Tormil Realty and Development Corporation, et al. vs. Manuel A. Torres, Jr.

[SEC-SICD * CASE NO. 03545. January 8, 1998.] TORMIL REALTY AND DEVELOPMENT CORPORATION, ANTONIO P. TORRES, JR., MILAGROS P. TORRES, MA. LUISA T. MORALES, MA. CRISTINA T. CARLOS and DANTE MORALES , complainants , vs . MANUEL A. TORRES, JR. , respondent . D E C I S I O N This is a complaint filed by the above named complainants seeking the reconveyance of the title, ownership and possession of several real and personal properties; accounting, reimbursement and payment of all the fruits, income and interest generated and earned from these properties; payment of compensatory and exemplary damages; attorney's fees and costs of suit. In the event reconveyance of any of the said properties are no longer possible, complainants pray for the reimbursement and payment of their fair market value including the legal rate of interest due therefrom. prLL The parties, facts, issues, evidence required and the laws involved in the case at bar appear to be identical with SEC consolidated Cases Nos. 3153 and 3161 which were previously considered and resolved by this Office. The decision rendered by this Office in the said cases was affirmed by the SEC En Banc in SEC AC No. 339 and reaffirmed by both the Court of Appeals in CA-G.R. Sp. No. 31748 and the Supreme Court in G.R. No. 120138. Thus, upon motion, this Office issued an Order dated September 12, 1990 to take judicial notice of all the proceedings in said SEC Case Nos. 3153 and 3161. The records showing the pieces of evidence as well as the factual findings of the decisions rendered by this Office, the SEC En Banc, the Court of Appeals and the Supreme Court in the aforementioned cases, establish the following: The late Manuel Torres, Jr. (respondent herein) was the majority stockholder of Tormil Realty & Development Corporation while complainants, who are the children of respondent's deceased brother Antonio A. Torres constituted the minority stockholders. (G.R. No. 120138, p. 2, par. 3) Tormil Realty & Development Corporation (TORMIL for brevity) was incorporated on December 18, 1978 to engage in real estate business. The authorized capital stock is Four Million Pesos (P4,000,000.00) with a par value of P10 each. Out of this authorized capital stock, P1,750,000.00 had been subscribed by the following incorporators and/or directors: Name Amount subscribed No. of shares Percentage 1) Antonio Torres P587,000 58,700 33.54% 2) Manuel A. Torres, Jr. 809,000 80,900 46.23% 3) Milagros P. Torres 104,000 10,400 5.94% 4) Ma. Luisa T. Morales 45,000 4,500 2.57% 5) Josefina P. Torres 50,000 5,000 2.86% 6) Ma. Cristina T. Carlos 50,000 5,000 2.86% 7) Antonio P. Torres 50,000 5,000 2.86% 8) Jacinta Torres 5,000 500 0.28% TOTAL P1,750,000 175,000 100.00% thereby leaving all unsubscribed portion of P2,250,000.00 worth of or 225,000 unissued common shares. The 1983 General Information Sheet which was prepared by Edgardo D. Pabalan (one of the respondents in SEC Case No. 3161) and submitted to the SEC, provide the following information: Name Amount No. of Percentage Subscribed shares 1) Manuel A. Torres, Jr. P1,001,200 100,120 57.21% 2) Milagros P. Torres 334,300 33,430 19.10% 3) Antonio P. Torres 82,900 8,290 4.74% 4) Ma. Luisa T. Morales 77,790 7,790 4.45% 5) Ma. Cristina T. Carlos 82,900 8,290 4.75% 6) Josefina P. Torres 82,900 8,290 4.75% 7) Jacinta T. Preysler 82,900 8,290 4.75% 8) Dante Morales 5,000 500 0.28% TOTAL P1,750,000 175,000 100.00% Sometime in July and August, 1984, respondent Torres executed ten (10) deeds of assignment in favor of TORMIL, assigning and conveying to the latter various real properties consisting of nine (9) parcels of land and personal properties consisting of shares of stock in several companies in exchange for 225,972.30 or 225,972 common shares of the latter, the breakdown of which are as follows, to wit: Date of Property Location No. of Order Assignment Assigned Shares of To be Compliance Issued 1) 13 July 1984 TCT 81834 Quezon City 13,252 3rd TCT 144240 Quezon City 2) 13 July 1984 TCT 77008 Manila 78,493 2nd TCT 65689 Manila TCT 102200 Manila 3) 13 July 1984 TCT 374079 Makati 8,307 1st 4) 24 July 1984 TCT 41527 Pasay 9,855 4th TCT 41528 Pasay TCT 41529 Pasay 5) 6 August 1984 El Hogar Filipino Stocks 2,000 7th 6) 6 August 1984 Manila Jockey Club Stocks 48,737 5th 7) 7 August 1984 San Miguel Corp. Stocks 50,283 8th 8) 7 August 1984 China Banking Corp. Stocks 6,300 6th 9) 20 August 1984 Ayala Corp. Stocks 7,468.2 9th 10) 29 August 1984 Ayala Fund Stocks 1,322.1 10th TOTAL 225,972.3 Shares By virtue of these assignments, respondent was issued all the remaining 225,000 unissued shares of TORMIL, 972 shares short of the total 225,972 shares agreed in the deeds of assignment. The acceptance of 225,000 shares by respondent brought about the following stockholdings as reflected in the 1984-1985 General Information Sheet of TORMIL, also prepared by Pabalan: Name No. of shares Percentage 1) Manuel A Torres, Jr. 325,120 81.28% 2) Milagros P. Torres 33,430 8.35% 3) Antonio P. Torres 8,290 2.07% 4) Ma. Luisa T. Morales 7,790 1.95% 5) Ma. Cristina T. Carlos 8,290 2.07% 6) Josefina P. Torres 8,290 2.07% 7) Jacinta T. Preysler 8,290 2.07% 8) Dante Morales 500 0.13% TOTAL 400,000 100.00% (Decision dated July 19, 1993, SEC-AC No. 339 , pp. 2-5) Consequently, the said properties were duly recorded in the inventory of assets of TORMIL and the revenues generated by the said properties were correspondingly entered in the corporation's books of accounts and financial records. Likewise, all the assigned parcels of land were duly registered with the respective Register of Deeds in the name of TORMIL except for the ones located in Makati and Pasay City. At the time of the assignment and exchange, however, only 225,000 TORMIL shares remained unsubscribed; all of which were duly issued to and received by respondent as evidenced by Stock Certificates Nos. 17, 18, 19, 20, 21, 22, 23, 24 and 25. Due to the insufficient number of shares of stock issued to respondent and the alleged refusal of complainants to approve the needed increase in the corporation's authorized capital stock to cover the shortage of 972 shares due to respondent Torres, the latter revoked the two (2) deeds of assignment covering the properties in Makati and Pasay City on 11 September 1986. Noting the disappearance of the Makati and Pasay City properties from the corporation's inventory of assets and financial records, complainants were constrained to file a complaint on March 31, 1987 with this Commission docketed as SEC Case No. 3153 to compel respondent to deliver to TORMIL the two deeds of assignment covering the said Makati and Pasay City properties which he had unilaterally revoked and to cause the registration of the corresponding titles in the name of TORMIL. Complainants alleged that following the disappearance of the properties from the corporation's inventory of assets, they found out that on October 24, 1986, respondent, together with Edgardo Pabalan and Graciano Tobias, then general manager and legal counsel, respectively, of TORMIL, formed and organized a corporation named "Torres-Pabalan Realty and Development Corporation." As part of respondent's contribution to this new corporation, he executed in its favor a deed of assignment conveying the same Makati and Pasay City properties he had earlier transferred to TORMIL. On March 25, 1987, the annual stockholders meeting and election of director of TORMIL was scheduled in compliance with the provisions of its by-laws. Prior, thereto, respondent assigned from his own shares, one (1) share each to Edgardo Pabalan, Attys. Graciano Tobias, Rodolfo Jocson, Melvin Jurisprudencia and Augustus Ceasar Azura. These assigned shares were in the nature of "qualifying shares," for the sole purpose of meeting the legal requirement to be able to elect them (Tobias and company) to the Board of Directors as Torres' nominees. The assigned shares were covered by corresponding TORMIL Stock certificates Nos. 026, 027, 028, 029, 030 and at the back of each certificate the following inscription is found: "The present certificate and/or the one share it represents, conformably to the purpose and intentions of the Deeds of Assignment dated March 16, 1987, is not held by me under any claim of ownership and I acknowledge that I hold the same merely as trustee of Judge Manuel A. Torres, Jr. and for the sole purpose of qualifying me as a director. (Signature of Assignee)" The reason behind the aforestated action, according to respondent, was to remedy the inequitable lopsided set-up obtaining in the corporation, where, notwithstanding his controlling interest in the corporation, the respondent held only a single seat in the nine member board of directors and was, therefor, at the mercy of the minority; a combination of any two of whom would suffice to overrule the majority stockholder in the Board's decision making function. On March 25, 1987, the annual stockholders' meeting was held as scheduled. What transpired therein was ably narrated by Attys. Benito Cataran and Bayani de los Reyes of the Corporate and Legal Department of this Office, who were sent to observe the proceedings (upon request of the respondent) in their report dated March 27, 1987: "The undersigned arrived at 1:55 p.m. in the place of the meeting, a residential bungalow in Urdaneta Village, Makati, Metro Manila. Upon arrival, Josefina Torres introduced us to the stockholders, namely: Milagros Torres, Antonio Torres, Jr., Ma. Luisa Morales, Ma. Cristina Carlos and Ma. Jacinta Torres. Antonio Torres, Jr. questioned our authority and personality to appear in the meeting claiming subject corporation is a family and private firm. We explained that our appearance there was merely in response to the request of Manuel Torres, Jr. and that SEC has jurisdiction over all registered corporations. Manuel Torres, Jr., a septuagenarian, argued that as holder of the major and controlling shares, he approved of our attendance in the meeting. At about 2 : 30 p . m ., a group composed of Edgardo Pabalan, Atty. Graciano Tobias, Atty. Rodolfo Jocson, Jr., Atty. Melvin Jurisprudencia and Atty. Augustus Ceasar Azura arrived. Atty . Azura told the body that they came as counsels of Manuel Torres, Jr . and stockholders having assigned qualifying shares by Manuel Torres, Jr . The stockholders' meeting started at 2 : 45 p.m. with Mr. Pabalan presiding after (being) verbally authorized by Manuel Torres, Jr., the President and Chairman of the Board. The secretary when asked about a quorum, said that there was more than a quorum . Mr. Pabalan distributed copies of the president's report and the financial statements. Antonio Torres, Jr. requested time to study the reports and brought out the question of auditing the finances of the corporation which he claimed was approved previously by the board. Heated arguments ensued which also touched on family matters. Antonio Torres, Jr. moved for the suspension of the meeting but Manuel Torres, Jr. voted for the continuance of the proceeding . LexLib Mr. Pabalan suggested that the opinion of the SEC representatives be asked on the propriety of suspending the meeting but Antonio Torres, Jr. objected reasoning out that we were just observers. When the chairman called for the election of directors, the secretary refused to write down the names of nominees prompting Atty. Azura to initiate the appointment of Atty. Jocson, Jr. as Acting Secretary. Antonio Torres, Jr. nominated the present members of the board . At this juncture, Milagros Torres cried out and told the group of Manuel Torres, Jr. to leave the house. Manuel Torres, Jr. together with his lawyers-stockholders went to the residence of Ma. Jacinta Torres in San Miguel Village, Makati, Metro Manila. The undersigned joined them since the group with Manuel Torres, Jr. the one who requested for S.E.C. observers, represented the majority of the outstanding capital stock and still constituted a quorum. At the resumption of the meeting, the following were nominated and elected as directors for the year 1987-1988: Manuel Torres, Jr. Ma. Jacinta Torres Edgardo Pabalan Graciano Tobias Rodolfo Jocson, Jr. Melvin Jurisprudencia Augustus Ceasar Azura Josefina Torres Dante Morales After the election, it was resolved that after the meeting, the new board of directors shall convene for the election of officers." Consequently, on April 10, 1987, complainants instituted a complaint with this Office (SEC Case No. 3161), praying in the main, that the election of Tobias and company to the board of directors be annulled. Complainant alleged that Tobias and Company were not legitimate stockholders of TORMIL because the assignment of shares to them violated the minority stockholders' right of preemption as provided in the corporation's articles and by-laws. On March 6, 1991, the SEC rendered a consolidated decision in favor of complainants (SEC Cases Nos. 3153 and 3161). The dispositive portion thereof states, thus: "WHEREFORE, premises considered, judgment is hereby rendered as follows: 1) Ordering and directing the respondents, particularly respondent Manuel A. Torres, Jr., to turn over and deliver to TORMIL through its Corporate Secretary, Ma. Cristina T. Carlos: (a) the originals of the Deeds of Assignment dated July 13 and 24, 1984 together with the owner's duplicates of Transfer Certificates of Title Nos. 374079 of the Registry of Deeds for Makati; and 41527, 41528, and 41529 of the Registry of Deeds for Pasay City and/or to cause the formal registration and transfer of title in and over such real properties in favor of TORMIL with the proper government agency; (b) all corporate books of account, records and papers as may be necessary for the conduct of a comprehensive audit examination; and to allow the examination and inspection of such accounting books, papers and records by any or all of the corporate directors, officers and stockholders and/or their duly authorized representatives or auditors. 2) Declaring as permanent and final the writ of preliminary injunction issued by the Hearing Panel on February 13, 1989; 3) Declaring as null and void the election and appointment of respondents to the Board of Directors and executive positions of TORMIL held on March 25, 1987, and all their acts and resolutions made for and in behalf of TORMIL by authority of and pursuant to such invalid appointment and election held on March 25, 1987; LLpr 4) Ordering the respondents jointly and severally, to pay the complainants the sum of ONE HUNDRED THOUSAND PESOS (P100,000.00) as and by way of attorney's fees. (Decision, SEC Cases Nos. 3153 and 3161) Respondent promptly appealed said Decision to the SEC En Banc (docketed as SEC-AC No. 339 ). On July 19, 1993, the SEC En Banc rendered a decision, the dispositive portion of which reads, thus: "WHEREFORE, premises considered, the appealed decision of the hearing panel is hereby affirmed and all motions pending before us incident to this appealed case are necessarily DISMISSED. SO ORDERED." Undaunted, respondent proceeded to plead his cause to the Court of Appeals on August 10, 1993, by way of petition for review (docketed as CA-G.R. Sp. No. 31748 ). On May 23, 1994, the Court of Appeals dismissed the petition for review and affirmed the appealed decision. From the said decision, respondent filed a motion for reconsideration which was denied in a resolution issued by the Court of Appeals dated May 10, 1995; (G.R. No. 120138, pp. 3-11) Insisting on his cause, respondent filed a petition for review before the Supreme Court docketed as G.R. No. 120138 which was also dismissed through the Decision dated September 5, 1997. A motion for reconsideration was filed and was denied with finality through Supreme the Court Resolution of November 17, 1997. Thus, on July 8, 1998, the Supreme Court issued an Entry of Judgment stating that its decision dated September 5, 1997 has become final and executory on December 12, 1997. While said SEC Cases Nos. 3153 and 3161 were still pending for trial, complainants learned that respondent executed on April 6, 1987 several documents denominated as Deeds of Revocation of Assignment unilaterally revoking and cancelling all the other deeds of assignment he previously executed in favor of TORMIL in 1984 (Exhs. "CC", "DD", "JJ" to "JJ-2", "VV" to "VV-2", "WW" to "WW-2", "XX" to "XX-2", "YY" to "YY-2", "A", "B", "C", "D", "F", "G" and "H"). Complainants also learned that on April 3, 1987, respondent Torres-Pabalan and company, passed Resolution No. 3-87 (Exh. "LL") authorizing the respondent to act for himself and for the complainant firm to sign and approve the Deeds of Revocation of Assignment revoking and cancelling all the assignments over the real and personal properties which respondent previously executed in favor of TORMIL. As a result of which, the Transfer Certificates of Title (TCT) Nos. 162339, 162340 and 162341 in the name of TORMIL were cancelled and in lieu thereof, TCT Nos. 174181, 174182 and 174183 were issued in the name of respondent by the Registry of Deeds for Manila. Also, TCT Nos. 319263 and 319264 in the name of TORMIL were cancelled and TCT Nos. 357965 and 357966 were issued in the name of respondent by the Registry of Deeds of Quezon City. Furthermore, all the stock certificates in the name of TORMIL in San Miguel Corporation, Manila Jockey Club, Inc., China Banking Corporation, El Hogar Filipino, Ayala Corporation, Ayala Fund, Philippine Long Distance Telephone Co., Phil. Tannery Co., Inc., F.G.U. Insurance Corp., Filipinas Life Insurance Co., Jardine Davies, Inc., and Universal Reinsurance Corp. were cancelled and new ones were issued in the names of respondent. (Exhs. "L", "M", "N", "O", "P", "EE", "FF", "GG", "HH", "II", "MM" "NN" to "NN-11", "OO", "PP", "QQ", "RR", "SS", "TT" to "TT-2", "ZZ", "AAA" "BBB", "CCC", "DDD", "EEE", "HHH" to "HHH-1", "III", "JJJ" to "JJJ-5", "KKK" to "KKK-8" and "LLL"). Moreover, after the issuance of TCT No. 174183 (Exh. "GG"), respondent sold the parcel of land covered therein to Josefina Serrano on April 20, 1987 in the amount of P470,000.00. Hence, TCT No. 174183 was cancelled and TCT No. 176670 was issued in the name of Josefina Serrano (Exhs. "GG" and "KK"). Respondent also sold the certificates of stock of Ayala Fund, Inc., China Banking Corporation, Philippine Long Distance Telephone Co. and San Miguel Corporation in the total amount of P10,235,297.13 (Exhs. "FFF", "FFF-5", "HHH" to "HHH-1", "MMM" to "MMM-1", "NNN" to "NNN-1", "OOO" to "OOO-1", "PPP" to "PPP-1", "QQQ" to "QQQ-1", "RRR" to "RRR-1", "SSS" to "SSS-1", "TTT" to "TTT-1", "UUU" to "UUU-1", "VVV" to "VVV-1", "XXX" to "XXX-1", "YYY" to "YYY-1", "ZZZ" to "ZZZ-1", "AAAA" to "AAAA-1", "CCCC" to "CCCC-1", "DDDD" to "DDDD-1", "EEEE" to "EEEE-1", "FFFF" to "FFFF-1", "GGGG" to "GGGG-1", "HHHH" to "HHHH-1", "IIII" to IIII-14). Thus, complainants were constrained to file the present action on April 6, 1989. Respondent in his answer with Compulsory Counterclaim dated May 15, 1989, alleged that he intended to change the nature of the ownership over certain properties from individual to incorporated form pursuant to an "estate planning" scheme intended for his own benefit, fully known and approved by the complainants. Under this "scheme", the legal title of these properties would be placed in the name of complainant corporation which he holds the controlling interest, thereby making the corporation his alter ego or business conduit; thus, enabling him to save on costs and taxes. However, he alleged that the said plan could not be implemented, because the number of shares of TORMIL then unissued, fell short of what was necessary to cover the properties contemplated by the assignment and compounded by the refusal of the minority stockholders and their opposition to the needed increase in TORMIL's authorized capital stock. Respondent further alleged that acceptance by the board of directors of the properties he conveyed and transferred to TORMIL were made precisely in contemplation of and in furtherance of this "estate planning." These board resolutions were not self executing as they merely authorized the respondent to perform the operative act of actual implementation or acceptance in behalf of the corporation of the assignment he made. While he admitted the recording of his properties in TORMIL's inventory of assets and its books of accounts, he maintains that these were preliminary and inefficacious steps in the implementation of the estate planning scheme which was, however, aborted. Because of this "estate planning", respondent claimed that TORMIL never became a beneficial owner of the properties assigned to it under the deeds of assignment which he executed; that the non-realization of the scheme is due to reasons attributable to the complainants and TORMIL acted merely as a trustee with respect to the properties transferred in its name for the exclusive benefit of respondent Torres, the cestui que trust . Because of the foregoing circumstances and being the real and beneficial owner of these assigned properties, respondent possesses the absolute prerogative to do with them in any manner as it pleased him, and neither the private complainants nor TORMIL could interfere therewith as they are devoid of any interest in them. Respondent admitted the revocation of the deeds of assignment and stated as reason that since the essential condition for their execution and continued, efficacy was wanting, they could likewise be revoked unilaterally and without the conformity of any party including the individual complainants and TORMIL; the latter being the cause of the non-accomplishment of the "estate planning scheme." The respondent also alleged that the disputed Board Resolution No. 3-87, was not necessary for any revocation that respondent made and was passed before any question was raised on the qualification and election of the members of the board of directors held on March 25, 1987. Clearly, the defenses raised by the respondent in this case and in SEC cases 3153 and 3161 are similar in all respect. In the same manner, the issues in this case are likewise alike to those that have been resolved in the said cases. In G.R. No. 120138, affirming the ruling of the SEC in 3153 and 3161, the Supreme Court ruled that: "Petitioners find legal basis for respondent's act of revoking the assignment of his properties in Makati and Pasay City to Tormil corporation by relying on Art. 1191 of the Civil Code which provides that: "ARTICLE 1191. The power to rescind obligations is implied in reciprocal ones, in case of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission even if he has chosen fulfillment, if the latter should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period. This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Article 1385 and 1388 and the Mortgage Law. * " Petitioner's contention cannot be sustained. We see no justifiable reason to disturb the findings of SEC, as affirmed by the Court of Appeals. We sustain the ruling of respondent SEC in the decision appealed from (Rollo, pp. 45-46) that. '. . . the shortage of 972 shares would not be valid ground for respondent Torres to unilaterally revoke the deeds of assignment he had executed on July 13, 1984 and July 24, 1984 wherein he voluntarily assigned to TORMIL real properties covered by TCT No. 374079 (Makati) and TCT No. 41527, 41528 and 41529 (Pasay) respectively. A comparison of the number of shares that respondent Torres received from TORMIL by virtue of the 'deeds of assignment' and the stock certificates issued by the latter to the former readily showed that TORMIL had substantially performed what was expected of it. In fact, the first two issuances were in satisfaction to the properties being evoked by respondent Torres. Hence, the shortage of 972 shares would never be a valid ground for the revocation of the deeds covering Pasay and Quezon City properties.' In Universal Food Corporation vs. CA, the Supreme Court held: The general rule is that rescission of a contract will not be permitted for a slight or carnal breach, but only for such substantial and fundamental breach as would defeat the very object of the parties in making the agreement. The shortage of 972 shares definitely is not substantial and fundamental breach as would defeat the very object of the parties in entering into contract. Art. 3155 of the Civil Code * also provides: "Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence." There being no fraud, mistake or undue influence being exerted on respondent Torres by TORMIL and the latter having already issued to the former its 225,000 unissued shares, the most logical cause of action is to declare as null and void the deed of revocation executed by respondent Torres. The aforequoted Civil Code provision does not apply in this particular situation for the obvious reason that a specific number of shares of stock (as evidenced by stock certificates) had already been issued to the respondent in exchange for his Makati and Pasay City properties. The records thus disclose: Date of Property Location No. of Order Assignment Assigned Shares of to be Compliance Issued 1) July 13, 1984 TCT 81834 Quezon City 13,252 3rd TCT 144240 Quezon City 2) July 13, 1984 TCT 77008 Manila 78,493 2nd TCT 65689 Manila TCT 102200 Manila 3) July 13, 1984 TCT 374079 Makati 8,307 1st 4) July 24, 1984 TCT 41527 Pasay 9,855 4th TCT 41528 Pasay TCT 41528 Pasay 5) August 6, 1984 El Hogar Filipino Stocks 2,000 7th 6) August 6, 1984 Manila Jockey Club Stocks 48,737 5th 7) August 7, 1984 San Miguel Corp. Stocks 50,283 8th 8) August 7, 1984 China Banking Corp. Stocks 6,300 6th 9) August 20, 1984 Ayala Corp. Stocks 7,468.2 9th 10) August 29, 1984 Ayala Fund Stocks 1,322.1 10th TOTAL 225,972.3 Order of Stock certificate issuances by TORMIL to respondent Torres relative to the Deeds of Assignment he executed sometime in July and August, 1984 (Emphasis ours). cdll Moreover, we agree with the contention of the Solicitor General that the shortage of shares should not have affected the assignment of the Makati and Pasay City properties which were executed in 13 and 24 of July 1984 and the consideration for which have been duly paid or fulfilled but should have been applied logically to the last assignment of property Judge Torres' Ayala Fund shares which was executed on 29 August 1984." We see no reason why we should now deviate from such ruling primarily because complainants' posture is well-entrenched by the law on contracts. Article 1355 of the Civil Code provided that except in cases specified by law, lesion or inadequacy of cause should not invalidate a contract, unless there has been fraud, mistake or undue influence. Respondent has not shown nor alleged that he was unduly influenced, mistaken or misled in executing the Deeds of Assignment subject of the controversy herein. The conveyance of his properties was supported by a valid and commensurate consideration. Further, the parties' relationship should be governed by the principle of "mutuality of contracts" by virtue of which obligations arising from contracts have the force and effect of law between the contracting parties and should be complied with in good faith (Art. 1159, New Civil Code). Corollary to such principle, a contract should bind both the parties thereto and its efficacy cannot be left to either of them. When a person enters into a contract, he should not be permitted to unilaterally and on his own exclusive whims and caprice, renounce, revoke or escape from the effects of his obligation arising therefrom unless such renunciation, revocation or evasion is allowed by the other party or in cases permitted by law. Thus, it was held in Jocson vs. Court of Appeals, G.R. No. L-55322, February 16, 1989, that mere inadequacy of price does not vitiate a contract of sale. The Supreme Court in Robleza vs. Court of Appeals, G.R. No. 80364, June 28, 1989, was more emphatic in declaring that when the parties agreed upon a price but the vendee did not in fact pay or failed to pay in full the purchase price, the contract may still be supported by some other consideration. The fact of payment or non-payment is not the controlling criterion in declaring the contract null and void for want of consideration. Non-payment of the contract price results merely in a breach of contract for non-performance and warrants an action for specific performance under Article 1191 of the Civil Code. A person cannot be allowed to repudiate the effects of his voluntary acts simply because it did not fit him or simply because the judge before whom he executed the act did not have jurisdiction of the case. In a regime of law and order, repudiation of an agreement validly entered into cannot be made without any ground or reason in law or in fact for such repudiation (Martin vs. Martin, G.R. No. L-12439, May 22, 1959, 105 Phil. 750). As in the case at bar, the respondent was very much in a position to form an independent judgment as to whether or not to enter into an exchange of properties. And, by doing so, he cannot just unilaterally cancel the contract because the bargain was a hard one or the results thereof were contrary to his expectation. Besides, while it is true that there was a shortage in the stocks issued to respondent, the only thing that would be affected by such fact, if at all, would be the tenth deed of assignment (Exh. "B-9", SEC Cases 3153 and 3161), executed much later on August 29, 1984 (Decision, SEC Cases Nos. 3153 and 3161, p. 21), covering the exchange of Ayala Funds, Inc.'s shares of stocks. Assuming that the assignment of respondent's properties were made under the self-contrived "estate planning scheme," respondent miserably failed to show how this would work. The fact that he accepted the shares of stock in exchange for his properties would show the real intention of the parties in entering into the agreement. As a matter of fact, he is now estopped from claiming that their agreement was invalid for want of consideration. If he had basis for cancellation or revocation of the Deeds of Assignment, he should have gone to court instead of taking the law into his own hands. llcd The validity of the Deeds of Assignment covering the properties in Makati and Pasay City, which respondent did not register in the name of TORMIL, was upheld by the Supreme Court. With more reason then that the validity of the other eight (8) deeds of assignment should likewise be upheld in this case when the facts demonstrate that both parties have substantially performed their part in the bargain and specifically when respondent voluntarily accepted the consideration stipulated in the agreement. Respondent's claim that the assignments he made were purely unilateral on his part and the same was not accepted by TORMIL is bereft of factual basis. The certification of the corporate secretary dated August 31, 1984 and October 2, 1984 (Exhs. "J" and "I") attest to the resolution adopted by the board of directors on July 25, 1984 accepting and approving the assignment of (9) parcels of land and the various shares of stocks in exchange for the common shares of stocks of TORMIL. The shares of stocks accepted by TORMIL are as follows: a) San Miguel Corporation 50,283 shares b) China Banking Corporation 6,300 shares c) Ayala Funds, Inc. 1,322.1 shares d) Manila Jockey Club, Inc. 487,370 shares e) El Hogar Filipino 100 shares f) Ayala Corporation 74,682 shares g) PLDT 565 shares h) Phil. Tannery Co., Inc. 1,701 shares i) F.G.U. Insurance, Inc. 453 shares j) Filipinas Life Insurance 162 shares k) Jardine Davies, Inc. 750 shares l) Universal Reinsurance Corp. 806 shares These resolutions were further ratified, confirmed and approved by all the stockholders, including the herein respondent as evidenced by the Minutes of the Meeting of the Stockholders on September 26, 1984 (Exh. "K"). Notably, Exh. "K" was even signed by respondent himself. The complainants were able to establish without any tinge of uncertainty that the assignments were not merely perfected but were in fact consummated, except the non-registration of the Makati and Pasay City properties with the appropriate Register of Deeds; which, however, was ordered to be done in SEC Cases Nos. 3153 and 3161. The assigned parcels of land together with the improvements erected thereon and shares of stock including the income derived therefrom were recorded, booked and included in the inventory of assets, books of accounts and financial statements of TORMIL. As of December 31, 1984 (the year the assignment was made) TORMIL's assets increased from P1,821,462 as of December 31, 1983 to P4,873,096.67 represented by an increase in investments from P1,170.00 to P990,919.00; in land from P1,469,406.52 to P1,692,226.52; and in building from P228,648.00 to P1,978,608.00. The audited financial statements registered a corresponding increase in capital stocks issued, outstanding and paid-up from P1,750,000.00 as of December 31, 1983 to P4,000,000.00 for the period ending December 31, 1985. On respondent's claim that the assignment he made in favor of TORMIL were "entrustments", there is nothing on record to support this contention. The terms and conditions of the deeds of assignment do not support this claim. On the contrary, the language of the deeds of assignment are clear and unequivocal and any claim to the contrary is unavailing. Intention cannot prevail over the express terms of a contract. An express trust pertaining to real property or any interest therein may not be proved by parol evidence. In the case at bar, whatever motives that impelled respondent Torres in making the assignments, whether it be for his personal benefit, to save cost and taxes, to show love for his filial relatives or his enmity with them, to gain control of the corporation, or merely on the advise of some person are of no moment and do not affect the validity of the deeds of assignment he voluntarily and lucidly made. Subsequently, he cannot raise these matters to evade compliance with what is legally incumbent upon him. prLL Anent the contention of respondent that Board Resolution No. 3-87 was not necessary for him to effectively make the revocation, we find the same without merit. As already stated, respondent never had any valid ground to unilaterally revoke the deeds of assignment executed in favor of TORMIL. And since said deeds of assignment to TORMIL are valid, legal and lawful in all aspects, the deeds of revocation executed by respondent must logically be considered and declared null and void. There is no need to lengthily discuss the nullity of Board Resolution No. 3-87 since the same was previously ruled as null and void in SEC Case No. 3161 when this Office rendered judgment as follows: "Declaring as null and void the election and appointment of respondents to the Board of Directors and executive positions of TORMIL held on March 25, 1987, and all their acts and resolutions made for and in behalf of TORMIL by authority of and pursuant to such invalid appointment and election held on March 25, 1987." (Decision, SEC Cases Nos. 3153 and 3161, p. 29) Further the said ruling made by this Office was affirmed by the Supreme Court in G.R. No. 120138, which held: We likewise sustain respondent SEC when it ruled, interpreting Section 74 of the Corporation Code, as follows (Rollo, p.45): In the absence of (any) provision to the contrary, the corporate secretary, is the custodian of corporate records. Corollarily, he keeps the stock and transfer book and makes proper and necessary entities therein. Contrary to the generally accepted corporate practice, the stock and transfer book of TORMIL was not kept by Ms. Maria Cristina Carlos, the corporate secretary but by respondent Torres, the President and Chairman of the Board of Directors of TORMIL. In contravention to the above cited provision the stock and transfer book was not kept at the principal office of the corporation either but at the place of respondent Torres. These being the obtaining circumstances, any entries made in the stock and transfer book in March 8, 1987 by respondent Torres of an alleged transfer of nominal shares to Pabalan and Co. cannot therefore be given any valid effect. Where the entries made are not valid, Pabalan and Co. cannot therefore be considered as stockholders of record of TORMIL. Because they are not stockholders, they cannot therefore be elected as directors of TORMIL. To rule otherwise would not only encourage violation of clear mandate of Sec. 74 of the Corporation Code that stock and transfer book shall be kept at the principal office of the corporation but would likewise open the floodgates of confusion in the corporation as to who has the proper custody of the stock and transfer book and who are the real stockholders of record of a certain corporation as any holder of the stock and transfer book, though not the corporate secretary, at pleasure would make entries therein. The fact that respondent Torres holds 81.28% of the outstanding capital stock of TORMIL is of no moment and is not a license for him to arrogate unto himself a duty lodged to ( sic ) the corporate secretary."(G.R. No. 120138, pp. 27 to 28) This being the ruling of the Supreme Court, we cannot likewise sustain respondent's theory that when the purpose of the assignment is simply to meet the legal requirements of seating a stockholder's representative in a corporation's Board of Directors, there is no real transfer or conveyance to speak of that would give rise to the exercise of stockholders' right of first refusal. While respondent engaged himself in a legal argument on this issue, his contention in SEC Cases Nos. 3153 and 3161 vis-a-vis his theory in this case is unfortunately the same dog with a different collar. Thus, the Supreme Court ruled that respondent should have been more careful in ensuring that his actions particularly the assignment of shares to his nominees, complying with the requirements with law. Moreover, the transfer restrictions prescribed by the articles of incorporation and by-laws of TORMIL are plain, absolute and unqualified. It does not make any distinction between real and simulated stock transfer for the purpose of seating a stockholder's representative to the board. Necessarily, transfers alienations or assignments without delving into their purposes must strictly comply with the prescribed restrictions; namely, the application and exercise of the stockholders' right of first refusal. The rationale for such transfer restriction is not hard to fathom. TORMIL is a close family corporation within the contemplation of Section 96 of the Corporation Code. Being so, transfer restrictions were specially adopted in TORMIL's articles of incorporation and by-laws precisely to maintain its being a close corporation. Although restrictions on the transfer of shares are occasionally adopted for other reasons, the usual purpose is to prevent changes in control of the corporation which might otherwise result from the transfer of voting shares (W.L. Cary, Cases and Materials on Corporation Law, 7969 Ed., p. 494). These restrictions are employed by the so-called close corporations as part of the attempt to equate the corporate structure to a partnership by giving the original stockholders a sort of pre-emptive right through which they may, if they choose, veto the admission of a new participant (Allen vs. Biltmore Issue Corp., 2. N.Y.Z Ed. 5384,148 N.E. Ed. 812). This is the nature and purpose of the transfer restriction as adopted by the corporation, thus giving the stockholders the right of first refusal. Under such as evident purpose, the transfer restriction provision prescribed in TORMIL's articles/by-laws should be applied with emphasis in view of respondent's admission that there was no intention to transfer ownership. More so, if the final purpose is to unseat the duly elected Board of Directors of TORMIL as a sinister move to wrest the voting control, direction and management of the complainant corporation. And since the assignment of shares made by respondent to Pabalan and company were declared invalid, it inevitably follows that any or all of their acts as such are likewise null and void and without any binding effect upon complainant TORMIL or to the individual complainants herein; specifically, the adoption and approval of Board Resolution No. 3-87. Hence, under these circumstances, respondent is under legal obligation to re-convey the real properties he earlier assigned and transferred to TORMIL as well as the shares of stock in exchange for the 225,000 shares of TORMIL. And for those properties which can no longer be reconveyed since they have been sold, respondent should be held liable to pay and reimburse TORMIL the proceeds thereof with legal interest due thereon from the time such properties were disposed on until fully paid. Likewise, respondent must account, reimburse and pay to TORMIL all the fruits, income and interests generated and realized from the said properties from the time their assignments were revoked on April 6, 1987. Since it appears that respondent Torres sold the shares of stock from San Miguel Corp., Ayala Funds, Inc., China Banking Corporation, and PLDT, he must also account, reimburse and pay to TORMIL the proceeds thereof together with the legal rate of interests due thereon from the time of disposition until fully paid. Without a doubt, complainants were justified in filing this case in behalf of TORMIL. For this purpose, the award of attorney's fees is proper under the circumstances. Conversely respondent has shown no justification for his counterclaim for damages and attorney's fees. Similarly, complainants claim for actual and exemplary damages are dismissed for lack of evidence to support the same. WHEREFORE, premises considered, JUDGMENT is hereby rendered as follows: 1) Board Resolution No. 3-87 dated April 3, 1987 passed and approved by Edgardo Pabalan, Graciano Tobias, Rodolfo Jocson, Jr., Melvin Jurisprudencia and Augustus Ceasar Azuna, authorizing Torres to act for himself and for TORMIL to sign and approve the Deeds of Revocation of Assignment executed by respondent is hereby declared NULL and VOID; 2) The Deeds of Revocation of Assignment all dated April 6, 1987 executed and signed by respondent Torres revoking and canceling the assignment of real properties/shares of stock in exchange for the 225,000 shares of TORMIL are hereby declared NULL and VOID; 3) The respondent, through the court appointed Administratrix in Special Proceedings No. M-1768 pending before the Regional Trial Court of Makati City, is hereby ORDERED to execute the necessary deeds/instruments of reconveyance, in order to effectively and legally vest the title, ownership and possession in and over the parcel of land covered by TCT Nos. 17481 and 174182 of the Registry of Deeds of Manila and TCT Nos. 357965 and 357966 of the Registry of Deeds of Quezon City in favor of TORMIL; 4) ORDERING the respondent through the same Administratrix to account for and to deliver to complainant TORMIL the proceeds of the sale of the lot covered by TCT No. 174183 of the Registry of Deeds of Manila sold by respondent Torres to one Josephine Serrano in the amount of P740,000.00 plus legal interest thereon computed from the time of its disposition on April 20, 1987 until fully accounted for; 5) ORDERING the respondent through the same Administratrix to execute the necessary deeds/instrument of reconveyance in order to effectively/legally vest the title, ownership and possession of the shares of stock which respondent conveyed to TORMIL in exchange for its 225,000 shares of stock, particularly the following shares of stock, to wit: a) Manila Jockey Club, Inc. b) El Hogar Filipino c) Ayala Corporation d) Philippine Long Distance Telephone Co. e) Phil. Tannery Co., Inc. f) F. G. U. Insurance Corp. g) Filipino Life Insurance Co. h) Jardine Daries, Inc. i) Universal Reinsurance Corp.; 6) ORDERING the Administratrix to account for, reimburse and pay to complainant TORMIL the value of such shares of stock of San Miguel Corporation, Ayala Fund, Inc., China Banking Corporation, and PLDT already disposed of plus legal interest thereon computed from the time of disposition on October 24, 1986 until fully paid; 7) ORDERING the respondent through the same Administratrix to account for, reimburse and pay complainant TORMIL any and all fruits, income and interests generated and/or earned by TCT Nos. 174181 and 174182 (Manila) and TCT Nos. 357965 and 357966 (Quezon City) and by the shares of stock of Manila Jockey Club, Inc.; El Hogar Filipino; Ayala Corporation; Philippine Long Distance Telephone Co.; Philippine Tannery Co. Inc.; F. G. U. Insurance Corp.; Filipinas Life Insurance Company; Jardine Davies, Inc. and Universal Reinsurance Corporation from the time they were revoked by respondent Torres on April 6, 1987 until titles thereof shall have been reinstated in TORMIL's favor; 8) ORDERING the respondent through the same Administratrix to pay complainants attorney's fees in the amount of P50,000.00 and the costs of suit. Respondent's counterclaim for damages and attorney's fees are hereby DISMISSED for lack of merit. dctai SO ORDERED. (SGD.) JAMES K. ABUGAN Hearing Officer (SGD.) SIMEON P. BADILLO, JR. (SGD.) ROBERTO O. SENCIO, JR. Hearing Officer Hearing Officer * Copied verbatim from documents obtained directly from the Securities and Exchange Commission .