Corporate Law Case Digest: Nava v. Peers Marketing Corp. (2006)

G.R. No. L-28120 November 25, 1976

Lessons Applicable: Stock and Transfer Book (Corporate Law)

FACTS:

• Teofilo Po as an incorporator subscribed to 80 shares of Peers Marketing Corporation at P100 PV and paid 25%.  No certificate of stock was issued to him or to any incorporator, subscriber or stockholder.
• April 2, 1966: Po sold to Ricardo A. Nava for P2,000 20 of 80 shares
• Nava requested to register the sale in the books of the corporation. 
• denied - Po has not paid fully the amount of his subscription
• Po was delinquent of the balance due so the corporation claimed on his entire subscription of which included 20 shares sold to Nava.
• December 21, 1966: Nava filed this mandamus to register 20 shares in Nava's name in the corporation's transfer book.
• CFI: court dismissed the petition
• Nava appealed on the basis that
• Section 37: "no certificate of stock shall be issued to a subscriber as fully paid up until the full par value thereof, or the full subscription in case of no par stock, has been paid by him to the corporation"

ISSUE: W/N officers of Peers Marketing Corporation can be compelled by mandamus to enter in its stock and transfer book the sale made

HELD: NO. dismissal affirmed.

• no provision of the by-laws of the corporation covers that situation
• SEC. 35. The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or the vice-president, countersigned by the secretary or clerk and sealed with the seal of the corporation, shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate indorsed by the owner or his attorney in fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the, parties, until the transfer is entered and noted upon the books of the corporation so as to show the names of the parties to the transaction, the date of the transfer, the number of the certificate, and the number of shares transferred.

         No share of stock against which the corporation holds any unpaid claim shall be transferable on the  

         books of the corporation.

• SEC. 36. (re voting trust agreement) ...

          The certificates of stock so transferred shall be surrendered and cancelled, and new certificates          

          therefor issued to such person or persons, or corporation, as such trustee or trustees, in which new

          certificates it shall appear that they are issued pursuant to said agreement.

• A stock subscription is a subsisting liability from the time the subscription is made. The subscriber is as much bound to pay his subscription as he would be to pay any other debt. The right of the corporation to demand payment is no less incontestable.
• no clear legal duty on the part of the officers of the corporation to register the 20 shares in Nava's name -  no cause of action for mandamus.
• Baltazar case:  partial payment = entitled to vote the said shares 
• although he has not paid the balance of his subscription and a call or demand had been made for the payment of the par value of the delinquent shares
• Without stock certificate, which is the evidence of ownership of corporate stock, the assignment of corporate shares is effective only between the parties to the transaction
• delivery of the stock certificate, which represents the shares to be alienated , is essential for the protection of both the corporation and its stockholders