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Mariano Rivera = one of the incorporators of Cooperativa Naval Filipina

De Silva subscribed for 650 shares of stock of Aboitiz = Paid 200 shares only

The corporation became insolvent = Phil Trust became the ASSIGNEE during

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 )

Phil Trust instituted to recover one-half of the stock subscription of the defendant
( w/c was NOT PAID by Mariano )

Did not pay = Declared Delinquent

Reason for non-payment = resolution was made

capital should be reduced by 50 per centum
subscribers released from the obligation to pay any unpaid balance of
their subscription in excess of 50 per centum of the same

Filed a complaint Resolution was invalid = Grounds:

prescribing another method of paying the subscription to the capital
stock different from that provided in its by-laws
all the shares subscribed and not paid = shall be paid out of the 70% of
the profit obtained

Trial judge ruled resolution relied upon was without effect and was still liable for the
unpaid balance.

Trial Court dismissed the complaint. Hence appeal.

Hence appeal.
Held: YES
subscription to the capital of a corporation constitute a find to which
creditors have a right to look for satisfaction of their claims and that the
assignee in insolvency can maintain an action upon any unpaid stock
subscription in order to realize assets for the payment of its debts


Gen RULE: A corporation has no power to release an original

subscriber to its capital stock from the obligation of paying for his
Exception: 1. valuable consideration for such release
2. as against creditors a reduction of the capital stock can
take place only in the manner an under the
conditions prescribed by the statute or the charter
or the articles of incorporation
Resolution was wholly ineffectual

an attempted withdrawal of so much capital from the fund

upon which the company's creditors were entitled ultimately
to rely

effected without compliance with the statutory requirements

WON collect subscription by another method different from that prescribed in the bylaws?
Held: YES
it is discretionary on the part of the board of directors to do whatever is
provided in the said article relative to the application of a part of the 70
per cent of the profit

If the board of directors does not wish to make use of said authority it
has two other remedies for accomplishing the same purpose

special remedy given by the statute = permitting the

corporation to put the unpaid stock for sale and dispose
of it for the account of the delinquent subscriber

PROVIDED 4 in Corporation Law = which is binding upon

it and its stockholders

artificial entity created by virtue of that same law = made use

of the discretionary power granted to it by that law


the plaintiff has no right whatsoever under the provision of the above
cited article 46 of the said by-laws to prevent the board of directors from
applying any other method than that mentioned in the said article


Alberto Miranda subscribed for 100 shares of Tarlac Rice Mill Company TO BE
He transferred in lieu of cash for the benefit and to the credit of the Tarlac Rice Mill
Company, Inc = a parcel of land
Tarlac loaned from Mariano Tablante and mortgaged the said land to him
Became due on 1929 = Not Paid = Sold the Land for payment
Miranda questioned the sale should have not be made because:
violated the terms of the contract in mortgaging the land = because the
only sum then due is 3000
that when the remaining installments of the stock subscription became
due = no obligation to pay because the corporation had already ceased
to do business
WON the mortgage and subsequent sale of the land is valid?
Held: YES
BOD may at any time declare due and payable to the corporation unpaid

this power of the directors is absolute and cannot be limited

by the subscription contract

No call is necessary when a subscription is payable = when it is

payable in installments at specified times

RULE = duty of the subscriber to pay AS SOON AS IT IS

DUE = without any call or demand

Failure = action may be brought at any time

When this action was filed on September 2, 1930, the last of

the instalments had already become payable in accordance
with the subscription agreement.

Neither the fact that the corporation has ceased to do

business nor the fact that the other stockholders have not
been required to pay for their shares in accordance with their
subscription agreement justifies us in ordering the
corporation to return to the plaintiff the amount paid in by
Alberto Miranda.

Chua Soco subscribed 500 shares of China Banking Corporation = paid half of the
subscription price
Condition = failure to pay = 500 shares specified in this receipt is subject to sale by
the China Banking Corporation for the payment of any unpaid subscriptions
Chua Soco executed a promissory note in favor of the plaintiff Fua Cun = chattel
mortgage on the shares
500 shares were attached and levied upon to satisfy his debt with China Banking
Fua Cun thereupon brought the present action = Grounds:
by virtue of the payment of the one-half of the subscription price
in effect became the owner of 250 shares
By virtue of Chattle Mortgage = hold priority over the claim
Trial court ruled in favor of Fua Cun = ORDER the return of the shares. Hence
WON by paying one-half of the subscription in effect became the owner of 250
Held: NO
A subscriber does not become the owner of a particular number of shares
corresponding to the amount he already paid but merely holds a right of equity in
the total number of shares subscribed.
Complete ownership over the total number of shares subscribed will only vest
with the stockholder upon payment of the whole subscription price.

Supplementary Notes:

A banking corporation has no lien upon its own stock for the indebtedness of
the stockholders even when the by-laws provide that the shares shall be
transferable only upon the books of the corporation and that no such transfer
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

certain number of shares of stock does not upon payment of one-half of the
subscription price, become entitled to the issuance of certificates for one-half
the number of shares subscribed for.

An equity in shares of stock may be assigned, the assignment becoming

effective as between the parties and as to third parties with notice


option to redeem was clearly vested in the bank

GR: the redemption rests entirely with the corporation

and the stockholder is without right to either compel or
refuse the redemption of its stock
Exception: otherwise provided in the stock certificate

the terms and conditions set forth therein use the word "may"

The Central Bank also made a finding that the Bank has been
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

to a corporate entity, may thus be considered as an exercise
of police power.


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

of consensus

RULE = stockholders do not become entitled to the

payment thereof as a matter of right without necessity of
a prior declaration of dividends


Interest bearing stocks = on which the corporation agrees absolutely to

pay interest before dividends are paid to common stockholders is legal
only when construed as requiring payment of interest as dividends
from net earnings or surplus only

Thus, the declaration of dividends is dependent upon the

availability of surplus profit or unrestricted retained earnings,
as the case may be.

even if there are existing profits, the board of directors has the
discretion to determine whether or not dividends are to be



Teofilo Po subscribed to 80 shares of Peers Marketing Corporation = 25% of the

amount of his subscription was paid
Po sold to Nava his shares = Po represented that he was "the absolute and
registered owner of twenty shares"
Nava requested to register the sale in the books of the corporation
Denied because not fully paid
Po was delinquent in the payment and corporation had a claim on his entire
Nava filed a petition for mandamus to order the PEERS Marketing to register the
Peers marketings 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.
WON the provision in the by-laws is valid?
Held: YES


The corporation may include in its by-laws rules not inconsistent

with law governing the transfer of its shares of stock

The twenty shares in question, however, are not covered

by any certificate of stock in Po's name.

As no stock certificate was issued to Po; and without the

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.

HENCE no clear legal duty on the part of the officers of

the corporation to register the 20 shares in Nava's
A stock subscription is a subsisting liability from the time the
subscription is made.

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.

Republic Planters Bank vs. Agana

Robes Realty secured a loan P120000 from the Republic Planters Bank
** Partially in the form Money and Partially in the form ofpreferred shares of
Stocks bear the following terms and conditions:
right to receive a quarterly dividend of 1% (cumulative and participating )
such preferred shares may be redeemed

Supplementary Notes

preferred share of stock = one which entitles the holder thereof to certain
preferences over the holders of common stock

preferences are designed to induce persons to subscribe for shares of a


The most common forms may be classified into two:

preferred shares as to assets = preference in the distribution of
the assets of the corporation in case of liquidation
preferred as to dividends = entitled to receive dividends on said
share to the extent agreed upon before any dividends at all are
paid to the holders of common stock

RULE = There is no guarantee, however, that the share will receive any

Preferences (X) Includes:

lien upon the property of the corporation
being creditors of the corporation
*** Rule = Right of SH is subordinate to the Creditors

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.

Redeemable shares

usually preferred

When = by their terms are redeemable at a fixed date, / at the

option of either corporation or stockholder or both at certain
redemption price

RULE = redemption may not be made where the corporation

is insolvent or if such redemption will cause insolvency or
inability of the corporation to meet its debts as they mature.

Robes Realty filed a complaint = Failure of the bank to give dividends and redeem
the shares


Trial court ordered the bank to:

pay Robes Realty the face value of the stock certificates as redemption
1% quarterly interest thereon until full payment

A Trust agreement was entered into because: Reeses desire that Mantrasco and
Mantrasocs 2 subsidiaries to continue under the management of Manning et al
upon his [Reese] death

Hence Appeal.

Reese died = Mantrasco paid Reeses estate the value of his shares
= This shares was cancelled and a new certificate was issued in the
name of Mantrasco

WON the bank can be compelled to redeem the preferred shares issued to RFRDC
and Robes?
WON entitled to the payment of certain rate of interest on the stocks as a matter of
right without necessity of a prior declaration of dividend?
Held: NO and NO

When said purchase price has been fully paid = shares which were declared as
BIR issued assessments = failed to declare the said stock dividends as part of their
taxable income

** concluded that the distribution of Reese's shares as stock dividends was in

effect a distribution of the "asset or property of the corporation
They appealed to the CTA = Absolved their liability = Grounds: their respective 1/3
interest in Mantrasco remained the same


WON the shares are treasury shares?
Held: NO
Treasury shares = are stocks issued and fully paid for and re-acquired by
the corporation either by purchase, donation forfeiture or other means

They do not have the status of outstanding shares

ALTHOUGH not retired = Corporation has the option of

reissuance or selling it again


so long as it remains a treasury share = it does not participate in

dividends NOR vote in stockholders meeting

(X) Dividends = dividends cannot be declared by the

corporation to itself

(X) Voting Power = otherwise equal distribution of voting

powers among stockholders will be effectively lost and
the directors will be able to perpetuate their control of the

It still represents a paid-for interest in the property of the

Manifest Intentions of the Party to the Trust agreement


until fully paid

RULE = A stock dividend being one payable in capital

stock cannot be declared out of the outstanding
corporate stock BUT ONLY from Retained Earnings

Hence declaration of Stock Dividend is NULL AND VOID

( Violative of public Policy )

Supplementary Notes

Nature of a stock dividend = always involves a transfer of surplus (or profit)

to capital stock
= a conversion of surplus or undivided profits
into capital stock which is
distributed to stockholders in lieu
of a cash dividend

Nielson & Co. Inc. vs. Lepanto Consolidated Mining Co.

Nielson entered into a management contract with Lepanto

** Nielson was given the right for 5 years to develop and operate the mining
claims of Lepanto
Contract was modified = which grants Nielson as compensation for its services
10% of any dividends declared and paid.
The SC ruled before that the import of this provision is that Nielson will be given
10% of what is actually going to be declared and distributed as dividends by
** Since Lepanto declared a total of P3M of dividends during the period of
extension of the contract, the SC ordered Lepanto to grant P300,000 worth
of its stocks to Nielson
Lepanto contests this judgment =Such provision is contrary to the Corporation Code
WON a corporation can issue stock dividends to a person who is not a stockholder
in payment of services rendered?
Held: NO
Nielson is not entitled to a share in the stock dividends since he is not a

Effects of the Inclusion of a Non-stockholder as a Stock

Dividend Beneficiary:
deprives a stockholder of his right share in the
corporate profits
proportion of a stockholders interest changes
radically to his or her detriment
non-stockholder benefits without assuming the
same risks as those born by a stockholder

Dividend = the portion of the profits of the enterprise which the

corporation sets apart for ratable division among the holders of the
capital stock

stocks issued as dividend can only be issued to existing


they are the only ones entitled to a proportional share in that

part of the surplus which is declared as dividends

the intention was only to tie the computation of Nielsons compensation

with 10% of the declared dividend IN WHAT EVER FORM it may be

The dividend is only the basis but not the source for such

Supplementary Notes

General Rule: No Stock dividend may be declared, except out of

unrestricted retained earnings.
Retained Earnings the net accumulated earnings of the corporation
out transactions with individuals or firms outside of the corporation.
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
corporate property other than its stock in trade, at a price higher than cost.
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

Retained earnings (X) include transactions involving:

treasury stock = purchase and sale of such stock are regarded
as contractions and expansions or paid-in capital.
donations = also considered as additional paid-in capital.
value of existing assets has increased = forms part of
unrealized capital

Unrestricted Retained Earnings the undistributed earnings of the

corporation which have NOT been allocated for any managerial,
contractual or legal purposes and which are free for distribution to
the stockholders as dividends.


Don Andres Soriano (American) = founder of Soriano Corp had a total
shareholdings of 185,000 shares
When he died = half of the shares he held went to his wife as her conjugal share
and half to his estate
Even after his death = the estate still continued to receive stock dividends from ASC
until it grew to total of 108,000 shares
ASC made a board resolution = for the redemption of shares from Sorianos estate
= Purpose: for the planned Filipinization of ASC
Shares were redeemed = tax audit was conducted
CIR issued an assessment against ASC for deficiency withholding tax-at-source =
when the redemption was made =the estate profited (because ASC
would have to pay the estate to redeem)
ASC would have withheld tax payments from the Soriano Estate yet it
remitted no such withheld tax to the government
ASCs Defense:
** not duty bound to withhold tax from the estate FOR the purpose = Filipinization
of ASC and also to reduce its remittance abroad
WON ASCs arguments are tenable?
Held: NO
The proceeds from a redemption is taxable and ASC is duty bound to
withhold the tax at source

total of 108,000 shares redeemed composing of Original

Issuance and Stock Dividend

Sale of stock dividends is taxable


Tax Code presumes that every distribution of corporate property, in

whole or in part, is made out of corporate profits such as stock

108,000 shares were distributed from the capital of ASC

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

Steinberg is the receiver of the Sibuguey Trading Company

It is alleged that the Officers of Sibuguey
approved and authorized various unlawful purchases already made of a
large portion of the capital stock

** diverting its funds = in fraud of the creditors of the corporation

BOD of Sibuguey Trading Company authorized the purchase of 330 shares
of stock of the corporation
** when they had accounts payable to about Php 14K
declared payment of P3000 as dividends to stockholders
** when they had accounts payable of about Php 9K


Steinberg prayed that the Officers be liable for the amount of the capital stock
purchased and the amount of the dividends paid
The lower court dismissed the complained and rendered judgment in favor of the

shares not fully paid up may be voted provided no subscription is unpaid and
it modified sec 36 of the old corporation law by making payment of par valueas
prerequisite for the issuance of certificates of par value stocks and makes payment
of full subscription as prerequisite for issuance of certificates of no-par value stocks.
Stated in another way, the present law requires as a condition before a share
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
stockholder can vote the shares fully paid by him only, irrespective of the
unpaid delinquent shares.

Hence appeal. In their defense = Grounds:

the amount represented by said dividends really constitutes a surplus profit
of the corporation
Since they have Accounts Receivable amounting to 12K


WON Board of Directors of Sibuguey could legally declare a dividend?

Gonzalo Toco mortgaged his shares to Chua Chiu to guarantee the payment of debt

Held: NO
there was no stipulation as to the actual cash value of those

Hence the purchase of its own stock and in declaring

dividends = the real assets of the corporation were
diminished by Php 6,300 ( Payment = affect the financial
condition of the corporation )

the corporation did not have then an actual bona fide

surplus from which dividends could be paid

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
corporation will not use its assets to purchase its own stock or to
declare dividends to its stockholders when the corporation is insolvent.
GR: It has been said that directors are not liable for losses resulting to
the corporation from want of knowledge on their part; or for mistakes of
judgment, provided they were honest, and provided they are fairly within
the scope of the powers and discretion confided to the managing body.
Exception: If the directors of a corporation do acts clearly beyond
their power, by reason of which a loss
ensued, or dispose of its property without
authority = LIABLE for the loss out of their
private estate


Lingayen Gulf = is alleged that it has always been the practice and procedure of the
Corporation to issue certificates of stock to its individual subscribers for unpaid
shares of stock
Baltazar subscribed but failed to pay for the full subscription = corporation issued
certificates of stock for his paid share
Annual stockholders' meeting was held = Resolution
cancelling some stocks for delinquency
all unpaid subscription should bear interest annually from the year of
declaring all shares having been declared delinquent are incapacitated
to vote.
Trial court ruled that all shares covered by fully paid capital stock shares = entitled
to vote in all meetings of SH
Issues :
WON SH who has not fully paid his subscription be divested of his voting rights?
Held: NO
If a stockholder in a stock corporation subscribes to a certain number of shares and
makes partial payment for which he is issued certificates of stock, he is entitled to
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

Chua Chiu assigned all his right and interest in said mortgage to Chua Guan was
registered in the
office of the register of deeds in the City of Manila
the office of the said corporation
Toco defaulted = HENCE Chua Guan foreclosed said mortgage
Chua Guan = Highest bidder
= Sheriff executed in his favor a certificate of sale of said shares
tendered the certificates of stock standing in the name of Toco = wants to:
have it canceled
Issue new ones in his name
Officers REFUSED = Reason: prior to the date when the Chua made demands = 9
attachments were made on the stocks
: Chua Refused to have these attachments noted on
the new certificates
WON registration of said chattel mortgage give constructive notice to the said
attaching creditors?
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
the possession of the property mortgage must be delivered to and
retained by the mortgagee
without such delivery the mortgage must be recorded in the proper office
or offices of the register or registers of deeds
the proper place of registration of such a mortgage

the chattel mortgage should be registered both at owner's domicile and

principal office of the Corporation

the property mortgaged is not the certificate but the participation

and share of the owner in the assets of the corporation

THEREFORE = Registration of chattel mortgage in the office of

corporation not necessary and had no legal effect.


Enrique Monserrat assigned the usufruct of half of his common shares of stock to
Condition = prohibiting Ceron from selling, mortgaging, encumbering, or exercising
any act implying absolute ownership
Ceron = mortgaged and endorsed the shares of stock including Monserrats shares
to Eduardo Matute
= as payment of his debt
Matute was not informed of the condition
Trial court ruled in favor of Monserrat and declared the mortgage null and void

The Fua vs Cun (equity on vote) principle does not come in this case
sec 37 (64) states that 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
the case of no par stock, has been paid by him to the corporation. Subscribed

Hence Matute appealed.

WON it is necessary to enter upon the books of the corporation a mortgage
constituted on common shares of stock in order that such mortgage may be valid
and effective against 3rd persons?

Section 35 of the Corporation Law does not require any entry except
of transfers of shares of stock in order that such transfers may be valid as
against third persons

Transfer = to assign or waive the right in, or absolute ownership of, a

thing in favor of another, making him the owner thereof ( absolute and
unconditional conveyance of the title and ownership of a share of stock )

chattel mortgage is not the transfer referred to in Corporation law

THEREFORE notation upon the books of the corporation is not

necessary requisite to its validity

Supplementary Notes

No Registration of Transfer of Unpaid Shares

The shares are thus not transferable on the corporate books
there is nothing to prevent the stockholder from transferring his
interest in the corporation by way of a deed of assignment
unpaid claim of section 63 = does not necessarily mean that
there should have been a previous call by the board of
As long as portion remains unpaid


Remedy if Registration Refused

action to enforce the right does not accrue until there has been
a demand and a refusal to record the transfer
wrongfully refuse = Petition for Mandamus

Diosomito sold and delivered his North Electric shares to Barcelon

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

Victory Cement Corporation to Ponce

Trial Court ruled in favor of Uson = Hence the Shares were foreclosed

VCC was renamed Floro Cement Corporation (FCC) and then to Alsons Cement
Corporation (ACC)

Uson was the highest bidder

Barcelon sold the same to H.P.L. Jollye = files and action in court
The lower court ruled for Uson.
WON a bona fide transfer of the shares of a corporation, not registered or noted on
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
said transfer or not?
Held: NO
no transfer, however, shall be valid except as between the parties, until the
transfer is entered and noted upon the books of the corporation.

right of the owner of the shares of stock to transfer the same by delivery
= limited and restricted by the law

Therefore, the transfer from Diosomito to Barcelon was not valid as to


Reason = since at the time it was attached, the shares still stood in
the name of Diosomito on the books of the corporation
RULE = an attachment lien prevails over a prior unregistered bona fide stock


The CFI of Manila ordered Salvosa to transfer and deliver to Escano shares of the
Filipinas Mining Corp.
The escrow however was only to be transferred upon its release by the said

Until Now = no stock issued in the name of Gaid

Ponce Filed a Petition for Mandamus = Grounds:
** Despite repeated demands = the ACC refused without any justifiable reason to
issue the stocks
ACC moved to dismiss.
SEC dismissed the case. SEC En Banc reversed the decision.
ACC appeal to CA. Reversed the decision = Grounds:
The transfer of the shares between Gaid and Ponce was NOT registered
in the stock and transfer book of ACC
Ponce has no cause of action.
WON the cert. of stocks of Gaid can be transferred to Ponce
Held: NO
Ponce had not made a previous request upon to record the alleged transfer
of stocks.

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.

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


without such recording = may legally refuse the issuance of

stock certificates in the name of the transferee

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

GR: mandamus should not issue to compel the secretary of a

corporation to make a transfer of the stock on the books of the
Exception: 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.


mandamus - proper remedy to make him the rightful owner and holder of a
stock certificate to be issued in his name

Despite the said order = Salvosa was able to sell the shares to Bengzon
Bengzon thereafter sold the shares to Standard Investment
Filipinas Mining thereafter issued certificates of shares of stock to Standard
** despite the fact that the sales and transfers from Salvosa to Bengzon, Bengzon
to Standard, were not recorded in the corporate books until 3 years after the
said shares were attached by garnishment.
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
Held: No.
transfer needs to be recorded in the corporate books to be effective
as against 3rd persons This recording is required

1) to know who the real owner of the shares
2) gives the corporation a chance to object to such transfer =
against any claims it may have on the stock
3) to avoid fictitious and fraudulent transfers
RULE = There is no valid reason to treat unissued shares held in escrow
differently from the issued shares insofar as their sale and transfer are

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
Tan's certificate of stock was cancelled by virtue of a resolution = made new stocks
certificate for Alfonso and Angel
Tan sold (50) shares out of his capital stock to Angel = in order to complete the

Batong Buhay vs. CA

Batong Buhay issued Stocks to Francisco Aguac
Francisco Aguac sold his shares to of the Incoporated Mining Corporation w/o
knowledge of his wife Paula
Paula requested Batong Buhay to withhold the transfer of the shares = BEING A
CONJUGAL PROPERTY proceeds were not given to her
A criminal case was filed against Aguac

Alfonso S. Tan was given back Stock Certificate = for him to endorse and he
deliberately withheld it for reasons of his own
** so as if no delivery

Incoporated Mining's counsel presented the certificate for registration for transfer to
his name

Tan was dislodged from his position as president = WITHDREW

Batong buhay refused to transfer = Reason = that they might he held liable for

BOD had a meeting = effecting the cancellation of Stock Certificate of Alfonso

Alfonso S. Tan filed the SEC case questioning the cancellation of his stocks

Petitioner prayed for preliminary mandatory injunction = Granted

BUT = appealed because lower court's alleged failure to award damages for the
wrongful refusal of petitioner to transfer

WON transfer is valid w/o delivery?

Not Granted. Hence Appeal.

Held: YES
Section 63 of the Corporation Code of the Philippines is NOT "mandatory in

Facts = there was already delivery of the unendorsed Stock

Certificate No. 2
= return of the cancelled certificate and Deliberate nonindorsement

But delivery is not essential where it appears that the persons sought
to be held as stockholders are officers of the corporation, and have
the custody of the stock book
The certificate is not stock in the corporation but is merely evidence of the
holder's interest and status in the corporation

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?
Held: NO
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

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

WON Court of Appeals award damages by way of unrealized profits despite the
absence of supporting evidence?
Held: NO
Stipulation of facts of the parties = (X) show intent to sell on specific dates

True that stocks may rise and fall

whatever profits could have been made are purely SPECULATIVE

RULE = speculative damages cannot be recovered