DISPOSITIVE:

SUBJECTS/DOCTRINES/DIGEST:

WHAT IS THE CENTRAL ISSUE?

THE ISSUE IS: WHETHER CHRISTINA AND JOHN RUSTY ARE STOCKHOLDERS OF LC LOPEZ AND CONQUEROR?

WHAT IS THE PRIMARY BASIS FOR DETERMINING THE SHAREHOLDERS OF A CORPORATION?

THE STOCK AND TRANSFER BOOK. IT IS ONLY WHEN THE TRANSFER OF SHARES HAS BEEN RECORDED IN THE STOCK AND TRANSFER BOOK THAT A CORPORATION MAY RIGHTFULLY REGARD THE TRANSFEREE AS ONE OF ITS STOCKHOLDERS.

WHAT IS THE BASIS FOR SUCH RULE?

THE CORPORATION CODE PROVIDES THAT “NO TRANSFER OF SHARES SHALL BE VAID EXCEPT AS BETWEEN THE PARTIES UNTIL THE TRANSFER IS RECORDED IN THE BOOKS OF THE CORPORATION SHOWING THE NAMES OF THE PARTIES TO THE TRANSACTION, THE DATE OF THE TRANSFER, THE NUMBER OF THE CERTIFICATE OR CERTIFICATES AND THE NUMBER OF SHARES  TRANSFERRED.”

DOES THE RULE ADMITS OF EXCEPTIONS?

YES LIKE IN SITUATIONS WHERE PAROL EVIDENCE MAY BE USED TO SUPPLY ADMISSIONS, EXPLAIN AMBIGUITIES OR TO IMPUGN THE CORPORATE RECORDS.

BUT DOES THE EXCEPTIONS APPLY TO THIS CASE?

NO. THE GENERAL RULE REMAINS APPLICABLE.

BUT THE GIS OF BOTH LC LOPEZ AND CONQUEROR INDICATE THAT CHRISTINA AND JOHN RUSTY ARE STOCKHOLDERS OF THE RESPECTIVE CORPORATIONS. IS THIS NOT SUFFICIENT TO DECLARE THEM AS STOCKHOLDERS?

NO. THEIR NAMES MUST APPEAR AS STOCKHOLDERS IN THE STOCK AND TRANFER BOOK. MERE INCLUSION AS SHAREHOLDER IN THE GIS IS  BY ITSELF INSUFFICIENT PROOF THAT SUCH PERSON IS A SHAREHOLDER. BETWEEN THE STOCKHOLDER AND TRANSFER BOOK AND THE GIS THE FORMER IS CONTROLLING.

THE TESTIMONIES OF LOLITO, BENEDICTO L. VILLAFUERTE AND TERESITA FERNANDO CONFIRMED THAT CHRISTINA AND JOHN RUSTY ARE STOCKHOLDERS IN SUPPORT OF THE CLAIMS MADE IN THE GIS. ARE THESE NOT SUFFICIENT TO PROVE THEIR BEING STOCKHOLDERS?

NOT SUFFICIENT TO PROVE THAT THEY ARE STOCKHOLDERS AND TO SUCCESSFULLY CONTRADICT THE STOCK AND TRANSFER BOOKS. THIS IS BASED ON JURISPRUDENCE.

WHAT OTHER DOCUMENT MAY BE PRESENTED TO PROVE THAT ONE IS A STOCKHOLDER?

IN THE CASE OF LAO VS LAO A CERTIFICATE OF STOCK IS THE EVIDENCE OF A HOLDER’S INTEREST AND STATUS IN A CORPORATION.

WHAT IS A CERTIFICATE OF STOCK?

IT IS A WRITTEN INSTRUMENT SIGNED BY THE PROPER OFFICER OF A CORPORATION STATING OR ACKNOWLEDING THAT THE PERSON NAMED IN THE DOCUMENT IS THE OWNER OF A DESIGNATED NUMBER OF SHARES OF ITS STOCK. IT IS A PRIME FACIE EVIDENCE  THAT THE HOLDER IS A SHAREHOLDER OF A CORPORATION.

WHAT ELSE DID THE COURT OBSERVED IN THIS LAO VS LAO CASE?

THE COURT NOTED THAT THERE WAS NO WRITTEN DOCUMENT PROVING SALE OR TRANSFER OF SHARES.

IF THERE ARE NO CERTIFICATE OF SHARE IN ONE’S NAME OR ANY DOCUMENT EVIDENCING TRANSFER OF SHARES WHAT OTHER PROOF IS SUFFICIENT.

ABSENT A WRITTEN DOCUMENT ONE MUST PROVE AT THE VERY LEAST POSSESSION OF THE CERTIFICATE OF STOCK OF THE TRANSFERROR.

WHAT DID THE COURT OBSERVED IN THE CASE OF CHRISTINA AND JOHN RUSTY?

THAT THEY ALSO DO NOT HAVE IN THEIR POSSESSION ANY CERTIFICATES OF STOCK NOR HAVE THEY ANY DOCUMENT TO PROVE OWNERSHIP OF SHARES AND THERE HAVE BEEN NO ALLEGATIONS OR EXPLANATIONS OF HOW THEY COME TO OWN THE SHARES.

WHAT ELSE DID THE COURT OBSERVED IN THE CASE OF CHRISTINA AND JOHN RUSTY?

THAT THERE ARE OTHER STOCKHOLDERS LISTED IN THE STOCK AND TRANSFER BOOK HOLDING THE SHARES OF CHRISTINA AND JOHN RUSTY.

TO READ THE DECISION, JUST CLICK/DOWNLOAD THE FILE BELOW. IF FILE DOES NOT APPEAR ON SCREEN GO TO DOWNLOAD. IT IS THE FIRST ITEM. OPEN IT.

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