G.R. No. L-23241 March 14, 1925
Lessons Applicable: Right of First Refusal (Corporate Law)
FACTS:
- March 13, 1923: Manuel Gonzales made a written statement to the Botica Nolasco, Inc., requesting that 5 shares of stock sold by him to Henry Fleischer be noted transferred to Fleischer's name
- He also acknowledged in said written statement the preferential right of the corporation to buy said five shares
- June 14, 1923: he withdraw and cancelled his written statement of March 13, 1923
- Nolasco replied that his letter of June 14th was of no effect, and that the shares in question had been registered in the name of the Botica Nolasco, Inc.,
- November 15, 1923: Fleischer
- filed an amended complaint against the Botica Nolasco, Inc., alleging that he became the owner of 5 shares of fully paid stock of Botica Nolasco Co (Nolasco) by purchase from their original owner, Manuel Gonzalez
- Despite repeated demands, Nolasco refused to register said shares in his name in the books of the corporation
- caused him damages amounting to P500
- Nolasco's defense:
- article 12 of its by-laws: it had preferential right to buy the shares at the par value of P100/share, plus P90 as dividends corresponding to the year 1922
- offer was refused by Fleischer
- Trial Court: favored Fleischer and ordered the shared be registered
ISSUE: W/N article 12 of Nolasco's by-laws is in conflict with Act No. 1459 (Corporation Law), especially with section 35 (Now Sec. 63)
HELD: Affirmed. mandamus will lie to compel the officers of the corporation to transfer said stock upon the books of the corporation
- Section 13, paragraph 7, above-quoted, empowers a corporation to make by-laws, not inconsistent with any existing law, for the transferring of its stock.
- section 35 of Act No. 1459 (now Sec. 63)
- contemplates no restriction as to whom they may be transferred or sold
- It does not suggest that any discrimination may be created by the corporation in favor or against a certain purchaser.
- The holder of shares, as owner of personal property, is at liberty, under said section, to dispose of them in favor of whomsoever he pleases, without any other limitation in this respect, than the general provisions of law
- GR: the by-laws of a corporation are valid if they are reasonable and calculated to carry into effect the objects of the corporation, and are not contradictory to the general policy of the laws of the land
- A by-law cannot take away or abridge the substantial rights of stockholder.
- Under a statute authorizing by- laws for the transfer of stock, a corporation can do no more than prescribe a general mode of transfer on the corporate books and cannot justify an unreasonable restriction upon the right of sale.
- by-law cannot operate to defeat his rights as a purchaser who obtained them in good faith and for a valuable consideration