Ellie F. Dimson, et al. vs. Dr. Jesus S. Dimson, et al.

[SEC-SICD * CASE NO. 3065. March 12, 1992.] ELLIE F. DIMSON, ET AL. , petitioners , vs .DR. JESUS S. DIMSON, ET AL. , respondents . D E C I S I O N This is a petition for mandamus with application for the issuance of a temporary restraining order and/or writ of preliminary injunction filed by petitioners Ellie P. Dimson and Marilou P. Dimson against respondents Jesus S. Dimson Millie V. Dimson and Bienvenido S. Dimson. prLL Petitioners prayed that after due hearing, a decision be rendered in their favor and against the respondents: 1. Ordering the respondents to deliver to them Certificate of Stock Nos. 33 and 35 covering their 1,250 shares of stock in Visayan Forest Development Corporation (VFDC, for brevity) and, if for one reason or another the same could no longer be delivered, that respondents be ordered, jointly and severally, to pay them the current value of said shares based on the amount of P6.5 Million for the 5,000 outstanding shares of stock of VFDC, or at the rate of P1,300.00 per share thereby making their 1,250 shares of stock valued at P1,625,000.00, together with the legal interest thereon from the filing of the instant petition; and, 2) Ordering the respondents, jointly and severally, to pay them moral, exemplary and actual damages, including attorney's fees. In support thereof, petitioners, alleged, inter alia, that VFDC is a domestic entity duly organized and existing under Philippine laws, having been registered with this Commission on May 12, 1967 under Registration No. 32382 with an authorized capital stock of One Million Pesos divided into 10,000 shares with a par value of P100.00 per share, and out of said authorized capital stock, 5,000 shares have been fully subscribed and paid; that the petitioners and the respondents are stockholders of record of VDFC and their stockholdings are as follows: Jesus S. Dimson 2,300 shares Bienvenido S. Dimson 1,250 shares Ellie P. Dimson 1,000 shares Marilou P. Dimson 250 shares Millie V. Dimson 100 shares Luz S. Dimson 100 shares that in a report of Atty. Filomeno Ligutan submitted in SEC Case No. 2918 ,entitled: "Mahogany Development Corporation of the Philippines vs. Dr. Jesus S. Dimson, et al.," herein petitioners were issued Certificate of Stock Nos. 33 and 35 corresponding to their stockholdings; that being relatives, herein petitioners have exerted diligent efforts to settle this case amicably with the respondents, but despite several attempts to amicably settle the case, respondents unlawfully and unreasonably denied the rights of the petitioners; in fact, respondents deceitfully and fraudulently refused to acknowledge that petitioner are lawful stockholders of VFDC, thus rendering any compromise settlement in this case futile; that sometime on August 27, 1984, respondent Jesus S. Dimson and his wife, respondent Millie V. Dimson, fraudulently and deceitfully entered into a Memorandum of Agreement with Mahogany Development Corporation of the Philippines, (MDCP, for brevity) for the absolute sale of all the outstanding capital stock of VFDC for the sum of P6.5 Million, unlawfully claiming to be the sole owners of all such outstanding capital stock; that on March 12, 1985, respondent Bienvenido S. Dimson connived and conspired with his co-respondents, and he affirmed and confirmed the Memorandum of Agreement dated August 27, 1984, and agreed with one another to be the owners of the said outstanding capital stock of VFDC on the basis of 50% each; that all of the aforesaid transactions were never revealed to the petitioners and the latter discovered the matter only when Atty. Filomeno Ligutan, a lawyer and representative of the respondents, came to the house of the petitioners and was offering a Cashier's check for P12,500.00 for petitioner Marilou P. Dimson's 250 shares of stock therein and informed them that the respondents have sold the corporation to Mr. Bueno and that the par value of each share is P100.00 only; that Atty. Ligutan was asking the petitioners to sign a document covering the payment of their shares; that petitioners refused the offer of Atty. Ligutan and instead, petitioner Ellie P. Dimson communicated with Mr. Valeriano C. Bueno (President of MDCP, buyer of VFDC) wherein she discovered that the buying price thereof is P6.5 Million and that the value of each share of stock is P1,300.00; that on October 1, 1986, petitioner Ellie P. Dimson wrote Mr. Valeriano C. Bueno requesting for the latter's intercession for an amicable settlement and the payment of the value of petitioners' shares of stock; that in an effort to make a compromise settlement, Mr. Valeriano C. Bueno, through his counsel, referred the matter to the respondents on October 2, 1986, and instead of being conciliatory, the respondents blatantly denied any right of the petitioners to the 1,250 shares of stock in VFDC and in fact, respondent Bienvenido S. Dimson is allegedly intending to cancel the said stockholdings of the petitioners and convert the same to his own without the consent and conformity of the said stockholders on record; that the petitioners have fully paid for their shares of stock of 1,250 shares in VFDC and in fact, Certificate of Stock Nos. 33 and 35 were already recorded in their favor, however, despite several demands from the respondents for the delivery of the said certificates of stock covering their legitimate shares of stock in VFDC, the respondents unlawfully and unreasonably failed and/or refused to deliver the same to the petitioners; that the deceitful and fraudulent acts of the respondents in selling all the outstanding shares of stock in VFDC without involving the petitioners must be stopped altogether, and in order to serve as a warning to all other persons of the same bent of mind as the respondents, the latter should be charged to pay exemplary damages to the petitioners; that as a result of the said deceitful and fraudulent practices of the respondents, the petitioners have suffered wounded feelings, serious anxiety, besmirched reputation, sleepless nights and other similar injuries that must be compensated by the respondents; that because of the unlawful acts of the respondents, petitioners will be compelled to engage the services of a lawyer; that from a verification from MDCP through its President, Valeriano C. Bueno, it was learned that respondents have already received the sum of P5 Million out of the P6.5 Million purchase price of VFDC; that on April 17, 1985, respondents opened Current Account No. 118-000656 and Savings Account No. 6223 with the United Coconut Planters Bank, Cubao Branch, Cubao, Quezon City, wherein the respondents through MDCP deposited the latter's payment for the sale of the VFDC's outstanding shares; that per verification from MDCP, there is still a balance of P1.5 Million in its possession which is scheduled to be paid for the cost of the said shares of stock in VFDC, but is being temporarily withheld due to the claim of herein petitioners; that there is a great danger that the respondents will withdraw all the deposits under the aforesaid accounts with the United Coconut Planters Bank and unless restrained by this Commission, the petitioners will suffer great and irreparable damage and injuries by the disposal of the aforesaid available funds, including the balance which is still in the possession of MDCP; that there is no sufficient security for the claim sought to be enforced by this action; that unless a temporary restraining order or writ of preliminary injunction is issued, the respondents may be able to withdraw and dispose of the monies deposited with the United Coconut Planters Bank, as well as that which is still in the possession of MDCP, and that the petitioners may not be able to recover the judgment, in whole or in part, which may be rendered by this Commission, in favor of the petitioners; and, that the petitioners are willing and ready to post a bond for and in any such amount as may be determined by this Commission, to pay for all the costs and damages that may be sustained by the respondents by reason of the issuance of the writ of preliminary injunction in the event this Commission shall finally adjudge that petitioners are not entitled thereto. prLL On October 22, 1986, a Temporary Restraining Order was issued "enjoining the respondents, their agents and representatives and all other persons claiming rights under- them, from withdrawing any amount from their Joint Current Account No. 118-000656 with United Coconut Planters Bank, Cubao Branch, Cubao, Quezon City, without the consent or clearance from the Commission." On November 14, 1986, MDCP, through its counsel, filed a motion for leave to intervene alleging that its rights will be adversely affected by any decision in the instant case. On December 8, 1986, respondents filed their answer which specifically denied the material allegations in the petition and, by way of special and affirmative defenses, alleged, inter alia, that petitioners have no cause of action against respondents; that petitioners are not, and have never been, stockholders or subscribers of VFDC; that the Commission has no jurisdiction over the nature and subject matter of the petition since petitioners are not bon fide stockholders of VFDC, hence, there is no intra-corporate relationship between the parties; that respondents Jesus S. Dimson and Bienvenido S. Dimson were the original controlling stockholders of VFDC together with others, excluding the petitioners; that the inclusion of the names of the petitioners as listed in the Minutes of the Stockholders' Meeting and General Information Sheet (Annexes "A" and "B" of the petition, respectively) were merely incidental considering that as of December 31, 1973, the remaining stockholders of VFDC were only respondents Jesus S. Dimson and Bienvenido S. Dimson; that as a close family owned corporation and to constitute a Board in accordance with its By-Laws, the names of the petitioners were listed as stockholders, but their shares of stock were taken from respondent Bienvenido S. Dimson, as reflected in Annex "C" of the petition; that prior to 1973, all the other stockholders of VFDC transferred their respective shares to the Dimson brothers, such that, as of December 31, 1973 the remaining stockholders of record were only respondents Jesus S. Dimson and Bienvenido S. Dimson with 2,500 shares each; that the set-up in VFDC as of December 31, 1974 or after including the names of the petitioners, et al.,are as follows: SHARES AMOUNT AMOUNT NAME SUBSCRIBES SUBSCRIBED PAID-UP 1. Dimson Bienvenido 1,250 P125,000.00 P56,000.00 2. Dimson Jesus 2,300 230,000.00 104,000.00 3. Dimson Ellie 1,000 100,000.00 44,800.00 4. Dimson Marilou 250 25,000.00 11,200.00 5. Dimson Millie 100 10,000.00 4,000.00 6. Dimson Luz 100 10,000.00 4,000.00 Total 5,000 P500,000.00 P224,000.00 ====== ========= ========= that petitioners have not claimed nor in any way exercised any act of ownership over the same except when they learned that VFDC was sold to MDCP and at a time when the marital relationship of petitioner Ellie P. Dimson and respondent Bienvenido S. Dimson was already irreconciliably strained; that in order to avoid confusion brought about by the unilateral act of respondents in having the shares in question listed in the names of petitioners, respondent Bienvenido S. Dimson had caused the cancellation of Certificates of Stock Nos. 33 and 35 and caused the issuance of new certificates in his name; Respondents further alleged, by way of compulsory counterclaim, that petitioner Ellie P. Dimson, with malice aforethought, and for the purpose of exerting pressure on her husband, respondent Bienvenido S. Dimson, to give in to her unconscionable demand, perverted the truth by filing the instant petition and in the process included her daughter Marilou P. Dimson without the latter's knowledge and consent, and as a consequence, the respondents have suffered wounded feelings, besmirched reputation, mental anguish and such other similar injury thereby making petitioner Ellie P. Dimson liable by way of moral damages; that for having falsified the truth so as to be able to file the instant petition against herein respondents, petitioner Ellie P. Dimson should be held liable to indemnify the former by way of exemplary damages; and, in order to vindicate themselves of the false charges leveled against them, the respondents were constrained to engage the services of counsel and for which they have incurred expenses. On June 16, 1987, this Hearing Officer denied the petitioners' prayer for the issuance of a writ of preliminary injunction, as well as the intervenor MDCP's motion for leave to intervene. As culled from the records and pleadings submitted by the parties, the issues to be resolved are; 1. Whether or not the petitioners are stockholders of VFDC. 2. Whether or not the petitioners are entitled to the delivery of their Certificates of Stock covering their alleged, 1,250 shares of stock in VFDC or the current value of said shares based on the amount of P6.5 Million as the cost of 5,000 outstanding shares of stock of VFDC; and, 3. Who should be entitled to the claim for damages and attorney's fee? Based from the corporate records of VFDC on file with the Commission and the evidence presented by the parties, the undisputed and pertinent facts of this case are as follows: On May 12, 1967, VFDC was duly registered with this Commission to engage in the exploitation, development and/or utilization of timber and agricultural lands and other natural resources in the Philippines for a term of fifty (50) years with the following as incorporators/directors, namely: 1. Bienvenido C. Dimson (one of the respondents and husband and father of petitioner's Ellie P. Dimson and Marilou Dimson, respectively.) 2. Jesus S. Dimson (brother-in-law of petitioner Ellie P. Dimson) 3. Romulo C. Llave 4. Fausta Ortiz 5. Lilia Ortiz 6. Vicente Aucente 7. Jesus Garcia 8. Pedro Bonifacio The authorized capital stock of VFDC is One Million Pesos (P1,000,000.00) divided into Ten Thousand (10,000) shares with a par value of One Hundred Pesos (P100.00) each. Out of this authorized capital stock, Five Hundred Thousand Pesos (P500,000.00) had been subscribed by the following subscribers, namely: LLpr NO. OF AMOUNT NAME SHARES PERCENTAGE SUBSCRIBED Bienvenido S. Dimson 1,365 27 .30% P136,500.00 Jesus S. Dimson 1,365 27 .30% 136,500.00 Romulo C. Llave 950 19% 95,000.00 Fausta Ortiz 700 14% 70,000.00 Lilia Ortiz 500 10% 50,000.00 Vicente Aucente 100 2% 10,000.00 Jesus Garcia 10 .20% 1,000.00 Pedro Bonifacio 10 .20% 1,000.00 Total 5,000 100% P500,000.00 ====== ====== ========= Out of the aforesaid subscription, Two Hundred Thousand Pesos (P200,000.00) had been paid by the following subscribers as follows: NAME AMOUNT PAID-UP Bienvenido S. Dimson P51,000.00 Jesus S. Dimson 51,000.00 Romulo C. Llave 45,000.00 Fausta Ortiz 25,000.00 Lilia Ortiz 16,000.00 Vicente Aucente 10,000.00 Jesus Garcia 1,000.00 Pedro Bonifacio 1,000.00 Total P200,000.00 =========== Sometime in 1973, respondents Jesus S. Dimson and Bienvenido S. Dimson bought the shares of Llave, Aucente and the other stockholders of VFDC (TSN, Oct. 18, 1989, pp. 10-11) thus leaving them as the only stockholders of VFDC. On February 25, 1974, respondent Bienvenido S. Dimson transferred his 448 shares in VFDC to petitioner Ellie S. Dimson and another 112 shares to Marilou Dimson (Exhs. "N" and "O",respectively). On December 31, 1983, another Certificate of Stock No. 33 was issued to petitioner Ellie P. Dimson for 552 shares (Exh. "P") while Certificate of Stock No. 35 for 138 shares was issued to petitioner Marilou P. Dimson (Exh. "Q").Thus, by the end of December 31, 1985, petitioner Ellie P. Dimson had 1,000 shares registered in her name while petitioner Marilou P. Dimson already owned 250 shares (Exh. "C-3-B"). Therefore, based from the records of VFDC, and the evidence submitted by the petitioners (Exhs. "A","B","C","C-1","C-2","C-3","D","D-1","E-2"),the petitioners are stockholders of VFDC. As regards the second issue, that is, whether or not the petitioners are entitled to the delivery of their Certificates of Stock covering their 1,250 shares of stock in VFDC or the current value of said shares based on the amount of P6.5 Million as the cost of 5,000 outstanding shares of stock of VFDC, the answer needs further elucidation. Section 65 of the Corporation Code of the Philippines provides that "No certificates of stock shall be issued to a subscriber until the full amount of his subscription together with interest and expenses (in case of delinquent shares), if any is due, has been paid." The records of VFDC show that the petitioners have fully paid for their subscriptions (Exhs. "C-3","C-3-A),and "C-3-B).Consequently, under this circumstance, certificates of stock should now be issued to the petitioners. In fact, the certificates of stock covering the petitioners 1,250 shares of stock in VFDC were already issued to them (Exhs. "L" and "M") per records of VFDC but the same were not delivered to them and remained in the custody of the corporate secretary of VFDC respondent Millie V. Dimson. (TSN, Aug. 17, 1990, p. 21).However, on August 27, 1984, an Agreement (Exh. "F") was executed by and between VFDC, represented by respondents Jesus S. Dimson and Millie V. Dimson, and MDCP, represented by its President Valeriano C. Bueno, whereby the former sold, transferred and conveyed to the latter all the outstanding shares of stock of VFDC totalling 5,000 shares for an aggregate consideration of P6.5 Million (TSN, Sept. 16, 1987, pp. 9-11) or at P1,300.00 per share, of which P5 Million has already been paid and received by respondent Jesus S. Dimson while the balance of P1.5 Million remains unpaid (TSN, Sept. 16, 1987, p. 30) In view of the fact that the entire outstanding shares of stock of VFDC totalling 5,000 shares have already been sold to MDCP at the rate of P1,300.00 per share, petitioners could no longer claim for the issuance of their Certificates of stock. Nonetheless, petitioners are entitled to the cash equivalent of their shares. Since the amount of P5 Million had already been received by the respondents, petitioner Ellie P. Dimson must now be given her proportionate share therein in the amount of P1 Million obtained by dividing P5 Million to the number or shares held by the petitioners and the respondents, that is, 5,000 shares and multiplying the quotient of P1,000.00 by the number of shares held by petitioner Ellie P. Dimson which is 1,000 shares thereby resulting in the product of P1 Million. by following the same formula or mathematical computation, petitioner Marilou V. Dimson should receive the amount of P250,000.00 as the equivalent of 250 shares held by her. With respect to the balance of P1.5 Million, and following the same mathematical computation, petitioner Ellie P. Dimson should received the amount of P300,000.00 while Marilou P. Dimson must receive the amount of P75,000.00 upon full payment of the said balance of P1.5 Million by MDCP. Apropos the petitioners' claim for damages, as well as the respondents' prayer for compulsory counterclaim, the same could not be granted for failure of either party to present sufficient or substantial evidence in support of their respective claims. WHEREFORE, judgment is hereby rendered: 1. Ordering the respondents to pay the petitioners Ellie P. Dimson and Marilou P. Dimson the sum of P1 Million and P250,000.00, respectively, out of the P5 Million received by the respondents from Mahogany Development Corporation of the Philippines as initial payment of the latter for the purchase of the entire outstanding shares of stock of Visayan Forest Development Corporation, within three (3) months from finality of this Decision, with legal interest thereon from the date of the filing of the petition. 2. Ordering the respondents to pay the petitioners Ellie P. Dimson and Marilou P. Dimson the sum of P300,000.00 and P75,000.00 respectively, out of the balance of P1.5 Million to be paid by Mahogany Development Corporation of the Philippines to Visayan Forest Development Corporation immediately upon payment of said balance by Mahogany Development Corporation of the Philippines. prcd SO ORDERED. (SGD.) ROLANDO C. MALABONGA Hearing Officer