Dwxi Prayer Partners Foundation Inc., et al. vs. Mariano Z. Velarde, et al.

[SEC-SICD * CASE NO. 3390. May 22, 1990.] DWXI PRAYER PARTNERS FOUNDATION, INC., ET AL. , plaintiffs, vs . MARIANO Z. VELARDE, ET AL. , respondents . D E C I S I O N This case involves a derivative suit filed by the plaintiffs as minority members of plaintiff DWXI Prayer Partners Foundation Inc. to protect and vindicate corporate rights and to nullify the acts committed by the defendants, majority of whom are members of the Board of Trustees. LexLib Plaintiffs allege that defendants conspired and succeeded in soliciting funds from its members and the public through enticements made by the use of radio programs and its own in-house print publication, "Bagong Liwanag" in the form of donation, tithes and offering without the defendants' first securing the required permits from the appropriate government agencies. The financial resources generated from such illegal solicitations were not duly recorded in the books of account of the plaintiff Foundation. Plaintiffs further averred that the defendants conspired and succeeded in siphoning and dissipating corporate funds for respondents Velarde and their family business interests. In order to ensure their perpetuation in power and control of the Foundation, defendants have not held any annual general membership meeting to elect the directors as required by the by-laws and in violation of the Corporation Code. Plaintiffs pray for the declaration as illegal all the acts of the defendants complained of and all subsequent acts and decisions committed by them and that they be ordered to vacate their respective executive positions which they are unlawfully holding in the corporation and to return in full to the Foundation all the corporate funds and moneys which they have received. Defendants made specific denials to the allegations of the complaint and stated that the plaintiffs headed by Cesar K. Roxas as Executive Vice-President and Chairman of the Executive Committee, Norma Balaton as Corporate Secretary, Leticia Acoba as Chief Accountant, Val Balaton, Jr. as Financial Assistance Officer and a majority of the plaintiffs as members of the Executive Committee assumed full control and authority over the management of the operations of the Foundation. Their exclusive authority included the receipts and disbursements of funds from 1985 to December 1987 but with no accurate accounting of funds. Defendants deny that defendant Mariano Velarde used corporate Foundation funds for his business, the truth being that defendants even allowed the Foundation the free use during the first two years of its organization all office equipments, furniture transportation facilities and the three floors of the Queens Mary Commercial Center, Inc. building, telephone and electric services and most importantly radio station DWXI, all owned by defendant Mariano Z Velarde. Defendants further allege that the money accountabilities complained of are all authorized deposits and withdrawals which were all approved by plaintiff Cesar K. Roxas as Chairman of the Executive Committee and as Executive Vice-President. A special accounts set aside a portion of Foundation funds as forced savings for the construction of El Shaddai Fellowship Center as attested by the series of deposits and withdrawals signed by plaintiff Cesar K. Roxas. Because of the questionable manner that plaintiff Roxas operated the Foundation, defendant Mariano Velarde effectively opted to exercise his duties as President. The original amount and all earnings by way of interest are all intact and properly accounted for. llcd Jose Taniajura, Elizer Capalad, Leo Panelo, et al. filed an answer in intervention alleging, among others, that if it is true as alleged by the complainants that financial resources were not duly recorded in the books of account of the corporation, then it is plaintiff Leticia Acoba who should be held accountable as Chief Accountant of the Foundation. Both parties presented testimonial and documentary evidence in addition to those presented during the preliminary injunction. This Commission finds the following facts as indubitable: Bank of the Philippine Island Check No. 88-467007 dated March 2, 1988 showed the transfer of the Foundation funds in the amount of one million five hundred thirty five thousand six hundred sixty three and 05/100 pesos (P1,535,663.05) in favor of Ma. Estrella L. Sales, a relative of defendant Avelina Velarde without any Board resolution. Plaintiffs claimed that defendants Mariano Velarde had used the funds of the Foundation as though these are his personal funds without any board authorization after soliciting tithes and love offerings from members of the Foundation who were residing abroad. Likewise to prove that the Foundation failed to comply with the submission of the reportorial requirements such as the General Information Sheet from 1986 to the present and the Financial Statement for 1986 as well as the non-registration of corporate books, a Certification (Exh. "L") was issued by the Chief of the Records Division of this Commission to indicate that a show cause letter to the Foundation was issued. Respondents through counsel admit the existence of the BPI checks (Exh. "A") which is also Exh. "1" during the cross-examination of Leticia Acoba and claimed that there appears the handwritten notation of the witness Acoba analyzing that check. This amount came from the joint savings account upon the joint signatures of defendant Avelina Velarde and plaintiff Cesar Roxas as admitted by plaintiff Acoba (TSN August 11, 1988 p. 65). The accounting of Foundation funds from February 22, 1987 to January 31, 1988, marked as Exh "2" shows the analysis of the 30% coming from the total tithes and love offerings. This accounting analysis prepared by no less than the Chief Accountant herself Leticia Acoba including withdrawals does not show any irregularity in the procedure and management of the Foundation. All BPI bank withdrawals, Exh. "3", "3-A", "3-B", "3-C" were taken from the joint savings account of defendant Avelina Velarde and plaintiff Cesar Roxas upon their joint signature (TSN August 11, 1988 pp. 76-77). Moreover all these BPI Checks were the withdrawn amounts which represented the amount of P1,535,663.05 (TSN August 11, 1988 pp. 76-77) and after which this same amount was subsequently deposited to the corporate account of the Foundation (Ibid, p. 78). From the foregoing consideration, the Foundation did not stand to suffer any injury. The amount of P1,535,663.05 remains in its coffers. On the matter of disbursement of funds without board resolution, plaintiff Acoba could not distinguish what matters needed authorization from the board of directors and what are those disbursements that do not require any (Ibid, p.106). Moreover, the testimony of the plaintiff Acoba as Chief Accountant that she issued provisional receipt upon receiving tithes or offerings are not much of any probative value where she failed to present any such duplicate provisional receipts and there is no indication that there was any document evidencing her official turn over of documents in her possession (Ibid, pp. 137-151). Moreover, Mrs. Acoba testified in the hearing (TSN August 26, 1988 p. 23) that the amount of P1,535,663.05 together with a cash of P500,000.00 was deposited by her as Chief Accountant of the Foundation in the corporate account. During all this time material to the evidence presented, this Commission observes that the Executive Committee has plaintiff Cesar Roxas as its Chairman and plaintiff Acoba as accountant and Val Balaton, Jr. (TSN August 11, 1988 p. 43-47). On the matter of whether or not the Board of directors perpetuate themselves perennially in power by not holding any annual meeting of members to elect the directors and officers of the Foundation, plaintiffs presented Norma Balaton, wife of the plaintiff Val Balaton, Jr. and Corporate Secretary of the Foundation. She testified on the Certification of the organizational meeting (Exh 9) regarding the holding of the meeting of the Board of Directors of the Foundation on January 31, 1987. She subsequently claimed, however, that she signed this certificate out of her trust and confidence in respondent Mariano Velarde although there was actually no organizational meeting held on said date. To rebut this contradictory statements, respondents presented as witness the Notary Public who notarized this Certification. This Notary Public recognized the documents he notarized as presented to him by Mrs. Balaton herself. How much weight then must be given to the oral testimony of Mrs. Balaton as against the documentary evidence of her Certification on the holding of the annual meeting of the Foundation and the election of the Board of Directors? This Commission finds the Certification (Exh. 9) must be given more weight and probity considering that this document was executed as best evidence of the proceedings that transpired on January 31, 1987. Under the Best Evidence Rule, there can be no evidence of a writing, the contents of which is the subject of inquiry, other than the original writing itself. Thus, the oral testimony cannot be given more weight over the written certification that a meeting was held and election of the directors conducted. This situation must be given a significant parallelism in the case of Conde vs. Court of Appeals, G.R. No. L-40242, December 15, 1982, 119 SCRA 245. In the latter case, the Supreme Court ruled that the oral testimony cannot prevail over written agreement of the document of repurchase. Moreover, self-contradiction refers to a statement made by a witness somewhere else, and inconsistent with his allegations of claim in the case on trial. His two statements being inconsistent, one or the other must be incorrect hence, a doubt is thrown on his present allegation. He may be able to explain away the other and inconsistent statement; but unless he does so, the present allegation remains discredited (Wigmore on Evidence, Stud. Textbook, 197). Plaintiff's witness Mrs. Balaton attempted to explain her inconsistency as appearing in the certificate and her oral testimony regarding the holding of the annual meeting and election in that she signed the certificate out of trust and confidence. It would seem, however, that this was not satisfactorily explained. On the contrary, the respondents were able to rebut the witness' testimony by presenting the Notary Public who notarized the certification and who testified that Norma Balaton as Corporate Secretary presented to him for notarization the said document and inquired if the same was in the correct form. On the matter of the omnibus motion, filed by plaintiffs through counsel, it alleges, among others, that an Order was issued denying plaintiffs' motion for the issuance of the writ of preliminary injunction and receivership for lack of merit; that the defendants, members of the Board of Directors of DWXI Prayer Partners Foundation, Inc. were directed to submit a monthly request of all disbursement of corporate funds to this Honorable Commission; and that on February 28, 1989 during the preliminary conference, counsel for the plaintiff reported that the Board of Directors have not complied with the above Order. Thus, plaintiffs pray that after due notice and hearings, defendants who are members of the Board of Directors of DWXI Prayer Partners Foundation, Inc. be cited for contempt of the Commission and to immediately suspend the franchise or motu proprio create a management committee. Defendants oppose the said motion and aver that there is no contempt when the act sought to be enjoined could not possibly have been disobeyed. Moreover, plaintiff purposely omitted quoting the entire portion to tailor their argument to what is an otherwise qualifiedly directory not mandatory instruction. Thus, ". . . For the information and guidelines of the Commission, the Board of Directors of the Foundation is hereby directed to submit a monthly report of all disbursements of corporate funds except those incurred for its ordinary and necessary operational expenses. . . ." Moreover, not all the members of the Board of Directors are defendants in this case. In so far as compliance with the submission of the report is concerned, defendants feel that the duty to report does not exist where the expenses are ordinary and necessary operational expenses. The Board explained and felt that so far there are no disbursements made that are not ordinary and necessary operational expenses. After considering both pleadings filed, this Commission finds that since only ordinary and necessary operational expenses have been incurred by the Foundation, no report is required. Consequently, the defendants are not guilty of contempt of this commission. In view thereof, the omnibus motion is denied for lack of merit. WHEREFORE, judgment is hereby rendered dismissing the petition. SO ORDERED. (SGD.) JOSEFINA L. PASAY-PAZ Hearing Officer