People's Park Developers, Inc. vs. Benigno Yuson, Sr., et al.

[SEC-SICD * CASE NO. 3053. May 18, 1987.] PEOPLE'S PARK DEVELOPERS, INC. Represented herein by its Vice President, MR. AMADOR R. DOMINGO , petitioner , vs .BENIGNO YUSON, SR. and GAPAN MEMORIAL PARK, INC. , respondents . D E C I S I O N On September 18, 1986, petitioner PEOPLE'S PARK DEVELOPERS, INC. filed a petition against herein respondents BENIGNO YUSON, SR. and GAPAN MEMORIAL PARK, INC. praying that a writ of preliminary injunction be issued enjoining respondent Benigno Yuson, Sr. from disposing his illegally acquired 15,000 shares of the authorized capital of the respondent corporation to any third person and after due notice and hearing a writ of preliminary mandatory injunction be issued directing respondent Benigno Yuson, Sr. to call for a stockholders' meeting. On October 8, 1986, a temporary restraining order was issued enjoining respondent Yuson, Sr. from disposing of the 15,000 shares of the unsubscribed portion of the authorized capital stock to third persons and the incident for the application of the writ of preliminary injunction was set for hearing on October 13, 1986. On October 24, 1986, respondents filed their Answer. Thereafter, various hearings were held including several conferences to settle the case between the parties with the agreement that the resolution on the application for the prayer of the writ of injunction be suspended in the meantime while the parties were working for a settlement. Considering that the parties could not reach an agreement, both submitted the pending incident and merits of the case for resolution on the basis of documentary evidence. Petitioner in its petition alleges among others, that it is a stockholder of respondent Gapan Memorial Park; that respondent corporation was organized and registered with the SEC with an authorized capital stock of P2,000,000.00 of which P500,000.00 was subscribed and paid in full in the form of real estate property previously owned by respondent Benigno L. Yuson, Sr. under TCT No. 168178 (Exh. "A" on behalf of the following subscribers: NO. OF SHARES AMOUNT NAME SUBSCRIBED AMOUNT PAID Benigno L. Yuson 4,910 P491,000.00 P491,000.00 Luisito Magpayo 10 1,000.00 1,000.00 Primitivo E. Domingo 10 1,000.00 1,000.00 Vicente Magadia 10 1,000.00 1,000.00 Dioscorro de Leon 10 1,000.00 1,000.00 Lolita Borja 10 1,000.00 1,000.00 Feliciano Parcutela 10 1,000.00 1,000.00 Diosdado del Ponso 10 1,000.00 1,000.00 Modesta Boquirer 10 1,000.00 1,000.00 Benigno S. Yuson, Jr. 10 1,000.00 1,000.00 Total 5,000 P500,000.00 P500,000.00 ====== ========== ========= that on April 12, 1983, respondent Yuson, Sr. sold to petitioner 2,500 shares from his 4,910 shares in respondent corporation which petitioner has fully paid (Exh. "B"), Assignment of Shares of Stock and Exh. "C", (Stock Certificate); that on June 27, 1986, respondent Yuson, Sr., assigned 1,250 shares to petitioner leaving for himself 1,160 shares, substantially reducing his original holdings and interest in the respondent corporation and thus making the petitioner the majority stockholder of the respondent corporation (Exh. "D", Assignment of Shares and Exh. "E", Stock Certificate); that from the time the corporation was organized no annual stockholders' meeting, or organizational meeting of the board has been called, set or conducted by respondent Yuson Sr.; that petitioner as majority stockholder and controlling 75% of the authorized shares of stock, on July, 1986, orally requested from respondent Yuson to call for a stockholders' meeting for purposes of electing the new members of the board, (Exh. "F", List of Stockholders); that respondent instead of acting on the request, furnished the petitioner a copy of an alleged minutes (Exh. "G", Minutes) of the special stockholders' meeting dated April 25, 1986, which said minutes states that the remaining 15,000 unissued shares of stock were issued to respondent Yuson, Sr. by applying as consideration thereof the alleged excess value of the property already transferred to the corporation as payments to the subscription during the incorporation of respondent corporation in 1981; that immediately thereafter, he issued to himself the corresponding Stock Certificate No. 023 representing the unsubscribed 15,000 shares of the authorized capital of the corporation; that the alleged special stockholders' meeting of April 26, 1986, as well as the Resolution No. S-1 allegedly approved by the stockholders present are highly irregular and illegal; that since the act of the respondent is against and in violation of the Corporation Code and By-Laws of the corporation, the alleged special stockholders' meeting on April 26, 1986 and the Board Resolution No. S-1 and subsequent issuance of the shares of stock respecting 15,000 shares to respondent Yuson are null and void, hence this petition. Respondents in their Answer and supplemental comments with correction made admission and denials and raised special and affirmative defenses. Respondents allege in the special and affirmative defenses that the real estate property of the petitioner was valued by an independent appraiser, A. Calero and Co.,Inc. at 3.9 M broken down as follows: Land P3,350,000.00 Improvements 550,000.00 P3,900,000.00 =========== that the paid up value of P500,000.00 is therefore a part of the approved SEC valuation of P2,500,000.00 from the appraisers value of P3.9 M; that on April 12, 1983, respondent Yuson, Sr. who was then in financial distress with undue pressure assigned his rights, interest and participation over 2,500 common shares of respondent corporation in favor of Primitivo E. Domingo for an amount of P300,000.00 but on said date respondent Yuson received from the petitioner only the amount of P20,000.00, as evidenced by a receipt dated June 22, 1983 (ANNEX "I");that as of April 12, 1983, petitioner has not fully paid the said 2,500 shares; that on June 23, 1983, petitioner through Primitivo E. Domingo continued to pressure respondent Yuson and the latter was forced to sign Stock Certificate No. 20 (ANNEX "C") of the petition, in exchange for the initial amount of only P10,000.00 as part of the total amount of P300,000.00; that the total amount of P300,000.00 took petitioner through Primitivo E. Domingo more than 3 years to pay in several installments so much so that the amount of P300,000.00 was not paid in lump sum and did not serve the purpose for which respondent Yuson intended, which purpose is to pay the loan he borrowed from the bank the proceeds of said loan having been used and spent for the improvement and development of Gapan Memorial Park; that on June 27, 1986, petitioner through Primitivo E. Domingo, knowing that respondent Yuson is in dire need of cash to pay the latter's obligation with the bank and while respondent is in such poor financial state, offered to buy respondent Yuson's 1,250 shares for a lump sum of P150,000.00 on the condition that respondent assign to petitioner 1,250 shares worth P150,000.00; that despite the assignment of 1,250 shares on June 27, 1986, it was only on July 14, 1986 that respondent Yuson received the amount of P10,000.00 in cashier's check instead of P150,000.00 so that, as of June 27, 1986 petitioner did not own the 1,250 shares as there has been no sufficient consideration for the assignment of said shares; that as of July, 1986, respondent Benigno Yuson is still the majority stockholder of Gapan Memorial Park, Inc.,being the owner of the majority stocks in said corporation including the whole 15,000 shares, contrary to the allegation of the petitioner under paragraphs 9 and 10 of the petition; that the special stockholders' meeting of April 26, 1986, as well as Resolution No. S-1 Series of 1986 are regular and legal therefore, both the meeting and the resolution, are valid, contrary to the allegations under paragraphs 11 and 12 of the petition; Furthermore, the Resolution No. S-1 Series of 1986 issued during the April 26, 1986 meeting is merely a duplication and a confirmation of the resolution unanimously adopted by the stockholders at 4:30 in the afternoon of June 6, 1981 during the organizational meeting of stockholders and later the Board of Directors unanimously adopted Resolution No. S-1 Series of 1981 during the organizational meeting at 5:40 in the afternoon of the same date; that the acts complained of by petitioner under paragraphs 13 and 14 of the petitioner are accomplished acts and therefore, such claim is now moot and academic since as of July 29, 1986, respondents owned the 15,000 shares of stock and that out of the 15,000 shares of stock 3,000 shares were disposed and transferred in favor of Estanislao G. Alinea, Jr. on August 30, 1986; and 5,000 shares of stock were disposed and transferred in favor of Teresita F. Pamintuan on August 30, 1986; and that the remaining 7,000 shares of stock evidenced by Certificate of Stock No. 26 attached as Annex "D" hereof still belongs to respondent Benigno L. Yuson, Sr.;hence, respondents pray for the dismissal of the petition for lack of merit. The principal issue to be resolved in the instant action is whether the issuance of the unissued, unsubscribed shares of stock of the authorized capital stock of respondent Gapan Memorial Park, Inc. to respondent Benigno L. Yuson, Sr. is valid or not. From the documentary evidence presented by the parties, it appears that Gapan Memorial Park was organized on February 9, 1981 with an authorized capital stock of P2,000,000.00, divided into 20,000 shares with a par value of P100.00 each; a subscribed capital of P500,000.00 which is fully paid by way of real property formerly registered in the name of respondent Benigno L. Yuson, Sr. as evidenced by a Deed of Assignment and Supplementary Agreement to the Deed of Assignment dated August 31, 1980 and October 23, 1980 respectively. The said real property was earlier appraised by a private appraiser at P3,900,000.00. On April 26, 1986, Gapan Memorial Park, Inc. issued its remaining 15,000 unsubscribed shares of stock to its president and chairman of the Board of Directors, respondent Benigno Yuson, Sr. by applying as consideration thereof the excess fair market value of the real property already transferred to corporation as full payment of the subscribed capital stocks valued at P500,000.00. To justify the legality of the issuance of 15,000 questioned shares in his name, respondent Yuson now claims that the Corporation is under obligation to pay him back the excess value of his real property worth P3,900,000.00 which he assigned to the corporation at P500,000.00 in payment of its paid capital stocks. Such issuance was allegedly taken up during the organizational meeting of the stockholders allegedly held on June 6, 1981 whereby the stockholders unanimously adopted the following resolutions: "RESOLVED, that every stockholder waived, as each and every stockholder hereby waives, the pre-emptive right in favor of Mr. Benigno L. Yuson, Sr. or to whoever he shall endorse or assign such pre-emptive right as additional consideration for the assignment by him in favor of the corporation of the real property being developed by the company containing an area of 66,533 sq. m. more or less. RESOLVED, further, that the Board of Directors be authorized, as it is hereby authorized to execute, implement and carry out this resolution by effecting the issue to Mr. Benigno L. Yuson, Sr. of the 15,000 unissued shares of the corporation". Likewise, on the same date, the Board of Directors of Gapan Memorial Park, Inc.,allegedly held its meeting and adopted the following resolutions: "RESOLVED, that the corporation recognize its obligation and liability to Mr. Benigno L. Yuson, Sr.,arising out of the assignment made by him to the corporation of real property, with improvements, which was appraised by A. S. Calero & Co. with a total market value of P3,900,000.00, the consideration in the said assignment being the sum of one (1) Peso and other valuable consideration; RESOLVED, further, that to compensate Mr. Benigno L. Yuson, Sr.,the corporation shall issue to him all the unissued shares of the capital stock totalling 15,000 shares. RESOLVED, further, that the 15,000 shares to be issued to Mr. Benigno L. Yuson, Sr.,is in addition to P500,000.00. RESOLVED, finally, that as waived by the stockholders, the pre-emptive right pertaining to the unissued 15,000 shares, which was given to Mr. Benigno L. Yuson, Sr. shall consider as not in any way pertaining to the present 5,000 shares issued and outstanding". From the foregoing circumstances, the Commission believes that the resolution of the issue involved in the instant case is determinative upon the terms and conditions of the Deed of Assignment, dated August 31, 1980, executed by respondent Yuson, Sr.,in favor of Gapan Memorial Park, Inc. It may not be amiss to state at this juncture that the said Deed of Assignment was executed for the fulfillment of an obligation arising from the subscription contract entered into by respondent Yuson, Sr. and Gapan Memorial Park, Inc. at the time of its incorporation. The said instrument having been executed with all the formalities prescribed by the law, is admissible as evidence against the contracting parties and their successors with respect to the recitals made therein by the former. Thus, in the absence of any express stipulation to the effect that the assignee (Gapan Memorial Park, Inc.) is under obligation to pay the assignor (Yuson, Sr.) the alleged excess fair market value of the real property used in payment of paid up capital of the assignee, the assignor is deemed to have conveyed his entire legal interest thereto upon delivery of said property. For all intents and purposes, the transaction is recorded in the corporate books of account as follows: ASSETS EQUITIES & LIABILITIES Land P3,350,000.00 Paid Up Capital P 500,000.00 Improvements 550,000.00 Premium on Stocks 3,400,000.00 P3,900,000.00 P3,900,000.00 ============ ============ The fact that the real property was appraised at P3,900,000.00 and was assigned only at P500,000.00, the assignor, cannot, on his own volition, raise the defense of insufficiency of consideration. "Consideration" may mean any advantage flowing to one party or a loss that is occasioned to the other. Any advantage to one party, slight or otherwise, or a trifling inconvenience to the other, is a sufficient consideration to support a contract when made by a person of good capacity, like a lawyer in the person of respondent Benigno L. Yuson, Sr.,who is not at the time under the influence of any fraud, imposition, or mistake. Finding the transfer of the real property in favor of Gapan Memorial Park, Inc. to be absolute and unconditional, we necessarily find the issuance of 15,000 unsubscribed shares to be watered stocks and therefore invalid for complete lack of consideration thereof to the prejudice of the corporation and in violation of the "Trust fund Doctrine" under the Corporation Code. Thus, the alleged Board resolution supposedly authorizing such issuance as well as the alleged waiver of pre-emptive rights from the stockholders, to our mind, are pure curative act done through the influence of respondent Yuson, Sr. to legalize a claim or right which is clearly renounced, relinquished, waived, or conveyed by virtue of a Deed executed with all the legal requisites under the safeguard of a notarial certificate. We come now to the issue of who is the majority stockholder of Gapan Memorial Park, Inc. LexLib Respondent on two occasions on April 12, 1983 and June 27, 1986 sold substantially 3,750 shares from his 4,910 shares of stock to petitioner herein leaving to himself 1,160 shares. These transactions are all supported in evidence with assignments of shares and corresponding stock certificates which respondent Yuson does not dispute as to its authenticity and genuineness except for the fact that he was just allegedly pressured to sell his shares of stock to petitioner while he was in financial distress and that he was not fully paid up to this time. By this fact of transfer which respondent failed to contest substantially, clearly established that petitioner is now the majority stockholder of the corporation, practically holding and controlling 75% of the authorized capital stock of the corporation as shown in the list of stockholders dated July 25, 1986. WHEREFORE, premises considered, the issuance of 15,000 shares to Atty. Benigno L. Yuson, Sr. is hereby declared NULL and VOID. Respondent Atty. Benigno L. Yuson, Sr. is hereby directed to call for stockholders' meeting of Gapan Memorial Park, Inc. within thirty (30) days after the finality of this Decision. SO ORDERED. (SGD.) NAPOLEON M. TUMAMAO Hearing Officer