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    Guy vs. Guy, Gr. No. 184068, April 19, 2016, Sereno, C.J.

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    Charmaine Valientes Cayaban
    The document summarizes a case regarding a dispute over a stockholders' meeting. It finds that the notice of the meeting was properly sent in accordance with the corporation's bylaws, which only require notice be mailed 5 days prior to the meeting. It also finds that the petitioner's claim that another individual was entitled to notice as a shareholder of record was unfounded, as that individual was not registered as a shareholder on the corporation's stock transfer book. Therefore, the notice of the meeting was valid and complied with law.

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    Guy vs. Guy, Gr. No. 184068, April 19, 2016, Sereno, C.J.

    Uploaded by

    Charmaine Valientes Cayaban
    33 views6 pages
    The document summarizes a case regarding a dispute over a stockholders' meeting. It finds that the notice of the meeting was properly sent in accordance with the corporation's bylaws, which only require notice be mailed 5 days prior to the meeting. It also finds that the petitioner's claim that another individual was entitled to notice as a shareholder of record was unfounded, as that individual was not registered as a shareholder on the corporation's stock transfer book. Therefore, the notice of the meeting was valid and complied with law.

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    Original Title

    1. GUY VS. GUY, GR. NO. 184068, APRIL 19, 2016, SERENO, C.J.

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    The document summarizes a case regarding a dispute over a stockholders' meeting. It finds that the notice of the meeting was properly sent in accordance with the corporation's bylaws, which only require notice be mailed 5 days prior to the meeting. It also finds that the petitioner's claim that another individual was entitled to notice as a shareholder of record was unfounded, as that individual was not registered as a shareholder on the corporation's stock transfer book. Therefore, the notice of the meeting was valid and complied with law.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views6 pages

    Guy vs. Guy, Gr. No. 184068, April 19, 2016, Sereno, C.J.

    Uploaded by

    Charmaine Valientes Cayaban
    The document summarizes a case regarding a dispute over a stockholders' meeting. It finds that the notice of the meeting was properly sent in accordance with the corporation's bylaws, which only require notice be mailed 5 days prior to the meeting. It also finds that the petitioner's claim that another individual was entitled to notice as a shareholder of record was unfounded, as that individual was not registered as a shareholder on the corporation's stock transfer book. Therefore, the notice of the meeting was valid and complied with law.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 6

    DOCTRINE: A person who has purchased stock, and who desires to be

    recognized as a stockholder for the purpose of voting, must secure such a standing
    by having the transfer recorded on the corporate books. Until the transfer is
    registered, the transferee is not a stockholder but an outsider.

    CASE TITLE: SIMNY G. GUY, AS MINORITY STOCKHOLDER AND


    FOR AND IN BEHALF OF GOODLAND COMPANY,
    INC., Petitioner, v. GILBERT G. GUY, ALVIN AGUSTIN T. IGNACIO
    AND JOHN AND/OR JANE DOES, Respondents. G.R. No. 184068, April 19,
    2016, SERENO, C.J.

    FACTS:
    GCI is a family-owned corporation of the Guy family duly organized and existing
    under Philippine laws.4 Petitioner Simny G. Guy (Simny) is a stockholder of
    record and member of the board of directors of the corporation. Respondents are
    also GCI stockholders of record who were allegedly elected as new directors by
    virtue of the assailed stockholders' meeting held on 7 September 2004.

    GCI is a family-owned corporation of the Guy family duly organized and existing
    under Philippine laws.4 Petitioner Simny G. Guy (Simny) is a stockholder of
    record and member of the board of directors of the corporation. Respondents are
    also GCI stockholders of record who were allegedly elected as new directors by
    virtue of the assailed stockholders' meeting held on 7 September 2004. A notice of
    meeting was sent. 

    On 22 September 2004, or fifteen (15) days after the stockholders' meeting,


    petitioner received the notice. Petitioner for himself and on behalf of GCI and
    Grace Guy Cheu, filed a complaint against Respondents before the RTC of Manila
    for the nullification of Stockholders’ Meeting and Election of Directors,
    Nullification of Acts and Resolutions, and Injunction. 

    Petitoner assailed the election held on 7 September 2004 on the following grounds:
    (1) there was no previous notice to petitioner and Cheu; (2) the meeting was not
    called by the proper person; and (3) the notices were not issued by the person who
    had the legal authority to do so.
    In his Answer, respondent Gilbert G. Guy (Gilbert) argued that the stockholders'
    meeting on 7 September 2004 was legally called and held; that the notice of
    meeting was signed by the authorized officer of GCI and sent in accordance with
    the by-laws of the corporation; and that Cheu was not a stockholder of record of
    the corporation, a status that would have entitled her to receive a notice of the
    meeting.

    The RTC issued a TRO enjoining Respondents and their officers from acting or
    holding themselves out as new directors/officers of the Corporation. 

    In a Manifestation dated 10 August 2005, respondents disclosed that an annual


    stockholders' meeting of GCI for the year 2005 had been held. They prayed for the
    dismissal of the Complaint, claiming that the issues raised therein had already
    become moot and academic by virtue of the 2005 annual stockholders' meeting.
    Paragraph 6 of the Manifestation reads: 

    1. Plaintiff SIMNY G. GUY [herein petitioner] was notified three (3) times by
    the post office of the said "Notice of 2005 Annual Meeting of Stockholders"
    on April 6, 2005, April 11, 2005 and April 20, 2005, respectively, but the
    same was (sic) ignored by plaintiff SIMNY G. GUY [petitioner] and the said
    "Notice of 2005 Annual Meeting of Stockholders" was "UNCLAIMED" x x
    x.

    On 26 October 2005, the RTC denied the prayer for dismissal and ruled that the
    case had not been mooted by the holding of the 2005 annual stockholders' meeting.
    In a Decision dated 25 June 2007, the RTC dismissed the Complaint filed by
    petitioner and Cheu. The RTC rules that notice was given to Simny by registered
    mail in accordance with the By-Laws of Goodland. Grace Cheu  and Gilbert Guy
    also failed to show proof of her alleged ownership of shares in Goodland. 

    Aggrieved, petitioner filed a Petition for Review28 under Rule 43 of the Rules of


    Court based on Section 1 of A.M. No. 04-9-07-SC dated 18 July 2007 and
    docketed as CA-G.R. No. 99749. According to this provision, "[a]ll decisions and
    final orders in cases falling under the Interim Rules of Corporate Rehabilitation
    and the Interim Rules of Procedure Governing Intra-Corporate Controversies under
    Republic Act No. 8799 shall be appealable to the Court of Appeals through a
    petition for review under Rule 43 of the Rules of Court."
    In a Decision30 dated 30 April 2008, the CA affirmed the RTC ruling in toto.

    ISSUE:
    Whether the notice of the stockholders’ meeting was properly sent in compliance
    with law and the by-laws of the Corporation. 

    HELD:
    ection 50 of Batas Pambansa Blg. 68 (B.P. 68) or the Corporation Code of the
    Philippines reads as follows:

    SECTION 50. Regular and Special Meetings of Stockholders or Members. —


    Regular meetings of stockholders or members shall be held annually on a date
    fixed in the by-laws, or if not so fixed, on any date in April of every year as
    determined by the board of directors or trustees: Provided, That written notice
    of regular meetings shall be sent to all stockholders or members of record at
    least two (2) weeks prior to the meeting, unless a different period is required
    by the by-laws.

    Special meetings of stockholders or members shall be held at any time deemed


    necessary or as provided in the by-laws: Provided, however, That at least one
    (1) week written notice shall be sent to all stockholders or members, unless
    otherwise provided in the by-laws.

    Notice of any meeting may be waived, expressly or impliedly, by any


    stockholder or member.

    Whenever, for any cause, there is no person authorized to call a meeting, the
    Securities and Exchange Commission, upon petition of a stockholder or
    member, and on the showing of good cause therefor, may issue an order to the
    petitioning stockholder or member directing him to call a meeting of the
    corporation by giving proper notice required by this Code or by the bylaws.
    The petitioning stockholder or member shall preside thereat until at least a
    majority of the stockholders or members present have chosen one of their
    number as presiding officer. 
    For a stockholders' special meeting to be valid, certain requirements must be met
    with respect to notice, quorum and place. In relation to the above provision 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 of GCI, the notice of meeting shall be mailed not less than five
    (5) days prior to the date set for the special meeting. The pertinent provision reads:

    Section 3. Notice of meeting written or printed for every regular or special


    meeting of the stockholders shall be prepared and mailed to the registered post
    office address of each stockholder not less than five (5) days prior to the date
    set for such meeting, and if for a special meeting, such notice shall state the
    object or objects of the same. No failure or irregularity of notice of any
    meeting shall invalidate such meeting at which all the stockholders are present
    and voting without protest.

    The Corporation Code itself permits the shortening (or lengthening) of the period
    within which to send the notice to call a special (or regular) meeting. Thus, no
    irregularity exists in the mailing of the notice sent by respondent Gilbert G. Guy on
    2 September 2004 calling for the special stockholders' meeting to be held on 7
    September 2004, since it abides by what is stated in GCI's by-laws as quoted
    above.

    Petitioner begs the Court to interpret the provisions on notice in Section 50 of the
    Corporation Code and GCI's by-laws pursuant to a rule in statutory construction
    that states: "Statutes should receive a sensible construction, such as will give effect
    to the legislative intention and so as to avoid an unjust or an absurd conclusion."

    Petitioner persists in his view that to achieve the intent of the law, the notice must
    be actually received, and not just sent, prior to the date of the meeting. Petitioner
    cites the provision on "completeness of service" under the Rules of Court, which
    states that service by registered mail is deemed complete upon actual receipt by the
    addressee or after five (5) days from the date of receipt of the first notice of the
    postmaster, whichever date is earlier.

    We are not persuaded.


    Petitioner also asserts that the special stockholders' meeting on 7 September 2004
    was invalid for lack of due notice to Grace Cheu, allegedly a stockholder of record
    of GCI. She was considered as such for having been in possession of the stock
    certificates of stockholders Paulino Delfin Pe and Benjamin Lim.

    This contention cannot be sustained.

    A "stockholder of record" is defined as follows:

    A person who desires to be recognized as stockholder for the purpose 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 arc entitled to all rights of a
    stockholder. 

    More so, Section 63 of the Corporation Code provides:

    SECTION 63. Certificate of Slock and Transfer of Shares. — The capital stock


    of stock corporations shall be divided into shares for which certificates signed
    by the president or vice-president, countersigned by the secretary or assistant
    secretary, and sealed with the seal of the corporation shall be issued in
    accordance with the by-laws. Shares of stock so issued arc personal property
    and may be transferred by delivery of the certificate or certificates indorsed by
    the owner or his attorney-in-fact or other person legally authorized to make the
    transfer. No transfer, however, shall be valid, except as between the parties,
    until the transfer is recorded in the books of the corporation so as to show the
    names of the parties to the transaction, the date of the transfer, the number of
    the certificate or certificates and the number of shares transferred.

    The Court affirmed this provision in Batangas Laguna Tayabas Bus Company, Inc.
    v. Bitanga.

    Indeed, until registration is accomplished, the transfer, though valid between the
    parties, cannot be effective as against the corporation. Thus, the unrecorded
    transferee, the Bitanga group in this case, cannot vote nor be voted for. The
    purpose of registration, therefore, is two-fold: to enable the transferee to exercise
    all the rights of a stockholder, including the right to vote and to be voted for, and to
    inform the corporation of any change in share ownership so that it can ascertain the
    persons entitled to the rights and subject to the liabilities of a stockholder. Until
    challenged in a proper proceeding, a stockholder of record has a right to participate
    in any meeting; his vote can be properly counted to determine whether a
    stockholders' resolution was approved, despite the claim of the alleged
    transferee. On the other hand, a person who has purchased stock, and who desires
    to be recognized as a stockholder for the purpose of voting, must secure such a
    standing by having the transfer recorded on the corporate books. Until the transfer
    is registered, the transferee is not a stockholder but an outsider.

    The above pronouncements are embodied in GCI's by-laws, specifically Article I,


    Sections 2, 3 and 4:

    Section 2. Every certificate surrendered for exchange or transfer shall be


    cancelled and affixed to the original stub in the certificate book and no new
    certificates shall be issued unless and until the old certificates have been so
    cancelled and returned to the corporation, or satisfactory proof of their loss is
    presented.

    Section 3. Certificates of stock may be sold, transferred or hypothecated by


    indorsement or separate deed, but the corporation shall not consider any
    transfer effective until the indorsed certificate is submitted for cancellation and
    a new one issued in the name of the transferee. 

    All told, the validity of the special stockholders' meeting held on 7 September 2004
    has been sufficiently established. Accordingly, we find no necessity to decide on
    the other issue of damages claimed by petitioner, as we find no merit therein.

    WHEREFORE, the instant Petition for Review is DENIED. The Court of


    Appeals Decision in CA-G.R. SP No. 99749 is hereby AFFIRMED.

    SO ORDERED.

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