FACTS:

The case involves separate petitions for review on certiorari assailing the decision of the Court of Appeals (CA) declaring the annual stockholders' meeting held by Cecilia Que, Eumir Carlo Que, and Ma. Corazon Que on January 25, 2014, void for lack of quorum and declaring all acts performed by them as ultra vires. Phil-Ville Development and Housing Corporation is a family corporation founded by Geronima Gallego Que. After Geronima's death, the shares of stock were distributed among her six children. Cecilia allegedly effected an inequitable distribution of the shares belonging to Geronima through a sale of shares of stocks. In January 2013, Cecilia, Eumir Carlo Que, and Ma. Corazon Que wrote a letter to Ana Maria, the corporate secretary of Phil-Ville, to send notices for the annual stockholders' meeting. However, before Ana Maria could reply, Cecilia and Ma. Corazon sent letters to Phil-Ville's stockholders regarding the meeting. The majority of the Board of Directors decided to postpone the meeting until the issue of the distribution of shares is settled. Despite the postponement, Cecilia, Eumir Carlo Que, and Ma. Corazon proceeded with the scheduled annual stockholders' meeting and elected new members of the Board of Directors and officers of Phil-Ville. Carolina, Ana Maria, and Angelica filed a complaint for annulment of the distribution of shares and subsequently filed an amended complaint. While the civil case was still pending, Eumir Carlo sent a notice of the annual stockholders' meeting to all the stockholders of Phil-Ville.

ISSUES:

1. Whether the CA was correct in holding that the RTC decision violated Section 14, Article VIII of the Constitution.

2. Whether the total undisputed shares of stocks in Phil-Ville should be the basis in determining the presence of a quorum.

3. Whether Cecilia et al. were barred from filing an answer.

4. Whether the trial court's decision failed to comply with the constitutional requirement of stating clearly and distinctly the facts and the law on which it is based.

5. Whether the disputed shares of stocks should be excluded in determining the presence of quorum in a stockholders' meeting.

6. Whether the transfer of shares of stocks not recorded in the stock and transfer book of the corporation is valid.

RULING:

1. The CA was correct in holding that the RTC decision violated Section 14, Article VIII of the Constitution.

2. The total undisputed shares of stocks in Phil-Ville should be the basis in determining the presence of a quorum.

3. Cecilia et al. were not barred from filing an answer.

4. Yes, the trial court's decision failed to comply with the constitutional requirement. The decision merely adopted the allegations of the plaintiffs without any explanation or justification as to why the trial court ruled that way. Therefore, the decision was declared null and void for violating the constitutional provision.

5. The disputed shares of stocks should not be excluded in determining the presence of quorum in a stockholders' meeting. Section 52 of the Corporation Code states that the quorum shall consist of the stockholders representing a majority of the outstanding capital stock. The term "outstanding capital stock" is defined under Section 137 of the same Code as the total shares of stock issued under binding subscription agreements to subscribers or stockholders. Only stocks actually issued and outstanding may be voted, and unissued stocks may not be considered in determining quorum. Thus, the 200,000 outstanding capital stocks of the corporation should be the basis for determining the presence of quorum, without distinguishing disputed or undisputed shares.

6. The transfer of shares of stocks not recorded in the stock and transfer book of the corporation is not valid. Section 63 of the Corporation Code provides that no transfer of shares shall be valid except as between the parties until the transfer is recorded in the books of the corporation. The corporation looks to its books to determine its shareholders, and it is only when the transfer has been recorded in the stock and transfer book that a corporation may recognize the transferee as its stockholder. If a stockholder is refused by an officer of the corporation to inspect or examine the books of the corporation, the stockholder may file a case in accordance with Section 144 of the same Code.

PRINCIPLES:

• Jurisdiction over the person of the defendant in a civil case is obtained through a valid service of summons. When there is no service of summons, the court acquires no jurisdiction over the defendant's person, and a judgment rendered against him is null and void.

• The invalidity of the service of summons is cured by the voluntary appearance of the defendant in court and their submission to the court's authority.

• Filing a motion for extension of time to file an answer is considered a voluntary submission to the jurisdiction of the court.

• The RTC decision must comply with the constitutional requirement of a valid judgment, which includes stating the facts and the law on which it is based.

• Section 14, Article VIII of the Constitution mandates that a decision must state clearly and distinctly the facts and the law on which it is based to adhere to due process and fair play.

• The requirement of clarity and distinctness in a decision is an assurance to the parties that legal reasoning was used in arriving at the judgment.

• There is no rigid formula as to the language used to satisfy the requirement of clarity and distinctness in a decision. The discretion of the judge in this respect, while not unlimited, is necessarily broad.

• The quorum in a stockholders' meeting is based on the number of outstanding voting stocks, without distinguishing disputed or undisputed shares.

• The transfer of shares of stocks must be recorded in the stock and transfer book of the corporation to be valid. The corporation looks to its books to determine its shareholders, and it may only recognize transferees as stockholders once the transfer has been recorded.