lao vs lao

7/21/2019 Lao vs Lao

1/9

G.R. No. 170585 October 6, 2008

DAVID C. LAO and JOS C. LAO,petitioners,

vs.

DIONISIO C. LAO,respondents.

D E C I S I O N

R!S, R."., J.#

IS the mere inclusion as shareholder in the General Information Sheet of a corporation sufficient

proof that one is a shareholder in such corporation?

This is the main question for resolution in this petition for revie on certiorariof the !mended

Decision"of the Court of !ppeals #C!$ affirmin% the Decision&of the 'e%ional Trial Court #'TC$,

(ranch "", Ce)u Cit* in CE(+&-"+S'C.

"$e %act&

On Octo)er ", "--/, petitioners David and 0ose 1ao filed a petition ith the Securities and

E2chan%e Commission #SEC$ a%ainst respondent Dionisio 1ao, president of 3acific 4oundr* Shop

Corporation #34SC$. 3etitioners pra*ed for a declaration as stoc5holders and directors of 34SC,

issuance of certificates of shares in their name and to )e alloed to e2amine the corporate )oo5s of

34SC.6

3etitioners claimed that the* are stoc5holders of 34SC )ased on the General Information Sheet filed

ith the SEC, in hich the* are named as stoc5holders and directors of the corporation. 3etitioner

David 1ao alle%ed that he acquired 77 shares in 34SC from his father, 1ao 3on% (ao, hichshares ere previousl* purchased from a certain 8ipolito 1ao. 3etitioner 0ose 1ao, on the other

hand, alle%ed that he acquired 666 shares from respondent Dionisio 1ao himself.7

'espondent denied petitioners9 claim. 8e alle%ed that the inclusion of their names in the

corporation9s General Information Sheet as inadvertentl* made. 8e also claimed that petitioners

did not acquire an* shares in 34SC )* an* of the modes reco%ni:ed )* la, namel* su)scription,

purchase, or transfer. Since the* ere neither stoc5holders nor directors of 34SC, petitioners had no

ri%ht to )e issued certificates or stoc5s or to inspect its corporate )oo5s.

On 0une "-, &;;;, 'epu)lic !ct /


2/9

R"C D'&(o&'t'on

On Decem)er "-, &;;", the 'TC rendered a 0oint Decision/ith the folloin% pertinent disposition,

thus

@8E'E4O'E, in vie of the fore%oin% premises, =ud%ment is here)* rendered )* the Courtin these cases

#a$ Den*in% the petition of David C. 1ao and 0ose C. 1ao to )e reco%ni:ed as stoc5holders

and directors of 3acific 4oundr* Shop Corporation, to )e issued certificates of stoc5 of said

corporation and to )e alloed to e2ercise ri%hts of stoc5holders of the same corporation. -

In den*in% the petition, the 'TC ratiocinated

2 2 2 Thus, the petitioners David C. 1ao and 0ose C 1ao do not appear to have )ecome

re%istered stoc5holders of 3acific 4oundr* Shop corporation, as the* do not appear to have

acquired shares of stoc5 of the corporation either as su)scri)ers or )* purchase from aholder of outstandin% shares or )* purchase from the corporation of additionall* issued

shares.

2 2 2 2

Secondl*, the claim or contention of the petitioners David C. 1ao and 0ose C. 1ao is antin%

in merit )ecause the* have no stoc5 certificates in their names. ! stoc5 certificate, as e

ver* ell 5no, is the evidence of onership of corporate stoc5. If ever the said petitioners

acquired shares of stoc5 of the corporation, there is a need for their acquisition of said

shares to )e re%istered in the Stoc5 and Transfer (oo5 of the corporation. 'e%istration is

necessar* to entitle a person to e2ercise the ri%hts of a stoc5holder and to hold office asdirector or other offices #"& 4letcher 676$. That is h* it is e2plicitl* provided in Section 6 of

the Corporation Code of the 3hilippines that no transfer of shares of stoc5 shall )e valid until

the transfer is recorded in the )oo5s of the corporation. !n unre%istered transfer is not valid

as a%ainst the corporation #Uson vs. Diosomito, " 3hil. 6$. ! transfer must )e re%istered,

or at least notice thereof %iven to the corporation for the purpose of re%istration, )efore the

transferee can acquire an* ri%ht as a%ainst the corporation other than the ri%ht to have the

transfer re%istered #"& 4letcher 66-$. !n unrecorded transferee can not en=o* the status of a

stoc5holder, he can not vote nor he voted for #Price & Sulu Development Corp. vs. Martin, /

3hil.


3/9

3etitioners appealed to the C!.

CA D'&(o&'t'on

On Aa* &


4/9

On 0ul* "", &;;, respondent moved to inhi)it"the ponente of the C! decision, 0ustice Aa%pale,

from resolvin% his pendin% motion for reconsideration.

On 0ul* &&, &;;, 0ustice Aa%pale issued a 'esolution"voluntaril* inhi)itin% himself from further

participatin% in the resolution of the pendin% motion for reconsideration. 0ustice Aa%pale stated

!lthou%h the undersi%nedponentedoes not a%ree ith the imputations of respondent+

appellee and that the same are not an* of those %rounds mentioned in 'ule "6< of the

'evised 'ules of Court, nonetheless the ponente voluntaril* inhi)its himself from further

handlin% this case in order to free the entire court of the sli%htest suspicion of )ias and

pre=udice a%ainst the respondent+appellee."s to )elieve such alle%ation. The

part* alle%in% the same has the )urden of proof to present evidence necessar* to esta)lish

his claim, unfortunatel* hoever petitioners failed to do so. The General Information Sheets

and the Ainutes of the Aeetin%s adduced )* petitioners+appellants do not prove such

alle%ation of fraud or deceit. In the a)sence thereof, the presumption remains that private

transactions have )een fair and re%ular.

!s for the alle%ed shares of 0ose C. 1ao, @e find his position identicall* situated ith David

C. 1ao. There is also no evidence on record that ould clearl* esta)lish ho he acquired

said shares of 34SC. 0ose C. 1ao failed to sho that there as endorsement and deliver* to

him of the stoc5 certificates or an* documents shoin% such transfer or assi%nment. In fact,

the 666 shares )ein% claimed )* him is still under the name of Dionisio C. 1ao as reflected

)* the Certificate of Stoc5 as ell as in 34SC9s Stoc5 and Transfer (oo5. Corollar*, 0ose C.

1ao could not )e considered a stoc5holder of 34SC in the a)sence of support reflectin% his

ri%ht to the 666 shares other than the inclusion of his name in the General Information

Sheets from "-/< to "--/ and the Ainutes of the Stoc5holder9s Aeetin% and (oard of

Director9s Aeetin%.&;

3etitioners moved for reconsideration )ut their motion as denied. &"8ence, the present petition for

revie on certiorari under 'ule 7 of the "--< 'ules of Civil 3rocedure.

I&&*e&

3etitioners raise five #$ issues for Our consideration, thus

". @hether or not the inhi)ition of 0ustice !rsenio 0. Aa%pale is proper hen there is no

e2trinsic evidence of )ias, )ad faith, malice, or corrupt purpose on the part of 0ustice

Aa%pale, hich is required )* this 8onora)le Court in its decision in Webb, et al. v. People

of the Philippines, &


6/9

to the decision of thisonorable Court in !an v. Securities and "#chan$e Commission, &;

SC'! * 1am Tion%, former Corporate Secretar*,

the Ainutes of the !nnual Stoc5holders Aeetin% of 34SC on 0anuar* &/, "-//, and the

Ainutes of Aeetin% of the (oard of Directors on 0anuar* &/, "-//, mentioned )* 0ustice

Aa%pale in hisponencia, are sufficient proof of petitioners onership of stoc5s in the

corporation.

. @hether or not respondent is stopped from questionin% petitioners9 onership of stoc5s in

the corporation in vie of his admissions and representations in the General Information

Sheets he su)mitted to the Securities and E2chan%e Commission from "-/< to "--/ thatpetitioners ere stoc5holders and officers of the corporation.&&

Essentiall*, onl* to #&$ issues are raised in this petition. The first concerns the voluntar* inhi)ition of

0ustice Aa%pale, hile the second involves the su)stantive issue of hether or not petitioners are

indeed stoc5holders of 34SC.

O*r R*+'n

@e den* the petition.

Vo+*ntar- 'n$'b't'on '& 't$'n t$e &o*nd d'&cret'on o/ a=ud%e.

3etitioners claim that the motion to inhi)it 0ustice Aa%pale from resolvin% the pendin% motion for

reconsideration as improper and unethical. The* assert that the )ias and pre=udice %rounds

alle%ed )* private respondent ere unsu)stantiated and, orse, constituted proscri)ed forum

shoppin%. The* ar%ue that 0ustice Aa%pale should have resolved the pendin% motion, instead of

voluntaril* inhi)itin% himself from the case.

In cases of voluntar* inhi)ition, the la leaves to the sound discretion of the =ud%e the decision to

decide for himself the question of hether or not he ill inhi)it himself from the case. Section ", 'ule

"6< of the 'ules of Court provides

Section ". Dis%ualification of ud$es. + No =ud%e or =udicial officer shall sit in an* case in

hich he, or his ife or child, is pecuniaril* interested as heir, le%atee, creditor, or otherise,

or in hich he is related to either part* ithin the si2th de%ree of consan%uinit* or affinit*, or

to counsel ithin the fourth de%ree, computed accordin% to the rules of the civil la, or in

hich he has )een e2ecutor, administrator, %uardian, trustee, or counsel, or in hich he has

presided in an* inferior court hen his rulin% or decision is the su)=ect of revie, ithout the

ritten consent of all parties in interest, si%ned )* them and entered upon the record.
http://www.lawphil.net/judjuris/juri2008/oct2008/gr_170585_2008.html#fnt22http://www.lawphil.net/judjuris/juri2008/oct2008/gr_170585_2008.html#fnt22


7/9

! =ud%e ma*, in the e2ercise of his sound discretion, disqualif* himself from sittin% in a case,

for =ust or valid reasons other than those mentioned a)ove.

8ere, 0ustice Aa%pale voluntaril* inhi)ited himself in order to free the entire court FC! of the

sli%htest suspicion of )ias and pre=udice 2 2 2.&6@e certainl* cannot nullif* the decision of 0ustice

Aa%pale recusin% himself from the case )ecause that is a matter left entirel* to his discretion. Norcan @e fault him for doin% so. No =ud%e should preside in a case in hich he feels that he is not

holl* free, disinterested, impartial, and independent.

@e a%ree ith petitioners that it ma* seem unpalata)le and even revoltin% hen a losin% part*

see5s the disqualification of a =ud%e ho had previousl* ruled a%ainst him in the hope that a ne

=ud%e mi%ht )e more favora)le to him. (ut @e cannot ta5e that )asic proposition too far. That 0ustice

Aa%pale opted to voluntaril* recuse himself from the appealed case is alread* fait accompli. It is, in

popular idiom, ater under the )rid%e.

3etitioners cannot )an5 on his voluntar* inhi)ition to nullif* the !mended Decision later issued )*

the appellate court. It is hi%hl* specious to assume that 0ustice Aa%pale ould have ruled in favor ofpetitioners on the pendin% motion for reconsideration if he too5 a different course and opted to sta*

on ith the case. It is also illo%ical to presume that the !mended Decision ould not have )een

issued ith or ithout the participation of 0ustice Aa%pale. The !mended Decision is too far

removed from the issue of voluntar* inhi)ition. It does not follo that petitioners ould )e )etter off

ere it not for the voluntar* inhi)ition.

et't'oner& /a'+ed to (roe t$at t$e- are &$are$o+der& o/ S%C.

3etitioners insist that the* are shareholders of 34SC. The* claim purchasin% shares in 34SC.

3etitioner David 1ao alle%es that he acquired 77 shares in the corporation from his father, 1ao

3on% (ao, hich shares ere previousl* purchased from a certain 8ipolito 1ao. 3etitioner 0ose 1ao,on the other hand, alle%es that he acquired 666 shares from respondent Dionisio 1ao.

'ecords, hoever, disclose that petitioners have no certificates of shares in their name. ! certificate

of stoc5 is the evidence of a holder9s interest and status in a corporation. It is a ritten instrument

si%ned )* the proper officer of a corporation statin% or ac5noled%in% that the person named in the

document is the oner of a desi%nated num)er of shares of its stoc5.&7It isprima facieevidence that

the holder is a shareholder of a corporation.

Nor is there an* ritten document that there as a sale of shares, as claimed )* petitioners.

3etitioners did not present an* deed of assi%nment, or an* similar instrument, )eteen 1ao 3on%

(ao and 8ipolito 1aoB or )eteen 1ao 3on% (ao and petitioner David 1ao. There is li5eise no deedof assi%nment )eteen petitioner 0ose 1ao and private respondent Dionisio 1ao.

!)sent a ritten document, petitioners must prove, at the ver* least, possession of the certificates of

shares in the name of the alle%ed seller. !%ain, the* failed to prove possession. The* failed to prove

the due deliver* of the certificates of shares of the sellers to them. Section 6 of the Corporation

Code provides
http://www.lawphil.net/judjuris/juri2008/oct2008/gr_170585_2008.html#fnt23http://www.lawphil.net/judjuris/juri2008/oct2008/gr_170585_2008.html#fnt24http://www.lawphil.net/judjuris/juri2008/oct2008/gr_170585_2008.html#fnt24http://www.lawphil.net/judjuris/juri2008/oct2008/gr_170585_2008.html#fnt23http://www.lawphil.net/judjuris/juri2008/oct2008/gr_170585_2008.html#fnt24


8/9

Sec. 6. Certificate of stoc' and transfer of shares. + The capital stoc5 of stoc5 corporations

shall )e divided into shares for hich certificates si%ned )* the president or vice+president,

countersi%ned )* the secretar* or assistant secretar*, and sealed ith the seal of the

corporation shall )e issued in accordance ith the )*+las. Shares of stoc5 so issued are

personal propert* and ma* )e transferred )* deliver* of the certificate or certificates

indorsed )* the oner or his attorne*+in+fact or other person le%all* authori:ed to ma5e thetransfer. No transfer, hoever, shall )e valid, e2cept as )eteen the parties, until the transfer

is recorded in the )oo5s of the corporation so as to sho the names of the parties to the

transaction, the date of the transfer, the num)er of the certificate or certificates and the

num)er of shares transferred.

In contrast, respondent as a)le to prove that he is the oner of the disputed shares. 8e had in his

possession the certificates of stoc5s of 8ipolito 1ao. The certificates of stoc5s ere also properl*

endorsed to him. Aore importantl*, the transfer as dul* re%istered in the stoc5 and transfer )oo5 of

the corporation. Thus, as )eteen the parties, respondent has proven his ri%ht over the disputed

shares. !s correctl* ruled )* the C!

(u contraire, Dionisio C. 1ao as a)le to sho throu%h competent evidence that he is

undenia)l* the oner of the disputed shares of stoc5s )ein% claimed )* David C. 1ao. 8e

as a)le to validate that he has the ph*sical possession of the certificates coverin% the

shares of 8ipolito 1ao. Nota)l*, it as 8ipolito 1ao ho properl* endorsed said certificates to

herein Dionisio 1ao and that such transfer as re%istered in 34SC9s Stoc5 and Transfer

(oo5. These circumstances are more in accord ith the valid transfer contemplated )*

Section 6 of the Corporation Code.&

"$e )ere 'nc+*&'on a& &$are$o+der o/ (et't'oner& 'n t$e Genera+ In/or)at'on S$eet o/ %SC '&

'n&*//'c'ent (roo/ t$at t$e- are &$are$o+der& o/ t$e co)(an-.

3etitioners )an5 heavil* on the General Information Sheet su)mitted )* 34SC to the SEC in hich

the* ere named as shareholders of 34SC. The* claim that respondent is no estopped from

contestin% the General Information Sheet.

@hile it ma* )e true that petitioners ere named as shareholders in the General Information Sheet

su)mitted to the SEC, that document alone does not conclusivel* prove that the* are shareholders

of 34SC. The information in the document ill still have to )e correlated ith the corporate )oo5s of

34SC. !s )eteen the General Information Sheet and the corporate )oo5s, it is the latter that is

controllin%. !s correctl* ruled )* the C!

@e a%ree ith the trial court that mere inclusion in the General Information Sheets asstoc5holders and officers does not ma5e one a stoc5holder of a corporation, for this ma*

have come to pass )* mista5e, e2pedienc* or ne%li%ence. !s professed )* respondent+

appellee, this as done merel* to compl* ith the reportorial requirements ith the SEC.

This ma*)e a%ainst the la )ut practice, no matter ho lon% continued, cannot %ive rise to

an* vested ri%ht.


9/9

If a transferee of shares of stoc5 ho failed to re%ister such transfer in the Stoc5 and

Transfer (oo5 of the Corporation could not e2ercise the ri%hts %ranted unto him )* la as

stoc5holder, ith more reason that such ri%hts )e denied to a person ho is not a

stoc5holder of a corporation. 3etitioners+appellants never secured such a standin% as

stoc5holders of 34SC and consequentl*, their petition should )e denied.&

It should )e stressed that the )urden of proof is on petitioners to sho that the* are shareholders of

34SC. This is so )ecause the* do not have an* certificates of shares in their name. Aoreover, the*

do not appear in the corporate )oo5s as re%istered shareholders. If the* had certificates of shares,

the )urden ould have )een ith 34SC to prove that the* are not shareholders of the corporation.

!s discussed, petitioners failed to hurdle their )urden. There is no ritten document evidencin% their

claimed purchase of shares. @e note that petitioners a%reed to su)mit their case for decision )ased

merel* on the documents on record. 8ence, no testimonial evidence as presented to prove the

alle%ed purchase of shares. !)sent an* documentar* or testimonial evidence, the )are assertion of

petitioners that the* are shareholders cannot prevail.

!ll told, @e a%ree ith the 'TC and C! decision that petitioners are not shareholders of 34SC.

3R%OR, the petition is DNIDand the appealed !mended Decision A%%IR4D IN %LL.

SO ORDRD.

lao vs lao

Documents