G.R. No. 202205, 6 March 2013
Petitioner Forest Hills Golf & Country Club (Forest Hills) is a domestic non-profit stock corporation that operates and maintains a golf and country club facility in Antipolo City. Forest Hills was created as a result of a joint venture agreement between Kings Properties Corporation (Kings) and Fil-Estate Golf and Development, Inc. (FEGDI). Accordingly, Kings and FEGDI owned the shares of stock of Forest Hills, holding 40%and 60% of the shares, respectively. FEGDI sold to RS Asuncion Construction Corporation (RSACC) one (1) Class “Common share of Forest Hills for₱1.1 million. Prior to the full payment of the purchase price, RSACC transferred its interests over FEGDI’s Class “C” common share to respondent Vertex Sales and Trading, Inc. (Vertex).
Despite the sale of FEGDI’s Class “C” common share to Vertex, the share remained in the name of FEGDI, prompting Vertex to demand for the issuance of a stock certificate in its name. Vertex filed a complaint for rescission with damages against defendants Forest Hills, FEGDI, and Fil-Estate Land,Inc. Vertex averred that the defendants defaulted in their obligation as sellers. It prayed for the rescission of the sale and the return of the sums it paid; it also claimed payment of actual damages for the defendants’ unjustified refusal to issue the stock certificate.
Forest Hills denied transacting business with Vertex and claimed that it was not a party to the sale of the share. FELI claimed the same defense. While admitting that no stock certificate was issued, FEGDI alleged that Vertex nonetheless was recognized as a stockholder of Forest Hills and, as such, it exercised rights and privileges of one. FEGDI added that during the pendency of Vertex’s action for rescission, a stock certificate was issued in Vertex’s name, but Vertex refused to accept it.
Can Forest Hill appeal the ruling rescinding the sale?
As correctly pointed out by Forest Hills, it was not a party to the sale even though the subject of the sale was its share of stock. The corporation whose shares of stock are the subject of a transfer transaction (through sale, assignment, donation, or any other mode of conveyance) need not be a party to the transaction, as may be inferred from the terms of Section 63 of the Corporation Code.
However, to bind the corporation as well as third parties, it is necessary that the transfer is recorded in the books of the corporation. In the present case, the parties to the sale of the share were FEGDI as the seller and Vertex as the buyer (after it succeeded RSACC). As party to the sale, FEGDI is the one who may appeal the ruling rescinding the sale. The remedy of appeal is available to a party who has “a present interest in the subject matter of the litigation and is aggrieved or prejudiced by the judgment. A party, in turn, is deemed aggrieved or prejudiced when his interest, recognized by law in the subject matter of the lawsuit, is injuriously affected by the judgment, order or decree.” The rescission of the sale does not in any way prejudice Forest Hills in such a manner that its interest in the subject matter – the share of stock – is injuriously affected. Thus, Forest Hills is in no position to appeal the ruling rescinding the sale of the share. Since FEGDI, as party to the sale, filed no appeal against its rescission, we consider as final the CA’s ruling on this matter.
*Case Digest by Lowel Dave D. Manuel, JD-4, Andres Bonifacio Law School, S.Y. 2019-2020