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PHILIPPINE TRUST COMPANY vs MARCIANO RIVERA De Silva subscribed for 650 shares of stock of Aboitiz = Paid 200 shares

50 shares of stock of Aboitiz = Paid 200 shares only

Mariano Rivera = one of the incorporators of Cooperativa Naval Filipina he was notified of a resolution = declaring the unpaid subscriptions to the capital
stock of the corporation to have become due and payable ( was published )
The corporation became insolvent = Phil Trust became the ASSIGNEE during
bankruptcy Did not pay = Declared Delinquent
Phil Trust instituted to recover one-half of the stock subscription of the defendant Filed a complaint Resolution was invalid = Grounds:
( w/c was NOT PAID by Mariano ) 1. prescribing another method of paying the subscription to the capital
stock different from that provided in its by-laws
Reason for non-payment = resolution was made 2. all the shares subscribed and not paid = shall be paid out of the 70% of
1. capital should be reduced by 50 per centum the profit obtained
2. subscribers released from the obligation to pay any unpaid balance of
their subscription in excess of 50 per centum of the same Trial Court dismissed the complaint. Hence appeal.
Trial judge ruled resolution relied upon was without effect and was still liable for the Issue:
unpaid balance. WON collect subscription by another method different from that prescribed in the by-
Hence appeal.
Held: YES
Held: YES 1. it is discretionary on the part of the board of directors to do whatever is
1. subscription to the capital of a corporation constitute a find to which provided in the said article relative to the application of a part of the 70
creditors have a right to look for satisfaction of their claims and that the per cent of the profit
assignee in insolvency can maintain an action upon any unpaid stock
subscription in order to realize assets for the payment of its debts 2. If the board of directors does not wish to make use of said authority it
has two other remedies for accomplishing the same purpose
2. Gen RULE: A corporation has no power to release an original
subscriber to its capital stock from the obligation of paying for his  special remedy given by the statute = permitting the
share corporation to put the unpaid stock for sale and dispose
Exception: 1. valuable consideration for such release of it for the account of the delinquent subscriber
2. as against creditors a reduction of the capital stock can
take place only in the manner an under the  PROVIDED 4 in Corporation Law = which is binding upon
conditions prescribed by the statute or the charter it and its stockholders
or the articles of incorporation  artificial entity created by virtue of that same law = made use
of the discretionary power granted to it by that law
1. Resolution was wholly ineffectual
 an attempted withdrawal of so much capital from the fund 3. the plaintiff has no right whatsoever under the provision of the above
upon which the company's creditors were entitled ultimately cited article 46 of the said by-laws to prevent the board of directors from
to rely applying any other method than that mentioned in the said article
 effected without compliance with the statutory requirements


Alberto Miranda subscribed for 100 shares of Tarlac Rice Mill Company TO BE PAID Chua Soco subscribed 500 shares of China Banking Corporation = paid half of the
IN INSTALLMENTS subscription price
He transferred in lieu of cash for the benefit and to the credit of the Tarlac Rice Mill Condition = failure to pay = 500 shares specified in this receipt is subject to sale by
Company, Inc = a parcel of land the China Banking Corporation for the payment of any unpaid subscriptions
Tarlac loaned from Mariano Tablante and mortgaged the said land to him Chua Soco executed a promissory note in favor of the plaintiff Fua Cun = chattel
mortgage on the shares
Became due on 1929 = Not Paid = Sold the Land for payment
500 shares were attached and levied upon to satisfy his debt with China Banking
Miranda questioned the sale should have not be made because: Corp
1. violated the terms of the contract in mortgaging the land = because the
only sum then due is 3000 Fua Cun thereupon brought the present action = Grounds:
2. that when the remaining installments of the stock subscription became
due = no obligation to pay because the corporation had already ceased 1. by virtue of the payment of the one-half of the subscription price
to do business 2. in effect became the owner of 250 shares
3. By virtue of Chattle Mortgage = hold priority over the claim
WON the mortgage and subsequent sale of the land is valid? Trial court ruled in favor of Fua Cun = ORDER the return of the shares. Hence
Held: YES
a) BOD may at any time declare due and payable to the corporation unpaid Issue:
subscriptions WON by paying one-half of the subscription in effect became the owner of 250
 this power of the directors is absolute and cannot be limited shares?
by the subscription contract
Held: NO
b) No call is necessary when a subscription is payable = when it is A subscriber does not become the owner of a particular number of shares
payable in installments at specified times corresponding to the amount he already paid but merely holds a right of equity in
 RULE = duty of the subscriber to pay AS SOON AS IT IS the total number of shares subscribed.
DUE = without any call or demand
 Failure = action may be brought at any time Complete ownership over the total number of shares subscribed will only vest
 When this action was filed on September 2, 1930, the last of with the stockholder upon payment of the whole subscription price.
the instalments had already become payable in accordance
with the subscription agreement.
 Neither the fact that the corporation has ceased to do
Supplementary Notes:
business nor the fact that the other stockholders have not
been required to pay for their shares in accordance with their  A banking corporation has no lien upon its own stock for the indebtedness of
subscription agreement justifies us in ordering the the stockholders even when the by-laws provide that the shares shall be
corporation to return to the plaintiff the amount paid in by transferable only upon the books of the corporation and that no such transfer
Alberto Miranda. shall be made if the holder of the shares is indebted to the corporation.


 In the absence of special agreement to the contrary, a subscriber for a  GR: the redemption rests entirely with the corporation
certain number of shares of stock does not upon payment of one-half of the and the stockholder is without right to either compel or
subscription price, become entitled to the issuance of certificates for one-half refuse the redemption of its stock
the number of shares subscribed for. Exception: otherwise provided in the stock certificate
 the terms and conditions set forth therein use the word "may"
 An equity in shares of stock may be assigned, the assignment becoming  The Central Bank also made a finding that the Bank has been
effective as between the parties and as to third parties with notice suffering from chronic reserve deficiency = ORDERED not to
redeem any preferred shares Since redemption would reduce
the assets of the Bank to the prejudice of its depositors and
 The directive, in limiting the exercise of a right granted by law
RICARDO A. NAVA vs PEERS MARKETING CORPORATION, RENATO R. CUSI to a corporate entity, may thus be considered as an exercise
and AMPARO CUSI of police power.

2. Payment of dividends to a stockholder is not a matter of right but a matter

Teofilo Po subscribed to 80 shares of Peers Marketing Corporation = 25% of the of consensus
amount of his subscription was paid  RULE = stockholders do not become entitled to the
payment thereof as a matter of right without necessity of
Po sold to Nava his shares = Po represented that he was "the absolute and a prior declaration of dividends
registered owner of twenty shares"
3. ”Interest bearing stocks” = on which the corporation agrees absolutely to
Nava requested to register the sale in the books of the corporation pay interest before dividends are paid to common stockholders is legal
only when construed as requiring payment of interest as dividends
Denied because not fully paid from net earnings or surplus only
Po was delinquent in the payment and corporation had a claim on his entire  Thus, the declaration of dividends is dependent upon the
subscription availability of surplus profit or unrestricted retained earnings,
as the case may be.
Nava filed a petition for mandamus to order the PEERS Marketing to register the  even if there are existing profits, the board of directors has the
sale discretion to determine whether or not dividends are to be
Peers marketing’s defense their by-law provides that = no shares of stock against
which the corporation holds an unpaid claim are transferable in the books of
the corporation. Supplementary Notes
Issue:  preferred share of stock = one which entitles the holder thereof to certain
WON the provision in the by-laws is valid? preferences over the holders of common stock

Held: YES  preferences are designed to induce persons to subscribe for shares of a
1. The corporation may include in its by-laws rules not inconsistent corporation
with law governing the transfer of its shares of stock
 The twenty shares in question, however, are not covered  The most common forms may be classified into two:

by any certificate of stock in Po's name.
As no stock certificate was issued to Po; and without the
1. preferred shares as to assets = preference in the distribution of
the assets of the corporation in case of liquidation
stock certificate, which is the evidence of ownership of
corporate stock, the assignment of corporate shares is 2. preferred as to dividends = entitled to receive dividends on said
effective only between the parties to the transaction. share to the extent agreed upon before any dividends at all are
 HENCE no clear legal duty on the part of the officers of paid to the holders of common stock
the corporation to register the 20 shares in Nava's
name.  RULE = There is no guarantee, however, that the share will receive any
2. A stock subscription is a subsisting liability from the time the
subscription is made.  Preferences (X) Includes:
 subscriber is as much bound to pay his subscription as a) lien upon the property of the corporation
he would be to pay any other debt b) being creditors of the corporation
 The right of the corporation to demand payment is no *** Rule = Right of SH is subordinate to the Creditors
less incontestable.

Republic Planters Bank vs. Agana  Shareholders, both common and preferred are considered = risk takers who
invest capital in the business arid who can look only to what is left after
corporate debts and liabilities are fully paid.
Robes Realty secured a loan P120000 from the Republic Planters Bank  Redeemable shares
** Partially in the form Money and Partially in the form ofpreferred shares of  usually preferred
 When = by their terms are redeemable at a fixed date, / at the
Stocks bear the following terms and conditions: option of either corporation or stockholder or both at certain
1. right to receive a quarterly dividend of 1% (cumulative and participating ) redemption price
2. such preferred shares may be redeemed  RULE = redemption may not be made where the corporation
is insolvent or if such redemption will cause insolvency or
Robes Realty filed a complaint = Failure of the bank to give dividends and redeem inability of the corporation to meet its debts as they mature.
the shares

Trial court ordered the bank to:

1. pay Robes Realty the face value of the stock certificates as redemption COMMISSIONER OF INTERNAL REVENUE vs. MANNING
2. 1% quarterly interest thereon until full payment
A Trust agreement was entered into because: Reese’s desire that Mantrasco and
Hence Appeal. Mantrasoc’s 2 subsidiaries to continue under the management of Manning et al
upon his [Reese] death
WON the bank can be compelled to redeem the preferred shares issued to RFRDC Reese died = Mantrasco paid Reese’s estate the value of his shares
and Robes? = This shares was cancelled and a new certificate was issued in the
WON entitled to the payment of certain rate of interest on the stocks as a matter of name of Mantrasco
right without necessity of a prior declaration of dividend?
When said purchase price has been fully paid = shares which were declared as
Held: NO and NO dividends
1. option to redeem was clearly vested in the bank
BIR issued assessments = failed to declare the said stock dividends as part of their
taxable income
2. Dividend = the portion of the profits of the enterprise which the
** concluded that the distribution of Reese's shares as stock dividends was in corporation sets apart for ratable division among the holders of the
effect a distribution of the "asset or property of the corporation capital stock
 stocks issued as dividend can only be issued to existing
They appealed to the CTA = Absolved their liability = Grounds: their respective 1/3 stockholders
interest in Mantrasco remained the same  they are the only ones entitled to a proportional share in that
part of the surplus which is declared as dividends
WON the shares are treasury shares? 3. the intention was only to tie the computation of Nielson’s compensation
with 10% of the declared dividend IN WHAT EVER FORM it may be
Held: NO  The dividend is only the basis but not the source for such
1. Treasury shares = are stocks issued and fully paid for and re-acquired by
the corporation either by purchase, donation forfeiture or other means Supplementary Notes
 They do not have the status of outstanding shares  General Rule: No Stock dividend may be declared, except out of
 ALTHOUGH not retired = Corporation has the option of unrestricted retained earnings.
reissuance or selling it again
 Retained Earnings – the net accumulated earnings of the corporation
2. so long as it remains a treasury share = it does not participate in out transactions with individuals or firms outside of the corporation.
dividends NOR vote in stockholders’ meeting Retained earnings include earnings from the sale of goods or services in
the ordinary course of its business, as well as earnings from the sale of
 (X) Dividends = dividends cannot be declared by the corporate property other than its stock in trade, at a price higher than cost.
corporation to itself
 (X) Voting Power = otherwise equal distribution of voting
 Implicit from the term retained earnings is the limitation that a corporation
has no power to declare dividends unless its legal or stated capital is
powers among stockholders will be effectively lost and maintained.
the directors will be able to perpetuate their control of the
 It still represents a paid-for interest in the property of the  Retained earnings (X) include transactions involving:
corporation a) treasury stock = purchase and sale of such stock are regarded
as contractions and expansions or paid-in capital.
3. Manifest Intentions of the Party to the Trust agreement
b) donations = also considered as additional paid-in capital.
 Treat the Shares of Reese AS ABSOLUTELY OUTSTANDING
c) value of existing assets has increased = forms part of
until fully paid
unrealized capital
 RULE = A stock dividend being one payable in capital
stock cannot be declared out of the outstanding
corporate stock BUT ONLY from Retained Earnings  Unrestricted Retained Earnings – the undistributed earnings of the
 Hence declaration of Stock Dividend is NULL AND VOID corporation which have NOT been allocated for any managerial,
( Violative of public Policy ) contractual or legal purposes and which are free for distribution to
the stockholders as dividends.


 Nature of a stock dividend = always involves a transfer of surplus (or profit)
to capital stock Don Andres Soriano (American) = founder of Soriano Corp had a total
= a conversion of surplus or undivided profits shareholdings of 185,000 shares
into capital stock which is
distributed to stockholders in lieu When he died = half of the shares he held went to his wife as her conjugal share
of a cash dividend and half to his estate

Even after his death = the estate still continued to receive stock dividends from ASC
Nielson & Co. Inc. vs. Lepanto Consolidated Mining Co. until it grew to total of 108,000 shares

ASC made a board resolution = for the redemption of shares from Soriano’s estate
= Purpose: for the planned “Filipinization” of ASC
Nielson entered into a management contract with Lepanto
** Nielson was given the right for 5 years to develop and operate the mining Shares were redeemed = tax audit was conducted
claims of Lepanto
CIR issued an assessment against ASC for deficiency withholding tax-at-source =
Contract was modified = which grants Nielson as compensation for its services Grounds:
“10% of any dividends declared and paid.” 1. when the redemption was made =the estate profited (because ASC
would have to pay the estate to redeem)
The SC ruled before that the import of this provision is that Nielson will be given 2. ASC would have withheld tax payments from the Soriano Estate yet it
10% of what is actually going to be declared and distributed as dividends by remitted no such withheld tax to the government
** Since Lepanto declared a total of P3M of dividends during the period of ASC’s Defense:
extension of the contract, the SC ordered Lepanto to grant P300,000 worth ** not duty bound to withhold tax from the estate FOR the purpose = “Filipinization”
of its stocks to Nielson of ASC and also to reduce its remittance abroad

Lepanto contests this judgment =Such provision is contrary to the Corporation Code ISSUE:
WON ASC’s arguments are tenable?
WON a corporation can issue stock dividends to a person who is not a stockholder Held: NO
in payment of services rendered?
1. The proceeds from a redemption is taxable and ASC is duty bound to
Held: NO withhold the tax at source
1. Nielson is not entitled to a share in the stock dividends since he is not a  total of 108,000 shares redeemed composing of Original
stockholder Issuance and Stock Dividend
 Effects of the Inclusion of a Non-stockholder as a Stock  Sale of stock dividends is taxable
Dividend Beneficiary:
a) deprives a stockholder of his right share in the
corporate profits
2. Tax Code presumes that every distribution of corporate property, in
b) proportion of a stockholder’s interest changes whole or in part, is made out of corporate profits such as stock
radically to his or her detriment dividends.
c) non-stockholder benefits without assuming the  108,000 shares were distributed from the capital of ASC
same risks as those born by a stockholder  capital cannot be distributed in the form of redemption of
stock dividends without violating the trust fund doctrine
 RULE = Once capital, it is always capital
Steinberg v. Velasco vote the latter, notwithstanding the fact that he has not paid the balance of his
subscription which has been called for payment or declared delinquent

Steinberg is the receiver of the Sibuguey Trading Company

It is alleged that the Officers of Sibuguey

The Fua vs Cun (equity on vote) principle does not come in this case
1. approved and authorized various unlawful purchases already made of a
large portion of the capital stock sec 37 (64) states that “No certificate of stock shall be issued to a
** diverting its funds = in fraud of the creditors of the corporation subscriber as fully paid up until the full par value thereof, or the full subscription in
2. BOD of Sibuguey Trading Company authorized the purchase of 330 shares
the case of no par stock, has been paid by him to the corporation. Subscribed
of stock of the corporation
** when they had accounts payable to about Php 14K shares not fully paid up may be voted provided no subscription is unpaid and
3. declared payment of P3000 as dividends to stockholders delinquent.”
** when they had accounts payable of about Php 9K
it modified sec 36 of the old corporation law by making payment of “par value”as
Steinberg prayed that the Officers be liable for the amount of the capital stock prerequisite for the issuance of certificates of par value stocks and makes payment
purchased and the amount of the dividends paid
of full subscription as prerequisite for issuance of certificates of no-par value stocks.
The lower court dismissed the complained and rendered judgment in favor of the Stated in another way, the present law requires as a condition before a share
defendants. holder can vote his shares, that his full subscription be paid in the case of no
par value stock; and in case of stock corporation with par value, the
Hence appeal. In their defense = Grounds: stockholder can vote the shares fully paid by him only, irrespective of the
1. the amount represented by said dividends really constitutes a surplus profit unpaid delinquent shares.
of the corporation
2. Since they have Accounts Receivable amounting to 12K

WON Board of Directors of Sibuguey could legally declare a dividend? CHUA GUAN vs SAMAHANG MAGSASAKA

Held: NO
Gonzalo Toco mortgaged his shares to Chua Chiu to guarantee the payment of debt
1. there was no stipulation as to the actual cash value of those
Chua Chiu assigned all his right and interest in said mortgage to Chua Guan was
 Hence the purchase of its own stock and in declaring registered in the
dividends = the real assets of the corporation were 1. office of the register of deeds in the City of Manila
diminished by Php 6,300 ( Payment = affect the financial 2. the office of the said corporation
condition of the corporation )
Toco defaulted = HENCE Chua Guan foreclosed said mortgage
 the corporation did not have then an actual bona fide
surplus from which dividends could be paid Chua Guan = Highest bidder
= Sheriff executed in his favor a certificate of sale of said shares
- RULE = The creditors of a corporation have the right to assume that so
long as there are debts and liabilities, the board of directors of the tendered the certificates of stock standing in the name of Toco = wants to:
corporation will not use its assets to purchase its own stock or to 1. have it canceled
declare dividends to its stockholders when the corporation is insolvent. 2. Issue new ones in his name

Officers REFUSED = Reason: prior to the date when the Chua made demands = 9
- GR: It has been said that directors are not liable for losses resulting to attachments were made on the stocks
the corporation from want of knowledge on their part; or for mistakes of : Chua Refused to have these attachments noted on
judgment, provided they were honest, and provided they are fairly within the new certificates
the scope of the powers and discretion confided to the managing body.
Exception: If the directors of a corporation do acts clearly beyond Issue:
their power, by reason of which a loss WON registration of said chattel mortgage give constructive notice to the said
ensued, or dispose of its property without attaching creditors?
authority = LIABLE for the loss out of their
private estate Held: NO it was invalid
The registration of the chattel mortgage in the office of the corporation was
not necessary and had no legal effect.

two ways for executing a valid chattel mortgage which shall be effective against third
a) the possession of the property mortgage must be delivered to and
Lingayen Gulf = is alleged that it has always been the practice and procedure of the retained by the mortgagee
Corporation to issue certificates of stock to its individual subscribers for unpaid b) without such delivery the mortgage must be recorded in the proper office
shares of stock or offices of the register or registers of deeds

the proper place of registration of such a mortgage

Baltazar subscribed but failed to pay for the full subscription = corporation issued  the chattel mortgage should be registered both at owner's domicile and
certificates of stock for his paid share principal office of the Corporation
 the property mortgaged is not the certificate but the participation
Annual stockholders' meeting was held = Resolution and share of the owner in the assets of the corporation
 THEREFORE = Registration of chattel mortgage in the office of
1. cancelling some stocks for delinquency corporation not necessary and had no legal effect.
2. all unpaid subscription should bear interest annually from the year of
3. declaring all shares having been declared delinquent are incapacitated ENRIQUE MONSERRAT vs CERON
to vote.

Trial court ruled that all shares covered by fully paid capital stock shares = entitled Enrique Monserrat assigned the usufruct of half of his common shares of stock to
to vote in all meetings of SH Ceron
Issues : Condition = prohibiting Ceron from selling, mortgaging, encumbering, or exercising
WON SH who has not fully paid his subscription be divested of his voting rights? any act implying absolute ownership
Held: NO Ceron = mortgaged and endorsed the shares of stock including Monserrat’s shares
If a stockholder in a stock corporation subscribes to a certain number of shares and to Eduardo Matute
makes partial payment for which he is issued certificates of stock, he is entitled to = as payment of his debt
Matute was not informed of the condition Held: No.

Trial court ruled in favor of Monserrat and declared the mortgage null and void
1. transfer needs to be recorded in the corporate books to be effective
as against 3rd persons This recording is required
Hence Matute appealed.  reasons:
1) to know who the real owner of the shares
Issue: 2) gives the corporation a chance to object to such transfer =
WON it is necessary to enter upon the books of the corporation a mortgage against any claims it may have on the stock
constituted on common shares of stock in order that such mortgage may be valid 3) to avoid fictitious and fraudulent transfers
and effective against 3rd persons?
RULE = There is no valid reason to treat unissued shares held in escrow
Held: differently from the issued shares insofar as their sale and transfer are
Section 35 of the Corporation Law does not require any entry except concerned.
of transfers of shares of stock in order that such transfers may be valid as
against third persons
Supplementary Notes
 Transfer = to assign or waive the right in, or absolute ownership of, a  No Registration of Transfer of Unpaid Shares
thing in favor of another, making him the owner thereof ( absolute and o The shares are thus not transferable on the corporate books
unconditional conveyance of the title and ownership of a share of stock ) o there is nothing to prevent the stockholder from transferring his
 chattel mortgage is not the transfer referred to in Corporation law interest in the corporation by way of a deed of assignment
 THEREFORE notation upon the books of the corporation is not o “unpaid claim” of section 63 = does not necessarily mean that
necessary requisite to its validity there should have been a previous call by the board of
o As long as portion remains unpaid
 Remedy if Registration Refused
o action to enforce the right does not accrue until there has been
a demand and a refusal to record the transfer
Diosomito sold and delivered his North Electric shares to Barcelon o wrongfully refuse = Petition for Mandamus

Uson sued Diosomito for a debt and attached the said shares ( w/c was still in
Diosomito name on the books of the Corp )
Then Barcelon presented the certificates for registration = 9 months after the
attachment had been levied 3
Ponce and Gaid executed a “Deed of Undertaking” = endorsing the shares of
Trial Court ruled in favor of Uson = Hence the Shares were foreclosed Victory Cement Corporation to Ponce

Uson was the highest bidder VCC was renamed Floro Cement Corporation (FCC) and then to Alsons Cement
Corporation (ACC)
Barcelon sold the same to H.P.L. Jollye = files and action in court
Until Now = no stock issued in the name of Gaid
The lower court ruled for Uson.
Ponce Filed a Petition for Mandamus = Grounds:
Issue: ** Despite repeated demands = the ACC refused without any justifiable reason to
WON a bona fide transfer of the shares of a corporation, not registered or noted on issue the stocks
the books of the corporation, is valid as against a subsequent lawful attachment of
said shares, regardless of whether the attaching creditor had actual notice of ACC moved to dismiss.
said transfer or not?
SEC dismissed the case. SEC En Banc reversed the decision.
Held: NO
“no transfer, however, shall be valid except as between the parties, until the ACC appeal to CA. Reversed the decision = Grounds:
transfer is entered and noted upon the books of the corporation.” 1. The transfer of the shares between Gaid and Ponce was NOT registered
 right of the owner of the shares of stock to transfer the same by delivery in the stock and transfer book of ACC
= limited and restricted by the law 2. Ponce has no cause of action.
 Therefore, the transfer from Diosomito to Barcelon was not valid as to
WON the cert. of stocks of Gaid can be transferred to Ponce
 Reason = since at the time it was attached, the shares still stood in
the name of Diosomito on the books of the corporation Held: NO
1. Ponce had not made a previous request upon to record the alleged transfer
RULE = an attachment lien prevails over a prior unregistered bona fide stock of stocks.
transfer.  RULE = a transfer of shares of stock not recorded in the
stock and transfer book of the corporation is non-existent as
far as the corporation is concerned.
ESCAÑO vs FILIPINAS MINING CORPORATION  the corporation looks only to its books for the purpose of
determining who its shareholders are
 UPON RECORD = rightfully regard the transferee as one of its
The CFI of Manila ordered Salvosa to transfer and deliver to Escano shares of the stockholders
Filipinas Mining Corp.  without such recording = may legally refuse the issuance of
stock certificates in the name of the transferee
The escrow however was only to be transferred upon its release by the said
Company. 2. mere indorsement of stock certificates does not in itself give to the indorsee
such a right to have a transfer of the shares of stock on the books of the
Despite the said order = Salvosa was able to sell the shares to Bengzon company
 GR: mandamus should not issue to compel the secretary of a
Bengzon thereafter sold the shares to Standard Investment corporation to make a transfer of the stock on the books of the
Filipinas Mining thereafter issued certificates of shares of stock to Standard Exception: it affirmatively appears that he has failed or
Investment refused so to do, upon the demand either
** despite the fact that the sales and transfers from Salvosa to Bengzon, Bengzon of the person in whose name the stock is
to Standard, were not recorded in the corporate books until 3 years after the registered, or of some person holding a
said shares were attached by garnishment. power of attorney for that purpose from
the registered owner of the stock.
Issue: Whether the issuance of the certificate of shares of stock by Filipinas Mining
to Standard Investment was valid as against the attaching creditor of the said 3. mandamus - proper remedy to make him the rightful owner and holder of a
shares? stock certificate to be issued in his name
Held: NO
1. No share of stock against which the corporation holds any unpaid
claim, shall be transferable on the books of the corporation.
 To issue the writ = require an officer to transfer stock under
conditions where the law expressly prohibited such
 The writ of mandamus will never issue to compel a person to
violate an express provision of the law

2. Writ will not ordinarily issue if the plaintiff has other remedies
 corporation improperly refuses to transfer = clearly liable for the damages


Alfonso = owner of 400 shares of the capital stock ( evidenced by certificate number
= elected as President

Young and Ong ( incorporators ) = withdrew by assigning to the corp. their shares
Batong Buhay vs. CA
Tan's certificate of stock was cancelled by virtue of a resolution = made new stocks
certificate for Alfonso and Angel Batong Buhay issued Stocks to Francisco Aguac

Tan sold (50) shares out of his capital stock to Angel = in order to complete the Francisco Aguac sold his shares to of the Incoporated Mining Corporation w/o
Directors knowledge of his wife Paula

Alfonso S. Tan was given back Stock Certificate = for him to endorse and he Paula requested Batong Buhay to withhold the transfer of the shares = BEING A
deliberately withheld it for reasons of his own CONJUGAL PROPERTY proceeds were not given to her
** so as if no delivery
A criminal case was filed against Aguac
Tan was dislodged from his position as president = WITHDREW
Incoporated Mining's counsel presented the certificate for registration for transfer to
BOD had a meeting = effecting the cancellation of Stock Certificate of Alfonso his name

Alfonso S. Tan filed the SEC case questioning the cancellation of his stocks Batong buhay refused to transfer = Reason = that they might he held liable for
WON transfer is valid w/o delivery? Petitioner prayed for preliminary mandatory injunction = Granted
BUT = appealed because lower court's alleged failure to award damages for the
Held: YES wrongful refusal of petitioner to transfer
Section 63 of the Corporation Code of the Philippines is NOT "mandatory in
nature" Not Granted. Hence Appeal.
 Facts = there was already delivery of the unendorsed Stock
Certificate No. 2 Issue:
= return of the cancelled certificate and Deliberate non- WON Court of Appeals award damages by way of unrealized profits despite the
indorsement absence of supporting evidence?
 But delivery is not essential where it appears that the persons sought
to be held as stockholders are officers of the corporation, and have Held: NO
the custody of the stock book Stipulation of facts of the parties = (X) show intent to sell on specific dates
 True that stocks may rise and fall
The certificate is not stock in the corporation but is merely evidence of the  whatever profits could have been made are purely SPECULATIVE
holder's interest and status in the corporation  RULE = speculative damages cannot be recovered
 Only representation of his equity = but is not in law the equivalent of
such ownership
 expresses the contract = but is not essential to the existence of a
share in stock

a certificate of stock is not a negotiable instrument

 sometime regarded as quasi-negotiable = transferred by
endorsement, coupled with delivery
 non-negotiable = holder thereof takes it without prejudice to such
rights or defenses as the registered owner/s or transferror's
creditor may have under the law, except insofar as such rights
or defenses are subject to the limitations imposed by the
principles governing estoppels


Hager filed a writ of mandamus against the Bryan ( Corp Sec ) = to compel him to
transfer upon the books of the company certain shares of stock SOLD TO HIM BY

certificates were issued in the name of Bryan-London & Co. and by them indorsed
to your petitioner

Bryan refused to transfer stocks and filed a demurrer

WON a writ of mandamus is proper in this case?