Atty. Pedro H. Ferrer

August 4, 1989 Atty. Pedro H. Ferrer Cedo Ferrer & Associates Ground Floor, Marvin Plaza 2153 Pasong Tamo, Makati, Metro Manila Sir : This refers to your letter, dated July 14, 1989, requesting the opinion of this Commission as to whether or not the blank indorsements made by the late Florencio Palanca on five stock certificates of Eastern Brokerage Co.,Inc. representing 823 shares that he owned therein, constitute sufficient basis for the transfer of said shares in favor of his children without need of any deed of sale. In connection therewith, please be advised that the Commission refrains from rendering opinions on queries based on justiciable allegations which could only be clarified and determined in a proper proceeding. Like in other letter-queries of similar nature, the Commission has adopted the policy of not taking any action on justiciable issues and/or anticipatory questions presented before it for the reason that the opinion which may be rendered thereon would not be binding upon private parties who would in all probability, if the opinion happens to be adverse to their interest take issue therewith and contest it before the court. However, for purposes of information only, the following may be imparted. Section 63 of the Corporation Code of the Philippines partly quoted hereunder, prescribes the manner by which shares of stock may be transferred. "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 showing 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) Thus, mere indorsement of the certificate of stock shall be sufficient to effect the transfer provided the same is coupled with delivery. But to make the transfer valid against third parties and the corporation, the same must be recorded in the stock and transfer book of the corporation. The authorities are agreed that shares of stock are personal property and they may be transferred by indorsement and delivery of the certificate, that as between the shareholder and his vendee, a good title to the shares of stock may be conveyed by simple indorsement in blank and delivery of the certificate; that when the certificate representing the shares of stock has been indorsed in blank, the holder thereof has authority to fill in his own name as transferee and cause the transfer to be registered in the books of the corporation, and that the death of the transferor before the transfer is recorded does not affect the transferee's rights. (Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, Vol. 3, 1988 ed. p. 507-508, citing Navarro v. Suntay, (1952) 48 O.G. No. 125335, citing 12 Fletcher Cyclopedia of the Law of Private Corporation, 226-267; 287-288). The Supreme Court also held in the case of Santamaria v. The Hongkong & Shanghai Banking Corporation G.R. No. 2808, August 31, 1951, that "a certificate of stock indorsed in blank is deemed quasi-negotiable, and as such, the transferee thereof is justified in believing that it belongs to the holder and transferor." (Ibid, p. 495 citing GR No.L-2808, Aug. 31, 1951). The foregoing cited authorities do not restrain or preclude judicial interpretation and application of the law on the actual facts of the case should the issue raised therein be litigated in the future. LibLex Please be advised accordingly. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner