Lopez v. Lopez
REITERATIONFacts
The Antecedents: This case involves a dispute over the validity of special stockholders' meetings and subsequent elections of directors for two corporations: iSpecialist Development Corporation and LC Lopez Resources, Inc. (along with Conqueror International, Inc.). The core of the dispute centers on whether the meetings were properly convened, whether certain shares were validly issued and voted, and whether specific individuals were legitimate stockholders entitled to participate or be elected. The petitioner, Lily C. Lopez, contends that the meetings and elections were null and void due to procedural irregularities and violations of corporate by-laws and the Corporation Code. The respondents, led by Lolito S. Lopez, assert the validity of these proceedings. Procedural History: The petitioner initially filed an election contest before the Regional Trial Court (RTC) of Quezon City concerning iSpecialist Development Corporation, which ruled in her favor, declaring the special stockholders' meeting and election void. Simultaneously, the petitioner and her children filed another election contest before the RTC of Marikina City concerning LC Lopez Resources, Inc. and Conqueror International, Inc., which also resulted in a ruling in their favor, nullifying the special stockholders' meeting and elections. The respondents appealed both decisions to the Court of Appeals (CA). The CA consolidated the appeals and, in a decision, reversed the RTC rulings, declaring the special stockholders' meetings and elections valid. The petitioner then filed the present Petition for Review on Certiorari before the Supreme Court. The Petition: The petitioner seeks a review of the Court of Appeals' decision, arguing that the CA erred in reversing the RTCs' rulings. Specifically, the petitioner contends that the CA should have upheld the RTC of Quezon City's finding that the petition for review before it was filed out of time, thereby rendering the CA's decision on the merits of that case void. Furthermore, the petitioner argues that the CA erred in its substantive findings, particularly in disregarding Christina Lopez's status as a stockholder and in validating respondent Lolito Lopez's purchase of unissued shares without proper board authorization and in violation of pre-emptive rights. The petitioner asserts that the RTCs' original decisions, which found the meetings and elections void, were more in accord with law and jurisprudence.
Issue(s)
Whether the petition in CA-G.R. SP No. 162134 was timely filed. Whether Christina is a stockholder of LC Lopez and Conqueror. Whether respondent Lolito Lopez's purchase of the unissued shares of stock was valid.
Ruling
The Supreme Court granted the petition, set aside the Court of Appeals' decision, and reinstated the decisions of the Regional Trial Courts of Quezon City and Marikina City. The Court found that the petition in CA-G.R. SP No. 162134 was filed out of time, thus dismissing it. It also reinstated the Marikina RTC's ruling, affirming Christina's status as a stockholder and the invalidity of respondent Lolito's purchase of unissued shares, and consequently, the nullity of the special stockholders' meetings for lack of quorum.
Ratio Decidendi
On the timeliness of the petition in CA-G.R. SP No. 162134: The Court found that the certification issued by the RTC clerk of court, attesting to the personal receipt of the decision by respondents' counsel through an authorized representative on August 6, 2019, carried the presumption of regularity. The respondents failed to present clear and convincing evidence to overthrow this presumption, such as proving that the representative was not an employee or not authorized to receive the copy. Their inquiry to the court about the representative's authority was insufficient to defeat the presumption. Therefore, the petition filed on August 28, 2019, was deemed filed beyond the reglementary period, leading to its dismissal based on the doctrine that the perfection of an appeal within the prescribed period is jurisdictional. On Christina's status as a stockholder: The Court agreed with the RTC that Christina is a stockholder of LC Lopez and Conqueror. While the general rule, as established in Lao v. Lao, is that the Stock and Transfer Book (STB) controls over the General Information Sheet (GIS), this rule was distinguished due to the unique factual milieu. Here, Christina's stockholder status was supported by evidence beyond the GIS, including the testimonies of respondent Lolito, Benedicto L. Villafuerte, and Teresita Fernando, who confirmed her status. Furthermore, respondent Lolito himself sent notices to Christina and John Rusty to attend the special stockholders' meeting, and he was estopped from denying her status as a stockholder, having presented her as such in prior bank transactions. The RTC's finding that the STB entries were of doubtful veracity, made by an unauthorized person and without supporting documents, further justified reliance on other evidence. On the validity of respondent Lolito's purchase of unissued shares: The Court upheld the RTC's ruling that respondent Lolito's purchase of unissued shares was invalid. Section 23 of the Corporation Code mandates that corporate powers are exercised by the Board of Directors. Respondent Lolito's purchase of unissued shares without prior authorization from the Board of Directors, evidenced by a board resolution, was a violation of this provision. The sale was therefore invalid, rendering the shares incapable of being legally voted upon in the election of directors. Additionally, the purchase violated petitioner's preemptive right under Section 39 of the Corporation Code, as the shares were not offered to existing stockholders in proportion to their shareholdings, and no valid denial of this right was established. Consequently, the sale was void and could not be ratified as a mere voidable ultra vires act.
Main Doctrine
The Court reinstated the trial courts' decisions, finding the special stockholders' meetings and elections void due to the invalid issuance and voting of unissued shares without board authorization and in violation of preemptive rights. It also held that the petition before the Court of Appeals in one case was filed out of time, warranting its dismissal.