Yap v. Coloso

[SEC-SICD * CASE NO. 2949. December 4, 1996.] CONRADO M. YAP, ET AL. , complainants , vs . LEONARDO G. COLOSO , respondent . D E C I S I O N This is a case which complainants seek from the respondent the following: 1. To render an accounting of the funds of the corporation, were particularly the collections made by him for the National Housing Authority (NHA) on account of the work accomplished by the Corporation regarding the development of the Commercial site in Phase 1, Area B, DBB, Dasmarias, Cavite. 2. To pay the accounts payable of the corporation to the creditors; and 3. To pay the complainants attorneys fees and other expenses of litigation. The facts of this case are as follows: Complainants are stockholders of the LGC Development Corporation, while the respondent is the President and Chief Operating Officer of the Corporation (Exhibits "A" and "B"; TSN pp. 6-12, September 28, 1992) Prior to June, 1984, the Corporation undertook a construction project in Dasmarias, Cavite for the NHA for the land development of a commercial site, Phase I, Area B, DBB of the resettlement project at Dasmarias. On or about June 5, 1984, the respondent collected from the NHA a sum as third partial payment of the work accomplished by the corporation concerning the said land development project. On November 15, 1984 and December 20, 1984 the respondent also made collections from the NHA in behalf of the corporation account of said land development (TSN, pp. 12-13, September 28, 1992) As late as September 1984, the respondent misrepresented the complainants that there were no collections yet made on account of the land development project at Dasmarias being undertaken by the corporation for the NHA (TSN, pp. 13-14, September 28, 1992) LLphil In the operation of the corporation, more particularly relative to the land development projects at Dasmarias Cavite, the corporation needed operating capital and the creditor would not lend to the corporation unless the complainants and the respondent signed and bound themselves as joint and several maker or debtor (TSN, pp. 14, September 28, 1992). Said obligations have remained unpaid or unsettled (TSN, pp. 15-16, September 28, 1992) Complainant Balbastro came to know that respondent made said collections because he personally asked the respondent in view of the obligations which were coming due when respondent continued to misrepresent that there were no collections yet. Said complainant personally went to the NHA, and through the help of some acquaintances in the NHA, said complainant was able to discover the collections made by the respondent in behalf of the corporation and was able to secure some certified xerox copies of the documents showing such collections (Exhibits "7" to "S" TSN, pp. 15, 17-19, September 28, 1992) After the respondent had made those collections, the Dasmarias project was stopped by the NHA due to the financial crisis that took place after the assassination of the late Senator Benigno Aquino, although later on the NHA ordered the corporation to resume the project. Unfortunately, the corporation practically abandoned the project for which the respondent, as President and Chief Operating Officer, is responsible because despite the MEMORANDUM sent to him by NHA to resume the project, he failed to do so. (TSN, pp. 16-17, September 28, 1992) On August 12, 1985, during a conversation with one of the complainants, the respondent admitted that he used P70,000.00 of the previous collections of the corporation from the NHA and promised to settle obligations have remained unpaid or unsettled (TSN, pp. 15-16, September 28, 1992) Complainant Balbastro came to know that respondent made said collections because he personally asked the respondent in view of the obligations which were coming due when respondent continued to misrepresent that there were no collections yet. Said complainant personally went to the NHA, and through the help of some acquaintances in the NHA, said complainant was able to discover the collections made by the respondent in behalf of the corporation and was able to secure some certified xerox copies of the documents showing such collections (Exhibits "7" to "S" TSN, pp. 15, 17-19, September 28, 1992) LLjur After the respondent had made those collections, the Dasmarias project was stopped by the NHA due to the financial crisis that took place after the assassination of the late Senator Benigno Aquino, although later on the NHA ordered the corporation to resume the project. Unfortunately, the corporation practically abandoned the project for which the respondent, as President and Chief Operating Officer, is responsible because despite the MEMORANDUM sent to him by NHA to resume the project, he failed to do so. (TSN, pp. 16-17, September 28, 1992) On August 12, 1985, during a conversation with one of the complainants, the respondent admitted that he used P70,000.00 of the previous collections of the corporation from the NHA and promised to settle his commitment under the MEMORANDUM agreement within two months. But the respondent did not comply with said promise (TSN, pp. 24-26, September 28, 1992) Upon discovering the collections made by the respondent in behalf of the corporation from the NHA, more particularly on October 14, 1985, the complainants asked their lawyer to send a letter of demand, which the latter did. (Exhibits "C", "C-1", "D", "D-1", "E", "E-1" and "E-2", TSN, pp. 19-24) Up to the present, the respondent has not made any accounting despite his several promises (TSN, pp. 26-27, September 28, 1992) When the respondent failed to comply with his commitment and his promise to make an accounting, complainants asked their counsel to file a complaint against the respondent. Hence, this case. The issues to be resolved in this case are the following: 1. Whether or not the respondent will be directed to render an accounting of the funds of the corporation, more particularly the collections made by him from the NHA on account of the work accomplished by the corporation in the development of the commercial site in Dasmarias Cavite in the amount of not less than P973,889.98; and 2. Whether or not the respondent will be directed to pay the accounts payable of the LGC Construction and Development Corporation to its creditors. In both issues, the answer is on the positive. It is an admitted fact that both the complainants and the respondent are directors, officers, and stockholders of LGC Construction and Development Corporation. The dispute in this case involves the operation and funds of the corporation. So that, it is therefore, clear that the instant case is an intra corporate controversy which is within the original and exclusive jurisdiction of this Commission (Sec. 5(b), P.D. No. 902-A, as amended) Despite respondent's denial and misrepresentation that no collection had yet been made, the fact established in the record is that respondent made collections in behalf of the corporation from the NHA for work accomplished in the Dasmarias project. In fact, there were at least three (3) collections made by the respondent from NHA, namely: P393,670.13, P364,969.40, P50,000.00 and P165,250.45 among others. As late as September, 1994, the respondent misrepresented to the complainants that no collections were made on account of the work accomplished in the Dasmarias Project. But the fact is that respondent made collections from the NHA in behalf of the corporation for work accomplished in said project on June 3, 1984 and also on November 15, 1984 and December 20, 1984. In the operation of the corporation more particularly relative to the land development project at Dasmarias, Cavite, the corporation incurred obligations for which the complainants and the respondent bound themselves jointly and severally with the corporation because unless they did so the creditor would not lend to the corporation. These obligations have remained unpaid up to the present (TSN, pp. 14-16, September 28, 1992) As shown earlier, the respondent made collections in behalf of the corporation from the time NHA for work accomplished in the Dasmarias Project (Exhibits "F" to "S" inclusive; TSN pp. 13, September 28, 1992) Yet said corporate obligation have remained unpaid or unsettled up to the present (TSN, pp. 15-16, September 28, 1992) It is therefore clear that despite his promises and commitment, respondent has not paid the said corporate indebtedness to creditors (TSN, pp. 24-25, September 28, 1992) During his conversation with one of the complainants respondent admitted that he used part of the collections to the extent of P70,000.00 for his personal use and benefit (TSN, pp. 24-25, September 28, 1992) Such act of the respondent will constitute misappropriation or estafa. Worse, the complainants do not know what happened to the rest of the collections and completely kept them in the dark about this matter. As established, the respondent collected in behalf of the corporation from the NHA not less than P973,889.98 (Exhibits "F" to "S") Respondent has not rendered any accounting for the funds of the corporation which went into his hands, Initially, he used as an alibi that complainant Yap had all the records. However, it appears that when the office was closed he was the one who brought all the records out of the office and not a single paper was taken by or given to complainant Conrado Yap so that the latter, as treasurer could not be in a position to make any accounting (TSN, pp. 26-27, September 28, 1992) It is therefore clear that the respondent has the obligation to render an accounting of the amounts which he collected in behalf of the corporation from the NHA. If he cannot account for those funds, he should turn over or pay the same to the corporation. WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. Ordering respondent to render an accounting of the funds of the corporation more particularly the collections made by him from the NHA on account of the work accomplished by the corporation in the development of the Commercial site in Phase 1, Area B, DBB Dasmarias, Cavite in the amount of not less than P973,889.98. Or in the alternative if the respondent cannot account for those funds, he is ordered/directed to pay the same to the corporation. 2. Ordering the respondent to pay the account payable of the LGC Construction and Development Corporation to its creditors. LibLex SO ORDERED. (SGD.) JUANITO B. ALMOSA, JR. Hearing Officer