O. Ventanilla Enterprises Corporation vs. Araullo University, et al.

[SEC-SICD * CASE NO. 3080. July 5, 1990.] O. VENTANILLA ENTERPRISES CORPORATION , complainant , vs . ARAULLO UNIVERSITY AND LOUIS C. VENTANILLA , respondents . D E C I S I O N This is a complaint filed by O. Ventanilla Enterprises Corporation (OVEC, for brevity), praying that judgment be issued mandating Araullo University (ARAULLO, for brevity) to deliver to OVEC, the certificates of stock corresponding to the stock dividends declared by ARAULLO in 1983 and 1984, and the respondents to pay jointly and severally damages of at least P60,000.00. In support thereof, complainant OVEC alleged, inter alia, that OVEC is and was a stockholder of Araullo; that on June 30, 1983, respondent ARAULLO declared stock dividends pursuant to which it issued in the name of OVEC Certificate No. 1250 for 3,952 shares and Certificate No. 1412 for 2,964 shares on June 25, 1984; that the said certificates of stock were never delivered to OVEC; that respondent Louis C. Ventanilla was at that time not a director or officer of OVEC and had no authority to receive the certificates of stock in behalf of OVEC; that despite demands, ARAULLO has failed and refused to deliver to OVEC the certificates of stock; and that as a result of ARAULLO's acts, OVEC has been prejudiced in not being able to exercise the rights in respect to said shares of stock or to deal with them as their owner. In answer to the complaint, respondent ARAULLO admits certain averments and denies generally and specifically the allegations that a) Certificates of Stock No. 1250 and No. 1412 were never delivered to the complainant; b) Louis C. Ventanilla was not a director or officer of OVEC, and had no authority to receive the certificates of stock in behalf of OVEC; and c) that despite demands, ARAULLO failed and refused to deliver to OVEC the said certificates of stock. Respondent ARAULLO, in denying certain averments in the complaint contended that the Certificates of Stock Nos. 1250 and 1412 were delivered to the complainant OVEC through respondent Louis C. Ventanilla, the corporate secretary and legal counsel of OVEC and by way of counterclaim, ARAULLO prayed that OVEC be made to pay the amount of P1,000,000.00 as moral and compensatory corrective damages and P10,000,000.00 as attorney's fees. Respondent Louis C. Ventanilla's answer did not specifically deny any material averments in the complaint. Instead, he interposed a counterclaim which alleged, inter alia, that Oscar Ventanilla, Jr. and Rosalinda V. Escano, together with their sister Gloria V. Apolonio, brothers Rogelio and Moises and himself are the stockholders and incorporators of a close family corporation, O. Ventanilla Enterprises Corporation, together with their father Oscar Ventanilla, Sr.; that upon the death of Oscar Ventanilla, Sr., the rights of the heirs to his estate were regulated by the Last Will and Testament which is the subject of Special Proceedings No. 1792 before Br. 26, Regional Trial Court of Cabanatuan City; that the assets of the corporation consist of the inheritance of the heirs of Oscar Ventanilla, Sr. transferred to the corporation in Deed of Conveyance dated November 17, 1971; that after the death of Oscar Ventanilla, Sr., Oscar Ventanilla Jr., through fraud and in conspiracy with other heirs, caused the transfer of founder stocks to Carmen D. Ventanilla and Rosalinda B. Escano in violation of clause seven of the Articles of Incorporation of OVEC which provides that the holders of either founder or common shares desiring to dispose or sell their holdings should give preference to the corporation for a period of ninety (90) days and hence, to holders of similar shares within the same period; that in conspiracy with other heirs, Oscar Ventanilla, Jr. deposed Louis O. Ventanilla as corporate secretary, general counsel and director of OVEC, depriving him of a total monthly income of P5,200.00 from February 1, 1982 up to his death on February 14, 1989; that at the meeting where Louis C. Ventanilla was deposed, the meeting was held without a quorum; that OVEC has a lease contract since 1933 with Crisostomo Estate but Oscar Ventanilla, Jr., with intent to defraud Louis C. Ventanilla, sold the building and the right to the lot without the knowledge and consent of Louis C. Ventanilla and without any accounting; that unless a declaration of the right of the heirs of Oscar Ventanilla, Sr. is judicially pronounced, the OVEC will continue to commit acts tending to render nugatory Special Proceedings No. 1792 pending in the Regional Trial Court in Cabanatuan City, thus defrauding the legal heirs of their inheritance. Louis C. Ventanilla prayed for the issuance of a restraining order against OVEC to maintain the status quo of the officers of OVEC and for a preliminary mandatory injunction directing the plaintiff OVEC to reinstate Louis C. Ventanilla to his position in the corporation. On January 9, 1987, Louis C. Ventanilla filed an ex-parte motion to resolve his counterclaim and on January 28, 1987, Hearing Officer Antero F.L. Villaflor, Jr., issued an Order directing the complainant to file his comments thereon within five (5) days from receipt thereof, and to serve the complainant with a copy of the motion. OVEC filed its comment thereto dated February 3, 1987 and prayed that Louis C. Ventanilla's counterclaim be stricken off the record and dismissed on the following grounds: 1) that the counterclaim introduces new and independent causes of action which may not be deemed filed until the corresponding docket or filing fee is paid; 2) that it raises matters not within the jurisdiction of this Commission; 3) that the matters raised had been taken up in previous cases which had been dismissed; 4) that the matters raised pertain to probate proceedings which had been initiated and dismissed; 5) that Louis C. Ventanilla ceased to be a stockholder of OVEC and has no cause of action in respect to the matter raised in the counterclaim which had been extinguished; 6) that the allegations in the counterclaim are mainly and merely opinion and conclusions which are false. When the case was called for hearing on February 20, 1987, only counsel for OVEC appeared. Minutes of the proceedings do not indicate what was taken up. OVEC filed a motion dated March 13, 1987 praying to strike off Louis C. Ventanilla's answer and to render summary judgment ordering the respondents to issue and/or deliver certificates of stock for stock dividends declared in 1983 and 1984 to OVEC. In his opposition dated March 23, 1987, Louis C. Ventanilla argued that there was no need to specifically deny the allegations in the complaint. As a matter of fact it was admitted. He argued further that the counterclaim is within the jurisdiction of this Commission because the same had been dismissed by the Regional Trial Court for lack of jurisdiction. On August 11, 1989, the widow and heirs of Louis C. Ventanilla, through counsel, moved for the substitution of respondent Louis C. Ventanilla, who died on February 14, 1989. The said motion was granted in an Order recognizing Nenita O. Ventanilla, the widow as substitute of respondent Louis C. Ventanilla in the instant case. At the hearing on December 20, 1989 where both counsels for OVEC and Nenita O. Ventanilla were present, counsel for Nenita O. Ventanilla admitted that the certificates in question are in the possession of the latter. He justified the retention of the certificates of stock by Nenita O. Ventanilla as a co-owner of OVEC. On the other hand, OVEC argued that the certificates of stock were issued in the name of OVEC, so that on their face, the stocks belong to the corporation and not co-owned by anybody else. OVEC further argued that it has a personality of its own separate and distinct from its stockholders such that its properties cannot be claimed by the stockholders to be owned in common by them. Furthermore, OVEC argued that Louis C. Ventanilla is estopped from questioning the personality of OVEC as a corporation because at one time he served as its corporate secretary and director. At the same hearing, counsel for OVEC observed that Nenita O. Ventanilla was paddling in two rivers because of the action she filed in the Regional Trial Court involving the same claim which is being tried in the Commission. According to counsel for Nenita O. Ventanilla, the case in the Regional Trial Court has been dismissed and now on appeal in the Court of Appeals. A careful perusal of the records of the case, the arguments of the parties, their respective pleadings, as well as the annexes thereto will show that ARAULLO, by its own allegation in its answer, admitted that OVEC was a stockholder of ARAULLO in 1983 and 1984 when the latter declared stock dividends in those years and issued Certificates of Stock No. 1250 for 3,952 shares and Certificate No. 1412 for 2,964 shares which were delivered to OVEC, through Louis C. Ventanilla. Louis C. Ventanilla's refusal to turn over the certificates of stock to OVEC despite repeated demand on the lame excuse that he also has a demand from OVEC which it refused to heed is completely devoid of reason. In the first place, he knew too well that he does not have title to the certificates and for him to continue holding on to them makes him a possessor in bad faith. However, when the xerox copies of the said certificates were presented at the hearing by Nenita O. Ventanilla and shown to the counsel of OVEC for examination, it turned out that they could not be deciphered having been damaged by water according to counsel of respondent Nenita O. Ventanilla. In view thereof, and considering the present state and condition of the certificates of stock, this Hearing Officer finds it useless to require Nenita O. Ventanilla to turn over the certificates of stock in favor of OVEC. Instead, the cancellation of the damaged certificates and the issuance of new certificates for the same number of shares in the name of OVEC is in order. On the counterclaim of Louis C. Ventanilla, seeking for a judicial pronouncement of the rights of the heirs of Oscar Ventanilla, Sr. over his estate, as well as his stockholdings in OVEC, the records of the case will show that the probate of the Last Will and Testament of Oscar Ventanilla, Sr. had been dismissed by the Regional Trial Court in Cabanatuan City and is now on appeal in the Court of Appeals. For this Hearing Officer to make a ruling on the matter will unnecessarily expose him to the risk of being accused of unwarranted interference with the Court of Appeals' judicial processes. Secondly, it should be borne in mind that complainant in this case is OVEC and not Oscar Ventanilla, Sr. who is just a stockholder of OVEC. Hence, the counterclaim filed by Louis C. Ventanilla is defective as it is not against OVEC as the opposing party. Thirdly, assuming arguendo that there is no such case on appeal in the Court of Appeals, this Hearing Officer entertains serious doubts as to his competence to rule upon the hereditary rights of the heirs of Oscar Ventanilla, Sr. The allegation that Clause Seven of the Articles of Incorporation has been violated by Oscar Ventanilla, Jr. necessitates a close perusal of the provision which reads: xxx xxx xxx That the corporation's share of stock shall be freely transferable without restrictions in favor of the corporation or the original subscribers, incorporators, owners or holders and their spouses, descendants and families up to the 4th civil degree by consanguinity and up to the 2nd degree by affinity. In case a stockholder desires to sell his shares of stock to any person other than the corporation or those enumerated above, he must first offer them for sale to the corporation and/or the aforesaid persons. Notice to the corporation shall be given to the Secretary. . . .". (as amended January 1, 1984) The aforequoted Article Seven as amended, is clearly intended to keep the corporate stocks within the control of the Ventanilla family and their relatives within certain degree of affinity and consanguinity. Considering that the stocks of Oscar Ventanilla, Sr. are now held by members of the same family and relatives, the alleged violation of Article Seven of the Articles of Incorporation appears to have no valid legal basis. Again, the counterclaim is against Oscar Ventanilla, Jr. and not against the complainant. As to Louis C. Ventanilla's accusation that Oscar Ventanilla, Jr. had arrogated unto himself certain stocks of the deceased Oscar Ventanilla, Sr., it was incumbent upon him to substantiate and to prove the same by presenting evidence, testimonial or documentary, but the records of the case fail to show such evidence. Such an accusation cannot be accepted on its face value without the necessary proof and evidence. Besides, this claim is not against OVEC but against Oscar Ventanilla, Jr. which is not proper in a counterclaim. Louis C. Ventanilla questioned his exclusion from OVEC as director, corporate secretary and counsel which he claimed was done at a meeting where there was no quorum. He stressed that he was deprived of a monthly income of P5,000.00 from March 1982 up to his death on February 14, 1989. OVEC justified his ouster when his holdings in OVEC were levied upon to satisfy the judgment against him in Civil Case No. 6639, Court of First Instance of Nueva Ecija and the offsetting of his outstanding account with OVEC as shown in its Board Resolution dated June 12, 1982. He tried to discredit the Board Resolution but he failed to present any evidence to show that said resolution has not been validly issued. On the allegation that OVEC has a contract of lease with Crisostomo Estate in 1933 and sold the building and the right to said lot without the knowledge of Louis C. Ventanilla and without accounting, suffice it to say that OVEC could not have entered into said contract having been incorporated only in 1972. In addition, the building and the lot mentioned have not been identified, to whom and when the said properties were sold. Hence, the accusation is so unclear and ambiguous and no evidence were presented on the matter. Assuming Louis C. Ventanilla's contention that OVEC is not a real corporation to be true, then there would not be an intra-corporate dispute to speak of. LibLex Considering that Louis C. Ventanilla was no longer connected with OVEC at the time the counterclaim for reinstatement to his former position in OVEC, he has also lost his rights thereto. Considering further that Louis C. Ventanilla failed to show, much less prove, that his ouster from his former positions in OVEC is illegal, his claim for reinstatement has no justifiable legal basis. As regards the claim for damages, no evidence was shown to warrant the entitlement to damages. WHEREFORE, judgment is hereby rendered: 1) Ordering Araullo University to cancel Certificates of Stock Nos. 1250 and 1412 originally issued and to issue new certificates for the same number of shares in the name of OVEC; 2) Dismissing the counterclaim for lack of merit; and 3) Denying reinstatement of Louis C. Ventanilla; through his substitute Nenita O. Ventanilla, to the position of director, corporate secretary and general counsel of OVEC. No pronouncement as to cost. (SGD.) MANUEL P. PEREA Hearing Officer