G.R. No. 139802 December 10, 2002
VICENTE C. PONCE, petitioner, vs. ALSONS CEMENT CORPORATION, and FRANCISCO M. GIRON, JR., respondents.

FACTS

Petitioner Vicente C. Ponce filed a complaint for mandamus and damages with the Securities and Exchange Commission (SEC) against respondents Alsons Cement Corporation and its corporate secretary. He alleged that the late Fausto G. Gaid, an incorporator of Victory Cement Corporation (later renamed Floro Cement Corporation and then Alsons Cement Corporation), had subscribed to and fully paid for 239,500 shares. On February 8, 1968, Gaid executed a “Deed of Undertaking” and “Indorsement” acknowledging Ponce as the owner of said shares and assigning/endorsing them to Ponce. Despite demands, respondents refused to issue the corresponding stock certificates in Ponce’s name. Respondents moved to dismiss the complaint, arguing it stated no cause of action, mandamus was improper, Ponce was not the real party in interest, and the action was barred by the statute of limitations and laches. They contended that the indorsement was not recorded in the corporation’s books, making it invalid against third parties under the Corporation Code. The SEC Hearing Officer dismissed the complaint, ruling Ponce was not the real party in interest as there was no record of the transfer in the corporate books and no instruction from Gaid. The SEC En Banc reversed, citing Abejo vs. De la Cruz, holding that registration of the transfer is not a prerequisite for the SEC to enforce a stockholder’s rights. The Court of Appeals set aside the SEC En Banc decision and reinstated the Hearing Officer’s dismissal, ruling that without an allegation that the transfer was registered in the stock and transfer book, the complaint failed to state a cause of action for mandamus.

ISSUE

Whether the Court of Appeals erred in holding that petitioner has no cause of action for a writ of mandamus due to the failure to allege that the transfer of shares was registered in the corporation’s stock and transfer book.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that for a writ of mandamus to compel the issuance of stock certificates, the petitioner must have a clear legal right to the relief sought, and the respondent must have a correlative duty to perform the act. Under Section 63 of the Corporation Code, no transfer of shares is valid against the corporation and third parties unless recorded in its stock and transfer book. The complaint did not allege that the Deed of Undertaking and Indorsement was recorded in the corporate books. Without such recording, the transfer is not binding on the corporation, and it has no duty to issue new certificates to the transferee. The Court distinguished the case from Abejo vs. De la Cruz, noting that in Abejo, the transfer was recorded, and the corporate secretary’s refusal was unjustified. Here, the absence of recording meant the corporation had no ministerial duty to act. The Court also clarified that while a stock certificate is evidence of ownership, its issuance is not essential to the existence of a share, but the recording of the transfer is a prerequisite for enforcing the right to a certificate against the corporation. Therefore, the complaint failed to state a cause of action for mandamus.