BLTB Vs Bitanga

BLTB vs.
BITANGA
TOPIC: Certificate of Stock and Transfer of Shares
DOCTRINE: Until registration is accomplished, the transfer,
though valid between the parties, cannot be effective as
against the corporation. Thus, the unrecorded transferee, the
Bitanga group in this case, cannot vote nor be voted for.
FACTS:
1. On October 28, 1997, Dolores Potenciano, Max Joseph
Potenciano, Mercedelin Potenciano, Delfin Yorro, and
Maya Industries, Inc., entered into a Sale and Purchase
Agreement, whereby they sold to BMB Property
Holdings, Inc., represented by its President, Benjamin
Bitanga, their 21,071,114 shares of stock in BLTB.
2. The said shares represented 47.98% of the total
outstanding capital stock of BLTB. A downpayment was
made while the balance was payable on November 26,
1997.
3.
The contracting parties stipulated that the
downpayment was conditioned upon receipt by the
buyer of certain documents upon signing of the
Agreement, namely among others, a Declaration of
Trust made by the sellers in favor of the buyer
acknowledging that the subject shares shall be held in
trust by the sellers for the buyer pending their transfer
to the latter's name.
4. A month after the agreement was executed, November
21, 1997, at a meeting of the stockholders of BLTB,
Benjamin Bitanga and Monina Grace Lim were elected
as directors of the corporation.
5. Subsequently, on November 28, 1997, another
stockholders' meeting was held, wherein Laureano A.
Siy and Renato L. Leveriza were elected as directors.
6. During a meeting of the Board of Directors on April 14,
1998, the newly elected directors of BLTB scheduled
the annual stockholders' meeting on May 19, 1998.
Before the scheduled meeting, Michael Potenciano
wrote
Benjamin
Bitanga,
requesting
for
a
postponement of the stockholders' meeting due to the
absence of a thirty-day advance notice. However, no
response from Bitanga on whether or not the request
for postponement was favorably acted upon.
7. On the scheduled date of the meeting, a meeting of
postponement was posted in Manila Bulletin. Inasmuch
as there was no notice of postponement prior to that, a
total of 286 stockholders, representing 87% of the
shares of stock of BLTB, arrived and attended the
meeting. The majority of the stockholders present
rejected the postponement and voted to proceed with
the meeting. The Potenciano group was re-elected to
the Board of Directors, and a new set of officers was
thereafter elected.
8. Bitanga group refused to relinquish their position. On
May 21, 1998, the Bitanga group filed with the SEC a
Complaint for Damages and Injunction.
9. On June 8, 1998, the Bitanga group filed another
complaint with application for a writ of preliminary
injunction and prayer for temporary restraining order.
On June 17, 1998, the SEC Hearing Panel granted the
Bitanga group's application for a writ of preliminary
injunction upon the posting of a bond in the amount of
P20,000,000.00.
a. Michael Potenciano had himself asked for its
postponement due to improper notice;
b. Second, there was no quorum, since BMB
Holdings, Inc., represented by the Bitanga
group, which then owned 50.26% of BLTB's
shares having purchased the same from the
Potenciano group, was not present at the said
meeting.
i. Bitanga Board remains the legitimate
Board in a hold-over capacity.
10.The Potenciano group filed a petition for certiorari with
the SEC En Banc on June 29, 1998, seeking a writ of
preliminary injunction to restrain the implementation

of the Hearing Panel's assailed Order.
11. Meanwhile, on July 29, 1998, the SEC En Banc issued
a writ of preliminary injunction against the Bitanga
group, after the Potencianos posted the required bond
of P20,000,000.00.
12.CA reversed the assailed Orders of the SEC En Banc
and reinstating the Order of the Hearing Panel ordered
dated June 17, 1998. The CA denied the Motions for
Reconsideration in a Resolution dated March 25, 1999.
Hence, this petition for review.
ISSUE: Whether or not the stockholders' meeting on May 19,
1998 was void since BMB Holdings, Inc., represented by the
Bitanga group was not present at the said meeting.
RULING:
Until registration is accomplished, the transfer, though
valid between the parties, cannot be effective as
against the corporation. Thus, the unrecorded
transferee, the Bitanga group in this case, cannot vote
nor be voted for.
The purpose of registration is two-fold:
o To enable the transferee to exercise all the
rights of a stockholder, including the right to
vote and to be voted for; and
To inform the corporation of any change in

share ownership so that it can ascertain the
persons entitled to the rights and subject to the
liabilities of a stockholder.
Until challenged in a proper proceeding, a stockholder
of record has a right to participate in any meeting; his
vote can be properly counted to determine whether a
stockholders' resolution was approved, despite the
claim of the alleged transferee.
On the other hand, a person who has purchased stock,
and who desires to be recognized as a stockholder for
the purpose of voting, must secure such a standing by
having the transfer recorded on the corporate books.
Until the transfer is registered, the transferee is not a
stockholder but an outsider.
DISPOSITIVE: Petition Granted.
DISCLAIMER: sobrang gulo ng facts guys, since both the
respondents and the petitioner nagfile ng separate cases sa
SEC.
o

BLTB Vs Bitanga

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preliminary injunction to restrain the implementation

To inform the corporation of any change in

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