Rural Bank of Salinas vs.

CA

Doctrine: The corporation's obligation to register is ministerial and can be compelled by mandamus in
case of refusal.

Facts: Clemente, the President of the Rural Bank of Salinas, Inc., executed a Special Power of Attorney in
favor of his wife, Melania, giving and granting the latter full power of authority to sell or otherwise
dispose of and/or mortgage 473 shares of stock of the Bank registered in his name. Before the death of
Clemente, Melania, pursuant to the said SPA, executed Deed of Assignments for the shares of stock in
favor of private respondents.

After the death of Clemente, Melania proceeded in presenting the said Deed with request for the
transfer in the Bank’s stock and transfer book of the 473 shares of stock so assigned, the cancellation of
stock certificates in the name of Clemente and the issuance of new stock certificates in the name of the
new owners thereof. The Bank however denied the request. Melania then filed with SEC an action for
Mandamus against Rural Bank of Salinas, its President and Secretary. The latter bank contended in its
answer that the shares of Clemente became the property of his estate and thus must be first settled and
liquidated.

Issue: Whether petitioner may restrict the registration of shares of stock or its transfer.

Ruling: No. The corporation's obligation to register is ministerial and can be compelled by mandamus.

The Corporation Code provides under Sec. 63 that:

...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...

Clemente assigned his rights over his shares to Melania and the right of a transferee or assignee to have
stocks transferred to her name is an inherent right flowing from her ownership of the stocks.

Thus: "Whenever a corporation refuses to transfer and register stock in cases like the present,
mandamus will be to compel the officers of the corporation to transfer said stock in the books of the
corporation" (26, Cyc. 347, Hyer v. Bryan, 19 Phil. 138; Fleischer v. Botica Nolasco, 47 Phil. 583, 594).

The corporation’s obligation to register is ministerial. "In transferring stock, the secretary of a
corporation acts in purely ministerial capacity and does not try to decide the question of ownership."
(Fletcher, Sec. 5528, page 434).

"The duty of the corporation to transfer is a ministerial one and if it refuses to make such transaction
without good cause, it may be compelled to do so by mandamus." (Sec. 5518, 12 Fletcher 394)

The corporation cannot impose restrictions or impediments to the transfer since their duty when it
comes to transfer or registration of stocks is purely ministerial. The only limitation found under Sec. 63
is when the corporation holds any unpaid claim against the shares intended to be transferred. Such a
limitation is absent in this case. Thus, petitioner may be compelled to register the stocks by mandamus.