BITONG v.
CA recording in the stock and transfer book can exercise all the rights as stockholder,
Petitioner: Nora Bitong
Respodent: CA, Apostol, Mr. & Ms. Publishing, Magsanoc. Ayuda
Author: De Luna
FACTS: Nora Bitong is the treasurer and member of the BOD of Mr. & Ms.
Publishing Co. She made a complaint before the SEC about irregularities
committed by the Eugenia Apostol, the President and Chairperson of the BOD.
She complained that all transactions and agreements entered into by the
company with Philippine Daily Inquirer were not supported by any bond and/or
stockholder resolution. And, upon instructions of Eugenia D. Apostol, Mr. &
Ms. made several cash advances to PDI on various occasions amounting to P3.276
million. There existed no board o stockholder resolution for the advances, nor
contract or any other document that could legally authorized it.
On the hand, respondent Apostol averred hat all he PDI shares owned by
the Apostols were acquired through their own private funds; Furthermore,
reposndents argued that Bitong was not the true party to this case, the real party
being JAKA Investments. Respondents contends that Bitong is merely a holder-
in-trust of JAKA shares, only represented and continued to represent JAKA in the
board. But Bitong testified that she became the registered and beneficial owner
of 997 shares owned by JAKA through a deed of sale and it was recorded in the
Stock and Tranfer Book of Mr. & Ms.
SEC Hearing Panel dismissed that case finding no serious
mismanagement of Mr. & Ms. But SEC En Banc reversed and ordered the
respodents to return all funds and assets they disbursed as a result of their
investments in PDI for reasons of fraud, mismanagement, disloyalty and conflict
of interest.
However, CA reversed the decision of SEC En Banc and held that BIytong
was not the owner of any share of stock in Mr. & Ms. And therefore not a real
party-in-interest. Bitong was only an agnet and could not file a derivative suit on
behalf of her principal. Thus, her complaint did not state a cuase of action
ISSUE: WON Bitong is a shareholder, hence a real party-in-interest.
HELD:
Bitong contends that the she was a holder of the proper certificate of
shares of stock and that the transfer was recorded in the books of Mr. & Ms. She
invokes Sec. 63 of The Corporation Code which provides that no transfer shall be
valid except as between the parties until the transfer is recorded in the books of
the corporation, and upon its recording the corporation is bound by it and is
estopped to deny the fact of transfer of said shares. Shealleges that even in the
absence of the stock certificate, stockholder solely on the strength of the
including the right to file a derivative suit in the name of the corporation.
According to the Court, once the stock certificate is issued it is a
representation that it is valid and genuine, and is at least prima facie evidence
that it was legally issued in the absence of evidence to the contrary. However, this
presumption may be rebutted. The books and records of a corporation are not
conclusive even against the corporation but are prima facie evidence only. The
effect of entries in the books of the corporation stockholders can be destroyed by
testimony of a more conclusive character than mere suspicion that there was an
irregularity.
As found by the Hearing Panel and affirmed by respondent Court of Appeals,
there is overwhelming evidence that despite what appears on the certificate
of stock and stock and transfer book, petitioner was not a bona
fide stockholder of Mr. & Ms. at thet ime the acts were committed to qualify
her to institute a stockholder derivative suit against the respondents.
Several corporate documents disclose that the true party-in-interest is not
petitioner but JAKA.
Furthermore, it was admitted by Bitong the stock certificates were not yet
been signed on 1983, at the time of filing of the complaint with the SEC, although
they were issued years before.
The Certificate of Stock No. 008 was only legally issued on 17 March 1989
when it was actually signed by the President of the corporation. While a
certificate of stock is not necessary to make one a stockholder, it is supposed to
serve as paper representative of the stock itself and of the owners interest
therein. Hence, when Certificate of Stock was admittedly signed and issued only
on 1989 and not on 1983.
But, Bitong counters that it was Sen. Enrile, shareholder of the company who
sold the to Bitong the shres of JAKA. However, records shows the contrary. It
shows that sale was executed by JAKA transferring 1,000 shares of Mr. & Ms. to
respondent Apostol and not to Bitong.
It should be emphasized that JAKA executed a deed of sale over
1,000 Mr. & Ms. shares in favor of respondent Eugenio D. Apostol. On the
same day, respondent Apostol signed a declaration of trust stating that she
was the registered owner of 1,000 Mr. & Ms. shares covered by Certificate of
Stock. The declaration of trust further showed that although respondent Apostol
was the registered owner, she held the shares of stock and dividends which might
be paid in connection therewith solely in trust for the benefit of JAKA, her
principal. And, there is nothing in the records which shows that JAKA had
revoked the trust it reposed on respondent Eugenia D. Apostol.
The rule is that the endorsement of the certificate of stock by the
owner or his attorney-in-fact or any other person legally authorized to
make the transfer shall be sufficient to effect the transfer of shares only if
the same is coupled with delivery. Thedelivery of the stock certificate duly
endorsed by the owner is the operative act of transfer of shares from the
lawful owner to the new transferee.
 Thus, for a valid transfer of stocks, the requirements are as follows:
(a) There must be delivery of the stock certificate;
(b) The certificate must be endorsed by the owner or his attorney-in-fact or
other persons legally authorized to make the transfer; and,
(c) to be valid against third parties, the transfer must be recorded in the
books of the corporation.
At most, in the instant case, petitioner has satisfied only the third
requirement. Compliance with the first two requisites has not been clearly and
sufficiently shown. Thus, his bona fide ownership was not proven, hence no
standing to institute a derivative suit.
Hence, based on the foregoing, the petition is denied.