Kapisanang Pinagbuklod na Tahanan, Inc. v. Santillan

[SEC-SICD * CASE NO. 10-94-4903. January 2, 1996.] KAPISANANG PINAGBUKLOD NA TAHANAN, INC. (KAPIT-INC.) ET AL. , petitioners , vs . SANNIE SANTILLAN, ET AL. , respondents . D E C I S I O N This is a petition for accounting filed by the herein named petitioners against the respondents. prcd Respondents, instead of filing an answer to the petition, filed a motion to dismiss, dated November 23, 1994, which motion to dismiss was denied for lack of merit per Order issued by this Hearing Officer dated December 14, 1994. On January 11, 1995, respondents filed a motion for reconsideration of the aforesaid denial of their (respondents) motion which motion for reconsideration was also denied per Order dated January 31, 1995. On April 27, 1995, upon motion made by counsel for petitioners, an order was issued by this Hearing Officer declaring the herein respondents in default for their failure to file their answer within he reglementary period. LLjur In their petition, petitioners allege that petitioner Kapit-Inc. is a non-stock corporation organized and existing since June 20, 1988 while co-petitioners are members of the aforesaid corporation; that the respondents were the officers of Kapit-Inc. from the time it was registered and still claim to be incumbent officers up to the present; that it is a requirement under the Corporation Code of the Philippines that the financial statements of the corporation shall be presented every year to the members of the corporation and no such financial statement of its assets and liabilities had ever been presented nor submitted to the SEC by the respondents; that this failure to comply on the part of the respondents with Section 141 of the Corporation Code have adverse effects upon the interest of the members and the corporation itself for the assets and liabilities of the corporation which should be known to the members and the SEC had instead become a secret shared by the respondents alone; that the corporate funds were earned through the payments for the consumption of electricity supplied by MERALCO through the corporation; that for every kilowatt hour of electric consumption the corporation charges Five Pesos (P5.00) and one half of this amount is paid to MERALCO and the other half is retained by the corporation forming part of the corporate assets; that another source of corporate funds are the deductions from the total charges of MERALCO which is given monthly every time a billing is made with the deduction being retained as corporate funds; that from 1989 up to January, 1994 the approximate amount collected from the consumers was at least P3,120,710.00 and one-half of which, in the amount of P1,560,355.00, should have been retained as corporate funds; that there is an unpaid obligation with the MERALCO branch in the amount of P342,778.53 that led to the cutting off of the electric supply to the corporation bringing difficulties to the consumers and loss of income to the corporation; that the unpaid obligation should have not arisen and the cutting off of the electric supply avoided had Sannie Santillan and his co-respondents, who handled the corporate funds in trust as the law requires, had made available and forthcoming the said funds and made the necessary payments; that the members of the corporation and the petitioners have fears that the unpaid obligation with MERALCO was not settled because the funds of the corporation are being dissipated, if not already dissipated, and there is a need for this Commission to look into the assets and books of the corporation so as to protect the interest of the corporation and that of the members from what appears to be an unchecked dissipation of corporate funds that should be held in trust. To support their allegations in the petition, petitioners presented witnesses and documentary evidence. The sole issue to be resolved in this case is whether or not the herein respondents can be compelled by the petitioners to render an accounting? The positive testimonies of petitioners' witnesses that respondents herein did not render an accounting to the general membership of the association Kapisanang Pinagbuklod Na Tahanan, Inc. (Kapit-Inc.) since its registration where the respondents were already the officers of the corporation and still claiming to be the incumbent officers of the said corporation up to the present without rebuttal from the respondents are enough for this Hearing Officer to resolve the aforestated issue of this case in the affirmative. Individual petitioners, as members of the corporation Kapit-Inc., has a right to demand an accounting from the officers of the corporation and the respondents herein, being the officers of the said corporation, have the legal obligation to render an accounting to the herein individual petitioners. This right and obligation of the parties are quite explicit and as provided for in Sections 75 and 141 of the Corporation Code which state: LLpr "SECTION 75. Rights to Financial Statements . Within ten (10) days from receipt of a written request of any stockholder or member, the corporation shall furnish to him its most recent financial statement, which shall include a balance sheet as of the end of the last taxable year and a profit or loss statements for said taxable year, showing in reasonable detail its assets and liabilities and the result of its operations. At the regular meeting of stockholders or members, the board of directors or trustees shall present to such stockholders or members a financial report of the operations of the corporation for the preceding year, which shall include financial statements, duly signed and certified by an independent certified public accountant. However, if the paid up capital of the corporation is less than P50,000.00, the financial statements may be certified under oath by the treasurer or any responsible officer of the corporation." SECTION 141. Annual Report of the Corporation . Every corporation, domestic or foreign, lawfully doing business in the Philippines shall submit to the Securities and Exchange Commission an annual report of its operations together with a financial statement of its assets and liabilities certified by any independent certified public accountant in appropriate cases covering the preceding fiscal year and such other requirements as the Securities and Exchange Commission may require. Such report shall be submitted within such period as may be prescribed by the Securities and Exchange Commission." Wherefore, premises considered judgment is hereby rendered as follows: 1. Directing the herein respondents to render an accounting of the financial conditions of Kapit-Inc. to the herein petitioners immediately upon receipt hereof or for the herein petitioners to conduct an accounting of the financial conditions of the aforestated corporation immediately upon receipt hereof at the expense of the respondents. Let copy of this Decision be furnished to the Supervision and Monitoring Department, this Commission, for action insofar as the non-compliance of the herein respondents of the reportorial requirements of this Commission. LLjur SO ORDERED. (SGD.) ROGELIO C. SESCON Hearing Officer