Beaulah T. Tong vs. Eufrosina T. Velasco

[SEC-SICD * CASE NO. 3094. July 5, 1990.] BEAULAH T. TONG , complainant , vs . EUFROSINA T. VELASCO , respondent . D E C I S I O N This is an amended complaint instituted by Beaulah T. Tong against Eufrosina T. Velasco principally for accounting of corporate funds and mismanagement, with a prayer for the issuance of a restraining order and/or writ of preliminary injunction. Complainant alleges, among others, that she is a member of the Board of Directors while respondent Eufrosina T. Velasco is the President and General Manager of Mountainer Overseas Research Experts, Inc.; that Mountainer Overseas Research Experts, Inc., is a corporation duly organized and registered with the Securities and Exchange Commission with office address at Lola Toya Bldg., 1155-E Quezon Boulevard, Quezon City; that since the start of the business operation of the corporation as a recruitment and placement agency in July 1985, respondent had been collecting placement fees from overseas workers and the fees she collected were not turned over to the corporation nor deposited in the depository bank of the corporation, but instead, said amounts were used by respondent Velasco for her own personal enjoyment and benefit to the damage and prejudice of the corporation and officers, including the stockholders thereof; that respondent Eufrosina T. Velasco failed to render an accounting regarding her collection despite several demands by the complainant. Complainant further alleged that job applicants for abroad from whom respondent collected placement fees demanded from her and the corporation the return of their monies in view of the failure of the respondent and/or the corporation to deploy them abroad; that the applicants also filed cases in court, either criminal or administrative, which affect the life of the corporation and ruin its business operation, thus placing it under imminent danger of suspension, if not revocation of its license to recruit by the POEA; that this illegal collection of placement fees and other mismanagement activities committed by respondent would certainly destroy the name, reputation and integrity of the corporation and its officers, including the stockholders thereof; that respondent mortgaged or is about to mortgage the license of the corporation to a third person; that unless respondent be restrained, stopped and enjoined from illegally collecting placement fees and mortgaging the license of the corporation, the corporation, its officers and stockholders will suffer and continue to suffer irreparable loss and damage which is prejudicial to their interest. In their answer dated February 18, 1987, respondent specifically denied the material allegations on the amended complaint and also interposed the following Special and Affirmative Defenses: 1. that complainant does not have the legal personality to sue the respondent nor does she have the personality to occupy any seat in the corporation, much less manage the business of the corporation. 2. that the complainant does not have any cause of action against the respondent and the complainant's cause of action is based on speculation, conjecture and generalities; 3. that the complainant has a conflict of interest with the kind of business for which Mountainer Overseas Research Experts, Inc. is principally engaged in. Complainant presented testimonial and documentary evidence during the hearings on the injunction incident. However, at the October 2, 1987 hearing, after this Hearing Officer ruled to admit all the evidence of the complainant in the injunction incident, complainant manifested in open court that she would forego the resolution in the injunction incident and instead submit this case on the merits for resolution on the basis of the evidence presented and admitted in the injunction incident. On said hearing, it was also agreed that the only issue to be resolved in this case is whether or not respondent can be compelled to render an accounting of the corporate funds of the corporation. LibLex On October 9, 1987, respondent filed a Motion To Dismiss and after the complainant filed her Opposition, the Hearing Officer issued an Order dated January 5, 1988 denying the said motion. When respondent's turn to present evidence came, she failed to do so despite several opportunities given her, prompting this Hearing Officer to issue an Order dated August 24, 1989, declaring respondent to have waived her right to present evidence and considered the case submitted for resolution. From the evidence adduced by the complainant, the following facts were established: 1. that Mountainer Overseas Research Experts, Inc. is a corporation duly organized and registered with the Securities and Exchange Commission on July 2, 1985 under Registration Certificate No. 127313 (Exh. "B"); 2. the corporation is likewise a licensed private Employment Agency, under License No. NCC NO. 03-2020 issued by the Philippine Overseas Employment Administration on February 17, 1988. (Exh. "A"); 3. that respondent Eufrosina T. Velasco is the president and general manager of the corporation from the time it started operation sometime in 1985, up to the time the controversy arose; 4. that complainant Beaulah T. Tong is a stockholder and director of the corporation. Aside from the foregoing established facts, it was also established during the hearings that respondent collected placement fees and other fees from job applicants for abroad (TSN page 4, April 14, 1987) and among those applicants respondent collected fees from were Julia N. Raquidan, Maria Sabado and Cresencia T. Sabado and no accounting was ever made by respondent in all the monies and/or placement fees she collected, despite demands from the complainant. Further, Evangeline Felipe, who was once the treasurer of the corporation for almost six (6) months, testified that she never received any money from the corporation (TSN page 23 and 24, April 1, 1987) nor did the respondent turned over to her the monies she directly collected from the applicants. (TSN page 4, April 14, 1987) Furthermore, respondent never called any stockholders' or directors' meeting, despite request from the complainant, thereby depriving stockholders to know the business operations of the corporation. Based on the foregoing established facts, there is no denying that respondent Eufrosina T. Velasco, as president and general manager of the corporation, personally received monies from the job applicants but said monies were never turned over to the coffer of the corporation. Under these given set of facts, respondent is not only duty bound to render an accounting for all the monies she personally received which are due to the corporation, but also violated the trust and confidence reposed upon her as a director and officer of the corporation. WHEREFORE, in view of all the foregoing, respondent Eufrosina T. Velasco is hereby directed to render an accounting for all the monies she directly received from the job applicants which are due to the corporation within thirty (30) days from finality of this decision. SO ORDERED. (SGD.) JAMES K. ABUGAN Hearing Officer