G.R. No. L-38684 December 21, 1933
Lessons Applicable: Right of First Refusal (Corporate Law)
FACTS:
- January 1, 1923 to April 15, 1929: Padgett was an employee of the Babcock & Templation Inc (Babcock)
- he bought 35 shares at P100/share at the suggestion of the president of Babcock
- recipient of 9 shares from Christmas bonus
- owner of 44 shares for which the 12 certificates were issued
- word "nontransferable" appears on each and every one of these certificates
- Before leaving the corporation, he proposed to the president that thecorporation buy his 44 shares at par value plus the interest thereon, or that he be authorized to sell them to other persons
- The corporation bought similar shares belonging to other employees, at par value.
- Sometime later, the president offered to buy his shares first at P85 each and then at P80
- he did not agree
ISSUE: W/N the shares are transferable despite the restriction appearing therein
HELD: NO. word "nontransferable" appearing on the 12 certificates of shares of stock, is declared null and void. to issue in lieu thereof new ones without any restriction whatsoever, with the costs of both instances against the said defendant-appellants
- Shares of corporate stock being regarded as property, the owner of such shares may, as a general rule, dispose of them as he sees fit, unless the corporation has been dissolved, or unless the right to do so is properly restricted, or the owner's privilege of disposing of his shares has been hampered by his own action.
- restriction consisting in the word "nontransferable" appearing on the 12 certificates is illegal and should be eliminated
- there has been no such contract, either express or implied, between the plaintiff and the defendants
- In the absence of a similar contractual obligation and of a legal provision applicable thereto, it is logical to conclude that it would be unjust and unreasonable to compel the said defendants to comply with a non-existent or imaginary obligation