8/10/2019 Padgett vs. Bobcock & Templeton Inc. December 21,

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Padgett vs. Bobcock: Corporation- transfer of shares

05/21/2013

PADGETT vs. BOBCOCK & TEMPLETON INC.December 21, 1933; G.R. No. L-38684

Issues:1. Whether or not the Corporation can limit the transfer of sharessuch as putting a "no transfer clause" in the certificate of stocks.2. Whether or not a stockholder compel the corporation to buy theshares at its par value.Facts:

Plaintiff Padgett was an employee of defendant corporation. Through

the persuasive encouragement of corporation's director plaintiff

bought shares of stocks of the corporation at issued par value of 100

pesos per share. The corporation issued a 11 certificate of stocks

containing the word "nontransferable." Before ending his service to

the corporation plaintiff ask the corporation to buy back the shares of

stock at issued par value plus interest thereon. The corporation

offered to buy the stocks at 85 pesos per share. Plaintiff refused to

sell it at said price hence this petition.

Held:

1. No. "Shares of corporate stock being regarded as property, the

owner of such shares may, as a general rule,dispose of them as he

sees fit, unless the corporation has been dissolved, or unless the rightto do so is properly restricted, or the owner's privilege of disposing of

his shares has been hampered by his own action."

"Any restriction on a stockholder's right to dispose of his shares must

be construed strictly; and nay attempt to restrain a transfer of shares

is regarded as being in restraint of trade, in the absence of a v

upon its shares, and except to the extent that valid restrictive

regulations and agreements exists and are applicable.Subject

such restrictions, a stockholder cannot be controlled in or rest

from exercising his right to transfer by the corporation of its o

or by other stockholders, even though the sale is to a competi

the company, or to an insolvent person, or even though a con

interest is sold to one purchaser."

2. As we have hereinbefore stated, there is no existing law no

authority in support of the plaintiff's claim to the effect that th

defendants are obliged to buy his shares of stock value at par

plus the interest demanded thereon. In this respect, we hold t

there has been no such contract, either express or implied, be

the plaintiff and the defendants. In the absence of a similar

contractual obligation and of a legal provision applicable there

logical to conclude that it would be unjust and unreasonable t

compel the said defendants to comply with a non-existent or

imaginary obligation. Whereupon, we are likewise compelled t

conclude that the judgment originally rendered to that effect i

untenable and should be set aside."

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