Associated Bank vs. Celebrity Sports Plaza, et al.

[SEC-SICD * CASE NO. 3070. May 23, 1989.] ASSOCIATED BANK , petitioner , vs . CELEBRITY SPORTS PLAZA, ET AL. , respondents . D E C I S I O N This is a petition for mandamus filed by Associated Bank against Celebrity Sports Plaza, Inc. and its corporate secretary, Vivencio Alcasid (now deceased), to compel the issuance of new certificates of stocks in its name and to register the same in the books of the respondent corporation. A statement in detail of some of the essential facts of this case as borne out from the pleadings and evidence adduced by both parties disclosed that Philippine Underwriters Finance Corporation, (Philfinance, for brevity), had been the owner of the following proprietary shares of the capital stock of respondent corporation to wit: "Shares of Stock Nos. 1290, 5883, 5905, 1289, 5904, 5901, 5902, 6142, 6143, 5551, 5552, 5553, 6641, 6238, 6178, 6125, 5869, 5870, 5755, 5871, 6111, 5634, 5126, 5125; 5797, 5798 and 6187. The ownership of the foregoing shares of stock is now being claimed by the herein petitioner to have been absolutely transferred, sold and assigned to it by Philfinance as evidenced by Detached Assignments. On the other hand, respondents' answer specifically pleads that the petitioner did not acquire valid title to the shares of stock sought to be transferred in its name for failure to prove the due execution, genuineness and authenticity of the Deed of Detached Assignments and to produce any resolution of the Board of Directors of Philfinance authorizing the assignment of the questioned shares of stock to the herein petitioner. Another defense raised by the respondent is the contention that the proper party in interest in this case was not properly impleaded for failure to substitute the name of the new corporate secretary of the respondent corporation in lieu of the former secretary who is now deceased. Finally, as a special and affirmative defense, respondents maintain that the present action of the petitioner in filing the instant case is premature, and that, petitioner failed to comply with the requirements for the transfer of the questioned shares of stocks in the books of the respondent corporation. The principal issues at bar to be resolved are: a) Whether or not the petitioner acquired valid title to the questioned shares of stock; b) Whether or not the name of the new corporate secretary of respondent corporation should be impleaded as a real party in interest in lieu of the former corporate secretary, now deceased; c) Whether or not the instant case was prematurely filed by the herein petitioner. On the first issue, records of this case will show that the genuineness and due execution of the questioned deed of detached assignments were never denied nor raised by the respondents as an issue in this case. What was categorically denied by the respondents was any knowledge of the transfer or assignment of the questioned shares of stock. Respondents' failure to raise the question of genuineness and due execution of the subject instrument and the validity of the transfer of the questioned shares of stock can readily be gleaned from their answer expressly denying any information or knowledge as to the truth or falsity thereof. For obvious reason, therefore, the respondents cannot now raise this particular issue for lack of basis. Respondents were put on notice of the need to inquire into the validity of the subject transaction to raise the proper defenses thereto, upon receipt of petitioner's claim. But respondents purely relied on their general denial on the belief that the burden of proof is shifted to the petitioner to prove the validity of the transfer of the questioned shares of stock. LexLib Even assuming arguendo that the respondents had properly raised the issue of genuineness and due execution of the questioned instrument, still they will be barred from disturbing what the parties to the instrument have expressly intended in the absence of any showing of erasure, alteration or any signs of irregularity on the face of the questioned instruments to justify the presentation of extrinsic evidence. Furthermore, to permit the respondents to contest the title and the authority of the personality whose signature appears on the face of the questioned instrument will in effect allow a person who is not privy to the contract to destroy the value thereof. The phraseology employed in a questioned deed of detached assignment is clear enough to express what the parties therein have intended to agree upon. As provided therein, Philfinance sold, transferred and assigned to the herein petitioner all its rights, titles and interests to the certificates of stock of the respondent corporation and irrevocably authorized the issuer (the herein respondents) to transfer the subject shares of stock in the books of its fiscal agent. The detached assignment, like any other deed of conveyance, is the overlying instrument that assigned the unendorsed subject shares of stock which were duly attached thereto. And the delivery of unendorsed stock certificate and a separate document containing a written assignment is one of the acceptable modes that permit transfer of title of corporate stocks represented by certificates, considering the quasi-negotiable status of stock certificates. Jurisprudence is replete with rulings to this effect to wit: "The title to stock certificates and the shares represented thereby can be transferred under Uniform Stock and Transfer Act only by delivery of certificate properly endorsed or accompanied by a separate document containing written assignment or power of attorney to assign or transfer certificate of shares represented thereby. (Knight v. Shutz, 141 Ohio St. 267, 47 N.E. (2d 886)." "Shares of stock may be transferred by means of an assignment and delivery of certificates." (13 AM-JUR Corporation FN 414). ". . . such transfer may also be made by delivery of unendorsed certificates together with specific assignments . . . (Id. 415)." Anent the second issue, this Hearing Officer finds that the joinder of the name of the present corporate secretary of respondent corporation is not material to substantially affect the final determination of this case. The present secretary of the respondent corporation and even the office of the corporate secretary itself is not an indispensable party to bar complete relief to those already parties in this case, if not included. The office is a mere integral part of the corporate structural organization amply represented herein by respondent corporation. What is important is that the corporation itself is made a party in this case in order to make the Commission's decision binding upon it. Finally, respondents' contention that the filing of the instant case by the petitioner is premature, should not be given much weight considering that as early as July 27, 1981, petitioner had already requested for the appropriate certificate to be issued in its name but efforts to effectuate transfer have failed. Again, the request for the transfer of the subject shares of stock was reiterated in a letter dated March 25, 1988 sent by the counsel for the petitioner to the corporate secretary of the respondent corporation, and in reply thereto respondents' counsel, who is the incumbent corporate secretary, enumerated the requirements for the transfer of the subject shares of stocks. Said requirements are: "1. a duly notarized deed of sale or assignment of the shares from Philfinance to Associated Bank "2. a duly notarized secretary's certificate that the Board of Directors of Philfinance has authorized the sale and transfer of the subject shares of stock to your client. NOTE: If compliance with requirements nos. 1 and 2 are not feasible at this time in the light of the situation of Philfinance, then a duly notarized Deed of Assignment by the receiver of Philfinance plus a certified true copy of an Order of the SEC approving said assignment will suffice, instead. "3. a certification from the BIR that capital gains tax for the sale or transfer of the shares has been satisfied. "4. a duly accomplished application for membership with Celebrity; "5. payment of the documentary stamps and transfer fees. "6. surrender of the original certificates of stock covering the shares being transferred." LLjur The above-enumerated requirements are almost prohibitive impediment upon the petitioner for the registration of the subject shares of stock. While seemingly amenable to effect the transfer in the books of the respondent corporation, the incumbent corporate secretary, nevertheless, deprives the petitioner the means by which such transfer can be effected in the books of the respondent. In particular reference is the No. 2 requirement where the petitioner will be confronted with the practical difficulty of being compelled not only to search the records of Philfinance consisting of voluminous records of business transactions but also the topsy-turvy condition of these records due to the liquidation of its assets by the Receiver. Likewise, it will be an almost impossibility to require the present receiver of Philfinance to assign the subject shares of stock to the herein petitioner in view of the fact that the present liquidation receiver is not a privy to the original transaction held between the herein petitioner and former officers of Philfinance. Accordingly, the coercive power of Mandamus will lie to compel the herein respondent corporation to register a transfer of its stocks on its books and to issue stock certificates to those entitled thereto for such act is purely a ministerial duty. "The duty of corporate officers to issue stock certificates to those entitled thereto is a ministerial duty enforceable by mandamus." (Hertz Drive, Jr., Self System, Inc., of Calo v. Roak. 94 Calo 200, 2a P2d 625) "Where request is presented with valid judgments placing parties in possession of stock, transfer on the books of corporation is ministerial duty." (State v. Bunllie Coca Cola Bottling Co., Inc., 222 La 603, 63-80 2d 13) prLL WHEREFORE, judgment is hereby rendered, ordering the respondent corporation Celebrity Sports Plaza, Inc. to record in its books the transfer of Philfinance shares of stock nos. 1290, 5883, 5985, 1289, 5904, 5901, 5902, 6142, 6143, 5551, 5552, 5553, 6641, 6238,6178, 6125, 5869, 5870, 5755, 5871, 6111, 5634, 5126, 5125, 5797, 5798 and 6187 to the herein petitioner and to issue new certificates of stocks in its name. SO ORDERED. (SGD.) ANTONIO M. ESTEVES Hearing Officer