Andrew O. Nocon vs. Tanauan Institute, Inc., et al.

[SEC-SICD * CASE NO. 12-98-6161. January 17, 2000.] ANDREW O. NOCON , petitioner , vs . TANAUAN INSTITUTE, INC. ET AL , respondents . D E C I S I O N Before this Commission for decision is a petition for mandamus to compel the respondent corporation thru its co-respondent Emmanuel Puyo, who is its corporate secretary, to immediately register in the respondent corporation's stock and transfer book the transfer of 598 shares formerly owned by respondent Enriqueta Puyo, to petitioner's name after the latter acquired said shares in an auction sale. The petition alleges, among others: that respondent Enriqueta Puyo is the registered owner of 598 shares of stock of respondent corporation as evidenced by Stock Certificate No. 548; that on September 28, 1995 the said respondent pledged her 598 shares to a certain Juanita Gallevo as evidenced by a contract of pledge which was registered with this Commission on June 7, 1996; that Juanita Gallevo moreover sent a "NOTICE TO CORPORATION ISSUER OF PLEDGED STOCKS' to respondent corporation said notice even bearing the signature of respondent Enriqueta Puyo to indicate her conformity thereto; that in addition to the " registration " and " notice ", a certain Atty. Acyatan as acting counsel of Juanita Gallevo, sent a letter to the Corporate Secretary of respondent corporation together with the copy of the contract of pledge and the "Notice to Corporation Issuer of Pledged share" with the information that if the obligation of Enriqueta Puyo, which was already due, is not paid the pledged shares shall be auctioned and the proceeds thereof applied to the payment of her obligation; that since respondent Enriqueta Puyo failed to pay her obligation to Juanita Gallevo after repeated demands, a notice of auction sale was sent to the respondents by the lawyer of Juanita Gallevo, notifying them that an auction sale of the pledged shares will be held on April 15, 1998, 10:00 A.M. at counsel's office in Sta. Mesa, Manila; that the auction sale proceeded as scheduled and the 598 shares sold to petitioner; that respondent Emmanuel Puyo being the corporate secretary of respondent corporation, was notified by the notary public who conducted the auction sale of the result thereof, informing him that petitioner Andrew O. Nocon won the bidding having submitted the highest bid, and that therefore Stock Certificate No. 548 in the name of respondent Enriqueta Puyo should now be canceled and a new certificate be issued in the name of petitioner covering the 598 shares; that two subsequent demand letters for the cancellation of respondent Enriqueta Puyo's stock certificate and the issuance of a new one in petitioner's name, were sent to respondent Emmanuel Puyo as the corporate secretary of respondent corporation but were all ignored by the said respondent, leaving the petitioner no other choice but to file the instant case. By way of relief, petitioner prays that judgment be rendered against the respondents commanding them, thru respondent Emmanuel Puyo to immediately register in the stock and transfer book of Tanauan Institute Inc. the transfer of 598 shares formerly owned by respondent Enriqueta Puyo, to petitioner; to cancel Stock Certificate No. 548 and to issue a new one in petitioner's name covering the 598 shares; to pay the petitioner attorney's fee in the amount of P300,000.00. For their part, respondents initially filed a Motion to Dismiss on two grounds, to wit: (a) that respondents are not the proper parties, therefore, petitioner has no cause of action against them; and (b) the corporate secretary who is an indispensable party to the instant case, was not impleaded, hence, the case should be dismissed for failure to implead an indispensable party. Finding no merit in the motion, the same was denied in an order dated 29 March 1999. In their Answer with Counterclaim, respondents interposed the following affirmative and/or special defenses in support of their partial admissions and denials; that respondent Enriqueta Puyo's 598 shares are covered by Stock Certificates Nos. 522, 525, 528, 530, 532 and 534; and not by Stock Certificate No. 548; that said respondent indeed approached Juanita Gallevo who was then the Branch Manager of PNB Los Baos, and sought the latter's assistance in obtaining a loan from the bank which she will use to finance an ongoing development project in Batangas City; that as standard practice, Juanita Gallevo asked her to sign documents required by the bank for the approval of her loan application; that respondent Enriqueta Puyo does not recall having signed a contract of pledge as it was not among the bank documents Mrs. Gallevo asked her to sign; that she does not recall giving or surrendering Tanauan Institute Inc. Stock Certificate No. 548 to Mrs. Gallevo; that Stock Certificate No. 548 is in fact one of the blank stock certificates which were declared lost by the respondent Corporation; that insofar as respondent Emmanuel Puyo is concerned, he admits having received the September 15, 1998 letter only which informed him that in the Auction Sale conducted by Notary Public Atty. Antonio P. Acyatan, petitioner Andrew Nocon was adjudged the winning bidder of Stock Certificate No. 548 for 598 shares of Tanauan Institute formerly owned by respondent Enriqueta Puyo; that he did not act favorably on the request for him to cancel Stock Certificate No. 548 and issue another one in the name of the petitioner because of respondents' position, as stated earlier, that Stock Certificate No. 548 does not represent the 598 shares stockholdings of respondent Enriqueta Puyo but is one of the missing or lost blank stock certificates. Moreover, respondents reiterate their stand that the instant case is dismissable for lack of cause of action, failure to implead an indispensable party, and lack of jurisdiction on the part of the notary public who conducted the auction sale of the alleged pledged shares, to conduct the same. E And by way of counterclaim, respondents allege that the filing of this "baseless" suit compelled them to secure the services of an attorney with whom they agreed to pay P250,000.00 as and for attorney's fees. Additionally they also claim to have incurred, and will continue to incur litigation expenses estimated to reach P50,000.00, all of which should be reimbursed to them by the petitioner. Petitioner then filed a motion for judgment on the pleadings on the ground that the answer failed to tender a genuine issue. This was opposed by respondents who maintained that their answer tendered an issue, i.e. their denial of the genuineness and due execution of Stock Certificate No. 548 which, according to respondent Emmanuel Puyo who is also the corporation's corporate secretary, was never issued but was in fact among those blank certificates which were lost. Pursuant to the new Rules of Procedure in this Commission, the instant case is ripe for resolution whether the answer tendered a genuine issue or not. We will, therefore, resolve it on the basis of the pleadings filed and the evidence submitted by the parties in support of their respective positions. After a careful study and evaluation of the evidence as well as the arguments presented by the contending parties, this Commission believes that the petitioner is entitled to the relief prayed for. The petition alleges, among others, that respondent Enriqueta Puyo obtained certain loans from Juanita L. Gallevo and as security or guaranty for the payment of said loans, the former pledged her 598 shares of Stock Certificate No. 548 in favor of the latter. Said contract of pledge was signed by Enriqueta Puyo and was duly notarized before Atty. Lorenzo C. Meneses, Jr., a notary public for and in the municipality of Los Baos, Laguna. The contract of pledge, no doubt, is an actionable document within the meaning of Section 7, Rule 8 of the Revised Rules of Court. The same must therefore be denied under oath by respondent Enriqueta Puyo who is the party to the contract of pledge pursuant to Sec. 8 Rule 8 of the Revised Rules of Court. HEDSIc As correctly observed and pointed out by the petitioner, respondent Enriqueta Puyo did not sign and therefore could not have verified the answer. It was her husband and co-respondent Emmanuel Puyo who signed the verification. Therefore, the genuineness and due execution of the contract of pledge are deemed admitted. Besides, in their Answer, respondents allege: "2.4 Respondent Enriqueta Puyo does not recall or remember having signed a Contract of Pledge (Annex A of Petition) not among the bank documents which she was asked to sign by Mrs. Gallevo." This is clearly not the specific denial that complies with the requirements of the law, hence, we agree with the petitioner that the Answer failed to tender a genuine issue. With the genuineness and due execution of the contract of pledge no longer an issue, it now becomes an established fact that indeed respondent Enriqueta Puyo obtained loans from Juanita L. Gallevo and as security therefor pledged to the latter Stock Certificate No. 548 representing her 598 shares of stock in Tanauan Institute, Inc. And, as further alleged in the petition, respondent Enriqueta Puyo failed to pay her loans with Mrs. Gallevo, As a consequence, the pledged stock certificate was eventually sold at a public auction to petitioner Andrew Nocon who submitted the highest bid therefor. Respondent Emmanuel Puyo's defense that Stock Certificate No. 548 was never issued to anyone and is among those blank certificates which were lost, therefore, Enriqueta M. Puyo could not have pledged the same to Mrs. Gallevo, does not improve respondents' position-. If it were true that Stock Certificate No. 548 was not issued to anybody and it was in fact one of those blank certificates which were lost, then why did not the respondents make such assertion during the many instances when Mrs. Gallevo through her lawyer notified them that unless Enriqueta Puyo's obligations to her are settled the pledged Stock Certificate No. 548 shall be auctioned? And why did not the respondents cause a notice to be published to inform the public about the loss of blank certificates of stocks of Tanauan Institute Inc. if such has indeed occurred? Prudence dictates that a notice to the public should be published to warn people against entering into transactions involving those lost stock certificates in order that the corporation may exempt itself from any liability which may arise out of those certificates. CcSEIH Moreover, to argue that respondent Enriqueta M. Puyo could not have pledged Stock Certificate No. 548 since her stockholdings in Tanauan Institute are reflected in Stock Certificates Nos. 522; 525; 528; 530; 532 and 534, is to beg the issue. It has the same weight as her other statement of denial that she could not have pledged Stock Certificate No. 548 to Mrs. Gallevo because she "does not recall or remember having signed a contract of pledge . . . as it is not among the bank documents which she was asked to sign by Mrs. Gallevo". Respondent Enriqueta Puyo could have categorically and flatly denied that she pledged to Mrs. Gallevo Stock Certificate No. 548 covering her 598 shares of stock in Tanauan Institute, Inc. if that were the truth. But if she does that she also would have to deny that the signature appearing on the contract of pledge is hers. That she did not make such categorical denial means only one thing that the signatures are undeniably hers and that she indeed executed the document of pledge in favor of Mrs. Gallevo. As to respondents' allegations that Stock Certificate No. 548 was not issued to anyone and that Enriqueta Puyo's stockholdings are reflected in stock certificates nos. 522; 525; 528; 530; 532 and 534, no proof was presented to support this claim. Respondents could have alleged that the entire stockholdings of Enriqueta Puyo in Tanauan Institute Inc. amounts to so much and they could have presented the pertinent pages of the stock and transfer book to show that the above-enumerated stock certificates cover the entirety of her stockholdings in the respondent corporation. That they did not do so only shows that respondents do not stand on a tenable ground. Incidentally, it is interesting to note that while the corporate secretary of Tanauan Institute, Inc. specifically denies that Stock Certificate No. 548 was ever issued to anybody, respondent Enriqueta Puyo for her part had been evasive and has so far not made any categorical denial of petitioner's allegation that she pledged the certificate of stock in question. As correctly emphasized by the petitioner, such evasiveness, in law, amounts to an admission. Besides, the Contract of Pledge speaks for itself and it would only put her in a much worse position if Mrs. Puyo denies having executed the same because she cannot possibly disown her own signatures in the document. However, in claiming that Stock Certificate No. 548 was never issued but was in fact one of those blank stock certificates which were lost, respondent Emmanuel Puyo is virtually putting the noose on his wife's neck. Such assertion, if maintained, will surely expose Mrs. Puyo to criminal prosecution for estafa. Respondent Enriqueta Puyo's saving grace is that this Commission is inclined to believe that Stock Certificate No. 548 truly represents the 598 shares of stocks owned by her in Tanauan Institute, Inc. and that the same was acquired by petitioner in an auction sale upon her failure to redeem it from Mrs. Gallevo. Being a purchaser in good faith and for value, petitioner is certainly entitled to have the shares he bought transferred to his name in the stock and transfer book of the corporation and have the corresponding stock certificate therefor issued to him. This mandamus case was filed by him precisely to compel such acts to be done inasmuch as the respondent corporation and the corporate-secretary refuse to effect such transfer. Considering that it is a ministerial duty of the corporate secretary to record and enter in the stock and transfer book any transaction involving transfers of shares, which in this case is the auction sale of the 598 shares of respondent Enriqueta M. Puyo in favor of herein petitioner as the winning bidder, and it appearing that there is no plain, speedy and adequate remedy available to petitioner except this present petition, petitioner is clearly entitled to the writ of mandamus herein prayed for pursuant to Sec. 3, Rule 65 of the 1997 Rules of Civil Procedure. IaAEHD WHEREFORE, the petition is hereby GRANTED and an order issued: (a) Commanding respondent Emmanuel Puyo, the corporate secretary of respondent corporation, to immediately register in the stock transfer book of the Tanauan Institute, Inc. the certificate of sale marked as Annex "G" of the petition showing the transfer of 598 shares of Enriqueta M. Puyo covered by Stock Certificate No. 548 in favor of herein petitioner Andrew Nocon; (b) Further commanding respondent Emmanuel Puyo to cancel Stock Certificate No. 548 in the name of Enriqueta M. Puyo and in lieu thereof, to immediately issue a stock certificate in the name of petitioner Andrew Nocon covering the aforesaid 598 shares; (c) Requiring respondent Emmanuel Puyo to immediately register or record the above transactions involving the cancellation of the old certificate and the issuance of a new one in the stock and transfer book; d) Ordering respondents, jointly and severally, to pay attorney's fees in the amount of P100,000.00. SO ORDERED. (SGD.) MALTHIE G. MILITAR Hearing Officer