing stock certificates is insufficient without registration of transfer. Cheu failed to prove her registration as a stockholder of record. Accordingly, she was not entitled to notice of the meeting.
Mootness Argument and Holding of Subsequent Annual Meeting
Respondents contended the case became moot due to a subsequent annual stockholders’ meeting held in April 2005. The RTC rejected this argument, ruling that the validity of the September 7, 2004 special meeting still had legal consequences regarding acts and resolutions emanating therefrom, thus maintaining the controversy’s justiciability.
Final Ruling and Reasoning
The Supreme Court denied the petition for review, affirming the lo
Case Syllabus (G.R. No. 184068)
Nature of the Case and Procedural History
- The case is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the Decision and Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 99749.
- The CA affirmed the Regional Trial Court (RTC) of Manila, Branch 24's Decision, which upheld the validity of a special stockholders’ meeting, the election of directors and officers of Goodland Company, Inc. (GCI), and all related proceedings and resolutions.
- Petitioner Simny G. Guy, a minority stockholder and board member, assailed the special meeting and its outcomes.
- The case traces back to a complaint filed with the RTC seeking nullification of the special stockholders’ meeting held on 7 September 2004, the election held therein, and related resolutions, including a prayer for temporary restraining order and damages.
- After dismissal by the RTC and affirmation by the CA, petitioner elevated the matter to the Supreme Court via petition for review on certiorari.
Factual Antecedents
- GCI is a family-owned corporation under Philippine law, owned primarily by members of the Guy family.
- Petitioner Simny G. Guy is a stockholder of record and a board member.
- Respondents, including Gilbert G. Guy, were allegedly elected as new directors during the special meeting called on 7 September 2004.
- Notice of the special stockholders’ meeting, scheduled at the Manila Diamond Hotel, was sent on 31 August 2004, signed by respondent Gilbert G. Guy as Executive Vice-President.
- Petitioner claimed receipt of the notice only on 22 September 2004, well after the meeting was held.
- Petitioner and Grace Guy Cheu—who claimed stockholder status—filed a complaint challenging the legality of the meeting and election alleging issues on notice, authority to call the meeting, and legitimacy of notices issued.
- Respondents opposed, arguing that the meeting notice was legally sent, the meeting was properly called by the authorized person, and Cheu was not a stockholder of record entitled to notice.
- The RTC issued a Temporary Restraining Order enjoining respondents from acting as new directors pending final resolution.
- Respondents later held the 2005 annual meeting and claimed that the issues raised had become moot.
- The RTC denied dismissal, holding the case was not mooted by the 2005 meeting.
Legal Issues Presented
- Whether the special stockholders' meeting held on 7 September 2004 was validly called and conducted, particularly with respect to the legality and sufficiency of notice.
- Whether the notice of meeting was properly sent and whether failure of actual receipt invalidated it.
- Whether the meeting was called by the proper person authorized under the Corporation Code and GCI’s by-laws.
- Whether Grace Guy Cheu was a stockholder of record entitled to notice and participation in the special meeting.
- Whether petitioner’s claim for damages has merit given the circumstances.
Applicable Legal Provisions and By-laws
- Section 50 of Batas Pambansa Blg. 68 (B.P. 68), the Corporation Code of the Philippines, requiring:
- Regular meetings to be preceded by written notice sent at least two weeks prior, unless otherwise provided.
- Special meetings to have written notice at least one week prior, unless by-laws provide otherwise.
- Notice may be expressly or impliedly waived.
- When no person is authorized to call meetings, the Securities and Exchange Commission may order a stockholder to call a meeting.
- GCI’s by-laws:
- Section 3, A