Republic v. Estate of Hans Menzi 23 Nov. 2005| Ponente, Tinga, J.. FACTS 1.

Subject of this case are three blocks of shares of the Bulleting Publishiong Corp., as follows: a. 154 block 154, 472 shares b. 198 block 198, 052.5 shares c. 214 block 214, 424.5 shares 2) In an action for reconveyance earlier decided by the Sandiganbayan, said tribunal decided that: a. Ff. shares were ill-gotten: i. 46,000 shares (belonging to the 214 block), under the name of Danding Cojuangco, and the ii. entire 198 block, which were originally under the names of Campos, Cojuangco and Zalamea then subsequently sold to HMHMI (Hans Menzu Holdings and Mgt. Inc) b. The 154 block was not ill-gotten c. The estate of Hans Menzi must thus surrender for cancellation the certificates of stock in its possession 3) This present appeal pertains to the propriety of declaring the 154 block, on the one hand, as not illgotten, and the 198 and 214 blocks as ill-gotten. G.R. 152578 Re 154 block (This is the more relevant half) FACTS a. In 1957, Menzi purchased the entire interest in Bulletin Publishing b. In 1961, US Automotive purchased Bulletin shares from Menzi c. In 1968, a stock option was executed between Menzi and US Automotive giving each other preferential rights in the purchase of each others Bulleting shares d. Later in the same year, Bulletins articles of incorporation were amended to place restrictions on the transfer of Bulletin shares to non-stockholders where by stockholders seeking to sell must first make an offer to Bulleting itself. e. In 1984, Menzi sold the 154 block to US automotive. US Automotives VP executed a promissory note in favor of Menzi f. Days later, Menzi dies and a petition for the probate of his will was filed. In said proceedings, the executor moved for the

confirmation of the sale of the 154 block; which motion the probate court granted. g. Subsequently, the executor received 2 checks representing full payment; he in turn, issues a receipt.
ISSUE

Is the sale of the 154 block from Menzi to US Automotive valid. YES. HELD / RATIO: 1. Requisites for a valid transfer per Sec. 63: a. Between the parties: i. Delivery ii. Indorsement b. To be valid as to third persons: i. Recorded in the books of the corporation 2. Per the above requisites, a deed of sale, as insisted by the Republic, is not required. In fact, per Rural Bank of Lipa v. CA, the execurtion of a deed of sale does not necessarily make the transfer effective as it is the delivery of the stock certificate duly indorsed by the owner which is the oprative act that transfers the shares. 3. Here, there is no dispute, that delivery and indorsement in favor of US Automotive were made. 4. Moreover, the executors authority to negotiate the transfer is found in the general power of attorney executed by Menzi. Also, the formers authority to accept payment springs from Menzis will and the order of the probate court confirming the sale. 5. As found by the Sandiganbayan, it was Menzi himself who sold to US Automotive, hencem the noninclusion of the subject shares in MEnzis will an din the inventory of his estate is attributable to the fact that at the time the aforesaid were taken, they already belonged to US Automotive. G.R. 154487 and 154518 Re 198 and 214 blocks
(Relevant) ISSUE

Were the covered shares validly ceded by Camps and Zalamea to the government? YES. HELD / RATIO: 1. The fact that the stock certificates covering the shares ceded to the Republic (ie, Campos and Zalameas portions in the 214 block), and which were under the names of Campos, Zalamea and Cojuangco (Cojuangco did not cede his 46,000

shares) were found in Menzis possession does not prove that Menzi owned the shares. 2. A stock certificate is merely a tangible evidence of ownership of shares of stock. Its presence or absence does not affect the right of the registered owner to dispose of the shares. Accordingly, Campo and Zalamea, as registered owners, validly ceded their shares in favor of the Government. Doctrine: Requisites for a valid transfer per Sec. 63: a. Between the parties: i. Delivery ii. Indorsement b. To be valid as to third persons: i. Recorded in the books of the corporation * All other formalities are mere superfluities that do not add to nor detract from the validity of a transfer.