Dimasalang P. Flores vs. Generosa C. Benitez, et al.

[SEC-SICD * CASE NO. 07-96-5398. July 30, 1998.] DIMASALANG P. FLORES , complainant-petitioner vs . GENEROSA C. BENITEZ, ET AL , respondents . D E C I S I O N This is an action for annulment of the amended corporate name St. Joseph Christian School, Inc. formerly St. Joseph Study Center, Inc., with a prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction enjoining respondent Generosa C. Benitez from collecting fees from students for the school year 1996-1997 and from using the joint ventures funds. The petitioner also prays for an accounting of the income of the school for the said school year and for award of damages. Respondents' answer raised the affirmative defenses of (1) lack of jurisdiction, (2) forum-shopping, (3) lack of cause of action, and (4) non-compliance with the requirements of a derivative suit which affirmative defenses were treated as a Motion to Dismiss. In an order dated August 1, 1997, the motion to dismiss was denied. Likewise, the alleged defense of forum-shopping was ruled out in that Order. Civil Case No. C-17284, filed in the Regional Trial Court of Caloocan City, Branch 131, wherein the reliefs prayed for overlap some of the reliefs prayed for in the case at bar, is not identical to the case before this forum. The issue to be resolved in the instant case shall thus be limited to the legality of the amendment of the corporate name. Respondents requested for three resettings of the pre-trial conferences. On the fourth resetting, respondents failed to appear despite notice. On motion of the petitioner, respondents were declared as in default. Petitioner was allowed to present evidence ex-parte in accordance with Rule VIII, Section 4 of the SICD Revised Rules of Procedure in an order dated January 16, 1998. Accordingly, complainant/petitioner Dimasalang P. Flores was presented as sole witness. The facts as gathered from his testimony and documentary evidence presented are as follows: St. Joseph Study Center, Inc. was registered on April 16, 1985 with SEC Registration No. 126002 for a term of fifty (50) years (Exhibit "A"). The incorporators who were also the trustees were Norma C. Morales, Lorenza C. Aban, Bienvinido M. Calalo, Louie Aguila Epres and respondent Generosa C. Benitez. On April 19, 1987, respondent Generosa C. Benitez persuaded complainant/petitioner Dimasalang P. Flores to form under a school joint venture arrangement. The joint venture was reduced into writing, denominated as Memorandum of Agreement (Exhibit "B") whereby Flores and defendant Generosa C. Benitez shall on a fifty-fifty share basis, run and operate St. Joseph Study Center, Inc. In accordance with the agreement, complainant contributed a house and lot valued at Two Hundred Five Thousand Eight Hundred Pesos (P205,800.00) and cash in the amount of Three Hundred Eleven Thousand One Hundred Fifty Pesos (P311,150.00). Pursuant to the fifth and last "whereas" clause of the Memorandum of Agreement, respondent Generosa C. Benitez caused the execution on January 21, 1993, a Waiver of Rights (Exhibit "C") whereby the original incorporators and trustees of St. Joseph Study Center, Inc. waived and relinquished their position and participation, including any and all rights, shares and interests in St. Joseph Study Center, Inc., in favor of the following trustees: Generosa C. Benitez, principal respondent, Dimasalang P. Flores, complainant/petitioner, Ernesto F. Daez, Alex Taaca, Gloria Taaca and Alicia Q. Marcial (Exhibit "C "). As additional proof that complainant/petitioner became a member of St. Joseph Study Center, Inc., an Amendment Data Sheet (Exhibit "D") dated January 20, 1993 signed by Generosa C. Benitez in which the name of Dimasalang P. Flores appeared as Trustee, and General Information Sheet (Exhibit "E", Annex "D" to the complaint) stamped and received by the SEC on January 21, 1993, in which the name Dimasalang P. Flores was reflected as Director (Trustee) and Secretary, were presented. On February 13, 1996, respondents caused the amendment of the corporate name of the school from St. Joseph Study Center, Inc. to St. Joseph Christian School, Inc., evidenced by a trustees certificate (Exh. G", Annex "F" of the complaint), signed by respondents (Exhibit "G-1") and Certificate of Filing of Amended Articles of Incorporation amending the corporate name issued on April 10, 1996 (Annex "G" of the complaint). Complainant Flores in his testimony declared that the signatories to the Trustees Certificate, who are the respondents, were never elected as Trustees of St. Joseph Study Center, Inc. much less was there any resolution or notice calling for the election of new trustees. Complainant also testified that because of the malicious, fraudulent and conspirational actuations of respondents, he suffered and continues to suffer mental anguish, fright, besmirched reputation, wounded feelings, social and business humiliation which entitles him to an award of moral damages. And to serve as deterrent example for the public good, and to other persons similarly inclined in flaunting contracts and obligations, respondent Benitez should be held liable to pay exemplary damages. Complainant has a legal right to complain against respondent since at the time of the amendment of the corporate name on February 13, 1996, the school under joint venture between complainant and defendant Generosa C. Benitez was still existing. Complainant was a member of the corporation at the time of the change in corporate name. On November 11, 1997, a decision was rendered in Civil Case No. C- 17284 dissolving the joint school venture between complainant and Generosa C. Benitez. In that decision, which is pending appeal before the Court of Appeals, the court ruled in favor of complainant Dimasalang P. Flores. Wherefore, (1) this forum finds and so declares that the amendment of the corporate name is null and void, the same not having been approved in accordance with the provision of Section 16 of the Corporation Code. However, the issue has become moot and academic with the dissolution of the joint school venture and winding up of the affairs of the partnership venture in Civil Case No. C-17284 of the Regional Trial Court of Caloocan City. No pronouncement as to cost. SO ORDERED. (SGD.) NATIVIDAD P. QUERIJERO Hearing Officer