Genato v.
de Lorenzo ISSUES
GR L-24983 | May 20, 1968 | Reyes, J.B.L., Actg. CJ
Petitioners: Florentino Genato, Francisco Genato, and Genato
Commercial Corporation
Respondent: Felisa Genato de Lorenzo
FACTS
- Sps. Vicente Genato and Simona de Genato were founders
of the Genato Commercial Corporation (a family
corporation). They had 6 children: Francisco, Florentino,
Manuel, Carmen, Felisa and Juan.
- Genato Commercial Corporation’s board of directors
consisted of Vicente (President), Simona (Secretary-
Treasurer), Florentino (VP), Carmen, and Felisa.
- On Dec. 23, 1942, the majority of BOD (Vicente, Simona,
and Florentino) held a meeting where Florentino was
elected and designated as Assistant Secretary-Treasurer
of the corporation.
o Simona explained that due to her advanced age,
it is more convenient that Florentino act as Asst.
Secretary-Treasurer.
- 4 or 5 days thereafter, Florentino, as Asst. Secretary-
Treasurer, cancelled share certificates Nos. 7 & 18 and in
lieu thereof issued share certificate No. 118 for 265 shares
in his favor and share certificate No. 119 for 265 shares in
favor of Francisco.
o According to Florentino, on Dec. 25, 1942, his
mother, Simona delivered to him 2 share
certificates Nos. 7 & 18, already indorsed, and
ordered him to ‘transfer them’
- After Simona Vda. de Genato’s death in 1946, an intestate
proceeding of her estate was filed. Subsequently, the
Philippine Trust Company (judicial administrator of
intestate estate), and the legal heirs Manuel, Felisa, and
Juan filed a complaint to recover from Florentino and
Francisco the 530 shares of stock in order that they may
be included in the inventory of the intestate estate of
Simona.
- In their answer, Francisco and Florentino alleged that they
had acquired ownership of the 530 shares by simple
donation from Simona.
- CFI: in favor of Florentino and Francisco. Hence, Felisa
appealed the case.
- CA: reversed CFI. It invalidated the transfer of shares to
Florentino and Francisco and decreed that the shares of
stock remained part of Simona’s estate.
o There was neither consideration nor valid
donation of the shares of stock due to lack of
proper acceptance and non-compliance with
statutory requirements.
- CA also ruled that appeal of Felisa inured to the benefit of
her other co-plaintiffs. Hence, this appeal.
1. WON Florentino and Francisco committed fraud in the
transfer of the shares of stock in their names
- It is immaterial that the evidence did not show any
fraudulent machinations on the part of appellants, as the
uncontested evidence showed that the transfer was not
supported by valid cause or consideration, which in itself
is a ground for invalidating the transaction.
- Moreover, it is confirmed by the appellants’ own claim
that their mother's shares in the corporation were
donated to them, and not sold, as recited by the
indorsement of Certificates Nos. 7 and 18; and that the
indorsement of shares should not be taken literally as it
was used to disguise a different factual situation.
o Hence, the presumption that the private
transaction was fair and regular cannot apply.
2. WON there has been a valid donation – NO.
- Assuming that Simona gave the Certificates of Stock Nos.
7 & 18 to Florentino with instructions to transfer the same
to him and his brother, this did not constitute a valid
manual donation for lack of proper acceptance.
- One of the two donees was not present at the delivery,
and there is no showing that Francisco had authorized
Florentino to accept for both of them
- According to Manresa, the delivery by the donor and the
acceptance by the donee must be simultaneous, and the
acceptance by a person other than the true donee must
be authorized by a proper power of attorney set forth in
a public document – none has been claimed to exist in this
case
- Since by appellants’ own version, donation intended was
a joint one to both donees, one could not accept
independently of his co-donee, for there is no accretion
among donees unless expressly so provided (Art. 637) or
unless they be husband and wife.
- There being neither valid donation, nor sale, the
cancellation of the original certificates of stock as well as
the issuance of new certificates in the name of Florentino
and Francisco was illegal and improper for lack of valid
authority. Consequently, the shares in question are
deemed never to have ceased to be property Simona and
must be considered still forming part of the assets of her
estate.
3. WON Felisa’s appeal can inure to the benefit of the other
heirs – YES
- As Simona’s estate is still pending liquidation, the interest
of each heir cannot be deemed independent of that of
others. As held by CA, the interests of all the heirs are so
interwoven as to become inseparable, the appeal by one
heir prevented the appealed decision from becoming final
as to the others.
RULING: CA decision is AFFIRMED.

NOTES
The indorsement appearing on the back of share certificate No.
7 (which is identical, except as to the no. of shares, to that
appearing on the back of share certificate No. 18), with the
typewritten words filling the blank spaces indicated by
underlines, reads as follows:
"For value Received, I hereby sell, assign and transfer unto
Florentino Genato and Francisco Genato his heirs,
administrators and legal representatives, the Shares of the
Capital stock represented by the within Certificate, and all
rights, interests, participations and privileges represented
thereby, and do hereby irrevocably constitute and appoint
Genato Commercial Corporation to transfer the said Stock on
the books of the within corporation with full power of
substitution in the premises.”