Case Summary (G.R. No. 222523)
SEC Proceedings and Decisions
In 1982, Acayan heirs successfully petitioned the SEC to register their inherited 132 shares. In 1992 private respondents challenged the validity of the May 6, 1992 meeting’s quorum basis, arguing it should follow the original 776 shares in the articles of incorporation. The SEC En Banc agreed, directing a fresh meeting calculated on the articles’ figures.
Consolidation and Court of Appeals Proceedings
Petitioners and other stockholders filed separate petitions for review with the CA, which were consolidated. The CA affirmed the SEC En Banc’s order, holding that the articles of incorporation govern the outstanding capital stock for quorum purposes and that Acayan heirs’ rights benefit private respondents ipso facto.
Issues Raised
- Whether quorum should be based on shares in the 1978 stock and transfer book or on the 1952 articles of incorporation
- Whether the CA erred in applying the SEC En Banc’s Acayan decision to private respondents
Doctrine of Res Judicata
Private respondents invoked res judicata and forum-shopping, citing the earlier denial of G.R. No. 131315. The Supreme Court found no identity of parties or causes of action, as each petition involved distinct stockholders with separate interests, and parties properly disclosed pendency of related proceedings, thereby negating forum-shopping.
Basis for Quorum Determination
Under Section 24 and Section 52 of the Corporation Code, quorum in a stock corporation is a majority of outstanding capital stock, defined in Section 137 as all issued shares under binding subscription, excluding treasury shares.
Role of Articles of Incorporation vs Stock and Transfer Book
The articles of incorporation are the fundamental charter binding corporation and stockholders; they demonstrate the original 776 issued shares. The stock and transfer book, while convenient for record-keeping, is only prima facie evidence and may be contradicted by parol or documentary proof.
Evidentiary Value of Corporate Records
Corporate records, including the stock and transfer book, are not exclusive or conclusive evidence. Parol evidence and foundational documents like the articles of incorporation may correct omissions or inaccuracies in the book, especially where no transactions acco
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Procedural History
- Petitioners challenged the Court of Appeals’ Decision (CA-G.R. SP No. 41473) of 18 August 1997, which affirmed the SEC Order of 20 June 1996 and denied reconsideration on 31 October 1997.
- The dispute arose from a petition filed in 1992 with the SEC contesting the basis for quorum at a special stockholders’ meeting of PMMSI held on 06 May 1992.
- Two petitions for review of the same SEC En Banc orders were filed, consolidated by the Court of Appeals, and resolved in one Decision.
- Petitioners subsequently filed a petition for certiorari before the Supreme Court, urging reversal of the CA Decision.
Antecedent Facts
- PMMSI was incorporated in 1952 with initial capital stock of 700 founders’ shares and 76 common shares (total 776 shares) per its Articles of Incorporation.
- The stock and transfer book was first registered in 1978, recording only 33 common shares as issued and outstanding.
- In 1979, a special stockholders’ meeting was held on the basis that 27 common shares constituted a quorum.
- In 1982, heirs of incorporator Juan Acayan successfully petitioned the SEC to record their rights to 120 founders’ shares and 12 common shares.
- Following the 1982 SEC En Banc affirmance, Acayan’s shares were entered in the stock and transfer book.
- On 06 May 1992, a special meeting was convened to elect directors, using 165 issued and outstanding shares in the stock and transfer book as the quorum base.
- Private respondents challenged the meeting’s validity, arguing the quorum should be based on 776 shares from the Articles of Incorporation.
Issues Presented
- What is the proper basis for determining quorum at PMMSI stockholders’ meetings: (a) the outstanding capital stock in the 1952 Articles of Incorporation or (b) the shares listed in the company’s stock and transfer book?
- Whether the Court of Appeals erred in extending the benefit of the Acayan (Espejo) Decision to private respondents.
- Whether res judicata or forum-shopping principles bar the petition.
Securities and Exchange Commission Proceedings
- The SEC hearing officer granted Acayan heirs’ claim and ordered a special meeting for new officer election.
- The SEC En Banc reversed the dismissal of the 1992 petition, holding that shares claimed by deceased incorporators must be represented by heirs or administrators and directed a new meeting based on the Articles of Incorporation.
- Private respondents urged the SEC to rec