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Facts: Sy Guiok and Sy Lim secured a loan from Lim Tay in the amount of P40,000. This was secured by a contract
of pledge whereby the former pledged their 300 shares of stock each in Go Fay & Company to the latter. However,
they failed to pay their respective loans. Hence, Lim Tay filed a petition for mandamus against Go Fay & Company
with the SEC praying that an order be issued directing the corporate secretary of the said corporation to register
the stock transfers and issue new certificates in favor of Lim Tay.

Go Fay & Company filed its answer contending that SEC had no jurisdiction to entertain the complaint on the
ground that since Lim Tay was not a stockholder of the company, no intra corporate controversy took place; and
furthermore, that the default of payment of Sy Guiok and Sy Lim did not automatically vest in Lim Tay the
ownership of the pledged shares.

SEC dismissed the complaint. On appeal to the CA, it affirmed SEC’s decision. Hence, this petition for certiorari
with the SC.

Issue: Whether or not SEC had jurisdiction.

Held: No. The registration of shares in a stockholder’s name, the issuance of stock certificates, and the right to
receive dividends which pertain to the said shares are all rights that flow from ownership. The determination of
whether or not a shareholder is entitled to exercise the above mentioned rights falls within the jurisdiction of the
SEC. However, if ownership of the shares is not clearly established and is still unresolved at the time the action for
mandamus is filed, then jurisdiction lies with the regular courts.
In the case at bar, reading into the contract of pledge, the stipulation shows that Lim Tay was merely authorized to
foreclose the pledge upon maturity of the loans, not to own them. Such foreclosure was not automatic, for it must
be done in a public or private sale. Nowhere was it mentioned that he exercised his right of foreclosure. Hence, his
status was still a mere pledgee, and under civil law, this does not entitle him to ownership of the shares of stock in
Ponce vs. Alsons Cement Corporation
[GR 139802, 10 December 2002]
Second Division, Quisumbing (J): 4 concur


On 25 January 1996, Vicente C. Ponce, filed a complaint with the SEC for mandamus and damages against Alsons
Cement Corporation and its corporate secretary Francisco M. Giron, Jr. In his complaint, Ponce alleged, among
others, that "the late Fausto G. Gaid was an incorporator of Victory Cement Corporation (VCC), having subscribed to
and fully paid 239,500 shares of said corporation; that on 8 February 1968, Ponce and Fausto Gaid executed a
"Deed of Undertaking" and "Indorsement" whereby the latter acknowledges that the former is the owner of said
shares and he was therefore assigning/endorsing the same to Ponce; that on 10 April 1968, VCC was renamed Floro
Cement Corporation (FCC); that on 22 October 1990, FCC was renamed Alsons Cement Corporation (ACC); that from
the time of incorporation of VCC 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 Ponce; and that despite repeated
demands, ACC and Giron refused and continue to refuse without any justifiable reason to issue to Ponce the
certificates of stocks corresponding to the 239,500 shares of Gaid, in violation of Ponce's right to secure the
corresponding certificate of stock in his name. ACC and Giron moved to dismiss. SEC Hearing Officer Enrique L.
Flores, Jr. granted the motion to dismiss in an Order dated 29 February 1996. Ponce appealed the Order of
dismissal. On 6 January 1997, the Commission En Banc reversed the appealed Order and directed the Hearing
Officer to proceed with the case. In ruling that a transfer or assignment of stocks need not be registered first before
it can take cognizance of the case to enforce Ponce's rights as a stockholder, the Commission En Banc cited the
Supreme Court's ruling in Abejo vs. De la Cruz, 149 SCRA 654 (1987). Their motion for reconsideration having been
denied, ACC and Giron appealed the decision of the SEC En Banc and the resolution denying their motion for
reconsideration to the Court of Appeals. In its decision, the Court of Appeals held that in the absence of any
allegation that the transfer of the shares between Gaid and Ponce was registered in the stock and transfer book of
ACC, Ponce failed to state a cause of action. Thus, said the appellate court, "the complaint for mandamus should be
dismissed for failure to state a cause of action." Ponce's motion for reconsideration was denied in a resolution dated
10 August 1999. Ponce filed the petition for review on certiorari.


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


Fausto Gaid was an original subscriber of ACC's 239,500 shares. From the Amended Articles of Incorporation
approved on 9 April 1995, each share had a par value of P1.00 per share. Ponce had not made a previous request
upon the corporate secretary of ACC, Francisco M. Giron Jr., to record the alleged transfer of stocks. 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. A petition for mandamus fails to state a cause of action
where it appears that the petitioner is not the registered stockholder and there is no allegation that he holds any
power of attorney from the registered stockholder, from whom he obtained the stocks, to make the transfer. The
deed of undertaking with indorsement presented by Ponce does not establish, on its face, his right to demand for
the registration of the transfer and the issuance of certificates of stocks. Under the provisions of our statute
touching the transfer of stock, the mere indorsement of stock certificates does not in itself give to the indorsee such
a right to have a transfer of the shares of stock on the books of the company as will entitle him to the writ of
mandamus to compel the company and its officers to make such transfer at his demand, because, under such
circumstances the duty, the legal obligation, is not so clear and indisputable as to justify the issuance of the writ. As
a general rule, 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, so that a mere
indorsee of a stock certificate, claiming to be the owner, will not necessarily be recognized as such by the
corporation and its officers, in the absence of express instructions of the registered owner to make such transfer to
the indorsee, or a power of attorney authorizing such transfer. Thus, absent an allegation that the transfer of shares
is recorded in the stock and transfer book of ACC, there appears no basis for a clear and indisputable duty or clear
legal obligation that can be imposed upon the corporate secretary, so as to justify the issuance of the writ of
mandamus to compel him to perform the transfer of the shares to Ponce.





Clemente G. Guerrero, President of the Rural Bank of Salinas, Inc., executed a Special Power of Attorney in favor of
his wife, private respondent Melania Guerrero, giving and granting the latter full power and authority to sell or
otherwise dispose of and/or mortgage 473 shares of stock of the Bank registered in his name. Pursuant to said
Special Power of Attorney, private respondent Melania Guerrero, as Attorney-in-Fact, executed a Deed of
Assignment for 472 shares out of the 473 shares, in favor of private respondents. Almost four months later, or two
(2) days before the death of Clemente Guerrero, private respondent Melania Guerrero, pursuant to the same
Special Power of Attorney, executed a Deed of Assignment for the remaining one (1) share of stock in favor of
private respondent Francisco Guerrero, Sr. Subsequently, private respondent Melania Guerrero presented to
petitioner Rural Bank of Salinas the two (2) Deeds of Assignment for registration with a 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 G. Guerrero, and the issuance of new stock certificates covering the transferred shares of
stocks in the name of the new owners thereof. However, petitioner Bank denied the request of respondent Melania

On December 5, 1980, private respondent Melania Guerrero filed with the Securities and Exchange Commission"
(SEC) an action for mandamus against petitioners Rural Bank of Salinas, its President and Corporate Secretary.

Rural Bank of Salinas filed their Answer with counterclaim alleging the upon the death of Clemente G. Guerrero, his
473 shares of stock became the property of his estate, and his property and that of his widow should first be settled
and liquidated in accordance with law before any distribution can be effected so that petitioners may not be a party
to any scheme to evade payment of estate or inheritance tax and in order to avoid liability to any third persons or
creditors of the late Clemente G. Guerrero.

A motion for intervention was filed by Maripol Guerrero, a legally adopted daughter of the late Clemente G.
Guerrero and private respondent Melania Guerrero, who stated therein that almost two weeks before the filing of
the petition for Mandamu a Petition for the administration of the estate of the late Clemente G. Guerrero had been
filed with the Regional Trial Court. Maripol Guerrero further claimed that the Deeds of Assignment for the subject
shares of stock are fictitious and antedated; that said conveyances are donations since the considerations therefor
are below the book value of the shares, the assignees/private respondents being close relatives of private
respondent Melania Guerrero; and that the transfer of the shares in question to assignees/private respondents,
other than private respondent Melania Guerrero, would deprive her (Maripol Guerrero) of her rightful share in the
inheritance. The SEC hearing officer denied the Motion for Intervention for lack of merit.

SEC En Banc affirmed the decision.

Intervenor Guerrero filed a complaint before the then Court of First Instance of Rizal, Quezon City Branch, against
private respondents for the annulment of the Deeds of Assignment. The SEC Hearing Officer denied the motion to
dismiss filed bu the Rural Bank.

The SEC Hearing Officer rendered a Decision granting the writ of Mandamus prayed for by the private respondents
and directing petitioners to cancel subject stock certificates of the Bank, all in the name of Clemente G. Guerrero,
and to issue new certificates in the names of private respondents, except Melania Guerrero.

SEC En Banc affirmed the decision of the Hearing Officer. CA affirmed such decision.


Whether or not the respondent court erred in sustaining the Securities and Exchange Commission when it
compelled by Mandamus the Rural Bank of Salinas to register in its stock and transfer book the transfer of 473
shares of stock to private respondents.


The only limitation imposed by Section 63 of the Corporation Code is when the corporation holds any
unpaid claim against the shares intended to be transferred, which is absent here.

Respondent SEC correctly ruled in favor of the registering of the shares of stock in question in private respondent's
names. Such ruling finds support under Section 63 of the Corporation Code, to wit:

Sec. 63. . . . 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 . . .

In the case of Fleisher vs. Botica Nolasco, 47 Phil. 583, the Court interpreted Sec. 63 in his wise:

Said Section (Sec. 35 of Act 1459 [now Sec. 63 of the Corporation Code]) contemplates no
restriction as to whom the stocks may be transferred. It does not suggest that any discrimination
may be created by the corporation in favor of, or against a certain purchaser. The owner of
shares, as owner of personal property, is at liberty, under said section to dispose them in favor of
whomever he pleases, without limitation in this respect, than the general provisions of law. . . .

A corporation, either by its board, its by-laws, or the act of its officers, cannot create restrictions in stock transfers,

. . . Restrictions in the traffic of stock must have their source in legislative enactment, as the
corporation itself cannot create such impediment. By-laws are intended merely for the protection
of the corporation, and prescribe regulation, not restriction; they are always subject to the charter
of the corporation. The corporation, in the absence of such power, cannot ordinarily inquire into or
pass upon the legality of the transactions by which its stock passes from one person to another,
nor can it question the consideration upon which a sale is based. . . . (Tomson on Corporation Sec.
4137, citedin Fleisher vs. Nolasco, Supra).

The right of a transferee/assignee to have stocks transferred to his name is an inherent right flowing from his
ownership of the stocks hence mandamus will lie.

The corporation's obligation to register is ministerial.

G.R. No. L-6230 January 18, 1911

A. R. HAGER, petitioner,
ABERT J. BRYAN, respondent.


Hager was the sole owner of 100 shares of capital stock of Visayan Electric Company where Bryan was the
secretary. Said certificates were issued in the name of Bryan-London Co and indorsed to Hager. Hager sold to
Levering a number of his shares. It was understood and agreed that delivery of all the stock should be made free
from all encumbrances and the necessary transfers made on the books of the company. It was discovered that the
aforementioned agreement grew out of the fact that certain parties among whom were Bryan-London & Co., of
which the respondent was and is member, were at that time trying by various means and manipulations to get
control of the said Visayan Electric Company, and the said Levering and your petitioner were desirous of preventing
their thus securing control. Ordinarily, the shares of the said Visayan Electric Company are transferable only on the
books of the company to which the petitioner has repeatedly demanded and requested the respondent, as
secretary of the said Visayan Electric Company to transfer on the books of the company the aforesaid shares to the
name of A. R. Hager so that he may fully and faithfully carry out his agreement with the said Levering hereinbefore

Bryan, individually, as a member of the firm of Bryan-London & Company, and as secretary of the said Visayan
Electric Company has refused and neglects to transfer or permit the transfer of the said aforementioned shares on
the books of the company in the name of your petitioner.


Will mandamus lie to compel the secretary of a corporation to transfer upon the books of said company certain
shares mentioned in the petition?

The Honorable Arthur L. Sanborn, judge of the United States district court for the western district of Wisconsin, in
his article entitled "Mandamus" (26 Cy. of Law and Procedure (Cyc), at p. 347), said:

By the weight of authority mandamus will not lie in ordinary cases to compel a corporation of its
officers to transfer stock on its books and issue new certificates to the transferee, since the writ
(in such a case) is a purely private one, and there is generally an adequate remedy by an action against
the corporation for damages.

Section 35, Act No. 1459, provides among other things, that:

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

To permit the writ of mandamus to issue for the purpose of compelling the officers of a corporation, in cases like
the present one, to transfer stock upon the books of the corporation, might, under certain circumstances, require
such officers to transfer stock against which the corporation holds unpaid claims. These claims might easily arise
between the time of the issuance of the writ and the service of the same upon such officers. If the court
should issue the writ, it might require an officer to transfer stock under conditions where the law expressly
prohibited such transfer. The writ ofmandamus will never issue to compel a person to violate an express provision
of the law. The act required to be performed must be one which the law specially enjoin as a duty resulting from an
office, trust, or station or unlawfully excludes the plaintiff from the used and enjoyment of a right or office to which
he is entitled and from which he is unlawfully precluded.

"This suit is against a private corporation, and its object is to enforce a mere private right. It is in no sense a
proceeding to enforce the performance of a public duty. We have no precedent in this State for allowing this writ to
compel the transfer of stock in a private corporation, and the authorities elsewhere are against it," — citing in
support of his conclusions cases: Cushman vs. Thayer Manufacturing Co., (76 N. Y., 365), Town vs. Nichols, (73 Me.,
515), States vs. Peoples' Building Association (43 N. J. Law, 389), Bank vs. Harrison (66 Ga., 696).

NORA A. BITONG, petitioner,




Bitong was the treasurer and member of the BoD of Mr. & Mrs. Corporation. She filed a complaint with the SEC to
hold respondent spouses Apostol liable for fraud, misrepresentation, disloyalty, evident bad faith, conflict of interest
and mismanagement in directing the affairs of the corporation to the prejudice of the stockholders. She alleges
that certain transactions entered into by the corporation were not supported by any stockholder’s resolution.

The complaint sought to enjoin Apostol from further acting as president-director of the corporation and from
disbursing any money or funds. Apostol contends that Bitong was merely a holder-in-trust of the JAKA shares of the
corporation, hence, not entitled to the relief she prays for. SEC Hearing Panel issued a writ enjoining Apostol.

After hearing the evidence, SEC Hearing Panel dissolved the writ and dismissed the complaint filed by Bitong.
Bitong appealed to the SEC en banc. The latter reversed SEC Hearing Panel decision. Apostol filed petition for
review with the CA. CA reversed SEC en banc ruling holding that Bitong was not the owner of any share of stock in
the corporation and therefore, not a real party in interest to prosecute the complaint. Hence, this petition with the

Whether or not Bitong was the real party in interest.


Based on the evidence presented, it could be gleaned that Bitong was not a bona fide stockholder of the
corporation. Several corporate documents disclose that the true party in interest was JAKA.

Sec. 63 of The Corporation Code expressly provides —

Sec. 63. Certificate of stock and transfer of shares. — The capital stock of stock corporations shall
be divided into shares for which certificates signed by the president or vice president,
countersigned by the secretary or assistant secretary, 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 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 showing the names of the parties to the transaction, the date of the transfer, the
number of the certificate or certificates and the number of shares transferred . . . .

Although her buying of the shares were recorded in the Stock and Transfer Book of the corporation, and as provided
by Sec. 63 of the Corp Code that no transfer shall be valid except as between the parties until the transfer is
recorded in the books of the corporation, and upon its recording the corporation is bound by it and is estopped to
deny the fact of transfer of said shares, this provision is not conclusive even against the corporation but
are prima facie evidence only. Parol evidence may be admitted to supply the omissions in the records, explain
ambiguities, or show what transpired where no records were kept, or in some cases where such records were

Besides, the provision envisions a formal certificate of stock which can be issued only upon compliance with certain
(1) certificates must be signed by the president or vice president, countersigned by the secretary or
assistant secretary, and sealed with the seal of the corporation,
(2) delivery of the certificate;
(3) the par value, as to par value shares, or the full subscription as to no par value shares, must be first
fully paid;
(4) the original certificate must be surrendered where the person requesting the issuance of a certificate
is a transferee from a stockholder.

These considerations are founded on the basic principle that stock issued without authority and in violation of the
law is void and confers no rights on the person to whom it is issued and subjects him to no liabilities. Where there
is an inherent lack of power in the corporation to issue the stock, neither the corporation nor the person to whom
the stock is issued is estopped to question its validity since an estoppel cannot operate to create stock which under
the law cannot have existence.
NORBERTO BRAGA, respondents.

No. L-68450-51 May 19, 1987

VIRGINIA BRAGA, petitioners,
BANDOLINO, respondents.

Telectronics, purchased 133,000 minority shareholdings from Abejo who were principal stockholders of Pocket Bell
Philippines and 63,000 shares from Braga who were also majority stockholders, with such purchases, Telectronics
would become the majority stockholder holding 56% of the outstanding stock and voting power of Pocket Bell.

Telectronic requested Braga, who was the corporate secretary to register and transfer to its name, and those of its
nominees the total 196,000 Pocket Bell shares in the corporation's transfer book, cancel the surrendered
certificates of stock and issue the corresponding new certificates of stock in its name and those of its nominees.
Braga refused to register the aforesaid transfer of shares in the corporate books, asserting preemptive rights over
the 133,000 Abejo shares and that Virginia Braga never transferred her 63,000 shares to Telectronics but had lost
the five stock certificates representing those shares.

The Petitioners now filed a case for mandamus in the SEC ordering Braga to register in their names the transfer
and sale of the Pocketbell shares and cancel the surrendered certificates as duly endorsed and issue new

The Bragas’ on the other hand filed with the RTC a case praying for rescission and annulment (with TRO) of the
sale made by the Abejos in favor of Telectronics on the ground that they had an alleged perfected preemptive right
over the Abejos' shares as well as for annulment of sale to Telectronics of Virginia Braga's shares covered by street
certificates duly endorsed by her in blank. Such case is an ordinary action falling under the jurisdiction of the
regular courts. Simply put, The Bragas' contention is that the question of ordering the recording of the transfers
ultimately hinges on the question of ownership or right over the shares.


Is this an intra-corporate controversy falling under the jurisdiction of the SEC?


The Court rules that the SEC has original and exclusive jurisdiction over the dispute between the principal
stockholders of the corporation Pocket Bell, namely, the Abejos and Telectronics, the purchasers of the 56%
majority stock.

The case is an intracorporate dispute that has arisen between and among the principal stockholders of the
corporation Pocket Bell due to the refusal of the corporate secretary, backed up by his parents as erstwhile majority
shareholders, to perform his "ministerial duty" to record the transfers of the corporation's controlling (56%) shares
of stock, covered by duly endorsed certificates of stock, in favor of Telectronics as the purchaser thereof.

Mandamus in the SEC to compel the corporate secretary to register the transfers and issue new certificates in favor
of Telectronics and its nominees was properly resorted to under Rule XXI, Section 1 of the SEC's New Rules of
Procedure, which provides for the filing of such petitions with the SEC. Section 3 of said Rules further authorizes the
SEC to "issue orders expediting the proceedings ... and also [to] grant a preliminary injunction for the preservation
of the rights of the parties pending such proceedings, "

The claims of the Bragas, which they assert in their complaint in the Regional Trial Court, praying for rescission and
annulment of the sale made by the Abejos in favor of Telectronics on the ground that they had an alleged perfected
preemptive right over the Abejos' shares as well as for annulment of sale to Telectronics of Virginia Braga's shares
covered by street certificates duly endorsed by her in blank, may in no way deprive the SEC of its primary and
exclusive jurisdiction to grant or not the writ of mandamus ordering the registration of the shares so transferred.

The Bragas' contention that the question of ordering the recording of the transfers ultimately hinges on the
question of ownership or right thereto over the shares notwithstanding, the jurisdiction over the dispute is clearly
vested in the SEC.

The very complaint of the Bragas for annulment of the sales and transfers as filed by them in the regular court
questions the validity of the transfer and endorsement of the certificates of stock, claiming alleged pre-emptive
rights in the case of the Abejos' shares and alleged loss of the certificates and lack of consent and consideration in
the case of Virginia Braga's shares. Such dispute clearly involves controversies "between and among stockholders,
" as to the Abejos' right to sell and dispose of their shares to Telectronics, the validity of the latter's acquisition of
Virginia Braga's shares, who between the Bragas and the Abejos' transferee should be recognized as the controlling
shareholders of the corporation, with the right to elect the corporate officers and the management and control of its
Such a dispute and case clearly falls within the original and exclusive jurisdiction of the SEC to decide, under
Section 5 of P.D. 902-A. As stressed by the Solicitor General on behalf of the SEC, the Court has held that "Nowhere
does the law [PD 902-A] empower any Court of First Instance [now Regional Trial Court] to interfere with the orders
of the Commission," and consequently "any ruling by the trial court on the issue of ownership of the shares of stock
is not binding on the Commission for want of jurisdiction.

Santamaria vs. Hongkong


Around February 1937, Santamaria bought ten thousand shares for the sum of about P8,000.00 of the Batangas
Minerals, Inc. through the offices of Woo, Uy-Tioco and Naftaly, a stock brokerage firm. The buyer received the
stock certificates in the name of Woo, Uy-Tioco and Naftaly and indorsed in blank by the firm. Subsequently,
Santamaria placed an order for ten thousand shares of the Crown Mines, Inc. This time through another brokerage
firm by the name of R.J. Campos and Company. To secure the transaction, she submitted the stock certificate
representing her prior purchase of Batangas Minerals, Inc. stocks which certificate was still in the same condition
as Santamaria received it.
Upon Santamaria’s return to R.J. Campos and Company for payment, she found out that the firm was desisted by
the SEC to continue transacting business. She also learned that the certificate that was forwarded as security was
in the possession of Hongkong and Shanghai Banking Corporation by virtue of a document of hypothecation
wherein all shares in the brokerage firm’s custody was pledged to the bank. In this aspect, HKSBC sent the
certificate to Batangas Minerals, Inc. for registration. Hence, this civil action.


Whether or not the contested certificate of stock should be returned to Santamaria.


The Supreme Court ruled that it should not be returned. Santamaria was negligent in the transaction and is
stopped from claiming further title against the bona fide transfer to HKSBC. The latter was justified in believing that
R.J. Campos and Company had title thereto considering it was indorsed in blank, and, therefore, deemed quasi-
negotiable. Thus, HKSBC cannot be blamed for believing that such belonged to the holder and transferor.
Furthermore, the bank was not obligated to look beyond the certificate to ascertain the ownership of the stock at
the time it received the same from R.J. Campos and Company, for it was given to the bank pursuant to their letter
of hypothecation.