Metropolitan Rental and Sales, Inc. vs. Leocadio O. Isip and Augustin Cloribel

[SEC-SICD * CASE NO. 3025. August 31, 1990.] METROPOLITAN RENTAL AND SALES, INC. , petitioner , vs .LEOCADIO O. ISIP AND AUGUSTIN CLORIBEL , respondents . D E C I S I O N The petition alleges that respondents are stockholders and directors of the petitioner corporation at the time of its incorporation but were subsequently replaced by a new, set of directors; that the respondents represent and hold 40% of the shares of the petitioner while the new set of directors, 60%;that despite knowledge that they do not hold sufficient shares to convene or call for any meeting in order to operate the petitioner corporation, the respondents have arrogated unto themselves the powers of the corporation by electing a different set of directors and officers without sufficient quorum; that respondents have likewise arrogated unto themselves the corporate power to sue and are in fact in the middle of several suits using the name of the petitioner without authority to the great prejudice, irreparable damage, and loss of goodwill by the petitioner. prcd Respondents in their answer specifically denied all the material allegations of the petition and averred in their special and affirmative defenses, inter alia, that this Commission has no jurisdiction over the nature of the action or suit; that petitioner has no legal capacity to sue and the petition states no cause of action. Further, respondents contend that the petition was initiated at the instance of Eduardo C. Estrella who is a total stranger, hence, cannot bind the corporation; that the said Eduardo C. Estrella is the President of Homestead Property Corporation which leased one (1) Toyota SE Model 1983 which incurred arrears and for which a replevin suit is pending in the Regional Trial Court of Caloocan City; that it is clear and manifest that said Eduardo C. Estrella filed this suit precisely to relieve him and the corporation he represents from the onerous rental and obligation imposed upon them under the contract of lease; that to the knowledge of respondent Leocadio Isip, there is only one set of the board of directors for which he is a member and that Eduardo C. Estrella and his group was never a member of the board of directors of petitioner corporation. Subsequently, after the filing of the answer, respondents filed a motion to dismiss, however, the resolution was deferred until trial on the merits. It appears that the petitioner corporation was organized by five (5) incorporators/stockholders, namely: Nilo Rubi, Marciano Madarang, Eduardo Que and the respondents herein, Leocadio Isip and Agustin Cloribel. Respondents, representing the group of Leocadio Isip, claimed that they are the majority and legitimate stockholders of the petitioner corporation by virtue of the deeds of sale executed by Nilo Rubi and Agustin Cloribel in favor of Leocadio Isip, as well as the deed of sale executed by Mariano Madarang in favor of Henry de Rama Co sometime in September 1983. On the other hand, petitioner, being represented by the group of Eduardo C. Estrella, also claimed that its group owns the majority of the stockholdings of petitioner corporation in view of the Deeds of Assignments executed by Nilo Rubi in favor of Orlando N. Cardona, Marciano Madarang in favor of Briccio Almeda and Eduardo Que in favor of Apolo Salud sometime in December 1983. After a thorough evaluation of the evidence adduced by the parties, both testimonial and documentary, as well as the law applicable, we find sufficient basis to uphold petitioner's contention. In the issue at bar, the deeds of sale executed in favor of the respondents group were never registered in the original stock and transfer book. However, the dispositions in favor of the group of the petitioner were properly registered in the aforesaid book. Under Section 63 of the Corporation Code, it is expressly provided that: xxx xxx xxx "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 transfer, the number of the certificate or certificates and the number of shares transferred". The aforecited proviso on the lawful restraint upon transfers of shares of stocks, that of having the same registered in the books of the corporation in order to be valid as far as the corporation is concerned is well enunciated in the case of Fleischer vs. Botica Nolasco, Inc., G.R. No. 23241, March 14, 1925, 47 Phil. 583, wherein it was ruled that this restriction is necessary in order that the officers of the corporation may know who are the stockholders which is essential in conducting election of officers, in calling meeting of stockholders, and for other purposes. It is significant to stress that the aforementioned vendors, Nilo Rubi and Marciano Madarang never made any request nor attempt to have the transfer in favor of the respondents' group registered in the original stock and transfer book. Conformably thereto, it is equally the right and duty of the vendees to register the proper transfer in the said book. In the case of Hager vs. Bryan, G.R. No. L-6230, March 21, 1911, 19 Phil. 138, it imposes the duty upon a corporation and upon the officer in charge of the books of the corporation to provide for the entry and notation upon the books of the corporation of lawful transfer of stock, where the entry of such transfer is lawfully demanded. Further, it is of importance to consider the testimony of Marciano Madarang that all the incorporators acted as mere representative or beneficial owners who in reality were the investors in the corporation. Such testimony is an admission against his own interest that should be given weight in favor of the petitioner. WHEREFORE, the motion to dismiss is hereby denied. Accordingly, judgment is hereby rendered enjoining the respondents from further usurping the functions and powers of petitioner corporation. No pronouncement as to costs. llcd (SGD.) ENRIQUE L. FLORES, JR. Hearing Officer