Neugene Marketing Inc. vs.

CA [303 SCRA 295 (Feb 18 1999)]

Ownership of Corporate Share/Stock Certificates

Facts: Neugene was duly registered with SEC to engage in trading business. Private
Respondents Sy, Yang, and Suen, holders of 5250 shares or 2/3 of the outstanding capital stock
sent notice to the BoD for a board meeting. In this meeting, they approved a resolution
dissolving Neugene.
SEC thus issued a Certificate of Dissolution of Neugene. Petitioners Tan, Martin, Moreno and
Lee brought an action to annul said SEC Certification contending that they were the majority
stockholders of the corporation, and that prior to the board meeting, the private respondents had
already divested themselves of their stockholdings by endorsing them in blank and delivering
them to the Uy family. The latter in turn awarded said stock certificates to Johnny Uy, who in
turn sold the same to petitioners. Hence, private respondents could no longer validly vote for the
dissolution of Neugene at the time of the board meeting.
Private respondents contend that the assignment of shares were simulated and fraudulently
effected since the endorsement in blank by them of the stock certificates to the Uy family was
only for safekeeping when they were stolen from a vault by Johnny Uy.
SEC nullified the Certificate of Dissolution. CA, on the other hand, upheld Neugenes
dissolution. Hence, this petition with the SC.

Issue: Whether or not private respondents divested themselves of their stockholdings when they
voted for the resolution dissolving Neugene.

Held: No. Entries in the Stock and Transfer Book show that at the time of dissolution of
Neugene, the private respondents owned at least 2/3 of the outstanding capital stock, in sufficient
compliance with Sec. 118 of the Corporation Code of the Philippines.
Petitioners submitted the same Stock and Transfer Book to show that the certificates of private
respondents were cancelled. But after a careful examination of the evidence on record, SC found
that the stock certificates of private respondents were stolen and therefore not validly transfered,
and the transfers of stock relied upon by petitioners were fraudulently recorded in the Stock and
Transfer Book of Neugene.
The true relationship between stockholders of Neugene and that of the Uy family was that they
had an understanding that the beneficial ownership of Neugene would remain with the Uy
family, such that the shares of stock were endorsed in blank, upon issuance, by the shareholders
and entrusted to the Uy family for safekeeping. Such beneficial ownership has been admitted
through the testimonies not only of private respondents but also of petitioners.