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SECOND DIVISION

ROGELIO M. FLORETE, SR., G.R. No. 223321

THE ESTATE OF THE LATE
TERESITA F. MENCHAVEZ, Presents:
represented by MARY ANN
THERESE F. MENCHAVEZ, CARPIO,* J., Chairperson,
ROSIE JILL F. MENCHAVEZ, PERALTA,
MA. ROSARIO F. MENCHAVEZ, PERLAS-BERNABE,
CRISTINE JOY F. MENCHAVEZ, CAGUIOA, and
and EPHRAIM MENCHAVEZ, and REYES, JR.,** JJ.
DIANE GRACE F. MENCHAVEZ,
Petitioners,

- versus -

MARCELINO M. FLORETE, JR. Promulgated:

and MA. ELENA F. MUYCO, O APR
Respondents. 2~
~
2018 ~
x--------------------------------------------------------------~~- -- x

DECISION
..........

PERALTA, J.:

Before us is a petition for review on certiorari seeking to nullify the

Decision 1 dated August 3, 2015 of the Court of Appeals in CA- G.R. SP No.
07673, as well as the Resolution2 dated February 19, 2016 denying the
motion for reconsideration thereof.

Acting Chief Justice per Special Order No. 2539 dated February 28, 2018.
On wellness leave.
Penned by Justice Edward B. Contreras and concurred in by Associate Justices Edgardo L. delos
Santos and Renato C. Francisco; rollo, pp. 77-84.
2
Penned by Associate Justice Edward B. Contreras and concurred in by Associate Justices Edgardo
L. delos Santos and Geraldine C. Piel-Macaraig; id. at 85-86.

{7
··..... ~
Decision -2- G.R. No. 223321

On October 7, 1966, Marsal & Co., Inc. (Marsal) was organized as a

close corporation by Marcelino Sr., Salome, Rogelio, Marcelino Jr., Ma.
Elena, and Teresita (all surnamed Florete ). Since its incorporation, the
Articles of Incorporation (AO!) had been amended3 several times to increase
its authorized capital stocks of P500,000.00 to P5,000,000.00.
Notwithstanding the amendments, paragraph 7 of their AOI which provides
for the procedure in the sale of the shares of stocks of a stockholder
remained the same, to wit:

SEVENTH. - x x x Any stockholder who desires to sell his share of stock in

the company must notify in writing the Board of Directors of the company of
his ·intention to sell. The Board of Directors upon receipt of such notice must
immediately notify all stockholders of record within five days upon receipt
of the letter of said stockholder. Any stockholder of record has the
preemptive right to buy any share offered for sale by any stockholder of the
company on book value base[ d] on the balance sheet approved by the Board
of Directors. The aforementioned preemptive right must be exercised by any
stockholder of the company within ten (10) days upon his receipt of the
written notice sent to him by the Board of Directors of the offer to sell. Any
sale or transfer in violation of the above terms and conditions shall be null
and void. The above terms and conditions must be printed at the back of the
stock certificate. 4

And as of June 1, 1982, the capital profile of Marsal was as follows:

Name Shareholdings
Marcelino M. Florete, Sr. 7,569 shares
Rogelio M. Florete 3,489 shares
Ma. Elena F. Muyco 3,489 shares
Marcelino M. Florete, Jr. 3,489 shares
Teresita F. Menchavez 3,464 shares 5

On September 19, 1989, Teresita Florete Menchavez died. In 1992,

Ephraim Menchavez, Teresita's husband, filed a Petition for Issuance of
Letters of Administration6 over her estate. An Amended Opposition was filed
by petitioner Rogelio Florete, Sr. and Marsal, represented by petitioner as
President thereof, with Atty. Raul A. Muyco, the husband of respondent Ma.
Elena, as counsel, on the ground of Ephraim's incompetency. Ephraim,
however, was later granted letters of administration. In 1995, Ephraim, the
special administrator, entered into a Compromise Agreement and Deed of
Assignment7 with petitioner Rogelio ceding all the shareholdings of Teresita
in various corporations owned and controlled by the Florete family, which
included the 3,464 shares in Marsal corporation, as well as her shares,

'
6
Ia'. at 132.
Id. at 140.
Id. at 142-144; Docketed as SPL. PROC. NO. 4855.
ti
Id at 154-155.
Decision -3- G.R. No. 223321

interests and participation as heir in all the real and personal properties of
her parents to petitioner Rogelio. A Motion to Approve Compromise
Agreement and Deed of Assignment was filed by respondent Ephraim,
through counsel Atty. Henry Villegas, with the conformity of Atty. Raul
Muyco, the oppositors' counsel. The motion was granted and approved by
the Probate Court in its Order8 dated February 14, 1995.

On October 3; 1990, Marcelino Florete Sr., patriarch of the Florete

family, died. An intestate proceeding to settle his estate was filed by
petitioner Rogelio, who was later appointed as administrator of the estate.
Petitioner Rogelio filed a project of partition enumerating ~herein all the
properties of the estate of Marcelino Sr. in accordance with the inventory
earlier filed with the intestate court. In the Order9 dated May 16, 1995, the
court approved the project of partition adjudicating to petitioner Rogelio
one-half (Yz) share of the whole estate; and to respondents Ma. Elena and
Marcelino Jr., the undivided one-fourth (Y4) share each of the enumerated
properties. In the same Order, the Probate Court had noted the sale of all the
shares of the late Teresita which she inherited from her deceased parents to
petitioner Rogelio. 10

On February 21, 2012, respondents Marcelino Jr. and Ma. Elena filed
with the Regional Trial Court (RTC), Branch .39, Iloilo City, a case 11 for
annulment/rescission of sale of shares of stocks and the ~xercise of their pre-
emptive rights in Marsal corporation and damages against petitioners
Rogelio Florete, Sr. and the estate of the late Teresita F. Menchavez, herein
represented by her heirs, namely, Mary Ann Therese Menchavez, Christine
Joy F. Menchavez, Ma. Rosario F. Menchavez, Diane Grace Menchavez,
Rosie Jill F. Menchavez, and Ephraim Menchavez. Respondents claimed
that the sale of Teresita's 3,464 Marsal shares of stocks made by petitioner
estate to petitioner Rogelio was void ab initio as it violated paragraph 7 of
Marsal's AOI~ since the sale was made sans written notice to the Board of
Directors who was not able to notify respondents in writing of the petitioner
estate and heirs' intention to sell and convey the Marsal shares and depriving
respondents of their preemptive rights.

On April 26, 2013, the RTC, as a Special Commercial Court,

dismissed the complaint. 12 It found that the sale of Teresita's Marsal shares
of stocks to petitioner Rogelio, being one. of the incorporators and
stockholders of Marsal at the time of sale, was not a sale to a third party or
outsider as would justify the restriction on transfer of shares in the AOL The
RTC also found that !aches and estoppel had already set in as respondents'

9
IO
JI
Id. at 156; Per Assisting Judge Lolita Contreras-Besana.
Id. at 173-179; Per Judge Jose G. Abdallah.
Id. at 174.
Id at 88-97.
/
12
Id at 265-277; per Presiding Judge Victorino Oliveros Maniba, Jr.
Decision -4- G.R. No. 223321

inaction for 17 years constituted a neglect for an unreasonable time to

question the same; and that respondents could not feign ignorance of the
transacffons as they knew of the same and yet they did not do anything at
that time.

Respondents filed with the CA a petition for review under, Rule 43

with prayer for the issuance of a temporary restraining order and/or writ of
preliminary injunction. Petitioners filed their Comment thereto.

On August 3, 2015, the CA rendered its assailed Decision, the decretal

portion of which reads:

WHEREFORE, in view of the foregoing, the instant appeal is

GRANTED, the Decision dated April 26, 2013 of the Regional Trial Court,
6th Judicial Region, Branch 39, Iloilo City, in SCC Case No. 12-049 for
Annulment/Rescission of Sale of Shares of Stocks, Pre-Emptive Rights and
Damages is hereby REVERSED and SET ASIDE. Let a new one be entered
declaring the conveyance of 3,464 Marsal shares of respondents in favor of
Rogelio M. Florete Sr., NULL and VOID, in violation of Paragraph 7 of
Marsal's Articles of Incorporation. 13

In so ruling, the CA found that Teresita's 3,464 Marsal shares of stocks

were conveyed by petitioner estate to petitioner Rogelio in a Compromise
Agreement and Deed of Assignment without first offering them to the
existing stockholders as provided under paragraph 7 of the AOI; that since
the AOI is considered a contract between the corporation and its
stockholders, the sale of Teresita's shares in favor of petitioner Rogelio
constituted a breach of contract on the part of petitioner estate, hence, null
and void; and that it is inconsequential whether the transfer was made to one
of the existing stockholders of the closed corporation. Anent Atty. Muyco's
acting as counsel of petitioner Rogelio and Marsal in Teresita's intestate
proceedings and who was presumed to have transmitted to respondents his
knowledge regarding the sale of Teresita's Marsal shares to petitioner
Rogelio, the CA ruled that the notice acquired from a third person even if
true Was not the notice meant under paragraph 7 of the AOI; and that Atty.
Muyco admitted that he did not know of petitioner Rogelio's plan of
acquiring Teresita's shares. A void contract has no effect from the beginning,
thus, the action for its nullity even if filed 17 years later after its execution,
cannot be barred by prescription for it is imprescriptible; and the defense of
!aches is unavailing as it had been jurisprudentially provided that courts
should never apply the doctrine of lac hes earlier than the expiration of time
limited for the commencement of action at law. c7'
13
Id. at 84.
 Decision -5- G.R. No. 223321

Petitioners filed a motion for reconsideration, which was denied by

· the CA in a Resolution dated February 19, 2016.

Hence, this petition filed by petitioners alleging the following

assignment of errors:

I
THE COURT OF APPEALS GRIEVOUSLY ERRED IN REFUSING TO
RULE ON WHETHER OR NOT THE VERY INVALIDATION CLAUSE
IN THE SUBJECT SHARE TRANSFER RESTRICTION IS VOID
FROM WHICH NO CAUSE OF ACTION MAY ORIGINATE.

II
THE COURT OF APPEALS GRIEVOUSLY ERRED IN REFUSING TO
RULE ON WHETHER OR NOT THE SUBJECT SHARE TRANSFER
RESTRICTION CAN BE ENFORCED -IN LIGHT OF THE
CORPORATION CODE PROVISION WHICH RECOGNIZES AS
VALID ONLY SUCH RESTRICTIONS IN A CLOSE CORPORATION
AS DEFINED IN THE CODE, WHICH SUBJECT CORPORATION IS
NOT.

III
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT RULING
THAT ASSUMING ARGUENDO THE SUBJECT SHARE TRANSFER
RESTRICTIONS ARE VALID, THE SAME CANNOT BE APPLIED TO
THE QUESTIONED TRANSFER OR SALE OF STOCK. IT NOT
BEING A SALE TO OUTSIDERS, AMONG OTHER MATTERS.

IV
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT RULING
THAT RESPONDENTS' CAUSE OF ACTION, IF ANY, IS BARRED BY
PRESCRIPTION.

v
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT RULING
THAT RESPONDENTS' CAUSE OF ACTION, IF ANY, IS BARRED BY
LACHES.

VI
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT RULING
THAT RESPONDENTS ARE ESTOPPED BY THEIR DEEDS OR
CONDUCT FROM PURSUING THEIR CLAIM.

VII
THE COURT OF APPEALS GRIEVOUSLY ERRED IN NOT RULING
THAT RESPONDENTS' CAUSE OF ACTION, IF ANY, IS BARRED BY
RES JUDJCATA. 14

t7'V
14
Id. at 40-41.
Decision -6- G.R. No. 223321

The pivotal issue for resolution is whether the CA erred in ruling that
the sale of Teresita's 3 ,464 Marsal shares of stocks made by petitioner estate
of Teresita to petitioner Rogelio was in violation of paragraph 7 of
Marsal's Article of Incorporation and hence null and void and must be
annulled or rescinded.

We rule in the affirmative.

The issue raised is factual. As a rule, the re-examination of the

eviderice proffered by the contending parties during the trial of the case is
not a function that this Court n01mally undertakes inasmuch as the findings
of fact of the Court of Appeals are generally binding and conclusive on the
Supreme Court. 15 The jurisdiction of this Court in a petition for review on
certiorari under Rule 45 of the Revised Rules of Court is limited to
reviewing only errors of law. A reevaluation of factual issues by this Court is
justified when the findings of fact complained of are devoid of support by
the evidence on record, or when the assailed judgment is based on
misapprehension of facts, which we find in the case at bar.

Preliminarily, petitioners' claim that Marsal is not a close corporation

deserves scant consideration as they had already admitted that it is. In his
Affidavit 16 filed in this case, petitioner Rogelio alleged, among others:

10. That MARSAL & CO., INC. is a close family corporation, the
stockholder of which are now three, since Teresita Menchavez is already
-. dead, and. so is our father Marcelino Florete, Sr. x x x.

and in his Answer with Compulsory Counterclaim, 17 he stated:

2. That answering defendant admits the allegations set forth m

paragraphs 5, 6, 7, 8 ,9, 10, 11,12, 13, 14, 15 of the complaint; 18

xx xx

16. That MARSAL & CO., INC., being a close family corporation, the
presence of the said provision of pre-emptive right did not invalidate the
acquisition by one stockholder of the share of another stockholder who
exercised his pre-emptive right in view of the knowledge of the same by the
other stockholders and their inaction which is equivalent to consent and
acquiescence to the said acquisition. 19

15
-. A.;ala Corporation v. Ray Burton Development Corporation, 355 Phil. 475, 490 (I 998)r7
16
Rollo, pp. 180-184.
17
Id. at 157-166.
18
Id. at 157.
19
Id at 162.
Decision -7- G.R. No. 223321

The allegations under paragraph 6 of the complaint which petitioner

Rogelio admitted stated:

6. MARSAL is a close corporation duly organized and registered with

the Securities and Exchange Commission (SEC) on 07 October 1966 with
the authorized capital stock of Five Hundred Thousand Pesos (P500,000.00).
xxx.

7. As close corporation, all stocks issued by MARSAL are subject to

restrictions on transfer. x x x20

Petitioners judicially admitted that Marsal is a close corporation.

Section 4, Rule 129 of the Revised Rules of Court provides:

Sec. 4. Judicial admissions. An admission, verbal or written, made

by a party in the course of the proceedings in the same case, .does not
require proof. The admission may be contradicted only by showing that it
was made through palpable mistake or that no such admission was made.

A party may make judicial admissions in (a) the pleadings, (b) during
the trial, either by verbal or written manifestations or stipulations, or (c) in
other stages of the judicial proceeding. 21 In Alfelor v. Halasan, 22 we held
that:

A party who judicially admits a fact cannot later challenge that fact
as judicial admissions are a waiver of proof; production of evidence is
dispensed with. A judicial admission also removes an admitted fact from
the field of controversy. Consequently, an admission made in the pleadings
cannot be controverted by the party making such admission and are
conclusive as to such party, and all proofs to the contrary or inconsistent
therewith should be ignored, whether objection is interposed by the party
or not. The allegations, statements or admissions contained in a pleading
are conclusive as against the pleader. A party cannot subsequently take a
position contrary of or inconsistent with what was pleaded. 23

As Marsal is a close corporation, it is allowed under the Corporation

Code to provide for restrictions on the transfer of its stocks. We quote the
pertinent provisions of the Code as follows:

Sec. 97. Articles of incorporation. - The articles of incorporation of

a close corporation may provide:

20
Id. at 89-90.
21
Spouses Binarao v. Plus Builders, Inc., 524 Phil. 361, 365 (2006), citing Regalado, Remedial Law
Compendium, Volume Two, Seventh Revised Edition, p. 650.
22
23
520 Phil. 982 (2006).
Id. at 991. (Citations omitted) {/
Decision - 8- G.R. No. 223321

1. For a classification of shares or rights and the qualifications for owning

or holding the same and restrictions on their transfers as may be stated
therein, subject to the provisions of the following section;

xx xx

Sec. 98. Validity of restrictions on transfer of shares. - Restrictions

on the right to transfer shares must appear in the articles of incorporation
and in the by-laws as well as in the certificate of stock; otherwise, the
same shall not be binding on any purchaser thereof in good faith. Said
restrictions shall not be more onerous than granting the existing
stockholders or the corporation the option to purchase the shares of the
transferring stockholder with such reasonable terms, conditions or period
stated therein. If upon the expiration of said period, the existing
stockholders or the corporation fails to exercise the option to purchase, the
transferring stockholder may sell his shares to any third person.

The AOI ofMarsal provides for the procedure for the sale of shares of
stock of a stockholder which we quote again for easy reference, to wit:

SEVENTH. x x x Any stockholder who desires to sell his share of stock in

the company must notify in writing the Board of Directors of the company
of his intention to sell. The Board of Directors upon receipt of such notice
must immediately notify all stockholders of record within five days upon
receipt of the letter of said stockholder. Any stockholder of record has the
preemptive right to buy any share offered for sale by any stockholder of
the company on book value based on the balance sheet approved by the
Board of Directors. The aforementioned preemptive right must be
exercised by any stockholder of the company within 10 days upon his
receipt of the written notice sent to him by the Board of Directors of the
offer to sell. Any sale or transfer in violation of the above terms and
conditions shall be null and void. The above terms and conditions must be
printed at the back of the stock certificate. 24

Thus, the stockholder seller must notify in writing the Board of

Directors of his intention to sell, who, iri tum, must notify all the
stockholders of records within 5 days upon receipt of such letter, and the
stockholder must exercise the preemptive right within ten days from notice
of the Board, otherwise, the sale shall be null and void. Here, Teresita's
3,464 Marsal shares were sold by petitioner estate to petitioner Rogelio in a
Compromise Agreement and Deed of Assignment they entered into which
was approved by the Probate Court. The CA found that such sale of stocks
was null and void as it violated Paragraph 7 of their AOL ~/

We do not agree. V
24
Supra note 4.
Decision -9- G.R. No. 223321

While it would appear that petitioner estate of Teresita, through its

administrator Ephraim and petitioner Rogelio, did not comply with the
procedure on the sale of Teresita's Marsal shares as stated under paragraph 7
of the AOI, however, it appeared in the records that respondents had
nonetheless been informed of such sale to which they had already given their
consent thereto as shown by the following circumstances:

First. Teresita died on September 19, 1989. Her husband Ephraim

filed a petition for letters of administration of her estate in 1992, and alleged
the following:

xx xx

6. That the herein petitioner, as one of the legal heirs of the deceased,
Teresita Florete Menchavez, had on several occasions, requested
decedent's brothers and sisters to make a settlement and liquidation of the
estate left by the said deceased Teresita Florete Menchavez and to deliver
it to all the legal heirs what is due to each and every one of them, but this
has not been done. x x x25

Petitioner Rogelio filed an Opposition thereto which was later

amended to include MARSAL & CO., INC. as represented by its President,
herein petitioner. Notably, Atty. Raul A. Muyco was the oppositors' counsel
and he is also the husband of respondent Ma. Elena. Subsequently, a
Compromise Agreement and Deed of Assignment was entered into between
petitioner estate through Ephraim and petitioner Rogelio with respect to
Teresita's shares of stocks in various corporations which included the 3,464
shares in Marsal. A Motion to Approve Compromise Agreement and
Deed of Assignment was filed by administrator Ephraim, through counsel,
with the conformity of Atty. Muyco which was approved by the probate
court. It bears stressing that Atty. Muyco was not only acting as counsel of
petitioner Rogelio but also of Marsal. Thus,. it would be impossible for
Atty. Muyco, who had the duty to protect Marsal's int~rest in the intestate
proceedings of Teresita's estate, not to have informed respondents of such
compromise agreement since they are the stockholders and Board of
Directors of Marsal who would be deprived of their preemptive right to the
Marsal shares.

Second. The sale of all of Teresita's shares which she inherited from
her deceased parents which were sold to petitioner Rogelio, and which
included the 3,464 Marshal shares, had also been made known to
respondents in the intestate proceedings to settle the estate of Marcelino
Florete, Sr., who died on October 3, 1990. Petitioner Rogelio was later

~ Rollo, p. 142-A. C
Decision - 10 - G.R. No. 223321

appointed as the administrator of the estate. In the Order dated May 16,
1995,.. the probate court stated, among others, that:

x x x The said deceased left the following heirs, namely :

Rogelio M. Florete, Ma. Elena Florete Muyco and Marcelino

Florete Jr.

Further the deceased had a daughter by the name of Teresita

Florete-Menchavez who predeceased him, having died on September 8,
1989 in the City of Iloilo leaving the following heirs;

xx xx

On February 24, 1995, this Court has noted, as prayed by the

counsel for the petitioner, of the sale by Ephraim Menchavez, the special
administrator of the intestate estate of the late Teresita F. Menchavez, of
all the shares of the late Teresita F. Menchavez inherited from her
deceased parents Marcelino and Salome Florete, to Rogelio M. Florete .
........ xx xx

On May 5, 1995, no other heirs aside from those mentioned earlier

have appeared in court to file their claim with regard to the property
owned by the late Marcelino Florete, Sr. This Court, therefore, declared
that Marcelino Florete, Sr. who died intestate in the City of Iloilo on
October 3, 1990 had left only the following heirs, namely; 1. Rogelio M.
Florete, 2. Ma. Elena Florete Muyco; 3. Marcelino Florete Jr.; 4. Teresita
Florete-Menchavez. The last nc.med heir predeceased the decedent and left
the following children, namely; 1. Mary Ann Therese Menchavez; 2.
Christine Joy Menchavez; 3. Rosie Jill Menchavez; 4. Diane Grace
Menchavez; and 5. Ma. Rosario Menchavez.'

All the shares of Teresita F. Menchavez, however, which she

inherited from her parents were sold by Ephraim Menchavez, the special
administrator of the estate of Teresita Menchavez, to petitioner Rogelio M.
Florete. The sale was duly approved by the intestate court.

As stated earlier, on April 27, 1995, the administrator, through

·.cuunsel, filed a Project of Partition enumerating therein all the properties
o:f the estate in accordance with the inventory filed before this Court on
March 3, 1995, which properties are enumerated as follows:

I. REAL PROPERTIES

xx xx

II. PERSONAL PROPERTIES

xx xx

This court hereby adjudicates the above-mentioned properties to /JI

the following heirs: L/
Decision - 11 - G.R. No. 223321

1. Rogelio M. Florete, married to Imelda Florete,

the one half share of the whole estate;

2. Ma. Elena Florete Muyco, married to Raul

Muyco, the undivided Y4 share of the .above-enumerated
properties;

3. Marcelino M. Florete, Jr., married to Susan

Florete, the undivided Y4 share of all the properties as above
enumerated.

This proceeding is hereby considered closed and terminated.

Furnish the Register of Deeds of the province of Iloilo and the

26
province of Rizal with copies of this Order.

There was already substantial compliance with paragraph 7 of the AOI

when respondents obtained actual knowledge of the sale of Teresita's 3 ,464
Marsal shares to petitioner Rogelio as early as 1995. In fact, respondents
had already given their consent and conformity to such sale by their inaction
for 17 years despite knowledge of the sale. Moreover, they had already
waived the procedure of the stockholder's sale of stocks as provided under
. 27
Paragraph 7 of the AOL In People v. Judge Donato, We explained the
doctrine of waiver as .follows:

Waiver is defined as "a voluntary and intentional relinquishment or

abandonment of a known existing legal right, advantage, benefit, claim or
privilege, which except for such waiver the party would have enjoyed; the
voluntary abandonment or surrender, by a capable person, of a right
known by him to exist, with the intent that such right shall be surrendered
and such person forever deprived of its benefit; or such conduct as
warrants an inference of the relinquishment of such right; or the
intentional doing of an act inconsistent with claiming it."

As to what rights and privileges may be waived, the authority is

settled:

x x x the doctrine of waiver extends to rights and

privileges of any character, and, since the word "waiver"
covers every conceivable right, it is the general rule that a
person may waive any matter which affects his property,
and any alienable right or privilege of which he is the
owner or ·which belongs to him or to which he is legally
entitled, whether secured by contract, conferred with
statute, or guaranteed by constitution, provided such rights
and privileges rest in the individual, are intended for his
sole benefit, do not infringe on the rights of others, and
further prcvided the waiver of the right or privilege is not

26
27
Id. at 173-179.
275 Phil 145 (1991).
t/)
Decision - 12 - G.R. No. 223321

forbidden by law, and does not contravene public policy;

and the principle is recognized that everyone has a right to
waive, and agree to waive, the advantage of a law or rule
made solely for the benefit and protection of the individual
in his private capacity, if it can be dispensed with and
relinquished without infringing on any public right, and
. h out detnment
wit . . at 1arge x x x. 28
to th e commumty

Moreover, Section 99 of the Corporation Code provides for the effects

of transfer of stock in breach of qualifying conditions, to wit:

Sec. 99. Effects of issuance or transfer of stock in breach of

qualifYing conditions. -

xx xx

3. If a stock certificate of any close corporation

conspicuously shows a restriction on transfer of stock of
the corporation, the transferee of the stock is conclusively
presumed to have notice of the fact that he has acquired
stock in violation of the restriction, if such acquisition
violates the restriction.

4. Whenever any person to whom stock of a close

corporation has been issued or transferred has, or is
conclusively presumed under this section to have, notice
either (a) that he is a person not eligible to be a holder of
stock of the corporation, or (b) that transfer of stock to him
would cause the stock of the corporation to be held by more
than the number of persons permitted by its articles of
incorporation to hold stock of the corporation, or (c) that
the transfer of stock is in violation of a restriction on
transfer of stock, the corporation may, at its option, refuse
to register the transfer of stock in the name of the
transferee.

5. The provisions of subsection (4) shall not applicable if

the transfer of stock, though contrary to subsections ( 1), (2)
of (3), has been consented to by all the stockholders of the
close corporation, or if the close corporation has amended
its articles of incorporation in accordance with this Title.

Clearly, under the above-quoted provision, even if the transfer of

stocks is made in violation of the restrictions enumerated under Section 99,
such transfer is still valid if it has been consented to by all the stockholders
of the close corporation and the corporation cannot refuse to register
the transfer of stock in the name of the transferee. In this case, We find that
the sale of Teresita's 3,464 Marsal shares had already been consented to by

28
Id. at 173. t?
Decision - 13 - G.R. No. 223321

respondents as We have discussed, and may be registered in the name of

petitioner Rogelio.

We find that there is indeed no violation of paragraph 7 of Marsal's

Articles of Incorporation. We need not discuss the other issues raised in the
petition.

WHEREFORE, premises considered, the petition for review is

GRANTED. The Decision dated August 3, 2015 and the Resolution dated
February 19, 2016 rendered by the Court of Appeals in CA-G.R. SP No.
07673 ·are hereby REVERSED and SET ASIDE.

SO ORDERED.
Decision - 14 - G.R. No. 223321

WE CONCUR:

~)
Acting Chief Justice
Chairperson

vD.~
ESTELA M'~ fERLAS-BERNABE S. CAGUIOA
Associate Justice

On wellness leave
ANDRES B. REYES, JR.
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that

the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.

at::r~
ANTONIO T. CAR
Acting Chief Justice