Supreme Court Clarifies Stockholder Proof Requirements
MANILA, Philippines – The Supreme Court has clarified that a corporation’s General Information Sheet (GIS) alone does not prove an individual is a stockholder. Instead, the stock and transfer book remains the definitive and official record for determining stockholder status.
This ruling highlights the critical role of the stock and transfer book in establishing stock ownership. The Court emphasized that despite names appearing in the GIS, this document is not enough evidence to confirm stockholder rights.
Case Background and Court Decisions
The First Division of the Supreme Court ruled that Ma. Christina Patricia Lopez and John Rusty Lito Lopez are not stockholders of LC Lopez and Conqueror. Although their names appeared in the companies’ GIS submitted to the Securities and Exchange Commission, their names were absent from the official stock and transfer books.
The Court explained, “It is established in jurisprudence that the mere inclusion as shareholder in the GIS of a corporation is by itself insufficient proof that such person is a shareholder. Between the stock and transfer book and the GIS, the former is controlling,” according to the decision authored by Associate Justice Ramon Paul Hernando.
Trial and Appeals Court Rulings
Initially, the Marikina City Regional Trial Court ruled that Christina and John Rusty were stockholders and directors based on their inclusion in the GIS, despite their absence from the stock and transfer books. However, the Court of Appeals overturned that decision, stating that the stock and transfer books carry more weight in proving ownership.
The Court of Appeals noted that neither individual provided sufficient evidence to confirm share ownership. This ruling was later challenged and temporarily reversed by the Supreme Court in 2022, which had accepted the GIS and witness testimonies as adequate proof.
Final Supreme Court Reversal and Dissenting Opinion
Following a motion for reconsideration, the Supreme Court revisited the case and reversed its earlier ruling, reaffirming that the stock and transfer book is the primary proof of stock ownership.
Associate Justice Ricardo Rosario dissented, agreeing that stock certificates and transfer books are generally more authoritative than the GIS. However, he stressed that these documents should not be considered absolute or conclusive evidence of stock ownership.
The case underscores the importance of relying on the proper corporate records when verifying stockholder status. It also serves as a reminder that documentary evidence must meet stringent standards to establish legal rights within corporations.
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