199 Uson vs.

Diosomito et al AUTHOR:
[G.R. No. L-42135; June 17, 1935] NOTES:
TOPIC: Transfer of Shares; Effect of lack of registration Sale of Shares:
PONENTE: Butte, J. Diosmito Barcelon Jollye

Uson claims to be the owner of these shares by virtue of a

judgement in the CFI against Diosomito.
FACTS:
Background of the case
 On February 3, 1931, defendant Diosmito sold his 75 shares in the North Electric Company to defendant Barcelon.
This sale was only registered in the books of the corporation on September 16, 1932.

 Barcelon transferred these shares to defendant Jollye to whom a new certificate was issued on February 13, 1933.

Main Facts
 Petitioner Uson filed in the CFI a civil action for debt against Diosimito (Civil Case 2525). Upon institution of the
action, Diosomito’s property, including the 75 shares, was attached and levied on January 18, 1932.

 On June 23, 1932, the CFI rendered judgement in Uson’s favor. To satisfy the judgment, the sheriff sold the 75
shares at a public auction. Uson was the highest bidder and these shares were adjudicated to her.

 In this action, Defendant Jollye claims to be the owner of these shares. He presents a certificate of stock issued to
him on February 13, 1933.

 Note: The transfer of shares from Diosomito to Barcelon on February 3, 1931 was only registered on September
16, 1932; nine months after the shares were attached and levied, and three months after Diosimito lost his case to
Uson.

 The defendants argue that based on American Jurisprudence, an unregistered transfer is valid against the lien of a
subsequent attachment sued out by a creditor of the assignor.
ISSUE(S):
Is a transfer of the shares of a corporation, not registered or noted on the books of the corporation, valid against a
subsequent lawful attachment? Who owns the shares?

HELD/RATIO:
No. The common law right that the defendants cite is limited by Section 35 of the Corporation Law which provides that:

No transfer, however, shall be valid, except as between the parties, until the transfer is
entered and noted upon 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, and the
number of shares transferred.

Thus the transfer made by Diosomito to Barcelon was not valid as to Toribia Uson, on January 18, 1932 – the date on
which Uson obtained her attachment lien on the shares of stock which were still in Diosomito’s name on the books of the
corporation.
CASE LAW/ DOCTRINE:
No transfer [of shares] shall be valid, except as between the parties, until the transfer is entered and noted upon the
books of the corporation.