Filriters Guaranty Assurance Corporation vs. Pilipinas Bank and Its Corporate Secretary

[SEC-SICD * CASE NO. 3275. February 7, 1990.] FILRITERS GUARANTY ASSURANCE CORPORATION , petitioner , vs . PILIPINAS BANK AND ITS CORPORATE SECRETARY , respondents . D E C I S I O N This is an action for mandamus to compel respondents to effect the transfer of the shares of stock, as well as the issuance of the new certificates in favor of the petitioner. cdll In support thereof, petitioner alleged among others, that it is the owner of the following Pilipinas Bank's (FMB) 54,633 shares of stock per certificate of sale dated September 30, 1985 issued by Notary Public Remedios C. Balderama: NO. OF NO. OF CERT. NO. SHARES CERT. NO. SHARES 332 1 450 19 333 1 509 5,000 447 10,000 516 4,001 448 5,000 527 113 449 10,000 539 3,999 499 3,429 017 8,922 037 83 039 3,625 038 50 041 3,390 That on June 9, 1986, petitioner, acting through its conservator, Atty. Julian J. Locsin, formally advised respondents of its acquisition of the aforesaid shares; that on November 6, 1986, the request was reiterated by the said conservator. However, on November 26, 1986, respondents notified petitioner of their refusal to transfer the shares and to issue new certificates on the following grounds: a.) The absence of participation and consent of the other stockholders; b.) Lack of approval of the receiver of Philfinance; c.) As to FMB Certificate Nos. 509 and 516, which are subject of voting rights agreement in favor of the Philippine National Bank, consent of PNB is necessary. dctai On November 27, 1986, the conservator, Atty. Julian J. Locsin, in reply to respondents' letter, insisted on the transfer and issuance of new certificates on the following grounds: a.) Filriters' acquisition of the shares was not by voluntary sale but by public auction; b.) The approval of the receiver of Philfinance is not required because Filriters is not under the receivership of Philfinance but under conservatorship, subject to the supervision of the Insurance Commission. On July 9, 1987, petitioner's counsel made the final demand on respondents to transfer the shares and issue new certificates, but to no avail; that respondents' act in refusing to transfer the shares and issue new certificates had prejudiced petitioner's right to the transfer of the shares and has deprived petitioner the opportunity to exercise its right as stockholder since June 9, 1986; that there is no plain, speedy and adequate remedy on the ordinary course of law to enforce petitioner's right and respondents' obligation to make the transfer of the shares and issuance of new certificate. cdll Respondents filed their answer with counter-claim which specifically denied the material averments of the petition. It alleged as special and affirmative defenses that the petition has no valid cause of action; that the Third Party Pledge Agreement and the subsequent foreclosure of the shares pledged, do not appear to have the conformity of the real registered owners whose consent and participation is being required by respondents. Respondents further contend that based on the Order dated June 18, 1981 and amplified by the Order dated August 7, 1981, the management of Philippine Underwriters Finance Corporation (Philfinance) was taken over by the Securities & Exchange Commission and the Central Bank of the Philippines, thru a Management Committee, whose consent and authority has not been obtained in the execution of the Third Party Pledge Agreement which involved an alleged security to Philfinance indebtedness in favor of petitioner, that the said agreement and the subsequent foreclosure are all in violation of the SEC Orders hence, the requirement of respondents for the approval of Philfinance; that the shares of stock which are requested to be transferred in the name of petitioner are all subject to an agreement with the Philippine National Bank, for the latter to give its consent to any sale or assignment to said shares pursuant to the rehabilitation plan in 1980 of Pilipinas Bank where PNB obtained majority control of the total shares of respondent bank. Hearings were conducted where both parties presented evidence, respondents presenting only one (1) documentary evidence, which is the Third Party Pledge Agreement (Exhibit "I"). From the evidence adduced, it is the opinion of this hearing Officer and so holds that the refusal of respondents to effect the transfer of the certificate of stocks in question and to issue new certificate of stocks is without legal basis. Their defense that the consent and conformity to the pledge of the shares by the Receiver of Philfinance is untenable as the shares pledged were owned by the pledgor, Ricardo Silverio, who is not under a Receiver. Moreover, the representative of the SEC-appointed liquidator of Philfinance, testifying as rebuttal witness for the petitioner, stated that Philfinance has no interest in the Third Party Pledge Agreement and has no objection to the transfer of shares of stocks in question. On the defense that the stock certificates are covered by voting trust agreement in favor of Philippine National Bank, evidence disclosed that only two (2) stock certificates, namely, certificate Nos. 509 and 516 are covered by the voting trust agreement, which were not included in the petition. Clearly, the petitioner, as pledgee of the questioned shares of stock and subsequently the highest bidder in an extrajudicial foreclosure of said shares of stock has the right to effect the transfer of the shares bought in the foreclosure sale and the issuance of new certificate of stocks in its name and the respondents may be compelled by mandamus to effect such transfer and issuance of new certificate of stocks. In the issue at bar, a writ of mandamus may be invoked to compel the performance of ministerial acts by corporate officers only where the relator has a clear, legal right to the performance of such acts and defendant has a corresponding duty to perform. (55 C.J.B. 426) "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 Pd 625) WHEREFORE, judgment is hereby rendered commanding respondents to effect the transfer of Pilipinas Bank Stock Certificate Nos. 332, 333, 447, 448, 449, 499, 037, 038, 450, 509, 516, 527, 539, 017, 039 and 041 and to issue new certificates in favor of Filriters Guaranty Assurance Corporation, upon surrender of the original certificate and respondents are ordered jointly and severally to pay petitioner P10,000.00 as attorney's fees. No pronouncement as to costs. LexLib (SGD.) ENRIQUE L. FLORES, JR. Hearing Officer