G.R. No. 178523, June 16, 2010
Topics:
Deed of Absolute Sale, Right of first refusal
Doctrines:
The right of a transferee to have the stocks transferred to its name is an inherent right flowing from its ownership.
Summary:
The petitioner sued Cheng and claimed payment of P1,000,000 as compensation for alleged fraud and injury. Fraud was committed by Cheng and McFoods in the transfers involving Stock Certificate No. A 2243. Cheng is accused of giving insiders information about the shares’ status and facilitating the transfer by altering the books to make the transaction appear more orderly. McFoods did this with the intention of making a P1,000,000 profit at the cost of the petitioner, not with the intention of becoming a legitimate holder of Class A shares.
Facts:
Defendant Cheng was the corporate treasurer and a director when Makati Sports Club (MSCIBOD )’s approved a resolution on October 20, 1994, approving the sale of 19 unissued Class A and Class B shares.
Hodreal stated his desire to purchase a share on July 7, 1995, and asked that his name be added to the waiting list. McFoods Inc. expressed interest in purchasing a share sometime in November 1995. McFood was able to purchase the Class A shares from the petitioner for the sum of P1,800,000. Payment for the share was made on November 28, 1995. On December 15, 1995, the Deed of Absolute Sale was completed, and on January 5, 1996, the stock certificate was issued. McFood informed the petitioner on December 27, 1995, that it was prepared to resell the stock for P 2,800,000. There seems to have been a negotiation going on between McFoods and Hodreal at the same time that the sale between the petitioner and McFood was being discussed. On November 24, 1995, Hondreal made a P1,400,000 payment to McFoods, and on December 27, 1995, another P1,400,000 payment was made. On January 29, 1996, McFoods and Hodreal signed a Deed of Sale for the same part of stock. The petitioner was only informed of the sale between McFoods and Hodreal on February 7, 1996. On demand, a fresh stock certificate was given out. An inquiry revealed that Cheng had been charged with profiteering from the aforementioned transaction. Cheng and McFoods allegedly plotted against MSCI, according to the petitioner. The petitioner sued Cheng and claimed payment of P1,000,000 as compensation for alleged fraud and injury. Fraud was committed by Cheng and McFoods in the transfers involving Stock Certificate No. A 2243. Cheng is accused of giving insiders information about the shares’ status and facilitating the transfer by altering the books to make the transaction appear more orderly. McFoods did this with the intention of making a P1,000,000 profit at the cost of the petitioner, not with the intention of becoming a legitimate holder of Class A shares.
Issue:
Can McFoods legally sell his MSCI shares before the certificate of sale was issued?
Ruling:
Yes. McFoods finally came to be the owner of the Class A share covered by Certificate A2243, there is nothing improper with the fact that Hodreal made the first payment or installment to McFoods before McFoods made the same payment to MSCI. McFoods had the right to request the delivery of the stock certificate in his name after paying P1,800,000 to MSCI and signing the Deed of Absolute Sale on December 15, 1995. A transferee’s inherent right to have the stocks transferred to its name stems from their ownership. It is incorrect for the petitioner to claim that McFoods breached its bylaws by exercising its right of first refusal because on December 27, 1995, McFoods made an offer to sell the shares to MSCI. Even though the certificate was issued in January 1996, it had the legal authority to do so due to the payment made by McFoods and the signing of the Deed of Absolute Sale.