Jorge Dumatol vs. Richard Tee, et al.

[SEC-SICD * CASE NO. 3209. July 25, 1988.] JORGE DUMATOL , petitioner , vs . RICHARD TEE, ET AL. , respondents . D E C I S I O N The petitioner, who is a stockholder and at the same time incorporator of "Horizon Travel and Tours, Inc." brought this case before the Commission: 1) "to nullify and void the alleged transfer and assignment of shares of the petitioner and to correspondingly cancel said shares of stock issued thereto;" 2) "to order respondents to account for the corporate funds of the corporation pursuant to Section 74 & 75 of Batas Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines," and 3) to declare "that all the proceedings held and/or minutes taken during the alleged stockholders' meeting on September 11, 1985 as null and void," among others. prcd On the other hand, it was after the corporation had been organized that all the six respondents became stockholders by virtue of a "Stock Purchase Agreement". Under this agreement, which has been marked as a common exhibit by and for the contending parties, the original stockholders, one of whom is the petitioner, are to sell, through an alleged authorized representative their shares of stock to the herein respondents. It was, for this "Stock Purchase Agreement" that respondents no longer saw the need of sending to herein petitioner notice of meeting held on September 11, 1985 and as a consequence, petitioner did not become privy to the said meeting wherein the company's increase in its authorized capital was approved, the validity of which, petitioner is now contesting. Against this backdrop, petitioner claims he "never sold nor disposed in any manner" his shareholdings in "Horizon Travel & Tours, Inc." neither "have I" said he, "authorized anybody to sell my stocks for me." Thus, petitioner contends he was "unlawfully and arbitrarily excluded as a legitimate stockholder of record of the corporation," and therefore respondents' failure to send petitioner, notice of meeting for the increase of the corporation's authorized capital renders "the whole proceedings on September 11, 1985, null and void as it was done in violation of petitioner's right of pre-emption and deprivation of property rights without due process". Surprisingly enough, respondent, Richard Lee sad to say, virtually admitted all of petitioner's afore-quoted allegations instead of denying them as was expected of him. Consider these excerpts of the transcript of the proceedings, while respondent was under cross-examination: Q. And so from the time the contract of "Stock Purchase Agreement" was signed in the 1984, up to 1987, you don't have yet that special power of attorney of Mr. Dumatol (petitioner), authorizing Mr. Castao . . . . A. No, we took the word of Mr. Castao that he had the power of attorney. Of course, the stock certificate of Mr. Dumatol, we were still waiting until 1987 . . .". (TSN, March 10, 1988,p 66). Q. Now you said you did not send any notice to Mr. Dumatol (petitioner) of that meeting held on September 11, 1985 because as you have stated Mr. Dumatol is no longer a stockholder of the corporation: A. Yes. xxx xxx xxx Q. Now that there is no authority as you have stated and in your previous statement you admitted that there is no power of attorney, what can you say about now? A. Well, based on the last meeting I had with Mr. Dumatol (petitioner) as I said again earlier, I think 1987, we were prepared to recognize Mr. Dumatol's right as stockholder in view that Mr. Castao have yet to produce the document; that he had the power of attorney. xxx xxx xxx Q. And this "Stocks Purchase Agreement" if I may recall right was the basis of the transfer of the corporation stock and bond in favor of your (respondent) group? A. Yes. Q. But until now there is no such valid transfer from Mr. Dumatol, am I right? A. Yes. (TSN, March 28, 1988, pp. 18, 19, 20 and 22). Thus, it is too evident from respondent's above-quoted testimony that petitioner's causes of action and/or demand are indubitably well founded, so much so that to elaborate further is to emphasize the obvious. In the light of the foregoing, it is our considered opinion and so holds that no valid sale or transfer of shares by the petitioner had been satisfactorily shown or proven by respondents, hence the stock purchase agreement executed on April 1984, is null and void insofar as petitioner Dumatol is concerned. It is hereby declared that all the proceedings held and/or minutes taken during the alleged stockholders' meeting held on September 11, 1985, as null and void, no notice of meeting having been sent to the petitioner as required under Section 38, 50 & 51 of the Corporation Code of the Philippines; Finally, respondents are hereby ordered to make an accounting of the corporate funds of the Corporation within thirty (30) days from receipt of a copy of this decision pursuant to Section 74 and 75 of Batas Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines. (SGD.) BERNARDO T. ESPEJO Hearing Officer