Ponce v. Alsons Cement Corp. (393 SCRA 602) G. R. NO. 139802 - December 10, 2002

Ponce v. Alsons Cement Corp. (393 SCRA 602 [2002])

F: Petitioner Vicente C. Ponce, filed a complaint with the SEC for mandamus and damages against respondents Alsons Cement Corporation and its corporate secretary Francisco M. Giron, Jr. 

He alleged that the late Fausto G. Gaid was an incorporator of Victory Cement Corporation (VCC) now Alsons Cement Corp, having subscribed to and fully paid 239,500 shares of said corporation. That they executed a “Deed of Undertaking” and “Indorsement” whereby the Fausto acknowledges that the Ponce is the owner of said shares and he was therefore assigning/endorsing the same to the Ponce. 

However, 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 the plaintiff. Despite repeated demands, the defendants refused and continue to refuse without any justifiable reason to issue to plaintiff the certificates of stocks corresponding to the 239,500 shares of Gaid, in violation of plaintiff’s right to secure the corresponding certificate of stock in his name.

I: WON Ponce has no cause of action for a writ of mandamus

H: Ponce has no cause of action for a writ of mandamus to compel the corp secretary to issue certificates of stock in his favor. 

Pursuant to Sec 63 of RCC, 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. 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. 

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.