Guanzon and Sons vs. Register of Deeds of Manila

A certificate of liquidation distributing corporate assets to stockholders upon dissolution constitutes a conveyance or transfer of title from the corporation to the stockholders, subject to registration fees and documentary stamp taxes, because a corporation is a juridical person distinct from its members, and corporate assets belong to the corporate entity rather than the stockholders individually.

• On September 17, 1960, the stockholders of F. Guanzon and Sons, Inc. adopted a resolution dissolving the corporation.
• On September 19, 1960, the five stockholders executed a certificate of liquidation of the corporation's assets, reciting that they had distributed among themselves, as liquidating dividends in proportion to their shareholdings, the assets of the corporation, including real properties located in Manila.
• The certificate of liquidation was presented to the Register of Deeds of Manila for registration.
• The Register of Deeds denied registration on seven grounds, of which the stockholders disputed grounds Nos. 3 (number of parcels not certified to in the acknowledgment), 5 (payment of P430.50 registration fees), 6 (attachment of P940.45 documentary stamps), and 7 (presentation of court judgment approving dissolution under Rule 104, Section 3 of the Rules of Court).
• The Commissioner of Land Registration, deciding the consulta, overruled ground No. 7 but sustained requirements Nos. 3, 5, and 6, ruling that the certificate was essentially a transfer or conveyance.

• The certificate of liquidation is not a conveyance or transfer but merely a distribution of the assets of a corporation that has ceased to exist due to dissolution.
• Because it is not a conveyance, the certificate need not contain a statement of the number of parcels of land in the acknowledgment.
• The documentary stamps required should only be P0.30, not P940.45 as required by the Register of Deeds.
• The requirement to pay P430.50 as registration fee is incorrect.
• The minutes for dissolution attached to the document support the position that this is merely a distribution, not a transfer.

• The certificate of liquidation, though involving a distribution of corporate assets, in substance represents a transfer of said assets from the corporation to the stockholders.
• The certificate is therefore a transfer or conveyance subject to the usual registration requirements, including proper acknowledgment, registration fees, and documentary stamps.
• The Register of Deeds correctly imposed the requirements applicable to transfers or conveyances of real property.

• Procedural:
  • Whether the certificate of liquidation must comply with the requirements for transfers/conveyances, including certification of the number of parcels in the acknowledgment, payment of registration fees, and attachment of documentary stamps.
• Substantive Issues:
  • Whether a certificate of liquidation distributing corporate assets to stockholders upon dissolution constitutes a conveyance or transfer of title.
  • Whether stockholders are co-owners of corporate property such that distribution constitutes partition rather than transfer.

• Procedural:
  • The Supreme Court affirmed the resolution of the Commissioner of Land Registration sustaining the requirements imposed by the Register of Deeds (Nos. 3, 5, and 6).
  • The Court held that because the certificate is a conveyance, it must comply with the formalities of transfers, including stating the number of parcels in the acknowledgment and paying the corresponding registration fees and documentary stamps.
• Substantive:
  • The Court ruled that the certificate of liquidation is a conveyance or transfer, not merely a distribution.
  • A corporation is a juridical person distinct from its members. Properties registered in the corporation's name are owned by the corporate entity, separate and distinct from its stockholders.
  • Shares of stock constitute personal property but do not represent ownership of corporate property or entitle the holder to possession of any definite portion of corporate assets.
  • Stockholders are not co-owners or tenants in common of corporate property.
  • Therefore, the act of liquidating and distributing corporate assets is a transfer of title from the corporation to the individual stockholders, requiring a deed of conveyance and compliance with registration requirements.

• Corporation as a Juridical Person Distinct from its Members — A corporation has a personality separate and distinct from its stockholders. It is an artificial being that owns property in its own right, and its stockholders do not have direct ownership interests in specific corporate assets. The Court applied this doctrine to establish that corporate assets belong to the corporate entity, necessitating a formal transfer to stockholders upon dissolution.
• Nature of Shares of Stock — Shares of stock are personal property that typify an aliquot part of the corporation's property or the right to share in its proceeds when distributed, but they do not confer ownership of any specific portion of the capital or assets of the corporation. The Court utilized this principle to distinguish between ownership of shares (which represents a contractual right to dividends) and ownership of the underlying corporate assets.
• Distribution of Assets Upon Dissolution as Conveyance — The distribution of corporate assets to stockholders upon liquidation and dissolution constitutes a transfer or conveyance of title from the corporation to the stockholders, not a partition of co-owned property. The Court applied this doctrine to determine that the certificate of liquidation was subject to the requirements applicable to deeds of conveyance.

• "A corporation is a juridical person distinct from the members composing it."
• "Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its members."
• "A share of stock only typifies an aliquot part of the corporation's property, or the right to share in its proceeds to that extent when distributed according to law and equity, but its holder is not the owner of any part of the capital of the corporation."
• "The stockholder is not a co-owner or tenant in common of the corporate property."
• "The act of liquidation made by the stockholders... is not and cannot be considered a partition of community property, but rather a transfer or conveyance of the title of its assets to the individual stockholders."

• Nelson v. Owen, 113 Ala., 372, 21 So. 75 — Cited for the proposition that a corporation has property of its own which consists chiefly of real estate, distinct from the personal property represented by shares of stock.
• Morrow v. Gould, 145 Iowa 1, 123 N.W. 743 — Cited alongside Nelson v. Owen to support the distinction between corporate property and shareholder interests.
• Hall & Faley v. Alabama Terminal, 173 Ala 398, 56 So., 235 — Cited for the definition of a share of stock as typifying an aliquot part of the corporation's property or the right to share in its proceeds.
• Bradley v. Bauder, 36 Ohio St., 28 — Cited for the principle that a stockholder is not the owner of any part of the capital of the corporation.
• Gottfried v. Miller, 104 U.S., 521 — Cited for the rule that a stockholder is not entitled to the possession of any definite portion of the corporation's property or assets.
• Jones v. Davis, 35 Ohio St., 474 — Cited alongside Gottfried v. Miller regarding the stockholder's lack of entitlement to specific corporate assets.
• Halton v. Hohnston, 166 Ala 317, 51 So 992 — Cited for the principle that the stockholder is not a co-owner or tenant in common of the corporate property.

• Rules of Court, Rule 104, Section 3 — Cited by the Register of Deeds as requiring the presentation of a court judgment approving the dissolution and directing the disposition of assets. The Commissioner of Land Registration overruled this ground, and the Supreme Court did not reverse this aspect, effectively agreeing that this particular requirement was not applicable or had been satisfied.

• Labrador, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal, JJ. — The decision states that these justices concurred in the opinion authored by Bautista Angelo, J., indicating unanimous agreement with the ruling that the certificate constitutes a conveyance and the affirmation of the corporate entity doctrine.