Mohan Lalwani, et al. vs. Juanito Vitug, et al.

[SEC-SICD * CASE NO. 2992. April 24, 1990.] MOHAN LALWANI, ET AL. , petitioners , vs .JUANITO VITUG, ET AL. , respondents . D E C I S I O N Petitioners instituted an action to compel the respondents to register in the books of the respondent corporation the transfer of certain shares of stocks and to issue a new certificate of stock in the name of the transferee pursuant to Section 63 of the Corporation Code and Article IV and V of the corporate by-laws. llcd Petitioners allege that petitioner Lalwani sold, assigned, and transferred ownership over the one hundred fifty shares of the company's capital stock covered by Stock Certificate No. 004 to co-petitioner Nanwani on January 15, 1986. A stock power was executed by the petitioner Lalwani, acknowledging the sale by him to petitioner Nanwani of the one hundred fifty shares of the common capital stock of the company covered by Stock Certificate No. 004. Petitioner Nanwani wrote the Corporate Secretary to deliver the original copies of Stock Certificate No. 004 and the Stock Power and requested for the issuance of new stock certificate covering the transferred shares to be issued in her name. After a demand for the respondents to comply and respondents' failure to effect the transfer and to issue new stock certificate, petitioners filed the instant case to compel the respondents to register the transfer of the 150 shares covered by Stock Certificate No. 004 and to issue a new stock certificate covering said shares in the name of the petitioner. Respondents in their answer made material denials and allege that petitioner Lalwani does not own any shares of respondent corporate capital stock, for he transferred all his shares in favor of Ramesh Genomal on 23 June 1983 pursuant to a deed of assignment of subscribed capital stock covering 120 shares of the capital stock of respondent corporation and another deed of assignment dated November 12, 1983 covering thirty (30) shares of stock. Respondents further raised in their defense that Stock Certificate No. 004 is null and void having been previously declared as lost by petitioner Lalwani in July 1982 and declared as null and void by the respondent corporation on December 24, 1982. The bone of contention lies on whether or not the deed of assignment dated June 23, 1983 and the other deed of assignment dated November 12, 1983 have been duly executed as to transfer and cede the one hundred fifty shares of petitioner Lalwani to his brother Ramesh Genomal in the corporation. A positive finding that indeed there was an authentic transfer of the said one hundred fifty shares would mandate the corporation to register the assignment of the shares of stock made by petitioner Lalwani in favor of Nanwani and to issue a new stock certificate for and in the name of Nanwani. On the other hand, an adverse finding will give the corporation a legitimate reason to refuse the registration of these deeds and the issuance of new stock certificates for and in the name of Nanwani. From the pleadings and the evidence adduced by both parties the following facts are indubitable as found by the Commission. Petitioner Lalwani claims that the deed of assignment dated June 23, 1983 in his possession marked as Exh. "A",Deposition TSN dated September 27, 1988, pp. 22-23, show that he affixed his signature as witness. However, respondents' copy of the same deed indicates that the signature of petitioner Lalwani appears on the word "assignor" marked as Exh. "2" Deposition. Respondents' copy of the deed of assignment has been altered although the respondents claimed that the alteration was upon authority of petitioner Lalwani. This Commission gives more weight and credence to petitioners' assertion that he affixed his signature as witness in order that his brother may not worry on account of personal guarantees he had extended to bank overseas which might run against the corporation. His brother tried to convince him to sign a deed of assignment to make it appear that Lalwani may no longer have interest in the corporation. The true intent of petitioner Lalwani must be taken into consideration as appearing on the document. Respondents went on to dispute the petitioners' version by presenting evidence of his customary way of signing at the witness' portion of the documents. Atty. Vitug testifies that on several occasions petitioner Lalwani had signed on the witness line but for what purpose Atty. Vitug didn't know (TSN September 21, 1989, p. 30).Yet, assuming Atty. Vitug's claim to be true, why did he assert in the same vein when queried by the Hearing Officer whether or not he noticed the signing of Lalwani right then and there as a witness and he replied that he did not notice that Lalwani signed as witness (TSN September 21, 1989, pp. 30-31).His knowledge of Lalwani's customary way of signing as witness could have prompted him to correct right then and there without the necessity of allowing the latter to leave the next day and for Atty. Vitug to make a unilateral correction. This perception is bolstered by the General Power of Attorney marked as Exh. "7" executed by Nari Genomal in favor of Lalwani as attorney-in-fact on July 31, 1974. Petitioner Lalwani affixed his signature in the place of the witness, which he subsequently crossed out (Exh. 17-a-1) and properly corrected the same by affixing his signature in the place of the attorney-in-fact to reflect his true intent. LLjur Moreover, the claim of Lalwani that indeed he affixed his signature intentionally as witness so that the document cannot be used as an assignment of his shares is given substantial credence upon evidence of his letter to Atty. Vitug dated July 8, 1985 (Exh. "L"),wherein he wishes to stress the importance of not transferring his shares in the corporation without his presence in the Philippines. Atty. Vitug admitted having received this letter or a letter of the same sense (TSN of September 10, 1987, pp. 34-36).Respondents never replied nor denied petitioner, Lalwani's claim as contained in his letter dated July 8, 1985 that he had shares which he did not want to be transferred without his presence. One must take note that the aforementioned letter was dated July 8, 1985, two years after the two questioned deeds of assignment were allegedly executed in 1983. These controversial deeds of assignment executed in June 23, 1983 and November 12, 1983 as claimed by respondents are in addition over-thrown by the supervening evidence of reportorial requirements already on file with the Commission. As of April 10, 1984, petitioner Lalwani was still a stockholder and director pursuant to the Minutes of both the directors' and stockholders' meeting and in the General Information Sheet of the corporation. The Minutes of the Stockholders meeting, marked as Exh. "G",held on April 10, 1984 indicates that the name of petitioner Lalwani as one of the stockholders has been received and on file with this Commission as of May 9, 1984. Similarly filed with this Commission on May 9, 1984 was the Minutes of the Board of directors held on April 10, 1984, marked as Exh. "F" where petitioner Lalwani was shown to be present and elected as President of the corporation (exh. "F-3").The General Information Sheet as of December 31, 1983, marked as Exh. "H",also received on May 9, 1984 showed Mohan Lalwani as director and stockholder of the V. Lilaram Development Corporation. To rebut these documents, respondents submitted the General Information Sheet of April 10, 1984 but received by this Commission only on May 8, 1986, two years after the disputed deeds of sale, marked as Exh. "3" for the respondents and Exh. "K","K-1" for the petitioners. In the said document petitioner Lalwani's name did not appear. Exhs. "1" and "2" appear to be the Minutes of stockholders' meeting, and of the directors' meeting as of April 10, 1984 which showed that Lalwani was not a stockholder as of that date, and respondent Vitug's name also appeared as Corporate Secretary therein, just like in petitioner's evidence. But one notes that petitioners' Exhibit "F","G" and "H" were found to be regularly filed long before any controversy arose while respondents' Exhibits "1","2",and "3" came after petitioner Lalwani questioned the deeds of sale. Thus, as a stockholder of respondent corporation, he can freely dispose of his shares pursuant to Sec. 63 of the Corporation Code: "...Shares of stock so issued are 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. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred." The affidavit of Felix Genagaling (Exh. "21") asserts and points to June 23, 24, and 25, 1983 when Mohan Lalwani and Ramesh Genomal met to discuss matters. To support respondents' claim that petitioner was here in the Philippines in the abovementioned dates and to refute the denial in his deposition that he was not present during those times, the letter-reply (Exh. "22") was submitted to show Lalwani's arrival on June 23, 1983 and departure on June 1983. Going over petitioner's deposition, taken on September 27, 1988, pp. 20 lines 3-10, this Commission finds that Lalwani denied having signed the deed of assignment in the Philippines in July 1982 when he was asked what he can say about Ramesh Genomal's testimony that he signed the deed for one hundred twenty shares (Exh. "1") in the presence of Ramesh Genomal and at the office of Atty. Vitug in Binondo. However, no denial was made in so far as his presence on June 23, 24, and 25, 1983 in the Philippines. Petitioner Lalwani presented, moreover, his stock certificate No. 004 (Exh. "K" deposition) to further strengthen his being still a stockholder of V. Lilaram Corporation. Respondents in their defense aver that stock certificates Nos. 001 to 010 including that numbered 004 were lost and declared null and void, in a special directors' meeting on December 24, 1982 as shown in the Minutes of the meeting (Exh. "5"). In the said minutes, all the directors with the exception of Lalwani were present. This averment cannot be given credence in the light of the numbered 004 but also those in the name of Nari Genomal, numbered 005 to 008 and 010 in the name of Parpati Genomal. Moreover, Sec. 73 of the Corporation Code should have been followed regarding lost shares of stock. In view of the foregoing premises, this Commission finds that the petitioners have sufficiently established their case by a preponderance of evidence. Judgment is hereby rendered granting the petition and ordering the Corporate Secretary Juanito Vitug to record in the books of V. Lilaram Development Corporation the transfer of the one hundred fifty (150) shares covered by stock Certificate No. 004 by petitioner Lalwani and to issue a new certificate of stock in the name of his transferee Anita Nanwani. SO ORDERED. (SGD.) JOSEFINA L. PASAY-PAZ Hearing Officer