Jesusias De Leon vs. Rogelio Ayroso, et al.

[SEC-SICD * CASE NO. 3381. November 24, 1989.] JESUSIAS DE LEON , petitioner , vs .ROGELIO AYROSO, ET AL. , respondents . D E C I S I O N Petitioner, in his amended petition filed with the Commission on August 18, 1988 for the nullification of Board Resolutions dated May 28, May 31, June 1, and June 13, 1988 issued by respondents; and to declare null and void the milling contract dated June 1, 1988. In the same amended petition, he prayed for a writ of preliminary injunction to enjoin respondents from implementing aforestated Board Resolutions and Milling Contract; After due notice, hearings were held on the petitioner's application for a writ of preliminary injunction, where both parties presented testimonial, as well as documentary evidences. The writ of preliminary injunction applied for was issued when it was established that the appointments of Messrs. Rogelio Ayroso, Simeon Cabanding, Rogelio Flores and Domingo Bautista as members of the Board of Directors of South Nueva Ecija Development and Food Producers Association, Inc. (SONEDFA) were illegal not only because it increased the membership in the Board of Directors from nine (9) to eleven (11), in violation of the Articles of Incorporation and By-laws of the corporation and also because the members of the Board of Directors were appointed ones when they should be elected pursuant to the Corporation Code. In the scheduled preliminary conference hearing on July 24, 1989, only counsel for the petitioner appeared notwithstanding due notice to all parties. For failure of respondents and their counsel to appear, petitioner's counsel moved that they be declared in default, which motion was granted in the order dated July 24, 1989 and reception of evidence for the petitioner was set for August 10, 1989. At the hearing on August 10, 1989, counsel for the petitioner manifested that he is adopting the evidence presented during the hearing on his application for a writ of preliminary injunction as evidence on the main case. Considering that the evidence for the petitioner clearly established that Board Resolutions dated May 28, May 31, June 1 and June 13, 1988 were adopted by the Board of Directors whose members were merely appointed and not elected, coupled with the fact that the membership was increased from nine (9) to eleven (11) members without an approved Amended Articles of Incorporation and By-laws, said Board Resolutions were adopted by an illegally constituted Board of Directors. Consequently, the same must be, as they are hereby declared illegal, null and void. The same applies to the approval and entrance into a milling contract dated June 1, 1988. WHEREFORE, judgment is hereby rendered as follows: a) declaring Board Resolutions dated May 28, May 31, June 1 and June 13, 1988 NULL and VOID. b) declaring the Milling Contract dated June 1, 1988 entered into by and between Danilo Garcia (for SONEDFA) and San Gregorio Wood Industries, Inc. also NULL and VOID; and c) making permanent the preliminary injunction issued against the herein respondents. SO ORDERED. (SGD.) MACARIO P. MALLARI Hearing Officer