Case Digest (G.R. No. 23241)
Facts:
Henry Fleischer v. Botica Nolasco Co., Inc., G.R. No. 23241. March 14, 1925, the Supreme Court, Johnson, J., writing for the Court.
Plaintiff-appellee Henry Fleischer sued Botica Nolasco Co., Inc. in the Court of First Instance of the Province of Oriental Negros on August 14, 1923, seeking an order that five shares of stock be registered in his name and P500 damages for refusal to register them. The suit originally named the board of directors as defendants; a demurrer that the corporation itself was the proper party was sustained and the complaint was amended on November 15, 1923, to name the corporation.
The amended complaint alleged that Fleischer purchased five fully paid shares (Nos. 16–20) from the original owner, Manuel Gonzalez, by endorsement and delivery; that despite repeated demands the corporation refused to register the shares in Fleischer’s name; and that this refusal caused P500 in damages. The corporation pleaded general denials and, as a special defense, invoked article 12 of its by-laws to assert a preferential/right of first refusal to repurchase the shares (allegedly at par plus dividends), alleging that its offer was refused by Fleischer and praying for judgment absolving it and for damages and costs.
At trial the material facts were undisputed: Gonzalez endorsed and delivered the certificates to Fleischer on March 11, 1923; on March 13 the corporation’s secretary-treasurer, Dr. Eduardo Miciano, offered to buy the shares for P500 under article 12; Fleischer refused and demanded registration, which Miciano refused citing the by-law. On March 13 Gonzalez also made a written statement requesting that the shares not be transferred to Fleischer and acknowledged the corporation’s preferential right; on June 14 Gonzalez attempted to withdraw that statement but on June 15 the corporation replied it was in conformity with the by-laws and had registered the shares in the name of the corporation.
On August 21, 1924, the Court of First Instance (Judge N. Capistrano) held that article 12 of the by-laws conflicted with the Corporation Law (Act No. 1459), particularly Section 35, and ordered...(Pro-only)
Issues:
- Under the Corporation Law (Act No. 1459), is article 12 of the Botica Nolasco, Inc. by-laws — which grants the corporation a preferential/right-of-first-refusal to acquire shares offered for transfer — valid or ultra vires?
- If article 12 is invalid, can its existence or Gonzalez’s earlier written statement bind a bona fide purchaser for value without notice (Henry Fleischer) so as to prevent regi...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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