Case Summary (G.R. No. 170783)
Petitioners and Respondents
Petitioners: Lilia M. Palanca, Rosanna D. Imai, Gloria Domingo, Ray Vincent (former directors).
Respondents: Amelia P. Muer et al. (elected directors for 2004–2005).
Key Dates
April 2, 2004 – Annual meeting called; adjourned for lack of quorum; respondents proceed with election.
April 13 & 14, 2004 – Original and first amended complaints filed in RTC of Manila.
April 21, 2004 – Ex parte temporary restraining order issued; respondents file answer.
July 21 & September 24, 2004 – Trial court denies motion to admit Second Amended Complaint and motion for reconsideration.
July 22 & November 24, 2005 – Court of Appeals affirms RTC.
June 18, 2012 – Supreme Court renders decision.
Applicable Law
1987 Philippine Constitution (post-1990); Rules of Court on amended pleadings; Corporation Code provisions on derivative suits; jurisprudence distinguishing direct and derivative actions.
Factual Background
Under corporate by-laws, the incumbent board set April 2, 2004 for the annual meeting and election. Of 5,723 entitled voters, 1,358 held proxies. The Election Committee deemed most proxies irregular, prompting petitioners to adjourn for lack of quorum. Respondents disputed the adjournment, declared a quorum, conducted the election, and filed new officer listings with the SEC.
Trial Court Proceedings
Petitioners filed for nullity of election, injunctions, and damages. After initial pleadings and a 72-hour TRO, Judge De Castro clarified that respondents could manage pending the suit. At pre-trial, petitioners sought to amend their complaint a second time to add the corporation as plaintiff; the trial court denied both the admission and reconsideration, citing impropriety in adding the corporation when members acted in personal capacities.
Court of Appeals Ruling
The appellate court denied certiorari, holding no grave abuse of discretion. It reasoned that petitioners’ cause was a personal right to vote—a direct action—and that Legaspi Towers 300, Inc. could not be impleaded under a derivative-suit theory, since the harm was to individual members, not the corporation.
Issues on Appeal to the Supreme Court
- Whether the trial court erred in denying admission of the Second Amended Complaint after previously “admitting” it.
- Whether petitioners, as a reconstituted board, had authority to sue on behalf of the corporation.
- Whether subsequent elections rendered the issues moot.
Supreme Court’s Analysis on Motion to Amend
The Supreme Court upheld the RTC’s correction of a clerical error: the April 26, 2004 order “received,” not “admitted,” the Second Amended Complaint. Judges may amend their orders to conform to justice. The Court found no abuse of discretion in refusing to implead the corporation, as the contested right was personal to petitioners.
Derivative versus Direct Action
The Court app
...continue readingCase Syllabus (G.R. No. 170783)
Facts of the Case
- Legaspi Towers 300, Inc. by-laws set the 2004–2005 annual meeting and election on April 2, 2004 at 5:00 p.m. in the condominium lobby.
- Total voting members numbered 5,723; quorum required was 2,863 (50% + 1).
- 1,358 members were to vote by proxy; Election Committee found most proxies facially irregular and lacked time for authentication.
- Petitioners (incumbent Board) adjourned the meeting for lack of quorum.
- Respondents challenged the adjournment, proceeded with the election, and declared themselves the new Board.
- Respondents filed a General Information Sheet with the SEC listing new officers for 2004–2005.
Trial Court Proceedings
- April 13, 2004: Petitioners filed Complaint for Declaration of Nullity of Elections with prayers for TRO, preliminary injunction, and damages.
- April 14, 2004: RTC Manila Branch 3 admitted the Amended Complaint.
- April 20, 2004: Petitioners filed an urgent motion to admit Second Amended Complaint and for ex parte TRO; case had been raffled but two judges inhibited.
- April 21, 2004: Executive Judge Lanzanas issued a 72-hour TRO enjoining respondents from taking over management, to preserve status quo.
- April 21, 2004: Respondents filed Answer, relying on SEC Counsel Patricio’s report validating that a quorum by proxy and in person was declared and the election conducted lawfully.
- April 26, 2004: Trial court clarified that respondents could continue management (status quo) but finances would be monitored; case ripe for pre-trial; directed filing of pre-trial briefs.
- July 21, 2004: Trial court denied petitioners’ motion to amend complaint to include the corporation as plaintiff in two separate Orders.
- September 24, 2004: Trial court denied petitioners’ motion for reconsideration of the July 21 Orders for lack of merit, explaining “admitted” was a clerical error and that inclusion of the corporation was improper.
Court of Appeals Proceedings
- Petitioners filed petition for certiorari alleging grave abuse of discretion by Trial Court in denying admission of Second Am