GR No. L-23241, March 14, 1925 authorized to make the transfer. No transfer, FACTS: however, shall be valid, except as between Manuel Gonzales owns 5 shares of stocks. He the parties, until the transfer is entered and assigned and delivered these to Henry Fleischer in the form of noted upon the books of the corporation so endorsement together with other credits in consideration of a as to show the names of the parties to the large sum of money he owes Fleischer. transaction, the date of the transfer, the Dr. Eduardo Miciano offered to buy the 5 shares from number of the certificate, and the number of Fleischer at their par value of P100 a share, for P500. shares transferred. However, because of Botica Nolascos by-laws (Art. 12), the said corporation had the preferential right to buy from Thus, the holder of shares, as owner of personal Manuel Gonzales said shares at the par value of P100 a share, property, is at liberty, under said section, to dispose of them in. plus P90 as dividends. favor of whomsoever he pleases, without any other limitation in Fleischer refused to sell them to Botica. Thereafter, this respect, than the general provisions of law. Fleischer requested Dr. Miciano to register the shares in his In adopting said by-law the corporation has name. Dr. Miciano refused to do so saying that it is in violation transcended the limits fixed by law in the same section, and of the by-laws of the corporation. has not taken into consideration the provisions of section 35 of 2 days after the assignment of shares to Fleischer, the Corporation Code. Manuel Gonzales wrote to Botica requesting the shares to be It is well settled that by-laws of a corporation must be transferred to Fleischers name. However, Manuel Gonzales reasonable and for 'a corporate purpose, and always within the wrote again to Botica withdrawing and cancelling his charter limits. They must always be strictly subordinate to the statement. constitution and the general laws of the land. They must not Botica in turn replied that Manuel Gonzales latest infringe the policy of the state, nor be hostile to public welfare. letter conform to its by-laws. Thus, Botica registered the shares They must not disturb vested rights or impair the obligation of a in its name. contract, take away or abridge the substantial rights of Fleischer now files a Complaint against Botica stockholder or member, affect rights of property or create claiming ownership of the shares. obligations unknown to the law. Moreover, the by-law now in question cannot have ISSUE: Whether Art. 12 of the by-laws of Botica Nolasco is in any effect on the appellee. He had no knowledge of such by- conflict with the Corporation Code. law when the shares were assigned to him. He obtained them in good faith and for a valuable consideration. He was not a HELD: YES privy to the contract created by said by-law between the Art. 12 of the by-laws states that the corporation shareholder Manuel Gonzalez and the Botica Nolasco. creates in its favor a preferential right to buy, under the same Whenever a corporation refuses to transfer and conditions, the share or shares of stock of a retiring register stock in cases like the present, mandamus will lie to shareholder. compel the officers of the corporation to transfer said stock This is in conflict with the Corporation Code, Sec. 35 upon the books of the corporation. which states that: Shares of stock so issued are personal PETITION GRANTED. property and may be transferred by delivery of the certificate indorsed by the owner or