Spouses Beltran v. Spouses Caluag

SECOND DIVISION

[G.R. No. 259010. September 12, 2022-2021.]

SPS. FERDINAND AND ESTRELLA BELTRAN AND MICHAEL ANTHONY BELTRAN, petitioners,vs.SPS. MELCHOR AND VILMA CALUAG, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Second Division, issued a Resolution datedSeptember 12, 2022which reads as follows: HTcADC

"G.R. No. 259010 (Sps. Ferdinand and Estrella Beltran and Michael Anthony Beltran v. Sps. Melchor and Vilma Caluag). — Challenged in this present petition is the propriety of the writ of preliminary mandatory injunction (WPMI) issued by the Court of Appeals (CA) ordering Spouses Ferdinand and Estrella Beltran and Michael Anthony Beltran (Beltrans) and anyone acting on their behalf, to immediately transfer, turn-over and/or relinquish to the Sps. Melchor and Vilma Caluag (Sps. Caluag) the control on the composition of the board of directors of the King's Royal Hotel and Leisure Park Corporation (Corporation). The appellate court annulled and set aside the order of the Regional Trial Court (RTC) of San Fernando, Pampanga, Branch 42 denying the Sps. Caluag's application for the issuance of a WPMI.

Facts

Sometime in 2015, the Sps. Caluag filed a complaint for damages against the Beltrans. The case was docketed as Civil Case No. 14315 before the RTC. 1

The Sps. Caluag averred that: (i) on September 09, 2011, the parties entered into a shareholder's agreement by way of a Memorandum of Agreement (MOA), wherein the Sps. Caluag agreed to sell 1,250 of their shares in the Corporation to the Beltrans for P100,000.00 per share or a total of P125,000,000.00; (ii) the amount of P25,000,000.00 was paid and received on September 09, 2011, while the balance of P100,000,000.00 was leased by the Beltrans from the Sps. Caluag, payable within the period of September 2011 to November 2015, with an interest rate of 8.5% per annum; (iii) at the time of the filing of the complaint, the Beltrans have paid P110,000,000.00 of the total purchase price of P125,000,000.00; (iv) the Sps. Caluag, thereafter, transferred the total of 1,247 shares that correspond to the full purchase price of P125,000,000.00 in the name of the Beltrans despite partial payment by the latter; (v) despite transfer of the shares, the Beltrans asked the Sps. Caluag for the correction in the actual shares transferred; (vi) the Beltrans then issued three (3) postdated checks amounting to P15,000,000.00, their outstanding balance; (vii) the checks were, however, dishonored due to a stop payment order and for being drawn against insufficient funds; (viii) counsel for the Beltrans then reiterated the demands of the Beltrans for the transfer of shares in accordance with their instructions, and presentment of proof of proper transfers; (ix) on January 20, 2015, the Sps. Caluag filed unilateral supplemental deeds of assignment for the transfer of shares to the Beltrans with the Bureau of Internal Revenue (BIR), also corresponding taxes were paid for the transfer thereof; (x) despite the compliance of the Sps. Caluag with the demands of the Beltrans, the latter still failed to pay the P15,000,000.00 balance despite notice; and (xi) accordingly, the Sps. Caluag sent notices of termination with declarations of default to the Beltrans and informed the latter that, pursuant to the MOA, the former shall take immediate control of the Corporation. 2

On April 30, 2015, the Beltrans filed their answer with counterclaims. The Beltrans denied the allegations in the complaint and raised the following arguments, among others: (i) the complaint failed to state a cause of action in that, they were not in default at the time of the alleged termination of the MOA; (ii) the complaint is a mere nuisance suit, hence, should be dismissed; and (iii) petitioners are unlawfully usurping the management of the Corporation causing damage not only to the private respondents, but also to the Corporation, as well. They further insisted that their failure to pay their outstanding balance in the amount of P15,000,000.00 was due to the fact that petitioners failed to transfer in their favor the number of shares corresponding to the P110,000,000.00 payment of the purchase price, and that petitioners failed to present documentary proof of any transfer of shares. 3

Meanwhile, on April 10, 2015, the Beltrans filed a Complaint for Specific Performance and Damages against petitioners. This was docketed as Civil Case No. 14316. They prayed for the: (i) issuance of a Temporary Restraining Order against the Sps. Caluag, ordering them to cease and desist from further violating the provisions of the MOA dated September 9, 2011; (ii) issuance of a Temporary Restraining Order against the Sps. Caluag, ordering them to comply with their obligations and duties stipulated in the said MOA by respecting their authority over the "the management of, and assumption of full control of the usual day-to-day business operations" of the King's Royal Hotel and Leisure Park; (iii) issuance of a Temporary Restraining Order against the Sps. Caluag, ordering them to cease and desist from representing themselves, or any other entity or individuals, as the supposed "new management team" or "general managers" of the King's Royal Hotel and Leisure Park Corporation; (iv) issuance of a Writ of Preliminary Injunction enjoining the defendants (a) to cease and desist from further violating the provisions of the MOA dated September 9, 2011; and (b) to comply with their obligations and duties stipulated in the said MOA by respecting the plaintiffs' authority over the "the management of, and assumption of full control of the usual day-to-day business operations" of the King's Royal Hotel and Leisure Park; and (v) after trial on the merits, (a) declare that the Sps. Caluag's termination of the MOA is illegal, (b) command that the Sps. Caluag comply with their obligation to execute Deeds of Transfer/Sale of shares of the Corporation in their favor, so as to bring the total number of shares under the names of Ferdinand Beltran to 101 shares, to Estrella A. Beltran to 96 shares, and to Michael Anthony to 903 shares; (c) command that the Sps. Caluag to comply with their obligation to pay all taxes pursuant to the MOA, and deliver the corresponding transfer and tax documents to the Beltrans; and (d) order the Sps. Caluag, jointly and solidarily, to pay the Beltrans the amount of P310,000,00 as actual damages, P1,000,000.00 as moral damages, P1,000,00.00 as exemplary damages, P100,000.00 plus P5,000.00 per appearance as and for attorney's fees, and the costs of suit. 4

On April 28, 2015, the Sps. Caluag filed their answer with affirmative defenses that reiterated the arguments in their complaint for damages. The two cases were eventually consolidated. 5

The Sps. Caluag filed a Motion for Leave to Amend and to Admit Attached Amended Complaint with Application for the Issuance of a WPMI. 6 Their main argument is that since the Beltrans were in default in payment, the management, operations, and control of the business of the Corporation should be transferred to them. 7

On May 8, 2017, the RTC denied the Sps. Caluag's application for the issuance of a WPMI. The RTC explained in this manner:

The management of a corporation is with the Board of Directors. The herein SPOUSES CALUAG have not shown any evidence to the effect that the SPOUSES CALUAG exclusively comprise the Board of Directors. A perusal of the GENERAL INFORMATION SHEET of the King's Royal Hotel and Leisure Corporation, EXHIBIT JJ would show, that, it is not current. It is dated May 25, 2015. Moreover, the stated Board of Directors are FERDINAND BELTRAN, ESTRELLA BELTRAN, MICHAEL ANTHONY BELTRAN, VILMA B. CALUAG and MELCHOR CALUAG.

The CORPORATION CODE provides, that, the Board of Directors must act collegially and that each will have just one vote in the course of governance and management of the Corporation. x x x

Thus, no Director may insist on demanding from the other directors for the management of the corporation.

Moreover, the Board of Directors are elected by the stockholders in a meeting and election duly called for that purpose. No one stockholder or director can therefore demand that a dictatorship should be vested in him.

Likewise the removal of directors and trustees is explicitly provided by law.

Anent the prayer to order the SPOUSES BELTRAN "to relinquish to the Plaintiffs the control on the composition of the board of directors of the company," again, this is beyond the power of this Court.

The composition of the Board of Directors is by election.

Clearly, based on the law, there is no ground to GRANT the prayer for the issuance of the preliminary mandatory injunction.

There being no right vested on the SPOUSES CALUAG, there is no basis for the alleged injury. x x x 8

The Sps. Caluag filed a petition for certiorari before the CA after their motion for reconsideration was denied by the RTC. 9 They ascribed grave abuse of discretion to denying the Sps. Caluag's prayer for the issuance of a WPMI. 10

On March 26, 2019, the CA granted the petition for certiorari. The decretal portion of the Decision reads:

WHEREFORE, in view of the foregoing premises, the instant Petition for [Certiorari] is hereby GRANTED. The assailed Resolution dated August 07, 2017 of the Regional Trial Court of San Fernando, Pampanga, Branch 42, in Comm. Case Nos. 091 and 092, is REVERSED and SET ASIDE.

Let a Writ of Preliminary Mandatory Injunction be issued ordering private respondents, and anyone acting on their behalf, to immediately transfer, turn-over and/or relinquish to the petitioners the control on the composition of the board of directors of the Corporation, as well as, the management of the hotel in compliance with the pertinent provisions of the duly executed Memorandum of Agreement pending the final resolution on the merits of the consolidated complaints by the public respondent trial court.

The issuance of the Writ of Preliminary Mandatory Injunction is conditioned upon the posting by petitioners of a BOND, in the amount of Five Hundred Thousand Pesos ([P]500,000.00), which will answer for any and all damages which private respondents may suffer or sustain by reason of the issuance of the Writ of Preliminary Mandatory Injunction should the trial court finally decide that petitioners are not entitled thereto, and shall remain in full force and effect until the Consolidated Complaints are finally decided by the court a quo. 11

In reversing the trial court, the appellate court found that the Sps. Caluag had clear and unmistakable right over the Corporation. The CA noted that the trial court relied merely on the provisions of the Corporation Code while failing to consider the MOA executed by the parties. 12 The CA opined that the Beltrans were already in default in the payment of the balance owed to the Sps. Caluag. The appellate court went on further to state that even assuming that the Beltrans were not in default they still have the obligation to turn over the management, operations and control of the business pursuant to the MOA. 13 The CA viewed the continuous refusal of the Beltrans to turn over the management and control of the Corporation in favor of the Sps. Caluag had caused grave injustice and will continue to cause irreparable damage or injury. 14

The CA denied the subsequent motion for reconsideration filed by the Beltrans. 15

On October 27, 2019, the Beltrans filed before us a petition for review on certiorari. 16 The Beltrans likewise filed a verified ad cautelam motion to allow them to post a counterbond. 17

The Beltrans stated in their motion that the continuance of the WPMI would cause irreparable damage to the Beltrans as well as the employees of the Hotel. 18 The Beltrans manifested that they are ready and willing to post a counterbond in double the amount originally posted by the Sps. Caluag as an injunction bond. 19

The Sps. Caluag counter in their comment that the Beltrans failed to pay the required docket and other fees in a timely manner in violation of Sections 2 and 3 of Rule 45 of the Rules of Court. They further claim that their right to obtain a majority seat in the board of directors is unmistakable and that right sought to be protected by the CA is material and substantial. 20

The Sps. Caluag argue that the RTC committed grave abuse of discretion in denying their prayer for the issuance of a WPMI. On the other hand, they assert that CA did not err in ruling that there is an urgent and paramount necessity for the writ to prevent serious damage and that the Beltrans should turn over the management of the Corporation to them. 21 Lastly, the Sps. Caluag aver that the appeal of the Beltrans is without merit and they have not shown any special and compelling reasons to give due course to the petition. 22

Issue

The lone issue to be resolved is whether the RTC committed grave abuse of discretion in denying the Sps. Caluag application for a WPMI.

Our Ruling

Before this Court resolves the merits of the case. This Court takes note of the argument of the respondents that this Court should dismiss the petition due to the belated payment of appellate court fees.

In Municipality of Agoo, La Union v. Dy, 23 we have stated:

On this note, case law instructs that notwithstanding the mandatory nature of the requirement of appellate docket fees, the Court also recognizes that its strict application is qualified by the following: first, failure to pay those fees within the reglementary period allows only discretionary, not automatic, dismissal; second, such power should be used by the Court in conjunction with its exercise of sound discretion in accordance with the tenets of justice and fair play, as well as with a great deal of circumspection in consideration of all attendant circumstances,' as in this case, where respondents were able to pay said fees, albeit belatedly.

We find that the initial payment of the petitioners of a lower amount of appellate docket fees is already substantial compliance of the payment of the docket fees. The subsequent payment of the remainder of the amount rectifies the inadvertent mistake. Thus, we find that the petitioners were able to comply with the requirement of the payment of the appellate fees. The emerging trend in the rulings of this Court is to afford every party-litigant the amplest opportunity for the proper and just determination of his or her cause, free from the constraints of technicalities. 24

The RTC did not commit grave abuse of

The remedy to assail the denial of an application for the issuance of an injunctive relief is to file a petition for certiorari ascribing grave abuse of discretion. This Court in determining the correctness of the RTC's denial of the application should be guided by the definition of grave abuse of discretion, which we have consistently defined as:

By grave abuse of discretion is meant capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. 25

In the case under consideration, this Court finds no such grave abuse of discretion was committed by the trial court that would justify the setting aside of its order by the CA and its issuance of a WPMI.

The WPMI cannot be sought as a matter of right, but its grant or refusal rests in the sound discretion of the court under the circumstances and the facts of the particular case. The issuance of any injunctive relief is accepted as the strong arm of equity or a transcendent remedy to be used cautiously and sparingly as it affects the respective rights of the parties, and only upon full conviction on the part of the court of its extreme necessity should it issue. 26 Thus, the grant or denial of the injunctive relief sough rest on the sound discretion of the court having jurisdiction over the main case. This is because such court is in the best position to assess and evaluate factual matters based on the available pieces of evidence. 27

In Nerwin Industries Corp. v. PNOC-Energy Development Corp., 28 the Court stated the following reminder to judges:

Moreover, judges dealing with applications for the injunctive relief ought to be wary of improvidently or unwarrantedly issuing TROs or writs of injunction that tend to dispose of the merits without or before trial. Granting an application for the relief in disregard of that tendency is judicially impermissible, for it is never the function of a TRO or preliminary injunction to determine the merits of a case, or to decide controverted facts. It is but a preventive remedy whose only mission is to prevent threatened wrong, further injury, and irreparable harm or injustice until the rights of the parties can be settled. Judges should thus look at such relief only as a means to protect the ability of their courts to render a meaningful decision. Foremost in their minds should be to guard against a change of circumstances that will hamper or prevent the granting of proper reliefs after a trial on the merits. It is well worth remembering that the writ of preliminary injunction should issue only to prevent the threatened continuous and irremediable injury to the applicant before the claim can be justly and thoroughly studied and adjudicated.

In the present case, this Court finds that the RTC correctly denied the application for the issuance of the WPMI. On the other hand, we find that the CA overreached in granting the WPMI.

The CA in granting the WPMI effectively dislodged the current members of the board of directors of the Corporation in favor of a new set of directors. The prayer in the preliminary mandatory injunction, i.e., to order the Beltrans to relinquish to the Sps. Caluag the control of majority of the composition of the board of directors of the corporation is beyond the power of the CA, and even of this Court. The composition of the Board of Directors of a corporation is filled up by an election, as provided for in Sections 23, 24, and 25 of Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (Revised Corporation Code), the provisions read:

Section 23. Election of Directors or Trustees. — Except when the exclusive right is reserved for holders of founders' shares under Section 7 of this Code, each stockholder or member shall have the right to nominate any director or trustee who possesses all of the qualifications and none of the disqualifications set forth in this Code.

At all elections of directors or trustees, there must be present, either in person or through a representative authorized to act by written proxy, the owners of majority of the outstanding capital stock, or if there be no capital stock, a majority of the members entitled to vote. When so authorized in the bylaws or by a majority of the board of directors, the stockholders or members may also vote through remote communication or in absentia: Provided, that the right to vote through such modes may be exercised in corporations vested with public interest, notwithstanding the absence of a provision in the bylaws of such corporations.

A stockholder or member who participates through remote communication or in absentia, shall be deemed present for purposes of quorum.

The election must be by ballot if requested by any voting stockholder or member.

In stock corporations, stockholders entitled to vote shall have the right to vote the number of shares of stock standing in their own names in the stock books of the corporation at the time fixed in the bylaws or where the bylaws are silent, at the time of the election. The said stockholder may: (a) vote such number of shares for as many persons as there are directors to be elected; (b) cumulate said shares and give one (1) candidate as many votes as the number of directors to be elected multiplied by the number of the shares owned; or (c) distribute them on the same principle among as many candidates as may be seen fit: Provided, that the total number of votes cast shall not exceed the number of shares owned by the stockholders as shown in the books of the corporation multiplied by the whole number of directors to be elected: Provided, however, that no delinquent stock shall be voted. Unless otherwise provided in the articles of incorporation or in the bylaws, members of nonstock corporations may cast as many votes as there are trustees to be elected but may not cast more than one (1) vote for one (1) candidate. Nominees for directors or trustees receiving the highest number of votes shall be declared elected.

If no election is field, or the owners of majority of the outstanding capital stock or majority of the members entitled to vote are not present in person, by proxy, or through remote communication or not voting in absentia at the meeting, such meeting may be adjourned and the corporation shall proceed in accordance with Section 25 of this Code.

The directors or trustees elected shall perform their duties as prescribed by law, rules of good corporate governance, and bylaws of the corporation.

Section 24. Corporate Officers. — Immediately after their election, the directors of a corporation must formally organize and elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a citizen and resident of the Philippines; and (d) such other officers as may be provided in the bylaws. If the corporation is vested with public interest, the board shall also elect a compliance officer. The same person may hold two (2) or more positions concurrently, except that no one shall act as president and secretary or as president and treasurer at the same time, unless otherwise allowed in this Code.

The officers shall manage the corporation and perform such duties as may be provided in the bylaws and/or as resolved by the board of directors.

Section 25. Report of Election of Directors, Trustees and Officers, Non-Holding of Election and Cessation from Office. — Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary, or any other officer of the corporation, shall submit to the Commission, the names, nationalities, shareholdings, and residence addresses of the directors, trustees and officers elected.

The non-holding of elections and the reasons therefor shall be reported to the Commission within thirty (30) days from the date of the scheduled election. The report shall specify a new date for the election, which shall not be later than sixty (60) days from the scheduled date.

If no new date has been designated, or if the rescheduled election is likewise not held, the Commission may, upon the application of a stockholder, member, director or trustee, and after verification of the unjustified non-holding of the election, summarily order that an election be held. The Commission shall have the power to issue such orders as may be appropriate, including orders directing the issuance of a notice stating the time and place of the election, designated presiding officer, and the record date or dates for the determination of stockholders or members entitled to vote.

Notwithstanding any provision of the articles of incorporation or bylaws to the contrary, the shares of stock or membership represented at such meeting and entitled to vote shall constitute a quorum for purposes of conducting an election under this section.

Should a director, trustee or officer die, resign or in any manner cease to hold office, the secretary, or the director, trustee or officer of the corporation, shall, within seven (7) days from knowledge thereof, report in writing such fact to the Commission.

Section 23 of the Revised Corporation Code clearly states that membership in the board of directors of a corporation is by election from among the holders of stock in the corporation. Section 24 further reinforces the mandatory nature of "election" of directors, by providing for the manner and procedure by which directors are to be elected. Thus, the WPMI should not be a tool to short cut the process laid out by the law.

Even assuming that there is a valid ground for the issuance of the WPMI, the Court finds that the CA set the mandatory injunction bond at the amount of P500,000.00 does not approximate the damage that the petitioners may sustain while the WPMI is in effect.

The primary function of the bond is to serve as a fund to ensure compensation to a wrongfully enjoined defendant and to facilitate the collection of the damages awarded. In addition, because the bond sets an upper limit as to the plaintiff's liability, it provides the plaintiff with information regarding the scope of his potential liability for wrongfully issued preliminary injunctions. 29

Thus, Rule 58 of the Rules of Court mandates that courts when granting preliminary injunctions are to fix the amount of the bond to the effect that the applicant will pay to such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. 30

Even assuming that there might be valid a ground for the grant of the application, the CA should have allowed the petitioners to post a counter-bond based on the discussions above. Section 6, Rule 58 of the Rules of Court provides:

Section 6. Grounds for objection to, or for motion of dissolution of, injunction or restraining order. — The application for injunction or restraining order may be denied, upon a showing of its insufficiency. The injunction or restraining order may also be denied, or, if granted, may be dissolved, on other grounds upon affidavits of the party or person enjoined, which may be opposed by the applicant also by affidavits. It may further be denied, or if granted, may be dissolved, if it appears after hearing that although the applicant is entitled to the injunction or restraining order, the issuance or continuance thereof, as the case may be, would cause irreparable damage to the party of person enjoined while the applicant can be fully compensated for such damages is he may suffer, and the former files a bond in an amount fixed by the court conditioned that he will pay all damages which the applicant may suffer by the denial or the dissolution of the Injunction or restraining order. If it appears that the extent of the preliminary injunction or restraining order granted is too great, it may be modified.

A reading of the above quoted provision would reveal that even in a case where the applicant for an injunction is entitled thereto, the injunction granted may be dissolved upon a showing of compliance with three requirements:

(1) The issuance or continuance of the injunction would cause irreparable damage to the party or person enjoined;

(2) The applicant for injunction can be fully compensated for such damages as he may suffer by the lifting or non-continuance of the injunction; and

(3) The party enjoined files a bond, called a counter-bond, in an amount fixed by this court, conditioned that he will pay all damages which the applicant may suffer by the denial or the dissolution of the injunction or restraining order.

In SM Investments Corp. v. MAC Graphics Carranz International Corp., 31 we defined grave and irreparable injury as follows:

It is settled that a writ of preliminary injunction should be issued only to prevent grave and irreparable injury, that is, injury that is actual, substantial, and demonstrable. Here, there is no "irreparable injury" as understood in law. Rather, the damages alleged by the petitioner, namely, "immense loss in profit and possible damage claims from clients" and the cost of the billboard which is "a considerable amount of money" is easily quantifiable, and certainly does not fall within the concept of irreparable damage or injury as described in Social Security Commission v. Bayona:

Damages are irreparable within the meaning of the rule relative to the issuance of injunction where there is no standard by which their amount can be measured with reasonable accuracy. "An irreparable injury which a court of equity will enjoin includes that degree of wrong of a repeated and continuing kind which produce hurt, inconvenience, or damage that can be estimated only by conjecture, and not by any accurate standard of measurement." An irreparable injury to authorize an injunction consists of a serious charge of, or is destructive to, the property it affects, either physically or in the character in which it has been held and enjoined, or when the property has some peculiar quality or use, so that its pecuniary value will not fairly recompense the owner of the loss thereof. 32

To this Court's mind, the continuance of the WPMI issued by the CA would cause irreparable damage to the petitioners. The petitioners status as the duly elected directors and officers of the Corporation remained to be valid as there is no showing that there was as an election held to choose the new set of officers. As earlier pointed out, Sections 23 and 24 of the Revised Corporation Code provide the procedure in the selection of the board of directors and the officers of the corporation. Section 25 of the same law provides that the non-holding of elections and the reasons therefor shall be reported to the Securities and Exchange Commission within 30 days from the date of the scheduled election. The report shall specify a new date for the election, which shall not be later than 60 days from the scheduled date.

The WPMI was not intended to grant to the courts the power to overrule the election of directors, made and effected pursuant to the Revised Corporation Code by the corporation's stockholders. This is because there is a procedure to challenge their status as the duly elected and incumbent directors and officers of the corporation. Section 27 of the same law outlines the procedure for the removal of a director, it reads:

SECTION 27. Removal of Directors or Trustees. — Any director or trustee of a corporation may be removed from office by a vote of the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or in a nonstock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote: Provided, That such removal shall take place either at a regular meeting of the corporation or at a special meeting called for the purpose, and in either case, after previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting. A special meeting of the stockholders or members for the purpose of removing any director or trustee must be called by the secretary on order of the president, or upon written demand of the stockholders representing or holding at least a majority of the outstanding capital stock, or a majority of the members entitled to vote. If there is no secretary, or if the secretary, despite demand, fails or refuses to call the special meeting or to give notice thereof, the stockholder or member of the corporation signing the demand may call for the meeting by directly addressing the stockholders or members. Notice of the time and place of such meeting, as well as of the intention to propose such removal, must be given by publication or by written notice prescribed in this Code. Removal may be with or without cause: Provided, That removal without cause may not be used to deprive minority stockholders or members of the right of representation to which they may be entitled under Section 23 of this Code.

The Commission shall, motu proprio or upon verified complaint, and after due notice and hearing, order the removal of a director or trustee elected despite the disqualification, or whose disqualification arose or is discovered subsequent to an election. The removal of a disqualified director shall be without prejudice to other sanctions that the Commission may impose on the board of directors or trustees who, with knowledge of the disqualification, failed to remove such director or trustee.

Clearly, the WPMI caused great and irreparable damage against the petitioners since the respondents removed them as directors and officers of the Corporation without following the provisions of the Revised Election Code. Their removal from office deprived them of their right to exercise their rights to control the affairs of the Corporation as to their bidding. The petitioners pointed out such a situation when it averred that the respondents barred the employees hired by them to enter the premises of the Corporation. Further, the abrupt change of management tarnished the goodwill and reputation of the petitioners in the community.

Likewise, this Court is of the opinion that the respondents can also be fully compensated for such damages that they may suffer by reason of the dissolution of the WPMI. The respondents as stockholders of the Corporation is not an issue, and as such, their rights as stockholders remain. The respondents' right to dividends and to income from the corporation is also not affected by the discontinuance of the WPMI. The declaration of dividends by the Corporation is dependent upon the availability of surplus profit or unrestricted retained earnings, as the case may be. It is worthy to note that the respondents remain to be members of the board of directors of the Corporation. Their continued membership in the board of directors, their standing as stockholders, and their right to dividends and income from the corporation, are unaffected by the lifting of the WPMI. Further, the respondents had already admitted receiving the amount of P110,000,000.00 as payment from the petitioners. This amount is sufficient to cover for damages that they prayed for in their complaint. Furthermore, the petitioners manifested that they are ready and willing to post a counterbond in double the amount originally posted by the respondents as injunction bond, or any amount fixed by this Court. 33

FOR THESE REASONS, the instant petition is GRANTED. The March 26, 2019 Decision and September 3, 2019 Resolution of the Court of Appeals in CA-G.R. SP No. 152813 are hereby REVERSED and SET ASIDE.

The writ of preliminary mandatory injunction issued by the Court of Appeals is hereby DISSOLVED. aScITE

SO ORDERED."(Leonen, J., on official leave; Lazaro-Javier, J., Acting Chairperson per Special Order No. 2909 dated September 9, 2022)

By authority of the Court:

(SGD.) TERESITA AQUINO TUAZONDivision Clerk of Court

Footnotes

1. Rollo, p. 62.

2. Id. at 62-63.

3. Id. at 63.

4. Id. at 63-65.

5. Id. at 65.

6. Id.

7. Id.

8. Id. at 66-67.

9. Id. at 67.

10. Id. at 68.

11. Id. at 75.

12. Id. at 70-71.

13. Id. at 71.

14. Id. at 74.

15. Id. at 89.

16. Id. at 103.

17. Id. at 101.

18. Id. at 110.

19. Id.

20. Id. at 502.

21. Id.

22. Id. at 503.

23. G.R. No. 251914 (Notice), June 22, 2020.

24. Heirs of Pacaña v. Spouses Masalahit, G.R. No. 215761, September 13, 2021.

25. Land Transportation Franchising and Regulatory Board v. Valenzuela, G.R. No. 242860, March 11, 2019.

26. Chan Cuan v. Chiang Kai Shek College, Inc., 558 Phil. 778 (2007).

27. AMA Land, Inc. v. Wack Wack Residents' Association, Inc., 813 Phil. 932 (2017).

28. 685 Phil. 412, 427-429 (2012).

29. Ofer Grosskopf and Barak Medina, Seattle University Law Review (2009), p. 921.

30. Section 4 (b) of Rule 58 reads:

Section 4. Verified application and bond for preliminary injunction or temporary restraining order. — A preliminary injunction or temporary restraining order may be granted only when:

xxx xxx xxx

(b) Unless exempted by the court the applicant files with the court where the action or proceeding is pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that the applicant will pay to such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be issued.

31. 834 Phil. 106 (2018).

32. Id. at 122.

33. Rollo, p. 101.