G.R. No. 184068, 19 April 2016
FACTS:
Fifteen (15) days after the September 7, 2004 special stockholders’ meeting, Simny, a stockholder of record and a member of the BOD of the Goodland Company Inc. (GCI), received a notice about the said hearing electing respondents as new directors. Simny, for himself and on behalf of GCI and Grace Cheu (Cheu), filed a Complaint against respondents before the RTC of Manila for the Nullification of the said Meeting and Election of Directors with a prayer for TRO and/or WPI. Simny avered that there was no previous notice to him and Cheu, that the meeting was not called by the proper person and that the notices were not issued by the person who had legal authority to do so.
Respondent Gilbert Guy (Gilbert) argued that the meeting was legally called and held, that the notice of meeting was signed by an authorized officer (him, as Vice President) and sent in accordance with the bylaws, and that Cheu was not a stockholder of record. The RTC dismissed the complaint. The CA affirmed in toto the RTC ruling. Hence the petition before the SC.
ISSUE:
Whether the assailed special stockholder’s meeting was void.
RULING:
No. Notice of the stockholders’ meeting was properly sent in compliance with law and the by-laws of the corporation. For a stockholders’ special meeting to be valid, certain requirements must be met with respect to notice, quorum and place. In relation to Section 50 of B.P. 68, one of the requirements is a previous written notice sent to all stockholders at least one (1) week prior to the scheduled meeting, unless otherwise provided in the by-laws. Under the by-laws, the notice shall be mailed not less than five (5) days prior to the date set for the special meeting. The requirements under the bylaws were met when Gilbert Guy caused for the mailing of the notice on September 2, 2004 calling for the assailed special stockholder’s meeting. Since the bylaws were clear that only mailing was required, the courts must apply the law and must not add an additional requirement of actual receipt of the notice prior to the date of meeting. It was proven that notice to Simny was sent on Sept. 2, 2004 (5 days prior to the meeting).
The claim that the notice suffered fatal defects as it was not called by the proper person was also without merit. Under the by-laws, special meetings may be called by order of the President and must be called upon the request of stockholders representing (1/3) of the outstanding stock provided that the VP, if qualified shall exercise all the functions of the president in absence or disability of the latter. It was not disputed that the President suffered Alzheimer’s; that Gilbert was the VP; and that he represented 79.99% (more than 1/3) of the outstanding stock of GCI. Thus, the requirements under the bylaws were met. The records do show that he is a stockholder, and he is neither also Secretary nor Treasurer. Hence, he is qualified to act as President.
Cheu was not a stockholder of record and therefore not entitled to any notice of meeting. Cheu alleged that she was considered a stockholder of record for being in possession of stock certificate of Paulino and Benjamin. As a rule, however, a person who desires to be recognized as a stockholder for the prupose of exercising stockholders’ right must secure standing by having his ownership of share recorded on the stock and transfer book. Thus, only those whose ownership of shares are duly registered in the stock and transfer book are considered stockholders of record and are entitled to all rights of a stockholder. The requirements for transfer, not having been met, Cheu is not a stockholder of record, and thus not entitled to notice.
*Case Digest by Krishianne Louise C. Labiano, JD – 4, Andres Bonifacio College, SY 2019 – 2020