FACTS:

Nemesio Garcia, the petitioner in this case, filed an action for injunction with prayer for preliminary injunction against the spouses Jose and Sally Atinon and Nicolas Jomouad, the ex-oficio sheriff of Cebu. The action was in relation to a collection of sum of money case filed by the Atinon spouses against Jaime Dico. After the judgment in the collection case became final and executory, the respondent sheriff proceeded with the execution and levied on the Proprietary Ownership Certificate (POC) No. 0668 in the Cebu Country Club, which was in the name of Dico. Claiming ownership over the subject certificate, petitioner filed the action for injunction to enjoin respondents from proceeding with the auction. The lower court dismissed petitioner's complaint for injunction, and the Court of Appeals affirmed the decision, leading to the present petition for review on certiorari. Petitioner argues that the levy on the subject certificate was erroneous and that the transfer from Dico to petitioner was valid. The issue in this case is whether the unrecorded transfer of shares is valid against subsequent lawful attachment, regardless of whether the attaching creditor had actual notice of said transfer or not. In applying the jurisprudence in Uson vs. Diosomito, the Supreme Court held that the transfer of the subject certificate was not valid against the judgment creditors, as the transfer had not been recorded in the books of the corporation. The Court found no reversible error committed by the Court of Appeals in its decision. Davide, Jr., C.J., did not participate in the case due to close relation to a party.

ISSUES:

1. Whether the transfer of the subject certificate was valid and whether the entry in the minutes of the board of directors of the Club constituted compliance with Section 63 of the Corporation Code.

RULING:

1. The transfer of the subject certificate was not valid and the entry in the minutes of the board of directors of the Club did not constitute compliance with Section 63 of the Corporation Code. The transfer was not valid as it was not recorded in the books of the corporation, as required by law. Therefore, the levy on the subject certificate to satisfy the judgment debt of Dico was upheld.

PRINCIPLES:

• Shares of stock are personal property and may be transferred by delivery of the certificate or certificates, but the transfer must be recorded in the books of the corporation to be valid as against third parties.

• Unrecorded transfers of shares are invalid as to attaching or execution creditors, the corporation, and subsequent purchasers in good faith, as well as to all persons interested, except the parties to the transfer.