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value of the evidence presented. Section 1 of Rule 45 provides that a petition for review on certiorari shall raise only questions of law. Furthermore, it does not fall under the exemptions under Rule 45. Second, although established by Punzalans affidavit that she informed Cheng about Hodreals desire to purchase a Class A share and that Cheng asked for Hodreals contact number, it is not clear when Punzalan relayed the information to Cheng or if Cheng indeed initiated contact with Hodreal to peddle Mc Foods purchased share. [Yun lang talaga sabi ng case.] Third, charged with ascertaining the compliance of all the requirements for the purchase of MSCIs shares of stock under Section 29 of MSCIs amended by-laws, the Membership Committee failed to question the alleged irregularities attending Mc Foods purchase of one Class A share at P1,800,000. If there was really any irregularity in the transaction, this inaction of the Management Committee belies MSCIs cry of foul play on Mc Foods purchase of the subject share of stock. Fourth, considering that Mc Foods tendered its payment of P1,800,000 to MSCI on November 28, 1995, even assuming arguendo that it was driven solely by the intent to speculate on the price of the share of stock, it had all the right to negotiate and transact, at least on the anticipated and expected ownership of the share, with Hodreal. In other words, there is nothing wrong with the fact that the first installment paid by Hodreal preceded the payment of Mc Foods for the same share of stock to MSCI because eventually Mc Foods became the owner of a Class A share covered by Certificate A 2243. Fifth, MSCIs stance that Mc Foods violated Section 30(e) of MSCIs Amended By-Laws on its pre-emptive rights, which provides that ...the club shall have thirty days from receipt of written offer to purchase such share if the club has unrestricted revenue and with approval of 2/3 vote of the Board... , is untenable. When Mc Foods offered for sale one Class A share of stock to MSCI for the price of P 2,800,000 for the latter to exercise its pre- emptive right, MSCI failed to repurchase Mc Foods Class A share within the thirtyday pre-emptive period. Therefore Mc Foods complied with the requirement. Neither can MSCI argue that Mc Foods was not yet a registered owner of the share of stock when the latter offered it for resale, in order to void the transfer from Mc Foods to Hodreal. The corporations obligation to register is ministerial upon the buyers acquisition of ownership of the share of stock. The corporation, either by its board, its by-laws, or the act of its officers, cannot create restrictions in stock transfers. [See doctrine.] MSCIs petition is denied.
Neugene v. CA (1999)
Doctrine: To constitute a valid transfer, a stock certificate must be delivered and its delivery must be coupled with an intention of constituting the person to whom the stock is delivered the transferred (sic) thereof. Furthermore, in order that there is a valid transfer, the person to whom the stock certificates are endrosed (sic) must be a bona fide transferee and for value. Facts: NEUGENE had authorized capital stock of P3 MILLION (eventually became P7 MILLION), P600K of which is subscribed and P150K of those subscribed were paid up. On October 24, 1987, the private respondents, Charles O. Sy, Arsenio Yang, Jr. and Lok Chun Suen, constituting 2/3 of the total shares, sent notice to the directors of NEUGENE for a board meeting to be held on November 30, 1987. They also sent notice for a special stockholders meeting on the same day, November 30, 1987, to consider the dissolution of NEUGENE in which they voted in AFFIRMATIVE. Upon private respondentss Petition for Dissolution, SEC issued a Certificate of Dissolution but was reversed by the SEC Panel of Hearing Officers. This was again reversed by the CA, upholding the validity of NEUGENEs dissolution, thus the petition. Issue: 1. W/N the private respondents lacked the requisite number of shares of stock when they voted for the resolution dissolving NEUGENE. Held/Ratio: 1. NO. In the case at bar, Nicanor Martin and Leoncio Tan (petitioners) were not bona fide transferees for value and in good faith. Petitioner Johnson Lee alleged that petitioners Sy, Lok and Yang, Jr. indorsed and delivered their stock certificates to Nicanor Martin and Leoncio Tan.
However, Johnson Lee testified that he acquired his shares of stock from Johnny Uy, who in turn sold them to Nicanor Martin and Leoncio Tan. Evidence shows that no consideration was paid by Leoncio Tan and Nicanor Martin when they allegedly acquired the stock certificates from the Uy Family. In fact the CA found that the certificates of stock of the private respondents were stolen and therefore not validly transferred, and the transfers of stock relied upon by petitioners were fraudulently recorded in the Stock and Transfer Book of NEUGENE under the column Certificates Cancelled. Johnson Lee failed to produce any document evidencing the transaction or a receipt showing his payment for the stocks. Therefore, it is clear that they were not bona fide transferees for value and in good faith. Consequently, petitioners cannot be considered stockholders for the purpose of determining the 2/3 votes of the outstanding capital stock required to dissolve NEUGENE, in accordance with Sec. 118 of the Corporate Code. To constitute a valid transfer, a stock certificate must be delivered and its delivery must be coupled with an intention of constituting the person to whom the stock is delivered the transferred (sic) thereof. Furthermore, in order that there is a valid transfer, the person to whom the stock certificates are endrosed (sic) must be a bona fide transferee and for value.
Garcia v. Jomouad (2000) lent POC, attachment, transfer not recorded on books
Doctrine: A bona fide transfer of shares, not registered in the corporate books, is not valid as against a subsequent lawful attachment of said shares, regardless of whether the attaching creditor had actual notice of said transfer or not. All transfers not so entered on the books of the corporation are absolutely void; not because they are without notice or fraudulent in law or fact, but because they are made so void by statute. Facts: Petitioner Nemesio Garcia filed with the RTC of Cebu an action for injunction with prayer for preliminary injunction against respondents spouses Jose and Sally Atinon and Nicolas Jomouad, ex-officio sheriff of Cebu. Said action stemmed from an earlier case for collection of money filed by the spouses Atinon against Jaime Dico. In that case (collection case), the trial court rendered judgment ordering Dico to pay the spouses Atinon the sum of P900,000 plus interests. After said judgment became final and executory, respondent sheriff Jomouad proceeded with its execution. In the course thereof, the Propriety Ownership Certificate (POC) No. 0688 in the Cebu Country Club, which was in Dicos name, was levied on and scheduled for public auction. Claiming ownership over the subject certificate, Garcia filed the aforesaid action for injunction with prayer for preliminary injunction to enjoin respondents from proceeding with the auction. Garcia avers that Dico, the judgment debtor of the spouses Atinon, was employed as manager of his (petitioners) Young Auto Supply. To assist him in entertaining clients, Garcia lent his POC, then bearing the number 1459, in the Cebu Country Club to Dico so the latter could enjoy the signing of privileges of its members. The Club issued POC No. 0668 in the name of Dico. Thereafter, Dico resigned as manager. Upon demand of Garcia, Dico returned the POC. The latter then executed a Deed of Transfer covering the subject certificate in favor of Garcia. The Club was furnished with a copy of said deed but the transfer was not recorded in the books of the club because Garcia failed to present proof of payment of the requisite capital gains tax. The lower court dismissed the complaint for lack of merit. On appeal, the CA affirmed. Hence, this petition for review on certiorari. Issue: 1. W/N a bona fide transfer of the shares of a corporation, not registered or noted in the books of the corporation, is valid as against a subsequent lawful attachment of said shares, regardless of whether the attaching creditor had actual notice of said transfer or not. Held/Ratio: 1. NO. In the present case, the Court held that the transfer of the subject certificate made by Dico to Garcia was not valid as to the spouses Atinon, the judgment creditors, as the same still stood in the name of Dico, the judgment debtor, at the time of the levy on execution. In a similar case (Uson v. Diosomito), the Court ruled that, All transfers of shares not so entered are invalid as to attaching or execution creditors of the assignors, as well as to the corporation and to subsequent purchasers in good faith, and, indeed, as to all persons interested, except the parties to such transfers. All transfers not so entered on the books of the corporation are absolutely
void; not because they are without notice or fraudulent in law or fact, but because they are made so void by statute. Section 63 of the Corporation Code expressly states that No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred. As correctly ruled by the CA, the entry in the minutes of the meeting of the Clubs board of directors noting the resignation of Dico as proprietary member thereof does not constitute compliance with Section 63. Said provision of law strictly required the recording of the transfer in the books of the corporation and not elsewhere, to be valid against third parties.