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multi-million businesses and they, his parents,

had high hopes in him.


Today is Monday, January 22, 2018
Simny further claimed that upon the advice of
Custom Search their lawyers, upon the incorporation of
search GoodGold, they issued stock certificates
reflecting the shares held by each stockholder
Republic of the Philippines duly signed by Francisco as President and
SUPREME COURT Atty. Emmanuel Paras as Corporate
Manila Secretary, with corresponding blank
endorsements at the back of each certificate –
SECOND DIVISION including Stock Certificate Nos. 004-014
under Gilbert’s name.3 These certificates
G.R. No. 189486 September 5, 2012 were all with Gilbert’s irrevocable
endorsement and power of attorney to have
SIMNY G. GUY, GERALDINE G. GUY, these stocks transferred in the books of
GLADYS G. YAO, and the HEIRS OF THE corporation.4 All of these certificates were
LATE GRACE G. CHEU, Petitioners, always in the undisturbed possession of the
vs. spouses Francisco and Simny, including
GILBERT G. GUY, Respondent. Stock Certificate Nos. 004-014.5

x-----------------------x In 1999, the aging Francisco instructed


Benjamin Lim, a nominal shareholder of
G.R. No. 189699 GoodGold and his trusted employee, to
collaborate with Atty. Emmanuel Paras, to
SIMNY G. GUY, GERALDINE G. GUY, redistribute GoodGold’s shareholdings evenly
GLADYS G. YAO, and the HEIRS OF THE among his children, namely, Gilbert, Grace
LATE GRACE G. CHEU, Petitioners, Guy-Cheu (Grace), Geraldine Guy
vs. (Geraldine), and Gladys Guy (Gladys), while
THE HON. OFELIA C. CALO, in her capacity maintaining a proportionate share for himself
as Presiding Judge of the RTC -Mandaluyong and his wife, Simny.6
City - Branch 211 and GILBERT G. GUY,
Respondents. Accordingly, some of GoodGold’s certificates
were cancelled and new ones were issued to
DECISION represent the redistribution of GoodGold’s
shares of stock. The new certificates of stock
PEREZ, J.: were signed by Francisco and Atty.
Emmanuel Paras, as President and Corporate
THE FACTS Secretary, respectively.

With 519,997 shares of stock as reflected in The shares of stock were distributed among
Stock Certificate Nos. 004-014, herein the following stockholders:
respondent Gilbert G. Guy (Gilbert) practically
owned almost 80 percent of the 650,000 NAME NO. OF SHARES
subscribed capital stock of GoodGold Realty Francisco Guy [husband]
& Development Corporation (GoodGold),1 195,000
one of the multi-million corporations which Simny G. Guy [wife]
Gilbert claimed to have established in his 30s. 195,000
GoodGold’s remaining shares were divided Gilbert G. Guy [son] 65,000
among Francisco Guy (Francisco) with Geraldine G. Guy [daughter]
130,000 shares, Simny Guy (Simny), 65,000
Benjamin Lim and Paulino Delfin Pe, with one Grace G.Cheu (or her heirs) [daughter]
share each, respectively. Gilbert is the son of 65,000
spouses Francisco and Simny. Simny, one of Gladys G.Yao [daughter]65,000
the petitioners, however, alleged that it was Total 650,0007
she and her husband who established In September 2004, or five years after the
GoodGold, putting the bulk of its shares under redistribution of GoodGold’s shares of stock,
Gilbert’s name. She claimed that with their Gilbert filed with the Regional Trial Court
eldest son, Gaspar G. Guy (Gaspar), having (RTC) of Manila, a Complaint for the
entered the Focolare Missionary in 1970s, "Declaration of Nullity of Transfers of Shares
renouncing worldly possessions,2 she and in GoodGold and of General Information
Francisco put the future of the Guy group of Sheets and Minutes of Meeting, and for
companies in Gilbert’s hands. Gilbert was Damages with Application for a Preliminary
expected to bring to new heights their family Injunctive Relief," against his mother, Simny,
and his sisters, Geraldine, Grace, and
Gladys.8 Gilbert alleged, among others, that Gilbert alleged that he never signed any
no stock certificate ever existed;9 that his document which would justify and support the
signature at the back of the spurious Stock transfer of his shares to his siblings and that
Certificate Nos. 004-014 which purportedly he has in no way, disposed, alienated,
endorsed the same and that of the corporate encumbered, assigned or sold any or part of
secretary, Emmanuel Paras, at the obverse his shares in GoodGold.14 He also denied the
side of the certificates were forged, and, existence of the certificates of stocks.
hence, should be nullified.10 According to him, "there were no certificates
of stocks under his name for the shares of
Gilbert, however, withdrew the complaint, after stock subscribed by him were never issued
the National Bureau of Investigation (NBI) nor delivered to him from the time of the
submitted a report to the RTC of Manila inception of the corporation."15
authenticating Gilbert’s signature in the
endorsed certificates.11 The NBI report Gilbert added that the Amended General
stated: Information Sheets (GIS) of GoodGold for the
years 2000 to 2004 which his siblings
FINDINGS: submitted to the Securities and Exchange
Commission (SEC) were spurious as these
Comparative analysis of the specimens did not reflect his true shares in the
submitted under magnification using varied corporation which supposedly totaled to
lighting process and with the aid of 595,000 shares;16 that no valid stockholders’
photographic enlargements disclosed the annual meeting for the year 2004 was held,
presence of significant and fundamental hence proceedings taken thereon, including
similarities in the personal handwriting habits the election of corporate officers were null and
existing between the questioned signatures of void;17 and, that his siblings are foreign
"GILBERT G. GUY" and "EMMANUEL C. citizens, thus, cannot own more than forty
PARAS," on one hand, and their percent of the authorized capital stock of the
corresponding standard specimen/exemplar corporation.18
signatures, on the other hand, such as in:
Gilbert also asked in his complaint for the
- Basic design of letters/elements; issuance of a Writ of Preliminary and
Mandatory Injunction to protect his rights.19
- Manner of execution/line quality;
In an Order dated 30 June 2008,20 the RTC
- Minute identifying details. denied Gilbert’s Motion for Injunctive Relief21
which constrained him to file a motion for
CONCLUSION: reconsideration, and, thereafter, a Motion for
Inhibition against Judge Edwin Sorongon,
A. The questioned and the standard praying that the latter recuse himself from
specimen/exemplar signatures of Gilbert G. further taking part in the case.
Guy were written by one and the same
person; Meanwhile, Gilbert’s siblings filed a
manifestation claiming that the complaint is a
B. The questioned and the standard nuisance and harassment suit under Section
specimen/exemplar signatures of 1(b), Rule 1 of the Interim Rules of Procedure
"EMMANUEL C. PARAS" were written by one on Intra-Corporate Controversies.
and the same person. (Emphasis supplied)12
In an Order dated 6 November 2008,22 the
The present controversy arose, when in 2008, RTC denied the motion for inhibition. The RTC
three years after the complaint with the RTC also dismissed the case, declaring it a
of Manila was withdrawn, Gilbert again filed a nuisance and harassment suit, viz.:
complaint, this time, with the RTC of
Mandaluyong, captioned as "Intra-Corporate WHEREFORE, the court resolves:
Controversy: For the Declaration of Nullity of
Fraudulent Transfers of Shares of Stock (1) To DENY as it is hereby DENIED
Certificates, Fabricated Stock Certificates, respondent’s Motion for Inhibition;
Falsified General Information Sheets, Minutes
of Meetings, and Damages with Application (2) To DENY as it is hereby DENIED
for the Issuance of a Writ of Preliminary and respondent’s Motion for Reconsideration of
Mandatory Injunction," docketed as SEC- the June 30, 2008 Order; and,
MC08-112, against his mother, Simny, his
sisters, Geraldine, Gladys, and the heirs of his (3) To declare as it is herby declared the
late sister Grace.13 instant case as a nuisance or harassment suit.
Accordingly, pursuant to Section 1(b), Rule 1
of the Interim Rules of Procedure for Intra-
Corporate Dispute, the instant case is hereby Reconsideration filed [by petitioners] herein.
DISMISSED. No pronouncement as to Inasmuch as there is no longer any
costs.23 impediment to proceed with the instant case
and the fact that this court was specifically
This constrained Gilbert to assail the above directed by the May 27, 2009 Decision of the
Order before the Court of Appeals (CA). The CA Second Division to proceed with the trial
petition for review was docketed as CA-G.R. on the merits with dispatch, this court resolves
SP No. 106405. to deny the motion under consideration.

In a Decision24 dated 27 May 2009, the CA WHEREFORE, premises considered, the


upheld Judge Sorongon’s refusal to inhibit Motion to Defer Pre-Trial Conference and
from hearing the case on the ground that Further Proceedings filed by petitioners is
Gilbert failed to substantiate his allegation of hereby DENIED. Set the pre-trial on October
Judge Sorongon’s partiality and bias.25 20, 2009, at 8:30 in the morning.

The CA, in the same decision, also denied The denial of the petitioners’ motion to defer
Gilbert’s Petition for the Issuance of Writ of pre-trial, compelled them to file with this Court
Preliminary Injunction for failure to establish a a Petition for Certiorari with Urgent Application
clear and unmistakable right that was violated for the Issuance of TRO and/or A Writ of
as required under Section 3, rule 58 of the Preliminary Injunction, docketed as G.R. No.
1997 Rules of Civil Procedure.26 189699. Because of the pendency of the G.R.
No. 189486 before us, the petitioners deemed
The CA, however, found merit on Gilbert’s proper to question the said denial before us as
contention that the complaint should be heard an incident arising from the main
on the merits. It held that: controversy.29

A reading of the Order, supra, dismissing the OUR RULING


respondent’s complaint for being a
harassment suit revealed that the court a quo Suits by stockholders or members of a
relied heavily on the pieces of documentary corporation based on wrongful or fraudulent
evidence presented by the Petitioners to acts of directors or other persons may be
negate Respondent’s allegation of fraudulent classified into individual suits, class suits, and
transfer of shares of stock, fabrication of stock derivative suits.30
certificates and falsification of General
Information Sheets (GIS), inter alia. It bears An individual suit may be instituted by a
emphasis that the Respondent is even stockholder against another stockholder for
questioning the genuiness and authenticity of wrongs committed against him personally, and
the Petitioner’s documentary evidence. To our to determine their individual rights31 – this is
mind, only a full-blown trial on the merits can an individual suit between stockholders. But
afford the determination of the genuineness an individual suit may also be instituted
and authenticity of the documentary evidence against a corporation, the same having a
and other factual issues which will ultimately separate juridical personality, which by its own
resolve whether there was indeed a transfer of may be sued. It is of course, essential that the
shares of stock.27 suing stockholder has a cause of action
against the corporation.32
Hence, these consolidated petitions.
Individual suits against another stockholder or
G.R. No. 189486 is a Petition for Review against a corporation are remedies which an
under Rule 45 of the Rules of Court filed by aggrieved stockholder may avail of and which
Simny, Geraldine, Gladys, and the heirs of the are recognized in our jurisdiction as
late Grace against Gilbert, which prays that embedded in the Interim Rules on Intra-
this Court declare Civil Case No. SEC-MC08- Corporate Controversy. Together with this
112, a harassment or nuisance suit. right is the parallel obligation of a party to
comply with the compulsory joinder of
Meanwhile, during the pendency of G.R. No. indispensable parties whether they may be
189486, the trial court set the pre-trial stockholders or the corporation itself.
conference on the case subject of this
controversy, constraining the petitioners to file The absence of an indispensable
a Motion to defer the pre-trial, which was, party in a case renders all
however, denied by the court a quo in an subsequent actions of the court null
Order dated 11 September 2009,28 viz.: and void for want of authority to act,
not only as to the absent parties but
In a Resolution dated September 3, 2009, the even as to those present.33
Honorable Court of Appeals (CA) (Former
Second Division) denied the Motion for Partial
It bears emphasis that this controversy started nature that a final decree cannot be made
with Gilbert’s complaint filed with the RTC of without affecting his interest or leaving the
Mandaluyong City in his capacity as controversy in such a condition that its final
stockholder, director and Vice-President of determination may be wholly inconsistent with
GoodGold.34 equity and good conscience. It has also been
considered that an indispensable party is a
Gilbert’s complaint essentially prayed for the person in whose absence there cannot be a
return of his original 519,997 shares in determination between the parties already
GoodGold, by praying that the court declare before the court which is effective, complete,
that "there were no valid transfers of the or equitable. Further, an indispensable party is
contested shares to defendants and one who must be included in an action before
Francisco."35 It baffles this Court, however, it may properly go forward.
that Gilbert omitted Francisco as defendant in
his complaint. While Gilbert could have opted This was our pronouncements in Servicewide
to waive his shares in the name of Francisco Specialists Inc. v. CA,37 Arcelona v. CA,38
to justify the latter’s non-inclusion in the and Casals v. Tayud Golf and Country Club,
complaint, Gilbert did not do so, but instead, Inc.39
wanted everything back and even wanted the
whole transfer of shares declared fraudulent. Settled is the rule that joinder of indispensable
This cannot be done, without including parties is compulsory40 being a sine qua non
Francisco as defendant in the original case. for the exercise of judicial power,41 and, it is
The transfer of the shares cannot be, as precisely "when an indispensable party is not
Gilbert wanted, declared entirely fraudulent before the court that the action should be
without including those of Francisco who owns dismissed" for such absence renders all
almost a third of the total number. subsequent actions of the court null and void
for want of authority to act, not only as to the
Francisco, in both the 2004 and 2008 absent parties but even as to those present.42
complaints, is an indispensable party without
whom no final determination can be had for It bears emphasis that Gilbert, while suing as
the following reasons: (a) the complaint prays a stockholder against his co-stockholders,
that the shares now under the name of the should have also impleaded GoodGold as
defendants and Francisco be declared defendant. His complaint also prayed for the
fraudulent; (b) Francisco owns 195,000 annulment of the 2004 stockholders’ annual
shares some of which, Gilbert prays be meeting, the annulment of the 2004 election of
returned to him; (c) Francisco signed the the board of directors and of its officers, the
certificates of stocks evidencing the alleged annulment of 2004 GIS submitted to the SEC,
fraudulent shares previously in the name of issuance of an order for the accounting of all
Gilbert. The inclusion of the shares of monies and rentals of GoodGold, and the
Francisco in the complaint makes Francisco issuance of a writ of preliminary and
an indispensable party. Moreover, the mandatory injunction. We have made clear
pronouncement about the shares of Francisco that GoodGold is a separate juridical entity
would impact on the hereditary rights of the distinct from its stockholders and from its
contesting parties or on the conjugal directors and officers. The trial court, acting as
properties of the spouses to the effect that a special commercial court, cannot settle the
Francisco, being husband of Simny and father issues with finality without impleading
of the other contesting parties, must be GoodGold as defendant. Like Francisco, and
included for, otherwise, in his absence, there for the same reasons, GoodGold is an
cannot be a determination between the parties indispensable party which Gilbert should have
already before the court which is effective, impleaded as defendant in his complaint.
complete, or equitable.
Allegations of deceit, machination,
The definition in the Rules of Court, Section 7, false pretenses, misrepresentation,
Rule 3 thereof, of indispensable parties as and threats are largely conclusions
"parties in interest without whom no final of law that, without supporting
determination can be had of an action" has statements of the facts to which the
been jurisprudentially amplified. In Sps. allegations of fraud refer, do not
Garcia v. Garcia, et.al.,36 this Court held that: sufficiently state an effective cause of
action.43
An indispensable party is a party who has
such an interest in the controversy or subject "In all averments of fraud or mistake, the
matter that a final adjudication cannot be circumstances constituting fraud or mistake
made, in his absence, without injuring or must be stated with particularity"44 to
affecting that interest, a party who has not "appraise the other party of what he is to be
only an interest in the subject matter of the called on to answer, and so that it may be
controversy, but also has an interest of such determined whether the facts and
circumstances alleged amount to fraud."45 inception on June 6, 1988. Considering that
These particulars would necessarily include the corporation is merely a family corporation,
the time, place and specific acts of fraud plaintiff does not find the issuance of stock
committed.46 "The reason for this rule is that certificates necessary to protect his corporate
an allegation of fraud concerns the morality of interest and he did not even demand for its
the defendant’s conduct and he is entitled to issuance despite the fact that he was the sole
know fully the ground on which the allegations subscriber who actually paid his subscription
are made, so he may have every opportunity at the time of incorporation.48
to prepare his case to clear himself at the
trial."47 Tested against established standards, we find
that the charges of fraud which Gilbert
The complaint of Gilbert states: accuses his siblings are not supported by the
required factual allegations. In Reyes v. RTC
13. The said spurious Amended GIS for the of Makati,49 which we now reiterate, mutatis
years 2000, 2001, 2002, 2003, 2004 and also mutandis, while the complaint contained
in another falsified GIS for the year 2004, the allegations of fraud purportedly committed by
petitioners indicated the following alleged his siblings, these allegations are not
stockholders of GOODGOLD with their particular enough to bring the controversy
respective shareholdings, to wit: within the special commercial court’s
jurisdiction; they are not statements of
NAME NO. OF SHARES ultimate facts, but are mere conclusions of
Francisco Guy Co Chia 195,000 law: how and why the alleged transfer of
Simny G. Guy 195,000 shares can be characterized as "fraudulent"
Gilbert G. Guy 65,000 were not explained and elaborated on.50 As
Geraldine G. Guy 65,000 emphasized in Reyes:
Grace G.-Cheu 65,000
Gladys G.Yao 65,000 Not every allegation of fraud done in a
Total 650,000 corporate setting or perpetrated by corporate
14. The above spurious GIS would show that officers will bring the case within the special
form the original 519,997 shares of stocks commercial court’s jurisdiction. To fall within
owned by the respondent, which is equivalent this jurisdiction, there must be sufficient nexus
to almost 80% of the total subscriptions and/or showing that the corporation’s nature,
the outstanding capital stock of GOODGOLD, structure, or powers were used to facilitate the
respondent’s subscription was drastically fraudulent device or scheme.51 (Emphasis
reduced to only 65,000 shares of stocks which supplied)
is merely equivalent to only 10 percent of the
outstanding capital stock of the corporation. Significantly, no corporate power or office was
alleged to have facilitated the transfer of
15. Based on the spurious GIS, shares Gilbert’s shares. How the petitioners
pertaining to Benjamin Lim and Paulino Delfin perpetrated the fraud, if ever they did, is an
Pe were omitted and the total corporate indispensable allegation which Gilbert must
shares originally owned by incorporators have had alleged with particularity in his
including herein respondent have been complaint, but which he failed to.
fraudulently transferred and distributed, as
follows: x x x (Emphasis supplied) Failure to specifically allege the
fraudulent acts in intra-corporate
xxxx controversies is indicative of a
harassment or nuisance suit and may
18. To date, respondent is completely be dismissed motu proprio.
unaware of any documents signed by him that
would justify and support the foregoing In ordinary cases, the failure to specifically
transfer of his shares to the defendants. allege the fraudulent acts does not constitute
Respondent strongly affirms that he has not in a ground for dismissal since such a defect can
any way, up to this date of filing the instant be cured by a bill of particulars.52 Thus:
complaint, disposed, alienated, encumbered,
assigned or sold any or part of the shares of Failure to allege fraud or mistake with as
stocks of GOODGOLD corporation owned by much particularity as is desirable is not fatal if
him and registered under his name under the the general purport of the claim or defense is
books of the corporation. clear, since all pleadings should be so
construed as to do substantial justice. Doubt
19. Neither has respondent endorsed, signed, as to the meaning of the pleading may be
assigned any certificates of stock representing resolved by seeking a bill of particulars.
the tangible evidence of his stocks ownership,
there being no certificates of stocks issued by A bill of particulars may be ordered as to a
the corporation nor delivered to him since its defense of fraud or mistake if the
circumstances constituting fraud or mistake Complaint for the "Declaration of Nullity of
are not stated with the particularity required by Transfers of Shares in GoodGold and of
the rule.53 General Information Sheets and Minutes of
Meeting, and for Damages with Application for
The above-stated rule, however, does not a Preliminary Injunctive Relief," against his
apply to intra-corporate controversies. In mother, Simny, and his sisters, Geraldine,
Reyes,54 we pronounced that "in cases Grace, and Gladys.57 Gilbert alleged, among
governed by the Interim Rules of Procedure others, that no stock certificate ever
on Intra-Corporate Controversies a bill of existed;58 that his signature at the back of the
particulars is a prohibited pleading. It is spurious Stock Certificate Nos. 004-014 which
essential, therefore, for the complaint to show purportedly endorsed the same and that of the
on its face what are claimed to be the corporate secretary, Emmanuel Paras, at the
fraudulent corporate acts if the complainant obverse side of the certificates were forged,
wishes to invoke the court’s special and, hence, should be nullified.59 Gilbert
commercial jurisdiction." This is because fraud withdrew this complaint after the NBI
in intra-corporate controversies must be submitted a report to the RTC of Manila
based on "devises and schemes employed authenticating Gilbert’s signature in the
by, or any act of, the board of directors, endorsed certificates. And, it was only after
business associates, officers or partners, three years from the withdrawal of the Manila
amounting to fraud or misrepresentation which complaint, that Gilbert again filed in 2008 a
may be detrimental to the interest of the public complaint also for declaration of nullity of the
and/or of the stockholders, partners, or transfer of the shares of stock, this time with
members of any corporation, partnership, or the RTC of Mandaluyong. The caption of the
association," as stated under Rule 1, Section complaint is "Intra-Corporate Controversy: For
1 (a)(1) of the Interim Rules. The act of fraud the Declaration of Nullity of Fraudulent
or misrepresentation complained of becomes Transfers of Shares of Stock Certificates,
a criterion in determining whether the Fabricated Stock Certificates, Falsified
complaint on its face has merits, or within the General Information Sheets, Minutes of
jurisdiction of special commercial court, or Meetings, and Damages with Application for
merely a nuisance suit. the Issuance of a Writ of Preliminary and
Mandatory Injunction," docketed as SEC-
It did not escape us that Gilbert, instead of MC08-112, against his mother, Simny, his
particularly describing the fraudulent acts that sisters, Geraldine, Gladys, and the heirs of his
he complained of, just made a sweeping late sister Grace.60 1âwphi1
denial of the existence of stock certificates by
claiming that such were not necessary, When a stock certificate is endorsed
GoodGold being a mere family corporation.55 in blank by the owner thereof, it
As sweeping and bereft of particulars is his constitutes what is termed as "street
claim that he "is unaware of any document certificate," so that upon its face, the
signed by him that would justify and support holder is entitled to demand its
the transfer of his shares to herein transfer his name from the issuing
petitioners."56 Even more telling is the corporation.
contradiction between the denial of the
existence of stock certificates and the denial With Gilbert’s failure to allege specific acts of
of the transfer of his shares of stocks "under fraud in his complaint and his failure to rebut
his name under the books of the the NBI report, this Court pronounces, as a
corporations." consequence thereof, that the signatures
appearing on the stock certificates, including
It is unexplained that while Gilbert questioned his blank endorsement thereon were
the authenticity of his signatures indorsing the authentic. With the stock certificates having
stock certificates, and that of Atty. Emmanuel been endorsed in blank by Gilbert, which he
Paras, the corporate secretary, he did not put himself delivered to his parents, the same can
in issue as doubtful the signature of his father be cancelled and transferred in the names of
which also appeared in the certificate as herein petitioners.
President of the corporation. Notably, Gilbert,
during the entire controversy that started with In Santamaria v. Hongkong and Shanghai
his 2004 complaint, failed to rebut the NBI Banking Corp.,61 this Court held that when a
Report which authenticated all the signatures stock certificate is endorsed in blank by the
appearing in the stock certificates. owner thereof, it constitutes what is termed as
"street certificate," so that upon its face, the
Even beyond the vacant pleadings, its nature holder is entitled to demand its transfer into
as nuisance is palpable. To recapitulate, it his name from the issuing corporation. Such
was only after five years following the certificate is deemed quasi-negotiable, and as
redistribution of GoodGold’s shares of stock, such the transferee thereof is justified in
that Gilbert filed with the RTC of Manila, a
believing that it belongs to the holder and In the early case of Gayondato v. Treasurer of
transferor.1âwphi1 the Philippine Islands, this Court defines trust,
in its technical sense, as "a right of property,
While there is a contrary ruling, as an real or personal, held by one party for the
exception to the general rule enunciated benefit of another." Differently stated, a trust is
above, what the Court held in Neugene "a fiduciary relationship with respect to
Marketing Inc., et al., v CA,62 where stock property, subjecting the person holding the
certificates endorsed in blank were stolen same to the obligation of dealing with the
from the possession of the beneficial owners property for the benefit of another person."
thereof constraining this Court to declare the
transfer void for lack of delivery and want of Both Lincoln Continental and Gilbert claim that
value, the same cannot apply to Gilbert the latter holds legal title to the shares in
because the stock certificates which Gilbert question. But record shows that there is no
endorsed in blank were in the undisturbed evidence to support their claim. Rather, the
possession of his parents who were the evidence on record clearly indicates that the
beneficial owners thereof and who themselves stock certificates representing the contested
as such owners caused the transfer in their shares are in respondents' possession.
names. Indeed, even if Gilbert’s parents were Significantly, there is no proof to support his
not the beneficial owners, an endorsement in allegation that the transfer of the shares of
blank of the stock certificates coupled with its stock to respondent sisters is fraudulent. As
delivery, entitles the holder thereof to demand aptly held by the Court of Appeals, fraud is
the transfer of said stock certificates in his never presumed but must be established by
name from the issuing corporation.63 clear and convincing evidence. Gilbert failed
to discharge this burden. We agree with the
Interestingly, Gilbert also used the above Court of Appeals that respondent sisters own
discussed reasons as his arguments in Gilbert the shares of stocks, Gilbert being their mere
Guy v. Court of Appeals, et a.l,64 a case trustee. 66 (Underlining supplied).
earlier decided by this Court. In that petition,
Lincoln Continental, a corporation purportedly This Court finds no cogent reason to divert
owned by Gilbert, filed with the RTC, Branch from the above stated ruling, these two cases
24, Manila, a Complaint for Annulment of the having similar facts.
Transfer of Shares of Stock against Gilbert’s
siblings, including his mother, Simny. The WHEREFORE, premises considered, the
complaint basically alleged that Lincoln petitions in G.R. Nos. 189486 and 189699 are
Continental owns 20,160 shares of stock of hereby GRANTED. The Decision dated 27
Northern Islands; and that Gilbert’s siblings, in May 2009 of the Court of Appeals in CA-G .R.
order to oust him from the management of SP No. 106405 and its Resolution dated 03
Northern Islands, falsely transferred the said September 2009 are REVERSED and SET
shares of stock in his sisters’ names.65 This ASIDE. The Court DECLARES that SEC-
Court dismissed Gilbert’s petition and ruled in MC08-112 now pending before the Regional
favor of his siblings viz: Trial Court, Branch 211, Mandaluyong City, is
a nuisance suit and hereby ORDERS it to
One thing is clear. It was established before IMMEDIATELY DISMISS the same for
the trial court, affirmed by the Court of reasons discussed herein.
Appeals, that Lincoln Continental held the
disputed shares of stock of Northern Islands
merely in trust for the Guy sisters. In fact, the
evidence proffered by Lincoln Continental
itself supports this conclusion. It bears
emphasis that this factual finding by the trial
court was affirmed by the Court of Appeals,
being supported by evidence, and is,
therefore, final and conclusive upon this
Court.

Article 1440 of the Civil Code provides that:

"ART. 1440. A person who establishes a trust


is called the trustor; one in whom confidence
is reposed as regards property for the benefit
of another person is known as the trustee; and
the person for whose benefit the trust has
been created is referred to as the beneficiary."

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