Capital stock

Divided into shoes for which certificates signed by the President or VP

The stock certificate is evidence of the personalty owned by the stockholder. It -

- defines the nature and extent of his ownership over the share/s of stock. It
also
- outlines the regulations and limitations of ownership, which must be
considered and made known to the parties prior to any conveyance.

Obviously, without the stock certificate, these matters would be unknown to a

prospective buyer or transferee of shares of stock. Simply stated, the subject matter
of the conveyance will not be clear. Therefore,

only shares of stock covered by a stock certificate can be subject of a legally

demandable and binding sale or disposition.

In the case of De los Santos, et al. vs. MacGrath, et al., G.R. No. L-4818, 28
February 1955, the Supreme Court interpreted the provisions of Section 63 of the
Corporation Code. The Supreme Court held that any voluntary transfer of shares of
stock in a corporation that is represented by a certificate of stock must strictly
comply with the following conditions:

a. There must be delivery of the certificate;

b. The share must be indorsed by the owner or his agent; and
c. To be valid to the corporation and third parties, the transfer must be recorded
in the books of the corporation.

I. TRANSFER OF STOCKS

a) Subject to the restrictions, terms and conditions contained in the Articles of

Incorporation, shares may be transferred, sold, assigned or pledged by delivery of
the certificates duly indorsed by the stockholder, his attorney-in-fact, or other
legally authorized person. The transfer shall be valid and binding on the
corporation only upon record thereof in the books of the corporation. The
Secretary shall cancel the stock certificates and issue new certificates to the
transferee.

b) No share of stock against which the corporation holds unpaid claim shall be
transferable in the books of the corporation.

c) All certificates surrendered for transfer shall be stamped “Cancelled” on the face
thereof, together with the date of cancellation, and attached to the corresponding
stub with the certificate book.