Case Summary (G.R. No. 96674)
Key Dates and Documentary Background
June 10, 1979: Clemente G. Guerrero executed a Special Power of Attorney in favor of his wife, Melania Guerrero, authorizing her to sell, dispose of or otherwise transfer 473 shares registered in his name. February 27, 1980: pursuant to that power, Melania Guerrero (as attorney-in-fact) executed a Deed of Assignment transferring 472 shares to Luz Andico (457), Wilhelmina Rosales (10) and Francisco Guerrero, Jr. (5). June 22, 1980 (two days before Clemente Guerrero’s death on June 24, 1980): Melania Guerrero executed a Deed of Assignment for the remaining 1 share in favor of Francisco Guerrero, Sr. The assignee sought cancellation of Clemente’s certificates and issuance of new certificates in their names; the Rural Bank refused registration.
Procedural History
December 5, 1980: Melania Guerrero filed with the SEC a petition for mandamus against the Rural Bank and its officers (SEC Case No. 1979). Petitioners filed an answer and counterclaim (December 19, 1980) asserting that the shares constituted part of the deceased’s estate and that estate administration and settlement should precede any transfer. January 29, 1981: Maripol Guerrero (legally adopted daughter) moved to intervene, alleging a pending petition for administration filed November 26, 1980 (Special Proceedings No. 9400, RTC Pasig) and claiming the deeds were fictitious, antedated, possibly donations at undervalue, and prejudicial to her inheritance. The SEC hearing officer denied intervention and later (December 10, 1984) granted the writ of mandamus directing the Rural Bank to cancel the old certificates and issue new ones in the assignees’ names and to pay dividends for 1981–1984. The SEC En Banc affirmed; the Court of Appeals affirmed; the Supreme Court (Second Division) likewise affirmed and dismissed the petition for review.
Issues Presented
(1) Whether the SEC may grant the remedy of mandamus to compel a corporation to register and transfer stock when petitioners claiming registration are not yet stockholders in the corporation’s books. (2) Whether there were valid reasons to deny registration, specifically: (a) a pending RTC controversy over ownership (estate administration); (b) allegations that the Deeds of Assignment were fictitious and antedated; and (c) possible prejudice to inheritance rights and tax/creditor implications that would render mandamus improper.
Applicable Law and Constitutional Basis
The decision applies the 1987 Constitution as the operative constitution for cases decided after 1990. Statutory and doctrinal authorities applied in the reasoning include P.D. No. 902-A, Section 5(b) (conferring original and exclusive jurisdiction on the SEC over intracorporate controversies), and Section 63 of the Corporation Code (shares are personal property; transfers by delivery of endorsed certificates are valid inter partes only when recorded in the corporation’s books). The Court relied on prior jurisprudence interpreting Section 63 and on treatise authority describing the secretary’s ministerial role and the availability of mandamus to compel corporate registration.
Jurisdictional Analysis
The Court treated the controversy as an intracorporate controversy because it directly involves the transfer, cancellation and issuance of shares by the corporation, i.e., a dispute between stockholders/claimants and the corporation. Under P.D. No. 902-A, Section 5(b), the SEC has original and exclusive jurisdiction to hear and decide intracorporate controversies. The Court cited authority indicating that intracorporate controversies include disputes between a stockholder and the corporation and that no exception or qualification exists to remove such matters from SEC jurisdiction.
Legal Analysis on Transfer and Registration
Section 63 of the Corporation Code was central: shares are personal property and may be transferred by delivery of the endorsed certificate, but as between the parties a transfer is not valid until recorded in the corporation’s books. The Court relied on Fleisher v. Botica Nolasco and related authorities to explain that Section 63 imposes no restriction as to whom shares may be transferred, and that a corporation generally cannot create in its bylaws restrictions on transfers unless authorized by law. The corporation should not ordinarily inquire into or question the consideration or legality of the transaction by which stock passes. The transferee’s right to have stock registered in his name flows from ownership, and when a corporation refuses to register without good cause, mandamus will lie to compel registration.
Ministerial Duty of Corporate Officers and Mandamus
The Court emphasized that the corporate secretary’s duty to transfer and register stock is ministerial; the secretary does not adjudicate ownership disputes but performs a bookkeeping and administrative function. Authorities cited (treatise and cases) support that if the corporation refuses to register transfers without good cause, mandamus is the proper remedy to compel registration. Accordingly, the SEC and the Court of Appeals we
...continue readingCase Syllabus (G.R. No. 96674)
Title, Citation and Court
- Case reported at 285 Phil. 1016, Second Division, G.R. No. 96674, decided June 26, 1992.
- Decision penned by Justice Paras; Narvasa, C.J. (Chairman), Padilla, and Regalado, JJ., concurred; Nocon, J., on leave.
- Original pleadings and administrative proceedings involved the Securities and Exchange Commission (SEC), later reviewed by the Court of Appeals and ultimately by the Supreme Court.
Parties
- Petitioners: Rural Bank of Salinas, Inc.; Manuel Salud; Luzviminda Trias; Francisco Trias.
- Respondents: Court of Appeals; Securities and Exchange Commission; Melania A. Guerrero; Luz Andico; Wilhelmina G. Rosales; Francisco M. Guerrero, Jr.; Francisco Guerrero, Sr.
- Intervenor in SEC proceedings and civil suit: Maripol Guerrero (legally adopted daughter of the late Clemente G. Guerrero and of Melania Guerrero).
Core Controversy
- Central question: whether the respondent SEC and respondent Court of Appeals erred in compelling, by writ of mandamus, the Rural Bank of Salinas to register in its stock and transfer book the transfer of 473 shares of stock to private respondents.
- Petitioners contended the mandamus remedy was improper and that valid reasons existed to refuse registration, including:
- a pending controversy over ownership of the certificates of stock in the Regional Trial Court;
- allegations that the Deeds of Assignment were fictitious and antedated; and
- claims of possible deprivation of inheritance shares and scheme to evade estate or inheritance taxes.
Undisputed Facts
- On June 10, 1979, Clemente G. Guerrero, President of Rural Bank of Salinas, executed a Special Power of Attorney in favor of his wife, Melania A. Guerrero, authorizing her to sell, dispose of, mortgage or otherwise deal with 473 shares of the Bank registered in his name (represented by stock certificates nos. 26, 49 and 65), to execute documents therefor, and to receive and sign receipts.
- On February 27, 1980, Melania Guerrero, as Attorney-in-Fact, executed a Deed of Assignment covering 472 of the 473 shares in favor of:
- Luz Andico — 457 shares;
- Wilhelmina Rosales — 10 shares;
- Francisco Guerrero, Jr. — 5 shares.
- Two days before Clemente Guerrero’s death (June 24, 1980), Melania Guerrero, pursuant to the same Special Power of Attorney, executed a Deed of Assignment of the remaining one share in favor of Francisco Guerrero, Sr.
- Melania Guerrero presented both Deeds of Assignment to the Rural Bank of Salinas, requesting:
- registration of the transfers in the Bank’s stock and transfer book;
- cancellation of stock certificates nos. 26, 49 and 65 in the name of Clemente G. Guerrero; and
- issuance of new stock certificates in the names of the assignees.
- The Rural Bank of Salinas denied the registration request.
SEC Proceedings (SEC Case No. 1979)
- Melania Guerrero filed an action for mandamus with the SEC on December 5, 1980, docketed as SEC Case No. 1979, against the Rural Bank of Salinas, its President and Corporate Secretary.
- Petitioners filed an Answer with counterclaim on December 19, 1980, alleging that upon Clemente Guerrero’s death the 473 shares became part of his estate and that estate settlement should occur first to avoid schemes to evade estate or inheritance tax and to avoid liability to third persons or creditors.
- On January 29, 1981, Maripol Guerrero filed a motion to intervene, asserting:
- a Petition for the administration of the estate of the late Clemente G. Guerrero had been filed on November 26, 1980 with the Regional Trial Court, Pasig, Branch XI (Special Proceedings No. 9400);
- the Deeds of Assignment were fictitious and antedated;
- the conveyances were donations because considerations were below book value and assignees were close relatives of Melania Guerrero; and
- transfers would deprive her of her rightful inheritance share.
- The SEC hearing officer denied Maripol Guerrero’s motion to intervene for lack of merit; the SEC En Banc affirmed that denial on appeal.
Parallel Civil Litigation
- Intervenor Maripol Guerrero filed a complaint for annulment of the Deeds of Assignment against private respondents in the then Court of First Instance of Rizal, Quezon City Branch, docketed as Civil Case No. Q-32050, alleging the Deeds were fictitious and antedated.
- Petitioners moved before the SEC to dismiss and/or suspend hearing of SEC Case No. 1979 until Civil Case No. Q-32050 resolved the question of whether the Deeds of Assignment were fictitious, void or simulated; the SEC Hearing Officer denied this motion.
SEC Decision (Hearing Officer; En Banc)
- On December 10, 1984, the SEC Hearing Officer rendered a Decision granting the writ of mandamus prayed for by the private respondents and directing the Rural Bank of Salinas to cancel stock certificates nos. 26, 49 and 65 in the name of Clemente G. Guerrero and to issue new stock certificates covering the transferred shares in the names of the private respondents, except Melania Guerrero.
- Dispositive portion of the SEC decision (as quoted in the record):
- "WHEREFORE, judgment is hereby rendered in favor of the petitioners and against the respondents, directing the latter, particularly the corporate secretary of respondent Rural Bank of Salinas, Inc. to register in the latter's Sto
- "WHEREFORE, judgment is hereby rendered in favor of the petitioners and against the respondents, directing the latter, particularly the corporate secretary of respondent Rural Bank of Salinas, Inc. to register in the latter's Sto