Case Summary (G.R. No. 123553)
Petitioner’s Allegations and Reliefs
Asserting ownership of 1,000 of the corporation’s 4,088 shares and service as treasurer and director, Bitong sought:
a) Injunctions restraining the Apostols from corporate management and share transfers;
b) Nullification of PDI share subscriptions by respondents;
c) Accounting and reconveyance of illicit profits and benefits;
d) Appointment of a management committee to safeguard assets;
e) Damages for mismanagement and fraud;
f) Directives to enforce Mr. & Ms. rights against PDI and third parties.
Respondents’ Narrative and Defenses
Respondents countered that Mr. & Ms. operated as a close corporation among original investors—including JAKA Investments Corp. (JAKA), Luis Villafuerte, Ramon Siy and the Apostols—and that Bitong held JAKA’s shares in trust rather than beneficially. They maintained that all advances to PDI were authorized and repaid with interest, and contended that Bitong lacked legal personality to bring a derivative suit because she was not a bona fide shareholder.
Procedural History Before the SEC
On December 6, 1990, the SEC Hearing Panel issued a preliminary injunction but denied the creation of a management committee. After trial, it dismissed the suit on August 3, 1993 for failure to prove serious mismanagement, dissolved the injunction, but provisionally deemed Bitong the real party-in-interest solely to resolve substantive issues. The SEC En Banc on January 24, 1994 reversed that dismissal, found fraud and conflict of interest, voided the August 19, 1993 sale of PDI shares to Edgardo B. Espiritu, ordered restitution to Mr. & Ms., and enjoined respondents from further management.
Court of Appeals Decision
Consolidating related appeals, the Court of Appeals on August 31, 1995 held that Bitong never acquired valid share ownership in Mr. & Ms. and thus lacked standing as the real party-in-interest. It ruled that SEC orders predicated on her standing were issued without jurisdiction and were null and void, and it dismissed her petition and granted Espiritu’s certiorari relief.
Supreme Court Issue: Standing in a Derivative Suit
Under the 1987 Constitution and the Corporation Code, a plaintiff in a derivative action must be a bona fide stockholder at the time of the alleged wrongdoing. The sole issue before the Supreme Court was whether Bitong met that standing requirement.
Judicial Admissions and Interlocutory Orders
The Court found respondents’ qualified admissions in their answer insufficient to establish Bitong’s share ownership as a binding judicial admission. It also noted that the SEC Hearing Panel’s December 1990 injunction was interlocutory (and not appealable) and that the August 1993 merits decision—which deemed Bitong the real party-in-interest only for substantive adjudication—was favorable to respondents and therefore not appealed by them.
Statutory Formalities for Stock Transfer
Section 63 of the Corporation Code mandates that valid stock transfers require a certificate signed by corporate officers, delivery of the certificate to the transferee, and registration of the transfer in the corporation’s books. Corporate records are prima facie but rebuttable evidence of ownership.
Evidence Against Petitioner’s Ownership
Bitong introduced Certificate of Stock No. 008 dated July 25, 1983, but it was signed by the president only on March 17, 1989. Corporate docum
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Parties and Procedural Posture
- Nora A. Bitong filed a derivative suit before the SEC on 5 July 1989 (SEC Case No. 03604) on behalf of Mr. & Ms. Publishing Co., Inc.
- Private respondents included the Apostol spouses, Letty J. Magsanoc, Adoracion G. Nuyda, Mr. & Ms. Publishing Co., Inc., and later Edgardo B. Espiritu.
- The SEC Hearing Panel issued a preliminary injunction (6 December 1990), then dismissed the suit after trial (3 August 1993).
- Bitong appealed to the SEC En Banc, which reversed the Hearing Panel (24 January 1994).
- Private respondents and Espiritu sought review in the Court of Appeals (consolidated CA-GR SP 33291 & SP 33873).
- On 31 August 1995 the CA reversed the SEC En Banc, dismissed Bitong’s complaint for lack of standing, and annulled SEC orders.
- Bitong elevated the case to the Supreme Court under G.R. No. 123553.
Factual Background
- Mr. & Ms. Publishing Co., Inc. was incorporated on 29 October 1976, succeeding Ex Libris Publishing Co., Inc.
- Original investors: JAKA Investments Corp. (JAKA), Luis Villafuerte, Ramon Siy, Jose A. Apostol, Ex Libris; respondent Eugenia Apostol managed the company.
- Bitong claimed she served as treasurer and director from incorporation until 11 April 1989, and held 1,000 of 4,088 shares.
- From 1983 to 1987, substantial cash advances (P3.276 million) were allegedly made by Mr. & Ms. to Philippine Daily Inquirer (PDI) without proper board resolutions or interest.
- Respondents were stockholders, directors and officers in both Mr. & Ms. and PDI; they subscribed to PDI shares funded by Mr. & Ms. but never repaid.
Petitioner's Allegations and Reliefs Sought
- Alleged fraud, misrepresentation, bad faith, conflict of interest, mismanagement by Eugenia and Jose Apostol.
- Sought:
- Injunction against Apostol spouses from managing or disposing assets except ordinary expenses.
- Injunction against disposing PDI shares held by Apostols, Magsanoc, Nuyda.
- Accounting and reconveyance of profits, advances, dividends.
- Damages for prejudice to Mr. & Ms. and its stockholders.
- Appointment of a management committee to protect corporate assets.
- Direction for management committee to pursue rights against PDI and third parties.
Private Respondents’ Counterclaims and Defenses
- Argued Bitong was only JAKA’s nominee—real party in interest was JAKA, not Bitong.