Spouses Enrique M. Rojas, et al. vs. Grace O. Martirez

[SEC-SICD * CASE NO. 08-99-6392. July 3, 2000.] SPOUSES ENRIQUE M. ROJAS and CARMELA G. ROJAS, acting for Themselves and as stockholders/Incorporators of RMJ AGRO-INDUSTRIAL DEVELOPMENT CORPORATION , complainants , vs .GRACE O. MARTIREZ, for herself and Acting as President of RMJ AGRO-INDUSTRIAL DEVELOPMENT CORP. , respondent . Corporation Code ; separate juridical personality of the corporation . Pursuant to Sec. 2 of the Corporation Code, a corporation registered under the said code is considered a juridical person with a personality separate and distinct from that of the stockholders. This is an attribute most characteristic of a corporation. IDTHcA Same ; Section 23 . As a juridical person, a corporation can transact business only through its board of directors, officers and agents through a duly approved board resolution. A director can not act alone. D E C I S I O N This is a complaint filed by spouses Enrique M. Rojas and Carmela G Rojas against Grace O. Martirez, all stockholders of RMJ Agro-Industrial Corporation. From the context of the complaint, the spouses allege that respondent, without any written authority accommodated herself and her family in two (2) rooms of the Jaro Country Club, owned and operated by RMJ Agro-Industrial-Development Corporation, with full meals from the period March 16, 1998 to March 31, 1999 and incurred unpaid bills amounting to P800,000.00 to the damage and prejudice of the corporation; that respondent acted without any written authority to disburse undetermined substantial amount of corporate funds which unauthorized disbursements have contributed to the distress of the corporation; and that respondent, while having been authorized to sign and execute contracts to sell subdivision lots and other forms of conveyances of lots of Coastal View Subdivision, a subdivision owned by the corporation, the proceeds of such sales and conveyance amounting to about P16M has not been accounted for. Respondent, in her Answer, counters that the use of the two (2) rooms of the Jaro Country Club is for the convenience of the corporation, the efficient management and operation needed her presence most of the time; that the money value of her services is more than the benefit given to the corporation as she functions as president without compensation; that no bill was presented to show the details of such charges and no formal demand was even sent to respondent; that this availment was with the knowledge of the directors and none of them made objection in writing; and that all the affairs of the corporation are known to complainants because the office address is the residence of the complainants. cEaACD After the issues were joined, the pre-trial was set on February 21, 2000. A motion to transfer venue and to reset preliminary conference was filed but which was denied by this Hearing Officer. During the pre-trial conference, neither respondent nor her counsel appeared, probably assuming that the conference would be reset by reason of the motion. Incidentally, the SEC Rules of Procedure prohibits postponement such that the pre-trial proceeded without the respondent and her counsel. Consequently, respondent Grace O. Martirez was declared as in default and evidence was received for the complainants. In the oral testimony, complainant Enrique M. Rojas stated that respondent is the President and Chief Executive Officer and in her stint as such, she was designated as co-signer of checks together with the Treasurer, Jerry H. Jardiolin; that she was vested with the authority to manage the day-to-day affairs of Jaro Country Club (JCC) and Coastal View Subdivision (CVS);that without any board resolution, she took upon herself the task of commencing the renovation and repair of the 9-room hotel of JCC and its swimming pool and incurring expenses which were bloated. Complainant Rojas continued to testify that respondent Grace O. Martirez, without any authority from the-Board occupied two (2) rooms of the hotel of JCC from March 16, 1998 to March 31, 1999 together with her family and the total amount of the occupancy and meals summed up to P800,000.00. Demands were made on respondent but she ignored such demand and refused payment. With regard to Coastal View Subdivision, the witness testified that the day-to-day operation of business was also entrusted to respondent Grace Martirez; that she could not account for the proceeds of the sale of 178 lots and loans from Prime Bank, Overton Lending Corporation and Mercantile Credit Resources Corporation. TaHIDS Presented as documentary evidence are the Articles and By-laws of the corporation, the letter of demand dated August 15, 1999 (not duly acknowledged by respondent) and other documents to support the complaint. With the foregoing pleadings, the respondent admits that she stayed at the Jaro Country Club, however, she asserts that being the President and Chief Executive Officer, it is more beneficial for her and that of the corporation, she being the officer entrusted with the day-to-day operation of the corporation. We agree. However, the hotel accommodation and meals consumed by her and the other members of her family should not be shouldered by the corporation. There are other members of the board who would like also to take advantage of this privilege if this is offered to them, using the same defense that it would be beneficial to them and the corporation. Without the proper authority of the Board, the respondent is considered a guest of the hotel. Pursuant to this provision of Section 2 of the Corporation Code, a corporation registered under the said code is considered a juridical person with a personality separate and distinct from that of each stockholder. This is an attribute most characteristic of a corporation. It means that the stockholders are different from the corporation itself. Sec. 23 of the Corporation Code expressly states, to wit: "Sec. 23. The board of directors or trustees Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted, and all property of such corporations controlled and held by the board of directors or trustees to be elected from among holders of stocks, or where there is no stock, from among the members of the Corporation, . . ." As a juridical person, a corporation can only transact through its elected or appointed directors, officers and agents thru a Board Resolution duly approved by the members. A director can not act alone. As to the allegation that the disbursements are bloated, no documentary evidence was presented to support the same. The claim also that the proceeds of sale of subdivision lots and loans obtained from the banks and financing companies can not be accounted for, were not substantiated. Wherefore, with the foregoing, judgment is hereby rendered and this Commission; 1. Orders that a comprehensive audit of the books of accounts by Joaquin Cunanan & Co. or any independent auditor be conducted immediately, afterwhich the auditors shall submit the report to the Board of Directors, copy furnished this Commission, as soon as possible. 2. Orders the members of the Board of Directors to determine the amount due to or from the corporation on account of the cost of unpaid bills of the respondent incurred during the period between March 16, 1998 and March 31, 1999 and to deduct therefrom the compensation due to the respondent as president and chief executive officer. 3. Orders respondent Grace O. Martinez to immediately turn over any amount due to the corporation after the audit had been completed. No pronouncement as to costs. STaCcA SO ORDERED. City of Mandaluyong, Philippines. July 03, 2000. (SGD.) ROSITA R. GUERRERO Hearing Officer