Roque A. Tamayo vs. Supra Tours & Travel, Inc., et al.

[SEC-SICD * CASE NO. 3702. June 21, 1990.] ROQUE A. TAMAYO , petitioner , vs . SUPRA TOURS & TRAVEL, INC., ET AL. , respondents . DECISION This is a petition filed before the Commission on January 22, 1990, for Damages and Accounting of Corporate Assets and Properties of respondent Supra Tours and Travel, Inc., (hereinafter referred to as Supra Tours for brevity), a domestic corporation established pursuant to Philippine Laws, against Messrs. Ricardo Dizon Jr. and Reynaldo P. Dannug, President and Secretary, respectively of respondent corporation, with prayer for a writ of preliminary injunction. Petitioner in his petition alleged inter alia; that he is a stockholder, incorporator and director of record with Luz Travel and Tours, Inc., with a subscription of Thirty Thousand (P30,000.00) Pesos and paid up of Fifteen Thousand (P15,000.00) Pesos; that without due notice to the petitioner and with the avowed purpose to defraud his interest and rights with the Luz Travel and Tours, Inc., the former was clandestinely bought by said respondents through the unlawful participation by the same officers of Luz Travel and Tours, Inc.; that there was no evidence of stockholders' directors meeting in the unlawful sale of Luz Travel and Tours, Inc.; that upon discovery of the stealth, chicanery and connivance to unduly deprive him of his rights and interests, petitioner, on February 28, 1986 through his lawyer, wrote a letter to respondents (Annex "A") and a follow-up letter dated April 1, 1986 (Annex "B"), reiterating his request that since 1979, petitioner has not been furnished with notice of stockholders' meeting and copies of the financial statements of the respondent firm; that it was only on April 8, 1986 that respondent made a reply attaching therein the financial report for 1980, 1981, 1982, 1983 and 1984 (Annexes "C", "C-1", "C-3", and "C-4") including the list of stockholders as of December 31, 1985 (Annex "D"); that since 1985, up to the present, petitioner has not been furnished with a copy of the financial statements and notices of stockholders/directors meeting and yearly reports to the SEC, including inventory of assets, unduly depriving petitioner of his rights under the law; that reliable information has been established that respondents were selling all the assets of the respondent firm thereby unduly depriving the petitioner of his lawful rights and share from the respondents since 1979 up to the present; that demands were made to respondents for the declaration of dividends and access to corporate records, inventory of assets and accounting but to no avail. Petitioner thus prayed that to establish a status quo, a writ of preliminary injunction be issued against respondents and others under them, enjoining them to cease and desist from disposing the corporate assets and funds, until further orders from the Honorable Commission and upon trial, judgment be rendered: 1. Making the injunction permanent; 2. Ordering the respondent jointly and severally to pay moral damages to petitioner in the sum of P1,000,000.00 and attorney's fee in the sum of P150,000.00; 3. To order respondents to submit inventory of assets from 1979 up to the present and submit security of all funds; and 4. Ordering respondents to pay the yearly dividends from 1979 up to the present on the average of P150,000.00 yearly. And such other relief, just and equitable in the premises. Respondents having failed to file any responsive pleading to the petition within the reglementary period and upon verbal motion of counsel for the petitioner, respondents were declared in default in the Order dated February 15, 1990. Also upon motion of petitioner, the application for a writ of preliminary injunction was considered withdrawn and the case was heard on the merits with the petitioner presenting testimonial, as well as documentary evidence. A perusal of the corporate records of respondents Supra Tours, which can be taken judicial notice of, reveal that: (1) said corporation was originally named Luz Travel and Tours, Inc. but its Articles of Incorporation was amended to change the corporate name to Supra Tours and Travel, Inc. on March 2, 1990 (2) certain original stockholders of Luz Travel and Tours, Inc. have executed individual Deeds of Transfer of their shares of stock to third persons and (3) that on October 30, 1981, the authorized capital stock of the corporation was increased from P1,000,000.00 to P2,000,000.00. The evidence adduced by the petitioner clearly established that since 1979 up to 1990, he has not received any notice of any annual stockholders' meeting. However, it is the opinion of this Hearing Panel and so holds that the inaction on the part of the petitioner for a period of eleven (11) years may be construed as a waiver on his part to any notice or he is guilty of laches. Title VI, Section 50, par. 3 of the Corporation Code of the Philippines provide that "Notice of any meeting may be waived expressly or impliedly by any stockholder or member." And as enunciated in the case of Cruz vs. Court of Appeals, G.R. No. L-40880, October 23, 1979, "The laws aid the vigilant not those who slumber on their rights. Vigilantibus et non dormientibus jura subveniunt." As to the demand for declaration of stock dividends, access to corporate records and inventory of assets (Annexes "A" & "B"), there being no evidence presented by petitioner that the corporation earned surplus profits to entitle him to dividends, an award of the same cannot be declared. Section 43 of the New Corporate Code is quoted hereunder which provides the basis for declaration of dividends. SECTION 43. Power to declare dividends "The board of directors of a stock corporation may declare dividends out of the unrestricted retained earnings which shall be payable in cash, in property, or in stock to all stockholders on the basis of outstanding stock held by them; Provided, that any cash dividends due on delinquent stock shall first be applied to the unpaid balance on the subscription plus costs and expenses, while stock dividends shall be withheld from the delinquent stockholder until his unpaid subscription is fully paid: Provided, further, That no stock dividend shall be issued without the approval of stockholders representing not less than two-thirds (2/3) of the outstanding capital stock at a regular or special meeting duly called for the purpose. (16a) Stock corporations are prohibited from retaining surplus profits in excess of one hundred (100%) percent of their paid-in capital stock, except: (1) when justified by definite corporate expansion projects or programs approved by the Board of Directors; or (2) when the corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, from declaring dividends without its/his consent, and such consent has not yet been secured; or (3) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation, such as when there is a need for special reserve for probable contingencies." On the access to corporate records and inventory of assets, the same are rights expressly granted to stockholders by the New Corporation Code. Thus, Section 74 of said Code provides: "SECTION 74. Books to be kept; stock transfer agent . Every corporation shall, at its principal office, keep and carefully preserve a record of all business transactions, and minutes of all meetings of stockholders or members, or of the board of directors or trustees, in which shall be set forth in detail the time and place of holding the meeting, how authorized, the notice given, whether the meeting was regular or special, if special its object, those present and absent, and every act done or ordered done at the meeting. Upon the demand of any director, trustee, stockholder or member, the time when any director, trustee, stockholder or member entered or left the meeting must be noted in the minutes; and on a similar demand the yeas and nays must be taken on any motion or proposition, and a record thereof carefully made. The protest of any director, trustee, stockholder or member on any action or proposed action must be recorded in full on his demand. The records of all business transactions of the corporation and the minutes of any meeting shall be opened to the inspection of any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense. Any officer or agent of the corporation who shall refuse to allow any director, trustee, stockholder or member of the corporation to examine and copy excerpts from its records or minutes, in accordance with the provisions of this Code, shall be liable to such director, trustee, stockholder or member for damages, and in addition, shall be guilty of an offense which shall be punishable under Section 144 of this Code: Provided, That if such refusal is pursuant to a resolution or order of the Board of Directors or Trustees, the liability under this section for such action shall be imposed upon the directors or trustees who voted for such refusal: and Provided, further, That it shall be a defense to any action under this section that the person demanding to examine and copy excerpts from the corporation's records and minutes has improperly used any information secured through any prior examination of the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making his demand. Stock corporation must also keep a book to be known as the "stock and transfer book" in which must be kept a record of all stocks in the names of the stockholders alphabetically arranged, the installments paid and unpaid on all stock for which subscription has been made, and the date of payment of any installments; a statement of every alienation, sale or transfer of stock made, the date thereof and by and to whom made; and such other entries as the by-laws may prescribe. The stock and transfer book shall be kept in the principal office of the corporation or in the office of its stock transfer agent and shall be opened for inspection of any director or stockholder of the corporation at reasonable hours on business days. No stock transfer agent or one engaged principally in the business of registering transfer of stocks in behalf of a stock corporation shall be allowed to operate in the Philippines unless he secures a license from the Securities and Exchange Commission and pays a fee as may be fixed by the Commission, which shall be renewed annually: provided, That a stock corporation is not precluded from performing or making transfer of its own stocks, in which case all the rules and regulations imposed on stock transfer agents, except the payment of a license fee herein provided, shall be applicable. Section 75 of the same Code likewise provides in part: "SECTION 75. Right to Financial Statements . Within ten (10) days from receipt of a written request of any stockholder or member, the corporation shall furnish to him its most recent financial statement, which shall include a balance sheet as of the last taxable year and a profit or loss statement for said taxable year, showing in reasonable detail its assets and liabilities and the issues of its operations. At the regular meeting of stockholders or members, the board of directors or trustees shall present to such stockholders or members a financial report of the operations of the corporation for the preceding year, which shall include financial statement, duly signed and certified by an independent certified public accountant. . . ." As to claim for damages and attorney's fees, this Hearing Panel takes judicial notice of the case of Augusto Padilla vs. Manila Polo Club, Inc. GA-G.R. Sp. NO. 18630 promulgated on February 1, 1990 whereby the Court of Appeals resolved to declare that the Securities and Exchange Commission has "no jurisdiction to award compensatory, moral and exemplary damages." There being no proof as to attorney's fees, the same should not be awarded. WHEREFORE, judgment is hereby rendered, ordering respondents corporation Supra Tours and Travel, Inc., Messrs. Ricardo Dizon, its President and Reynold P. Dannug its Corporate Secretary, to furnish petitioner the records of the business transactions of the said corporation within reasonable hours on business day and furnish the herein petitioner financial statements which shall include a balance sheet and as statement of profit or loss of the said corporation from 1979 up to the present year within thirty (30) days from finality of this decision. No pronouncement as to cost. SO ORDERED. (SGD.) TRINIDAD L. DABBAY Hearing Officer (SGD.) INOCENCIO D. PAGALARAN, JR. Hearing Officer