Lessons Applicable:
- Nature of Certificate of Stock (Corporate Law)
- Remedy if Registration is Refused (Corporate Law)
FACTS:
- February 8, 1968: Vicente C. Ponce and Fausto Gaid, incorporator of Victory Cement Corporation (VCC), executed a “Deed of Undertaking” and “Indorsement” whereby Gaid acknowledges that Ponce is the owner of the shares and he was therefore assigning/endorsing it to Ponce
- VCC was renamed Floro Cement Corporation (FCC) and then to Alsons Cement Corporation (ACC)
- Up to the present, no certificates of stock corresponding to the 239,500 subscribed and fully paid shares of Gaid were issued in the name of Fausto G. Gaid and/or the plaintiff.
- Despite repeated demands, the ACC refused to issue the certificates of stocks
- SEC Hearing Officer Enrique L. Flores, Jr. granted the motion to dismiss
- Upon appeal, the Commission En Banc reversed the decision of the Hearing Officer
- Ponce, filed a complaint with the SEC for mandamus
- CA: mandamus should be dismissed for failure to state a cause of action
- in the absence of any allegation that the transfer of the shares was registered in the stock and transfer book
ISSUE: W/N the cert. of stocks of Gaid can be transferred to Ponce
HELD: NO. petition Denied.
- SEC. 63. Certificate of stock and transfer of shares.–The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, 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 or certificates 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 recorded in 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 or certificates and the number of shares transferred.
books of the corporation.
- the stock and transfer book is the basis for ascertaining the persons entitled to the rights and subject to the liabilities of a stockholder
- Where a transferee is not yet recognized as a stockholder, the corporation is under no specific legal duty to issue stock certificates in the transferee’s name.
- in a case such as that at bar, a mandamus should not issue to compel the secretary of a corporation to make a transfer of the stock on the books of the company
- unless it affirmatively appears that he has failed or refused so to do, upon the demand either of the person in whose name the stock is registered, or of some person holding a power of attorney for that purpose from the registered owner of the stock.
- mere indorsee of a stock certificate, claiming to be the owner, will not necessarily be recognized as such by the corporation and its officers, in the absence of express instructions of the registered owner to make such transfer to the indorsee, or a power of attorney authorizing such transfer
- mandamus - proper remedy to make him the rightful owner and holder of a stock certificate to be issued in his name