Case Summary (G.R. No. 138343)
Applicable Law
The ruling is based on the 1987 Philippine Constitution, relevant provisions of the Corporation Code, and the Rules of Court. Particularly, the case invokes Section 39 of the Corporation Code, which articulates the preemptive rights of stockholders.
Facts of the Case
At a special board meeting on October 7, 1994, Limpan Investment Corporation’s board resolved to issue shares to Gilda C. Lim for legal services valued at 1,551,500.00 Philippine Pesos, which resulted in her controlling 62.5% of the company's shares. In July 1996, Patricia Lim-Yu filed a complaint against the board members regarding this resolution, asserting her rights as a minority shareholder. The initial reaction from the board's members, including the petitioners, was to file a motion to dismiss based on several grounds, including the claim that the respondent lacked legal capacity to sue.
Procedural History
The case evolved through various motions, including petitions filed by both parties to seek the SEC’s stance on Lim-Yu’s capacity to sue, ultimately reaching the Court of Appeals, which upheld the lower court's decisions affirming the SEC’s dismissal of the petitioners' motion to dismiss.
Ruling of the Court of Appeals
The Court of Appeals determined that Lim-Yu was not precluded by any temporary restraining order (TRO) from filing her complaint regarding her preemptive rights as a shareholder. The appellate court recognized that her capacity to act was fundamentally distinct from the alleged corporate representation prohibited by the TRO.
Primary Legal Issue: Legal Capacity to Sue
The petitioners contended that the TRO barred Lim-Yu from entering into agreements that might affect the corporation, thus questioning her capacity to file a suit. The court clarified that the TRO allowed Lim-Yu to act on her own behalf while restricting actions that would bind her family or the corporation. The suit was characterized not as a derivative action—where the corporation is the real party in interest—but rather as an action to protect Lim-Yu’s preemptive rights. Hence, the court affirmed her standing to sue for the protection of her interests.
Incidental Issues: Clarification of Supreme Court Resolutions
The petitioners raised concerns about the SEC's authority to interpret Supreme Court orders, arguing that the Court held exclusive jurisdiction over the interpretation of its own resolutions. The ruling rejected this notion, emphasizing the distinct functions of the SEC in applying legal standards in the cases befor
...continue readingCase Syllabus (G.R. No. 138343)
Statement of the Case
- Petitioners Gilda C. Lim, Wilhelmina V. Joven, and Ditas A. Lerios seek the reversal of the July 31, 1998 Decision of the Court of Appeals and its March 25, 1999 Resolution under Rule 45 of the Rules of Court.
- The Court of Appeals affirmed the Securities and Exchange Commission (SEC), dismissing the petition for lack of merit and lifting the previously issued preliminary injunction.
Facts
- On October 7, 1994, Limpan Investment Corporation's Board of Directors approved a resolution to partially pay legal services for Gilda C. Lim in shares, resulting in her controlling 62.5% of the corporation's shares.
- Patricia Lim-Yu, a minority stockholder and sister of Gilda C. Lim, filed a complaint against the Board members regarding the share issuance, claiming it violated her preemptive rights.
- The petitioners argued that Lim-Yu lacked the legal capacity to sue due to a guardianship order that restricted her ab