Batangas Laguna Tayabas Bus Co. vs. Bitanga (362 SCRA 635 [2001])
FACTS:
(Potencianos) Dolores Potenciano, Max Joseph Potenciano, Mercedes Potenciano, Delfin Yorro, and Maya Industries, Inc., entered into a Sale and PurchaseAgreement, whereby they sold to BMB Property Holdings, Inc., represented by its President, Benjamin Bitanga, their 21,071,114 shares of stock in BLTB.
The purchase price was P72,076,425.00. A downpayment was made while the balance was payable onNovember 26, 1997.
Furthermore, the buyer guaranteed that it shall take over the management and operations of BLTB but shall immediately surrender the same to the sellers in case it fails to pay the balance of the purchase price on November 26, 1997.
On November 21, 1997, BLTB HELD a stockholders meeting. (Benjamin Bitanga and Monina Grace Lim were elected as directors of the corporation.)
On November 28, 1997, another stockholders' meeting was held. (NEW Directors were elected and officers)
The newly elected directors of BLTB scheduled the annual stockholders' meeting on May 19, 1998, BUT Michael Potenciano wrote Benjamin Bitanga, requesting for a postponement of the stockholders' meeting due to the absence of a thirty-day advance notice. NO RESPONSE.
On the scheduled date of the meeting, the Potenciano group was re-elected to the Board ofDirectors, and a new set of officers was thereafter elected.
The Bitanga group filed with the SEC a Complaint for Damages and Injunction. DENIED.
The Bitanga group filed another complaint with application for a writ of preliminary injunction and prayer for temporary restraining order, seeking to annul the May 19, 1998 stockholders' meeting.
SEC Hearing Panel granted it, declared
the May 19, 1998stockholders' meeting was void on the grounds that, first, Michael Potenciano had himself asked for its postponement due to improper notice; and,
second, there was no quorum, since BMBHoldings, Inc., represented by the Bitanga group, which then owned 50.26% of BLTB's shares having purchased the same from the Potenciano group, was not present at the said meeting.
The Bitanga Board remains the legitimate Board in a hold-over capacity.
The Potenciano group filed a petition for certiorari. The SEC En Banc set aside the June 17, 1998 Order Of the Hearing Panel.
Bitanga group immediately filed a petition for certiorari with the CAs.
CA reversed the assailed Orders of the SEC En Banc and reinstating the Order Of the Hearing Panel
ISSUE:
Whether or not the stockholders' meeting on May 19, 1998 was void since BMBHoldings, Inc., represented by the Bitanga group was not present at the said meeting.
RULING:
NO. IT WAS VALID.
As stockholders of record, the Potencianos are clearly entitled to exercise all the rights and privileges pertaining thereto. Until challenged in a proper proceeding, they may vote and be voted for as directors of the corporation, and the shares standing in their names may likewise be taken into account in determining whether or not there was a quorum for the conduct of corporate business.
Thus, pending the determination of the parties' rights under the Sale and Purchase Agreement, the Potencianos may rightfully sit in the BLTB Board.
Until registration is accomplished, the transfer, though valid between the parties, cannot be effective as against the corporation. Thus, the unrecorded transferee, the Bitangagroup in this case, cannot vote nor be voted for.
x x x
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 anymeeting; 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.
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