The distinction of undisputed or disputed shares of stocks is not provided for in the law or the jurisprudence. Ubi lex non distinguit nee nos distinguere debemus -when the law does not distinguish we should not distinguish…
Carolina Que Villongco v. Cecilia Que Yabut; G.R. No. 225022
Cecilia Que Yabut v. Carolina Que Villongco; G.R. No. 225024
Facts:
Phil-Ville Development and Housing Corporation (Phil-Ville) is a family corporation founded by Geronima Gallego Que (Geronima) that is engaged in the real estate business. The authorized capital stock of PhilVille is Twenty Million Pesos (₱20,000,000) divided into Two Hundred Thousand (200,000) shares with a par value of One Hundred Pesos (₱l00.00) per share. During her lifetime, Geronima owned 3,140 shares of stock while the remaining 196,860 shares were equally distributed among Geronima’s six children, namely: Carolina Que Villongco, Ana Maria Que Tan, Angelica Que Gonzales, Cecilia Que Yabut, Ma. Corazon Que Garcia, and Maria Luisa Que Camara.
Geronima died on August 31, 2007. By virtue of the Sale of Shares of Stocks dated June 11, 2005 purportedly executed by Cecilia as the attorney-in-fact of Geronima, Cecilia allegedly effected an inequitable distribution of the 3,140 shares that belonged to Geronima.
Accordingly, the distribution of Geronima’s shares in accordance with the Sale of Shares of Stocks was reflected in the General Information Sheets filed by Phil-Ville in 2010 and 2011.
On January 18, 2013, Cecilia, Eumir Carlo Que Camara and Ma. Corazon [Cecilia Que, et. al.] wrote a letter to Ana Maria, Corporate Secretary of Phil-Ville, to send out notices for the holding of the annual stockholders’ meeting. However, before Ana Maria could reply thereto, on January 21, 2013, several letters were sent to Phil-Ville’s stockholders containing a document captioned “Notice of Annual Stockholders’ Meeting” signed by Cecilia and Ma. Corazon as directors.
Thereafter, Carolina, Ana Maria, and Angelica, comprising the majority of the Board of Directors of Phil-Ville held an emergency meeting and made a decision, by consensus, to postpone the annual stockholders’ meeting of Phil-Ville until the issue of the distribution of the 3,140 shares of stocks in the name of certain stockholders is settled. All the stockholders were apprised of the decision to postpone the meeting in a letter dated January 21, 2013. Ana Maria, in her capacity as Corporate Secretary and Director of Phil-Ville likewise gave notice to the Securities and Exchange Commission (SEC) with regard to the postponement of the meeting.
Despite the postponement, however, Cecilia Que, et al. proceeded with the scheduled annual stockholder’s meeting participated only by a few stockholders. In the said meeting, they elected the new members of the Board of Directors and officers of Phil-Ville namely: Cecilia, Ma. Corazon and Eumir, Chairman/Vice President/Treasurer, President/General Manager, and Secretary, respectively.
Meantime, two days prior to the stockholders’ meeting, Carolina, Ana Maria, and Angelica, together with several others, had already filed a Complaint for Annulment of Sale/Distribution or Settlement of Shares of Stock/Injunction against Cecilia, Eumir Carlo and Ma. Corazon. They subsequently filed an Amended and Supplemental Complaint for Annulment of Sale/Distribution or Settlement of Shares of Stock/Annulment of Meeting/Injunction (with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary Prohibitory and Mandatory Injunction).
While Civil Case No. CV-940-MN was still pending, on January 15, 2014, Eumir Carlo sent a Notice of Annual Stockholders’ Meeting to all the stockholders of Phil-Ville, notifying them of the setting of the annual stockholders’ meeting on January 25, 2014 at 5:00 P.M. at Max’s Restaurant, Gov. Pascual comer M.H. Del Pilar Streets, Tugatog, Malabon City. During the meeting, Cecilia, Ma. Corazon and Eumir Carlo were elected as directors and later elected themselves to the following positions: Cecilia as Chairperson/Vice President/Treasurer; Ma. Corazon as Vice-Chairperson/ President/General Manager; and Eumir Carlo as Corporate Secretary/Secretary.
Consequently, on February 10, 2014, Carolina, Ana Maria, Angelica, Elaine and Edison Williams [Carolina, et al.] filed the instant election case against Cecilia Que, et al. before the RTC of Malabon City docketed as SEC Case No. 14-001-MN. The Complaint prayed that the election of Cecilia, Ma. Corazon and Eumir Carlo as directors be declared void considering the invalidity of the holding of the meeting at Max’s Restaurant for lack of quorum therein, the questionable manner by which it was conducted, including the invalid inclusion in the voting of the shares of the late Geronima, the questionable validation of proxies, the representation and exercise of voting rights by the alleged proxies representing those who were not personally present at the said meeting, and the invalidity of the proclamation of the winners. Carolina, et al. also questioned the election of Cecilia, Ma. Corazon and Eumir Carlo as officers of the corporation. They likewise prayed that all the actions taken by the petitioners in relation to their election as directors and officers of the corporation be declared void, including but not limited to the filing of the General Information Sheet with the Securities and Exchange Commission on January 27, 2014.
Carolina et. al., claimed that the basis for determining quorum should have been the total number of undisputed shares of stocks of Phil-Ville due to the exceptional nature of the case since the 3,140 shares of the late Geronima and the fractional .67, .67, and .66 shares of Eumir Que Camara; Paolo Que Camara and Abimar Que Camara are the subject of another dispute filed before the RTC. Thus, excluding the 3,142 shares from the 200,000 outstanding capital stock, the proper basis of determining the presence of quorum should be 196,858 shares of stocks.
Issue:
Whether the disputed shares should be excluded from the basis of quorum.
Ruling:
No.
Section 52 of the Corporation Code states that:
Section 52. Quorum in meetings. – Unless otherwise provided for in this Code or in the by-laws, a quorum shall consist of the stockholders representing a majority of the outstanding capital stock or a majority of the members in the case of non-stock corporations.
While Section 137 of the same Code defines “outstanding capital stock”, thus:
Section 137. Outstanding capital stock defined. – The term “outstanding capital stock”, as used in this Code, means the total shares of stock issued under binding subscription agreements to subscribers or stockholders, whether or not fully or partially paid, except treasury shares.
The right to vote is inherent in and incidental to the ownership of corporate stocks. It is settled that unissued stocks may not be voted or considered in determining whether a quorum is present in a stockholders’ meeting. Only stocks actually issued and outstanding may be voted. Thus, for stock corporations, the quorum is based on the number of outstanding voting stocks. The distinction of undisputed or disputed shares of stocks is not provided for in the law or the jurisprudence. Ubi lex non distinguit nee nos distinguere debemus -when the law does not distinguish we should not distinguish. Thus, the 200,000 outstanding capital stocks of Phil-Ville should be the basis for determining the presence of a quorum, without any distinction.
