Mainstream Credit Services Corp. v. Sanchez

[SEC-SICD * CASE NO. 08-97-5732. June 7, 1999.] MAINSTREAM CREDIT SERVICES CORPORATION, ET AL. , petitioners , vs . CARLITO J. SANCHEZ, ET AL. , respondents . D E C I S I O N This is a petition for injunction with a prayer for the issuance of a temporary restraining order (TRO) and writ of preliminary injunction to restrain and prevent herein respondents from further representing themselves to the clients-borrowers of petitioner corporation as its duly authorized representatives in the collection of any and all payments made by such clients-borrowers for loans obtained from the corporation and from actually collecting and receiving said payments; and the issuance of a preliminary mandatory injunction to compel respondents to allow herein petitioners access and entry into the office premises of petitioner corporation and to turn over to and/or furnish petitioners all papers, documents and records belonging to the corporation, especially those pertaining to the period July 22, 1997 to the present and for damages. The petition averred, among others, that the parties herein, except for respondent Consolacion S. Cervantes (hereinafter referred to as Consolacion), are incorporators, directors and stockholders of petitioner corporation; that petitioner corporation is duly authorized under its articles of incorporation and by the Central Bank of the Philippines to engage in the business of lending investor; that petitioners collectively subscribed to 50.04% of the authorized capital stock of the corporation while respondents collectively subscribed to the remaining 49.96%, that petitioners Carlos J. Sanchez and Arnel P. Pamplona are the incumbent chairman of the board and president of petitioner corporation, respectively; that petitioner Cecilia S. Cajucom is the vice president while respondents Carlito J. Sanchez (hereinafter referred to as Carlito), Ernesto B. Magsumbol and Norberto N. Cervantes are the executive vice president, corporate secretary and treasurer respectively; that to cut down on expenses petitioner corporation held office in the residence of respondent Carlito who had offered his house as temporary office of the corporation free of rent; that all the corporation's papers, documents and books of account are currently kept in the house of respondent Carlito, it being the temporary corporate office; that petitioner Pamplona, in his capacity as president of the corporation and in accordance with the provision of the corporation's by-laws, hired and appointed employees of the corporation; that two of such employees hired were respondents Carlito and Consolacion who were tasked with the duty and function, among others, of collecting payments made by clients-borrowers of the corporation; that effective July 28, 1997 petitioner Pamplona terminated the employment of respondents Carlito and Consolacion as collectors of the corporation on the ground of .unsatisfactory performance; that as a consequence of the termination of their employment, respondents Carlito and Consolacion were effectively disauthorized from further collecting and receiving payments made to the corporation by its clients-borrowers; that despite the termination of their employment as collector of the corporation and the withdrawal of their authority to collect and receive payments, respondents Carlito and Consolacion still continued to represent themselves as the duly authorized collectors of the corporation and to collect and receive payments; that starting July 24, 1997, in apparent retaliation for the termination of the employment of respondents Carlito and Consolacion, respondents herein excluded petitioners from the conduct of the affairs of the corporation by denying and refusing them entry and access into the office premises of the corporation at the house of respondent Carlito; that as a result thereof herein petitioners have been deprived of access to the corporate records and are now in the dark as to the status of corporate operations; that owing to the exclusion of petitioners from the affairs and operations of the corporation, and by reason of respondents' lack of training, expertise and experience in the conduct of the business of a lending investor, respondents are likely to, and are in fact steadily mismanaging and dissipating the resources, assets and income of the corporation; that petitioners, who are the majority stockholders of the corporation and who possess superior training, expertise and experience in the business of lending investor, could no longer exercise management of the affairs of the corporation owing to their being shut out from the corporate office and their lack of access to the corporate records; that in order to preserve and safeguard the resources, assets and income of the corporation from further mismanagement and dissipation by respondents, there is an urgent need to restrain and enjoin respondents from further collecting and receiving any and all payments made to the corporation by its clients-borrowers for loans obtained therefrom; and that by reason of respondents' unreasonable refusal to allow herein petitioners entry into the corporate office premises and access to the corporate records, and by reason further of their fraudulent persistence in collecting and receiving payments made by clients-borrowers of the corporation for loans obtained therefrom despite their having been disauthorized from doing so, petitioners were constrained to institute the present action to protect their interests. In their answer herein respondents denied the termination of employment of respondents Carlito and Consolacion, arguing that they never received a copy of the termination letter. They also denied having refused petitioners entry into the office premises of the corporation and of denying them access to the corporate records. Finally, they denied being guilty of mismanaging and dissipating the assets and revenues of the corporation. LLpr In the course of the hearings petitioners only pursued their prayer for the issuance of a writ of preliminary injunction. The following facts were admitted and/or established by the evidence adduced: 1) that petitioner corporation is duly registered with the Securities and Exchange Commission (SEC) and duly authorized to engage in the business ,of lending investor (Exh . "A" ); 2 ) that herein petitioners and respondents, except for respondent Consolacion, are all incorporators, stockholders and directors of petitioner corporation; 3) that petitioner Sanchez is the chairman of the board of petitioner corporation; petitioner Pamplona its president; petitioner Cajucom its vice president; respondent Carlito its executive vice president; respondent Magsumbol its corporate secretary; and respondent Cervantes its treasurer; 4) that the office of petitioner corporation is temporarily located in the house of respondent Carlito, free of rent, where corporate files and records pertaining to its lending activities are kept; 5) that records and documents relative to the corporation's lending business are kept and stored in the office of the corporation; 6) that petitioner corporation hired or employed collectors to perform the task of collecting/receiving payments of clients-borrowers from four areas of Metro Manila, namely, Tondo, Recto, Caloocan and Malabon/Navotas areas (TSN, September 4, 1997); 7) that the persons hired by the corporation as collectors were petitioner Sanchez, respondents Carlito and Consolacion, and one Liza Caudila who were each paid a monthly salary of five thousand pesos (P5,000.00) (TSN, September 4, 1997; 8) that respondents Carlito and Consolacion were dismissed as employees-collectors of petitioner corporation on the ground of inefficiency and unsatisfactory performance through a termination letter dated June 27, 1997 (Exh. "E") and signed by petitioner Pamplona in his capacity as president of the corporation and in accordance with the corporation's by-laws (TSN September 2 and 4, 1997; Exhibits "C" and "E"); 9) that respondents Carlito and Consolacion, however, refused to acknowledge receipt of said termination letter which was served on them on June 27, 1997 (TSN, September 4, 1997; 10) that respondents Carlito and Consolacion were each subsequently sent another termination letter via registered mail; that the registry return cards (Exh. "M" and "N") showed that the termination notices were respectively received by respondent Carlito through his wife, Amelita (Exh. "M-2"), on August 5, 1997 (Exh. "M-1"), and by respondent Consolacion through her husband, Norberto (Exh. "N-2"), on August 4, 1997 (Exh. "N-1"); that despite receipt by respondents Carlito and Consolacion of said termination letters, and despite their having been stripped of all authority to collect payments they nevertheless still continued to represent themselves to the clients-borrowers of the corporation as its duly authorized collectors and did, in fact, continue to collect and receive payments (TSN, September 15, 1997). On October 16, 1997, after due notice and hearing, an order was issued granting the petitioners' application for the issuance of the writ of preliminary injunction After the petitioners posted the required bond, the Commission, on October 23, 1997 issued the writ of preliminary injunction enjoining respondents Carlito J. Sanchez and Consolacion S. Cervantes "from further representing themselves to the clients-borrowers of the corporation as its duly authorized collectors and from actually receiving said payments from the clients-borrowers of the corporation until further order from this Hearing Officer." Due to non-appearance of respondents and their counsel at the several settings for preliminary conference they were finally declared in default in an order dated March 6, 1998. Thereafter, petitioners were allowed to present ex-parte their evidence on March 26, 1998. Petitioners adopted the evidence they have presented during the hearing on the prayer for a preliminary injunction and, in addition thereto, presented evidence in support of their prayer for award of moral damages and attorney's fees. The evidence on record further established the following additional facts: that respondents collected a total of One Hundred Sixty Five Thousand One Hundred Thirty Five Pesos (P165,135.00) for the period from July 23, 1997 to September 11, 1997 (Exh. "Z", Exhs. "1" to "3", Exh. "6", TSN, September 15, 1997; W. Carlito J. Sanchez, pp. 55-57) although respondents Carlito and Consolacion have already been dismissed as collectors of petitioner corporation and thereby stripped of all authority to continue collecting payments made to the corporation by its clients-borrowers; that respondents Carlito and Norberto each obtained from petitioner corporation loans amounting to Thirteen Thousand Pesos (P13,000.00) and Twenty Five Thousand Pesos (P25,000.00) respectively (Exhibits "Z" to "Z-5" inclusive); that respondents circulated to the clients-borrowers of petitioner corporation in utter bad faith a damaging document purporting to be a board resolution of petitioner corporation falsely announcing the alleged removal of petitioner Carlos J. Sanchez as director, chairman of the board and chief operating officer of petitioner corporation, and maliciously accusing him of having committed the felonies of qualified theft and grave threats Exh. "F"); that petitioner Carlos J. Sanchez was damaged and prejudiced by the spurious board resolution and that same has caused the former extreme embarrassment and anguish. (TSN March 26, 1998) As earlier stated, respondents were declared in default and therefore, all these evidence remain unrebutted. From the established facts and evidence adduced it can readily be seen that effective July 27, 1997 respondents Carlito and Consolacion were already without any authority whatsoever to continue collecting and receiving payments of clients-borrowers of petitioner corporation by reason of the termination of their employment as collectors of the latter. Due to the fraudulent persistence of respondents in further collecting and receiving payments made by clients-borrowers of petitioner corporation for loans obtained therefrom despite the termination of their employment as collectors, herein petitioners were constrained to institute the instant action for injunction and damages and engage the services of counsel for the sum of Twenty Thousand Pesos (P20,000.00). Thus, it is just proper that petitioners be entitled to the reliefs prayed to include damages and attorney's fees. WHEREFORE, premises considered, judgment is hereby rendered: a) Making the writ of preliminary injunction dated October 23, 1997 against respondents Carlito and Consolacion. permanent; b) Ordering respondents to pay petitioners the sum of Fifty Thousand Pesos (P50,000.00) as and by way of moral damages; c) Ordering respondents to indemnify petitioners the sum of Twenty Thousand Pesos (P20,000.00) as and for attorney's fees. Accordingly, the injunction bond posted by the petitioners is hereby cancelled. aEcSIH SO ORDERED. (SGD.) JAMES K. ABUGAN Hearing Officer