Amparo Aranza-Bonilla vs. Golden Gate Colleges

[SEC-SICD * CASE NO. 1807. September 5, 1980.] AMPARO ARANZA-BONILLA, in her capacity as Special Administratrix and legal heir of the late Ricardo B. Bonilla , petitioner , vs . GOLDEN GATE COLLEGES, INC. , respondent . D E C I S I O N This is an action against Golden Gate Colleges, Inc., (GGCI, for brevity) for cancellation of its certificate of registration on the ground that the same was procured through fraud. Amparo Aranza Bonilla, in her capacity as Special Administratrix and legal heir of the late Ricardo Bonilla, filed, thru counsel, the verified petition, dated 26 October 1979, alleging, inter alia, that in procuring the registration certificate of GGCI, fraud was committed by making it appear in its Articles of Incorporation that May and Gliceria Bonilla, two of the incorporators-stockholders of the respondent corporation were both of legal age when in fact, they were both minors, being only 14 years and two months old and 19 years old, respectively. Solely on this ground, petitioner prays for the cancellation of the respondent corporation's certificate of registration issued by this Commission on December 8, 1961. In its Answer, dated December 14, 1979, respondent, by counsel, interposed as special affirmative defense, petitioner's lack of cause of action. After trial on the merits of the instant case, records obtaining therein show that the following indisputable material facts have been established: 1. May and Gliceria Bonilla were both incorporators-stockholders of GGCI, a college situated in Batangas City. 2. May and Gliceria Bonilla were both minors at the time this Commission issued the GGCI certificate of registration on December 8, 1961. 3. The late Ricardo Bonilla was an incorporator, board member and president of GGCI at the time of his death. 4. The instant petition was actually filed on November 9, 1979. As agreed upon by the parties, the issue in this case is " Whether or not the inclusion of May and Gliceria Bonilla as incorporators in the incorporation of Golden Gate Colleges, Inc . on December 8, 1961 amounted to fraud which would warrant the revocation of the franchise of the corporation ?" In resolving said issue, the following pertinent provisions of the New Rule of Procedure in the Securities and Exchange Commission which has been promulgated pursuant to Presidential Decree No. 902-A, are hereby quoted for emphasis and ready reference: "RULE XX QUO WARRANTO: ACTION FOR SUSPENSION OR REVOCATION OF FRANCHISE" "SECTION 1. . . . "SECTION 2. Suspension or Revocation of Franchise of a Corporation, Partnership or Association . An action may be also instituted for the suspension or revocation of the franchise or certificate of registration of a corporation, partnership or association: a) When it has committed fraud in procuring its certificate of registration;" b) . . . c) . . . d) . . . e) . . . f) . . . "SECTION 3. Action by Whom Filed . a) An action under Section 1 hereof shall be commenced by the Commission, or by the Solicitor General or a fiscal, when directed by the President of the Philippines, or when upon complaint or otherwise he has good reason to believe that any case under said section can be established by proof. b) The Solicitor General or fiscal may bring such an action at the request and upon the relation of another person; but in a such case the officer bringing it may first require an indemnity be for the expenses and costs of the action be given to him by the person at whose request and upon whose relation the same is brought. c) Actions for the suspension or revocation of a franchise or certificate of registration of a corporation, partnership or association may be also commenced by the Commission motu proprio which, after proper notice and hearing, may issue the corresponding order as the evidence or circumstances of the case may warrant." "SECTION 8. Limitation . Nothing contained in this rule shall be construed to authorize an action against a corporation for forfeiture of charter unless the same be commenced within five (5) years after the act complained of was done or committed." The instant case having been filed for cancellation of GGCI registration certificate, the purpose therefore is to test the legality of the respondent corporation's organization or its existence in which case this action is a Quo Warranto proceeding or in the least, a proceeding of its nature and should be commenced by the Commission, or the Solicitor General or fiscal as provided for in the aforequoted Sec. 3, Rule XX of the New Rules of Procedure in the SEC . However, the case bar could have not been commenced by the aforementioned government agency or government officials even upon the relation or complaint/petition of herein petitioner considering that this case was filed only last November 9, 1979 or 17 years, 11 months and 1 day after December 8, 1961, the date the act complained of was committed. The aforequoted provision of Sec. 8 of Rule XX of the SEC New Rules of Procedure would not authorize an action against a corporation for forfeiture of charter unless the same is commenced within five (5) years after the act complained of was done or committed. Therefore, considering the aforequoted provision of Sec. 8, Rule XX and facts established in this case, the fraud relied upon by the herein petitioner or any of the grounds for revocation of franchise or cancellation of registration certificate of a corporation, enumerated under Sec. 2 of Rule XX would not be a valid cause of action, hence the instant petition must necessarily fail. Thus, the instant action should be dismissed without the necessity of delving into the aforequoted issue considering that the foregoing discussions have rendered said issue merely academic and the resolution thereof has become expendable. Assuming, however, that the present action has been commenced by the proper party within five (5) years after the act complained of was committed or done, said action would still not prosper considering that Quo Warranto or proceedings of its nature is a remedy designed to vindicate public rather than private rights, and it is not employed primarily in the interest of any individual. The wrongs complained of are of public, not private, concern and the proceeding is not a private action, even though instituted as a result of information given the government officer authorized to institute the action by a private individual or association. The remedy is not available for the enforcement of private rights or for the redress of private or local grievances. This is true whether the remedy is invoked by the public prosecutor or by a private citizen. To the effectuation of the public purpose, the protection of private interests which may be involved is only incidental (Fletcher Vol. 5, pp. 1028-1029 citing People vs. Healy, 230 Ill. 280, 82 NE 599, 15 LRA (N.S.) 603, etc., State vs. Norborne Land Drainage Dist. Co of Carsoll 290 Mo. 91, 234 S.W. 344, etc., People vs. California Protective Corp., 76 Cal. App. 354, 244 Pac. 1089, etc., State vs. Des Moines City Ry Co. 135 Iowa 694, 109 N.W. 867). In the instant case, the revocation of the franchise of GGCI or the cancellation of its registration certificate would undoubtedly prejudice the public considering the thousands of students enrolled in the GGCI who would be deprived, at least temporarily, of their opportunity to pursue their education which is the primary concern of the government towards the realization of its goal to produce better citizens of the New Society. As to the benefits that may be derived by anybody from the cancellation of the GGCI registration certificate, it is even doubtful if the petitioner herein would derive any. At any rate " the remedy is not available for the enforcement of private rights or for the redress of private or local grievances ." Moreover, the fact that May and Gliceria Bonilla are now both of legal are and managing the affairs of the corporation would further negate the necessity for the cancellation of the GGCI registration certificate. IN VIEW OF ALL THE FOREGOING, the instant petition, docketed as SEC Case No. 1807, should be, as it hereby is, DISMISSED, without pronouncement as to costs. (SGD.) ERNESTO T. MENDIOLA Hearing Officer