G.R. No. 44579. December 24, 1938
JUAN E. TUASON, PLAINTIFF AND APPELLEE, VS. LA PREVISORA FILIPINA, MUTUAL BUILDING AND LOAN ASSOCIATION, DEFENDANT AND APPELLANT.
VILLA-REAL, J.:
Building and Loan Association, from the judgment of the Court of First
Instance of Manila, the dispositive part of which is as follows:
“In
view of all the foregoing, judgment is hereby rendered in favor of the
plaintiff Juan E. Tuason, and against the defendant La Previsora
Filipina, ordering the defendant to pay the plaintiff the amount of
P22,513.91, plus 10 per cent interest on P22,000 from March 27, 1934,
until fully paid, and to pay the costs of this action. It is so
ordered.”
When the case was called for
trial in the Court of First Instance of Manila and before the
presentation of evidence, the parties submitted to the court for
decision the following partial stipulation of facts:
“It is hereby agreed and stipulated by and between the respective parties hereto:
“(1)
That the herein plaintiff is of age and a resident of the City of
Manila, and that the herein defendant is a building and loan
association, since 1929, having acquired by virtue of the laws of the
Philippine Islands, with its principal place of business in the City of
Manila.“(2) That on October 11, 1932, plaintiff applied
to surrender the shares of stock set out in plaintiff’s complaint, in
accordance with the provisions of Article 3 of the By-Laws.“(3) That on March 26, 1934, the turn of plaintiff’s application for
surrender had been reached, and the defendant company had sufficient
funds available to reimburse the plaintiff for the value of said shares.“(4) That the last dividends received by plaintiff on said shares were paid on the dates set forth below:
No.…………………………………………………………. …………………………………………………………. …………………………………………………………. …………………………………………………………. …………………………………………………………. …………………………………………………………. …………………………………………………………. …………………………………………………………. …………………………………………………………. “(5)
That the only shares in the defendant corporation ever held by the
plaintiff, other than those enumerated in plaintiff’s complaint are
thirty-five (35) shares of paid up stock of Series ‘M’ and one (1)
share of paid up stock of Series ‘F’; and that in addition thereto he
has subscribed to fifty thousand (50,000) shares of installment stock
of Series ‘A.’ “(6) It is further agreed and stipulated that the
parties may present such additional evidence as they may deem
convenient in support of their respective contentions in this case.“Wherefore, it is respectfully prayed that this stipulation be approved.
“Manila, January 8, 1935.
“DEWITT, PERKINS & BRADY By …………………………………. “Attorneys for the plaintiff “E. P. REVILLA “Attorney for the defendant”
From the additional evidence adduced by the parties, the following facts have been made clear:
Appellee Juan E. Tuason had been a stockholder of the defendant and
appellant, La Previsora Filipina, Mutual Building and Loan Association,
since 1929, having acquired on different dates shares of stock thereof
of the series M and C, at the par value of P200 per share with a
guaranteed dividend of 10 per cent. Plaintiff acted as treasurer of
defendant corporation from February 27, 1932 up to February 1, 1933. On
February 15, 1932, said plaintiff subscribed for 50,000 accumulative
shares of series A, paying on account the sum of P5,000, value of
twenty-five shares subscribed and paid for by him, which he had
exchanged for the equivalent value of the aforesaid accumulative shares
in accordance with section 25 of the by-laws of the association. The
corresponding certificate of stock, which bears number 8463 (Exhibit
5), had been prepared by defendant corporation and was dated February
15, 1932. On February 19, of the same year, said defendant corporation
addressed a letter (Exhibit 4) to plaintiff in which informed him that
the certificate (Exhibit 5) issued by in his favor for 50,000
accumulative shares of series A, bearing number 8463, remained at his
disposal in the office of said defendant where he might get the same
when he so desired.
On August 1, 1932, the Collector of
Internal Revenue, after an investigation, discovered that defendant had
not affixed documentary stamps on the aforesaid certificate No. 8463 in
violation of section 1449 (b) of Act No. 2711, for which
reason he required defendant to pay P10,000 for documentary stamps
(Exhibit 35). In view of said demand, the board of directors of
defendant corporation, by resolution of August 4, 1932, agreed to pay
the aforesaid amount.
Plaintiff Juan E. Tuason having failed
to pay the remaining installments on the price of the 50,000
accumulative shares of series A, defendant corporation, by resolution
of its board of directors of November 10, 1932, declared said shares
forfeited in December, 1932.
On March 9, 1934, defendant
corporation demanded of plaintiff, through the letter Exhibit Q, the
reimbursement of the sum paid by it for documentary stamps.
On April 19, 1934, plaintiff, through his attorney, was notified by
said defendant corporation of the declaration of forfeiture
above-mentioned of the aforesaid 50,000 accumulative shares (Exhibit N).
On April 25, 1934, the corresponding documentary stamps were affixed to
the stub Exhibit S of certificate No. 8463 (Exhibit 5) by a committee
appointed by the Collector of Internal Revenue, which immediately
cancelled the same.
The main question to be decided in this
appeal is whether or not plaintiff was bound to reimburse defendant
corporation for the value of the documentary stamps which the committee
appointed by the Collector of Internal Revenue has affixed to
certificate No. 8463 for 50,000 shares of stock issued in the name of
said plaintiff.
The pertinent portion of section 1449 of the Revised Administrative Code as amended by Act No. 3709, reads as follows:
“SEC. 1449. Stamp tax upon documents and papers.—
Upon documents, instruments, and papers, and upon acceptances,
assignments, sales, and transfers of the obligation, right, or property
incident thereto documentary taxes for and in respect of the
transaction so had or accomplished shall be paid as hereinafter
prescribed, by the person making, signing, issuing, accepting, or
transferring the same, and at the time such act is done or transaction
had:* * * * * * *
(b)
On every original issue, whether on organization, reorganization, or
for any lawful purpose, of certificates of stock by any such
association, company, or corporation, on each two hundred pesos, or
fractional part thereof, of the par value of such certificate, twenty
centavos: Provided, That in the case of the original issue of
stock without par value the amount of the documentary stamp tax herein
required snail be based upon the actual consideration received by the
corporation for the issuance of such stock, and in the case of stock
dividends, on the actual value represented by each share.”
According to the legal provisions above quoted, it is the duty of the
corporation or company issuing original shares of stock to affix the
documentary stamps therein required on the issuance of said shares.
Now, what is meant by the word “issue”‘ as used in the corresponding
texts of said section 1449 (b) or the Administrative Code?
On pages 324, 325 of volume 11 of Fletcher’s Cyclopedia of Corporations, the following may be found:
“While
issuance or delivery of a certificate is not necessary to constitute
one a stockholder, delivery is, generally speaking, an essential
element of the issuance of certificates. So there is no issuance of a
certificate where it is never detached from the stock book although the
blanks therein are properly filled up, if the person whose name is
inserted therein has no control over the books of the company. But the
contrary has been held to be true where the persons sought to be held
as stockholders are officers or trustees of the company, and have the
custody of the stock book and can detach the certificates at any time.
It has also been held that stock is not issued where a certificate made
out in the name of the subscriber is never delivered to him but is
retained by the corporation as security for notes given by him for the
unpaid portion of his subscription; and this has been held to be true
even though the subscriber votes the stock and though dividends are
declared on it which are credited on the notes. Making out a
certificate and mailing it to a stockholder is an issue thereof.” (See also 14 Corpus Juris, pages 484, 485.)
The fact, therefore, that plaintiff received notice from defendant
corporation on February 19, 1932 that certificate of stock No. 8463,
issued in his favor, was at his disposal in the office of the company
to be there taken by him when he so desired or had time to do so, was
not sufficient for the purpose of considering said shares as issued in
the light of the authorities above-cited because plaintiff could not
dispose of said certificate inasmuch as he did not have control or
ownership of the books of defendant corporation. Furthermore, the
documentary stamps which the law requires to be affixed upon the
issuance of the shares of stock not having been affixed on said date,
the mere making of the certificate which represents the 50,000
accumulative shares of stock of series A for which plaintiff had
subscribed can not be considered as having the effect of issuing them.
While it is true that upon the discovery on August 1, 1932 by the
Collector of Internal Revenue that the corresponding documentary stamps
had not been attached to the certificate of shares of stock in
question, said official required the defendant company to pay P10,000
for said stamps and that in view of said demand, the board of directors
of the defendant company agreed on August 4, 1932 to pay said sum,
payment had not been made. In the meantime, by resolution of November
10, 1932, the same board of directors declared said shares of stock
forfeited in December, 1932 on account of failure of the plaintiff to
pay the remaining installments on the price of the said 50,000
accumulative shares of stock of series A, depriving the plaintiff in
this manner of all his rights over said shares of stock from the
aforementioned month of December, 1932. If the obligation to pay the
value of the documentary stamps which were affixed to the certificate
of stock—supposing that plaintiff had agreed with defendant corporation
to assume the same, which he, however, denies and no authentic evidence
in the affirmative has been shown—arises from the existence of said
right, upon the latter’s disappearance, the former can not exist upon
the principle that when there is no cause there can be no effect. When
more than one year after, or on April 2b, 1934, the committee appointed
by the Acting Collector of Internal Revenue affixed to the stub Exhibit
B of the said certificate No. 8463 the documentary stamps in question
and immediately cancelled them, plaintiff had no longer anything to do
with the shares of stock which represented said certificate, and he can
not now be made to answer for the payment of their value.
In
view of the foregoing, we are of the opinion and so hold: First, that
the mere making of a certificate of stock in the name of the subscriber
thereof by installments and its signing by the officers of a mutual
building and loan association, without affixing thereto the
corresponding documentary stamps, does not constitute an issue of said
certificate, notwithstanding the notice which the secretary of said
association might have sent to the said subscriber advising him of its
issuance and informing him that said certificate “was at his disposal
whenever he desired or had time to get it”; second, that a subscriber
of shares of stock in an association is not bound to pay the
documentary stamp tax required by law, unless he had agreed with the
association to assume payment thereof; and third, that even when there
is such an agreement, if before the issuance of the shares of stock the
right of the subscriber to the same is declared forfeited, said
subscriber is likewise not bound to pay said tax.
Wherefore,
finding no error in the judgment appealed from, the same is hereby
affirmed in all its parts, with costs against the appellant. So ordered.
Avanceña, C. J., Imperial, Diaz, and Laurel, JJ., concur.