CASE DIGEST: RURAL BANK OF SALINAS, INC., vs. CA. G.R. No. 96674. June 26, 1992

FACTS:

Clemente, the President of the Rural Bank of Salinas, Inc., executed a Special Power of Attorney in favor of his wife, Melania, giving and granting the latter full power of authority to sell or otherwise dispose of and/or mortgage 473 shares of stock of the Bank registered in his name. Before the death of Clemente, Melania, pursuant to the said SPA, executed Deed of Assignments for the shares of stock in favor of private respondents. After the death of Clemente, Melania proceeded in presenting the said Deed with request for the transfer in the Bank’s stock and transfer book of the 473 shares of stock so assigned, the cancelation of stock certificates in the name of Clemente and the issuance of new stock certificates in the name of the new owners thereof. The Bank however denied the request. Melania then filed with SEC an action for Mandamus against Rural Bank of Salinas, its President and Secretary. The latter bank contended in its answer that the shares of Clemente became the property of his estate and thus must be first settled and liquidated before distribution. SEC nevertheless, issued mandamus against the bank.

ISSUES:

1. Whether SEC has jurisdiction over the matter.

2. Whether petitioner may restrict the registration of shares of stock or its transfer.

RULING:

1. Yes. SEC has jurisdiction. The law grants to the SEC  the exclusive and original jurisdiction to hear and decide cases involving intracorporate controversies. 

Under the law, an intracorporate controversy is one which arises between a stockholder and a corporation. 

This case involves controversy relating to the transfer, registration and cancellation of shares of stock of the bank's stockholder. Thus, it is within the power of SEC to adjudicate.

2. No. The corporation's obligation to register is ministerial and can be compelled by mandamus.

The Corporation Code provides under Sec. 63 that:

...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...

Clemente assigned his rights over his shares to Melania and the right of a transferee or assignee to have stocks transferred to her name is an inherent right flowing from her ownership of the stocks. 

The corporation cannot impose restrictions or impediments to the transfer since their duty when it comes to transfer or registration of stocks is purely ministerial. The only limitation found under Sec. 63 is when the corporation holds any unpaid claim against the shares intended to be transferred. Such a limitation is absent in this case. Thus, petitioner may be compelled to register the stocks by mandamus.