PARTIES INVOLVED: ISSUE:
Makati Sports  MAKATI SPORTS CLUB, INC.– Acting in his capacity as
Club, Inc. v Cheng receiver of the Mercantile Bank of China.
 CECILE H. CHENG – Treasurer and Director of the Makati
Sports Club Inc.
 MC FOODS, INC – Interested buyer of plaintiff’s shares.
 RAMON SABARRE - Sy has an account with the Mercantile
Bank of China in the form of “Trust Receipts”
HOW THE CASE STARTED:
 On October 20, 1994, plaintiff’s Board of Directors adopted a
resolution authorizing the sale of 19 unissued shares at a floor
price of P400,000 and P450,000 per share for Class A and B,
respectively.
 On July 7, 1995, one Hodreal expressed his interest to buy a
share, for this purpose he sent the letter. In said letter, he
requested that his name be included in the waiting list.(buti
pa sya marunong maghintay)
 Sometime in November 1995, McFoods expressed interest in
acquiring a share of the plaintiff, and subsequently it was
acquired with the payment to the plaintiff by McFoods of
P1,800,000 through Urban Bank
 On December 15, 1995, the Deed of Absolute Sale, was
executed by the plaintiff and McFoods Stock Certificate No. A
2243 was issued to McFoods on January 5, 1996.
 On December 27, 1995, McFoods sent a letter to the plaintiff
giving advise of its offer to resell the share.
 It appears that while the sale between the plaintiff and
McFoods was still under negotiations, there were
negotiations already between McFoods and Hodreal for the
purchase by the latter of a share of the plaintiff.
 On November 24, 1995, Hodreal paid McFoods P1,400,000.
Another payment of P1,400,000 was made by Hodreal to
McFoods on December 27, 1995, to complete the purchase
price of P2,800,000.
 On February 7, 1996, plaintiff was advised of the sale by
McFoods to Hodreal of the share evidenced by Certificate No.
2243 for P2.8 Million.
 Upon request, a new certificate was issued. In 1997, an
investigation was conducted and the committee held that
there is prima facie evidence to show that defendant Cheng
profited from the transaction because of her knowledge.
 Thus, petitioner sought judgment that would order
respondents to pay the sum of P1,000,000.00, representing
 W/N Cheng in collaboration with Mc Foods committed fraud in
the transaction/transfer of the stock?
DEED OF ABSOLUTE SALE
 Punzalan declared that, in December 1995, she received a Deed
of Absolute Sale between MSCI and Mc Foods of a Class A share
for P1,800,000.00 signed by Atty. Rico Domingo and Cheng, in
their respective capacities as then President and Treasurer of
MSCI, and by Ramon Sabarre, as President of Mc Foods, what she
merely did was to inquire from her immediate superior Becky
Pearanda what share to issue; and the latter, in turn, replied that
it should be an original share.
 Thereafter, Punzalan prepared a letter, signed by then corporate
secretary, Atty. Rafael Abiera, to be sent to MSCIs stock transfer
agent for the issuance of the corresponding certificate of stock.
Then, Certificate A 2243 was issued in favor of Mc Foods on
January 5, 1996.
 Charged with ascertaining the compliance of all the requirements
for the purchase of MSCIs shares of stock, the Membership
Committee failed to question the alleged irregularities attending
Mc Foods purchase of one Class A share at P1,800,000.00
 In fact, the purchase price of P1,800,000.00 cannot be said to be
detrimental to MSCI, considering that it is the same price paid for
a Class A share in the last sale of an original share to Land Bank
of the Philippines on September 25, 1995, and in the sale by
Marina Properties Corporation to Xanland Properties, Inc. on
October 23, 1995.
 These circumstances have not been denied by MSCI. What is
more, the purchase price of P1,800,000.00 is P1,400,000.00 more
than the floor price set by the MSCI Board of Directors for a Class
A share in its resolution dated October 20, 1994.
 Further, considering that Mc Foods tendered its payment of
P1,800,000.00 to MSCI on November 28, 1995, even assuming
arguendo that it was driven solely by the intent to speculate on
the price of the share of stock, it had all the right to negotiate and
transact, at least on the anticipated and expected ownership of
the share, with Hodreal.
 In other words, there is nothing wrong with the fact that the first
installment paid by Hodreal preceded the payment of Mc Foods
for the same share of stock to MSCI because eventually Mc Foods
became the owner of a Class A share covered by Certificate A
2243.
 Upon payment by Mc Foods of P1,800,000.00 to MSCI and the
execution of the Deed of Absolute Sale on December 15, 1995, it
 the amount allegedly defrauded, together with interest and
damages.
RTC
 Dismissed the complaint
 Hence the appeal to the CA
CA
 Affirmed RTC decision
Hence this petition
MSCI INSIST’S THAT
 Cheng, in collaboration with Mc Foods, committed fraud in
transacting the transfers involving Stock Certificate No. A
2243 (Certificate A 2243) on account of the following
circumstances:
 1.) On November 24, 1995, Joseph L. Hodreal (Hodreal) paid
the first installment of P1,400,000.00 for the purchase of a
Class A share in favor of Mc Foods;
 2.) on November 28, 1995, Mc Foods deposited to MSCIs
account an Allied Banking Corporation managers check for
the purchase of the same share in the amount of
P1,800,000.00, sans an official receipt from MSCI;
 3.) On December 15, 1995, MSCI and Mc Foods executed a
Deed of Sale for the purchase of a Class A share.
 4) on December 27, 1995, Hodreal paid the last installment of
P1,400,000.00 to Mc Foods;
 5) on December 27, 1995, Mc Foods sent a letter to MSCI,
offering to sell its purchased share of stock in the amount of
P2,800,000.00;
 6) on January 5, 1996, Certificate A 2243 was issued to Mc
Foods by MSCI; and
 7) on January 29, 1996, Mc Foods and Hodreal executed a
Deed of Sale for the same share of stock.
 In other words MSCI asserts that Mc Foods never intended to
become a legitimate holder of its purchased Class A share but
did so only for the purpose of realizing a profit in the amount
of P1,000,000.00 at the expense of the former.
then had the right to demand the delivery of the stock certificate
in its name. The right of a transferee to have stocks transferred to
its name is an inherent right flowing from its ownership of the
stocks.
VIOLATION OF PRE-EMPTIVE RIGHTS
 As provided by MSCI’s By-Laws:
Sale of Shares of Stockholder. Where the registered owner of
share of stock desires to sell his share of stock, he shall first offer
the same in writing to the Club at fair market value and the club
shall have thirty (30) days from receipt of written offer within
which to purchase such share, and only if the club has excess
revenues over expenses (unrestricted retained earning) and with
the approval of two-thirds (2/3) vote of the Board of Directors. If
the Club fails to purchase the share, the stockholder may dispose
of the same to other persons who are qualified to own and hold
shares in the club. If the share is not purchased at the price
quoted by the stockholder and he reduces said price, then the
Club shall have the same pre-emptive right subject to the same
conditions for the same period of thirty (30) days. Any transfer of
share, except by hereditary succession, made in violation of these
conditions shall be null and void and shall not be recorded in the
books of the Club.
The share of stock so acquired shall be offered and sold by the
Club to those in the Waiting List in the order that their names
appear in such list, or in the absence of a Waiting List, to any
applicant
 December 27, 1995, when Mc Foods offered for sale one Class A
share of stock to MSCI for the price of P2,800,000.00 for the latter
to exercise its pre-emptive right as required by Section 30(e) of
MSCIs Amended By-Laws, it legally had the right to do so since it
was already an owner of a Class A share by virtue of its payment
on November 28, 1995, and the Deed of Absolute Share dated
December 15, 1995, notwithstanding the fact that the stock
certificate was issued only on January 5, 1996.
 Therefore, Mc Foods properly complied with the requirement of
Section 30(e) of the Amended By-Laws on MSCIs pre-emptive
rights. Without doubt, MSCI failed to repurchase Mc Foods Class
A share within the thirty (30) day pre-emptive period as
provided by the Amended By-Laws.
 It was only on January 29, 1996, or 32 days after December 28,
1995, when MSCI received Mc Foods letter of offer to sell the

PARTIES INVOLVED:
Bitong v CA
NORA A. BITONG (Petitioner)
Sundin kasi lahat
ng requirements CA, EUGENIA D. APOSTOL, JOSE A. APOSTOL, MR. & MS.
hindi yung kulang PUBLISHING CO.,
LETTY J. MAGSANOC, AND ADORACION G. NUYDA (Respondents)
HOW THE CASE STARTED:
 Bitong had been the Treasurer and a Member of the Board of
Directors of Mr. & Ms. from the time it was incorporated on 29
October 1976 to 11 April 1989, and was the registered owner
of 1,000 shares of stock out of the 4,088 total outstanding
shares, petitioner complained of irregularities committed
from 1983 to 1987 by Eugenia D. Apostol, President and
Chairperson of the Board of Directors.
 Petitioner claimed that except for the sale of the name
Philippine Inquirer to Philippine Daily Inquirer (PDI) all other
share, that Mc Foods and Hodreal executed the Deed of Absolute
Sale over the said share of stock. While Hodreal had the right to
demand the immediate execution of the Deed of Absolute Sale
after his full payment of Mc Foods Class A share, he did not do so.
 The corporations obligation to register is ministerial upon the
buyers acquisition of ownership of the share of stock. The
corporation, either by its board, its by-laws, or the act of its
officers, cannot create restrictions in stock transfers.
CHENG x McFoods?
 The mere fact that she performed acts upon authority of Mc
Foods, i.e., receiving the payments of Hodreal in her office and
claiming the stock certificate on behalf of Mc Foods, do not by
themselves, individually or taken together, show badges of fraud,
since Mc Foods did acts well within its rights and there is no proof
that Cheng personally profited from the assailed transaction.
Even the statement of MSCI that Cheng doctored the books to give
a semblance of regularity to the transfers involving the share of
stock covered by Certificate A 2243 remains merely a plain
statement not buttressed by convincing proof.
FALLO: WHEREFORE, the petition is DENIED for lack of merit. The
Decision dated June 25, 2007 of the Court of Appeals in CA-G.R. CV No.
80631, affirming the decision dated August 20, 2003 of the Regional Trial
Court, Branch 138, Makati City in Civil Case No. 01-837, is AFFIRMED.
Costs against petitioner.
ISSUE: W/N Bitong is the true holder of stock certificates to be able
institute a derivative suit (NO)
 Sec 63 of the Corporation Code envisions a formal certificate
of stock which can be issued only upon compliance with
certain requisites:
First, the 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. A mere typewritten statement
advising a stockholder of the extent of his ownership in a corporation
without qualification and/or authentication cannot be considered as a
formal certificate of stock.
Second, delivery of the certificate is an essential element of its
issuance. There is no issuance of a stock certificate where it is never
detached from the stock books although blanks therein are properly filled
 transactions and agreements entered into by Mr. & Ms. with
PDI were not supported by any bond and/or stockholders
resolution and upon instructions of Eugenia D. Apostol, Mr. &
Ms. made several cash advances to PDI on various occasions
amounting to P3.276 million. On some of these borrowings
PDI paid no interest whatsoever. Despite the fact that the
advances made by Mr. & Ms. to PDI were booked as advances
to an affiliate, there existed no board or stock holders
resolution, contract nor any other document which could
legally authorize the creation of and support to an affiliate.
 Respondent spouses moved to dismiss on the ground that
petitioner had no legal standing to bring the suit as she was
merely a holder-in-trust of shares of JAKA Investments which
continued to be the true stockholder of Mr. & Ms.
 The SEC Hearing Panel issued a writ of preliminary injunction
enjoining private respondents from disbursing any money
except for the payment of salaries and other similar expenses
in the regular course of business.
 Petitioner testified at the trial that she became the registered
and beneficial owner of 997 shares of stock of Mr. & Ms. out of
the 4,088 total outstanding shares after she acquired them
from JAKA through a deed of sale executed on 25 July 1983
and recorded in the Stock and Transfer Book of Mr. & Ms.
under Certificate of Shares of Stock No. 008. She pointed out
that Senator Enrile decided that JAKA should completely
divest itself of its holdings in Mr. & Ms. and this resulted in the
sale to her of JAKAs interest and holdings in that publishing
firm.
 Private respondents refuted the statement of petitioner that
she was a stockholder of Mr. & Ms. since 25 July 1983.
 The SEC Hearing Panel dismissed the derivative suit filed by
petitioner and dissolved the writ of preliminary injunction
barring private respondents from disposing of their PDI
shares and any of Mr. & Ms. assets. The Hearing Panel ruled
that there was no serious mismanagement of Mr. & Ms. which
would warrant drastic corrective measures. The Apostol
spouses sold the PDI shares registered in the name of their
holding company, JAED Management Corporation, to Edgardo
B. Espiritu. Bitong appealed to the SEC En Banc.
 The SEC En Banc reversed the decision of the Hearing Panel.
The SEC En Banc also declared the August 1993 sale of the PDI
shares of JAED Management Corporation to Edgardo B.
Espiritu to be tainted with fraud, hence, null and void, and
considered Mr. & Ms. as the true and lawful owner of all the
up if the person whose name is inserted therein has no control over the
books of the company.
Third, the par value, as to par value shares, or the full subscription as
to no par value shares, must first be fully paid.
Fourth, the original certificate must be surrendered where the
person requesting the issuance of a certificate is a transferee from a
stockholder.
 The certificate of stock itself once issued is a continuing
affirmation or representation that the stock described therein 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.
Aside from petitioner’s own admissions, several corporate documents
disclose that the true party-in-interest is not petitioner but JAKA. 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 a Certificate of
Stock. There is nothing in the records which shows that JAKA had
revoked the trust it reposed on respondent Eugenia D. Apostol.
Neither was there any evidence that the principal had requested her to
assign and transfer the shares of stock to petitioner. In fine, the records
are unclear on how petitioner allegedly acquired the shares of stock
of JAKA.
 For a valid transfer of stocks, the requirements are as
follows:
First, there must be delivery of the stock certificate;
Second, the certificate must be endorsed by the owner or his attorney-in-
fact or other persons legally authorized to make the transfer;
Third, to be valid against third parties, the transfer must be recorded in
the books of the corporation.
 Petitioner has satisfied only the third requirement.
Compliance with the first two requisites has not been clearly
and sufficiently shown.
 PDI shares acquired by respondents Eugenia D. Apostol,
Magsanoc and Nuyda.
 Apostol spouses, Magsanoc, Nuyda, and Mr. & Ms. filed a
petition for review before respondent Court of Appeals.
dgardo B. Espiritu filed a petition for certiorari and
prohibition also before respondent Court of Appeals.
The CA rendered a decision reversing the SEC En Banc and held that
from the evidence on record petitioner was not the owner of any share
of stock in Mr. & Ms. and therefore not the real party-in-interest to
prosecute the complaint she had instituted against private
respondents. Petitioner alone and by herself as an agent could not file
a derivative suit in behalf of her principal. For not being the real party-
in-interest, petitioners complaint did not state a cause of action, a
defense which was never waived; hence, her petition should have been
dismissed. They also ruled that the assailed orders of the SEC were
issued in excess of jurisdiction, or want of it, and thus were null and
void.
 The basis of a stockholders suit is always one in equity. However,
it cannot prosper without first complying with the legal
requisites for its institution. The most important of these is the
bona fide ownership by a stockholder of a stock in his own right
at the time of the transaction complained of which invests him
with standing to institute a derivative action for the benefit of the
corporation.
FALLO: WHEREFORE, the petition is DENIED. The 31 August 1995
Decision of the Court of Appeals dismissing the complaint of petitioner
Nora A. Bitong in CA-G.R. No. SP 33291, and granting the petition for
certiorari and prohibition filed by respondent Edgardo B. Espiritu as well
as annulling the 5 November 1993, 24 January 1994 and 18 February
1994 Orders of the SEC En Banc in CA-G.R. No. SP 33873, is AFFIRMED.
Costs against petitioner.
SO ORDERED.