The Rural Bank of Lipa City Inc., etc. vs.

Court [GR 124535, 28 September Facts: Reynaldo Villanueva, Sr., a stockholder of the Rural Bank of Lipa City, executed of Assignment, wherein he assigned his shares, as well as those of 8 other shareholders his control with a total of 10,467 shares, in favor of the stockholders of the Bank represented its directors Bernardo Bautista, Jaime Custodio and Octavio Katigbak. Sometime Reynaldo Villanueva, Sr. and his wife, Avelina, executed an Agreement wherein acknowledged their indebtedness to the Bank in the amount of P4,000,000.00, and that said debt will be paid out of the proceeds of the sale of their real property described Agreement. At a meeting of the Board of Directors of the Bank on 15 November Villanueva spouses assured the Board that their debt would be paid on or before December that same year; otherwise, the Bank would be entitled to liquidate their shareholdings, those under their control. In such an event, should the proceeds of the sale of said satisfy in full the obligation, the unpaid balance shall be secured by other collateral therefor. When the Villanueva spouses failed to settle their obligation to the Bank date, the Board sent them a letter demanding: (1) the surrender of all the stock certificates to them; and (2) the delivery of sufficient collateral to secure the balance of their debt to P3,346,898.54. The Villanuevas ignored the bank's demands, whereupon their shares of stock were into Treasury Stocks. Later, the Villanuevas, through their counsel, questioned the legality conversion of their shares. On 15 January 1994, the stockholders of the Bank met new directors and set of officers for the year 1994. The Villanuevas were not notified meeting. In a letter dated 19 January 1994, Atty. Amado Ignacio, counsel for the spouses, questioned the legality of the said stockholders' meeting and the validity proceedings therein. In reply, the new set of officers of the Bank informed Atty. Ignacio Villanuevas were no longer entitled to notice of the said meeting since they had relinquished rights as stockholders in favor of the Bank. Consequently, the Villanueva spouses filed with the Securities and Exchange Commission (SEC), a petition for annulment of the stockholders' meeting and election of directors and officers on 15 January 1994, with damages and prayer for preliminary injunction (SEC Case 02-94-4683_. Joining them as co-petitioners were Catalino Villanueva, Andres Gonzales, Aurora Lacerna, Celso Laygo, Edgardo Reyes, Alejandro Tonogan, and Elena Usi. Named respondents were the newly-elected officers and directors of the Rural Bank, namely: Bernardo Bautista, Jaime Custodio, Octavio Katigbak, Francisco Custodio and Juanita Bautista. On 6 April 1994, the Villanuevas' application for the issuance of a writ of preliminary injunction was denied by the SEC Hearing Officer on the ground of lack of sufficient basis for the issuance thereof. However, a motion for reconsideration was granted on 16 December 1994, upon finding that since the Villanuevas' have not disposed of their shares, whether voluntarily or involuntarily, they were still stockholders entitled to notice of the annual stockholders' meeting was sustained by the SEC. Accordingly, a writ of preliminary injunction was issued enjoining Bautista, et. al. from acting as directors and officers of the bank. Thereafter, Bautista, et al. filed an urgent motion to quash the writ of preliminary injunction, challenging the propriety of the said writ considering that they had not yet received a copy of the order granting the application for the writ of preliminary injunction. With the impending 1995 annual stockholders' meeting only 9 days away, the Villanuevas filed an Omnibus Motion praying that the said meeting and election of officers scheduled on 14 January 1995 be suspended or held in abeyance, and that the 1993 Board of Directors be allowed, in the meantime, to act as such. 1 day before the scheduled stockholders meeting, the SEC Hearing Officer granted the Omnibus Motion by issuing a temporary restraining order preventing Bautista, et al. from holding the stockholders meeting and electing the board of directors and officers of the Bank. A petition for Certiorari and Annulment with Damages was filed by the Rural Bank, its directors and officers before the SEC en banc. On 7 June 1995, the SEC en banc denied the petition for certiorari. A subsequent motion for reconsideration was likewise denied by the SEC en banc in a Resolution dated 29 September 1995. A petition for review was filed before the Court of Appeals (CA-GR SP 38861), assailing the Order dated 7 June 1995 and the Resolution dated 29 September 1995 of the SEC en banc in SEC EB 440. The appellate court upheld the ruling of the SEC. Bautista, et al.'s motion for reconsideration was likewise denied by the Court of Appeals in an Order dated 29 March 1996. The bank, Bautista, the instant petition for review. Issue: Whether there was valid transfer of the shares to the Bank. Held: For a valid transfer of stocks, there must be strict compliance with the transfer prescribed by law. The requirements are: (a) There must be delivery of the stock certificate: (b) The certificate be endorsed by the owner or his attorneyin-fact or other persons legally authorized transfer; and (c) To be valid against third parties, the transfer must be recorded in the corporation. As it is, compliance with any of these requisites has not been sufficiently shown. Still, while the assignment may be valid and binding on the bank, Villanuevas, it does not necessarily make the transfer effective. Consequently, the bank mere assignees, cannot enjoy the status of a stockholder, cannot vote nor be voted not be entitled to dividends, insofar as the assigned shares are concerned. Parenthetically, Villanuevas cannot, as yet, be deprived of their rights as stockholders, until and unless of ownership and transfer of the shares in question is resolved with finality.

Ponce v. Alsons Cement FACTS: On January 1996, Vicente C. Ponce, filed a complaint with the SEC for mandamus and damages against Alsons Cement Corporation and its corporate secretary Francisco M. Giron, Jr. In his complaint, Ponce alleged, that "the late Fausto G. Gaid was an incorporator of Victory Cement Corporation (VCC), having subscribed to and fully paid 239,500 shares of said corporation; that Ponce and Fausto Gaid executed a "Deed of Undertaking" and "Indorsement" whereby the latter acknowledges that the former is the owner of said shares and he was therefore assigning/endorsing the same to Ponce; that on 10 April 1968, VCC was renamed Floro Cement Corporation (FCC); that on 22 October 1990, FCC was renamed Alsons Cement Corporation (ACC); that from the time of incorporation of VCC up to the present, no certificates of stock corresponding to the 239,500 subscribed and fully paid shares of Gaid were issued in the name of Fausto G. Gaid and/or Ponce; and that despite repeated demands, ACC and Giron refused and continue to refuse without any justifiable reason to issue to Ponce the certificates of stocks corresponding to the 239,500 shares of Gaid, in violation of Ponce's right to secure the corresponding certificate of stock in his name. ACC and Giron moved to dismiss. In its decision, the Court of Appeals held that in the absence of any allegation that the transfer of the shares between Gaid and Ponce was registered in the stock and transfer book of ACC, Ponce failed to state a cause of action. Thus, said the appellate court, "the complaint for mandamus should be dismissed for failure to state a cause of action." ISSUE: WON Ponce can require the corporate secretary, Giron, to register Gaids shares in his name. NO HELD: Pursuant to Sec. 63, a transfer of shares of stock not recorded in the stock and transfer book is non-existent as far as the corporation is concerned. As between the corporation on the one hand, and its shareholders and third persons on the other, the corporation looks only into its books for the purpose of determining who its shareholders are. Fausto Gaid was an original subscriber of ACC's 239,500 shares. From the Amended Articles of Incorporation approved on 9 April 1995, each share had a par value of P1.00 per share. Ponce had not made a previous request upon the corporate secretary of ACC, Francisco M. Giron Jr., to record the alleged transfer of stocks. It is only when the transfer has been recorded and transfer book that a corporation may rightfully regard the transferee as stockholders. From this time, the consequent obligation on the part of the corporation recognize such rights as it is mandated by law to recognize arises. Hence, without recording, the transferee may not be regarded by the corporation as one among its and the corporation may legally refuse the issuance of stock certificates in the transferee even when there has been compliance with the requirements of Section Corporation Code. The stock and transfer book is the basis for ascertaining the persons to the rights and subject to the liabilities of a stockholder. Where a transferee recognized as a stockholder, the corporation is under no specific legal duty to certificates in the transferee's name. Under the provisions of our statute touching the stock, the mere indorsement of stock certificates does not in itself give to the indorsee right to have a transfer of the shares of stock on the books of the company as will the writ of mandamus to compel the company and its officers to make such transfer demand, because, under such circumstances the duty, the legal obligation, is not indisputable as to justify the issuance of the writ. As a general rule, as between the on the one hand, and its shareholders and third persons on the other, the corporation to its books for the purpose of determining who its shareholders are, so that a mere indorsee stock certificate, claiming to be the owner, will not necessarily be recognized as corporation and its officers, in the absence of express instructions of the registered make such transfer to the indorsee, or a power of attorney authorizing such transfer. absent an allegation that the transfer of shares is recorded in the stock and transfer book there appears no basis for a clear and indisputable duty or clear legal obligation imposed upon the corporate secretary, so as to justify the issuance of the writ of mandamus compel him to perform the transfer of the shares to Ponce.

Republic v. Estate of Hans Menzi 23 Nov. 2005| Ponente, Tinga, J. .FACTS 1.Subject of this case are three blocks of shares of the Bulleting Publishiong Corp., as follows:a. 154 block 154, 472 sharesb. 198 block 198, 052.5 sharesc. 214 block 214, 424.5 shares2)In an action for reconveyance earlier decided bythe Sandiganbayan, said tribunal decided that:a. Ff. shares were ill-gotten:i. 46,000 shares (belonging to the 214block), under the name of DandingCojuangco, and theii. entire 198 block, which were originallyunder the names of Campos, Cojuangcoand Zalamea then subsequently sold toHMHMI (Hans Menzu Holdings and Mgt.Inc)b. The 154 block was not ill-gottenc. The estate of Hans Menzi must thus surrenderfor cancellation the certificates of stock inits possession3) This present appeal pertains to the propriety of declaring the 154 block, on the one hand, as not ill-gotten, and the 198 and 214 blocks as ill-gotten. G.R. 152578 Re 154 block (This is the more relevant half) FACTS a. In 1957, Menzi purchased the entire interest inBulletin Publishingb. In 1961, US Automotive purchased Bulletinshares from Menzic. In 1968, a stock option was executed betweenMenzi and US Automotive giving each otherpreferential rights in the purchase of eachothers Bulleting sharesd. Later in the same year, Bulletins articles of incorporation were amended to placerestrictions on the transfer of Bulletin sharesto non-stockholders where by stockholdersseeking to sell must first make an offer toBulleting itself.e. In 1984, Menzi sold the 154 block to USautomotive. US Automotives VP executed apromissory note in favor of Menzif. Days later, Menzi dies and a petition for theprobate of his will was filed. In saidproceedings, the executor moved for theconfirmation of the sale of the 154 block;which motion the probate court granted.g. Subsequently, the executor received 2 checksrepresenting full payment; he in turn, issues areceipt. ISSUE Is the sale of the 154 block from Menzi to USAutomotive valid. YES.HELD / RATIO: 1. Requisites for a valid transfer per Sec. 63:a. Between the parties:i. Deliveryii. Indorsementb. To be valid as to third persons:i. Recorded in the books of the corporation2. Per the above requisites, a deed of sale, as insistedby the Republic, is not required. In fact, per RuralBank of Lipa v. CA, the execurtion of a deed of saledoes not necessarily make the transfer effective asit is the delivery of the stock certificate dulyindorsed by the owner which is the oprative actthat transfers the shares.3. Here, there is no dispute, that delivery andindorsement in favor of US Automotive were made.4. Moreover, the executors authority to negotiate thetransfer is found in the general power of attorneyexecuted by Menzi. Also, the formers authority toaccept payment springs from Menzis will and theorder of the probate court confirming the sale.5. As found by the Sandiganbayan, it was Menzi himself who sold to US Automotive, hencem the non-inclusion of the subject shares in MEnzis will an dinthe inventory of his esta te is attributable to thefact that at the time the aforesaid were taken, theyalready belonged to US Automotive. G.R. 154487 and 154518 Re 198 and 214 blocks (Relevant) ISSUE Were the covered shares validly ceded by Camps andZalamea to the government? YES.HELD / RATIO: 1. The fact that the stock certificates covering theshares ceded to the Republic (ie, Campos andZalameas portions in the 214 block), and whichwere under the names of Campos, Zalamea andCojuangco (Cojuangco did not cede his 46,000 shares) were found in Menzis possession does notprove that Menzi owned the shares.2. A stock certificate is merely a tangible evidence of ownershi p of shares of stock. Its presence orabsence does not affect the right of the registeredowner to dispose of the shares. Accordingly, Campoand Zalamea, as registered owners, validly cededtheir shares in favor of the Government. Doctrine: Requisites for a valid transfer per Sec. 63:a. Between the parties:i. Deliveryii. Indorsementb. To be valid as to third persons:i. Recorded in the books of the corporation* All other formalities are mere superfluities that donot add to nor detract from the validity of a transfer.

Makati Sports Club Inc V. Cecile Cheng Lessons Applicable: Certificate of stock = merely tangible evidence of stock(Corporate Law) FACTS: October 20, 1994: Makati Sports Club Inc (MSCI) BOD adopted a resolution authorizing the sale of 19 unissued shares at a floor price of P400,000 and P450,000 per share for Class A and B, respectively. Cheng was a Treasurer and Director of Makati Sports Club in 1995 July 7, 1995: Hodreal expressed his interest to buy a share, for this purpose he sent the letter requesting to be wait listed November 1995: McFoods acquiried shares of Makati Sports Club at P1,800,000 through Urban Bank December 15, 1995: Stock cert. was issued to McFoods December 27, 1995: McFoods advised its offer to resell November 24, 1995: Hodreal paid McFoods P1,400,000 December 27, 1995: Hodreal again paid P1,400,000 February 7, 1996: Cheng advised sale by McFoods to Hodreal of the share evidenced by acertificate new certificate was issued 1997: investigation showed that Cheng profited from the transaction because of her knowledge MSCI sought judgment that would order respondents to pay the sum of P1,000,000.00, representing the amount allegedly defrauded, together with interest and damages CA affirmed RTC: dismissed ISSUE: W/N MSCI was defrauded by Cheng's collaboration with Mc Foods

HELD: NO. petition is DENIED no evidence on record that the Membership Committee acted on Hodreal's letter SEC. 29. (a) The Membership Committee shall process applications for membership; ascertain that the requirements for stock ownership, including citizenship, are complied with; submit to the Board its recommended on applicants for inclusion in the Waiting List; take charge of auction sales of shares of stock; and exercise such other powers and perform such other functions as may be authorized by the Board. Membership Committee failed to question the alleged irregularities attending Mc Foods purchase purchase price of P1,800,000.00 is P1,400,000.00 more than the floor price - NOT detrimental Upon payment and the execution of the Deed of Absolute Sale, it had the right to demand the delivery of the stock certificate in its name. The right of a transferee to have stocks transferred to its name is an inherent right flowing from its ownership of the stocks certificate of stock paper representative or tangible evidence of the stock itself and of the various interests therein not a stock in the corporation but is merely evidence of the holders interest and status in the corporation, his ownership of the share represented thereby MSCI failed to repurchase Mc Foods Class "A" share within the 30 day pre -emptive period no proof that Cheng personally profited

Lee v. Court of Appeals Facts: On November 15, 1985, a complaint for a sum of money was filed by the International Corporate Bank, Inc. against the private respondents who, in turn, filed a third party complaint against ALFA and the petitioners on March 17, 1986. Meanwhile, on July 12, 1988, the trial court issued an order requiring the issuance of an alias summons upon ALFA through the DBP as a consequence of the petitioner's letter informing the court that the summons for ALFA was erroneously served upon them considering that the management of ALFA had been transferred to the DBP. In a manifestation dated July 22, 1988, the DBP claimed that it was not authorized to receive summons on behalf of ALFA since the DBP had not taken over the company which has a separate and distinct corporate personality and existence. Private respondents argued that the voting trust agreement dated March 11, 1981 did not divest the petitioners of their positions as president and executive vice-president of ALFA so that service of summons upon ALFA through the petitioners as corporate officers was proper. The trial court upheld the validity of the service of summons on ALFA through the petitioners. On January 19, 1989, a second motion for reconsideration was filed by the petitioners reiterating their stand that by virtue of the voting trust agreement they ceased to be officers and directors of ALFA, hence, they could no longer receive summons or any court processes for or on behalf of ALFA. In support of their second motion for reconsideration, the petitioners attached thereto a copy of the voting trust agreement between all the stockholders of ALFA (the petitioners included), on the one hand, and the DBP, on the other hand, whereby the management and control of ALFA became vested upon the DBP. On April 25, 1989, the trial court reversed itself by setting aside its previous Order dated January 2, 1989 and declared that service upon the petitioners who were no longer corporate officers of ALFA cannot be considered as proper service of summons on ALFA. Issue: Who owns the stocks of the corporation under the terms of the voting trust agreement? Ruling: The law simply provides that a voting trust agreement is an agreement in writing whereby one or more stockholders of a corporation consent to transfer his or their shares to a trustee in order to vest in the latter voting or other rights pertaining to said shares for a period not exceeding five years upon the fulfilment of statutory conditions and such other conditions specified in the agreement. In the instant case, the point of controversy the effects of the creation of the voting trust agreement. The petitioners maintain that execution of the voting trust agreement between them and the other stockholders one party, and the DBP, as the other party, the former assigned and transferred all in ALFA to DBP, as trustee. They argue that by virtue to of the voting trust agreement petitioners can no longer be considered directors of ALFA. Considering that the agreement between ALFA and the DBP transferred legal ownership of the stock covered agreement to the DBP as trustee, the latter became the stockholder of record with respect said shares of stocks. In the absence of a showing that the DBP had caused to be transferred their names one share of stock for the purpose of qualifying as directors of ALFA, the can no longer be deemed to have retained their status as officers of ALFA which was before the execution of the subject voting trust agreement. There appears to be no dispute the records that DBP has taken over full control and management of the firm.

Republic of the Philippines (Presidential Commission on Good Government) vs. Sandiganbayan [GR 107789, 30 April 2003]; also Africa vs. Sandiganbayan [GR 147214] Resolution En Banc, Carpio-Morales (J): 9 concur, 1 concurs in result, 2 took no part, 1 abroad on officialbusiness Facts: On 7 August 1991, the Presidential Commission on Good Government (PCGG) conducted an EasternTelecommunications, Philippines, Inc. (ETPI) stockholders meeting during which a PCGG controlled boardof directors was elected. A special stockholders meeting was later convened by the registered ETPIstockholders wherein another set of board of directors was elected, as a result of which two sets of such boardand officers were elected. Victor Africa, a stockholder of ETPI, alleging that the PCGG had since 29 January1988 been "illegally 'exercising' the rights of stockholders of ETPI," especially in the election of the membersof the board of directors, filed a motion before the Sandiganbayan, prayed that said court order the "callingand holding of the Eastern Telecommunications, Philippines, Inc. (ETPI) annual stockholders meeting for 1992 under the [c]ourt's control and supervision and prescribed guidelines." The PCGG did not object toAfrica's motion provided that "(1) An Order be issued upholding the right of PCGG to vote all the Class "A"shares of ETPI; (2) In the alternative, in the remote event that PCGG's right to vote the sequestered shares benot upheld, an Order be issued (a) disregarding the Stock and Transfer Book and Booklet of Stock Certificatesof ETPI in determining who can vote the shares in an Annual Stockholders Meeting of ETPI, (b) allowingPCGG to vote 23.9% of the total subscription in ETPI, and (c) directing the amendment of the Articles of Incorporation and By-laws of ETPI providing for the minimum safeguards for the conservation of assets prior to the calling of a stockholders meeting. By the assailed Resolution of 13 November 1992, the Sandiganbayanresolved Africa's motion, ordering the conduct of an annual stockholders meeting of ETPI, for 1992. Assailingthe foregoing resolution, the PCGG filed before the Supreme Court a petition (GR 107789) for Certiorari,Mandamus and Prohibition.By Resolution of 26 November 1992, the Supreme Court enjoined the Sandiganbayan from (a) implementingits Resolution of 13 November 1992, and (b) holding the stockholders' meeting of ETPI scheduled on 27November 1992. On 7 December 1992, Aerocom Investors and Managers, Inc. (AEROCOM), Benito Nieto,Carlos Nieto, Manuel Nieto III, Ramon Nieto, Rosario Arellano, Victoria Legarda, Angela Lobregat, Ma. Ritade los Reyes, Carmen Tuazon and Rafael Valdez, all stockholders of record of ETPI, filed a motion tointervene in GR 107789. Their motion was granted by the Supreme Court by Resolution of 14 January 1993.After the parties submitted their respective memoranda, the PCGG, in early 1995, filed a "VERY URGENTPETITION FOR AUTHORITY TO HOLD SPECIAL STOCKHOLDERS' MEETING FOR [THE] SOLEPURPOSE OF INCREASING [ETPI's] AUTHORIZED CAPITAL STOCK," it claiming that the increase inauthorized capital stock was necessary in light of the requirements laid down by Executive Order 109 andRepublic Act 7975. By Resolution of 7 May 1996, the Supreme Court resolved to refer the PCGG's veryurgent petition to hold the special stockholders' meeting to the Sandiganbayan for reception of evidence andresolution. In compliance therewith, the Sandiganbayan issued a Resolution of 13 December 1996, grantingthe PCGG "authority to cause the holding of a special stockholders' meeting of ETPI for the sole purpose of increasing ETPI's authorized capital stock and to vote therein the sequestered Class 'A' shares of stock." ThePCGG-controlled ETPI board of directors thus authorized the ETPI Chair and Corporate Secretary to call thespecial stockholders meeting. Notices were sent to those entitled to vote for a meeting on 17 March 1997. Themeeting was held as scheduled and the increase in ETPI's authorized capital stock from P250 Million to P2.6Billion was "unanimously approved." On 1 April 1997, Africa filed before the Supreme Court a motion to citethe PCGG "and its accomplices" in contempt and "to nullify the 'stockholders meeting' called/conducted byPCGG and its accomplices," he contending that only this Court, and not the Sandiganbayan, has the power toauthorize the PCGG to call a stockholders meeting and vote the sequestered shares. Africa went on to contendthat, assuming that the Sandiganbayan had such power, its Resolution of 13 December 1996 authorizing thePCGG to hold the stockholders meeting had not yet become final because the motions for reconsideration of said resolution were still pending. Further, Africa alleged that he was not given notice of the meeting, and thePCGG had no right to vote the sequestered Class "A" shares. A motion for leave to intervene relative toAfrica's "Motion to Cite the PCGG and its Accomplices in Contempt" was filed by ETPI. The Supreme Courtgranted the motion for leave but ETPI never filed any pleading relative to Africa's motion to cite the PCGG incontempt. By Resolution of 16 February 2001, the Sandiganbayan finally resolved to deny the motions for reconsideration of its Resolution of 13 December 1996, prompting Africa to file on 6 April 2001 before theSupreme Court a petition for Review on Certiorari (GR 147214), challenging the Sandiganbayan Resolutionsof 13 December 1996 (authorizing the holding of a stockholders meeting to increase ETPI's authorized capital stock and to vote therein the sequestered Class "A" shares of stock) and 16 February 2001 (denyingreconsideration of the December 13, 1996 Resolution). The petitions were consolidated. Issue [1]:

Whether the PCGG can vote the sequestered ETPI Class "A" shares in the stockholders meeting for the election of the board of directors. Held [1]: When sequestered shares registered in the names of private individuals or entities are alleged tohave been acquired with ill-gotten wealth, then the two-tiered test is applied. However, when the sequesteredshares in the name of private individuals or entities are shown, prima facie, to have been (1) originallygovernment shares, or (2) purchased with public funds or those affected with public interest, then the two-tiered test does not apply. Rather, the public character exception in Baseco v. PCGG and Cojuangco Jr. v.Roxas prevail; that is, the government shall vote the shares. Issue [2]: Whether the Sandiganbayan can order the Division Clerk of Court to call the stockholders meetingand in appointing then Sandiganbayan Associate Justice Sabino de Leon, Jr. to control and supervise thesame. Held [2]: The Clerk of Court, who is already saddled with judicial responsibilities, need not be burdened withthe additional duties of a corporate secretary. Moreover, the Clerk of Court may not have the requisiteknowledge and expertise to discharge the functions of a corporate secretary. The case of Board of Directorsand Election Committee of SMB Workers Savings and Loan Asso., Inc. v. Tan, etc., et al. (105 Phil. 426(1959). Vide also 5 Fletcher Cyc Corp (Perm Ed) 2074; 18A Am Jur 2d ) provides a solution to theSandiganbayan's dilemma of calling a meeting when ETPI had two sets of officers. There, the Supreme Courtupheld the creation of a committee empowered to call, conduct and supervise the election of the board of directors. Such a committee composed of impartial persons knowledgeable in corporate proceedings wouldprovide the needed expertise and objectivity in the calling and the holding of the meeting withoutcompromising the Sandiganbayan or its officers. The appointment of the committee members and thedelineation of the scope of the duties of the committee may be made pursuant to an agreement by the partiesor in accordance with the provisions of Rule 9 (Management Committee) of the Interim Rules of Procedurefor Intra-Corporate Controversies insofar as they are applicable.

Republic of the Philippines vs. Cocofed (GRs 147062-64, 14 December 2001) Facts: Petitioner PCGG, by virtue of its power under Executive Orders No. 1, 2 and 14 issued by the late Pres. Corazon Aquino, implemented numerous sequestrations, freeze orders and provisional takeovers of allegedly ill-gotten companies, assets and properties, real or personal. Among the properties sequestered by the Commission were shares of stock in the United Coconut Planters Bank (UCPB) registered in the names of the alleged one million coconut farmers, the so-called Coconut Industry Investment Fund companies (CIIF companies) and Private Respondent Eduardo Cojuangco Jr. (hereinafter Cojuangco). In connection with the sequestration of the said UCPB shares, the PCGG, on July 31, 1987, instituted an action for reconveyance, reversion, accounting, restitution and damages docketed as in the Sandiganbayan. February 28, 2001, the First Division of the Sandiganbayan, assailed its decision acknowledging the movants COCOFED, et al. and Ballares, et al. as well as Eduardo Cojuangco, et al., to be the registered stockholders in its shares of stocks of the UCPB and to exercise their rights to vote their shares of stock and themselves to be voted upon in the United Coconut Planters Bank (UCPB) at the scheduled Stockholders Meeting on March 6, 2001 or on any subsequent continuation or resetting thereof, and to perform such acts as will normally follow in the exercise of these rights as registered stockholders. ISSUE: Who May Vote the Sequestered Shares of Stock? Held: The right to vote sequestered shares of stock registered in the names of private individuals or entities and alleged to have been acquired with ill-gotten wealth shall, as a rule, be exercised by the registered owner. The PCGG may, however, be granted such voting right provided it can (1) show prima facie evidence that the wealth and/or the shares are indeed ill-gotten; and (2) demonstrate imminent danger of dissipation of the assets, thus necessitating their continued sequestration and voting by the government until a decision, ruling with finality on their ownership, is promulgated by the proper court. However, the foregoing two -tiered test does not apply when the sequestered acquired with funds that are prima facie public in character or, at least, are affected interest. Inasmuch as the subject UCPB shares in the present case were undisputably with coco levy funds which are public in character, then the right to vote them shall by the PCGG. In sum, the public character test, not the twotiered one, applies controversy.

Nava vs. Peers Marketing Corp Facts: This is a mandamus case, Teofilo Po as an incorporator subscribed to eighty shares of Peers Marketing Corporation at one hundred pesos a share or a total par value of eight thousand pesos. Po paid two thousand pesos or twenty-five percent of the amount of his subscription. No certificate of stock was issued to him or, for that matter, to any incorporator, subscriber or stockholder. On April 2, 1966 Po sold to Ricardo A. Nava for two thousand pesos twenty of his eighty shares. In the deed of sale Po represented that he was "the absolute and registered owner of twenty shares" of Peers Marketing Corporation. Nava requested the officers of the corporation to register the sale in the books of the corporation. The request was denied because Po has not paid fully the amount of his subscription and that the corporation had a claim on his entire subscription of eighty shares which included the twenty shares that had been sold to Nava. Nava filed this mandamus action in the CFI of Negros Occidental, Bacolod City Branch to compel the corporation to register the said twenty shares in Nava's name in the corporation's transfer book but it was denied. Issue: Whether the officers of Peers Marketing Corporation can be compelled by mandamus to enter in its stock and transfer book the sale made by Po to Nava of the twenty shares forming part of Po's subscription of eighty shares. Ruling: No. Under the facts of this case, there is no clear legal duty on the part of the officers of the corporation to register the twenty shares in Nava's name, Hence, there is no cause of action for mandamus. The usual practice is for the stockholder to sign the form on the back of the stock certificate. The certificate may thereafter be transferred from one person to another. That procedure cannot be followed in the instant case because, as already twenty shares in question are not covered by any certificate of stock in Po's name. Moreover, corporation has a claim on the said shares for the unpaid balance of Po's subscription. subscription is a subsisting liability from the time the subscription is made. The subscriber much bound to pay his subscription as he would be to pay any other debt. The corporation to demand payment is no less incontestable.

Lim Tay vs. CA [293 SCRA 634

Facts: Sy Guiok and Sy Lim secured a loan from Lim Tay in the amount of P40,000. secured by a contract of pledge whereby the former pledged their 300 shares of stock Fay & Company to the latter. However, they failed to pay their respective loans. Hence, filed a petition for mandamus against Go Fay & Company with the SEC praying that issued directing the corporate secretary of the said corporation to register the stock transfers issue new certificates in favor of Lim Go Fay & Company filed its answer contending that SEC had no jurisdiction to complaint on the ground that since Lim Tay was not a stockholder of the company, corporate controversy took place; and furthermore, that the default of payment of Sy Sy Lim did not automatically vest in Lim Tay the ownership of the pledged shares. dismissed the complaint. On appeal to the CA, it affirmed SECs decision. Hence, for certiorari with the SC. Issue: Whether or not SEC had jurisdiction. Held: No. The registration of shares in a stockholders name, the issuance of stock and the right to receive dividends which pertain to the said shares are all rights that ownership. The determination of whether or not a shareholder is entitled to exercise mentioned rights falls within the jurisdiction of the SEC. However, if ownership of the not clearly established and is still unresolved at the time the action for mandamus jurisdiction lies with the regular In the case at bar, reading into the contract of pledge, the stipulation shows that Lim merely authorized to foreclose the pledge upon maturity of the loans, not to own foreclosure was not automatic, for it must be done in a public or private sale. Nowhere mentioned that he exercised his right of foreclosure. Hence, his status was still a mere and under civil law, this does not entitle him to ownership of the shares of stock in question.

Rural Bank of Lipa City vs. Court of Appeals G.R. No. 124535, September 28, 2001 Ynares-Santiago, J.: Facts: Private respondent , a stockholder of the Petitioner Bank assigned his shares, aswell as those of eight other shareholders under his control with a total of 10,467 shares,in favor of the stockholders of the Bank for their indebtedness to the Bank in the amountof Four Million Pesos, and stipulated that said debt will be paid out of the proceeds of the sale of their real property. The respondent failed to pay their debts and their stockswere liquidated and converted to Treasury Stocks. Later, the Villanuevas, through their counsel, questioned the legality of the conversion of their shares. A stockholders meeting was held to elect the new directors of the bank. TheRespondent was not notified of said meeting. The latter then questioned the legality of the said stockholders' meeting and the validity of all the proceedings therein. In reply,the new set of officers of the Bank informed the Villanuevas that theyre no lon ger entitled to notice of the said meeting since they had relinquished their rights asstockholders in favor of the Bank. Consequently, the Villanueva spouses filed with theSecurities and Exchange Commission (SEC), a petition for annulment of thestockholders' meeting. A writ of preliminary injunction was issued enjoining the petitioners from acting asdirectors and officers of the bank. Thereafter, petitioners filed an urgent motion to quashthe writ of preliminary injunction but the same was deined by the SEC. The Petitioner appealed to Respondent Court wich upheld the decision and found no grave abuse of discretion on the part of the SEC, hence this case.Issue: Whether or not the private respondents are still stockholders of the petitioner bank.Held: Yes. While it may be true that there was an assignment of private respondents'shares to the petitioners, said assignment was not sufficient to effect the transfer of shares since there was no endorsement of the certificates of stock by the owners, their attorneys-in-fact or any other person legally authorized to make the transfer. Moreover,petitioners admit that the assignment of shares was not coupled with delivery, theabsence of which is a fatal defect. The rule is that the delivery of the stock certificateduly endorsed by the owner is the operative act of transfer of shares from the lawful owner to the transferee.

Thus, title may be vested in the transferee only by delivery of the duly indorsed certificate of stock.The Supreme Court has uniformly held that for a valid transfer of stocks, there must bestrict compliance with the mode of transfer prescribed by law. The requirements are: (a)There must be delivery of the stock certificate: (b) The certificate must be endorsed bythe owner or his attorney-in-fact or other persons legally authorized to make thetransfer; and (c) To be valid against third parties, the transfer must be recorded in thebooks of the corporation. As it is, compliance with any of these requisites has not beenclearly and sufficiently shown.It may be argued that despite non-compliance with the requisite endorsement anddelivery, the assignment was valid between the parties, meaning the privaterespondents as assignors and the petitioners as assignees. While the assignment maybe valid and binding on the petitioners and private respondents, it does not necessarilymake the transfer effective. Consequently, the petitioners, as mere assignees, cannotenjoy the status of a stockholder, cannot vote nor be voted for, and will not be entitled todividends, insofar as the assigned shares are concerned Parenthetically, the privaterespondents cannot, as yet, be deprived of their rights as stockholders, until and unlessthe issue of ownership and transfer of the shares in question is resolved with finality. Stocks; Subscription Contracts

Ponce v. Alsons Cement Corporation [GR No. 139802, December 10, 2002] Facts: On January 25, 1996, petitioner Vicente C. Ponce, filed a complaint with the SEC for mandamus and damages against respondents Alsons Cement Corporation and its corporate secretary Francisco M. Giron, Jr. for refusing to issue to plaintiff the certificates of stocks corresponding to the 239,500 shares of one Fausto Gaid, in violation of his right to secure the corresponding certificate of stock in his name. Instead of filing an answer, respondents moved to dismiss the complaint on the grounds that the petitioner is not the real party in interest. They argued that there being no allegation that the alleged INDORSEMENT was recorded in the books of the corporation, said indorsement by Gaid to the plaintiff of the shares of stock in questionassuming that the indorsement was in fact a transfer of stockswas not valid against third persons such as ALSONS under Section 63 of the Corporation Code. There was, therefore, no specific legal duty on the part of the respondents to issue the corresponding certificates of stock, and mandamus will not lie. The SEC Hearing Office dismissed the complaint on the reasons that there is no record of any assignment or transfer in the books of the defendant corporation, and there is no instruction or authority from the transferor (Gaid) for such assignment or transfer. The Commission reversed the said order. On appeal to CA, it held that in the absence of any allegation that the transfer of the shares between Fausto Gaid and Vicente C. Ponce was registered in the stock and transfer book of ALSONS, Ponce failed to state a cause of action. Issue: Whether or not the Court of Appeals is correct that petitioner Ponce has no cause of Ruling: The Court of Appeals did not err in ruling that petitioner had no cause of action, Pursuant to Article 63 of the Corporation Code, a transfer of shares of stock not recorded stock and transfer book of the corporation is non-existent as far as the corporation is As between the corporation on the one hand, and its shareholders and third persons other, the corporation looks only to its books for the purpose of determining who its are. It is only when the transfer has been recorded in the stock and transfer corporation may rightfully regard the transferee as one of its stockholders. From this consequent obligation on the part of the corporation to recognize such rights as it is mandated law to recognize arises. Hence, without such recording, the transferee may not be regarded by the corporation among its stockholders and the corporation may legally refuse the issuance of stock in the name of the transferee even when there has been compliance with the requirements Section 64 of the Corporation Code. From the corporations point of view, the transfer is not effective until it is recorded. until such recording is made the de mand for the issuance of stock certificates to transferee has no legal basis. As between the corporation on the one hand, and its and third persons on the other, the corporation looks only to its books for the determining who its shareholders are. In other words, the stock and transfer book is ascertaining the persons entitled to the rights and subject to the liabilities of a stockholder. a transferee is not yet recognized as a stockholder, the corporation is under no specific to issue stock certificates in the tran sferees name. The petition is denied for no cause of action.

Ong Yong vs Tiu Facts: First Landlink Asia Development Corporation (FLADC), which was owned by the Tius, was heavily indebted to the Philippine National Bank (PNB). To stave off foreclosure of the mortgage, the Tius invited Ong Yonget al to invest in FLADC. Under the Pre-Subscription Agreement they entered into, the Ongs and the Tius agreed to maintain equal shareholdings in FLADC. The business harmony between the Ongs and the Tius in FLADC, however, was short lived because the Tius rescinded the Pre-Subscription Agreement. Issue: Whether or not the Tius could legally rescind the Pre-Subscription Agreement. No. Ruling: The subscription contract is between the Ongs and FLADCS and not between with Ongs and Tius. A subscription contract necessarily involves the corporation as one of the contracting parties since the subject matter of the transaction is property owned by the corporation its shares of stock. Thus, the subscription contract (denominated by the parties as a PreSubscription Agreement) whereby the Ongs invested P100 million for 1,000,000 shares of stock was, from the viewpoint of the law, one between the Ongs and FLADC, not between the Ongs and the Tius. Otherwise stated, the Tius did not contract in their personal capacities with the Ongs since they were not selling any of their own shares to them. It was FLADC that did. Considering therefore that the real contracting parties to the subscription agreement were FLADC and the Ongs alone, a civil case for rescission on the ground of breach of contract filed by the Tius in their personal capacities will not prosper. Assuming it had valid reasons so, only FLADC (and certainly not the Tius) had the legal personality to file suit rescinding subscription agreement with the Ongs inasmuch as it was the real party in interest therein. 1311 of the Civil Code provides that "contracts take effect only between the parties, and heirs" Therefore, a party who has not taken part in the transaction cannot sue for performance or for cancellation thereof, unless he shows that he has a real interest thereby.

Manuel Espiritu Jr. v. Petron Corporation Facts: Jose Nelson Doloiras served as a manager in the Kristina Patricia Enterprises (KPE), which was the exclusive distributor of Gasul LPGs in Sorsogon and owned by Carmen Doloiras. Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and distributing LPGs in Sorsogon but theirs carried the trademark "Bicol Savers Gas." Petitioner Audie Llona managed Bicol Gas. In April 2001, Bicol Gas agreed with KPE for the swapping of "captured cylinders" since one distributor could not refill captured cylinders with its own brand of LPG. At one time during those swapping arrangement, Jose visited Bicol Gas refilling plant and noticed several Gasul tanks in the Bicol Gas possession. He then requested for a swap over the said empty Gasul tanks, but Audie Llona replied that he needed to first ask the permission of the plants owners. Later, the permission was given and the swapping of 30 Gasul tanks happened. However, Jose noticed that there were still a number of Gasul tanks in Bicol Gas possession. He again offered to swap those, but Llona declined saying that the owners wanted to send those tanks to Batangas. On almost a daily basis, Jose observed that the Bicol Gas trucks roaming in the streets of the province carried a load of Gasul tanks. In one incident, he followed the truck carrying one unsealed 50kg Gasul tank and one 50kg Shellane tank. When he asked the driver (Misal) about it, the driver admitted that the tanks belong to a costumer who had them filled up by Bicol Gas. Misal also mentioned the name of Rolly Mirabena as his manager. A case was then filed against petitioner for violations of Republic Act (R.A.) 623 (illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of trade marks) and 169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293). The complaint charged the following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and several John and Jane Does, described as the directors, officers, and stockholders of Bicol Gas. These directors, officers, and stockholders were eventually identified during the preliminary investigation. The provincial prosecutor ruled that there was only probable cause on the violation of RA 623 and only the four employees namely: Misal, Leorena, Mirabena and Llona could be charged. The charges against the directors, officers and stockholders were dismissed. In the Court of Appeals, the court ordered for the inclusion of the stockholders Gas in various charges. Petitioners filed a motion for reconsideration, however it was the court. Thus, petitioner filed the instance case for review. Issue: Whether the stockholders are liable. Held: No, the stockholders are not liable. Before a stockholder may be held criminally liable for acts committed corporation, therefore, it must be shown that he had knowledge of the criminal committed in the name of the corporation and that he took part in the same consent to its commission, whether by action or inaction. In a corporation, the management of its business is generally vested in directors, not its stockholders. Stockholders are basically investors in a corporation. have a hand in running the day-to-day business operations of the corporation unless the same time directors or officers of the corporation. The Court of Appeals finding that the employees "could not have committed without the consent, [abetment], permission, or participation of the owners of Bicol sweeping speculation especially since, as demonstrated above, what was involved Petron Gasul tank found in a truck filled with Bicol Gas tanks. Although the KPE manager petitioner Llona say that he was going to consult the owners of Bicol Gas regarding swap additional captured cylinders, no indication was given as to which Bicol Gas Llona consulted. It would be unfair to charge all the stockholders involved, some of proved to be minors. No evidence was presented establishing the names of the stockholders were charged with running the operations of Bicol Gas. The complaint even failed to among the stockholders sat in the board of directors of the company.

Puno V. Puno FACTS Joselito Musni Puno claims to be an heir of the deceased Carlos L. Puno from his common-law wife, Amelia Puno. Carlos Puno was a stockholder and incorporator of Puno Enterrises. Joselito averred all entitlement of rights and privileges of his late father to be given to him. However, Puno Enterprises filed for dismissal asserting that Joselito does not have the legal personality to sue since in his birth certificate his name was Joselito Musni Muno and that it should need a judicial determination and declaration if he is the same Joselito Puno. Joselito submitted the corrected birth certificate with certification from the LCR of Manila. With this, the Trial Court rendered ordering Puno Enterprises to allow Joselito to inspect the corporate books and records of the company. On appeal, the CA declared that Joselito was not able able to establish the paternity and his filiation to Carlos L. Puno since his birth certificate was prepared without the intervention of and the participatory acknowledgment of paternity by Carlos L. Puno. Accordingly, the CA said that petitioner had no right to demand that he be allowed to examine respondents books. Moreover, petitioner was not a stockholder of the corporation but was merely claiming rights as an heir of Carlos L. Puno, an incorporator of the corporation. Hence, this petition. ISSUE Whether or not an heir automatically becomes a stockholder upon the death of his father. HELD No. Upon the death of a stockholder, the heirs do not automatically become of the corporation; neither are they mandatorily entitled to the rights and privileges stockholder. Joselito anchors his claim on his being an heir of the deceased stockholder. we agree with the appellate court that petitioner was not able to prove satisfactorily his the deceased stockholder; thus, the former cannot claim to be an heir of the latter. In any case, Sections 74 of the Corporation Code enumerate the persons entitled to the inspection of corporate books, thus Sec. 74. Books to be kept; stock transfer agent. XXX The records of all business transactions of the corporation and the minutes meeting shall be open to the inspection of any director, trustee, stockholder of the corporation at reasonable hours on business days and he may demand, for a copy of excerpts from said records or minutes, at his expense. The stockholders right of inspection of the corporations books and records upon his ownership of shares in the corporation and the necessity for self-protection. shareholder has the right to be intelligently informed about corp orate affairs. Such upon the stockholders underlying ownership of the corporations assets and property. only stockholders of record are entitled to receive dividends declared by the corporation, inherent in the ownership of the shares. Thus, even if petitioner presents sufficient evidence in this case to establish son of Carlos L. Puno, he would still not be allowed to inspect respondents books and to receive dividends from respondent, absent any showing in its transfer book that shares owne d by Carlos L. Puno were transferred to him.

Lim Tay vs. Court of Appeals [GR 126891, 5 August 1998]

Facts: On 8 January 1980, Sy Guiok secured a loan from Lim Tay in the amount of P40,000 payable within 6 months. To secure the payment of the aforesaid loan and interest thereon, Guiok executed a Contract of Pledge in favor of Lim Tay whereby he pledged his 300 shares of stock in the Go Fay & Company Inc. Guiok obliged himself to pay interest on said loan at the rate of 10% per annum from the date of said contract of pledge. On the same date, Alfonso Sy Lim secured a loan, from Lim Tay in the amount of P40,000 payable in 6 months. To secure the payment of his loan, Sy Lim executed a "Contract of Pledge" covering his 300 shares of stock in Go Fay & Co. Under said contract, Sy Lim obliged himself to pay interest on his loan at the rate of 10% per annum from the date of the execution of said contract. The contractual stipulation in the pledge showed that Lim Tay was merely authorized to foreclose the pledge upon maturity of the loans, not to own them. Such foreclosure is not automatic, for it must be done in a public or private sale. Guiok and Sy Lim endorsed their respective shares of stock in blank and delivered the same to Lim Tay. However, Guiok and Sy Lim failed to pay their respective loans and the accrued interests thereon to Lim Tay. In October 1990, Lim Tay filed a "Petition for Mandamus" against Go Fay & Co., with the SEC (SEC Case 03894), praying that an order be issued directing the corporate secretary of Go Fay & Co. to register the stock transfers and issue new certificates in favor of Lim Tay; and ordering Go Fay & Co. to pay all dividends due and unclaimed on the said certificates to Lim Tay. In the interim, Sy Lim died. Guiok and the Intestate Estate of Alfonso Sy Lim, represented by Conchita Lim, filed their Answer-In-Intervention with the SEC.

After due proceedings, the SEC hearing officer promulgated a Decision dismissing Lim Tay's Complaint on the ground that although the SEC had jurisdiction over the action, pursuant to the Decision of the Supreme Court in the case of "Rural Bank of Salinas et. al. versus Court of Appeals, et al., 210 SCRA 510," he failed to prove the legal basis for the secretary of the Corporation to be compelled to register stock transfers in favor of Lim Tay and to issue new certificates of stock under his name. Lim Tay appealed the Decision of the hearing officer to the SEC, but, on 7 March 1996, the SEC promulgated a Decision, dismissing Lim Tay's appeal. On appeal to the Court of Appeals, the appellate court debunked Lim Tay's claim that he had acquired ownership over the shares by virtue of novation, holding that Guiok's and Sy Lim's indorsement and delivery of the shares were pursuant to Articles 2093 and 2095 of the Civil Code and that Lim Tay's receipt of dividends was in compliance with Article 2102 of the same Code. Lim Tay's claim that he had acquired ownership of the shares by virtue of prescription was likewise dismissed by the appellate court. Lim Tay brought before the Supreme Court a Petition for Review on Certiorari in accordance with Rule 45 of the Rules of Court.

Issue: Whether Lim Tay is the owner of the shares previously subjected to pledge, for him to cause the registration of said shares in his own name.

Held: Lim Tay's ownership over the shares was not yet perfected when the Complaint was filed. The contract of pledge certainly does not make him the owner of the shares pledged. Further, whether prescription effectively transferred ownership of the shares, whether there was a novation of the contracts of pledge, and whether laches had set in were difficult legal issues, which were unpleaded and unresolved when Lim Tay asked the corporate secretary of Go Fay to effect the transfer, in his favor, of the shares pledged to him. Lim Tay has failed to establish a clear legal right. Lim Tay's contention that he is the owner of the said shares is completely without merit. Lim Tay does not have any ownership rights at all. At the time Lim Tay instituted his suit at the SEC, his ownership claim had no prima facie leg to stand on. At best, his contention was disputable and uncertain. Lim Tay cannot claim to have acquired ownership over the certificates of stock through extraordinary prescription, as provided for in Article 1132 of the Civil Code. What is required by Article 1132 is possession in the concept of an owner. Herein, Lim Tay's possession of the stock certificates came about because they were delivered to him pursuant to the contracts of pledge. His possession as a pledgee cannot ripen into ownership by prescription. Lim Tay expressly repudiated the pledge, only when he filed his Complaint and claimed that he was not a mere pledgee, but that he was already the owner of the shares. Based on the foregoing, Lim Tay has not acquired the certificates of stock through extraordinary prescription. Neither did Lim Tay acquire the shares by virtue of a novation of the contract of pledge. Novation cannot be presumed by Guiok's and Sy Lim's indorsement and delivery of the certificates of stock covering the 600 shares, nor Lim Tay's receipt of dividends from 1980 to 1983, nor the fact that Guiok and Sy Lim have not instituted any action to recover the shares since 1980. Novation is never presumed inferred.

Roxas vs. Court of Appeals and Heirs of Eugenia V. Roxas, Inc. Heirs of Eugenia V Roxas, Incorporated, was incorporated on December 4, 1962 with the primary purpose of engaging in agriculture to develop the properties inherited from Eugenia V. Roxas and that of y Eufrocino Roxas; that the Articles of Incorporation of the plaintiff, in 1971, was amended to allow it to engage in the resort business Respondent Corporation filed two separate complaints for recovery of possession with the RTC-Laguna against herein petitioners, praying for the ejectment of petitioners from buildings inside the Hidden Valley Springs Resort, allegedly owned by Respondent Corporation (Heirs of Eugenia V. Roxas, Inc.). Respondent alleged that (1) Rebecca Roxas is in possession of two houses built at the expense of (Heirs of Eugenia V. Roxas, Inc.), and that her occupancy on the said houses was only upon the tolerance of the corporation; and (2) Guillermo Roxas occupies a house which was built at the expense of the corporation during the time when Guiller mos father was still living and was the general manager of the corporation, and that Guillermos possession over the house and lot was only upon the tolerance of the corporation. In their separate answers, petitioners traversed the allegations stating that they are heirs of Eugenia V. Roxas, and therefore, co-owners of the Hidden Valley Springs Resort; and as co-owners of the property, they have the right to stay within its premises. RTC-Laguna decided in favor of HEIRS. On appeal, the decision of the RTC was affirmed. Hence, this petition. ISSUE Whether or not Petitioners have the right to possess the questioned properties with respect to their ownership of an aliquot portion of all the properties of the Respondent Corporation? RULING No. The respondent is a bona fide corporation. As such, it has a juridical personality of its own separate from the members composing it (Western Agro Industrial Corporation v. Court of Appeals, 188 SCRA 709 [1990]. While citing the case of Stockholders of F. Guanzon and Sons, Inc. v. Register of Deeds of Manila, (6 SCRA 373 [1962]) regarding properties owned by a corporation, the Supreme Court held that Properties registered in the name of the corporation are owned by it separate and distinct from its members. While shares of stock constitute personal property, do not represent property of the corporation. A share of stock only typifies an aliquot corporation's property, or the right to share in its proceeds to that extent when according to law and equity (Hall & Faley v. Alabama Terminal, 173 Ala., 398, 56 So. holder is not the owner of any part of the capital of the corporation (Bradley v. Bauder, St., 28). Nor is he entitled to the possession of any definite portion of its property (Gottfried V. Miller, 104 U.S., 521; Jones v. Davis, 35 Ohio St., 474). The stockholder or tenant in common of the corporate property (Harton v. Johnston, 166 Ala., 992). (at pp. 375-376) In the case at bar, the questioned properties belonged to Eugenia V. Roxas. death, the heirs of Eugenia V. Roxas, among them the petitioners herein, decided corporation Heirs of Eugenia V. Roxas, Incorporated (private respondent herein) inherited properties as capital of the corporation. The corporation was incorporated on 4, 1962 with the primary purpose of engaging in agriculture to develop the inherited The Articles of Incorporation of the respondent corporation were amended in 1971 engage in the resort business. Accordingly, the corporation put up a resort known Valley Springs Resort where the questioned properties are located. However, the record shows that Eufrocino V. Roxas who then controlled the management corporation, being the majority stockholder, consented to the petitioners' stay questioned properties. Specifically, Eufrocino Roxas gave his consent to the conversion recreation hall to a residential house, now occupied by petitioner Guillermo Roxas. The Directors did not object to the actions of Eufrocino Roxas. The petitioners were allowed within the questioned properties until August 27, 1983, when the Board of Directors Resolution ejecting the petitioners. In the end, the Supreme Court held that the petitioners' stay within the questioned properties merely by tolerance of the respondent corporation in deference to the wishes of Eufrocino who during his lifetime, controlled and managed the corporation. In the absence of contract between the petitioners and the respondent corporation, the corporation eject the petitioners at any time it wishes for the benefit and interest of the corporation.

Garcia vs. Jomouad FACTS: Petitioner filed with the Regional Trial Court, Branch 23 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 sum of money, docketed as Civil Case No. CEB-10433, before the RTC, Branch 10 of Cebu, filed by the spouses Atinon against Jaime Dico. In that case (collection of sum of money), the trial court rendered judgment ordering Dico to pay the spouses Atinon the sum of P900,000.00 plus interests. After said judgment became final and executory, respondent sheriff proceeded with its execution. In the course thereof, the Proprietary Ownership Certificate (POC) No. 0668 in the Cebu Country Club, which was in the name of Dico, was levied on and scheduled for public auction. Claiming ownership over the subject certificate, petitioner filed the aforesaid action for injunction with prayer for preliminary injunction to enjoin respondents from proceeding with the auction. After trial, the lower court rendered its Decision, dated 28 July 1995, dismissing petitioner's complaint for injunction for lack of merit. On appeal, the CA affirmed in toto the decision of the RTC upon finding that it committed no reversible error in rendering the same. Hence, this petition. Petitioner avers that Dico, the judgment debtor of the spouses Atinon, was employed as manager of his (petitioner's) Young Auto Supply. In order to assist him in entertaining clients, petitioner "lent" his POC, then bearing the number 1459, in the Cebu Country Club to Dico so the latter could enjoy the "signing" privileges of its members. The Club issued POC No. 0668 in the name of Dico. Thereafter, Dico resigned as manager of petitioner's business. Upon demand of petitioner, Dico returned POC No. 0668 to him. Dico then executed a Deed of Transfer, dated 18 November 1992, covering the subject certificate in favor of petitioner. The Club was furnished with a copy of said deed but the transfer was not recorded in the books of the Club because petitioner failed to present proof of payment of the requisite capital gains tax. In assailing the decision of the CA, petitioner mainly argues that the appellate court erroneously relied on Section 63 of the Corporation Code in upholding the levy on the subject certificate satisfy the judgment debt of Dico in Civil Case No. CEB-14033. Petitioner contends that subject stock of certificate, albeit in the name of Dico, cannot be levied upon the execution satisfy his judgment debt because even prior to the institution of the case for collection money against him: ISSUE: Whether or not the transfer of the subject certificate made by Dico to petitioner was valid the spouses Atinon. Whether or not CA erred in its ruling in upholding the levy on the subject certificate. RULING: Applying the foregoing jurisprudence in this case, we hold that the transfer of the subject certificate made by Dico to petitioner 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 on execution. In addition, as correctly ruled by the CA, the entry in the minutes of the the Club's board of directors noting the resignation of Dico as proprietary member thereof not constitute compliance with Section 63 of the Corporation Code. Said provision of requires the recording of the transfer in the books of the corporation, and not elsewhere, valid as against third parties. Accordingly, the CA committed no reversible error in rendering assailed decision. IN VIEW OF THE FOREGOING, the Court RESOLVED to DENY the petition.

Apodaca v. NLRC, 172 SCRA 442 (1989) FACTS: Petitioner Ernesto M. Apodaca was employed in respondent Intrans Phils., Inc. On August 28, 1985 respondent Jose M. Mirasol persuaded petitioner to subscribe to 1,500 shares of respondent corporation at P100.00 per share or a total of P150,000.00. Petitioner made an initial payment of P37,500.00. On September 1, 1975, petitioner was appointed President and General Manager of the respondent corporation. However he resigned on January 2, 1986. On December 19, 1986 petitioner instituted with the NLRC a complaint against private respondent for the payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and representation expenses and his bonus compensation for 1986. Private respondents admitted that there is due to the petitioner the amount of P17,060.07 but this was applied to the unpaid balance of his subscription in the amount of P95,439.93. Petitioner questioned the set-off alleging that that there was no call or notice for the payment of the unpaid subscription and that, accordingly, the alleged obligation is not enforceable. The Labor Arbiter sustained the claim of petitioner on the ground that the employer has no right to withhold payment of wages already earned under Article 103 of the Labor Code. On appeal, NLRC reversed the decision rendered by the Labor Arbiter ruling that a stockholder who fails to pay his unpaid subscription on call becomes the debtor of the corporation and that the set-off of said obligation against the wages and others due to petitioner is not contrary to law, morals and public policy. Hence this instant petition. ISSUE: Does this case falls within the jurisdiction of NLRC? Was the set-off made valid? RULING: On the first Issued: NO. NLRC has no jurisdiction over Intra-corporate disputes between the stockholder corporation in the matter of unpaid subscriptions. On the second issue: NO. Unpaid subscriptions are not due and payable until a call is made by the corporation payment. There should be a resolution of the board of directors of Respondent calling for the payment of the unpaid subscription. Moreover, even if there is a call for the payment of the unpaid subscriptions, NLRC cannot set it off against the wages and benefits due the petitioner it is provided for under Art Labor Code.

Chua vs. Court of Appeals [GR 150793, 19 November 2004] Facts: On 28 February 1996, Lydia Hao, treasurer of Siena Realty Corporation, filed a complaint-affidavit with the City Prosecutor of Manila charging Francis Chua and his wife, Elsa Chua, of four counts of falsification of public documents pursuant to Article 172[3] in relation to Article 171[4] of the Revised Penal Code. The charge reads: "That on or about May 13, 1994, in the City of Manila, Philippines, the said accused, being then a private individual, did then and there willfully, unlawfully and feloniously commit acts of falsification upon a public document, to wit: the said accused prepared, certified, and falsified the Minutes of the Annual Stockholders meeting of the Board of Directors of the Siena Realty Corporation, duly notarized before a Notary Public, Atty. Juanito G. Garcia and entered in his Notarial Registry as Doc No. 109, Page 22, Book No. IV and Series of 1994, and therefore, a public document, by making or causing it to appear in said Minutes of the Annual Stockholders Meeting that one LYDIA HAO CHUA was present and has participated in said proceedings, when in truth and in fact, as the said accused fully well knew that said Lydia C. Hao was never present during the Annual Stockholders Meeting held on April 30, 1994 and neither has participated in the proceedings thereof to the prejudice of public interest and in violation of public faith and destruction of truth as therein proclaimed. Contrary to Law."

Thereafter, the City Prosecutor filed the Information (Criminal Case 285721) for falsification of public document, before the Metropolitan Trial Court (MeTC) of Manila, Branch 22, against Francis Chua but dismissed the accusation against Elsa Chua. Francis Chua, was arraigned and trial ensued thereafter. During the trial in the MeTC, Atty. Evelyn Sua-Kho and Atty. Ariel Bruno Rivera appeared as private prosecutors and presented Hao as their first witness. After Haos testimony, Chua moved to exclude Haos counsels as private prosecutors in the case on the ground that Hao failed to allege and prove any civil liability in the case. In an Order, dated 26 April 1999, the MeTC granted Chuas motion and ordered the complainants counsels to be excluded from actively prosecuting Criminal Case 285721. Hao moved for reconsideration but it was denied. Hao filed a petition for certiorari (SCA 9994846), before the Regional Trial Court (RTC) of Manila, Branch 19. The RTC gave due course to the petition and on 5 October 1999, the RTC in an order reversed the MeTC Order. Chua moved for reconsideration which was denied. Dissatisfied, Chua filed before the Court of Appeals a petition for certiorari. On 14 June 2001, the appellate court promulgated its Decision denying the petition. The Court of Appeals held that the action was indeed a derivative suit, for it alleged that petitioner falsified documents pertaining to projects of the corporation and made it appear that Chua was a stockholder and a director of the corporation. According to the appellate court, the corporation was a necessary party to the petition filed with the RTC and even if Hao filed the criminal case, her act should not divest the Corporation of its right to be a party and present its own claim for damages. Chua moved for reconsideration but it was denied in a Resolution dated 20 November 2001. Hence, the petition by Chua. Issue: Whether the criminal complaint was in the nature of a derivative suit. Held: Under Section 36 of the Corporation Code, read in relation to Section 23, where a corporation is an injured party, its power to sue is lodged with its board of directors or trustees. An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stocks in order to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue, or are the ones to be sued, or hold the control of the corporation. In such actions, the suing stockholder is regarded as a nominal party, with the corporation as the real party in interest. A derivative action is a suit by a shareholder to enforce a corporate cause of action. The corporation is a necessary party to the suit. And the relief which is granted is a judgment against a third person in favor of the corporation. Similarly, if a corporation has a defense to an action against it and is not asserting it, a stockholder may intervene and defend on behalf of the corporation. Under the Revised Penal Code, every person criminally liable for a felony is also civilly liable. When a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action, unless the offended party waives the civil action, reserves the right to institute it separately or institutes the civil action prior to the criminal action. Not every suit filed in behalf of the corporation is a derivative suit. For a derivative suit to prosper, it is required that the minority stockholder suing for and on behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all other stockholders similarly situated who may wish to join him in the suit. It is a condition sine qua non that the corporation be impleaded as a party because not only is the corporation an indispensable party, but it is also the present rule that it must be served with process. The judgment must be made binding upon the corporation in order that the corporation may get the benefit of the suit and may not bring subsequent suit against the same defendants for the same cause of action. In other words, the corporation must be joined as party because it is its cause of action that is being litigated and because judgment must be a res adjudicata against it. Herein, the complaint was instituted by Hao against Chua for falsifying corporate documents whose subject concerns corporate projects of Siena Realty Corporation. Clearly, Siena Realty Corporation is an offended party. Hence, Siena Realty Corporation has a cause of action. And the civil case for the corporate cause of action is deemed instituted in the criminal action. However, the board of directors of the corporation in this case did not institute the action against Chua. Hao was the one who instituted the action. Nowhere is it stated that she is filing the same in behalf and for the benefit of the corporation. Thus, the criminal complaint including the civil aspect thereof could not be deemed in the nature of a derivative suit.

Santiago Cua Jr. et al VS. Miguel Ocampo Santiago Cua Jr et al, VS CA FACTS: The petitioners Santiago Cua, Jr. (Santiago Jr.), Solomon S. Cua (Solomon), and Exequiel D. Robles (Robles), directors of the Philippine Racing Club, Inc while with Miguel Ocampo Tan (Miguel), Jemie U. Tan (Jemie) and Atty. Brigido J. Dulay (Dulay) as respondents are member of the corporation. The controversy started when PRCI through the petitioner wished to convert its Makati property from a racetrack to urban residential and commercial use. Given the location and size of its Makati property, PRCI believed that said property was severely underutilized. Hence, PRCI management decided to transfer its racetrack from Makati to Cavite. PRCI began developing its Cavite property as a racetrack, scheduled to be completed by April 2008. Now as to its Makati property, PRCI management decided that it was best to spin off the management and development of the same to a wholly owned subsidiary, so that PRCI could continue to focus its efforts on pursuing its core business competence of horse racing. Instead of organizing and establishing a new corporation for the said purpose, PRCI management opted to acquire another domestic corporation, JTH Davies Holdings, Inc. (JTH).[11 The PRCI Board of Directors held a meeting on 26 September 2006. Among the directors present were petitioners Santiago Sr., Santiago Jr., and Solomon, as well as respondent Dulay. After discussing and deliberating on the matter of the acquisition of JTH by PRCI, all the directors present, except respondent Dulay, voted affirmatively to pass and approve the following resolutions: Another meeting was scheduled to conducted on July 17, 2007 to which one of the agenda is for the Exchange of the Corporations Makati Property with Shares of JTH Davies Holdings, Inc. However, on 10 July 2007, respondents Miguel, et al., as minority stockholders of PRCI, with the following shareholdings: filed before the RTC a Complaint, denominated as a Derivative Suit with prayer for Issuance of TRO/Preliminary Injunction, against the directors of PRCI and/or JTH. The Complaint was based on three causes of action: (1) the approval by directors of PRCI of the Board Resolutions dated 26 September 2006 and 11 May undue haste and deliberate speed, despite the absence of any disclosure and information not only anomalous and fraudulent, but also extremely prejudicial and inimical to interest committed in violation of their fiduciary duty as directors of the said corporation; (2) Solomon, as PRCI President, with the acquiescence of the majority directors of PRCI, refused and resisted the request of respondents Miguel, et al., for complete and information relative to the disputed Board Resolutions, brazenly and unlawfully violating of the minority stockholders to information and to inspect corporate books and records; without being officially and formally nominated, the majority directors of PRCI unlawfully constituted themselves as members of the Board of Directors and/or Executive of JTH, rendering all the actions they have taken as such null and void ab initio. respondents Miguel, et al., prayed to the RTC, after notice and hearing, that: ISSUE: Whether respondent Miguel as a minority shareholder is entitled to a Derivative against the petitioner for the following transactions; acquisition of JTH and Makati exchange with JTH? HELD: It is well settled in this jurisdiction that where corporate directors are breach of trust not of mere error of judgment or abuse of discretion and intracorporate remedy is futile or useless, a stockholder may institute a suit in behalf of himself stockholders and for the benefit of the corporation, to bring about a redress of the wrong directly upon the corporation and indirectly upon the stockholders. However , in the aforementioned controversy the court ruled that, the acquisition of JTH and the constitution of the JTH Board of Directors are no longer just the majority of the PRCI Board of Directors, but also of the majority of the PRCI stockholders. ratification, even an unauthorized act of an agent becomes the authorized act of the s such suit will not prosper. Moreover on the second issue the court recognized that a stockholders right derivative suit is not based on any express provision of the Corporation Code Securities Regulation Code, but is impliedly recognized when the said laws make corporate directors or officers liable for damages suffered by the corporation and its stockholders for violation of their fiduciary duties. In effect, the suit is an action for specific performance of an obligation, owed by the corporation to the stockholders, to assist its rights of action when the corporation has been put in default by the wrongful refusal of the directors or management to adopt suitable measures for its protection. The basis of a stockholders suit is always one of equity. However, it cannot prosper without first complying with the legal requisites for itsinstitution.[75] Rule 8, Section 1 of the Interim Rules of Procedure for Intra-Corporate Controversies (IRPICC) lays down the following requirements which a stockholder must comply with in filing a derivative suit: Sec. 1. Derivative action. A stockholder or member may bring an action in the name of a corporation or association, as the case may be, provided, that: (1) He was a stockholder or member at the time the acts or transactions

subject of the action occurred and at the time the action was filed; (2) He exerted all reasonable efforts, and alleges the same with particularity in the complaint, to exhaust all remedies available under the articles of incorporation, by-laws, laws or rules governing the corporation or partnershipto obtain the relief he desires; (3) No appraisal rights are available for the act or acts complained of; and (4) The suit is not a nuisance or harassment suit. (Emphasis ours.) It bears to point out that every derivative suit is necessarily grounded on an alleged violation by the board of directors of its fiduciary duties, committed by mismanagement, misrepresentation, or fraud, with the latter two situations already implying bad faith. If the Court upholds the position of respondents Miguel, et al. that the existence of mismanagement, misrepresentation, fraud, and/or bad faith renders the right of appraisal unavailable it would give rise to an absurd situation. Inevitably, appraisal rights would be unavailable in any derivative suit. This renders the requirement in Rule 8, Section 1(3) of the IPRICC and effectively inoperative; and in contravention of an elementary rule of legal hermeneutics effect must be given to every word, clause, and sentence of the statute, and that a statute be so interpreted that no part thereof becomes inoperative or superfluous. The import of establishing the availability or unavailability of appraisal minority stockholder is further highlighted by the fact that it is one of the factors in whether or not a complaint involving an intra-corporate controversy is a nuisance and suit. Section 1(b), Rule 1 of IRPICC provides: (b) Prohibition against nuisance and harassment suits. - Nuisance and harassment suits prohibited. In determining whether a suit is a nuisance or harassment suit, the court shall consider, among others, the following: (1) The extent of the shareholding or interest of the initiating stockholder or member; (2) Subject matter of the suit; (3) Legal and factual basis of the complaint; (4) Availability of appraisal rights for the act or acts complained of; and (5) Prejudice or damage to the corporation, partnership, or association in relation to the sought.