G.R. No. 184251, 9 March 2016


On July 1956, Dr. Ortañez organized and founded the Philippine International Life Insurance Company, Inc. (Philinterlife). At the time of its incorporation, Dr. Ortañez owned ninety percent (90%) of the subscribed capital stock of Philinterlife. Upon his death, Dr. Ortañez left behind an estate consisting of, among others, 2,029 shares of stock in Philinterlife, then representing at least 50.725% of the outstanding capital stock of Philinterlife which was at 4,000 shares valued at P4,000,000.00.

On March 2006, petitioners filed a Complaint for Election Contest before the RTC of Quezon City challenging the lawfulness and validity of the meeting and election conducted by the group of Lee (respondents). During the assailed meeting, respondents were elected as members of the Board of Directors of Philinterlife.

Petitioners claimed that before the contested election, they formally informed the respondents that without the participation of the Estate, no quorum would be constituted in the scheduled annual stockholders’ meeting. In spite of their formal announcement and notice that they were not participating in the session, the respondents continued, in bad faith, with the illegal meeting. Further, respondents allegedly elected themselves as directors of Philinterlife and proceeded to elect their own set of officers. Petitioners complained that despite being the true and lawful directors, they were prevented by respondents to enter into the office premises of Philinterlife’s corporate records and assets.

In their backgrounder, petitioners narrated that the 2,029 shares of stock of the Estate were sold to the group of Lee, through an entity called Filipino Loan Assistance Group (FLAG). By reason of said sale, respondents took control of the management of the corporation. In the course of their management, and by voting on the shares that they had illegally acquired, respondents increased the authorized capital stock of Philinterlife to 5,000 shares. Petitioners concluded that notwithstanding the decision and subsequent resolutions of this Court in G.R. No. 146006, respondents unlawfully held on to the management and control of Philinterlife and maliciously resisted and prevented all their efforts to regain control and management thereof.

Respondents, for their part, categorically denied the material allegations of the complaint and raised the defense that the stockholders’ meeting they conducted was valid as it was allegedly attended by stockholders representing 98.76% of the 50,000 shares representing the authorized and issued capital stock of Philinterlife.

The RTC dismissed the complaint filed by petitioners on the ground that the latter did not present the required preponderance of evidence to substantiate their claim that they were the owners of at least 51% of the outstanding capital stock of Philinterlife. Dissatisfied with the RTC ruling, petitioners elevated the matter to the CA. Hence, this Petition for Review on Certiorari6 under Rule 45 of the Rules of Court.


Whether the CA erred when it ruled that the election of respondents as directors of Philinterlife was in accordance with the provisions of the Corporation Code, despite the categorical pronouncement of this Court in G.R. No. 146006 that it is the Estate, and not the respondents, which own the controlling interest in Philinterlife.


Yes. We rule in favor of respondents. We note respondents’ submission that in March 1983, Jose S. Ortañez sold certain shares of stocks which he personally and exclusively owned to Lee and eighteen (18) other stockholders including Divina Ortañez-Enderes and her family. These shares of stock are separate and distinct from the 2,029 shares of stock belonging to the Estate.

From the foregoing facts and based on a careful evaluation of the evidence on record, we are of the considered view that petitioners indeed failed to present the required preponderance of evidence to prove their allegation in the complaint that they represented more than 51% of the outstanding capital stock of Philinterlife during the annual stockholders’ meeting held on 15 March 2006.

Clearly, the core issue to be resolved in the present case is simply on whether respondents were validly elected as Board of Directors during the annual stockholders’ meeting of Philinterlife held on 15 March 2006. We agree with the courts below that in the absence of evidence to the contrary, the presumption is that the respondents were duly elected as directors/officers of Philinterlife during the aforesaid annual stockholders’ meeting. Petitioners cannot, in the instant election contest case, question the increases in the capital stocks of the corporation. Given the ruling of this Court, as provided above, we find it no longer necessary to rule on the other matters raised in this case.

*Case Digest by Nikki P. Ebillo, JD-4, Andres Bonifacio Law School, SY 2019-2020