I. SHORT TITLE: RIVERA VS HON.

FLORENDO

II. FULL TITLE: Aquilino Rivera, Isamu Akasako and Fujiyama Hotel & Restaurant versus
The Hon. Alfredo Florendo, Judge of Court of First Instance of Manila,
Lourdes Jureidini and Milagros Tsuchiya G.R. No. L-57586, October 8,
1986, J. Paras

III. TOPIC: Corporation Law—Certificate of Stock and Transfer of Shares; Jurisdiction

of SEC

IV. STATEMENT OF FACTS:

Fujiyama Hotel & Restaurants, Inc. (Fujiyama), was organized and registered under Philippine laws
with a capital stock of P1,000,000 divided into 10,000 shares of P100.00 par value each by the
Aquilino Rivera (Rivera) and four other incorporators. Isamu Akasako (Akasako), a Japanese
national and co-petitioner who is allegedly the real owner of the shares of stock in the name of
petitioner Rivera, sold 2,550 shares of stocks to Milagros Tsuchiya (Tsuchiya) and Lourdes
Jureidini (Jureidini) for a consideration of Php 440,000 with the assurance that Tsuchiya will be
made President, and Jureidini will be made director of the corporation after the purchase of the
shares of stocks. Rivera assured Tsuchiya that he would sign the stock certificates as the shares of
stocks were registered under Rivera’s name. After the sale was consummated and the
consideration was paid, Rivera refused to make the indorsement unless he is also paid. Tsuchiya
and Jureidini attempted several times to register the stock certificates with the corporation but it
was refused.

V. STATEMENT OF THE CASE:

Tsuchiya and Jureidini filed a special action for mandamus and damages with preliminary
injunction and/or receivership against the petitioners with the Court of First Instance of Manila.
The court issued a writ of preliminary mandatory injunction authorizing Jureidini and Tsuchiya to
manage the corporation’s hotel and restaurant upon filing of a bond in the amount of P30,000.00.
Rivera, et.al. motion for reconsideration and motion to dismiss for lack of jurisdiction was denied
but the bond was increased to P120,000.00.

VI. ISSUE:

1. Whether or not the Corporation may refuse the registration of the

respondents’ shares.
2. Whether or not the SEC has the proper jurisdiction over the case.

VII. RULING:
1. Yes. As found in Sec. 63 of the Corporation Code, shares of stock may be transferred by
delivery of the certificate after indorsement by the owner or his attorney-in-fact or other person
legally authorized to make the transfer. By this provision it is evident that Rivera’s indorsement
must be obtained before any transfer of the questioned shares is effected. Thus, the Corporation’s
refusal for the registration of the shares of stock in the names of Jureidini and Tsuchiya is proper.
Since Jureidini and Tsuchiya chose special action for mandamus as a remedy to compel Rivera.
This recourse is not proper and, thus, the same should be dismissed without prejudice on filing the
proper action. The rights and obligations of Jureidini, Tsuchiya and the petitioners should be
determined in a proper action, not mandamus.

2. No, SEC does not have jurisdiction of the case since the dispute is not an intra-corporate
controversy. Intra-corporate controversies are those which arise between and stockholder and the
corporation or among the stockholders. In the present case, what it simply involves is a conflict on
the ownership of a group of shares between the registered owner and an outside party as Jureidini
and Tsuchiya are not deemed as stockholders.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the assailed orders of respondent Judge are SET ASIDE; the complaint (special
civil action for mandamus with damages, etc.) should ordinarily be dismissed without prejudice to
the filing of the proper action; but as all parties are already duly represented, We hereby consider
the case as an ordinary civil action for specific performance, and the case is therefore remanded to
the lower court for trial on the merits; the charge of contempt against respondent Jureidini is
DISMISSED but the order of Our Court restraining respondent from taking over the management
of the restaurant remains until after this case is decided.