China Banking Corporation vs. Court of Appeals
[GR 117604, 26 March 1997] First Division, Kapunan (J! 4 concur Facts: "n
21 #u$ust 1974, Ga%icano &a%apatia, Jr', a stocho%)*r o+ a%%*- Go%+ . &ountr&%u/, nc' (G&&, p%*)$*) his toc &*rti+i cat* 1219 to &hina anin$ &orporation (&&' "n 16 *pt*3/*r 1974, && rot* G&& r*5u*stin$ that th* p%*)$* a$r**3*nt /* r*cor)*) in its /oos' n a %*tt*r )at*) 27 *pt*3/*r 1974, G&& r*p%i*) that th* )**) o+ p%*)$* **cut*) /- &a%apatia in &&s +avor as ) u%- not*) in its corporat* /oos' "n 8 #u$ust 198, &a%apatia o/tain*) a %oan o+ :20,000'00 +ro3 &&, pa-3*nt o+ hich as s*cur*) /- th* p%*)$* a$r**3*nt sti%% *istin$ /*t**n &a%apatia an) &&' Du* to &a%apatias +ai%ur* to pa- his o/%i$ation, &&, on 12 #pri% 19;, +i%*) a p*tition +or *tra' )* *ra o+ Mani%a, r*5u*stin$ th* %att*r to con)uct a pu/%ic auction sa%* o+ th* p%*)$*) stoc' "n 14 Ma- 19;, && in+or3*) G&& o+ th* +or*c%osur* proc**)in$s an) r*5u*st*) that th* p%*)$*) stoc /* trans+*rr*) to its na3* an) th* sa3* /* r*cor)*) in th* corporat* /oos' ?o*v*r, on 1; Ju%- 19;, G&& rot* && *pr*ssin$ its ina/i%it- to acc*)* to &&s r*5u*st in vi* o+ &a%apatias uns*tt%*) accounts ith th* c%u/' D*spit* th* +or*$oin$, =otar- :u/%ic )* *ra h*%) a pu/%ic auction on 17 *pt*3/*r 19; an) && *3*r$*) as th* hi$h*st /i))*r at :20,000'00 +or th* p%*)$*) stoc' &ons*5u*nt%-, && as issu*) th* corr*spon)in$ c*rti+icat* o+ sa%*' "n 21 =ov*3/*r 19;, G&& s*nt &a%apatia a notic* )*3an)in$ +u%% pa-3*nt o+ his ov*r)u* account in th* a3ount o+ :1,78'24' ai) notic* as +o%%o*) /- a )*3an) %*tt*r )at*) 12 D*c*3/*r 19; +or th* sa3* a3ount an) anoth*r notic* )at*) 22 =ov*3/*r 196 +or :28,48'24' "n 4 D*c*3/*r 196, G&& caus*) to /* pu/%ish*) in th* n*spap*r Dai%- @pr*ss a notic* o+ auction sa%* o+ a nu 3/*r o+ its stoc c*rti+icat*s, to /* h*%) on 10 D*c*3/*r 196 at 10!00 a'3' nc%u)*) th*r*in as &a%apatias on shar* o+ stoc (toc &*rti+icat* 1219' >hrou$h a %*tt*r )at*) 1; D*c*3/*r 196, G&& in+or3*) &a%apatia o+ th* t*r3ination o+ his 3*3/*rship )u* to th* sa%* o+ his shar* o+ stoc in th* 10 D*c*3/*r 196 auction' "n ; Ma- 199, && a)vis*) G&& that it is th* n* on*r o+ &a%apatias toc &*rti+icat* 1219 /- virtu* o+ /*in$ th* hi$h*st /i))*r in th* 17 *pt*3/*r 19; auction an) r*5u*st*) that a n* c*rti+icat* o+ stoc /* issu*) in its na3*' "n 2 March 1990, G&& r*p%i*) that A+or r*ason o+ )*%in5u*nc-A &a%apatias stoc as so%) at th* pu/%ic auction h*%) on 10 D*c*3/*r 196 +or :2;,000'00' "n 9 March 1990, && prot*st*) th* sa%* /- G&& o+ th* su/<*ct shar* o+ stoc an) th*r*a+t*r +i%*) a cas* ith th* R*$iona% >ria% &ourt o+ Maati +or th* nu%%i+ication o+ th* 10 D*c*3/*r 196 auction an) +or th* issuanc* o+ a n* stoc c*rti+icat* in its na3*' "n 1 Jun* 1990, th* R*$iona% >ria% &ourt o+ Maati )is3iss*) th* co3p%aint +or %ac o+
)*cision in +avor o+ G&&, statin$ in th* 3ain that consi)*rin$ that th* sai) shar* is )*%in5u*nt, G&& ha) va%i) r*ason not to trans+*r th* shar* in th* na3* o+ && in th* /oos o+ G&& unti% %i5ui)ation o+ )*%in5u*nc-' &ons*5u*nt%-, th* cas* as )is3iss*)' "n 14 #pri% 1992, ?*arin$ "++ic*r :*r*a )*ni*) &&s 3otion +or r*consi)*ration' && app*a%*) to th* @& *n /anc an) on 4 Jun* 1998, th* &o33ission issu*) an or)*r r*v*rsin$ th* )*cision o+ its h*arin$ o++ic*rC ho%)in$ that && has a prior ri$ht ov*r th* p%*)$*) shar* an) /*caus* o+ p%*)$ors +ai%ur* to pa- th* principa% )*/t upon 3aturit-, && can proc**) ith th* +or*c%osur* o+ th* p%*)$*) shar*C )*c%arin$ that th* auction sa%* con)uct*) /- G&& on 10 D*c*3/*r 196 is )*c%ar*) =EE an) "DC an) or)*rin$ G&& to issu* anoth*r 3*3/*rship c*rti+icat* in th* na3* o+ &&' G&& sou$ht r*consi)*ration o+ th* or)*r' ?o*v*r, th* @& )*ni*) th* sa3* in its r*so%ution )at*) 7 D*c*3/*r 1998' >h* su))*n turn o+ *v*nts s*nt G&& to s** r*)r*ss +ro3 th* &ourt o+ #pp*a%s' "n 1; #u$ust 1994, th* &ourt o+ #pp*a%s r*n)*r*) its )*cision nu%%i+-in$ an) s*ttin$ asi)* th* or)*rs o+ th* @& an) its h*arin$ o++ic*r on $roun) o+ %ac o+ h* &ourt o+ #pp*a%s )*c%ar*) that th* controv*rs- /*t**n && an) G&& is not intraBcorporat*C nu%%i+-in$ th* @& or)*rs an) )is3issin$ &&s co3p%aint' && 3ov*) +or r*consi)*ration /ut th* sa3* as )*ni*) /- th* &ourt o+ #pp*a%s in its r*so%ution )at*) ; "cto/*r 1994' && +i%*) th* p*tition +or r*vi* on c*rtiorari' Issue:h*th*r
&& is /oun) /- G&&s /-B%as'
Held: n or)*r to /* /oun), th* thir) part- 3ust hav* ac5uir*) no%*)$* o+ th* p*rtin*nt /-B %as at th* ti3* th* transaction or a$r**3*nt /*t**n sai) thir) part- an) th* shar*ho%)*r as
*nt*r*) into' ?*r*in, at th* ti3* th* p%*)$* a$r**3*nt as **cut*)' G&& cou%) hav* *asi%in+or3*) && o+ its /-B%as h*n it s*nt notic* +or3a%%- r*co$niHin$ && as p%*)$** o+ on* o+ its shar*s r*$ist*r*) in &a%apatias na3*' &&s /*%at*) notic* o+ sai) /-B%as at th* ti3* o+ +or*c%osur* i%% not su++ic*' -B%as si$ni+i*s th* ru%*s an) r*$u%ations or privat* %as *nact*) /- th* corporation to r*$u%at*, $ov*rn an) contro% its on actions, a++airs an) conc*rns an) its stocho%)*rs or 3*3/*rs an) )ir*ctors an) o++ic*rs ith r*%ation th*r*to an) a3on$ th*3s*%v*s in th*ir r*%ation to it' n oth*r or)s, /-B%as ar* th* r*%ativ*%- p*r3an*nt an) continuin$ ru%*s o+ action a)opt*) /- th* corporation +or its on $ov*rn3*nt an) that o+ th* in)ivi)ua%s co3posin$ it an) havin$ th* )ir*ction, 3ana$*3*nt an) contro% o+ its a++airs, in ho%* or in part, in th* 3ana$*3*nt an) contro% o+ its a++airs an) activiti*s' >h* purpos* o+ a /-B%a is to r*$u%at* th* con)uct an) )*+in* th* )uti*s o+ th* 3*3/*rs toar)s th* corporation an) a3on$ th*3s*%v*s' >h*- ar* s*%+Bi3pos*) an), a%thou$h a)opt*) pursuant to statutor- authorit-, hav* no status as pu/%ic %a' >h*r*+or*, it is th* $*n*ra%%- acc*pt*) ru%* that thir) p*rsons ar* not /oun) /- /-B %as, *c*pt h*n th*- hav* no%*)$* o+ th* provisions *ith*r actua%%- or constructiv*%-' For th* *c*ption to th* $*n*ra% acc*pt*) ru%* that thir) p*rsons ar* not /oun) /- /-B%as to /* app%ica/%* an) /in)in$ upon th* p%*)$**, no%*)$* o+ th* provisions o+ th* G&& -B%as 3ust /* ac5uir*) at th* ti3* th* p%*)$* a$r**3*nt as contract*)' Kno%*)$* o+ sai) provisions, *ith*r actua% or constructiv*, at th* ti3* o+ +or*c%osur* i%% not a++*ct p%*)$**s ri$ht
ov*r th* p%*)$*) shar*' #rtic%* 207 o+ th* &ivi% &o)* provi)*s that it is a%so o+ th* *ss*nc* o+ th*s* contracts that h*n th* principa% o/%i$ation /*co3*s )u*, th* thin$s in hich th* p%*)$* or 3ort$a$* consists 3a-/* a%i*nat*) +or th* pa-3*nt to th* cr*)itor' Furth*r, G&&s cont*ntion that && is )ut-B/oun) to no its /-B%as /*caus* o+ #rtic%* 2099 o+ th* &ivi% &o)* hich stipu%at*s that th* cr*)itor 3ust ta* car* o+ th* thin$ p%*)$*) ith th* )i%i$*nc* o+ a $oo) +ath*r o+ a +a3i%-, +ai%s to convinc*' && as n*v*r in+or3*) o+ &a%apatias unpai) accounts an) th* r*strictiv* provisions in G&&s /-B%as' Furth*r3or*, *ction 68 o+ th* &orporation &o)* hich provi)*s that Ano shar*s o+ stoc a$ainst hich th* corporation ho%)s an- unpai) c%ai3 sha%% /* trans+*ra/%* in th* /oos o+ th* corporationA cannot /* uti%iH*) /- G&&' >h* t*r3 Aunpai) c%ai3A r*+*rs to Aan- unpai) c%ai3 arisin$ +ro3 unpai) su/scription, an) not to anin)*/t*)n*ss hich a su/scri/*r or stocho%)*r 3a- o* th* corporation arisin$ +ro3 an- oth*r transaction'A ?*r*in, th* su/scription +or th* shar* in 5u*stion has /**n +u%%- pai) as *vi)*nc*) /- th* issuanc* o+ M*3/*rship &*rti+icat* 1219' hat &a%apatia o*) th* corporation *r* 3*r*%- th* 3onth%- )u*s' ?*nc*, *ction 68 )o*s not app%-'
FIRST DIVISION
[G.R. No. 117604. March 26, 1997]
CHINA BANKING CORPORATION, petitioner, vs. COURT O APP!A"#, a$% &A""!' GO" a$% COUNTR' C"UB, INC ., respondents. (!CI#ION KAPUNAN, J.)
Through a petition for review on certiorari under Rule 45 of the Revised Rules of Court, petitioner China an!ing Corporation see!s the reversal of the de"ision of the Court of #ppeals dated $5 #ugust $%%4 nullif&ing the Se"urities and '("hange Co))ission*s order and resolution dated 4 +une $%% and - De"e).er $%%, respe"tivel&, for la"! of /urisdi"tion0 Si)ilarl& i)pugned is the Court of #ppeals* resolution dated 4 Septe).er $%%4 whi"h denied petitioner*s )otion for re"onsideration0 The "ase unfolds thus1
On 2$ #ugust $%-4, 3ali"ano Calapatia, +r0 Calapatia, for .revit& a sto"!holder of private respondent Valle& 3olf 6 Countr& Clu., In"0 V3CCI, for .revit&, pledged his Sto"! Certifi"ate No0 $2$% to petitioner China an!ing Corporation CC, for .revit&0 7$8
On $9 Septe).er $%-4, petitioner wrote V3CCI re:uesting that the afore)entioned pledge agree)ent .e re"orded in its .oo!s0 728
In a letter dated 2- Septe).er $%-4, V3CCI replied that the deed of pledge e(e"uted .& Calapatia in petitioner*s favor was dul& noted in its "orporate .oo!s0 78
On #ugust $%;, Calapatia o.tained a loan of <2=,===0== fro) petitioner, pa&)ent of whi"h was se"ured .& the aforestated pledge agree)ent still e(isting .etween Calapatia and petitioner0 748
Due to Calapatia*s failure to pa& his o.ligation, petitioner, on $2 #pril $%;5, filed a petition for e(tra/udi"ial fore"losure .efore Notar& anila, re:uesting the latter to "ondu"t a pu.li" au"tion sale of the pledged sto"!0 758
On $4 >a& $%;5, petitioner infor)ed V3CCI of the a.ove?)entioned fore"losure pro"eedings and re:uested that the pledged sto"! .e transferred to its petitioner*s na)e and the sa)e .e re"orded in the "orporate .oo!s0 @owever, on $5 +ul& $%;5, V3CCI wrote petitioner e(pressing its ina.ilit& to a""ede to petitioner*s re:uest in view of Calapatia*s unsettled a""ounts with the "lu.0 798
Despite the foregoing, Notar&
On 2$ Nove).er $%;5, V3CCI sent Calapatia a noti"e de)anding full pa&)ent of his overdue a""ount in the a)ount of <$;,-;0240 Said noti"e was followed .& a de)and letter dated $2 De"e).er $%;5 for the sa)e a)ount and another noti"e dated 22 Nove).er $%;9 for <2,4;0240 7;8
7%8
7$=8
On 4 De"e).er $%;9, V3CCI "aused to .e pu.lished in the newspaper Dail& '(press a noti"e of au"tion sale of a nu).er of its sto"! "ertifi"ates, to .e held on $= De"e).er $%;9 at $=1== a0)0 In"luded therein was Calapatia*s own share of sto"! Sto"! Certifi"ate No0 $2$%0 Through a letter dated $5 De"e).er $%;9, V3CCI infor)ed Calapatia of the ter)ination of his )e).ership due to the sale of his share of sto"! in the $= De"e).er $%;9 au"tion0 7$$8
On 5 >a& $%;%, petitioner advised V3CCI that it is the new owner of Calapatia*s Sto"! Certifi"ate No0 $2$% .& virtue of .eing the highest .idder in the $- Septe).er $%;5 au"tion and re:uested that a new "ertifi"ate of sto"! .e issued in its na)e0 7$28
On 2 >ar"h $%%=, V3CCI replied that Afor reason of delin:uen"&A Calapatia*s sto"! was sold at the pu.li" au"tion held on $= De"e).er $%;9 for <25,===0==0 7$8
On % >ar"h $%%=, petitioner protested the sale .& V3CCI of the su./e"t share of sto"! and thereafter filed a "ase with the Regional Trial Court of >a!ati for the
nullifi"ation of the $= De"e).er $%;9 au"tion and for the issuan"e of a new sto"! "ertifi"ate in its na)e0 7$48
On $; +une $%%=, the Regional Trial Court of >a!ati dis)issed the "o)plaint for la"! of /urisdi"tion over the su./e"t )atter on the theor& that it involves an intra? "orporate dispute and on 2- #ugust $%%= denied petitioner*s )otion for re"onsideration0 On 2= Septe).er $%%=, petitioner filed a "o)plaint with the Se"urities and '("hange Co))ission S'C for the nullifi"ation of the sale of Calapatia*s sto"! .& V3CCIB the "an"ellation of an& new sto"! "ertifi"ate issued pursuant theretoB for the issuan"e of a new "ertifi"ate in petitioner*s na)eB and for da)ages, attorne&*s fees and "osts of litigation0 On +anuar& $%%2, S'C @earing Offi"er >anuel <0
7$98
On $4 #pril $%%2, @earing Offi"er
>h* &o33ission en banc /*%i*v*s that app*%%antBp*tition*r has a prior ri$ht ov*r th* p%*)$*) shar* an) /*caus* o+ p%*)$ors +ai%ur* to pa- th* principa% )*/t upon 3aturit-, app*%%antBp*tition*r can proc**) ith th* +or*c%osur* o+ th* p%*)$*) shar*' WHEREFORE, pr*3is*s consi)*r*), th* "r)*rs o+ Januar- 8, 1992 an) #pri% 14, 1992 ar* h*r*/- SET ASIE. >h* auction sa%* con)uct*) /- app*%%**Br*spon)*nt &%u/ on D*c*3/*r 10, 196 is )*c%ar*) = EE an) "D' Fina%%-, app*%%**B r*spon)*nt &%u/ is or)*r*) to issu* anoth*r 3*3/*rship c*rti+icat* in th* na3* o+ app*%%antBp*tition*r /an' SO ORERE'
[1]
V3CCI sought re"onsideration of the a.ove"ited order0 @owever, the S'C denied the sa)e in its resolution dated - De"e).er $%%0 7$%8
The sudden turn of events sent V3CCI to see! redress fro) the Court of #ppeals0 On $5 #ugust $%%4, the Court of #ppeals rendered its de"ision nullif&ing and setting aside the orders of the S'C and its hearing offi"er on ground of la"! of /urisdi"tion over the su./e"t )atter and, "onse:uentl&, dis)issed petitioner*s srcinal "o)plaint0 The Court of #ppeals de"lared that the "ontrovers& .etween CC and V3CCI is not intra? "orporate0 It ruled as follows1
n or)*r that th* r*spon)*nt &o33ission can ta* co$niHanc* o+ a cas*, th* controv*rs- 3ust p*rtain to an- o+ th* +o%%oin$ r*%ationships! (a /*t**n th* corporation, partn*rship or association an) th* pu/%icC (/ /*t**n th* corporation, partn*rship or association an) its stocho%)*rs, partn*rs, 3*3/*rs, or o++ic*rsC (c /*t**n th* corporation, partn*rship or association an) th* stat* in so +ar as its +ranchis*, p*r3it or %ic*ns* to op*rat* is conc*rn*), an) () a3on$ th* stocho%)*rs, partn*rs or associat*s th*3s*%v*s (nion G%ass an) &ontain*r &orporation vs' @&, =ov*3/*r 2, 198, 126 &R# 81' >h* *sta/%ish3*nt o+ an- o+ th* r*%ationship 3*ntion*) i%% not n*c*ssari%- a%a-s con+*r h* stat*3*nt 3a)* in :hi%* Minin$ &orp' vs' R*-*s, 11 &R# 602, that th* ru%* a)3its o+ no *c*ptions or )istinctions is not that a/so%ut*' >h* /*tt*r po%ic- in )*t*r3inin$ hich /o)- has
[20]
@en"e, this petition wherein the following issues were raised1 II
I##U!#
?@>?@R "R @EI =">@RR@D R@:"=D@=> Division GR# ?@=! &"R> "F #::@#E (For3*r @i$hth
$0 IT NIFI'D #ND S'T #SID' T@' D'CISION D#T'D +N' =4, $%% #ND ORD'R D#T'D D'C'>'R =-, $%% OF T@' S'CRITI'S #ND 'EC@#N3' CO>>ISSION 'N #NC, #ND @'N IT DIS>ISS'D T@' CO><#INT OF <'TITION'R #3#INST R'S#TT'R OF T@' C#S'B 20 IT F#I'D TO #FFIR> T@' D'CISION OF T@' S'CRITI'S #ND 'EC@#N3' CO>>ISSION 'N #NC D#T'D +N' =4, $%% D'S'>'RS@I< C'RTIFIC#T' NO0 $2$% FOR ON' S@#R' OF R'S
The petition is granted0 The .asi" issue we )ust first hurdle is whi"h .od& has /urisdi"tion over the "ontrovers&, the regular "ourts or the S'C0 <0D0 No0 %=2?# "onferred upon the S'C the following pertinent powers1
@&>"= 8' >h* &o33ission sha%% hav* a/so%ut*
@&>"= ;' n a))ition to th* r*$u%ator- an) a)
c &ontrov*rsi*s in th* *%*ction or appoint3*nt o+ )ir*ctors, trust**s, o++ic*rs, or 3ana$*rs o+ such corporations, partn*rships or associations' ) :*titions o+ corporations, partn*rships or associations to /* )*c%ar*) in th* stat* o+ susp*nsion o+ pa-3*nts in cas*s h*r* th* corporation, partn*rship or association poss*ss*s prop*rt- to cov*r a%% o+ its )*/ts /ut +or*s**s th* i3possi/i%it- o+ 3**tin$ th*3 h*n th*- r*sp*ctiv*%- +a%% )u* or in cas*s h*r* th* corporation, partn*rship or association has no su++ici*nt ass*ts to cov*r its %ia/i%iti*s, /ut is un)*r th* Mana$*3*nt &o33itt** cr*at*) pursuant to this D*cr**' The afore"ited law was e(pounded upon in Vira& v0 C# and in the re"ent "ases of >ainland Constru"tion Co0, In"0v0 >ovilla and ernardo v0 C#, thus1 7228
728
7248
' ' ' >h* /*tt*r po%ic- in )*t*r3inin$ hich /o)- has
& virtue of the afore?)entioned sale, petitioner .e"a)e a bona fide sto"!holder of V3CCI and, therefore, the "onfli"t that arose .etween petitioner and V3CCI aptl& e(e)plies an intra?"orporate "ontrovers& .etween a "orporation and its sto"!holder under Se"0 5. of <0D0 %=2?#0 #n i)portant "onsideration, )oreover, is the nature of the "ontrovers& .etween petitioner and private respondent "orporation0 V3CCI "lai)s a prior right over the su./e"t share an"hored )ainl& on Se"0 , #rt VIII of its .&?laws whi"h provides that Aafter a )e).er shall have .een posted as delin:uent, the oard )a& order hisJherJits share sold to satisf& the "lai)s of the Clu. 0 0 0A It is pursuant to this provision that 7298
V3CCI also the su./e"t at pu.li" of whi"h it wasshould the highest .idder0 V3CCI "apssold its argu)ent .&share asserting that au"tion, its "orporate .&?laws prevail0 The .one of "ontention, thus, is the proper interpretation and appli"ation of V3CCI*s
afore:uoted .&?laws, a su./e"t whi"h irrefuta.l& "alls for the spe"ial "o)peten"e of the S'C0
* r*it*rat* h*r*in th* soun) po%ic- *nunciat*) /- th* &ourt in #/*
[27]
6' n th* +i+ti*s, th* &ourt tain$ co$niHanc* o+ th* 3ov* to v*st h* &ourt h*%) that un)*r th* As*ns*B3ain$ an) *p*)itious )octrin* o+ pri3ar- hus, in 194, th* &ourt not*) that A/*t**n th* po*r %o)$*) in an a)3inistrativ* /o)- an) a court, th* un3istaa/%* tr*n) has /**n to r*+ *r it to th* +or3*r' ncr*asin$%-, this &ourt has /**n co33itt*) to th* vi* that un%*ss th* %a sp*as c%*ar%- an) un*5uivoca/%-, th* choic* shou%) +a%% on [an a)3inistrativ* a$*nc-']A >h* &ourt in th* *ar%i*r cas* o+ @/on v' D* GuH3an, not*) that th* %a3ain$ authorit-, in r*storin$ to th* %a/or ar/it*rs an) th* =ER& th*ir h* @&, th*r*+or*, too prop*r co$niHanc* o+ th* instant cas*'
V3CCI further "ontends that petitioner is estopped fro) den&ing its earlier position, in the first "o)plaint it filed with the RTC of >a!ati Civil Case No0 %=?$$$2 that there is no intra?"orporate relations .etween itself and V3CCI0 V3CCI*s "ontention la"!s )erit0 In Ka)ora v0 Court of #ppeals, de"lared that1
72;8
this Court, through >r0 +usti"e Isagani #0 Cru,
t +o%%os that as a ru%* th* +i%in$ o+ a co3p%aint ith on* court hich has no h* p%ainti++ is not *stopp*) +ro3 )oin$ so si3p%- /*caus* it 3a)* a 3ista* /*+or* in th* choic* o+ th* prop*r +oru3 ' ' ' e re)ind V3CCI that in the sa)e pro"eedings .efore the RTC of >a!ati, it "ategori"all& stated in its )otion to dis)iss that the "ase .etween itself and petitioner is intra?"orporate and insisted that it is the S'C and not the regular "ourts whi"h has /urisdi"tion0 This is pre"isel& the reason wh& the said "ourt dis)issed petitioner*s "o)plaint and led to petitioner*s re"ourse to the S'C0 @aving resolved the issue on /urisdi"tion, instead of re)anding the whole "ase to the Court of #ppeals, this Court li!ewise dee)s it pro"edurall& sound to pro"eed and rule on its )erits in the sa)e pro"eedings0 It )ust .e unders"ored that petitioner did not "onfine the instant petition for review on "ertiorari on the issue of /urisdi"tion0 In its assign)ent of errors, petitioner spe"ifi"all& raised :uestions on the )erits of the "ase0 In turn, in its responsive pleadings, private respondent dul& answered and "ountered all the issues raised .& petitioner0 #ppli"a.le to this "ase is the prin"iple su""in"tl& enun"iated in the "ase of @eirs of Crisanta 3a.riel?#l)oradie v0 Court of #ppeals, "iting 's"udero v0 Dula& and The Ro)an Catholi" #r"h.ishop of >anilav0 Court of #ppeals1 72%8
7=8
7$8
n th* int*r*st o+ th* pu/%ic an) +or th* *p*)itious a)3inistration o+
is c%oth*) ith a3p%* authorit- to r*vi* 3att*rs, *v*n thos* not rais*) on app*a% i+ it +in)s that th*ir consi)*ration is n*c*ssar- in arrivin$ at a r0 +usti"e Ri"ardo +0 Fran"is"o, ruled in this wise1 728
#t th* outs*t, th* &ourts att*ntion is )ran to th* +act that that sinc* th* +i%in$ o+ this suit /*+or* th* tria% court, non* o+ th* su/stantia% issu*s hav* /**n r*so%v*)' >o avoi) an) $%oss ov*r th* issu*s rais*) /- th* parti*s, as hat th* tria% court an) r *spon)*nt &ourt o+ #pp*a%s )i), ou%) un)u%- pro%on$ this %iti$ation invo%vin$ a rath*r si3p%* cas* o+ +or*c%osur* o+ 3ort$a$*' n)ou/t*)%-, this i%% run count*r to th* avo*) purpos* o+ th* ru%*s, i'*', to assist th* parti*s in o/tainin$ h* &ourt, th*r*+or*, +**%s that th* c*ntra% issu*s o+ th* cas*, a%/*it unr*so%v*) /- th* courts /*%o, shou%) no /* s*tt%*) sp*cia%%- as th*- invo%v*) pur* 5u*stions o+ %a' Furth*r3or*, th* p%*a)in$s o+ th* r*sp*ctiv* parti*s on +i%* hav* a3p%- v*nti%at*) th*ir various positions an) ar$u3*nts on th* 3att*r n*c*ssitatin$ pro3pt a)
748
V3CCI*s "ontention is un)eritorious0 # "areful perusal of the pledge agree)ent will readil& reveal that the "ontra"ting parties e(pli"itl& stipulated therein that the said pledge will also stand as se"urit& for an& future advan"e)ents or renewals thereof that Calapatia the pledgor )a& pro"ure fro) petitioner1 (((
>his p%*)$* is $iv*n as s*curit- +or th* pro3pt pa-3*nt h*n )u* o+ a%% %oans, ov*r)ra+ts, pro3issor- not*s, )ra+ts, /i%%s or *chan$*, )iscounts, an) a%% oth*r o/%i$ations o+ *v*r- in) hich hav* h*r*to+or* /**n contract*), or hich 3ah*r*a+t*r /* contract*), /- th* :E@DG"R( an)or D@>"R( or an- on* o+ th*3, in +avor o+ th* :E@DG@@, inc%u)in$ )iscounts o+ &hin*s* )ra+ts, /i%%s o+ *chan$*,
pro3issor- not*s, *tc', ithout an- +urth*r *n)ors*3*nt /- th* :E@DG"R( an)or D*/tor(s up to th* su3 o+ >@=>I >?"#=D (:20,000'00 :@", to$*th*r ith th* accru*) int*r*st th*r*on, as h*r*ina+t*r provi)*), p%us th* costs, %oss*s, )a3a$*s an) *p*ns*s (inc%u)in$ attorn*-s +**s hich :E@DG@@ 3a- incur in conn*ction ith th* co%%*ction th*r*o+' (@3phasis ours' [8;]
The validit& of the pledge agree)ent .etween petitioner and Calapatia "annot thus .e held suspe"t .& V3CCI0 #s "andidl& e(plained .& petitioner, the pro)issor& note of #ugust $%; in the a)ount of <2=,===0== was .ut a renewal of the first pro)issor& note "overed .& the sa)e pledge agree)ent0 V3CCI li!ewise insists that due to Calapatia*s failure to settle his delin:uent a""ounts, it had the right to sell the share in :uestion in a""ordan"e with the e(press provision found in its .&?laws0 a& $%;5 of the fore"losure pro"eedings initiated against Calapatia*s pledged share, although Calapatia has .een delin:uent in pa&ing his )onthl& dues to the "lu. sin"e $%-50 Stranger still, petitioner, who) V3CCI had offi"iall& re"ognied as the pledgee of Calapatia*s share, was neither infor)ed nor furnished "opies of these letters of overdue a""ounts until V3CCI itself sold the pledged share at another pu.li" au"tion0 & doing so, V3CCI "o)pletel& disregarded petitioner*s rights as pledgee0 It even failed to give petitioner noti"e of said au"tion sale0 Su"h a"tuations of V3CCI thus .elie its "lai) of good faith0 In defending its a"tions, V3CCI li!ewise )aintains that petitioner is .ound .& its .&? laws0 It argues in this wise1
>h* $*n*ra% ru%* r*a%%- is that thir) p*rsons ar* not /oun) /- th* /-B%as o+ a corporation sinc* th*- ar* not priv- th*r*to (F%*isch*r v' otica =o%asco, 47 :hi%' ;4' >h* *c*ption to this is h*n thir) p*rsons hav* actua% or constructiv* no%*)$* o+ th* sa3*' n th* cas* at /ar, p*tition*r ha) actua% no%*)$* o+ th* /-B %as o+ privat* r*spon)*nt h*n p*tition*r +or*c%os*) th* p%*)$* 3a)* /- &a%apatia an) h*n p*tition*r purchas*) th* shar* +or*c%os*) on *pt*3/*r 17, 19;' >his is prov*n /- th* +act that prior th*r*to, i'*', on Ma- 14, 19; p*tition*r *v*n 5uot*) a portion o+ privat* r*spon)*nts /-B%as hich is 3at*ria% to th* issu* h*r*in in a %*tt*r it rot* to privat* r*spon)*nt' *caus* o+ this actua% no%*)$* o+ such /-B%as th*n th* sa3* /oun) th* p*tition*r as o+ th* ti3* h*n p*tition*r purchas*) th* shar*' inc* th* /-B%as as a%r*a)- /in)in$ upon p*tition*r h*n th* %att*r purchas*) th* shar* o+ &a%apatia on *pt*3/*r 17, 19; th*n th* p*tition*r purchas*) th* sai) shar* su/<*ct to th* ri$ht o+ th* privat* r *spon)*nt to s*%% th* sai) shar* +or r*a sons o+ )*%in5u*nc- an) th* ri$ht o+ privat* r*spon)*nt to hav* a +irst %i*n on sai) shar*s as th*s* ri$hts ar* provi)*) +or in th* /-B%as v*r- v*r- c%*ar%-' [86]
V3CCI )isunderstood the i)port of our ruling in Fleis"herv0 oti"a Nolas"o Co01
7-8
#n) 3or*ov*r, th* /-B%a no in 5u*stion cannot hav* an- *++*ct on th* app*%%**' ?* ha) no no%*)$* o+ such /-B%a h*n th* shar*s *r* assi$n*) to hi3' ?* o/tain*) th*3 in $oo) +aith an) +or a va%ua/%* consi)*ration' ?* as not a priv- to th* contract cr*at*) /- sai) /-B%a /*t**n th* shar*ho%)*r Manu*% GonHa%*s an) th* otica =o%asco, nc' ai) /-B%a cannot op*rat* to )*+*at his ri$hts as a purchas*r' A#n unauthoriH*) /-B%a +or/i))in$ a shar*ho%)*r to s*%% his shar*s ithout +irst o++*rin$ th*3 th* corporation +orcontract, a p*rio)a%thou$h o+ thirt- his )a-sassi$nor is not /in)in$ an assi$n** o+ th*tostoc as a p*rsona% n* o+upon th* /-B%a an) too part in its a)option'A (10 &-c', ;79C r*%an) vs' G%o/* Mi%%in$ &o', 21 R'', 9' Ah*n no r*striction is p%ac*) /- pu/%ic %a on th* trans+*r o+ corporat* stoc, a purchas*r is not a++*ct*) /- an- contractua% r*striction o+ hich h* ha) no notic*'A (rin*rho++BFarris >rust . avin$s &o' vs' ?o3* Eu3/*r &o', 11 Mo', 447' A>h* assi$n3*nt o+ shar*s o+ stoc in a corporation /- on* ho has ass*nt*) to an unauthoriH*) /-B%a has on%- th* *++*ct o+ a contract /-, an) *n+orc*a/%* a$ainst, th* assi$norC th* assi$n** is not /oun) /- such /-B%a / - virtu* o+ th* assi$n3*nt a%on*'A (r*%an) vs' G%o/* Mi%%in$ &o', 21 R'', 9' A# /-B%a o+ a corporation hich provi)*s that trans+*rs o+ stoc sha%% not /* va%i) un%*ss approv*) /- th* /oar) o+ )ir*ctors, hi%* it 3a- /* *n+orc*) as a r*asona/%* r*$u%ation +or th* prot*ction o+ th* corporation a$ainst orth%*ss stocho%)*rs, cannot /* 3a)* avai%a/%* to )*+*at th* ri$hts o+ thir) p*rsons'A (Far3*rs an) M*rchants an o+ Ein*vi%%* vs' asson, 4 oa, 886' (n)*rscorin$ ours' In order to .e .ound, the third part& )ust have a":uired !nowledge of the pertinent .&?laws at the ti)e the transa"tion or agree)ent .etween said third part& and the shareholder was entered into, in this "ase, at the ti)e the pledge agree)ent was e(e"uted0 V3CCI "ould have easil& infor)ed petitioner of its .&?laws when it sent noti"e for)all& re"ogniing petitioner as pledgee of one of its shares registered in Calapatia*s na)e0
-B%as si$ni+i*s th* ru%*s an) r*$u%ations or privat* %as *nact*) / - th* corporation to r*$u%at*, $ov*rn an) contro% its on actions, a++airs an) conc*rns an) its stocho%)*rs 3*3/*rs an) an) o++ic*rs ith r*%ation th*r*to an) a3on$ th*3s*%v*s inorth*ir r*%ation to )ir*ctors it' n oth*r or)s, /-B%as ar* th* r*%ativ*%p*r3an*nt an) continuin$ ru%*s o+ action a)opt*) /- th* corporation +or its on $ov*rn3*nt an) that o+ th* in)ivi)ua%s co3posin$ it an) havin$ th* )ir*ction, 3ana$*3*nt an) contro%
o+ its a++airs, in ho%* or in part, in th* 3ana$*3*nt an) contro% o+ its a ++airs an) activiti*s' (9 F%*tch*r 4166' 192 @)' >h* purpos* o+ a /-B%a is to r*$u%at* th* con)uct an) )*+in* th* )uti*s o+ th* 3*3/*rs toar)s th* corporation an) a3on$ th*3s*%v*s' >h*- ar* s*%+Bi3pos*) an), a%thou$h a)opt*) pursuant to statutor- authorit-, hav* no status as pu/%ic %a' (Ibid' >h*r*+or*, it is th* $*n*ra%%- acc*pt*) ru%* that thir) p*rsons ar* not /oun) /- /-B %as, *c*pt h*n th*- hav* no%*)$* o+ th* provisions *ith*r actua%%- or constructiv*%cas* o+ F%*ish*r th* v' otica =o%asco, 47cannot :hi%' ;4, upr*3* &ourt h*%) that' n th*th* /-B%a r*strictin$ trans+*r o+ shar*s hav*th* an*++*ct on th* th* trans+*r** o+ th* shar*s in 5u*stion as h* Aha) no no%*)$* o+ such /-B%a h*n th* shar*s *r* assi$n*) to hi3' ?* o/tain*) th*3 in $oo) +aith an) +or a va%ua/%* consi)*ration' ?* as not a priv- to th* contract cr*at*) /- th* /-B%a /*t**n th* shar*ho%)*r an) th* otica =o%asco, nc' ai) /-B%a cannot op*rat* to )*+*at his ri$ht as a purchas*r'A (n)*rscorin$ supp%i*)' - ana%o$- o+ th* a/ov*Bcit*) cas*, th* &o33ission en banc is o+ th* opinion that sai) cas* is app%ica/%* to th* pr*s*nt controv*rs-' #pp*%%antBp*tition*r /an as a thir) part- can not /* /oun) /- app*%%**Br*spon)*nts /-B%as' t 3ust /* r*ca%%*) that h*n app*%%**Br*spon)*nt co33unicat*) to app*%%antBp*tition*r /an that th* p%*)$* a$r**3*nt as )u%- not*) in th* c%u/s /oos th*r* as no 3*ntion o+ th* shar*ho%)*rBp%*)$ors unpai) accounts' >h* transcript o+ st*no$raphic not*s o+ th* Jun* 2;, 1991 ?*arin$ r*v*a%s that th* p%*)$or /*ca3* )*%in5u*nt on%- in 197;' >hus, app*%%antBp*tition*r as in $oo) +aith h*n th* p%*)$* a$r**3*nt as contract*)' >h* &o33ission en banc a%so /*%i*v*s that +or th* *c*ption to th* $*n*ra% acc*pt*) ru%* that thir) p*rsons ar* not /oun) /- /-B%as to /* app%ica/%* an) /in)in$ upon th* p%*)$**, no%*)$* o+ th* provisions o+ th* G&& -B%as 3ust /* ac5uir*) at th* ti3* th* p%*)$* a$r**3*nt as contract*)' Kno%*)$* o+ sai) provisions, *ith*r actua% or constructiv*, at th* ti3* o+ +or*c%osur* i%% not a++*ct p%*)$**s ri$ht ov*r th* p%*)$*) shar*' #rt' 207 o+ th* &ivi% &o)* provi)*s that it is a%so o+ th* *ss*nc* o+ th*s* contracts that h*n th* principa% o/%i$ation /*co3*s )u*, th* thin$s in hich th* p%*)$* or 3ort$a$* consists 3a-/* a%i*nat*) +or th* pa-3*nt to th* cr*)itor' n a %*tt*r )at*) March 10, 1976 a))r*ss*) to a%%*- Go%+ &%u/, nc', th* &o33ission issu*) an opinion to th* *++*ct that! #ccor)in$ to th* *i$ht o+ authorit-, th* canc*%%ation, p%*)$**s ri$ht is th* *ntit%*) to +u%% ithout surr*n)*r o+ th* c*rti+icat*, th*ir an) issuanc* to prot*ction hi3 o+ n* on*s, an) h*n )on*, th* p%*)$** i%% /* +u%%- prot*ct*) a$ainst a su/s*5u*nt
purchas*r ho ou%) /* char$*) ith constructiv* notic* that th* c*rti+icat* is cov*r*) /- th* p%*)$*' (12B# F%*tch*r ;02 >h* p%*)$** is *ntit%*) to r*tain poss*ssion o+ th* stoc unti% th* p%*)$or pa-s or t*n)*rs to hi3 th* a3ount )u* on th* )*/t s*cur*)' n oth*r or)s, th* p%*)$** has th* ri$ht to r*sort to its co%%at*ra% +or th* pa-3*nt o+ th* )*/ts' ( Ibid, ;02 >o canc*% th* p%*)$*) c*rti+icat* outri$ht an) th* issuanc* o+ n* c*rti+icat* to a thir) p*rson ho purchas*) th* sa3* c*rti+icat* cov*r*) /- th* p%*)$*, i%% c*rtain%- )*+*at th* ri$htor o+his th*r*pr*s*ntat p%*)$** toiv* r*sort to its co%%at*ra% +or th* pa-3*nt o+ th* )*/t' >h* p%*)$or or r*$ist*r*) stocho%)*rs has no ri$ht to r*5uir* a r*turn o+ th* p%*)$*) stoc unti% th* )*/t +or hich it as $iv*n as s*curit- is pai) an) satis+i*), r*$ar)%*ss o+ th* %*n$th o+ ti3* hich hav* *%aps*) sinc* )*/t as cr*at*)' (12B# F%*tch*r 409 # /ona +i)* p%*)$** ta*s +r** +ro3 an- %at*nt or s*cr *t *5uiti*s or %i*ns in +avor *ith*r o+ th* corporation or o+ thir) p*rsons, i+ h* has no notic* th*r*o+, /ut not oth*ris*' ?* a%so ta*s it +r** o+ %i*ns or c%ai3s that 3a- su/s*5u*nt%- aris* in +avor o+ th* corporation i+ it has notic* o+ th* p%*)$*, a%thou$h no )*3an) +or a trans+*r o+ th* stoc to th* p%*)$** on th* co rporat* /oos has /**n 3a)*' (12B# F%*tch*r ;684, 192 *)', citin$ n-)*r v' @a$%* Fruit &o', 7; F2)789 [8]
Si)ilarl&, V3CCI*s "ontention that petitioner is dut&?.ound to !now its .&?laws .e"ause of #rt0 2=%% of the Civil Code whi"h stipulates that the "reditor )ust ta!e "are of the thing pledged with the diligen"e of a good father of a fa)il&, fails to "onvin"e0 The "ase of Cru 6 Serrano v0 Chua #0 @ 0 ee, is "learl& not appli"a.le1 7%8
n app%-in$ this provision to th* situation /*+or* us it 3ust /* /orn* in 3in) that th* or)inar- pan tic*t is a )ocu3*nt /- virtu* o+ hich th* prop*rt- in th* thin$ p%*)$*) pass*s +ro3 han) to han) /- 3*r* )*%iv*r- o+ th* tic*tC an) th* contract o+ th* p%*)$* is, th*r*+or*, a/so%va/%* to /*ar*r' t r*su%ts that on* ho ta*s a pan tic*t in p%*)$* ac5uir*s )o3ination ov*r th* p%*)$*C an) it is th* ho%)*r ho 3ust r*n* th* p%*)$*, i+ it is to /* *pt a%iv*' It is :uite o.vious fro) the afore:uoted "ase that a )e).ership share is :uite different in "hara"ter fro) a pawn ti"!et and to reiterate, petitioner was never infor)ed of Calapatia* s unpaid a""ounts and the restri"tive provisions in V3CCI*s .&?laws0 Finall&, Se"0 9 of the Corporation Code whi"h provides that Ano shares of sto"! against whi"h the "orporation holds an& unpaid "lai) shall .e transfera.le in the .oo!s of the "orporationA "annot .e utilied .& V3CCI0 The ter) Aunpaid "lai)A refers to Aan& unpaid "lai) arising fro) unpaid su.s"ription, and not to an& inde.tedness whi"h a su.s"ri.er or sto"!holder )a& owe the "orporation arising fro) an& other transa"tion0A In the "ase at .ar, the su.s"ription for the share in :uestion has .een 74=8
full& paid as eviden"ed .& the issuan"e of >e).ership Certifi"ate No0 $2$%0 hat Calapatia owed the "orporation were )erel& the )onthl& dues0 @en"e, the afore:uoted provision does not appl&0 74$8
*H!R!OR!, pre)ises "onsidered, the assailed de"ision of the Court of #ppeals is R!&!R#!(and the order of the S'C en .an" dated 4 +une $%% is here.& AIRM!(0 #O OR(!R!(. Padilla, (Chairman), Bellosillo, Vitug, and Hermosisima, Jr., JJ0, "on"ur0
7$8
Original Re"ords, pp 4?5
728
Id0, at 90
78
Id0, at -0
748
Id0, at ;0
758
Id0, at %?4=0
798
Id0, at 4$?42
7-8
Id0, at 4?440
7;8
Id0, at 450
7%8
Id0, at 490
7$=8
Id0, at 4-0
7$$8
Id0, at 4%0
7$28
Id0, at 5=0
7$8
Id0, at 5$0
7$48
Id0, at 52?540
7$58
Rollo, p04;
7$98
Id0, at 5$0
7$-8
Id0, at 520
7$;8
Id0, at ;0
7$%8
Id0, at 40
72=8
Id0, at 2;?2%0
72$8
Id0, at $0
7228
$%$ SCR# =; $%%=0
728
25= SCR# 2%= $%%50
7248
30R0 No0 $2=-=, 2; O"to.er $%%90
7258
Rollo, p0;;0
7298
Id0, at 40
72-8
$4% SCR# 954 $%;-0
72;8
$; SCR# $-% $%%=0
72%8
22% SCR# $5 $%%40
7=8
$5; SCR# 9% $%;;0
7$8
$%; SCR# == $%%$0
728
30R0 No0 $2$$5;0 5 De"e).er $%%90
78
Rollo, pp0 ;4?;50
748
Id., at ;%0
Rollo, p, 4C For an ana%o$ous cas* s** Ajax arketing and !evelopment orp v. A, 24 &R# 222 (199; h*r* it as h*%p thatC
[8;]
#n a"tion to fore"lose a )ortgage is usuall& li)ited to the a)ount )entioned in the )ortgage, .ut where on the four "orners of the )ortgage "ontra"ts, as in this "ase, the intent of the "ontra"ting parties )anifest that the )ortgaged propert& shall also answer for future loans or advan"e)ents then the sa)e is not i)proper as it is valid and .inding .etween parties See also o!ica v. C" 2=$ SCR# 5$- $%%$0 798
Rollo, pp $92?$90
7-8
4-
7;8
Rollo, pp0 9?-0
7%8
54
74=8
#gpalo, Ru.en '0, Co))ents on the Corporation Code Of the
74$8
Rollo, p ;90
