Mr. Candido S. Dizon

September 10, 1982 Mr. Candido S. Dizon Assistant General Manager Planters Foundation, Inc. 5th Floor, Jovan Condominium Shaw Blvd. corner Samat St. Mandaluyong, Metro Manila Sir : This refers to your letter of July 30, 1982, requesting for the opinion of this Commission on the queries posed therein. LibLex Your letter states that thru L.O.I. No. 178, dated March 28, 1974, stock ownership of Planters Products Cooperative Marketing And Supply, Inc. (PPI), is being dispersed among all fertilizer end-users. To accomplish such dispersal of equity, Planters Foundation, Inc. was established, primarily, among others, to assume the portion of PPI stock not subscribe and paid for by the Sugar Producers' Cooperative Marketing Association, Inc., minus the 10% stock allocation to PPI officers and employees, and redistribute said shares among the fertilizer end-users by way of transfer pursuant to the directives of L.O.I. No. 178. The mechanics in the sale of PPI's equity show that upon purchase by the farmers of fertilizers, the Foundation is given instruction to issue an "Undertaking to Transfer Shares of Stock" (UTSS) to said purchasers, the number of shares corresponding to the number of bags of fertilizers purchased, after due processing of which by the Foundation, certificates of stock are issued in their respective favor. Your letter further alleges that due to the great volume of stock transfer operation, as well as the lack of interest shown by other farmer, the names and addresses of fertilizer purchasers have not been properly recorded on the "UTSS", hence, shareholdings corresponding to such unknown purchasers have not been recorded in the stock and transfer book of Planters Product Cooperative Marketing And Supply, Inc. In line with this, you want to know how the unknown stockholders of the corporation may be identified to enable the issuance of the corresponding certificates of stock, and if such is not feasible, opinion on the status of these shares of stock is requested. It is a well-settled rule that, even where the charter or by-laws of a corporation or the general law under which it is organized, provide that its stock shall be transferable only on the books, as between the parties, an unregistered transfer is valid (12 Fletcher Cyclopedia Corporations, Sec. 5496, p. 888). The entry of the transfer on the book is not necessary for the translation of the title, or in other words, as between the parties, the title passes by contract and not by the record. The effect of a statute providing that no transfer shall be valid except as between the parties until entered upon the corporate books is to relieve the corporation from any liability whatever on account of the transfer until it is entered upon the books (12 Fletcher Cyclopedia Corporations, Sec. 5500, p. 852, citing La Coff v. Dutch Miller Mining & Smelting Co., 81 Wash. 566). cdlex In the instant case, it would appear that a trust relation is impliedly created between the Planters Foundation, Inc. (trustee) and the fertilizer end-users (cestui que trustees). The Foundation would have the legal title to the undistributed shares of Planters Products Cooperative marketing and Supply, Inc., which were purchased by the farmers, and would hold such shares in trust for the equitable title-holders. These shares may be entered in the corporate book and shall stand in the name of the Foundation as "trustee" or said holder may be described as "trustee" in the certificate. According to the great weight of authority, the fact that one stock stands on the corporate book in the name of a person as trustee, or that, the holder thereof is described as a trustee in the certificate, is notice to both of the corporation and to the persons who may purchase such shares from the trustee, that he does not hold the shares in his own right. The fact that the cestui que trust is not named is immaterial. Mere lapse of time after failure of the cestui que trustee to appear and claim the stock and dividend thereon will not raise a presumption of personal ownership in the person named in the certificate as trustee (12 Fletcher Cyclopedia Corporations, Sec. 5547, p. 494, emphasis supplied). Nor will the fact that the person seeking the transfer has been unable to discover the cestuis que trustent (Ibid) . The entry on the books of the corporation is a continuous assertion that the stock is not the private property of Planters' Foundation, Inc., and thus, prevents the running of the statute of limitations. Until the stock is transferred on the corporation books in the name of the real owners, the Foundation remains the nominal owner of the shares and is regarded as the trustee of the stock for the benefit of the cestuis que trustent. As a matter of identifying the unknown stockholders of Planters Product Cooperative marketing and Supply, Inc., the Commission suggest that they be properly notified thru publication in a newspaper of general circulation, whereby the purchasers of stock of said corporation be directed to step forward and procure the proper transfer of the shares in their respective names, requiring them to produce such evidence of identity as well as their right to the transfer. Please be guided accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman