David Lao and Jose Lao v.

Dionisio Lao (Gador) Nature: Petition for review on certiorari of the Amended Decision of the Court of Appeals affirming the Decision of the Regional Trial Court Facts: 1. David and Jose Lao filed a petition with the SEC against Dionisio (President of PFSC). They prayed for: a. To be declared as stockholders and directors of PFSC b. The issuance of certificates of shares in their name c. To be allowed to examine the corporate books of PFSC 2. David and Jose claimed that they are stockholders of PFSC based on the General Information Sheet filed with the SEC by PFSC wherein it was indicated in the General Information Sheet that they were stockholders and directors of the PFSC. 3. David said that he inherited his shares while Jose said that he purchased the stocks directly from Dionisio. 4. Dionisio denied David and Jose s claim. He said that the inclusion of the petitioners name in the General Information Sheet was inadvertently made. 5. Before the case was tried with the SEC, RA 8799 was enacted. This law transferred the jurisdiction on intra-corporate disputes from the SEC to the RTC. So pursuant to the law the case was transferred to the RTC in Cebu. 6. RTC ruled in favor of Dionisio on the ground that; a. David and Jose have no stock certificates in their names. b. Their shares was not registered in the Stock and Transfer Book of the Corporation 7. The CA, however, reversed the RTC s decision. 8. Dionisio filed a motion for reconsideration with the CA. This motion was granted. However, this time the justice who penned the previous CA decision inhibited himself from deciding the case. Thus, a different justice penned the decision. 9. The CA then reversed its previous ruling. This time it ruled in favor of Dionisio. Issue: Is the fact that the name of Jose and David in the General Information Sheet that the PFSC submitted to the SEC, recognized them as the stockholder of the corporation? Held: No. 1. Records show that petitioners have no certificates of stock in their name. A certificate of stock is the evidence of a holder s interest and status in a corporation. a. It is a written instrument signed by the proper officer of a corporation stating and acknowledging that the person named in the document is the owner of a designated number of shares of its stock. b. It is a prima facie evidence that the holder is a shareholder of a corporation. 2. Neither was there any written document with regards to the sale of stocks to the petitioners. a. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorneyin-fact or other person legally authorized to make the transfer. No transefer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation so as to show 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. (Sec. 63, Corporation Code) 3. In contrast, Dionision was able to prove that he is the owner of the disputed shares. 4. While it may be true that David and Jose s name were in the General Information Sheet, this document alone does not conclusively prove that they are shareholders of PFSC. The information in the document will still have to be correlated with the corporate books of PFSC. a. As between the General Information Sheet and Corporate Books, it is the latter that is controlling.