G.R. No. 139802, 10 December 2002


Vicente C. Ponce and Fausto Gaid, incorporator of Victory Cement Corporation (VCC), executed a “Deed of Undertaking” and “Indorsement” whereby Gaid acknowledges that Ponce is the owner of the shares and he was therefore assigning/endorsing it to Ponce. VCC was renamed Floro Cement Corporation (FCC) and then to Alsons Cement Corporation (ACC). 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 the plaintiff. Despite repeated demands, the ACC refused to issue the certificates of stocks. SEC Hearing Officer Enrique L. Flores, Jr. granted the motion to dismiss. Upon appeal, the Commission En Banc reversed the decision of the Hearing Officer. Ponce, filed a complaint with the SEC for mandamus. CA ruled that mandamus should be dismissed for failure to state a cause of action in the absence of any allegation that the transfer of the shares was registered in the stock and transfer book.


Whether Ponce can require the corporate secretary, Giron, to register Gaid’s shares in his name.


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.

*Case Digest by Krishianne Louise C. Labiano, JD – 4, Andres Bonifacio College, SY 2019 – 2020