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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
No. Non-payment of capital gains tax does not affect the validity of the transfer as between the seller and the buyer. However, if the capital gains tax is not paid, the sale or the transfer of the shares shall not be registered in the books of the corporation by the transfer agent or secretary of the corporation pursuant to Revenue Regulation No. 2-82 of the Bureau of Internal Revenue (BIR). (SEC OGC Opinion No. 07-06 dated April 19, 2017)
SEC OGC Opinion No. 07-06 dated April 19, 2017 provides that:
The Corporation Code provides that 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 so as to show the names of the parties to the transaction, date of transfer, the number of the certificate or certificates and the number of shares transferred.
For the transfer to be valid against third parties and the corporation, the same must be recorded in the corporate books. An unrecorded transfer, though valid as between the parties, cannot be effective as against the corporation. The rights of a stockholder accrues only upon entry of his name in the books of the corporation.
Non-payment of capital gains does not affect the validity of the transfer as between the seller and the buyer. However, if the capital gains tax is not paid, the sale or the transfer of the shares shall not be registered in the books of the corporation by the transfer agent or secretary of the corporation pursuant to Revenue Regulation No. 2-82 of the Bureau of Internal Revenue (BIR).
Jurisprudence says –
Under the provision, certain minimum requisites must be complied with for there to be a valid transfer of stocks, to wit:
(a) there must be delivery of the stock certificate;
(b) the certificate must be endorsed by the owner or his attorney-in-fact or other persons legally authorized to make the transfer; and
(c) to be valid against third parties, the transfer must be recorded in the books of the corporation.
It is the delivery of the certificate, coupled with the endorsement by the owner or his duly authorized representative that is the operative act of transfer of shares from the original owner to the transferee. The Court even emphatically declared. in Fil-Estate Golf and Development, Inc., et al. v. Vertex Sales and Trading, Inc. that in “a sale of shares of stock, physical delivery of a stock certificate is one of the essential requisites for the transfer of ownership of the stocks purchased.” The delivery contemplated in Section 63, however, pertains to the delivery of the certificate of shares by the transferor to the transferee, that is, from the original stockholder named in the certificate to the person or entity the stockholder was transferring the shares to, whether by sale or some other valid form of absolute conveyance of ownership. “[S]hares of stock may be transferred by delivery to the transferee of the certificate properly indorsed. Title may be vested in the transferee by the delivery of the duly indorsed certificate of stock.”
ANNA TENG, vs. SECURITIES AND EXCHANGE COMMISSION (SEC) and TING PING LAY, G.R. No. 184332, February 17, 2016
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