Ting Ping Lay v. TCL Sales Corp.

[SEC-SICD * CASE NO. 3900. July 20, 1994.] TING PING LAY , petitioner , vs . TCL SALES CORPORATION AND ANNA TENG , respondents . D E C I S I O N This is a petition for Mandamus filed by petitioner Ting Ping Lay against respondents TCL Sales Corporation and Anna Teng, praying that the respondents be ordered to record in the books of the corporation the transfer of shares of stock to the petitioner and to issue in his favor new certificates of stock representing Four Thousand One Hundred Twenty Five (4,125) shares of stock of the corporation and with an additional prayer for damages and attorney's fees. prLL In support thereof, petitioner alleged among others, that he is a stockholder of record of respondent TCL Sales Corporation; that respondent TCL is a corporation duly organized and existing under the Philippine Laws with principal office at Room 207, Maritima Building, Dasmarias St., Binondo, Manila; that respondent Anna Teng is the corporate secretary of TCL; that on February 20, 1979, Peter Chin an original incorporator of TCL sold his shares of the company's stock to petitioner; that on June 1981, petitioner subscribed and paid for additional 240 shares of stock of TCL as evidenced by the latter's official Receipt Nos. 0122 and 0124 dated June 15 and July 12, 1981, respectively; that on September 22, 1985, petitioner's elder brother Teng Ching Lay, sold 1,400 shares of TCL's stock to petitioner through a document entitled "Sale of Shares of Stock"; that on Sept. 2, 1989, Ismaelita Maluto another stockholder of TCL sold all her 2,025 shares of TCL's stock to petitioner through a document entitled "Deed of Assignment"; that since the time TCL was organized in 1974 up to the death of his brother stockholder, Ting Ching Lay in 1989, the corporation was managed and operated by petitioner and his brother, Ting Ching Lay; that because of the filial relationships among the TCL's stockholders and with Teng Ching Lay as its President, petitioner did not immediately seek the transfer and recordation with the aforesaid shares in the books of the corporation; that upon the death of Teng Ching Lay in 1989, petitioner, who was then in charge of the company's operation, was directed by stockholder Henry Teng, the son of Teng Ching Lay and nephew of petitioner to vacate his post and surrender all the company's records to his representative; that trusting that the order or instruction was legitimate and for the best interest of the company, petitioner immediately complied with the instructions; that because of Henry Teng's conduct directing the immediate surrender to him of the company's records in the light of the death of the company's founder Teng Ching Lay whose patriarchal style of management could not be expected of his successors, petitioner sought to protect his interest in the company cognizant of the fact that the transfer of some of the shares to him had not been properly recorded in the books of the corporation; that on August 31, 1989, petitioner, through his counsel, requested respondent Anna Teng, to record the transfer of shares he had previously acquired; that on Sept. 21, 1989, another letter was sent by petitioner to respondents demanding that the aforementioned transfers be recorded in the books of the corporation and that corresponding new certificates of stock be likewise issued; that despite receipt by respondents of the petitioner's demand letters, respondents failed and refused to perform the acts which the law specifically enjoins them to perform; that because of respondents' unreasonable refusal to comply with petitioner's legitimate request, he was constrained to file this instant petition and hire the services of counsel to defend petitioner's right. On December 10, 1990, respondents filed their answer and denied specifically all the material allegations of the petition for lack of information sufficient to form a belief as to the truth of the petitioner's allegations. At the pre-trial hearing of the case, the parties agreed that the issues to be resolved are as follows: 1. Whether or not petitioner is entitled to have the transfer of TCL shares in his favor registered in the books of the corporation and the issuance of the corresponding certificate of stock in his favor. 2. Whether petitioner is entitled to damages and reimbursement of litigation expenses and attorney's fees. Trial on the merits have been conducted wherein both parties presented documentary and testimonial evidence. From the evidence adduced and the corporate record on file with the commission of which this Hearing Officer takes judicial notice, the following established facts are: Respondent TCL Sales Corporation was organized and registered in 1973 with an authorized capital stock of Five Hundred Thousand (P500,000.00) Pesos. In 1974, said capital stock was subsequently increased to Two Million (P2,000,000.00) Pesos, Eight Hundred Thousand (P800,000.00) Pesos of which was subscribed and paid. On February 20, 1979, petitioner purchased Four Hundred Eighty (480) shares of stocks of respondent corporation from stockholder Peter Chiu (Exhibit "A", Deed of Sale dated February 20, 1979). In 1985, petitioner's elder brother Teng Ching Lay also sold One Thousand Four Hundred (1,400) share to him per Deed of Sale executed by Teng Ching Lay dated September 22, 1985 in favor of Teng Ping Lay (Exhibit "D"). After the death of stockholder/president Teng Ching Lay in early 1989, respondent Henry Ting, president of respondent corporation, took over the management of the corporation. Petitioner Teng Ping Lay knowing fully well that some of his acquired shares of stock of respondent corporation were not properly recorded in the books of the corporation, requested respondents to record the said acquired shares but despite several demands respondents failed to record in the Books of the Corporation the transfer of shares. (Exhibit "H", "I", and "J-1") Evidence also show that when the authorized capital stock was increased to 2 Million in 1974, the total subscription was Eight Hundred Thousand (P800,000.00) Pesos or 8,000 shares which was also fully paid and the stockholders whose stockholdings appear opposite their respective names are as follows: Stockholders Shareholdings 1. Teng Ching Lay 2,880 shares 2. Henry Teng 2,000 3. Anna Teng 1,280 4. Ismaelita Maluto 1,440 5. Peter Chin 480 8,000 shares (Exhibits "K" and "1 to 20") Based on the foregoing established facts, this Hearing Officer is of the belief and so holds that as far as the 480 shares acquired by the petitioner from Peter Chiu on February 2, 1979 (Exhibit "A") and the 1,400 shares purchased by petitioner from his brother Teng Ching Lay on September 22, 1985 (Exhibit "D"), these shares have been legitimately and legally acquired by petitioner and therefore as new owner of said shares is entitled under the law, to compel respondents to record said shares in the books of the corporation. On the claim of petitioner that he purchased 2,025 shares from stockholder Ismaelita Maluto, the same could not be given total credence. Although the Deed of Assignment (Exhibit "F") covering the assigned number of shares appears to be in order, nevertheless, contrary evidence (Exhibits "K", "4", "14" and "20") which this Hearing Officer gives more weight, would also show that stockholder Ismaelita Maluto owns only 1,440 shares in the respondent corporation. This being the case, petitioner should only be credited to the extent of what the seller, Ismaelita Maluto, really owned. This Hearing Officer cannot also subscribed to the contention of petitioner that in 1981 he made additional contribution to the corporation in the amount of P21,000.00 equivalent to 240 shares. Evidence also shows that since 1981 up to 1988 the corporation's total outstanding capital stock which was also fully paid was only P800,000.00 and no sufficient record would also show that the corporation issued additional shares out of the remaining unissued shares of the corporation. To credit 240 shares more to petitioner's shareholding would certainly exceed the present outstanding capital stock of the corporation. As shown, petitioner had also made formal demands on respondents for the registration of the shares he legally acquired and the issuance of new stock certificates in his name covering those shares (Exhibit G, TSN, page 44, Sept. 1991) but despite persistent demand, respondents continued as they still continue to ignore such valid and legitimate demand. Under the law, if a corporation should wrongfully refuse to record the transfer or issue of new certificate in favor of the transferee, the latter may petition this Commission for a writ of mandamus to compel the corporation to do so. (Price and Sulu Development Corp. vs. Martin, G.R. No. 37281, November 10, 1933, 58 Phil. 707) prcd "Mandamus will be granted provided it is shown that the transferee has no other plain speedy and adequate remedy and that there are no unpaid claims against the stocks whose transfer is being sought to be recorded." (Hager vs. Bryan, G.R. No. L-6230, March 21, 1911, 19 Phil. 138) "Petitioners right to have the transfer registered arose from the time of the transfer. This right became enforceable when he made a demand therefor and respondents unreasonably chose to look the other way and ignored the demand." (Won vs. Wack Wack Golf and Country Club, G.R. No. L-10122, August 30, 1958, 104 Phil. 466) While ostensibly acting to prevent spurious claims against the corporation, it is unfortunate that respondents were apparently motivated by none other than spite and hatred in refusing to record and issue petitioner's shares. Despite petitioner being able to present to respondents copies of deed of sale and stock certificates from whom the shares were acquired (Exhibit "I") respondents, nevertheless, flatly ignored petitioner's legitimate request. As a matter of fact this judicial proceedings could have been averted had respondents acted in good faith and honored petitioner's request for recordation and issuance of new certificates after being shown the proof of his acquisition of said shares. For the respondents' utter disregard of the petitioner's legitimate request without valid and justifiable reason, it is just proper that petitioner be awarded moral damages. Likewise, for the reason that petitioner availed of the services of a lawyer to enforce his right that has been violated by respondents, he should also be entitled to reasonable attorney's fees. WHEREFORE, in view of all the foregoing facts and circumstances, judgment is hereby rendered. A. Ordering respondents to record in the Books of the Corporation the following shares: 1. 480 shares acquired by petitioner from Peter Chin per Deed of Sales dated February 20, 1979; 2. 1,400 shares acquired by petitioner from Teng Ching Lay per Deed of Sale dated September 22, 1985; and 3. 1,440 shares acquired by petitioner from Ismaelita Maluto per Deed of Assignment dated Sept. 2, 1989. B. Ordering respondents to issue corresponding new Certificates of stocks in the name of the petitioner. C. Ordering respondents to pay petitioner moral damages in the amount of One Hundred Thousand (P100,000.00) Pesos and Fifty Thousand (P50,000.00) Pesos for attorney's fees. SO ORDERED. LLpr (SGD.) JAMES K. ABUGAN Hearing Officer