Teresita V. Austria vs. Djuvel Management & Construction Services, Inc.

[SEC-SICD * CASE NO. 3217. February 18, 1988.] TERESITA Y. AUSTRIA, doing business under the name and style of Djuvel Management & Construction Services , petitioner , vs . DJUVEL MANAGEMENT & CONSTRUCTION SERVICES, INC. , respondent . D E C I S I O N In her petition dated 27 August 1987, petitioner, doing business under the name and style of Djuvel Management & Construction Services, Inc. on the ground of fraud in procuring its certificate of registration and in support thereof alleged, inter alia, that petitioner is the owner and proprietor of Djuvel Management & Construction Services; that petitioner is the holder from the Department of Labor and Employment through the Philippine Overseas Employment Administration (POEA) of license No. 02-2079 dated 14 February 1986; that without knowledge and consent of petitioner, respondents herein, namely: Teogenes Rosalin, Rafael Wasan, Elizabeth Rosalin, Rose Wasan, organized and registered with the Commission a corporation with the name of Djuvel Management & Construction Services, also engaged in the same line of business as that of petitioner, simply adding thereto the word "Inc." at the end of its name; that said incorporators were guilty of fraud in procuring the certificate of registration of respondent corporation by making it appear that petitioner had paid P150,000.00 out of the total paid-up P500,000.00, when in truth and in fact petitioner had not paid any single centavo of the paid-up of the corporation, the latter being organized without the knowledge nor consent of herein petitioner; that likewise lack of knowledge and consent is shown by the fact that petitioner's signature as appearing in the articles of incorporation is a forgery, including her Residence Certificate, Tax Account Number, as the same were never issued to petitioner; that petitioner never appeared before a certain Atty. Prospero Anave; a Notary Public for and in Pasig, much less exhibited her Residence Certificate; that Teogenes Rosalin, the alleged President of the respondent corporation was the one who deposited with the Bank the entire paid-up capital of Djuvel Management & Construction Services, Inc. and had withdrawn from the Bank the entire account which was made to appear as the paid-up capital of the corporation. Petitioner, in addition to the foregoing, prayed that respondent be immediately enjoined from seeking the replacement of the petitioner as the licensee for manpower agency of the Philippine Overseas Employment Administration (POEA). Acting on said petition, the Commission issued an Order dated 7 September 1987, directing respondent that a responsive pleading be filed and setting the hearing on the injunctive relief on 17 September 1987. To this, respondent corporation, thru Teogenes Rosalin, alleged President, filed an Urgent Motion to Transfer Hearing dated 16 September 1987, praying that the scheduled hearing on 17 September 1987 be cancelled in view of absence of counsel. In an Order dated 17 September 1987, the Commission granted respondent's Urgent Motion to Transfer Hearing, resetting the hearing to September 22, 1987. For lack of proper service of the Order dated 17 September 1987, the hearing scheduled on 22 September was again cancelled and was reset to October 7, 1988. After the hearing on the foregoing incident, petitioners filed a Motion to Declare Respondent in Default dated 9 October 1987 and praying that respondent be declared in default and that the ex-parte evidence of petitioner in the hearing of 7 October 1987 on the prayer for a restraining order and/or preliminary injunction be considered as evidence on the petition itself after the respondent has been declared in default. Likewise, simultaneous with the Motion to Declare Respondent in Default is petitioner's Formal Offer of Exhibits. In an Order dated 27 October 1987, the Commission declared that the incidents of injunction and the main case are deemed submitted for decision in view of the respondent's declaration of default and its failure to appear in the scheduled hearing of 27 October 1987 for the cross-examination of lone witness for the petitioner, Teresita Austria. This Commission, having carefully evaluated the pleadings, and supporting documents on file, having heard testimonies of petitioners' witness, now enters its Decision disposing of the instant case. The factual matters involved are of primordial consideration in this case because they are determinative of the lone issue of whether or not respondent corporation is guilty of fraud and misrepresentation in procuring the certificate of registration of Djuvel Management & Construction Services, Inc. as ground for its revocation/cancellation. Petitioner has shown hereunder why, under the law and the facts, they are entitled to the relief sought in the petition, bringing to the attention of the Commission the following points. The dispute at bar clearly falls within the general classification of cases within the Commission's original and exclusive jurisdiction to hear and decide disputes under Section 5 of Presidential Decree No. 902-A, as amended. Under P.D. No. 902-A, the Securities and Exchange Commission may suspend or revoke, after proper notice and hearing, the franchise or certificate of registration of corporations, partnerships, or associations, on the ground of fraud in procuring its certificate of incorporation. LLpr Insofar as the instant case is concerned, petitioner has simply shown her right to the relief being demanded substantiating with Exhibits "D", "D-1", to "D-7", containing the articles of incorporation of respondent corporation establishing the fact that incorporation of the latter was without her knowledge and consent, specially showing that her signature appearing thereon are all forgeries, by unlawfully making it appear that she was one of the incorporators, subscribers and paying the purported amount of P150,000.00 out of the total paid-up capital of P500,000.00 of the corporation. It was testified that all the signatures of petitioner appearing in respondent corporation's articles of incorporation and other documents supporting the same are identified to be not her signatures, including her alleged Residence Certificate, Tax Account Number (T.S.N. 10-7-87 pp. 14-30). To bolster its petition, petitioner concretely supported her petition with the following documentary evidence: Exhibits "A" and "B" which are letters of respondent corporation both dated 26 July 1987 to the Licensing and Regulation Division of the Department of Labor, advising the latter that petitioner had already ceased to be the official signatory for the agency as of said date; and Exh. "F" as proof that the incorporators of the respondent corporation were fully aware of petitioners' Djuvel Management & Construction Services at the time they executed the articles of incorporation. Fraud and misrepresentation committed by the respondent were clearly established by the fact that incorporation of the respondent corporation was made in order to appropriate unto themselves unlawfully the license of the petitioner acquired from the Department of Labor, to keep themselves in control of the license of the agency to the detriment and prejudice of herein petitioner. All these has added strength to the relief demanded by the petitioner to the revocation of franchise or dissolution of the respondent corporation. Needless to say, respondents resorted to this kind of acts to replace petitioner as a licensee for manpower placement agency of the Philippine Overseas Employment Administration (POEA) (Exhs. "A", "B", "E", and "F"). "Otherwise stated, in order that the SEC can take cognizance of a case, the controversy must pertain to any of the following relationships: c. between the corporation, partnership or association and the state insofar as its franchise, permit or license to operate is concerned; and . . .". [Union Glass & Container Corp. v. SEC, G.R. No. L-64013, November 28, 1983, 26 SCRA 31, 38 (1983) cited in DMRC Enterprises v. Este Del Sol Mountain Reserve, Inc., G.R. No. L-57936, September 28, 1984]. From the great concern of damage and prejudice expressed by the petitioner, respondents having committed acts of fraud and misrepresentation in order to secure its certificate of incorporation, it is but fair and just to give due course to the relief prayed for in the instant petition. Another aspect of fraud and misrepresentation committed by the respondent is the use and appropriation of petitioners' business name whereby confusion resulted in misrepresenting to the Department of Labor through the POEA that DJUVEL MANAGEMENT & CONSTRUCTION SERVICES, INC. is one and the same as that of the petitioner and the public dealing with it. It must be emphasized that respondent caused the registration of the corporation with the Commission using the business name of the petitioner, eventually replaced the latter, by making it appear that petitioner participated in the process of incorporation, using the same line of business and, thereafter, misrepresenting themselves as the holder of the license of herein petitioner with the Department of Labor and the public. We, think, therefore, that the proven facts sustain an adverse finding against the respondent for, upon principle, reason and authority, despite chances given unto the respondent to refute petitioners' stand, we are clearly convinced that revocation/cancellation of franchise of respondent corporation is called for as prayed for in the petition, for indeed the ground aforecited was clearly established on record as admitted facts. The evidence of petitioner is unrebutted; respondents did not even bother to file their answer and refute the allegations of petitioner in the petition. The Commission has only the evidence of petitioner on record to consider so it's left with no other recourse but to find for the petitioner. ACCORDINGLY, decision is hereby rendered revoking/cancelling the Certificate of Registration of Djuvel Management & Construction Services, Inc. on the ground provided for in Section 6 (a) of P.D. No. 902-A, as amended. Let copy of this decision be furnished the Prosecution and Enforcement Department for proper action. SO ORDERED. (SGD.) NAPOLEON M. TUMAMAO Hearing Officer