LIM TAY Vs CA

LIM TAY vs., COURT OF APPEALS, GO FAY AND CO. INC.
,
SY GUIOK, and THE ESTATE OF ALFONSO LIM  PETITIONER’S CONTENTION: He has acquired
G.R. No. 126891. August 5, 1998 ownership of the shares through extraordinary
PANGANIBAN, J. prescription, pursuant to Article 1132 of the Civil
Code, and through respondents subsequent
“The duty of a corporate secretary to record
acts, which amounted to a novation of the
transfers of stocks is ministerial. However, he cannot be
compelled to do so when the transferees title to said contracts of pledge. Petitioner also claims that
shares has no prima facie validity or is uncertain. More there was dacion en pago, in which the shares of
specifically, a pledgee, prior to foreclosure and sale, does stock were deemed sold to petitioner, the
not acquire ownership rights over the pledged shares consideration for which was the extinguishment
and thus cannot compel the corporate secretary to of the loans and the interests thereon. Petitioner
record his alleged ownership of such shares on the basis likewise claims that laches bars respondents
merely of the contract of pledge. xxx” from recovering the subject shares. [Thus
mandamus must lie in his favor]
FACTS
 On January 8, 1980, Sy Guiok and Alfonso Sy Lim  After due proceedings, Hearing Officer dismissed
secured loans from Lim Tay in the amount of Lim Tay’s Complaint on the ground that although
P40,000 each payable within six (6) months. the SEC had jurisdiction over the action,
They each executed a Contract of Pledge over pursuant to decision in Rural Bank of Salinas, et
their 300 shares of stock in the Go Fay & al. versus Court of Appeals, et al., 210 SCRA 510,
Company Inc [Respondent Corporation]. he failed to prove the legal basis for the secretary
 Under said Contracts of Pledge: of the Respondent Corporation to be compelled
o 3. In the event of the failure of the to register stock transfers.
PLEDGOR to pay xxx PLEDGEE is hereby  Lim Tay appealed to SEC but was dismissed for
authorized to foreclose the pledge upon lack of jurisdiction and lack of cause of action for
the said shares of stock by selling the mandamus.
same at public or private sale with or  CA: in favor of respondents
without notice to the PLEDGOR xxx
 Guiok and Sy Lim failed to pay their respective ISSUE: W/N LIM TAY IS ENTITLED TO RELIEF OF
loans and the accrued interests. MANDAMUS?
 In October, 1990, Lim Tay filed a Petition for
Mandamus against Respondent Corporation, RULING: NO
with the SEC entitled Lim Tay versus Go Fay &  Petitioner has failed to establish a clear legal
Company, Inc., SEC Case No. 03894, praying for right. X x x At the time petitioner instituted his
the registration of the stock transfers and issue suit at the SEC, his ownership claim had no prima
new certificates, and for the payment of the facie leg to stand on. At best, his contention was
dividends due. disputable and uncertain. Mandamus will not
 In the interim, Sy Lim died. – his estate is issue to establish a legal right, but only to
represented by CONCHITA LIM enforce one that is already clearly established.
 RESPONDENTS CONTENTIONS: Plaintiff is not a  Without Foreclosure and Purchase at Auction,

stockholder of the respondent corporation; Pledgee Is Not the Owner of Pledged Shares
there was no foreclosure of shares executed in o Petitioner did not acquire ownership of
accordance with the Chattel Mortgage Law the shares by virtue of the contracts of
whatsoever; there were no sales consummated pledge. Article 2112 of the Civil Code
that would transfer to the plaintiff the subject states:
shares of stocks and therefore, any demand to
transfer the shares of stocks to the name of the The creditor to whom the credit has not
plaintiff has no legal basis. been satisfied in due time, may proceed
before a Notary Public to the sale of the [JUST IN CASE SIR ASKS]
thing pledged. This sale shall be made at
 NO PRESCRIPTION: Petitioner did not acquire
a public auction, and with notification to
the shares by prescription either. The period of
the debtor and the owner of the thing
prescription of any cause of action is reckoned
pledged in a proper case, stating the
only from the date the cause of action accrued.
amount for which the public sale is to be
held. If at the first auction the thing is not o Accordingly, a cause of action on a
sold, a second one with the same written contract accrues when a breach
formalities shall be held; and if at the or violation thereof occurs.
second auction there is no sale either,
o Under the contracts of pledge, private
the creditor may appropriate the thing respondents would have a right to ask
pledged. In this case he shall be obliged for the redelivery of their certificates of
to give an acquaintance for his entire stock upon payment of their debts to
claim. petitioner, consonant with Article 2105
of the Civil Code, which reads:
o There is no showing that petitioner
made any attempt to foreclose or sell  The debtor cannot ask for the
the shares through public or private return of the thing pledged
auction, as stipulated in the contracts of against the will of the creditor,
pledge and as required by Article 2112 of unless and until he has paid the
the Civil Code. Therefore, ownership of debt and its interest, with
the shares could not have passed to expenses in a proper case.
him. The pledgor remains the owner o Thus, the right to recover the shares
during the pendency of the pledge and based on the written contract of pledge
prior to foreclosure and sale, as explicitly between petitioner and respondents
provided by Article 2103 of the same would arise only upon payment of their
Code: respective loans. Therefore, the
prescriptive period within which to
 Unless the thing pledged is
demand the return of the thing pledged
expropriated, the debtor
should begin to run only after the
continues to be the owner
payment of the loan and a demand for
thereof.
the thing has been made, because it is
 Nevertheless, the creditor may
only then that respondents acquire a
bring the actions which pertain
cause of action for the return of the
to the owner of the thing
thing pledged.
pledged in order to recover it
 No Novation in Favor of Petitioner: Novation
from, or defend it against a third
cannot be inferred from the mere fact that
person.
petitioner has not, since 1980, instituted any
 No Dacion en Pago in Favor of Petitioner: action to recover the shares. Such action is, in
Neither can there be dacion en pago, in which fact, premature, as the loan is still outstanding.
the certificates of stock are deemed sold to Besides, as already pointed out, novation is
petitioner, the consideration for which is the never presumed or inferred.
extinguishment of the loans and the accrued  Laches: In this case, it is in fact petitioner who
interests thereon. Dacion en pago is a form of may be guilty of laches. Petitioner had all the
novation in which a change takes place in the time to demand payment of the debt. More
object involved in the original contract. Absent important, under the contracts of pledge,
an explicit agreement, petitioner cannot simply petitioner could have foreclosed the pledges as
presume dacion en pago. soon as the loans became due. But for still
unknown or unexplained reasons, he failed to do
so, preferring instead to pursue his baseless
claim to ownership.

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LIM TAY vs., COURT OF APPEALS, GO FAY AND CO. INC.

 RESPONDENTS CONTENTIONS: Plaintiff is not a  Without Foreclosure and Purchase at Auction,

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