Atty. Dante T. Ramos

September 18, 1980 Atty. Dante T. Ramos 2178 2nd Floor Matrinco Bldg.,Pasong Tamo Makati, Metro Manila Sir : Anent your letter-query dated 16 July 1980 regarding transfer of stock certificates, the following answers are hereby advanced: cdlex 1. A blank transfer on the back of the certificate, to which the holder has affixed his name, is a good assignment and the party to whom; it is delivered is authorized to fill it up. It may be filled up with the name of a remote transferee, and the name to be inserted concerns only the purchaser. (12 Fletcher Sec. 5480 citing McCarthy v. Crawford; 238 Ill. 38, 86 N.E. 750) However, the above transfer shall be valid only between the parties and will not affect the corporation. The new Corporation Code has this to state: "No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation, the data of the transfer, the number of the certificate or certificates and the number of shares transferred." (3rd sentence, Sec. 63) 2. The transfer of shares of stock through a deed of assignment coupled with a delivery of the certificates even without endorsing the same is sufficient to convey ownership of the shares of stock. Relative thereto, we quote: "Indorsement of the certificate is not necessary to pass the title where a deed has been executed assigning the stock and authorizing the transfer on the books." (12 Fletcher Sec. 5480 citing Curtis v. Crossley, 59 N.J. Eq. 358, 45 Atl. 905) Whether the deed of assignment is in a private or public instrument is of no import. "The assignment need not be in any particular form and is sufficient if it shows the intention of the owner." (12 Fletcher Sec. 5480 citing Holmes v. Holmes, 182 Wis. 163, 196 N.W. 246) Again, such transfer, in order to bind the corporation must comply with the provision of Section 63, supra. 3. The resulting cancellation of the original certificate and the issuance of a new one under your two cited cases will not be valid for failure to observe the pertinent provisions of the new Corporation Code relative to transfer of stock certificate. Note that your query did not state if the certificates were delivered which is a requisite for a valid transfer. With respect to the second query, the innocent purchaser in good faith will acquire the rights of a stockholder since the corporation has supposedly issued a valid certificate of stock. As to the rights of the original owner, we have to qualify: a) If he did not actually deliver the certificate, no transfer of stock could be registered in the books of the corporation and no certificate would be surrendered and cancelled. Under this case, issuance of a new certificate in lieu of the undelivered one will not be proper. Indorsement of the new stock certificate shall not affect the rights of the original owner who, for all intents and purposes, remains a stockholder of record. cdlex b) If the certificate was delivered and later registered, the cancellation of the original certificate and issuance or a new one would be considered valid. The subsequent indorsement of the new stock certificate issued in favor of third person has no longer any effect with the original owner who ceases to be a stockholder upon endorsement and delivery of his original certificate. Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department