Corporation Law: The Revised Corporation Code of the Philippines - Sec 72

THE REVISED CORPORATION CODE  OF THE PHILIPPINES 

Republic Act No. 11232 

TITLE VII - STOCKS AND STOCKHOLDERS

Section 72. Lost or Destroyed Certificates.

The following procedure shall be followed by a corporation in issuing new certificates of stock in lieu of those which have been lost, stolen or destroyed:

(a) The registered owner of a certificate of stock in a corporation or such person's legal representative shall file with the corporation an affidavit in triplicate setting forth, if possible, the circumstances as to how the certificate was lost, stolen or destroyed, the number of shares represented by such certificate, the serial number of the certificate and the name of the corporation which issued the same. The owner of such certificate of stock shall also submit such other information and evidence as may be deemed necessary; and

(b) After verifying the affidavit and other information and evidence with the books of the corporation shall publish a notice in a newspaper of general circulation in the place where the corporation has its principal office, once a week for three (3) consecutive weeks at the expense of the registered owner of the certificate of stock which has been lost, stolen or destroyed. The notice shall state the name of the corporation, the name of the registered owner, the serial number of the certificate, the number of shares represented by such certificate, and shall state that after the expiration of one (1) year from the date of the last publication, if no contest has been presented to the corporation regarding the certificate of stock, the right to make such contest shall be barred and the corporation shall cancel the lost, destroyed or stolen certificate of stock, the right to make such contest shall be barred and the corporation shall cancel the lost, destroyed or stolen certificate of stock in its books. In lieu thereof, the corporation shall issue a new certificate of stock, unless the registered owner files a bond or other security as may be required, effective for a period of one (1) year, for such amount and in such form and with such sureties as may be satisfactory to the board of directors, in which case a new certificate may be issued even before the expiration of one (1) year period provided herein. If a contest has been presented to the corporation or if an action is pending in court regarding the ownership of the certificate of stock which has been lost, stolen in lieu thereof shall be suspended until the court renders a final decision regarding the ownership of the certificate of stock which has been lost, stolen ore destroyed.

Except in case of fraud, bad faith, or negligence on the part of the corporation and its officers, no action may be brought against any corporation which shall have issued certificate of stock in lieu of those lost, stolen or destroyed pursuant to the procedure above-described.

1. Rationale. 
  • The provision is designed to protect not only the real owner but the corporation as well. 
  • The real owner is protected against improvident issuance of another certificate and at the same time, Section 72 provides some sort of a shield to the corporation and its officers to prevent them from being made liable. 
  • Under Section 72, except in case of fraud, bad faith, or negligence on the part of the corporation and its officers, no action may be brought against any corporation which shall have issued a certificate of stock in lieu of that which is lost, stolen or destroyed pursuant to the procedure provided in the law. 
 2. When Applicable. 
  • Section 72 applies only if the certificates are lost, stolen or destroyed.
  • If the certificates are available but are just worn out, Section 72 does not apply and it is up to the corporation to decide if it will replace the certificates.
    • The provision is not also applicable if the certificate was never issued to the shareholder because it was not delivered by the corporation. 
    •  Section 72 does not apply if it is the corporation itself that loses the certificates before delivery.
3. Outline of Procedure.
  • The procedure under Section 72 may be summarized in this wise: 
  1. Affidavit. 
    • The registered owner shall execute and file an affidavit providing details about the shares represented by the lost certificate and the circumstances regarding its loss/ destruction;
  2. Verification. 
    • The corporation shall verify the affidavit and other information and evidence with the books of the corporation; 
  3. Publication. 
    • The corporation shall publish a notice in a newspaper of general circulation in the place where the corporation has its principal office, once a week for three consecutive weeks at the expense of the registered owner of the certificate of stock that has been lost, stolen or destroyed;
  4. One-Year Waiting Period. 
    • There shall be a waiting period of one year from the date of the last publication during which a contest can be interposed;
  5. Contest. 
    • If a contest has been presented to the corporation or if an action is pending in court regarding the ownership of the certificate of stock which has been lost, stolen or destroyed, the issuance of the new certificate of stock in lieu thereof shall be suspended until the final decision by the court regarding the ownership of said certificate of stock; and 
  6. Replacement. 
    • If there is no contest within the one-year period, the corporation shall then replace the certificate. 
    • The replacement of the certificate can only be made before the expiration of the one-year period if a bond is posted. 
    • Section 72 provides that in case the registered owner files a bond or other security in lieu thereof as may be required, effective for a period of one year, for such amount and in such form and with such sureties as may be satisfactory to the Board of Directors, a new certificate in lieu of one lost, stolen or destroyed may be issued even before the expiration of the one-year period. 
 4. Contents of Notice.
  • The notice shall state:
  1. the name of the corporation
  2. the name of the registered owner of the certificate
  3. the serial number of the certificate
  4. the number of shares represented by the certificate, and
  5. that after the expiration of one year from the date of the last publication, if no contest has been presented to the corporation regarding the certificate of stock, the right to make such contest shall be barred and the corporation shall cancel in its books the certificate of stock which has been lost, stolen or destroyed and issue in lieu thereof a new certificate of stock.
  • The requirements of Section 72 are mandatory in nature. 
  • For instance, all the facts indicated in Section 72 should be stated in the notice.
  • However, substantial compliance is also acceptable.


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