LIM TAY, 

petitioner,
vs.
COURT OF APPEALS, GO FAY AND CO. INC., SY GUIOK, and THE ESTATE OF
ALFONSO LIM, respondents.
G.R. No. 126891 August 5, 1998

Facts:
Sy Guiok and Sy Lim secured a loan from Lim Tay in the amount of P40,000. This was
secured by a contract of pledge whereby the former pledged their 300 shares of stock each
in Go Fay & Company to the latter. However, they failed to pay thei r respective
loans. Hence, Lim Tay filed a petition for mandamus against Go Fay & C o m p a n y
with the SEC praying that an order be issued directing the corporate
secretary of the said corporation to register the stock transfers and issue
n e w certificates in favor of Lim Tay. Go Fay & Company filed its answer contending that SEC
had no jurisdiction to entertain the complaint on the ground that since Lim Tay was not a
stockholder of the company, no intra corporate controversy took place; and furthermore, that
the default of payment of Sy Guiok and Sy Lim did not automatically vest in Lim
Tay the ownership of the pledged shares. SEC dismissed the complaint. On appeal to the
CA, it affirmed SEC’s decision. Hence, this petition for certiorari with the SC.

Issue: Whether or not SEC had jurisdiction over the case.

Held: No. The registration of shares in a stockholder’s name, the issuance of stock
certificates, and the right to receive dividends which pertain to the said shares are all
rights that flow from ownership. The determination of whether or not a shareholder is
entitled to exercise the above mentioned rights falls within the jurisdiction of the SEC.
However, if ownership of the shares is not clearly established and is still unresolved at the
time the action for mandamus is filed, then jurisdiction lies with the regular courts. In the
case at bar, reading into the contract of pledge, the stipulation shows that Lim Tay was
merely authorized to foreclose the pledge upon maturity of the loans, not to own them.
Such foreclosure was not automatic, for it must be done in a public or private sale.
Nowhere was it mentioned that he exercised his right of foreclosure. Hence, his status
was still a mere pledgee, and under civil law, this does not entitle him to ownership of the
shares of stock in question.