G.R. No. 184068. April 19, 2016.
SIMNY G. GUY, AS MINORITY STOCKHOLDER AND FOR AND IN BEHALF OF GOODLAND COMPANY, INC., PETITIONER, VS. GILBERT G. GUY, ALVIN AGUSTIN T. IGNACIO AND JOHN AND/OR JANE DOES, RESPONDENTS.

FACTS

Goodland Company, Inc. (GCI) is a family-owned corporation. Petitioner Simny G. Guy is a stockholder of record and director. Respondents, including Gilbert G. Guy, are also stockholders. On September 10, 2004, other stockholders informed petitioner they had received a notice dated August 31, 2004, calling for a special stockholders’ meeting on September 7, 2004, at the Manila Diamond Hotel for the election of directors. The notice was signed by respondent Gilbert G. Guy as Executive Vice-President. Petitioner himself received this notice only on September 22, 2004, fifteen days after the meeting. On September 30, 2004, petitioner, for himself and on behalf of GCI and Grace Guy Cheu, filed a Complaint before the RTC to nullify the September 7, 2004 stockholders’ meeting and the election of directors, on grounds of lack of proper notice, improper calling of the meeting, and lack of legal authority of the person issuing the notices. The RTC issued a Temporary Restraining Order. Respondents later disclosed that an annual stockholders’ meeting for 2005 had been held, arguing the case was moot. The RTC denied the motion to dismiss, ruling the case was not mooted. The RTC dismissed the Complaint, upholding the validity of the special meeting. The Court of Appeals affirmed the RTC decision. Petitioner elevated the case via a Petition for Review on Certiorari.

ISSUE

Whether the special stockholders’ meeting held on September 7, 2004, and the election of directors therein, are valid.

RULING

The Supreme Court DENIED the petition and AFFIRMED the challenged Court of Appeals Decision and Resolution. The special stockholders’ meeting and the election of directors were declared VALID.
The Court held that the notice for the September 7, 2004 meeting substantially complied with the corporation’s By-Laws and the Corporation Code. Article II, Section 3 of the GCI By-Laws required notice to be “mailed to the Registered post office address of each stockholder not less than five (5) days prior to the date set for such meeting.” The notice was sent by registered mail on September 2, 2004, five days before the meeting. The fact that petitioner received it after the meeting did not invalidate it, as the law and by-laws mandate sending, not receipt, within the prescribed period. The notice was also proper in form and content.
The Court further ruled that respondent Gilbert G. Guy, as Executive Vice-President and owner of more than one-third (specifically, about 79.99%) of the total outstanding stock, had the authority to call the special meeting. Article II, Section 2 of the By-Laws allowed a special meeting to be called “by order of the President” or “upon the written request of stockholders registered as the owners of one-third (1/3) of the total outstanding stock.” As a majority stockholder owning well over one-third, Gilbert could validly call the meeting. His act of signing the notice as Executive Vice-President was also justified under Article IV, Section 3 of the By-Laws, which authorized the Vice-President to perform the duties of the President in the latter’s absence or disability, a fact not disputed by petitioner regarding the incumbent President.
The Court also found that Grace Guy Cheu was not a stockholder of record entitled to notice, as she failed to prove her ownership of shares. Finally, the Court rejected the argument that the case was mooted by the subsequent 2005 annual meeting, as the validity of the 2004 election was a distinct justiciable issue, and the acts from the 2005 meeting were consequences of the challenged 2004 election.