193 Republic v. Estate of Hans Menzi

193 Republic v.
Estate of Hans Menzi AUTHOR: iskoba ng pag-ibig

November 23, 2005 G.R. No. 152578 Consolidated cases.
TOPIC: Certificate of Stock
PONENTE: TINGA, J.
FACTS
1. President Corazon C. Aquino issued Executive Order (EO) No. 1, creating the Presidential Commission on Good
Government (PCGG).
2. Subject of this case are three “blocks” of shares of the Bulleting Publishing Corp., as follows:
a. 154 block – 154, 472 shares
b. 198 block – 198, 052.5 shares
c. 214 block – 214, 424.5 shares
3. In an action for reconveyance earlier decided by the Sandiganbayan, said tribunal decided that:
a. Ff. shares were ill-gotten:
b. 46,000 shares (belonging to the 214 block), under the name of Danding Cojuangco, and the entire 198
block, which were originally under the names of Campos, Cojuangco and Zalamea then subsequently sold
to HMHMI (Hans Menzi Holdings and Mgt. Inc)
c. The 154 block was not ill-gotten
d. The estate of Hans Menzi must thus surrender for cancellation the certificates of stock in its possession
4. This present appeal pertains to the propriety of declaring the 154 block, on the one hand, as not ill-gotten, and the
198 and 214 blocks as ill-gotten.
5. For clarity of presentation, the 154 block, which is the subject of the Republic’s petition in G.R. No. 152578, is
treated separately from the 198 and 214 blocks, which are the subjects of the petitions in G.R. No. 154487 and
G.R. No. 154518.
BLOCK 154: (G.R. No. 152578)
1. In 1957, Menzi purchased the entire interest in Bulletin Publishing

2. In 1961, US Automotive purchased Bulletin shares from Menzi
3. In 1968, a stock option was executed between Menzi and US Automotive giving each other preferential rights
in the purchase of each other’s Bulleting shares
4. Later in the same year, Bulletin’s 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.
5. In 1984, Menzi sold the 154 block to US automotive. US Automotive’s VP executed a promissory note in
favor of Menzi
6. 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.
7. Subsequently, the executor received 2 checks representing full payment; he in turn, issues a receipt.
BLOCK 198 and 214:
1. HMHMI was incorporated on May 20, 1982 by Menzi, Campos, Cojuangco, Rolando C. Gapud (Gapud) and
Zalamea, with an authorized capital stock of P1, 000,000.00 divided into 100,000 shares with par value of P10.00
each.
2. Deed of Transfer and Conveyance was executed by Menzi, Campos, Cojuangco and Zalamea on August 17, 1983,
transferring the shares of stock registered in their names in various corporations to HMHMI in exchange for
6,000,000 shares of the latter’s capital stock, subject to the approval by the SEC of HMHMI’s Certificate of
Increase of Capital Stock. The shares of stock transferred included the 198 block of Bulletin shares, 90,866.5 of
which were registered in the name of Campos; 90,877 in the name of Cojuangco; and 16,309 in the name of
Zalamea.
3. On February 14, 1984, HMHMI amended its Articles of Incorporation by increasing its authorized capital stock
to P100, 000,000.00 divided into 10,000,000 shares with par value of P10.00 per share.
4. On January 15, 1986, the law firm of Siguion Reyna, Montecillo & Ongsiako wrote a letter to Bulletin’s corporate
secretary, Atty. Mendoza, requesting that three (3) certificates of stock representing 90,866.5, 90,877, and 16,309
Bulletin shares be issued in favor of HMHMI in exchange for 21 certificates of stock in HMHMI.
5. Atty. Mendoza acknowledged receipt of the 21 certificates of stock but replied that the transfer by Campos,
Cojuangco and Zalamea of their Bulletin shares to HMHMI cannot be recorded in the books of Bulletin because it
was made in violation of Bulletin’s Articles of Incorporation. Bulletin, however, offered to buy the shares at the
price fixed in the Articles of Incorporation.
6. Deed of Sale was executed on February 21, 1986 by Atty. Montecillo whereby HMHMI sold the 198 block to
Bulletin for the amount of P23, 675,195.85.
7. The SEC issued a certification to the effect that as of February 21, 1986, the total subscribed shares of Bulletin was
756,861. Of these, 198,052.5 were treasury shares, leaving the total outstanding shares at 567,808.5.
8. On July 31, 1987, the PCGG received from Bulletin the amount of P8, 173,506.06 as full payment of 46,620.5
Bulletin shares registered in the name of Campos. The receipt stated that “Mr. Jose Y. Campos has waived the
ownership of said shares in favor of the Republic of the Philippines through the Presidential Commission on Good
Government.”
9. A Deed of Assignment was likewise executed by Zalamea on October 15, 1987, assigning and waiving in favor of
the Republic his rights to 121,178 Bulletin shares registered in his name. On the same day, Bulletin issued in favor
of PCGG a check in the amount of P21, 244,926.96 as full payment of Zalamea’s shares.
10. As regards the 214 block, the Sandiganbayan ruled that there is no longer any dispute concerning the ownership of
the 46,620.5 shares held by Campos and the 121,178 shares held by Zalamea in view of the Teehankee Resolution
and the fact that these shares have been waived and assigned to PCGG. In G.R. No. 154487, petitioner Cojuangco
assails paragraphs 1 and 2 of the Sandiganbayan Decision.
ISSUE:
1. WON the sale of the 154 block from Menzi to US Automotive valid.
2. WON the covered shares were validly ceded by Camps and Zalamea to the government?
HELD:
1. YES
2. YES
RATIO:
1. 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 execution 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 operative act that transfers the shares.
Here, there is no dispute, that delivery and endorsements in favor of US Automotive were made.
Moreover, the executor’s authority to negotiate the transfer is found in the general power of attorney executed by
Menzi. Also, the former’s authority to accept payment springs from Menzi’s will and the order of the probate court
confirming the sale.
As found by the Sandiganbayan, it was Menzi himself who sold to US Automotive, hence the non-inclusion of the
subject shares in Menzi’s will and in the inventory of his estate is attributable to the fact that at the time the
aforesaid were taken, they already belonged to US Automotive.
2. The fact that the stock certificates covering the shares ceded to the Republic (ie, Campos and Zalamea’s 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 Menzi’s possession does not prove that Menzi owned the shares.
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.
CASE LAW/ DOCTRINE:
Requisites for a valid transfer per Sec. 63:
1. Between the parties:
 Delivery
 Endorsement
2. To be valid as to third persons:
 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.

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193 Republic v.

Estate of Hans Menzi AUTHOR: iskoba ng pag-ibig

BLOCK 154: (G.R. No. 152578)

1. In 1957, Menzi purchased the entire interest in Bulletin Publishing

BLOCK 198 and 214:

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