After reading May a stockholder bring suit to compel the corporate secretary to register valid transfer of stocks?, read also HOW ARE SHARES OF STOCKS TRANSFERRED?
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It is the duty and obligation of the corporate secretary to register the transfer of stocks.
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In transferring the stock, the corporate secretary acts in a purely ministerial capacity.
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If the corporate secretary refuses to register the transfer without due cause, it may be compelled to do so by mandamus.
A stockholder may compel the corporate secretary to register a valid transfer of stocks. It is the duty and obligation of the corporate secretary to register the transfer of stocks. (Chemphil Export and Import Corporation v. Court of Appeals, G.R. No. 112438-39, 12 December 1995)
The law says:
Section 62 of the Revised Corporation Code of the Philippines states that:
SEC. 62. Certificate of Stock and Transfer of Shares. – The capital stock of 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 bylaws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner, his attorney in-fact, or any 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. The Commission may require corporations whose securities are traded in trading markets and which can reasonably demonstrate their capability to do so to issue their securities or shares of stocks in uncertificated or scripless form in accordance with the rules of the Commission. No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of the corporation. (Emphasis supplied.)
Jurisprudence says:
The right of a transferee/assignee to have stocks transferred to his name is an inherent right flowing from his ownership of the stocks. Whenever a corporation refuses to transfer and register stock in cases like the present, mandamus will lie to compel the officers of the corporation to transfer said stock in the books of the corporation.
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.
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.” (Eric Lee v. Hon. Judge Trocino, G.R. No. 164648, 19 June 2009, citing Rural Bank of the Salinas, Inc. v. Court of Appeals, G.R. No. 96674, 26 June, 1992)
In case the transfer was not recorded in the stock and transfer book of the corporation, does the transferee have a cause of action to demand for the registration of the transfer and the issuance of stock certificates?
No, the transferee has no right to demand for the registration of the transfer and the issuance of stock certificates if the transfer was not recorded in the stock and transfer book of the corporation.
Absent an allegation that the transfer of shares is recorded in the stock and transfer book of the corporation, 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 the transferee.
The test of sufficiency of the facts alleged in a petition is whether or not, admitting the facts alleged, the court could render a valid judgment thereon in accordance with the prayer of the petition.
This test would not be satisfied if, as in this case, not all the elements of a cause of action are alleged in the complaint. Where the corporate secretary is under no clear legal duty to issue stock certificates because of the petitioner’s failure to record earlier the transfer of shares, one of the elements of the cause of action for mandamus is clearly missing. (Vicente C. Ponce v. Alsons Cement Corporation, G.R. No. 139802, 10 December 2002)
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