G.R. No. 165744, 11 August 2008


Petitioner and private respondent were siblings together with two others, namely Pedro and Anastacia, in a family business established as Zenith Insurance Corporation (Zenith), from which they owned shares of stocks. The Pedro and Anastacia subsequently died. The former had his estate judicially partitioned among his heirs, but the latter had not made the same in her shareholding in Zenith. Zenith and Rodrigo filed a complaint with the Securities and Exchange Commission (SEC) against petitioner (1) a derivative suit to obtain accounting of funds and assets of Zenith, and (2) to determine the shares of stock of deceased Pedro and Anastacia that were arbitrarily and fraudulently appropriated [by Oscar, and were unaccounted for].

In his answer with counterclaim, petitioner denied the illegality of the acquisition of shares of Anastacia and questioned the jurisdiction of SEC to entertain the complaint because it pertains to settlement of [Anastacia’s] estate. The case was transferred to. Petitioner filed Motion to Declare Complaint as Nuisance or Harassment Suit and must be dismissed. RTC denied the motion. The motion was elevated to the Court of Appeals by way of petition for certiorari, prohibition and mandamus, but was again denied.


Whether or not Rodrigo may be considered a stockholder of Zenith with respect to the shareholdings originally belonging to Anastacia.


No. Rodrigo must, hurdle two obstacles before he can be considered a stockholder of Zenith with respect to the shareholdings originally belonging to Anastacia.

First, he must prove that there are shareholdings that will be left to him and his co-heirs, and this can be determined only in a settlement of the decedent’s estate. No such proceeding has been commenced to date. Second, he must register the transfer of the shares allotted to him to make it binding against the corporation. He cannot demand that this be done unless and until he has established his specific allotment (and prima facie ownership) of the shares.

Without the settlement of Anastacia’s estate, there can be no definite partition and distribution of the estate to the heirs. Without the partition and distribution, there can be no registration of the transfer. And without the registration, we cannot consider the transferee-heir a stockholder who may invoke the existence of an intra-corporate relationship as premise for an intra-corporate controversy within the jurisdiction of a special commercial court. The subject shares of stock (i.e., Anastacia’s shares) are concerned – Rodrigo cannot be considered a stockholder of Zenith.

*Case Digest by Lowel Dave D. Manuel, JD-4, Andres Bonifacio Law School, S.Y. 2019-2020