Sps. Federico and Angelina Cruz, et al. vs. Teodoro U. Abalos

[SEC-AC NO. 278. April 30, 1990.] SPOUSES FEDERICO M. CRUZ AND ANGELINA C. CRUZ, ET AL. , petitioners-appellees , vs . TEODORO U. ABALOS, ET AL. , respondents-appellants . D E C I S I O N For consideration by this Commission en banc is an appeal from the December 12, 1989 Decision of the Hearing Officer James K. Abugan declaring the Certificate of Filing of Certificate of Increase of Capital Stock of Aquaculture Engineering and Technology Development Corporation of the Philippines dated March 9, 1987, as null and void. cdll On June 13, 1988 the instant petition docketed as SEC No. 03373 was filed by petitioners, alleging therein among others that documents (Certificate of Increase of Capital Stock, Treasurer's Affidavit, List of Subscribers and Deed of Assignment) relative to the corporation's request for increase of capital stock were altered by respondents without petitioners' consent and knowledge after the same were signed and submitted to the SEC; that among the most Controversial alterations is the substantial increase of the subscription of Teodoro Abalos to the increase of capital stock from 42 to 462 shares, and that the subsequent approval by the Commission of the altered application for increase enabled the respondents to hold/conduct a stockholders' meeting on May 21, 1988 electing new members of the Board and on May 23, a new set of corporate officers to the prejudice of the petitioners. On December 19, 1988 the hearing officer rendered his decision in question wherein he held that alterations and insertions of words are apparent in the subject documents; that all parties to the controversy claim to have no knowledge or participation in the alteration; that the Commission is of the belief that petitioners had nothing to do with the alterations and finds their contentions more logical and credible than those of respondents based on the following observations: 1. The amended Articles and supporting documents when filed with the Commission did not contain the questioned alterations as evidenced by the duplicate original copies in the possession of and presented by petitioners. The original duplicate were duly stamped "received" by the Commission; 2. The Notary Public testified that these duplicate originals are the accurate and unaltered documents. Respondent Teodoro Abalos acknowledged his signature in them. 3. A close comparison of the altered copy of the Certificate of Increase of Capital Stock, Treasurer's Affidavit, List of Subscribers and Deeds of Assignments reveals a clear discrepancy on the amount subscribed and paid by Teodoro Abalos as compared to those of other subscribers which are very close to, if not exactly the same, the amount paid by them; 4. The alterations (corrections to respondents) did not bear any initials and respondents cannot show proof that the board has authorized them or that petitioners have consented thereto; and 5. The application for increase of capitalization could not have been approved had there been no alterations made in the subject documents for the simple reason that the required 25% of the total increase of capitalization that should be subscribed has not been complied with. Hence this appeal. Respondents-appellants contend that the hearing officer erred in concluding that alterations were actually made on the documents relative to the corporation's application for increase of capital stock contrary to the original and true intentions of the parties concerned. In their Memorandum of Appeal, appellants argue that they could not be faulted for the erasures because there could have been no instance that they could lay their hands on the subject documents after petitioner Maxima Aquino had them submitted and received by the SEC. A perusal of documentary evidences submitted by both parties however negates the above-claim. The petty cash voucher (Exhibit "V"/Annex 9 of Respondents answer) states: "fare from Philcoa to SEC and back, by Guia (to deliver revised deed of assignment, original and photocopy of certified true copy of TCT) in the amount of P4.40". When crossed-examined, Mrs. Guia Abalos admitted she was the Guia who appeared in the said voucher (T.S.N. September 8, 1988, p. 7). Corollary thereto, Mrs. Maxima Aquino declared in her testimony that because of an altercation with the SEC examiner, who was first assigned to process the corporation's request for increase of capitalization, Guia Abalos suggested that she will make the follow-ups. (T.S.N., August 8, 1988, pp. 7-8) A study of the corporation's records on file with this Commission disclosed that Guia Abalos on March 9, 1988 received the Certificate of Filing as evidenced by her signature which was affixed on the duplicate of said certificate. This act of receiving supports the theory that Guia Abalos followed-up their application for increase of capitalization while pending approval. The other issue raised on appeal deserves scant consideration. That the hearing officer failed to take into consideration the testimony of Mrs. Nenita C. Aguirre that questioned documents were already with erasures when assigned to her for processing is not a reversible error. Mrs. Aguirre is neither a privy nor a witness to the execution of these documents and as such she cannot competently testify as to their genuineness. What was actually established in her testimony is that erasures do exist in questioned documents when they were assigned to her for action. Lastly, we find more logic in the petitioners-appellees contention that the true intention of the parties is that the value of the real property that the parties have contributed to the additional capitalization should be considered as full payment of the subscription placed by each stockholder. It would be highly incredible, if not illogical, for the appellees to have agreed to increase Teodoro Abalos' subscription from 42 to 462 shares without requiring a corresponding increase of his paid-up or to have authored the alterations only to favor appellants particularly Teodoro Abalos. WHEREFORE, in view of the foregoing, the decision of the hearing officer is hereby AFFIRMED and the instant appeal, DENIED. SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (did not participate) (SGD.) GONZALO T. SANTOS, JR. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner Associate Commissioner (SGD.) ARMANDO Z. GONZALES (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner