Atty. Ismael O. Baldado

June 29, 1989 Atty. Ismael O. Baldado 1551 Piy Margal Corner Gov. Forbes Streets Sampaloc, Manila Sir : This refers to your letter, dated June 13, 1989, requesting the opinion of this Commission on the following query: llcd May a corporation validly withhold voting rights of persons holding street certificates until a determination of beneficial ownership is ascertained? Otherwise stated, may the corporation effectively disenfranchise registered shareholders who have indorsed their certificates in blank? While shares of stock so issued are considered 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, yet, it has to be emphasized that no transfer shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation. The Corporation Code provides, thus: SECTION 63. Certificate of stock and transfer of shares . ...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, the date of the transfer, the number of the certificate or certificates and the number of shares transferred. ..." (emphasis supplied). It is clear from the aforecited provision that until the transfer is registered in the corporate books, the same, though valid as between the parties, cannot be effective as against the corporation. Thus it was held that until challenged in a proper proceeding, a stockholder of record has a right to participate in any meeting and, in the absence of fraud, any action at such meeting cannot be collaterally attached on account of such participation. The vote of such stockholder can therefore be properly counted to determine whether a stockholders' resolution was approved, despite the claims of the alleged transferee. (Campos Lopez-Campos, Corporation C od e, citing Price & Sulu Dev. Co. vs. Agusan Coconut, G.R. No. 37281, November 10, 1933, 58 Phil. 707 (1933). In the light of the foregoing, an unrecorded transferee cannot enjoy the status of a stockholder. Accordingly, he cannot vote nor be voted for. A person who has purchased stock, and who desires to be recognized as a stockholder for the purpose of voting must secure a standing by having the transfer recorded on the corporate books. cdlex Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner