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Fil-Estate Gold and Dev. Inc., Et Al. v. Vertex Sales and Trading

FEGDI sold a class C common share to Vertex but failed to issue the stock certificate despite repeated demands, constituting a breach of contract. The issue was whether this delay in issuing the stock certificate represented a substantial breach allowing rescission of the sale. The court held that yes, FEGDI failed to deliver the stock certificate within a reasonable time as required, representing a substantial breach entitling Vertex to rescind the sale according to the Civil Code.

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Minorka Sushmita Pataunia Santoluis
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135 views1 page

Fil-Estate Gold and Dev. Inc., Et Al. v. Vertex Sales and Trading

FEGDI sold a class C common share to Vertex but failed to issue the stock certificate despite repeated demands, constituting a breach of contract. The issue was whether this delay in issuing the stock certificate represented a substantial breach allowing rescission of the sale. The court held that yes, FEGDI failed to deliver the stock certificate within a reasonable time as required, representing a substantial breach entitling Vertex to rescind the sale according to the Civil Code.

Uploaded by

Minorka Sushmita Pataunia Santoluis
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Fil-Estate Gold and Dev. Inc., et al. v.

Vertex Sales and Trading,


Inc., G.R. No. 202079, June 10, 2013

Facts: FEGDI is a stock corporation whose primary business is


the development of golf courses. FELI is also a stock corporation,
but is engaged in real estate development. FEGDI was the
developer of the Forest Hills Golf and Country Club (Forest Hills).
FEGDI sold to Vertex a class C common share, however,
petitioner defaulted in their obligation as sellers when they failed
and refused to issue the stock certificate covering the subject
share despite repeated demands.

Issue: Is the delay in the issuance of a stock certificate can


be considered a substantial breach as to warrant rescission
of the contract of sale?

Held: Yes. Under these facts, considered in relation to the


governing law, FEGDI clearly failed to deliver the stock
certificates, representing the shares of stock purchased by
Vertex, within a reasonable time from the point the shares should
have been delivered. This was a substantial breach of their
contract that entitles Vertex the right to rescind the sale under
Article 1191 of the Civil Code. It is not entirely correct to say that a
sale had already been consummated as Vertex already enjoyed
the rights a shareholder can exercise. The enjoyment of these
rights cannot suffice where the law, by its express terms, requires
a specific form to transfer ownership.

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