LEE V.

CA
(Tenure, Qualifications and Disqualifications of Directors or Trustees) FACTS International Corporate Bank Inc. filed a complaint for sum of money against Saco o !anufacturing Corp, "a lo and T#omas $on%ales, &#o in turn filed a t#ird party complaint against '()' and t#e petitioners. "etitioners filed a motion to dismiss t#e t#ird party complaint ut it &as denied. T#e trial court issued an order requiring t#e issuance of an alias summons upon '()' t#roug# t#e DB" as a consequence of t#e petitioner*s letter informing t#e court t#at t#e summons for '()' &as erroneously ser+ed upon t#em considering t#at t#e management of '()' #ad een transferred to t#e DB". DB" claimed t#at it &as not aut#ori%ed to recei+e summons on e#alf of '()' since t#e DB" #ad not taken o+er t#e company &#ic# #as a separate and distinct corporate personality and e,istence. (ee and (acdao filed a !- su mitting t#at -ule ./, section .0 of t#e -e+ised -ules of Court is not applica le since t#ey &ere no longer officers of '()' and t#at t#e pri+ate respondents s#ould #a+e a+ailed of anot#er mode of ser+ice under -ule ./, Section .1 of t#e said -ules, i.e., t#roug# pu lication to effect proper ser+ice upon '()'. "ri+ate respondents argued t#at t#e +oting trust agreement did not di+est t#e petitioners of t#eir positions as president and e,ecuti+e +ice2president of '()' so t#at ser+ice of summons upon '()' t#roug# t#e petitioners as corporate officers &as proper. Trial court up#eld t#e +alidity of t#e ser+ice of summons on '()' t#roug# DB". "etitioners filed a second !- reiterating t#eir stand t#at y +irtue of t#e +oting trust agreement t#ey ceased to e officers and directors of '()', #ence, t#ey could no longer recei+e summons or any court processes for or on e#alf of '()'.

Trial court re+ersed itself y setting aside its pre+ious 3rder and declared t#at ser+ice upon t#e petitioners &#o &ere no longer corporate officers of '()' cannot e considered as proper ser+ice of summons on '()'. C' set aside t#e orders of t#e trial court. 4ence, t#e appeal ISSUE 5on y +irtue of t#e 673TI8$ T-9ST '$-::!:8T; t#e petitioners can no longer e considered directors of '()'. HELD YES "etitioners, y +irtue of t#e +oting trust agreement e,ecuted it disposed of all their shares through assignment and delivery in favour of the DBP, as trustee. Consequently, t#e petitioners ceased to o&n at least one s#are standing in t#eir names on t#e ooks of '()' as required under Section <0 of t#e ne& Corporation Code. T#ey also ceased to #a+e anyt#ing to do &it# t#e management of t#e enterprise. T#e petitioners ceased to e directors. 4ence, t#e transfer of t#e petitioners* s#ares to t#e DB" created +acancies in t#eir respecti+e positions as directors of '()'. T#e transfer of s#ares from t#e stock#older of '()' to t#e DB" is t#e essence of t#e su =ect +oting trust agreement. !oreo+er, t#ere appears to e no dispute from t#e records t#at DB" #as taken o+er full control and management of t#e firm. In addition, in t#e Certification issued y t#e DB" t#e petitioners &ere no longer included in t#e list of officers of '()'. T#ere is e+idence on record t#at at t#e time of t#e ser+ice of summons on '()' t#roug# t#e petitioners t#e +oting trust agreement in question &as not yet terminated so t#at t#e legal title to t#e stocks of '()', t#en, still elonged to t#e DB".