Scribd Logo
Upload

Welcome to Scribd!

  • 35 views

    Monserrat Vs Ceran

    Uploaded by

    Wayne Michael Novera

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Monserrat Vs Ceran

    Uploaded by

    Wayne Michael Novera
    35 views1 page

    Original Title

    Monserrat vs Ceran.docx

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    35 views1 page

    Monserrat Vs Ceran

    Uploaded by

    Wayne Michael Novera

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Wayne Novera

    2A

    CASE #3

    Monserrat vs Ceran

    FACTS: Monserrat was the president of Manila Yellow Taxicab Co. and he owns 1,200 shares of stock of Manila
    Taxicab. In consideration of the interest shown and the financial aid extended to him in the organization of the
    corporation by Ceron [Secretary of Manila Taxicab Co], Monserrat assigned to Ceron the usufruct of 600 shares of
    stock. Said agreement prohibited Ceron from mortgaging / alienating such shares. A stock certificate was issued in
    the name of Ceron. Ceron mortgaged to Eduardo Matute, president of Erma Inc., the 600 shares of stock in question
    under the usufruct. Ceron endorsed to Matute the certificate of stock, of which Matute has been in possession ever
    since [w/o any notation of the usufruct]. When Ceron mortgaged the shares in question to Matute, he did not inform
    Matute of the previous restrictions in the usufruct and represented that such shares was his own, and free from
    encumbrances. When Monserrat learned of this, he filed a case with the CFI to declare the mortgage null and void,
    considering he had no knowledge thereof and such mortgage was not recorded in the Stock and Transfer book. CFI
    ruled in favor of Monserrat declaring the mortgage over the ownership of the stocks null and void. Thus, this appeal
    to the SC.
    Erma Inc argues that The certificate of stock bore no notations of the restrictions as to the usufruct. Therefore, he
    was a mortgagee in good faith and should be protected by the law. Monserat argues the mortgage needs to be
    registered in the Stock & Transfer books of the Corporation to be binding against him, a third person, in the contract
    of mortgage between Erma Inc and Ceron.
    ISSUE: W/N 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 may have force and effect as against third persons?
    RULING: Chattel Mortgage need not be entered and noted in the Books of the Corporation to have legal
    effect.

    Section 35 of the Corporation code provides 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 so as to show the names of the
    parties to the transaction, the date of the transfer the number of the certificate, and the number of shares transferred.”
    Although a chattel mortgage, accompanied by delivery of the mortgaged thing, transfers the title and ownership
    thereof to the mortgage creditor, such transfer is not absolute but constitutes a mere security for the payment of
    the mortgage debt, the transfer in question becoming null and void from the time the mortgage debtor complies
    with his obligation to pay his debt.
    Therefore, the chattel mortgage is not the transfer referred to in section 35 of the Corporation law, which transfer
    should be entered and noted upon the books of a corporation in order to be valid, and which, as has already been
    said, means the absolute and unconditional conveyance of the title and ownership of a share of stock.
    Inasmuch as a chattel mortgage of the aforesaid title is not a complete and absolute alienation of the
    dominion and ownership thereof, its entry and notation upon the books of the corporation is not necessary
    requisite to its validity.
    CRITIC: This case was decided in 1933 under the old Corporation Code. In light with the new amendments in the
    Revised Corporation Code, or 90 years after the decision, the doctrine still holds true and applicable today- that is,
    Chattel Mortgage need not be entered and noted in the Books of the Corporation to have legal effect and be binding
    to third parties.

    You might also like