10.) Ponce vs.
Alsons Cement On 6 January 1997, the Commission En
Corporation Case Digest
Ponce vs. Alsons Cement
Corporation
[GR 139802, 10 December 2002]
Facts: On 25 January 1996, Vicente C.
Ponce, filed a complaint with the SEC
for mandamus and damages against
Alsons Cement Corporation and its
corporate secretary Francisco M.
Giron, Jr. In his complaint, Ponce
alleged, among others, that "the late
Fausto G. Gaid was an incorporator of
Victory Cement Corporation (VCC),
having subscribed to and fully paid
239,500 shares of said corporation;
that on 8 February 1968, Ponce and
Fausto Gaid executed a "Deed of
Undertaking" and "Indorsement"
whereby the latter acknowledges that
the former is the owner of said shares
and he was therefore
assigning/endorsing the same to
Ponce; that on 10 April 1968, VCC was
renamed Floro Cement Corporation
(FCC); that on 22 October 1990, FCC
was renamed Alsons Cement
Corporation (ACC); that from the time
of incorporation of VCC 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 Ponce; and that
despite repeated demands, ACC and
Giron refused and continue to refuse
without any justifiable reason to issue
to Ponce the certificates of stocks
corresponding to the 239,500 shares
of Gaid, in violation of Ponce's right to
secure the corresponding certificate of
stock in his name. ACC and Giron
moved to dismiss. SEC Hearing Officer
Enrique L. Flores, Jr. granted the
motion to dismiss in an Order dated 29
February 1996. Ponce appealed the
Order of dismissal.
Banc reversed the appealed Order and
directed the Hearing Officer to
proceed with the case. In ruling that a
transfer or assignment of stocks need
not be registered first before it can
take cognizance of the case to enforce
Ponce's rights as a stockholder, the
Commission En Banc cited the
Supreme Court's ruling in Abejo vs. De
la Cruz, 149 SCRA 654 (1987). Their
motion for reconsideration having
been denied, ACC and Giron appealed
the decision of the SEC En Banc and
the resolution denying their motion for
reconsideration to the Court of
Appeals. In its decision, the Court of
Appeals held that in the absence of
any allegation that the transfer of the
shares between Gaid and Ponce was
registered in the stock and transfer
book of ACC, Ponce failed to state a
cause of action. Thus, said the
appellate court, "the complaint for
mandamus should be dismissed for
failure to state a cause of action."
Ponce's motion for reconsideration
was denied in a resolution dated 10
August 1999. Ponce filed the petition
for review on certiorari.
Issue: Whether Ponce can require the
corporate secretary, Giron, to register
Gaids shares in his name.
Held: Fausto Gaid was an original
subscriber of ACC's 239,500 shares.
From the Amended Articles of
Incorporation approved on 9 April
1995, each share had a par value of
P1.00 per share. Ponce had not made
a previous request upon the corporate
secretary of ACC, Francisco M. Giron
Jr., to record the alleged transfer of
stocks. Pursuant to Section 63 of the
Corporation Code, 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. As between the
corporation on the one hand, and its
shareholders and third persons on the
other, the corporation looks only to its
books for the purpose of determining
who its shareholders are. It is only
when the transfer has been recorded
in the stock and transfer book that a
corporation may rightfully regard the
transferee as one of its stockholders.
From this time, the consequent
obligation on the part of the
corporation to recognize such rights as
it is mandated by law to recognize
arises. Hence, without such recording,
the transferee may not be regarded by
the corporation as one among its
stockholders and the corporation may
legally refuse the issuance of stock
certificates in the name of the
transferee even when there has been
compliance with the requirements of
Section 64 of the Corporation Code.
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. A
petition for mandamus fails to state a
cause of action where it appears that
the petitioner is not the registered
stockholder and there is no allegation
that he holds any power of attorney
from the registered stockholder, from
whom he obtained the stocks, to make
the transfer. The deed of undertaking
with indorsement presented by Ponce
does not establish, on its face, his
right to demand for the registration of
the transfer and the issuance of
certificates of stocks. Under the
provisions of our statute touching the
transfer of stock, the 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 company
as will entitle him to the writ of
mandamus to compel the company
and its officers to make such transfer
at his demand, because, under such
circumstances the duty, the legal
obligation, is not so clear and
indisputable as to justify the issuance
of the writ. As a general rule, as
between the corporation on the one
hand, and its shareholders and third
persons on the other, the corporation
looks only to its books for the purpose
of determining who its shareholders
are, so that a 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. Thus, absent an allegation
that the transfer of shares is recorded
in the stock and transfer book of ACC,
there appears no basis for a clear and
indisputable duty or clear legal
obligation that can be imposed upon
the corporate secretary, so as to
justify the issuance of the writ of
mandamus to compel him to perform
the transfer of the shares to Ponce.
19.) ORIBIA USON, plaintiff-
appellee,vs.VICENTE DIOSOMITO,
ET AL., defendants.VICENTE
DIOSOMITO, EMETERIO
BARCELON, H.P.L. JOLLYE and
NORTH ELECTRIC COMPANY,INC.,
appellants.
Facts: Defendant Vicente Diosomito
was the original owner of the seventy-
five shares of stock, having a par
value of P7,500, and that on February
3, 1931, he sold said shares to
Emeterio Barcelon and delivered to
the latter the corresponding
certificates. But Barcelon did not
present these certificates to the North
Electric Corporation for registration
until the 16th of September,1932,
when they were cancelled and a new
certificate was issued in favor of
Barcelon, who transferred the same of
the defendant H.P.L. Jollye. Meanwhile,
Toribia Uson had filed a civil action for
debt against Vicente Diosomito
and that an attachment was duly
issued and levied upon the property of
the defendant Diosomito, including
seventy-five shares of the North
Electric Co., Inc., which stood in
his name on the books of the
company. Subsequently, Toribia Uson
obtained judgment against the
defendant Diosomito for the sum of
P2,300 with interest and costs.
To satisfy said judgment, the sheriff
sold said shares at public auction. The
plaintiff Toribia Uson was the highest
bidder and said shares were
adjudicated to her. In the present
action, H.P.L. Jollye claims to be the
owner of said 75 shares of the North
Electric Co.,Inc., and presents a
certificate of stock issued to him by
the company. It will be seen, therefore,
that the transfer of said shares by
Vicente Diosomito, the judgment debt
or to Barcelon was not registered and
noted on the books of the corporation
until some nine months after the
attachment had been levied on said
shares
Issue: Whether 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.
Ruling: No. The transfer is not
valid. The true meaning of the
language is, and the obvious
intentionof the legislature in using it
was, that all transfers of shares should
be entered, as here required, onthe
books of the corporation. And it
is equally clear to us that all transfers
of shares not so entered are invalid as
to attaching or execution creditors of
the assignors, as well as to the
corporation and to subsequent
purchasers in good faith, and indeed,
as to all persons interested, except the
parties to such transfers. All transfers
not so entered on the books of the
corporation are absolutely void; not
because they are without notice or
fraudulent in law or fact, but because
they are made so void by statute. This
court still adheres to the principle that
its function is jus dicere non jus dare.
To us the language of the legislature is
plain to the effect that the right of the
owner of the shares of stock of a
Philippine corporation to transfer the
same by delivery of the certificate is
limited and restricted by the express
provision that "no transfer, however,
shall be valid, except as between the
parties, until the transfer is entered
and noted upon the books of the
corporation." Therefore, the transfer of
the75 shares in the North Electric
Company, Inc., made by the defendant
Diosomito to the defendant Barcelon
was not valid as to the plaintiff-
appellee, Toribia Uson on the date on
which she obtained her attachment
lien on said shares of stock which still
stood in the name of Diosomito on the
books of the corporation.