Lanuza vs.

CA
GR No. 131394 | March 28, 2005

Facts:
Petitioners seek to nullify the Court of Appeals Decision in CAG.R. SP No. 41473
1
promulgated on 18
August 1997, affirming the SEC Order dated 20 June 1996, and the Resolution
2
of the Court of Appeals
dated 31 October 1997 which denied petitioners motion for reconsideration.
In 1952, the Philippine Merchant Marine School, Inc. (PMMSI) was incorporated, with seven hundred
(700) founders shares and seventy-six (76) common shares as its initial capital stock subscription
reflected in the articles of incorporation
Onrubia et. al, who were in control of PMMSI registered the companys stock and transfer book for the
first time in 1978, recording thirty-three (33) common shares as the only issued and outstanding shares
of PMMSI.
In 1979, a special stockholders meeting was called and held on the basis of what was considered as a
quorum of twenty-seven (27) common shares, representing more than two-thirds (2/3) of the common
shares issued and outstanding.
In 1982, Juan Acayan, one of the heirs of the incorporators filed a petition for the registration of their
property rights was filed before the SEC over 120 founders shares and 12 common shares owned by
their father
SEC Hearing Officer: heirs of Acayan were entitled to the claimed shares and called for a special
stockholders meeting to elect a new set of officers.
SEC en banc: affirmed the decision
As a result, the shares of Acayan were recorded in the stock and transfer book.
On May 6, 1992, a special stockholders meeting was held to elect a new set of directors
Onrubia et al filed a petition with SEC questioning the validity of said meeting alleging that the quorum
for the said meeting should not be based on the 165 issued and outstanding shares as per the stock and
transfer book, but on the initial subscribed capital stock of seven hundred seventy-six (776) shares, as
reflected in the 1952 Articles of Incorporation
Petition was dismissed
SC en banc: shares of the deceased incorporators should be duly represented by their respective
administrators or heirs concerned. Called for a stockholders meeting on the basis of the stockholdings
reflected in the articles of incorporation for the purpose of electing a new set of officers for the
corporation
Lanuza, Acayan et al, who are PMMSI stockholders, filed a petition for review with the CA, raising the
following issues:
1. whether the basis the outstanding capital stock and accordingly also for determining the quorum at
stockholders meetings it should be the 1978 stock and transfer book or if it should be the 1952 articles
of incorporation
(They contended that the basis is the stock and transfer book, not articles of incorporation in computing
the quorum)
2. whether the Espejo decision (decision of SEC en banc ordering the recording of the shares of Jose
Acayan in the stock and transfer book) is applicable to the benefit of Onrubia et al
CA decision:
1. For purposes of transacting business, the quorum should be based on the outstanding capital stock as
found in the articles of incorporation
2. To require a separate judicial declaration to recognize the shares of the original incorporators would
entail unnecessary delay and expense. Besides. the incorporators have already proved their
stockholdings through the provisions of the articles of incorporation.
Appeal was made by Lanuza et al before the SC
Lanuza et al contention:
a. 1992 stockholders meeting was valid and legal
b. Reliance on the 1952 articles of incorporation for determining the quorum negates
the existence and validity of the stock and transfer book Onrubia et al prepared
c. Onrubia et al must show and prove entitlement to the founders and common
shares in a separate and independent action/proceeding in order to avail of the benefits
secured by the heirs of Acayan
Onrubia et als contention, based on the Memorandum: petition should be dismissed on the ground of
res judicata
Another appeal was made
Lanuza et als contention: instant petition is separate and distinct from G.R. No. 131315, there being no
identity of parties, and more importantly, the parties in the two petitions have their own distinct rights
and interests in relation to the subject matter in litigation
Onrubia et als manifestation and motion: moved for the dismissal of the case

Issue: What should be the basis of quorum for a stockholders meetingthe outstanding capital stock as
indicated in the articles of incorporation or that contained in the companys stock and transfer book?

Ruling:
Articles of Incorporation
- Defines the charter of the corporation and the contractual relationships between the State and the
corporation, the stockholders and the State, and between the corporation and its stockholders.
- Contents are binding, not only on the corporation, but also on its shareholders.
Stock and transfer book
- Book which records the names and addresses of all stockholders arranged alphabetically, the installments
paid and unpaid on all stock for which subscription has been made, and the date of payment thereof; a
statement of every alienation, sale or transfer of stock made, the date thereof and by and to whom
made; and such other entries as may be prescribed by law
- necessary as a measure of precaution, expediency and convenience since it provides the only certain and
accurate method of establishing the various corporate acts and transactions and of showing the
ownership of stock and like matters
- Not public record, and thus is not exclusive evidence of the matters and things which ordinarily are or
should be written therein
In this case, the articles of incorporation indicate that at the time of incorporation, the incorporators
were bona fide stockholders of 700 founders shares and 76 common shares. Hence, at that time, the
corporation had 776 issued and outstanding shares.
According to Sec. 52 of the Corp Code, a quorum shall consist of the stockholders representing a
majority of the outstanding capital stock. As such, quorum is based on the totality of the shares which
have been subscribed and issued, whether it be founders shares or common shares
To base the computation of quorum solely on the obviously deficient, if not inaccurate stock and transfer
book, and completely disregarding the issued and outstanding shares as indicated in the articles of
incorporation would work injustice to the owners and/or successors in interest of the said shares.
The stock and transfer book of PMMSI cannot be used as the sole basis for determining the quorum as it
does not reflect the totality of shares which have been subscribed, more so when the articles of
incorporation show a significantly larger amount of shares issued and outstanding as compared to that
listed in the stock and transfer book.
One who is actually a stockholder cannot be denied his right to vote by the corporation merely because
the corporate officers failed to keep its records accurately.

A corporations records are not the only
evidence of the ownership of stock in a corporation.
It is no less than the articles of incorporation that declare the incorporators to have in their name the
founders and several common shares. Thus, to disregard the contents of the articles of incorporation
would be to pretend that the basic document which legally triggered the creation of the corporation
does not exist and accordingly to allow great injustice to be caused to the incorporators and their heirs

WHEREFORE, the petition is DENIED and the assailed Decision is AFFIRMED. Costs against petitioners

Landmark Case: MAXIMO CALALANG vs A. D. WILLIAMS, ET AL., G.R. No. 47800 December 2, 1940
This case is named Calalang vs Williams (G.R. No. L-22545 November 28, 1969) when a A traffic
regulation in Manila banned calesas from some streets in Manila during certain afternoon hours. A
citizen challenged this regulation. Because of Justice Jose P. Laurel's definition of what social justice is,
this case had been a Landmark Case.

MAXIMO CALALANG vs A. D. WILLIAMS, ET AL., G.R. No. 47800 December 2, 1940
Digested Case / Case Digest -- Landmark Case

Doctrine: Social Justice: Salus populi est suprema lex.

LAUREL, J.:

Facts:

The National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to the
Director of the Public Works and to the Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along the following for a period of one year from the date of
the opening of the Colgante Bridge to traffic:
1) Rosario Street extending from Plaza Calderon de la Barca to Dasmarias
Street from 7:30Am to 12:30 pm and from 1:30 pm to 530 pm; and
2) along Rizal Avenue extending from the railroad crossing at Antipolo Street to
Echague Street from 7 am to 11pm The Chairman of the National Traffic Commission on July
18, 1940 recommended to the Director of Public Works with the approval of the Secretary of
Public Works the adoption of the measure proposed in the resolution aforementioned in
pursuance of the provision of the Commonwealth Act No. 548 which
authorizes said Director with the approval from control the use of and traffic on national
roads.
On August 2, 1940, the Director recommended to the Secretary the approval of the recommendations
made by the Chairman of the National Traffic Commission with modifications. The Secretary of Public
Works approved the recommendations on August 10,1940. The Mayor of Manila and the Acting Chief of
Police of Manila have enforced and caused to be enforced the rules and regulation. As a consequence, all
animal-drawn vehicles are not allowed to pass and pick up passengers in the places above mentioned to
the detriment not only of their owners but of the riding public as well.
Issues:
1) Whether the rules and regulations promulgated by the respondents pursuant to the provisions of
Commonwealth Act NO. 548 constitute an unlawful inference with legitimate business or trade and
abridged the right to personal liberty and freedom of locomotion?
2) Whether the rules and regulations complained of infringe upon the constitutional precept regarding
the promotion of social justice to insure the well-being and economic security of all the people?
Held:
1) No. The promulgation of the Act aims to promote safe transit upon and avoid obstructions on national
roads in the interest and convenience of the public. In enacting said law, the National Assembly was
prompted by considerations of public convenience and welfare. It was inspired by the desire to relieve
congestion of traffic, which is a menace to the public safety. Public welfare lies at the bottom of the
promulgation of the said law and the state in order to promote the general welfare may interfere with
personal liberty, with property, and with business and occupations. Persons and property may be subject
to all kinds of restraints and burdens in order to secure the general comfort, health, and prosperity of
the State. To this fundamental aims of the government, the rights of the individual are subordinated.
Liberty is a blessing which should not be made to prevail over authority because society will fall into
anarchy. Neither should authority be made to prevail over liberty because then the individual will fall
into slavery. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very
means of insuring its preserving.
2) No. Social justice is neither communism, nor despotism, nor atomism, nor anarchy, but the
humanization of laws and the equalization of social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be approximated. Social justice means the
promotion of the welfare of all the people, the adoption by the Government of measures calculated to
insure economic stability of all the competent elements of society, through the maintenance of a proper
economic and social equilibrium in the interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of
powers underlying the existence of all governments on the time-honored principles of salus populi
estsuprema lex.
Social justice must be founded on the recognition of the necessity of interdependence among divers and
diverse units of a society and of the protection that should be equally and evenly extended to all groups
as a combined force in our social and economic life, consistent with the fundamental and paramount
objective of the state of promoting health, comfort and quiet of all persons, and of bringing about the
greatest good to the greatest number.

Export Processing Zone Authority vs CHR , Valles, Aledia and Ordonez
G.R. No. 101476 April 14, 1992

Facts: Valles, Aedia and Ordonez filed with CHR a joint complaint against EPZA for allegedly violating
their human rights when EPZA Project Engineer Damondamon along with 215
th
PNP Company tried to
level the area occupied by complainants. The same parcel of land was reserved and allocated for
purpose of development into Cavite Export Processing Zone which was bought by Filoil Refinery
Corporation and was later sold to EPZA.CHR issued an order of injunction for EPZA and company to desist
from committing further acts of demolition, terrorism and harassment until further order. 2 weeks later
the group started bulldozing the area and CHR reiterated its order of injunction, including the Secretary
of Public Works and Highways to desist from doing work on the area. EPZA filed a motion to life the
order with CHR for lack of authority and said motion was dismissed.

EPZA filed the case at bar for certiorari and prohibition alleging that CHR acted in excess of
its jurisdiction in issuing a restraining order and injunctive writ;that the private respondents have no clea
r and positive right to be protected by an injunction; and that CHR abused its discretion in entertaining
the complaint.

EPZAs petition was granted and a TRO was issued ordering CHR to cease and desist from
enforcing/implementing the injunction orders. CHR commented that its function is not limited to mere
investigation (Art. 13, Sec. 18 of the 1987 Constitution).

Issue: WON CHR has the jurisdiction to issue a writ of injunction or restraining order against supposed
violators of human rights, to compel them to cease and desist from continuing the acts complained of.

Ruling: In Carino vs CHR, it was held that CHR is not a court of justice nor even a quasi-judicial body. The
mostthat may be conceded to the Commission in the way of adjudicative power is that it may
investigate, i.e., receiveevidence and make findings of fact as regards claimed human rights violations
involving civil and political rights.But fact-finding is not adjudication, and cannot be likened to the judicial
function of a court of justice, or even aquasi-judicial agency or official. The function of receiving evidence
and ascertaining there from the facts of a controversy is not a judicial function, properly speaking. The
constitutional provision directing the CHR to "provide for preventive measures and legal aid services to
the underprivileged whose human rights have been violated or need protection" may not be construed
to confer jurisdiction on the Commission to issue are straining order or writ of injunction for, if that were
the intention, the Constitution would have expressly said so. Jurisdiction is conferred by law and
never derived by implication. Evidently, the "preventive measures and legal aid services" mentioned in
the Constitution refer to extrajudicial and judicial remedies (including a preliminary writ of injunction)
which the CHR may seek from the proper courts on behalf of the victims of human rights violations. Not
being a court of justice, the CHR itself has no jurisdiction to issue the writ, for a writ of preliminary
injunction may only be issued "by the judge of any court in which the action is pending [within his
district], or by a Justice of the Court of Appeals, or of the Supreme Court. A writ of preliminary injunction
is an ancillary remedy. It is available only in a pending principal action, for the preservation or protection
of the rights and interest of a party thereto, and for no other purpose.
EPZAs petition is granted.