Bito, Lozada, Ortega & Castillo

January 24, 1989 Bito, Lozada, Ortega & Castillo P.O. Box 791 Manila, Philippines Gentlemen : This has reference to your letter dated December 12, 1988, requesting for a resolution on the query posed therein. As stated, it appears that judgment was rendered against defendants Francisco M. Zulueta, Cecilia S. Suzara and Jesus M. Zulueta in Civil Case No. 1171-R, filed with the Regional Trial Court of Baguio City for a total sum of P6,200,000.00, exclusive of interests and costs. A writ of execution was subsequently issued directing the Provincial Sheriff of Rizal to levy on defendants' assets. The 395,881 shares of stocks of defendant Francisco M. Zulueta with Philippine Cocoa Corporation (PCC, for short) and covered by Certificate Nos. A-234 and A-348 were consequently garnished and at the execution sale made after due notices, the shares of stocks were sold to plaintiffs Isabel Z. de Peralta and Concepcion Z. Bito, who were the highest bidders therein. Accordingly the Sheriff's Certificate of Sale was issued to the latter. Upon presentation of the Certificate of Sale and capital gains tax return to PCC for the purpose of effecting transfer of the said PCC shares to the highest bidders, the PCC Assistant Corporate Secretary replied that transfer thereof cannot be made unless and until the stock certificates covering the shares are previously surrendered for cancellation. The question which arises is whether PCC shares of stock sold by virtue of an execution sale to the highest bidders may be transferred in PCC's books on the basis at the Sheriff's Certificate of Sale considering that the stock certificates still remain in the possession of the judgment debtor. Central to this issue is the principle that for the purposes of execution, attachment or garnishment, the stock is generally regarded as being in the possession of the corporation in which the shares are held although the certificates are in the possession of a stockholder or a third person. Generally, the levy must be upon the shares of stock and cannot be made by seizing the stock certificates since they are not the stock itself but are mere evidences of it. (Am. Jur. 2d Sec. 253 p. 593) Under thereof rules follows that the corporation, and not the holder of the certificate of stock is the proper party upon whom to serve the attachment or garnishee process to reach and subject shares stock. (Fletcher Ch. 58 Sec. 5109 pp. 128 & 129). Moreover, stocks are deemed personally which are not capable of manual delivery. (Ellis v. Gibbons p. 145 p. 286). It is generally held that the sole of stock under levy passes such title and interest as the stockholder had to the purchaser, as in the sale of other personal property and the latter has the right to have the same transferred to him in the corporate books and is entitled to the usual remedies to compel such transfer. (Fletcher Ch. 58 Sec. 5111 p. 142). Wherefore, in the light of the foregoing premises, it is apparent that on the basis of the sheriff's Certificate of Sale, the PCC shares of stocks sold in execution sale may be transferred in the corporate books in the name of the highest bidders, who are furthermore entitled to the usual remedies provided by law to enforce such right. LibLex Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman