Philippine Jai-Alai And Amusement Corporation

December 8, 1986 Philippine Jai-Alai And Amusement Corporation c/o Atty. Benito Cuesta Jai-Alai Building Taft Avenue, Manila Gentlemen: This relates to the minutes of the special meeting of the stockholders of Philippine Jai-Alai and Amusement Corporation, held at the Army & Navy Club, Manila, on October 27, 1986, a copy of which was furnished this Commission. llcd The original articles of incorporation of Philippine Jai-Alai and Amusement Corporation (PJAC) which was approved by this Commission on September 26, 1975, provided for five (5) directors under Article VI thereof. However, at the directors/stockholders' meetings held on December 15 and 22, 1983, respectively, the number of directors of the corporation was increased from five (5) to nine (9),and for which the corresponding certificate of filing of amended articles of incorporation was issued by this Commission on March 5, 1984. Subsequently, directors/stockholders' meetings were held anew on April 11 and 17, 1984, respectively, reducing the number of directors of PJAC from nine (9) to its original five (5).The corresponding certificate of filing of the amended articles of incorporation was issued by the Commission on May 8, 1984. Corollary thereto, Section 16 of the Corporation Code provides in part thus: "SECTION 16. Amendment of Articles of Incorporation . Unless otherwise provided by this Code or by special Law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees or written assent of the stockholders representing at least two-thirds of the outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code, or the vote or written assent of two-thirds (2/3) of the members if it be a non-stock corporation. xxx xxx xxx The amendment shall take effect upon its approval by the Securities and Exchange Commission ....".(Emphasis supplied) Considering the foregoing, the lawful number of directors of PJAC as of May 8, 1984 is five (5). Until the number of directors of PJAC is increased from five (5) to nine (9) pursuant to Section 16 of the Corporation Code, the number of directors of said corporation is limited to five (5). Hence, it is advised that another stockholders' meeting of PJAC be duly called for the purpose of electing the five (5) members of the board of directors. The minutes further revealed that the importance of the "Stock and Transfer Book" of PJAC was not considered. Anent thereto, please be advised that books and records relating to the issuance, holding and transfer of stock are subject of statutory enactments, and the keeping of proper and adequate books and records of such matter is a duty positively imposed by such provisions. The pertinent law on the matter provides thus: "SECTION 74. Books to be kept; stock transfer agent . .... Stock corporations must also keep a book to be known as the " stock and transfer book ",in which must be kept a record of all stocks in the names of the stockholders alphabetically arranged; the installments paid and unpaid on all stock for which subscription has been made, and the date of payment of any installment; a statement of every alienation, sale or transfer of stock made, the date thereof, and by and to whom made ; and such other entries as the by-laws may prescribe. . . . .". (Corporation Code of the Philippines). While shares of stock so issued are considered personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer, yet, it has to be emphasized that " No transfer, however shall be valid, except as between parties, until the transfer is recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of certificate or certificates and the number of shares transferred ." (Sec. 63 Corporation Code). It is the general rule that original books and records if they are in existence and can be produced are prima facie evidence of the matters recorded therein .(5 Fletcher, Cyc. Corps.,1967 Rev. Vol.,sec. 2196, pp. 724-725).Jurisprudence is replete of authorities to the effect that the stock and transfer books are evidence of stock ownership and voting rights for purposes of corporate elections. The following rulings, among others, are cited: "It is not to be questioned that generally speaking, books and records kept by a corporation in the regular course of its business are admissible in evidence to the same extent and under the same conditions as other private books and record".(Martine Hairdressers, Inc. v. Potomac Beauty Supply, Co.,App. D.C.,203 A2d 200, cited in Fletcher Supra.,sec. 2196). "Stock books are admissible evidence of the fact of stockholding and ownership".(Diamond v. Davies 38 NYS2d 93, affd. 265 App. Div. 919, 39 NYS 2d 412, 292 NY 552, 54 NE2d 683). "Books and records are competent prima facie evidence ...as to the contents of the books, or terms of entries therein. (Boyd's Ex'r v. First Nat. Book of Williamsburg, Kentucky, 32 Ky L Rep. 1323, 108 SW 360, cited in Fletcher, sec. 2196). "In the absence of express provision to the contrary, the rule is that the right to vote shares of stock is in the person who has the legal title, and this is to be determined, at least prima facie, from the books of the corporation, where the stock is transferable on books".(Lawrence v. I.N. Porlier Estate Co.,15 Col. 2d 220, 100 P2d 765). "In the absence of judicial determination that stock is invalid persons in whose names it stands on company's books have right to vote it".(Bacich v. Northland Transp. Co.,185 Minn. 544, 242 NW 379, 382, cited in Fletcher, sec. 2033). "Stock books or ledgers are generally evidence of stockholdings, and Corporate books and records ordinarily are admissible and often are the best evidence".(4 Fletcher Cyc Corps.,1965 Rev. Vol. sec. 1975, citing Macon Union Co-op Ass'n. v. Chance, 31 Ga. App. 636, 122 SE 66). "Most courts hold that where a person's name appears upon the stock book or stock ledger of a corporation, even though not signed by him, the book is competent evidence to show that he is a subscriber or stockholder, and is prima facie proof and raises a prima facie presumption of that fact".(Kaye v. Metz, 186 Col. 42, 198 p. 1047, cited in 4 Fletcher, sec. 1976). On the election of the directors, Section 24 of the Corporation Code expressly provides that " every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing, at the time fixed in the by-laws, in his own name on the stock books of the corporation, or where the by-laws are silent, at the time of election ".And where the stock is transferable only on the books of the corporation, a transferee cannot vote the stock until his transfer has been registered. His remedy is in equity to compel the corporation to register the transfer or to compel the transferor to give him a proxy to vote, and until this is done, he cannot vote. (5 Fletcher, sec. 2033, p. 164).This is specially true where there is statutory provision requiring the transfer to be made on the books. Hence, it is informed that the stock and transfer books is the best evidence to establish stock ownership and voting rights for the purpose of corporate elections. The record owner of stock, as between himself and the corporation has the right to vote the stock. Please be advised accordingly. Very truly yours, (SGD.) JULIO A. SULIT, JR. Chairman