The precise question has not often been presented to the courts, for the reason,

probably, that they have with great uniformity held that stock certificates were not
negotiable instruments in the broad meaning of that phrase; but whenever the question
has a risen it has been held that the title of the true owner of a lost or stolen certificate
may be asserted against any one subsequently its possession although the holder may
be bona fide purchaser.

Besides, in Philippine jurisprudence, a certificate of stock is not a negotiable

instrument. "Although it is sometime regarded as quasi-negotiable, in the sense that it
may be transferred by endorsement, coupled with delivery, it is well-settled that it is
non-negotiable, because the holder thereof takes it without prejudice to such rights
or defenses as the registered owner/s or transferror's creditor may have under
the law, except insofar as such rights or defenses are subject to the limitations
imposed by the principles governing estoppel." (De los Santos vs. McGrath, 96 Phil.
577)

Why is a stock certificate not negotiable?

Because the holder thereof takes it without prejudice to such rights or defenses
as the registered owners or transferor’s creditor may have under the law, except
insofar as such rights or defenses are subject to the limitations imposed by the
principles governing estoppel. (De los Santos v. Republic, G.R. No. L-4818, Feb. 28,
1955)

:Requisites for Negotiability

Section 1. Form of negotiable instruments. - An instrument to be negotiable must

:conform to the following requirements

a) It must be in writing and signed by the maker or drawer

b) Must contain an unconditional promise or order to pay a sum certain in money

c) Must be payable on demand, or at a fixed or determinable future time

d) Must be payable to order or to bearer; and

e) Where the instrument is addressed to a drawee, he must be named or otherwise

indicated therein with reasonable certainty
How are shares of stock transferred?
1. If represented by a certificate, the following must be strictly complied with:
a. Indorsement by the owner and his agent
b. Delivery of the certificate
c. To be valid to third parties, the transfer must be recorded in the books of the
corporation. (Rural Bank of Lipa v. CA, G.R. No. 124535, Sept 28, 2001).
2. If not represented by a certificate (such as when the certificate has not yet been
issued or where for some reason is not in the possession of the stockholder).
a. By means of deed of assignment: and
b. Such is duly recorded in the books of the corporation.

What are the requirements for a valid transfer of stock?

1. The certificate of stock must be duly endorsed by the transferor or his legal
representative.
2. There must be delivery of the stock certificate.
3. To be valid against third parties, the transfer must be recorded in the books of the
corporation. (G.R. No. 124535, September 28, 2001)