Arminda Julia A. Paraiso vs. Graciano J. Tobias, et al.,

[SEC-SICD * CASE NO. 2738. November 19, 1987.] ARMINDA JULIA A. PARAISO , petitioner , vs .GRACIANO J. TOBIAS, ET AL. , respondents . ADORACION MAGA FARRO-CARLSON , Movant for Intervention . D E C I S I O N The nature of the original petition of Arminda Julia A. Paraiso, as culled from the allegations and prayers thereof, is for the placing of the corporation known as Manila Firehouse, Inc.,under receivership; for temporary restraining order/writ of preliminary injunction; for declaration of nullity of transfers of shares of stock in said corporation by Jose A. Suing and Graciano J. Tobias in favor of Adoracion Maga Farro; for reinstatement of petitioner as treasurer; for the calling of a stockholders' meeting to elect the board of directors and officers for 1985; for allowing the petitioner to inspect the corporate books and records; for attorney's fees and litigation costs; and for other reliefs. LLpr The essential allegations of the original petition are that the mentioned transfers of shares of stock, "which transfers have definitely resulted in the change of control over the corporation in favor of the transferee" (Adoracion Maga Farro) is in violation of the by-laws permitting transfer of shares of stock if it is in favor of an existing stockholder, among other things; that the respondents Graciano J. Tobias, Jose A. Suing, Joaquin Diquiatco and Mario Tanchanco, supposed members of the board of directors are threatening to withdraw corporate funds "in a massive scale",and have engaged the services of a foreign consultant for "an astronomical fee" without board approval; that respondents appointed another person as new treasurer without any board meeting therefor, and even if the petitioner was only on leave of absence; that respondents failed to call and/or hold annual stockholders' meeting; that petitioner has been denied access to in formation regarding the "day-to-day" management of the corporation, particularly its "financial status" and "related expense reports". The answer of the respondents stated, among others, that petitioner herself signed as instrumental witness to the questioned transfers of shares of stock; that the alleged threat to make massive withdrawal of corporate funds is without any factual basis; that the alleged astronomical consultants fee is non-existent; that it was the petitioner who became irregular in her attendance, and absented herself from work; that there were meetings held; that there is no basis for preliminary injunction; that the petitioner never made any demand for information or for examination of the records; that there is no ground or justification for receivership; and that the corporation is being operated and managed judiciously. The petitioner subsequently filed a supplemental petition the essential allegations of which are that respondent Tobias executed a deed of transfer of shares of stock, dated January 15, 1985, in favor of respondent Diquiatco covering the same shares which the former has purportedly sold on December 29, 1982 in favor of Adoracion Maga Farro; that respondent Suing executed a deed of transfer of shares of stock, dated January 15, 1985, in favor of respondent Tanchanco covering the same shares which the former had purportedly sold on August 25, 1983, in favor of Adoracion Maga Farro; that such transfers by respondents Tobias and Suing to respondent Diquiatco and Tanchanco are obviously intended to make it appear that the transfers were made to co-stockholders and not to non-stockholder Adoracion Maga Farro; that such subsequent transfers are therefore fictitious; that said subsequent transfers are also defective and null and void because these were made in violation of petitioner's pre-emptive right under Section 39 of the Corporation Code; that on March 4, 1985, a special board of directors' meeting was held at which were present Graciano J. Tobias, Arminda Julia A. Paraiso (the petitioner), Joaquin Diquiatco, Mario Tanchanco and Jose A. Suing, and at which meeting it was resolved that petitioner Paraiso was the treasurer and general manager of Manila Firehouse, Inc.; that this notwithstanding, the petitioner is still being prevented and barred from exercising her duties as such, and is still deprived of her right to inspect the books and records of the corporation as stockholder; that on March 18, 1985, the petitioner received a "notice" of special stockholders' meeting, called by respondent Tanchanco, to be held the following day, March 19, 1985, which notice the petitioner acknowledged under protest; that on March, 1985, a purported annual stockholders' meeting was held, attended by stockholders respondents Tanchanco and Diquiatco; that it was made to appear at said meeting that the shares held by respondents Tanchanco and Diquiatco constituted a quorum, because of the supposed transfers to them of the shares of respondents Tobias and Suing; that at said meeting, Mrs. Adoracion Maga Farro Carlson and Atty. Quirino A. Marquinez were elected as alleged new members of the board of directors; that on the same date, March 19, 1985, an alleged board of directors' meeting was held, the -directors present being respondent Diquiatco, respondent Tanchanco, Quirino A. Marquinez and Adoracion Farro Carlson, as Chairman, respondent Tanchanco as President, Quirino A. Marquinez as Vice President, Imelda A. Magat as Treasurer, Neil Gaylor as Asst. Treasurer and Irene Tanchanco as Secretary; that it was further resolved that Mrs. Imelda A. Magat and Neil Gaylor be authorized to open bank accounts, jointly sign papers, etc.; that the supposed stockholders' meeting and directors' meeting of March 19, 1985, and all actions taken thereat are null and void, defective and illegal, because the supposed January 15, 1985 transfers from respondents Tobias and Suing to respondents Diquiatco and Tanchanco were fictitious, and even if assumed bona fide, were violative of petitioner's preemptive rights; that the stockholders, directors and officers of the corporation are still petitioner Paraiso (Treasurer), respondent Tobias (Chairman and President), respondent Suing (Corporate Secretary), respondent Diquiatco (Vice President), and respondent Tanchanco (Assistant Vice President); that respondents acted fraudulently and maliciously against the petitioner; that she is entitled to millions in terms of moral damages, exemplary damages, attorney's fees and expenses of litigation. Despite respondents' opposition to petitioner's motion to admit supplemental petition, the same was granted and the supplemental petition was admitted in the Omnibus Order of July 10, 1985. Respondents' answer to the supplemental petition sets forth, among other things, that petitioner's contention concerning preemptive right is erroneous, because the law is concerned with unissued shares but not to shares already issued to and owned by individual owners; that the transfers of shares of stock from respondents Tobias and Suing to respondents Diquiatco and Tanchanco, respectively, are valid and legal; that consequently, the supposed meeting of directors held on March 4, 1985 (by petitioner Paraiso and others),after Tobias and Suing had divested themselves of their shares is void and of no effect as they were no longer shareholders at that time, and all proceedings taken therein are likewise null and void; that the claim for damages has no basis in law and in fact; that all other allegations are denied for being bereft of truth and without basis; and that the answer to the supplemental petition is also a supplement to respondents' original answer to the original petition. In the meantime, Adoracion Maga Farro-Carlson filed, through counsel, a motion for intervention, on the ground that she is the real owner of Manila Firehouse, Inc. and its businesses, including the Firehouse Club, and all of those who appear in the articles of incorporation were mere nominees of the movant, and none of them ever put a single centavo into the corporation and its business, the entire capital being put up by movant as the real owner with the financial and other assistance of her then fianc and now husband, David Carlson. The petition in intervention states the circumstances of the organization of the corporation and the establishment of the business, and further, that the formal incorporators were merely nominees of the intervenor who put up the entire capital for the corporation and its business with the financial and other assistance of her then fianc and now husband, David Carlson; that for said reason, apparent major stockholders Suing and Tobias transferred their stockholdings to intervenor; that as real owner of the corporation and its businesses, the intervenor and her husband actively operated and managed the same and made all major decisions relative thereto; that petitioner Paraiso was a mere nominee and agent of intervenor, had and has no real proprietary interest in the corporation and its businesses, and was never the general manager or treasurer thereof; that the special stockholders' meeting on March 4, 1984 (of petitioner Paraiso and others) is part and parcel of petitioner Paraiso's fraudulent design to usurp ownership, control and management of what does not belong to her; that said meeting is illegal; that the intervenor is now the Chairman of the Board, Mario Tanchanco, the President, Quirino A. Marquinez, the Vice President, Imelda Magat, the Treasurer, and Irene Tanchanco, the Secretary; that petitioner Paraiso is estopped to question the formal transfers of shares of stock to intervenor in 1982 and 1983 because she knew of those transfers since their execution, she signed one of them as witness, and she is guilty of laches; that the petition and supplemental petition of Arminda Julia Paraiso are without basis and are malicious, fraudulent and gravely injurious to the intervenor and her business; that it was the petitioner and her companions who committed illegal acts and stand charged with coercion and other offenses at the Manila Fiscal's Office because of their actuations in the night of March 4 and 5, 1985 in a frustrated attempt to usurp the intervenor's true ownership, control and management of the corporation's business; that due to the actuations of petitioner Paraiso and her companions, the intervenor suffered actual damages and is entitled also to exemplary damages, attorney's fees and other litigation expenses. Petitioner Paraiso opposed said motion for intervention, but the same was granted in Omnibus Order of October 7, 1985. LLpr Petitioner Paraiso elevated the question of intervention to the Commission en banc by way of petition for review. The Commission en banc Order of April 4, 1986 denied said petition for lack of merit. Petitioner Paraiso thereupon filed her answer to the petition in intervention, setting forth specific denials, and stating, among others, that she invested in the corporation and substantial investments were made by her with the financial and other assistance of her then fianc and now husband, David Carlson; that the fiscal's office dismissed all charges against her and her husband, except the grave coercion case; and that she has counterclaims against the intervenor in millions of pesos as moral damages, exemplary damages, attorney's fees and expenses of litigation. The hearings in this case span from February 7, 1985 to January 20, 1987. Only one witness, Nicolas Quintas of the Bank of the Philippine Islands, Ermita Branch, testified for petitioner Paraiso, although her counsel presented documentary exhibits, from exhibits "A" to "W" with submarkings. Intervenor Adoracion Maga Farro-Carlson presented David Albert Carlson, Jr. and herself as witnesses, as well as Exhibits "1-Intervenor to "34-Intervenor" with submarkings. The respondents adopted the testimonies of David Albert Carlson, Jr. and Adoracion Maga Farro-Carlson as their own, presented Mario Tanchanco and Atty. Quirino Marquinez as witnesses, adopted the intervenor's Exhibits "1" to "33" and submarkings as their own, and further presented and offered Exhibits "1-Respondents" to "11-Respondents" with submarkings. It was agreed that the respective parties' presentation of oral and documentary evidences on the matters of Injunction and receivership would be deemed as also the evidences on the merits of the case (TSN, May 7, 1986, pp. 8-11; TSN, Nov. 4, 1986, pp. 9-11). 1. The first issue to be resolved is whether or not the respondents were or are threatening to act in such a manner as to result in the dissipation or loss of corporate assets and properties by withdrawing or contemplating to withdraw corporate funds deposited with Manila Bank, Mabini Branch and Philippine Bank of Communication, Ermita, in a massive scale, and have engaged the services of a foreign consultant for an astronomical fee, as alleged by petitioner Paraiso in her original petition. We find that petitioner Paraiso has failed to prove her allegations. There is absolutely no evidence presented by petitioner Paraiso concerning the alleged engagement of the services of a foreign consultant for an "astronomical fee".It may be observed in that connection, that petitioner Paraiso did not give any testimony at all on any of her allegations in the petition and the supplemental petition, including the matter of "astronomical fee." Regarding the allegation of petitioner Paraiso of withdrawals or threat of withdrawals by respondents of corporate funds, specifically from the Manila Bank and the PB Communication "in a massive scale",there is also no proof thereof. The only witness presented by petitioner Paraiso is Nicolas Quintas, a clerk of the Bank of the Philippine Islands, Ermita Branch (TSN, April 8, 1985, pp. 6-7).He testified as to the records of deposits and withdrawals made by Imelda Magat and Neil Gaylor from their account. (TSN, April 8 & 16, 1985).Exhibits "A" and "A-1" constitute the ledgers in the names of Neil Gaylor and Imelda Magat. Exhibit "A-2" is a withdrawal of P100,000.00; Exhibit "A-4",a withdrawal of P395,897.37; and Exhibit "A-5",a withdrawal of P30,000.00. It is noted that these exhibits were offered in particular relation to Exhibit "G",among others, which is a certification of respondent Mario Tanchanco that, per board resolution Imelda Magat and/or Neil Gaylor are authorized to sign checks against the current and savings account of Manila Firehouse, Inc. with the Philippine Bank of Communication, Ermita Branch, Manila, which is also Exhibit "2-Respondents".Exhibits "G" and "2-Respondents" would show that the depository bank of Manila Firehouse, Inc. was the Philippine Bank of Communication, Ermita Branch, Manila. On the other hand, there is no showing that the Bank of the Philippine Islands, Ermita Branch was or is the depository bank of Manila Firehouse, Inc. As stated by Nicolas Quintas of BPI, Ermita, "as far as our branches are concerned ...we have only the deposits of the persons mentioned in the subpoena but not with the Manila Firehouse, Inc." (TSN, April 8, 1985, pp. 8-9).The persons adverted to are Imelda Magat and Neil Gaylor, but there is no proof that their deposits with the Bank of the Philippine Islands, Ermita, were funds of Manila Firehouse, Inc.,and we would not be justified to so conclude, specially in the light of Exhibits "G" and "2-Respondents, which identifies the Philippine Bank of Communication, not the Bank of the Philippine Islands, as the depository bank of the corporation. Moreover, even assuming for argument's sake that Exhibits "A-2","A-4" and "A-5" represent withdrawals of corporate funds, there is absolutely no showing that such withdrawals were "massive" or unjustified from the perspective of the corporation's operation. Indeed, Atty. Quirino Marquinez testified, without being contradicted or rebutted, that there really was no "massive" withdrawal of corporate funds, to his knowledge (TSN, December 22, 1986, p. 59).It may be said, therefore, that the evidence of petitioner Paraiso as to alleged "massive" withdrawals is, at best, grossly insufficient. LLjur 2. The next question, which is quite significant and far-reaching, is who really owns Manila Firehouse, Inc. and its businesses. The articles of incorporation and other corporate papers would show that the incorporators and stockholders of Manila Firehouse, Inc. are petitioner Paraiso (240 shares),respondent Tobias (240 shares),respondent Suing (240 shares),respondent Diquiatco (15 shares) and Mario Tanchanco (15 shares);that petitioner Paraiso was elected Treasurer on incorporation; that, at the organizational meeting of the board of directors, respondent Tobias was elected Chairman and President, respondent Diquiatco as Vice President, respondent Tanchanco as Assistant Vice President, petitioner Paraiso as Treasurer and respondent Suing, as Corporate Secretary; and that petitioner Paraiso and respondent Suing were authorized to open current and/or savings accounts with the Traders Royal Bank and to sign jointly documents, checks, etc.,for the corporation (Exhs. "B","B-1" to "B-8","C","C-1 " to "C-5"). On the other hand, witness David Albert Carlson, Jr.,for the Intervenor Adoracion Maga Farro-Carlson and the respondents, testified that he has been a fulltime resident of the Philippines since 1977; that he was in the Philippines five or six times in 1975 or 1976 as fire protection engineer and consultant of Integral Factors; that he met the intervenor in 1979, and he courted her; that she came to live with him in June, 1980; that they made plans for the future, about getting married and setting up businesses such as night clubs; that they started making definite plans for a disco business to be owned by the intervenor; that he would help her finance and set up the management of the business; that they found the proper location at 1400 M.H. del Pilar corner Sta. Monica, Ermita, Manila, which is where the Firehouse Club is located now; that they discussed lease terms and entered into lease agreement with the owner of the premises, PADPO, Inc.,represented by Nicanor Padilla, which agreement was signed by him and Mr. Padilla (Exhs. "1"," 1-A" & "1-B" for the intervenor) on January 22, 1981; that he contacted, made agreements with, was billed by and made payments to individuals and entities for the construction of the Club, such as the general contractor, architect, plumbing contractor, electrical contractor, light specialist, etc. (Exhs. "2" to "26" for the intervenor);that he paid all the bills for the intervenor who is the real and true owner of Firehouse; that he was legally separated from his American wife in June, 1980; that he got a divorce from her in July, 1981, for which he went to the U.S.A.;that he and the intervenor went to the U.S.A. in September, 1982 so she could meet his parents and family and friends; that they returned to Manila; that they went back to the States and got married in Rockford, Illinois, in the home of his father and mother on June 5, 1983, which marriage is evidenced also by a marriage license and certificate (Exh. "28" for the intervenor);that the wedding ceremony itself was attended by 25 people composed of close relatives and close friends, followed by a reception attended by about 500 people; that afterwards they went to a Wisconsin Resort, went back to his hometown for a high school reunion, and took an extended trip to the Southern part of the U.S.,principally Florida, along with his son by his first wife, returned again to his hometown; and then returned to the Philippines; that he and the intervenor managed the affairs of the Firehouse Club which is nominally owned by the Manila Firehouse, Inc.;that the intervenor is the actual owner of the business; that during their absences, whenever they were abroad, different people were left behind at different times, who were assigned to manage the business in the meantime, such as Carl Siegle (in the Club),Minda Paraiso (in the office),Bob Martin and Cecil Butac (also in the office);that the corporation was set up on recommendation of lawyers, because when he met his wife and when the club was established in 1981, she was still a minor; that his wife nominated Tanchanco, Diquiatco, Tobias, Suing and Paraiso as incorporators; that Tobias and Suing were recommended by the Executive Vice President and Trust Officer of Traders Royal Bank where he was banking; that Tanchanco and Diquiatco are both members of the fire service and he has been a fire consultant of the Integrated National Police, and they have been very closely working compatriots for many years; that Minda Paraiso (the petitioner) was trusted by him and intervenor, as she was working for Firehouse as office girl, girl Friday or secretary, and she performed any duties the intervenor asked her to do; that the nominees for the corporation did not pay anything for the shares in their names, but it was he who paid in behalf of his wife, the intervenor; as owner of Firehouse; that these nominees were not issued certificates of stock; that these nominees were not given dividends; that these nominees did not actually serve as directors, nor were they paid any salary; that Minda Paraiso was not really the treasurer, and she was not given any salary as such; that these nominees never demanded for issuance of any certificate of stock, because they knew they had no right to the stocks; that at no time did these nominees contribute to the capital and expenses of the corporation and the club. (TSN, Oct. 9, 1986, pp. 6-80). The Traders Royal Bank issued a certification that Dave Carlson obtained various loans from the Trust Department in the total sum of P2,041,000.00 to finance the acquisition, renovation and establishment of Firehouse (Exhs. "34" & "34-A"for the intervenor). On further questions by Atty. Esteban Bautista for the intervenor, David Carlson declared that he spent for his wife about $100,000.00 for the Firehouse Club, some of which came from the sale of a house in Southern California, the rest he borrowed from his father, and the money was transferred bank to bank (TSN, Oct. 9, 1986, pp. 115-117). Upon further questions asked by Atty. Quirino Marquinez for the respondents, David Carlson emphasized that petitioner Paraiso was a girl Friday, meaning that she did all sorts of jobs, like getting a cup of coffee, or getting lunch, typing a letter or dealing with salesmen, meaning "anything that we asked her to be done";that they asked her to be a nominee in the sense that "her name would be placed in the corporation but she never participated in the corporation or in the operation of the corporation whatsoever";that "she was not a beneficial owner of the corporation",she did not really own shares of stock, but that was "in paper only";that she did not receive any dividends, and she did not act as director; that the only participation she had in the preparation of the articles of incorporation was when she agreed for her name to be used as nominee and nominal director; and she was not involved in preparing the construction of the Firehouse Club (TSN, Oct. 24, 1986, pp. 8-14). LLphil On cross-examination, it was clarified that the money to build Firehouse actually came from loans from Traders Royal Bank, which were backed by David Carlson's deposit of U.S. dollars with the Traders Royal Bank. (TSN, Nov. 21, 1986, p. 18). The intervenor Adoracion Maga Farro-Carlson gave testimony essentially corroborating the testimony of David Carlson already set forth above (TSN, Oct. 24, 1986, pp. 19-50).The intervenor also testified that management decisions were made by her and her husband (ibid, p. 26);that it was she who signed the second lease of the premises in July, 1984, as president of the lessee (ibid, pp. 28-29);Exhs. "33","33-A" & "33-B" for the intervenor);that he even executed a general power of attorney for Arminda Paraiso, appointing the latter to be her attorney-in-fact in connection with her business affairs which included Manila Firehouse, Inc. and the Firehouse Club (ibid, pp. 29-32; Exhs. "30","30-A" & "30-B" for the intervenor);that she affirmed the truth of the statements made by respondents Suing and Tobias, in the deeds of transfer of shares of stock in her favor, that they were merely her nominees, she being the real owner of said shares (ibid, pp. 36-46; exhs. "D" & "E" for petitioner Paraiso; Exhs. "31 " to "31-D",specialty Exh. "31-D" & "32" to "32-C",specially Exh. "32",for the intervenor);that Arminda Paraiso even signed as a witness to the deed of transfer of shares of stock by respondent Suing to her (ibid, pp. 38-39; Exh. "31-C");that there were no similar transfers from the three other nominees because at that time they had to change lawyers (respondents Suing and Tobias),while Tanchanco and Diquiatco were trusted family friends, and Arminda Paraiso was still trusted as an employee of Firehouse (ibid, pp. 46-49).The deeds of transfer of shares of stock by respondents Suing and Tobias to the intervenor, and the statements therein whereby the transferors acknowledged that they were merely nominees of the intervenor as the real owner, were also marked and offered by the respondents as their Exhibits "4","4-A","5" and "5 A". Respondent Mario Tanchanco testified that he has known David Carlson since 1976 or 1977; that David Carlson is a best friend of his; that they shared problems; that he knew that David Carlson was putting up a club for the intervenor, and he even proposed the name Firehouse as they were both in the fire service; that he was an incorporator and member of the board of Firehouse as the nominee of the intervenor who, at the time of the organization of the corporation, was still a minor and single; that he did not put in a single centavo of investment in Firehouse; that it was financed by the intervenor and Dave Carlson; that the other incorporators/directors were nominees of intervenor, like him; that Suing and Tobias were not as close to David Carlson as he was, because they were lawyers employed by Carlson; that there was no need for him to transfer the shares in his name to the intervenor because David Carlson trusted him more than Suing and Tobias were; that Suing and Tobias had to transfer their shares because David and the intervenor changed lawyers, their new lawyer being Atty. Quirino Marquinez; that the Resolution-(Exh. "G1","2-Respondents") was adopted to pay the daily expenses of Firehouse, because Minda Paraiso refused to sign checks; that he issued the certification to the effect that petitioner Paraiso's authority to sign checks had been cancelled and revoked (Exh. "H","3-Respondents");that the incorporators/nominees never made any major decisions, nor managed the club as owners. (TSN, Dec. 16, 1986, pp. 3-40).On cross-examination and re-direct examination, Tanchanco emphasized that petitioner Paraiso was just a secretary, running errands for David Carlson and the intervenor, and that she was a director on paper but not in reality (TSN, Dec. 22, 1986, pp. 23, 26).He also declared that the transfers of shares by respondents Suing and Tobias to the intervenor (Exhs. "D" and "E","31" and "32",with submarkings, for the intervenor, "4" & "5",with submarkings, for the respondents) were executed by Attys. Suing and Tobias to confirm the fact that the true owner of the stocks is the intervenor; that this was ) witnessed by petitioner Minda Paraiso who requested him to prepare the same upon instructions of Adoracion Maga Farro; that he even discussed the matter with Attys. Suing and Tobias before he prepared the document, and he even first showed them the drafts and they made some corrections before these were finalized, and then they signed willingly as they knew that the real owner of the shares is Adoracion Maga Farro; that the incorporators/directors are mere nominees of the intervenor; that decisions on management and financial matters were made by the intervenor and David Carlson, though they were helped by some managers and consultants; that the persons who appear as stockholders and directors did not exercise any decisional acts on management and financial matters of the Manila Firehouse Corporation and the Firehouse Club itself; that they did not have certificates of stock issued to them, nor did they receive dividends; and that petitioner Paraiso was a girl Friday of David Carlson and the intervenor from the very beginning. (TSN, Dec. 22, 1986, pp. 27-41). The foregoing evidences, which are uncontradicted and unrebutted by petitioner Paraiso, convinced us that the intervenor Adoracion Maga Farro-Carlson is the real owner of Manila Firehouse, Inc. and its businesses, including the Firehouse Club; that petitioner Paraiso and the other incorporators/shareholders/directors/officers of the corporation are merely her nominees without any authority or participation in important matters of management and finance; that petitioner Paraiso and the others did not invest any money or property in the corporation and its businesses; and that the corporation and its businesses were established and developed by the intervenor Adoracion Maga Farro-Carlson with the financial and other assistance of her then fianc and common-law husband, and later lawful husband, David Carlson. 3. The third question concerns the contention of petitioner Paraiso that the deeds of transfer of shares of stock executed by respondents Suing and Tobias in favor of the intervenor on August 25, 1983 and December 22, 1982, respectively, (Exhs. "D" & "E","31" & "32",for the intervenor, "4" & "5",for the respondents),are null and void for being in violation of the provision in the by-laws providing for a close corporation and permitting transfer of shares of stock if it is in favor of an existing stockholder. We cannot sustain such contention of petitioner Paraiso for several reasons. The most important reason is that, as already found above. the actual owner of the corporation and its businesses is the intervenor Adoracion Maga Farro-Carlson. The undisputed facts even show that said transfers of shares of stock by respondents Suing and Tobias to the intervenor are in themselves their express recognition that they were merely her nominees and that she is the real owner of the corporation and its businesses, including those shares of stock (Exhs. "31-D" & "32-A" for the intervenor, "4-A" & "5-A'" for the respondents).Between a technical provision in the by-laws of the supposed close corporation and the actual ownership of that close corporation and its businesses by the intervenor, it should be obvious that the latter must prevail. A corporation may be organized and set up by the real owner through nominees, and it is but natural and logical that the corporation thus set up should not get out of the control, management and enjoyment of such real owner. To hold otherwise would be to allow the non-owner nominees to wrest the corporation and its businesses away from the real owner, which should not be countenanced. Another reason is estoppel. It is clear and undisputed that petitioner Paraiso was quite aware of such transfers of shares of stock by respondents Suing and Tobias in favor of the intervenor, because petitioner Paraiso "was the one who requested me (Atty. Quirino Marquinez) to prepare this upon instruction of Adoracion Maga Farro" (TSN, Dec. 22, 1986, p. 32).As Atty. Marquinez further testified, the deed of transfer of shares of stock by respondent Suing to the intervenor was even witnessed and signed by petitioner Paraiso (ibid, pp. 32-43; Exh. "31-B" for intervenor).This was also explicitly declared by the intervenor (TSN, Oct. 24, 1986, pp. 38-40).Considering all these, petitioner Paraiso is estopped from questioning the validity of such transfers of shares of stock by respondents Suing and Tobias to the intervenor. Still another reason is that the question of said transfers has, in a sense, become mooted by the subsequent transfers of the same shares by respondents Suing and Tobias, on January 15, 1985, in favor of respondents Tanchanco and Diquiatco, respectively (Exhs. "I" & "J","10" & '11' for the respondents).Such subsequent transfers are the basis of petitioner Paraiso's supplemental petition, obviously because subsequent transfers by respondents Suing and Tobias to respondents Tanchanco and Tobias tended to render the earlier transfers to the intervenor moot and academic insofar as petitioner Paraiso herself was concerned. 4. The fourth obvious question involves petitioner Paraiso's contention, her supplemental petition, that the aforesaid transfers of shares of stock by respondents Suing and Tobias in favor of respondents Tanchanco and Diquiatco, respectively (Exhs. "I" & "J","10" & "11" for the respondents),are fictitious, null and void. Again, we cannot sustain this contention of petitioner Paraiso. It is apparent that there is no proof in the record to show that such subsequent transfers by respondents Suing and Tobias to respondents Tanchanco and Diquiatco are fictitious. Assuming, for argument's sake, that respondents Suing and Tobias had executed those subsequent transfers in favor of stockholders Tanchanco and Diquiatco in order to avoid violating the by-laws, that would not render such transfer fictitious. Nor is there merit in the claim of petitioner Paraiso, in her supplemental petition, that such transfers are in violation of Section 39 of the Corporation Code, because said law applies to unissued shares of stock of the corporation, not to those already issued and individually owned by stockholders. But petitioner Paraiso also argues, through her offer of evidence, that such transfers are null and void because no tender was first made to the petitioner in violation of Article II, No. 5, second paragraph, of the by-laws. This argument, however, is countered by the fact that the real owner of the corporation and its businesses is no other than the intervenor Adoracion Maga Farro-Carlson. In order to protect her interests, such transfer was resorted to as a legal remedy. As well explained by Atty. Quirino Marquinez, as witness for the respondents: ..."it's good to have also a document assigning the shares of stock to co-stockholders because according to the provisions in the by-laws you cannot transfer this to an outsider. And it appears that at that time Dory (intervenor) was not even a stockholder as per their record but the truth is that she is the real owner. In order that this will not affect the corporation, it is good also to have that document for legal maneuver. It is only to safeguard or to protect the interest of Dory because these two people to whom it was assigned were actually very trusted persons of Dory'.(TSN, Dec. 22, 1986, p. 44). We find nothing wrong with such "legal maneuver," because the real owner of the corporation and its businesses, no other than Adoracion Maga Farro-Carlson, had all the right to protect her interests therein. Significantly, Atty. Marquinez also testified that respondents Suing and Tobias executed a Joint Affidavit dated April 1, 1985, stating among other things, that they had sold and transferred all their shares, interests and participation to respondents Tanchanco and Diquiatco; that respondents Suing and Tobias affirmed their Joint Affidavit before the Fiscal in connection with the charges against Paraiso et al.,arising from the March 4, 1985 incident; and that this was expressly mentioned in the Memorandum of the Fiscal who also pointed out that Suing and Tobias supported the position of the complainants as against the respondents Paraiso, et al. (TSN, December 22, 1986, pp. 50-55; Exhs. "7","7-A" & "7-B" for the respondents). 5. The fifth issue concerns the validity or invalidity of either the supposed special board of directors meeting of March 4, 1985, attended by petitioner Paraiso and respondents Suing, Tobias, Tanchanco and Diquiatco, or the purported annual stockholders' meeting and board of directors' meeting of March 19, 1985, attended by respondents Maga Farro-Carlson and Atty. Quirino Marquinez, among others. Considering our basic finding that the deeds of transfer of shares of stock by respondents Suing and Tobias to respondents Tanchanco and Diquiatco, dated January 15, 1985, are not fictitious and not null and void but are valid, it logically follows that the special meeting of the board of directors on March 4, 1985 is illegal and invalid. The obvious decisive factor is that as of March 4, 1985, respondents Suing and Tobias were no longer stockholders-nominees and therefore could no longer sit as director-nominees. In other words, respondents Suing and Tobias could no longer be called "stockholders" or "directors" even as nominees of intervenor Adoracion Maga Farro-Carlson. It is to be noted that the very minutes of such March 4, 1985 meeting show that respondent Tanchanco had moved to adjourn the meeting, but petitioner Paraiso et al. objected. As a result, respondents Tanchanco and Diquiatco manifested that they would walk out without waiting for the meeting to be finished (Exh. "K").Respondent Tanchanco shed further light on that meeting when he testified that he was questioning the meeting because Atty. Gil was there and they had no legal counsel in the person of Atty. Marquinez, but they said that the latter would be coming later; that there was a discussion about a "take over";of the Firehouse Club, but he observed that it is not proper as all of them were nominees and they should not take property that is not theirs; that Minda Paraiso said they will make much money if they take over; that he told everybody that the meeting was illegal; that he checked the time and announced for the others and the tape recorder that he and Diquiatco were leaving; that as they were leaving, Minda Paraiso blocked his way and offered him P120,000.00 if he stays on, but he rejected it; that he went directly to Firehouse and told Dave and Dory Carlson what happened, and the latter, who were displeased, called up Atty. Marquinez, (TSN, Dec. 16, 1986, pp. 21-27).These details concerning the March 4, 1985 meeting and the walk-out of respondents Tanchanco and Diquiatco served to emphasize the illegality and invalidity of said meeting. The meeting of March 4, 1985 was followed by the attempted take-over of the Firehouse Club by petitioner Paraiso et al. To more fully elaborate on the significance of this incident, and even the March 4, 1985 meeting itself, it would be useful to consider some antecedents. David Carlson testified that when he arrived in Manila in April 4 1984, after a trip abroad, he discovered intrigues, employee dissension, a "chaotic situation";that, as he found out, the problems were being created by Minda Paraiso who even tried to withhold information from him, that Minda Paraiso had taken a personal loan and borrowed it without authority; that she was not attending to her work properly and was guilty of absenteeism; that in May, 1984 he asked her, therefore, to resign; that she went into a rage, claiming that she was so valuable to the company and that "she would get back at us";that she stormed out with a bunch of threats; that she came back with a letter signed by her, dated May 28, 1984, supposedly filing a leave of absence for two months effective May 29, 1984, but received by Neil Gaylor on May 31, 1984 (Exhs. "27","27-A" & "27-B",for the intervenor);that Minda Paraiso made unreasonable demands, such as for exorbitant separation pay, and to the extent that she said "you know I still hold the position ...I am going to use that to take away your company";that when he and Dory were in the U.S.,Minda Paraiso filed the instant case; that they were told by respondents Tanchanco and Diquiatco about the March 4, 1985 meeting where the latter were offered great sums of money to join the side of petitioner Paraiso who attempted to take over the company. (TSN, Oct. 9, 1986, pp. 83-100).This was corroborated by Atty. Marquinez who stated that Minda Paraiso was no longer reporting the way she should, which was so abnormal; that she even refused to sign checks which was necessary for the payment of salaries; that her work was really affected when she got involved with David Crockett; that-while she supposedly took leave, it was more like abandonment because after she left she did not come back. (TSN, Dec. 22, 1986, pp. 40-43).As observed earlier, respondent Tanchanco testified that the resolution authorizing Imelda Magat and Neil Gaylor to sign checks in lieu of Arminda Paraiso (Exhs. "G-5","2" for the respondents),and the certification, dated June 1, 1984, that Arminda Paraiso's authority to sign checks and documents had been cancelled and revoked (Exhs. "H","3" for the respondents),were done to be able to pay for the daily expenses of Firehouse and because Minda Paraiso refused to sign checks (TSN, Dec. 16, 1986, pp. 35-38). All of these culminated in the attempted take-over of Firehouse by petitioner Paraiso et al. as manifested in the illegal and invalid March 4, 1985 meeting and the "raid" on Firehouse that followed. cdll David Carlson testified that in the evening of March 4, 1985 he received a phone call from their supervisor at Firehouse that Minda Paraiso and her husband, her attorney and at least five armed men were attempting an armed take-over of the premises and were threatening employees; that he called their attorney (Marquinez),respondent Tanchanco and others, and they went to precinct 5 to file a complaint, then they proceeded to the Manila Firehouse, Inc. Office, accompanied by two teams of policemen; that they opened the door, but there were some resistance from inside; that there were armed people inside who left hurriedly upon seeing them with policemen; that the husband of Minda Paraiso, David Crockett, was also there; that these people had broken into the master key case, used paper clips, went through and removed documents; that Minda Paraiso and her attorney were at the Firehouse Club; that he found out that Minda Paraiso had taken the day's receipts of P8,000.00, American Express vouchers, daily sales report and other documents; that they filed criminal charges against Minda Paraiso et al. (TSN, Oct. 9, 1986, pp. 101-111).Significantly, Minda Paraiso et al. returned the P8,000.00, "perhaps they were afraid because they know that it does not belong to them" (TSN, Oct. 24, 1986, pp. 15-16).These events were confirmed by respondents Tanchanco (TSN, Dec. 16, 1986, pp. 27-33) and Atty. Marquinez (TSN, Dec. 22, 1986, p. 45).Information for grave coercion was in fact filed against petitioner and her husband David Crockett (Exh. "29" for the intervenor; TSN, Oct. 24, 1986, p. 5),and warrant of arrest was issued against them (Exh. "6" for the respondents; TSN, Jan. 20, 1987, pp. 48-50). All the foregoing concatenation of events led to the stockholders' and directors' meeting of March 19, 1987 attended by old stockholders Tanchanco and Diquiatco, new stockholders Adoracion Maga Farro-Carlson and Quirino Marquinez, and Irene Tanchanco and Danne Samonte, as reflected in the minutes thereof (Exhs. "N" & "O","8" & "9" for the respondents).Petitioner Paraiso, though notified, was absent at said meetings. New stockholders Adoracion Maga Farro-Carlson and Quirino Marquinez were made new members of the board of directors. The new set of officers elected are Adoracion Maga Farro-Carlson, Chairman; Mario Tanchanco, President; Quirino Marquinez, Vice President; Imelda Magat, Treasurer; Neil Gaylor, Assistant Treasurer; and Irene Tanchanco, Secretary. Imelda Magat and Neil Gaylor were authorized to open current or savings accounts with any banking institution in Metro Manila, and to sign jointly checks and other documents for the corporation. Considering our previous findings and resolutions of issues, it follows, as we so find and hold, that the stockholders' and directors' meetings of March 19, 1985 are legal and valid. The transfers of shares of stock by respondents Suing and Tobias to respondents Tanchanco and Diquiatco, dated January 15, 1985, being legal and valid, respondents Tanchanco and Tobias became the overwhelming majority stockholders in their capacity as nominees of the real owner Adoracion Maga Farro-Carlson. More basically, the March 19, 1985 stockholders' and directors' meetings represented the continuation of legal efforts and maneuvers to protect the interest of the real owner Adoracion Maga Farro-Carlson and, needless to say, the corporation itself and its businesses. As stated by Atty. Quirino Marquinez, "we thought of calling this meeting for the purpose of correcting the situation, the present set-up" (TSN, Dec. 22, 1986, pp. 57, 58).As stated by respondent Tanchanco "it was an emergency meeting" called in order "to solve the problem created by Arminda Paraiso";and he was able to give only a one-day notice (Exh. "L"),because it was "a very special meeting","an urgent matter" (TSN, Dec. 16, 1986, pp. 33-35).We therefore further hold that, considering the urgent and emergency nature of the March 19, 1985 meetings, said short notice thereof was justified. And to emphasize, the real owner, Adoracion Maga Farro-Carlson, had the right to take immediate steps to protect her ownership and the corporation and its businesses, specially in the face of the grave and imminent perils posed by petitioner Paraiso and companions. 6. The sixth issue concerns the "removal" of petitioner Paraiso as "treasurer" of the corporation. Considering all the preceding discussions and findings, we find and so hold that the board had all the right, as well as the need, to remove petitioner Paraiso from any significant position or role in the corporation and its businesses, such as the signing of checks, specially in view of Paraiso's absenteeism, intrigues, refusal to sign checks, abandonment of work, threats, plots and actuations to take over the corporation and its businesses as seen from the March 4, 1985 meeting and raid on the Firehouse Club. Under such circumstances, it would be intolerable indeed for the corporation and its businesses to employ or rely on petitioner Paraiso in any concrete and significant way. 7. The seventh issue concerns the alleged denial to petitioner Paraiso of access to information on the day to day management of the corporation, its financial status and related expense reports. Such allegation has not been proved, not even a formal demand for such information has been shown. More basically, we do not see how petitioner Paraiso could claim any real right to inspection and information, considering that she is merely a nominee of the real owner Adoracion Maga Farro-Carlson, specially that she placed herself on a direct confrontational course with the latter. As nominee of the intervenor, petitioner Paraiso should have expected that she would be able exercise only such functions as the intervenor will assign to her; a worse, petitioner should not have expected any significant role in corporation and its businesses after she had opted to fight the real owner Adoracion Maga Farro-Carlson. WHEREFORE, judgment is hereby rendered as follows: 1. The petition and supplemental petition of Arminda Julia A. Paraiso are denied and dismissed for lack of merit; 2. The counterclaims of petitioner Arminda Julia A. Paraiso against the intervenor Adoracion Maga Farro-Carlson are, likewise denied for lack of merit; and 3. Intervenor Adoracion Maga Farro-Carlson is declared to be the real owner of Manila Firehouse, Inc. and its businesses, her corporate nominees being as reflected in the Minutes of the Annual Stockholders' Meeting of March 19, 1985, and in the Minutes of the Meeting of the Board of Directors of March 19, 1985 of the Manila Firehouse, Inc. LexLib No pronouncement as to costs and attorney's fees. SO ORDERED. (SGD.) JUANITO B. ALMOSA, JR. Hearing Officer