Puno v. Puno Enterprises, Inc.
REITERATIONFacts
The Antecedents: Carlos L. Puno, an incorporator of Puno Enterprises, Inc., died on June 25, 1963. Petitioner Joselito Musni Puno, claiming to be an heir (son of Carlos L. Puno with his common-law wife), filed a complaint for specific performance against respondent corporation. Petitioner sought to inspect corporate books, render an accounting of transactions from 1962, and receive profits/dividends pertaining to Carlos L. Puno's shares. Procedural History: Respondent moved to dismiss, questioning petitioner's legal personality due to discrepancies in his birth certificate (Joselito Musni Muno vs. Joselito Musni Puno). The court ordered proceedings in abeyance, finding the birth certificate insufficient proof of paternity. Petitioner submitted a corrected birth certificate, which the court conditionally admitted. The trial court ordered respondent to allow petitioner to inspect corporate books and records. On appeal, the Court of Appeals (CA) dismissed the complaint, holding that petitioner failed to establish paternity and filiation, and that his action was premature as he was not a stockholder but merely claiming rights as an heir. The CA ruled that the proper action was to prove paternity in estate settlement proceedings. Petitioner's motion for reconsideration was denied. The Petition: Petitioner raised issues concerning his entitlement to reliefs as an heir, the sufficiency of proof of his filiation, the identity of Joselito Muno and Joselito Puno, and the admission of factual allegations in the motion to dismiss. He argued that the CA erred in denying him the right to inspect corporate books.
Issue(s)
Whether petitioner, as a claimed heir of a deceased incorporator, is entitled to inspect the corporate books and receive dividends. Whether petitioner sufficiently established his filiation to the deceased incorporator, Carlos L. Puno. Whether the discrepancy in the surname on the birth certificate (Muno vs. Puno) precludes petitioner from asserting his rights, and whether an ordinary civil action for specific performance is the proper venue to adjudicate claims of heirship.
Ruling
The petition is denied. The Court of Appeals Decision and Resolution are affirmed.
Ratio Decidendi
On the entitlement to inspect corporate books and receive dividends: The Court reiterated that upon a shareholder's death, heirs do not automatically become stockholders. Their right to the deceased's shares and associated privileges, such as inspecting corporate books and receiving dividends, is contingent upon the proper settlement of the estate and the subsequent transfer and recording of the shares in the corporation's books. Sections 74 and 75 of the Corporation Code grant these rights exclusively to directors, trustees, stockholders, or members. The petitioner, not being a registered stockholder and having failed to establish his heirship through proper estate proceedings, cannot claim these rights. Even if paternity were proven, the absence of a transfer of shares in his name in the corporation's books would still bar his claim. On the sufficiency of proof of filiation: The Court affirmed the CA's finding that petitioner failed to satisfactorily prove his filiation to Carlos L. Puno. A certificate of live birth, especially when prepared solely by the mother without the putative father's participation or acknowledgment, is not competent evidence of paternity. The Court noted that the local civil registrar lacks the authority to record paternity on the information of a third person. Similarly, a baptismal certificate serves only as proof of the sacrament's administration, not the veracity of entries regarding paternity. Without evidence of Carlos L. Puno's acknowledgment of petitioner, the birth certificate alone was insufficient to establish the claimed filiation. On the discrepancy in the surname and the proper venue for determining heirship: While the Court acknowledged the discrepancy in the surname on the birth certificate, it found that this issue was secondary to the petitioner's failure to establish his filiation and his status as a legal heir through the proper legal process. The Court emphasized that the determination of heirship, especially for an illegitimate child claiming rights over a deceased's estate, must be ventilated in a special proceeding for the settlement of the estate. An ordinary civil action for specific performance is not the proper venue to adjudicate such claims. Therefore, even if the surname issue were resolved, the fundamental lack of proven heirship and proper transfer of shares would still prevent the petitioner from exercising the rights of a stockholder.
Main Doctrine
Upon the death of a shareholder, the heirs do not automatically become stockholders of the corporation; neither are they mandatorily entitled to the rights and privileges of a stockholder. The stocks must be distributed first to the heirs in estate proceedings, and the transfer of the stocks must be recorded in the books of the corporation. Until a settlement and division of the estate is effected, the stocks of the decedent are held by the administrator or executor, who is entitled to exercise the rights of the deceased as a stockholder.