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Bitong vs.

CA
Ownership of Corporate Shares/ Stock Certificates: Valid Issuance
Facts: Bitong was the treasurer and member of the BoD of Mr. & Mrs. Corporation. She filed a
complaint with the SEC to hold respondent spouses Apostol liable for fraud, misrepresentation,
disloyalty, evident bad faith, conflict of interest and mismanagement in directing the affairs of the
corporation to the prejudice of the stockholders. She alleges that certain transactions entered into by
the
corporation
were
not
supported
by
any
stockholders
resolution.
The complaint sought to enjoin Apostol from further acting as president-director of the corporation and
from disbursing any money or funds. Apostol contends that Bitong was merely a holder-in-trust of the
JAKA shares of the corporation, hence, not entitled to the relief she prays for. SEC Hearing Panel issued
a
writ
enjoining
Apostol.
After hearing the evidence, SEC Hearing Panel dissolved the writ and dismissed the complaint filed by
Bitong. Bitong appealed to the SEC en banc. The latter reversed SEC Hearing Panel decision. Apostol
filed petition for review with the CA. CA reversed SEC en banc ruling holding that Bitong was not the
owner of any share of stock in the corporation and therefore, not a real party in interest to prosecute
the complaint. Hence, this petition with the SC.
Issue: Whether or not Bitong was the real party in interest.
Held: Based on the evidence presented, it could be gleaned that Bitong was not a bona fide
stockholder of the corporation. Several corporate documents disclose that the true party in interest
was
JAKA.
Although her buying of the shares were recorded in the Stock and Transfer Book of the corporation,
and as provided by Sec. 63 of the Corp Code 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, this provision is
not conclusive even against the corporation but are prima facie evidence only. Parol evidence may be
admitted to supply the omissions in the records, explain ambiguities, or show what transpired where
no records were kept, or in some cases where such records were contradicted. Besides, the provision
envisions a formal certificate of stock which can be issued only upon compliance with certain
requisites: (1) certificates must be signed by the president or vice president, countersigned by the
secretary or assistant secretary, and sealed with the seal of the corporation, (2) delivery of the
certificate; (3) the par value, as to par value shares, or the full subscription as to no par value shares,
must be first fully paid; (4) the original certificate must be surrendered where the person requesting
the
issuance
of
a
certificate
is
a
transferee
from
a
stockholder.
These considerations are founded on the basic principle that stock issued without authority and in
violation of the law is void and confers no rights on the person to whom it is issued and subjects him to
no liabilities. Where there is an inherent lack of power in the corporation to issue the stock, neither the
corporation nor the person to whom the stock is issued is estopped to question its validity since an
estoppel cannot operate to create stock which under the law cannot have existence.