Teofilo Po as an incorporator subscribed to eighty shares of Peers Marketing Corporation. Po paid two thousand pesos or twenty-five percent of the amount of his subscription.
No certificate of stock was issued to him or, for that matter, to any incorporator, subscriber or stockholder. Po sold to Ricardo A. Nava for two thousand pesos twenty of his eighty shares. In the deed of sale Po represented that he was “the absolute and registered owner of twenty shares” of Peers Marketing Corporation. Nava requested the officers of the corporation to register the sale in the books of the corporation.
The request was denied because Po has not paid fully the amount of his subscription. Nava was informed 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 eighty shares which included the twenty shares that had been sold to Nava. Nava filed this mandamus action in the CFI to compel the corporation and Renato R. Cusi and Amparo Cusi, its executive vice-president and secretary, respectively, to register the said twenty shares in Nava’s name in the corporation’s transfer book.
The respondents in their answer pleaded the defense that no shares of stock against which the corporation holds an unpaid claim are transferable in the books of the corporation.
The trial court dismissed the petition.
Whether the officers of Peers Marketing Corporation can be compelled by mandamus to enter in its stock and transfer book the sale made by Po to Nava of the twenty shares forming part of Po’s subscription of eighty shares, with a total par value of P8,000 and for which Po had paid only P2,000, it being admitted that the corporation has an unpaid claim of P6,000 as the balance due on Po’s subscription and that the twenty shares are not covered by any stock certificate
The corporation can include in its by-laws rules, not inconsistent with law, governing the transfer of its shares of stock. 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.
A corporation cannot release an original subscriber from paying for his shares without a valuable consideration or without the unanimous consent of the stockholders.
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.
As already stressed, in this case no stock certificate was issued to Po. Without 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.
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