Case Summary (G.R. No. 173559)
Proceedings in the Quezon City Regional Trial Court
On March 1, 2019, Petitioner Lily C. Lopez, along with her daughter Ma. Christina Patricia C. Lopez, initiated an election contest against Respondents Lolito S. Lopez and others in the Quezon City Regional Trial Court (RTC-QC). The case, registered as Commercial Case No. R-QZN-19-03290-CV, challenged a stockholders' meeting held on February 14, 2019, which the Petitioner claimed violated the corporation's By-Laws and Articles of Incorporation, including improper venue and timing for conducting the meeting. The Petitioner asserted issues including the unauthorized voting of unissued shares and the conjugal nature of shares allegedly held by Respondent Lolito, questioning his right to vote.
Decision of the Quezon City Regional Trial Court
On July 29, 2019, the RTC-QC ruled in favor of the Petitioner, declaring the stockholders' meeting and elections invalid due to procedural violations. Specifically, it noted the lack of board authorization for the sale of unissued shares, which were effectively not validly exercised. As such, the court nullified the elections and barred Respondents from claiming directorship based on the contested stockholders' meeting.
Proceedings in the Marikina City Regional Trial Court
Simultaneously, Petitioner filed an election contest in Marikina, challenging another stockholders' meeting held on February 11, 2019, involving LC Lopez Resources, Inc. and Conqueror International, Inc. The suit raised similar complaints involving exclusion from participation and validity of share ownership. The court found that both Christina and her brother John Rusty were indeed stockholders based on the General Information Sheet (GIS) submitted to the Securities and Exchange Commission (SEC) and testimony confirming their status, despite their names being absent from the Stock and Transfer Book (STB).
Decision of the Marikina City Regional Trial Court
On September 13, 2019, RTC-Marikina declared the special stockholders' meeting null and void, asserting that the attendance and voting rights of the Petitioners held substantial significance for a lawful quorum. The court emphasized the invalid nature of the shares acquired by Respondent Lolito, affirming the requirement for board approval and adherence to preemptive rights outlined under the Corporation Code.
Court of Appeals Ruling
Respondents appealed the decisions to the Court of Appeals, which on February 26, 2020, overturned the RTC rulings, affirming the validity of both stockholders' meetings. The Court of Appeals based its decision on procedural grounds and the argument that the stock purchases made by Respondent Lolito could potentially be ratified by the Board, asserting that such purchases were justifiable.
Supreme Court Ruling
In addressing the petitions, the Supreme Court noted several pertinent issues including the timeliness of the petitions, the legitimacy of Christina's stockholder status, and the validity of the
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Overview of the Case
- The case involves a petition for review on certiorari filed by Lily C. Lopez against Lolito S. Lopez and others, contesting decisions made by the Court of Appeals regarding the validity of stockholders' meetings and elections of Board Directors in two corporations, namely i Specialist Development Corporation and LC Lopez Resources, Inc.
- The Supreme Court's ruling addressed procedural issues, stockholder status, and the validity of stock purchases and meetings.
Proceedings in the Quezon City Regional Trial Court
- On March 1, 2019, Lily C. Lopez and her daughter Ma. Christina Patricia C. Lopez filed an election contest against Lolito S. Lopez and others in the RTC-QC, questioning the validity of a special stockholders' meeting held on February 14, 2019.
- The trial court found the meeting and elections to be null and void due to violations of the By-Laws and Articles of Incorporation of the corporation.
Key Legal Issues Raised by Petitioner
- The meeting was not held at the principal office as required, and was conducted on a date different from that specified in the By-Laws.
- Christina was unlawfully prevented from attending, impacting the election's validity.
- The use of 33,495 unissued shares to vote in the elections violated the petitioner's pre-emptive rights.
- Respondent Lolito's voting rights were challenged on the basis that the shares were conjugal property.
Respondents' Defense
- Respondent Lolito argued the validity of the special meeting, citing provisions in th