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    Nava vs. Peers Marketing, 74 SCRA 65

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    Beatriz Emilia P. Guinto
    The officers of Peers Marketing Corporation refused to register the sale of 20 shares from Teofilo Po to Ricardo Nava because Po did not fully pay for his original subscription of 80 shares. The Supreme Court ruled that the corporation cannot be compelled by mandamus to register the transfer, as Po did not receive stock certificates for the shares and the corporation had an unpaid claim on the shares. A valid transfer requires stock certificates be issued and delivered with the proper endorsements, which did not occur in this case due to Po's unpaid subscription.

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    Nava vs. Peers Marketing, 74 SCRA 65

    Uploaded by

    Beatriz Emilia P. Guinto
    33 views2 pages
    The officers of Peers Marketing Corporation refused to register the sale of 20 shares from Teofilo Po to Ricardo Nava because Po did not fully pay for his original subscription of 80 shares. The Supreme Court ruled that the corporation cannot be compelled by mandamus to register the transfer, as Po did not receive stock certificates for the shares and the corporation had an unpaid claim on the shares. A valid transfer requires stock certificates be issued and delivered with the proper endorsements, which did not occur in this case due to Po's unpaid subscription.

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    The officers of Peers Marketing Corporation refused to register the sale of 20 shares from Teofilo Po to Ricardo Nava because Po did not fully pay for his original subscription of 80 shares. The Supreme Court ruled that the corporation cannot be compelled by mandamus to register the transfer, as Po did not receive stock certificates for the shares and the corporation had an unpaid claim on the shares. A valid transfer requires stock certificates be issued and delivered with the proper endorsements, which did not occur in this case due to Po's unpaid subscription.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    33 views2 pages

    Nava vs. Peers Marketing, 74 SCRA 65

    Uploaded by

    Beatriz Emilia P. Guinto
    The officers of Peers Marketing Corporation refused to register the sale of 20 shares from Teofilo Po to Ricardo Nava because Po did not fully pay for his original subscription of 80 shares. The Supreme Court ruled that the corporation cannot be compelled by mandamus to register the transfer, as Po did not receive stock certificates for the shares and the corporation had an unpaid claim on the shares. A valid transfer requires stock certificates be issued and delivered with the proper endorsements, which did not occur in this case due to Po's unpaid subscription.

    Copyright:

    © All Rights Reserved
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    of 2

    G.R. No.

    L-28120 November 25, 1976


    RICARDO A. NAVA v. PEERS MARKETING CORPORATION, RENATO R. CUSI and AMPARO CUSI

    Facts: Teofilo Po, as an incorporator, subscribed to 80 shares of Peers Marketing Corporation at 100
    pesos a share or a total par value of 8,000 pesos. Po paid 2,000 or 25% of the amount of his
    subscription. No certificate of stock was issued to him. Po eventually sold to Nava for 2,000 pesos 20
    of his 80 shares. Nava asked the officers of the corporation to register the sale in the books of the
    corporation but they refused because Po did not pay the entire amount of his subscription. It was
    notified to Nava that Po was delinquent in the payment of the balance due on his subscription and
    that the corporation had a claim on his entire subscription of 80 shares which included the 20
    shares that had been sold to Nava. He then filed a mandamus action to compel the corporation and
    its executive vice-president (Renato Cusi) and secretary (Amparo Cusi) to register the 20 shares in
    Nava's name in the transfer book of the company. The respondents averred that no shares of stock
    against which the corporation holds an unpaid claim are transferable in the books of the
    corporation. The petition was dismissed by the RTC relying on the Fua Cun case. Nava appealed
    citing Section 37 which provides that "no certificate of stock shall be issued to a subscriber as fully
    paid up until the full par value thereof, or the full subscription in case of no par stock, has been paid
    by him to the corporation."

    Issue: W/N the officers of PMC can be compelled by mandamus to enter in its stock and transfer
    book the sale made by Po to Nava

    Ruling: NO. The transfer made by Po to Nava is not the "alienation, sale, or transfer of stock" that is
    supposed to be recorded in the stock and transfer book, as contemplated in section 52 of the
    Corporation Law. As a rule, the shares which may be alienated are those which are covered by
    certificates of stock, as shown in the following provisions of the Corporation Law and as intimated in
    Hager v. Bryan, 19 Phil 138 (overruling the decision in Hager v. Bryan, 21 Phil. 523. See 19 Phil. 616,
    notes, and Hodges v. Lezama, 14 SCRA 1030). As prescribed in section 35, shares of stock may be
    transferred by delivery to the transferee of the certificate properly indorsed. "Title may be vested in
    the transferee by delivery of the certificate with a written assignment or indorsement thereof" (18
    C.J.S. 928). There should be compliance with the mode of transfer prescribed by law (18 C.J.S. 930).

    The usual practice is for the stockholder to sign the form on the back of the stock certificate. The
    certificate may thereafter be transferred from one person to another. If the holder of the certificate
    desires to assume the legal rights of a shareholder to enable him to vote at corporate elections and
    to receive dividends, he fills up the blanks in the form by inserting his own name as transferee. Then
    he delivers the certificate to the secretary of the corporation so that the transfer may be entered in
    the corporation’s books. The certificate is then surrendered and a new one issued to the transferee.
    (Hager v. Bryan, 19 Phil. 138, 143-4).

    That procedure cannot be followed in the instant case because, as already noted, the twenty shares
    in question are not covered by any certificate of stock in Po’s name. Moreover, the corporation has a
    claim on the said shares for the unpaid balance of Po’s subscription. A stock subscription is a
    subsisting liability from the time the subscription is made. The subscriber is as much bound to pay
    his subscription as he would be to pay any other debt. The right of the corporation to demand
    payment is no less incontestable. (Velasco v. Poizat, 37 Phil. 802; Lumanlan v. Cura, 59 Phil. 746)

    A corporation cannot release an original subscriber from paying for his shares without a valuable
    consideration (Philippine National Bank v. Bitulok Sawmill, Inc., L-24177-85, June 29, 1968, 23 SCRA
    1366) or without the unanimous consent of the stockholders (Lingayen Gulf Electric Power Co., Inc.
    v. Baltazar, 93 Phil. 404).

    Under the facts of this case, there is no clear legal duty on the part of the officers of the corporation
    to register the twenty shares in Nava’s name. Hence, there is no cause of action for mandamus.

    As already stressed, in this case, no stock certificate was issued to Po. Without the stock certificate,
    which is the evidence of ownership of corporate stock, the assignment of corporate shares is
    effective only between the parties to the transaction (Davis v. Wachter, 140 So. 361).

    The delivery of the stock certificate, which represents the shares to be alienated, is essential for the
    protection of both the corporation and its stockholders (Smallwood v. Moretti, 128 So. 2d 628).

    NOTES: "SEC. 35. The capital stock of stock corporations shall be divided into shares for which certificates signed by
    the president or the vice-president, countersigned by the secretary or clerk and sealed with the seal of the
    corporation, shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and
    may be transferred by delivery of the certificate 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 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.

    "No share of stock against which the corporation holds any unpaid claim shall be transferable on the books of the
    corporation.

    "SEC. 36. (re voting trust agreement) . . .

    "x x x

    "The certificates of stock so transferred shall be surrendered and cancelled, and new certificates therefor issued to
    such person or persons, or corporation, as such trustee or trustees, in which new certificates it shall appear that
    they are issued pursuant to said agreement.

    The rule enunciated in the Fua Cun case is that payment of one-half of the subscription does not entitle the
    subscriber to a certificate of stock for one-half of the number of shares subscribed.

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