PROVIDENT INTERNATIONAL RESOURCES CORPORATION v JOAQUIN T. VENUS, et al.

G.R. No. 167041, June 17, 2008

FACTS:
Another group, known as the Asistio group, composed of Luis A. Asistio, Lazaro L. Madara,
Alfredo D. Roa III, Joaquin T. Venus, and Jose Ma. Carlos L. Zumel, claimed that the Marcelo
group acquired shares in PIRC as mere trustees for the Asistio group. The Marcelo group
allegedly executed a waiver of pre-emptive right, blank deeds of assignment, and blank deeds
of transfer; endorsed in blank their respective stock certificates over all of the outstanding
capital stock registered in their names; and completed the blank deeds in 2002 to effect
transfers to the Asistio group.
The Company Registration and Monitoring Department (CRMD) of the SEC issued a
certification stating that verification made on the available records of PIRC showed failure to
register its stock and transfer book (STB).
On August 7, 2002, the Asistio group registered PIRC's STB. Upon learning of this, PIRC's
assistant corporate secretary, Celedonio Escaño, Jr., requested the SEC for a certification of
the registration in 1979 of PIRC's STB. Escaño presented the 1979-registered STB bearing the
SEC stamp and the signature of the officer in charge of book registration.
Meanwhile, the Asistio group filed a complaint against the Marcelo group. The Asistio group
prayed that the Marcelo group be enjoined from acting as directors of PIRC, from physically
holding office at PIRC's office, and from taking custody of PIRC's corporate records.
Then, the CRMD of the SEC issued a letter recalling the certification it had issued on August 6,
2002 and canceling the 2002-registered STB. However, one Kennedy B. Sarmiento requested
the SEC not to cancel the 2002-registered STB. The SEC thus scheduled a conference to
determine which of the two STBs is valid.
The Asistio group appealed to the SEC Board of Commissioners. They claimed that the issue
of which of the two STBs is valid is intra-corporate in nature; hence, the RTC, not the SEC,
has jurisdiction.
ISSUE:
Does SEC have jurisdiction to recall and cancel a stock and transfer book (STB) which it
issued?

RULING:
YES. Under Section 5 of RA No. 8799, it can be said that the SEC's regulatory authority over
private corporations encompasses a wide margin of areas, touching nearly all of a
corporation's concerns. This authority more vividly springs from the fact that a corporation
owes its existence to the concession of its corporate franchise from the state. Under its
regulatory responsibilities, the SEC may pass upon applications for, or may suspend or revoke
(after due notice and hearing), certificates of registration of corporations, partnerships and
associations (excluding cooperatives, homeowners' association, and labor unions); compel
legal and regulatory compliances; conduct inspections; and impose fines or other penalties
for violations of the Revised Securities Act, as well as implementing rules and directives of the
SEC, such as may be warranted.
Considering that the SEC, after due notice and hearing, has the regulatory power to revoke
the corporate franchise -- from which a corporation owes its legal existence -- the SEC must
likewise have the lesser power of merely recalling and canceling a STB that was erroneously
registered.
Going to the particular facts of the instant case, the SEC has the primary competence and
means to determine and verify whether the subject 1979 STB presented by the incumbent
assistant corporate secretary was indeed authentic, and duly registered by the SEC as early as
September 1979. As the administrative agency responsible for the registration and monitoring
of STBs, it is the body cognizant of the STB registration procedures, and in possession of the
pertinent files, records and specimen signatures of authorized officers relating to the
registration of STBs. The evaluation of whether a STB was authorized by the SEC primarily
requires an examination of the STB itself and the SEC files. This function necessarily belongs
to the SEC as part of its regulatory jurisdiction. Contrary to the allegations of respondents, the
issues involved in this case can be resolved without going into the intra-corporate
controversies brought up by respondents.
As the regulatory body, it is the SEC's duty to ensure that there is only one set of STB for each
corporation. The determination of whether or not the 1979-registered STB is valid and of
whether to cancel and revoke the August 6, 2002 certification and the registration of the 2002
STB on the ground that there already is an existing STB is impliedly and necessarily within the
regulatory jurisdiction of the SEC.
Simny Guy v Gilbert Guy
GR No. 189486, 5 September 2012
FACTS:

With 519,997 shares of stock as reflected in Stock Certificate Nos. 004-014, herein respondent
Gilbert G. Guy (Gilbert) practically owned almost 80 percent of the 650,000 subscribed capital
stock of GoodGold Realty & Development Corporation (GoodGold), one of the multi-million
corporations which Gilbert claimed to have established in his 30s. GoodGold’s remaining
shares were divided among Francisco Guy (Francisco) with 130,000 shares, Simny Guy (Simny),
Benjamin Lim and Paulino Delfin Pe, with one share each, respectively. Gilbert is the son of
spouses Francisco and Simny. Simny, one of the petitioners, however, alleged that it was she
and her husband who established GoodGold, putting the bulk of its shares under Gilbert’s
name. She claimed she and Francisco put the future of the Guy group of companies in Gilbert’s
hands.

Simny further claimed that upon the advice of their lawyers, upon the incorporation of
GoodGold, they issued stock certificates reflecting the shares held by each stockholder duly
signed by Francisco as President and Atty. Emmanuel Paras as Corporate Secretary, with
corresponding blank endorsements at the back of each certificate – including Stock Certificate
Nos. 004-014 under Gilbert’s name. These certificates were all with Gilbert’s irrevocable
endorsement and power of attorney to have these stocks transferred in the books of
corporation. All of these certificates were always in the undisturbed possession of the
spouses Francisco and Simny, including Stock Certificate Nos. 004-014.

In 1999, the aging Francisco instructed Benjamin Lim, a nominal shareholder of GoodGold and
his trusted employee, to collaborate with Atty. Emmanuel Paras, to redistribute GoodGold’s
shareholdings evenly among his children, namely, Gilbert, Grace Guy-Cheu (Grace), Geraldine
Guy (Geraldine), and Gladys Guy (Gladys), while maintaining a proportionate share for himself
and his wife, Simny.

Gilbert filed a complaint captioned as "Intra-Corporate Controversy: For the Declaration of

Nullity of Fraudulent Transfers of Shares of Stock Certificates, Fabricated Stock Certificates,
Falsified General Information Sheets, Minutes of Meetings, and Damages with Application for
the Issuance of a Writ of Preliminary and Mandatory Injunction," against his mother, Simny,
his sisters, Geraldine, Gladys, and the heirs of his late sister Grace.

Gilbert alleged that he never signed any document which would justify and support the
transfer of his shares to his siblings and that he has in no way, disposed, alienated,
encumbered, assigned or sold any or part of his shares in GoodGold. He also denied the
existence of the certificates of stocks. According to him, "there were no certificates of stocks
under his name for the shares of stock subscribed by him were never issued nor delivered to
him from the time of the inception of the corporation."

Gilbert added that the Amended General Information Sheets (GIS) of GoodGold for the years
2000 to 2004 which his siblings submitted to the Securities and Exchange Commission (SEC)
were spurious as these did not reflect his true shares in the corporation which supposedly
totaled to 595,000 shares;16 that no valid stockholders’ annual meeting for the year 2004 was
held, hence proceedings taken thereon, including the election of corporate officers were null
and void;17 and, that his siblings are foreign citizens, thus, cannot own more than forty percent
of the authorized capital stock of the corporation.18

ISSUE:

Is the transfer of the shares of stock in favor of the Gilbert’s mother and siblings valid?

RULING:

YES. With Gilbert’s failure to allege specific acts of fraud in his complaint and his failure to
rebut the NBI report, this Court pronounces, as a consequence thereof, that the signatures
appearing on the stock certificates, including his blank endorsement thereon were authentic.
With the stock certificates having been endorsed in blank by Gilbert, which he himself
delivered to his parents, the same can be cancelled and transferred in the names of herein
petitioners.

When a stock certificate is endorsed in blank by the owner thereof, it constitutes what is
termed as "street certificate," so that upon its face, the holder is entitled to demand its
transfer into his name from the issuing corporation. Such certificate is deemed quasi-
negotiable, and as such the transferee thereof is justified in believing that it belongs to the
holder and transferor.

As an exception to the general rule enunciated above, where stock certificates endorsed in blank
were stolen from the possession of the beneficial owners thereof constraining this Court to declare
the transfer void for lack of delivery and want of value, the same cannot apply to Gilbert because the
stock certificates which Gilbert endorsed in blank were in the undisturbed possession of his parents
who were the beneficial owners thereof and who themselves as such owners caused the transfer in
their names. Indeed, even if Gilbert’s parents were not the beneficial owners, an endorsement in
blank of the stock certificates coupled with its delivery, entitles the holder thereof to demand the
transfer of said stock certificates in his name from the issuing corporation.