Vicente C. Ponce vs. Alsons Cement Corporation

[SEC-AC NO. 545. January 6, 1997.] VICENTE C. PONCE , plaintiff-appellant , vs. ALSONS CEMENT CORPORATION & FRANCISCO M. GIRON, JR. , defendant-appellees . D E C I S I O N Before the Commission en banc is an appeal from the Order dated February 29, 1996, of the Hearing Officer in SEC Case No. 01-96-5240 , granting the motion to dismiss the complaint filed by Vicente Ponce against the herein defendant-appellees praying for the issuance of a certificate of stock in plaintiff-appellant's name. llcd The complaint alleges seriatem: that the late Fausto G. Gaid was an incorporator of Victory Cement Corporation (VCC), having subscribed to and fully paid 239,500 shares of said corporation; that on February 8, 1968, plaintiff-appellant and Fausto Gaid executed a "Deed of Undertaking" and "Indorsement" whereby the latter acknowledged that the former is the owner of said shares and he was therefore assigning them to the plaintiff-appellant; and that from the time of incorporation, no certificate of stock corresponding to the 239,500 subscribed and fully paid shares of Gaid were issued in his name nor in the name of the plaintiff-appellant. On February 9, 1996, the defendant-appellees filed a motion to dismiss based on lack of cause of action, that plaintiff-appellant is not the real party in interest, statute of limitations, and laches. An opposition to the foregoing motion was filed and an order was issued on February 29, 1996 dismissing the complaint. Consequently, plaintiff-appellant assigns errors of the Hearing Officer on appeal such as: 1. in holding that the complaint fails to state a cause of action; 2. in holding that mandamus is not proper and available to plaintiff-appellant; 3. in holding that the plaintiff-appellant is not the real party-in-interest. Vis-a-vis the first assignment of error that the Hearing Officer erred in holding that the complaint fails to state a cause of action, a thorough review thereof readily shows that the complaint alleges that the plaintiff-appellant and Fausto Gaid executed a "Deed of Undertaking" and "Indorsement" on February 8, 1968, when Gaid acknowledges that the plaintiff was the owner of said shares and he was therefore assigning/endorsing the same to the plaintiff. Despite repeated demands, the defendant-appellees allegedly refused and continue to refuse without any justifiable reason to issue to the plaintiff these stock certificates. A motion to dismiss based on failure to state a cause of action should be deemed to have admitted the facts alleged in the complaint. Hypothetically admitting these allegation to be true, plaintiff-appellant has a legitimate right to enforce against the defendant-appellees. Moreover, there exists herein a cause of action, a term defined by Justice Ruperto Martin in his Rules of Court in the Philippines, Civil Procedure, p. 147 as consisting of two factors: (1) the plaintiff's-appellant's primary right and the defendant-appellees' corresponding primary duty, whatever may be the subject to which they relate-persons, character, property or contract; and (2) the delict or wrongful act or omission of the defendant, by which the primary right and duty has been violated. In addition it is the rule that the sufficiency of the complaint can only be determined by considering the facts alleged in the complaint and no other as laid down in Dimayuga vs. Dimayuga, G.R. No. L-6740, April 29, 1955, 96 Phil. 859, Marabilles vs. Quito, G.R. No. L-10408, October 18, 1956, 100 Phil. 64, Acua vs. Batac Producers Cooperative, G.R. No. L-20333, June 30, 1967. Furthermore, in the case of Asejo vs. Leonoso, G.R. No. 9246, May 26, 1947, 78 Phil. 467, no evidence may be allowed and the issue should only be determined in the light of allegations of the complaint. Plaintiff-appellant stresses that the SEC Rules do not require that the complaint or petition for mandamus should allege that "there is no other plain, speedy and adequate remedy available to plaintiff in the ordinary course of law". Mere absence of an allegation of "no other speedy remedy, . . ." in the complaint does not automatically make the latter deficient in substance. However, defendant-appellees countered that the complaint or petition for mandamus must allege under oath, among others, that plaintiff-appellant has "no other plain, speedy, and adequate remedy . . . in the ordinary course of law" because if such other remedy is available, the action for mandamus would be improper. Defendant-appellees point out that in such a situation the rights of the parties have to be threshed out in an ordinary action invoking the ruling in the case of Rivera vs. Florendo, G.R. No. L-57586, October 6, 1986. This Commission en banc finds that although the complaint is entitled Mandamus and Damages, it contains allegations therein that indicate a case for mandamus or specific performance and damages, praying the defendant-appellees corporation and its Corporate Secretary to issue stock certificates in the name of plaintiff-appellant thereby explaining the reason why the complaint for mandamus does not have to contain the aforementioned clause "no other plain, speedy, and adequate remedy . . .". Likewise, the jurisprudence applicable herein is the case of Abejo vs. de la Cruz G.R. No. L-63558, May 19, 1987, where the Supreme Court ruled that: ". . . As the SEC maintains, "There is no requirement that a stockholder of a corporation must be a registered one in order that the Securities and Exchange Commission may take cognizance of a suit seeking to enforce his rights as such stockholder". This is because the SEC by express mandate has "absolute jurisdiction, supervision and control over all corporations" and is called upon to enforce the provisions of the Corporation Code, among which is the stock purchaser's right to secure the corresponding certificate in his name under the provisions of Section 63 of the Code. Needless to say, any problem encountered in securing the certificates of stock representing the investment made by the buyer must be expeditiously dealt with through administrative mandamus proceedings with the SEC, rather than through the usual tedious regular court procedure. . . ." Applying this principle in the case on hand, a transfer or assignment of stocks need not be registered first before the Commission can take cognizance of the case to enforce his rights as a stockholder. Also, the problem encountered in securing the certificates of stock made by the buyer must be expeditiously taken up through the so-called administrative mandamus proceedings with the SEC than in the regular courts. LexLib Plaintiff- appellant assigns as third error committed by the Hearing Officer in holding that the former is not the real party in interest. Defendant-appellees insist that Gaid and/or his heirs own the substantial interest to bring the action against them. The Commission en banc finds the Hearing Officer to have erred in holding that plaintiff-appellant is not the real party in interest. Jurisprudence on the matter is found in the Supreme Court ruling that: "The real party in interest is the party who stands to be benefited or injured by the judgment or the party entitled to the avails of the suit. "Interest" within the meaning of the rules means material interest, an interest in issue and to be affected by the decree, as distinguished from mere incidental interest." (Francisco, p. 209, cited in House International vs. IAC, G.R. No. 75287, June 30, 1987 and Samahan ng mga Nangungupahan sa Azcarraga vs. C.A., G.R. No. L-68357, September 26, 1988). As appearing in the allegations of the complaint, plaintiff-appellant is the transferee of the shares of stock of Gaid and is therefore entitled to avail of the suit to obtain the proper remedy to make him the rightful owner and holder of a stock certificate to be issued in his name. Moreover, defendant-appellees failed to show that the transferor nor his heirs have refuted the ownership of the transferee. Assuming these allegations to be true, the corporation has a mere ministerial duty to register in its stock and transfer book the shares of stock in the name of the plaintiff-appellant subject to the determination of the validity of the deed of assignment in the proper tribunal. A parallel case entitled Rural Bank of Salinas vs. C.A., G.R. No. 96674, June 26, 1992 infers that the heir of the owner of the shares of stock filed a complaint before the Court of First Instance for annulment of the Deed of Assignment for being fictitious and ante-dated. The Supreme Court held that: "For the petitioner Rural Bank of Salinas to refuse registration of the transferred shares in its stock and transfer book, which duty is ministerial on its part is to render nugatory and ineffectual the spirit and intent of Section 63 of the Corporation Code. Thus, respondent Court of Appeals did not err in upholding the decision of the respondent SEC affirming the decision of the hearing officer directing the registration of the 473 shares in the stock and transfer book in the name of private respondents. At all events, the registration is without prejudice to the proceedings in court to determine the validity of the Deeds of Assignment of the shares in question." IN VIEW OF THE FOREGOING COGENT CONSIDERATIONS, the Commission en banc hereby reverses and set aside the Order dated February 29, 1996 and the Hearing Officer of SEC Case No. 01-96-5240 is hereby directed to proceed with the hearing of the aforementioned case. SO ORDERED. (SGD.) PERFECTO R. YASAY, JR. Chairman (did not participate) (SGD.) FE ELOISA C. GLORIA (SGD.) EDIJER A. MARTINEZ Associate Commissioner Associate Commissioner (did not participate) (SGD.) ROSALINDA U. CASIGURAN (SGD.) DANILO L. CONCEPCION Associate Commissioner Associate Commissioner