Ao-As v. Batong

[SEC-SICD * CASE NO. 3857. March 9, 1995.] REV. LUIS AO-AS, REV. ESQUICIO GALLANG, REV. JOSE LAKING, REV. ISABELO MANONGGIT, REV. EDWINO MERCADO, REV. BENJAMIN MORENO, REV. DANIEL PONDEVIDA, REV. TEODORICO TARAN and DR. BENJAMIN GALAPIA , petitioners , vs .THOMAS P. BATONG, JUANITO BASALONG, AUGUSTO CATANGUI, PAUL GARCIA, OUIDO RIVERA, VICTORIO Y. SAQUILAYAN, and DANILO ZAMORA , respondents . D E C I S I O N In their petition dated August 14, 1990, petitioners prayed for: (a) the issuance of a temporary restraining order "enjoining respondents from further exercising their duties and functions as members of the Board of Directors and as Officers of the Lutheran Church in the Philippines, (LCP for brevity)", (b) the issuance of a writ of preliminary injunction; (c) the creation and appointment of a Management Committee to undertake the management of LCP, take control of all its properties and assets, and perform such other acts provided under Section 6 of Presidential Decree No. 902-A, as amended until such time that a new LCP Board of Directors is constituted; (d) making the aforesaid writ of preliminary injunction permanent; (e) requiring the respondents to account for all funds, properties and assets of LCP which may have come into their possession during their incumbency as officers and/or directors of LCP and to indemnify LCP for whatever funds, properties and assets which cannot be accounted for by them; and (f) payment for damages. prLL In support thereof, petitioners alleged, among other matters, that petitioners are members of the Lutheran Church in the Philippines and individual congregation of LCP, a religious non-stock corporation duly organized and existing under the laws of the Republic of the Philippines; that respondent Thomas P. Batong occupies the position of President of LCP and the six (6) other individual respondents are all members of the Board of Directors of LCP (LCP Board for brevity;) that respondents altogether comprise seven (7) out of eleven (11) members of the LCP Board and here impleaded in their official capacities as directors and president (in case of respondent Batong) of LCP, for gross mismanagement of the financial affairs and operations of LCP and for the commission of acts-including failure to perform official duties and functions-prejudicial and detrimental to the interests of LCP and the members thereof. Petitioners further averred, as a first cause of action, that sometime in October of 1983, LCP sold a parcel of land measuring 975 square meters in area and situated in the Municipality of La Trinidad, Province of Benguet (the "Old Trinidad Land") to one Aurea T. Benito for a total consideration of P 195,000.00; that this was paid on October 3, 1983 in the following manner: P45,000.00 in cash and P150,000.00 in manager's check and these were duly received by respondent Batong; that respondent Batong, however, contrary to established administrative procedures of and in violation of the sacred trust reposed in him by LCP, did not turn over to LCP any portion of the proceeds of the sale but simply withheld and kept in his possession the full amount of the same; that despite repeated demands for the remittance therefore to the LCP treasury, respondent Batong has not turned over to LCP any portion of the proceeds of the sale; that neither did respondent Batong submit to the LCP business office any of the documents covering the transaction; that on May 28, 1984, LCP acquired from one Molly Palasca a 300 square meter parcel of land covered by Transfer Certificate of Title No. T-15155, likewise situated in the Municipality of La Trinidad, Province of Benguet (the "New Trinidad Land");that the Deed of Absolute Sale stipulated a purchase price of P32,000.00 for the New Trinidad Land although, in reality, the amount of P75,000.00 was given in payment for said property; that as in the case of the sale of the Old Trinidad Land, LCP was represented in this second transaction by its President, respondent Batong; that the acquisition cost of P75,000.00 of the New Trinidad land was paid by respondent Batong out of the proceeds of the sale of the Old Trinidad Land withheld by him; that after the payment, however, respondent Batong, without offering any explanation whatsoever, continued to retain in his possession and control the balance of P120,000.00 of LCP funds, that in a letter dated October 5, 1984, then LCP Business Manager Excelsio J. Hipe reminded respondent Batong of his obligation and duty to remit to LCP the aforementioned P120,000.00 in his possession; that Mr. Hipe also requested respondent Batong "to reconcile and account fully for all the interest income which may have properly accrued to this particular amount",that respondent Batong responded two (2) weeks later by turning over the amount of P56,000.00 to the LCP treasury; that the residual amount of P64,000.00 (i.e.,P120,000.00 less P56,000.00),however, remained unsettled and unaccounted for; respondent Batong did nothing to effect transfer of registration of the New Trinidad Land in the name of LCP; that the New Trinidad Land was purchased by respondent Batong, not in behalf of LCP but in his own personal capacity and for himself, in which case LCP had been effectively defrauded by respondent Batong in the amount of P75,000.00. In the second cause of action, petitioners averred that up to and as of September 30, 1989, respondent Batong had been able to withdraw from LCP funds and accumulate in his favor cash advances in varying amounts for personal, travel and other miscellaneous purposes, the aggregate amount of no less than P323,750.00; that in this connection, official policy and procedure observed at LCP require that cash advance be duly liquidated by corresponding expense reports, to be submitted to the LCP; that records show, however, the last such expense report filed by respondent Batong was for the month of June in 1988, or more than two (2) years ago; that said cash advance to this day remain unpaid and outstanding in the LCP books of accounts; that LCP records show that except in a few instances, the money remittances made by respondent Batong beginning January of 1986 in settlement of his accountabilities to LCP have been limited to the measly sum of P200.00 per month; the considering the very substantial amount of respondent Batong's unpaid and outstanding liabilities to LCP, the repayment scheme adopted here has been, and continues to be, clearly prejudicial and detrimental to the interests of LCP and its members. In the third cause of action, petitioners averred that during the course of a year and from time to time, LCP receives from various sources a variety of grants, gifts and donations which it uses to fund and support specific church projects; that these donations, collectively, constitute the "Restricted Funds" of LCP and are classified more particularly in the books of LCP under the following items: Church Extension Funds (CEF),Capital Development Fund (CDF),Trust Fund (TF),Forward-in-Remembrance Fund (FIR) and Specific Funds (SF);that the trial balance of LCP as of September 30, 1989 registers total Restricted Funds of P4,920,815.52 broken down as follows: LLp r Church Extension Fund (CEF) P537,242.29 Capital Development Fund (CDF) 571,821.45 Trust Fund (TF) 530,675.78 Forward-in-Remembrance Fund (FRF) 52,237.67 Specific Fund (SF) 3,228,838.33 T O T A L P4,920,815.52 that the same trial balance reveals that a total cash and bank balance of only P81,776.23 remains in LCP's coffers-a discrepancy of more than P4.8 million; that up to this point in time, no explanation for this very glaring anomaly has been offered either by respondent Batong, as president of LCP, or the LCP Board, which respondents by virtue of sheer majority in number, control; that countless requests from the general membership of LCP for the rendering of an accounting on this matter have been ignored and to this day remain unacted upon by respondents; that respondents, especially respondent LCP President Batong, have allowed dissipation of over P4.8 million in LCP funds or have failed to account for the same while said funds were under their official custody and control. In the fourth cause of action, petitioners averred that sometime in 1989, LCP, through respondent LCP Vice President Victorio Y. Saquilayan, acquired a parcel of untitled land measuring 6,593 square meters situated in Barangay Mahayag, Albuera, Leyte (the "Leyte Land");that the Leyte Land was intended by LCP for development into a church site; that LCP records show that the LCP Board was never informed or appraised of the purchase of the Leyte Land, prior to said purchase; that notwithstanding this fact, however, respondent Batong nevertheless caused the release of LCP funds in the amount of P150,000.00 to the custody and care of respondent Saquilayan for the purchase of the Leyte Land; that the transaction went through despite the fact that the LCP Board had not approved the purchase of the Leyte Land nor accepted the purchase price of P150,000.00 offered therefore, and in wanton disregard of the Capital Investment-Church Extension Fund (CI-CEF) policy of LCP which provides that only lands with clean title may be subject of purchase; that the Deed of Sale covering the transfer identified respondent Saquilayan specifically as vendee of the Leyte Land; that the corresponding tax declaration covering the same property likewise identified respondent Saquilayan as the declarant thereof for the purpose of payment of taxes thereon; that all of the foregoing point to clear violation by respondent Saquilayan, aided by respondent Batong, not only of LCP's CI-CEF Policy but of the sacred trust reposed in respondents Batong and Saquilayan, as officers of LCP, to preserve and protect LCP property and assets. In the fifth cause of action, petitioners averred that in 1972, during a National Convention of LCP, a partner-church relationship was established formally between LCP and the Lutheran Church-Missouri Synod (LCMS);that time and up to the first quarter of this year, LCMS had been major benefactor and source of funds of LCP; that on March 15, 1990, respondent Batong and the six (6) other respondent-members of the LCP Board, for reason known only to them, summarily passed LCP Board Resolution No. LCP-BD-28-90 severing all relations with LCMS; that under LCP Board Resolution No. LCP-BD-33-70, "all actions taken by LCP in convention can only be amended, modified or changed by LCP in convention; that aforesaid resolution, upon the other hand, was never taken up and/or ratified by LCP in Convention but was merely adopted by the seven (7) respondents herein, acting in concert, and in secret, as members of the LCP Board; that when this latter resolution was adopted by respondents, there was no quorum of the LCP Board as required under Article 6 Section 2 B of the LCP By-laws. In the sixth and last cause of action, petitioners averred that sometime at about five o'clock in the early morning of March 19, 1990, respondent Batong, accompanied by members of the LCP board and about fifteen (15) armed security guards of the Saint Paul Security Agency, barged into the premises of LCP at 4461 Old Sta. Mesa, Manila and forcibly took from the lone and unarmed watchman on duty thereat the keys to all of the rooms and offices in the LCP building: that the watchman was manhandled, handcuffed and then thrown into the street by respondent Batong's group who warned him never to return to the LCP premises; that later that same morning, the employees of LCP and staff members of the Lutheran Church Missouri Synod and Lutheran Hour (which are housed inside the LCP building) arrived at the LCP premises to report for work, only to be prevented from entering the same. Respondent Batong later informed the employees of LCP that they have all been terminated from their jobs and that the LCP Business Office had already been abolished; that the management of the Lutheran Church Missouri Synod and Lutheran Hour, for their part, immediately instituted judicial proceedings against respondent Batong and, after a week, was able to gain entry into the premises and building of LCP for its employees and staff members; that respondent Batong, in the meantime, however caused the removal of all the official records and documents of LCP-i.e.,books of account, official receipts, checks and journal vouchers, official papers, titles to property, etc.,kept within LCP premises and had the same relocated in his residence in Caloocan City, Metro Manila and to the offices of the Immanuel Lutheran Church in Malabon; and that relocated also to these two (2) places were various LCP offices equipment, which included typewriters, computers office desks and chairs, mimeograph machines and a postage meter. Petitioners finally averred that all of the stated acts of respondents have caused and resulted in nothing but chaos within LCP; that all this time, the LCP Board, with the exception of four (4) members-namely: Rev. Benjamin Moreno, Rev. Teodorico Taran, Dr. Ben Galapia and Mr. Celestino Sipalay, Jr. (among petitioners herein) did, has done, and continues to do absolutely nothing, by way of administrative sanction and/or rectification, about the scandalously anomalous, wrongful and prejudicial acts perpetuated by respondent Batong; that six (6) other respondents members of the LCP Board, upon the other hand, in wanton violation of their solemn duty as directors to preserve and protect the properties and assets of LCP, have simply allowed the whims and caprices of respondent Batong to predominate and hold away, permitting the LCP Board to be manipulated at will-and with impunity-by one man; and that all told, these six (6) respondents constitute nothing more than a group of common and shameless conspirators in the devious designs of respondent Batong, and are hence equally responsible and liable for all damages that have befallen LCP as a result of the incidents narrated above. Respondents, on their separate answers with compulsory counterclaims and opposition to preliminary injunction, denied specifically most of the allegations of the petitioners. Respondents Thomas Batong, Augusto Catangui and Danilo Zamora, in their separate answers averred, among other matters, that there is no intra-corporate controversy which can come within the jurisdiction of this Commission, the truth being that the case is just a matter of compliance by the ex-treasurer and ex-business manager Excelsio J. Hipe of his legal obligations in a case which is now within the jurisdiction of this Commission, to wit: The Lutheran Church in the Philippines, Inc. et al., vs Excelsio Hipe, SEC Case No. 3250, for Violation of Section 74, Batas Pambansa Bilang 68; Specific Performance; Damages with Preliminary Mandatory Injunction. Respondent Batong averred that LCP Board Resolution No. LCP-BD-28-90 was discussed, passed and adopted by the required number of directors of the duly elected and constituted Board of Directors of LCP; that its legality has not been challenged before any authority and that if ever any convention action is required, then these causes of action of the Petition is premature for LCP convention shall still be held on October, 1992 in accordance with the Constitution and By-laws of LCP. Respondents further averred that petitioners do not have the legal capacity to sue; that this Commission has no jurisdiction over the nature of the action or suit; that the first, second, third and fifth causes of action are all the subject matters of any or all of the following cases pending before this Commission: (1) The Lutheran Church in the Philippines, Inc.,et al.,vs. Excelsio Hipe, SEC Case No. 3350 , For Violation of Section 74, BP Blg. 68; Specific Performance; Damages with Preliminary Injunction; (2) Domingo Sabu, et al., vs. Thomas Batong, et al., SEC Case No. 3524 ;Petition to Declare Board Resolution as Null and Void; and/or Excelsio Hipe, et al.,vs. Thomas Batong, et al., SEC Case No. 3556 ,For: Declaration of Nullity of Board Resolutions and Lack of Fitness to Continue in Office, Accounting of Funds and Damages; that the fourth cause of action, the subject matter which is specifically LCP-BD-28-90, is premature in that LCP convention shall still be held on October, 1992; that the subject matter of the sixth cause of action is not within the jurisdiction of this Commission and that there is a pending case involving the said incident, i.e.:The Lutheran Church-Missouri Synod and The Lutheran Hour, Philippines vs. The Lutheran Church in the Philippines, Civil Case No. 131879 CV for Forcible Entry pending in the sala of Judge Corazon T. Abalos-Herrera, Branch 21 of the Metropolitan Trial Court of Manila; that this Petition is evidently a clear case of multiplicity of suits; that petitioners will not suffer great and irreparable damage as a result of the non-issuance of a writ preliminary injunction; and that the appointment of a Management Committee in this case would violate the constitutional rights of the respondents to due process and the equal protection of the laws. By way of compulsory counterclaim, respondents, allege that petitioners being renegade Lutherans could have readily ascertained that their malicious, reckless and un-Christian act of bringing legal action in violation of the Holy Scriptures, i.e, 1 Cor. 6:1-11 for which they are subject to Church Discipline, according to Matt. 18:1522 which were incorporated in the Constitution and By-laws of LCP, have caused the respondents to incur damages. Hearing on the petitioners applications for writ of preliminary injunction and creation and/or appointment of a Management Committee were held wherein petitioners have presented their evidence. There being no objection/opposition filed by respondents, petitioners' testimonial as well as documentary exhibits were all admitted in evidence. (Order dated June 3, 1991). For unexplained failure of the respondents to file their formal offer of exhibits and/or rest their case as directed in the Order dated January 6, 1992, the petitioners' applications for writ of preliminary injunction and creation and/or appointment of a Management Committee were deemed submitted for resolution. (Order dated March 23, 1992). Thus, on September 3, 1992, an Order was issued as follows: "For resolution are petitioners' application for writ of preliminary injunction to enjoin the respondents from exercising their duties and functions as members of the Board of Directors and officers of the Lutheran Church in the Philippines (LCP for brevity) and creation of and appointment of the Management Committee to undertake the management of LCP, take control of all of its properties and assets and perform such other acts as provided by law. LibLex Hearings were conducted on the aforestated application where both parties were allowed to present their evidence. However, despite repeated reminders, respondents unjustifiably neglected to complete the presentation of their evidence up to the present. Consequently, the incidents were deemed submitted for resolution in order to obviate further delay in the determination of the merits of the above-entitled case. Evidence adduced by the petitioners, in so far, as relevant and material to the above-mentioned applications as well as the corporate records of LCP on the file with this Commission and SEC Cases Nos. 03524 , 03550 and 03556 which this Hearing Officer takes judicial notice of, disclosed that petitioners are members and pastors of LCP while respondents altogether comprised seven (7) out of the existing but unauthorized eleven (11) members of the Board of LCP namely: Rev. Dr. Thomas P. Batong, Rev. Victorio Saquilayan, Pastor Danilo Z. Zamora, Rev. Juanito Basalong, Rev. Augusto Catangui, Bro. Quido Rivera, Evangelist Paul Garcia, Rev. Benjamin Moreno, Dr, Ben Galapia, Rev. Rico Taran and Mr. Jun Sipalay. The Articles of Incorporation of the LCP particularly paragraph 6 thereof which is still in full and effect up to the present provides: "Sixth: that the affairs of the church shall be managed by a Board consisting of seven (7) members. .." However, notwithstanding the clear aforequoted provision, LCP has eleven (11) members of the Board of Directors since 1989 up to the present, and therefore its Board of Directors was not only irregularly but also illegally constituted. In SEC Case No. 3524 ,this Commission through its Hearing Officer, Hon. James K. Abugan, has declared, thus: "Under these given set of facts, this Hearing Officer is of the belief and so holds that not only the questioned resolutions passed and approved by the Board on January 26-27, 1989 meeting were illegal but the meeting itself is also irregular for the following reasons: First, the nine (9) members of the Board of Directors who attended the meeting out of the alleged eleven (11) members of the board of the present constitution of the board is contrary to or in violation of the Articles of Incorporation and By-laws which specifically provided for seven (7) membership in the Board ..." (Emphasis supplied). Consequently, all board resolutions and/or management actions or decisions passed and approved by them are deemed null and void ab initio for they were passed and approved by an illegally constituted Board of Directors. In fact, two (2) of the numerous resolutions passed and approved by the LCP Board were already declared null and void in SEC Case No. 3524 .And worse, several resolutions or Board's actions are not only (deemed) null and void but have caused irreparable damage to the corporation such as the termination of all LCP staff and employees (LCP-BD-29-90);dissolution of LCP Business Office (LCP-BD-37-90);termination of the partner-church relationship between LCP and the Lutheran Church-Missouri Synod which is the benefactor and source of funds of LCP (LCP-BD-28-90);forcible taking of almost all official records and equipment of LCP by respondent Thomas P. Batong and transferring the same from the LCP business office at 4461 old Sta. Mesa, Manila to his residence in Caloocan City, Metro Manila and to the offices of the Immanuel Lutheran Church in Malabon, Metro Manila; acquisition of some lands using the corporate funds were in the name of some person other than the LCP, and various cash advances of corporate funds by the respondents are not liquidated up to the present. Needless to say, all these acts of respondents caused not only chaos among the LCP membership but paralization of business operations of the corporation. In order therefore, to forestall any further dissipation, loss or wastage or destruction of assets or other properties or paralization of business operation of the LCP to the prejudice of its corporate existence, members and the public, the petitioners application for the creation and appointment of a Management Committee should be, as it is hereby GRANTED. WHEREFORE, premises considered, a MANAGEMENT COMMITTEE is hereby created to undertake the management of the Lutheran Church in the Philippines until such time that new members of the LCP Board of Directors shall have been elected and qualified in the election to be called and conducted by the Management Committee in accordance with the LCP's Article of Incorporation and By-laws preferably in October, 1992. The Management Committee shall be composed of the following to be appointed by this Hearing Officer: One (1) Chairman from the nominees of the parties; Six (6) Members three (3) nominees of the complaints and three (3) nominees of the respondents. The parties are hereby directed to submit the names and addresses of their respective nominees to this Hearing Officer within five (5) days from receipt of this Order. It is understood that upon appointment and qualification of the members of the Management Committee, the aforenamed illegally constituted board of directors of LCP shall cease and desist from representing themselves and performing their duties as a board. SO ORDERED." The Motion for Reconsideration of the aforequoted Order filed by the respondents was denied in the Order dated September 18, 1992. On October 8, 1992, an Order containing a notice of preliminary conference was issued. On October 16, 1992, an Order was issued granting the petitioners' application for writ of preliminary injunction, as follows: "On October 6, 1992, petitioners filed a "Motion and Application "for an injunctive relief seeking to enjoin the respondents their agents and all persons acting under their direction from continuing to act as the board of directors of the Lutheran Church of the Philippines, Inc. (LCP) and from calling and holding the 17th Convention as well as the election scheduled during said convention. At the hearing on the aforementioned "Motion and Application" on October 9, 1992, it was claimed that petitioners' "Motion and Application" is just a reiteration of the injunctive relief they have prayed for in their petition which was already exhaustively heard simultaneously with their application for a Management Committee, in which hearings the respondents were duly notified and represented by their counsel, Atty. Macario Espejo, Jr. Records show that indeed hearings were conducted on the petitioners' application for writ of preliminary injunction and creation and/or appointment of a Management Committee where both parties were allowed to present their evidence. However, despite repeated reminders, respondents unjustly neglected to complete the presentation of their evidence up to the present. Consequently, the incidents were deemed submitted for resolution in order to obviate further delay in the determination of the merits of the above-entitled case. In the Order dated September 3, 1992, a Management Committee was created to undertake the management of the Lutheran Church in the Philippines (LCP) until such time that new members of the LCP Board of Directors shall have been elected and qualified in the election to be called and conducted by the Management Committee in accordance with the LCP's Article of Incorporation and By-laws. In the same Order, the respondents, being members of the illegally constituted Board of Directors of LCP, were also advised to cease and desist from representing themselves and performing their duties as a board immediately upon appointment and qualification of the members of the Management Committee. In the Order dated September 29, 1992, the following were appointed to the Management Committee. namely: Atty. Leven S. Puno Chairman Rev. Jose Laking Member Rev. Eduardo Ladlas Member Rev. Romeo J. Celiz Member On October 9, 1992, the aforenamed members have taken their oath of office while Atty. Leven S. Puno took his oath of office on October 12, 1992. The majority of the (seven-member) Management Committee having been appointed and qualified to undertake the management of the Lutheran Church in the Philippines and considering that the board of directors of the LCP of which the respondents are members was declared to have been illegally constituted, the petitioners' application for a writ of preliminary injunction should be, as it is hereby, GRANTED. WHEREFORE, let a writ of preliminary injunction issue immediately upon the filing of the petitioners of a bond in the amount of Fifty Thousand Pesos (P50,000.00),to answer for any damage that respondents may suffer should the Commission finally decide that the petitioners are not entitled thereto, enjoining the respondents, their agents, representatives or any person acting for or under their instruction from representing themselves or from acting as board of directors or officers of LCP and from holding any convention, general or special membership meeting as well as election of the members of the LCP Board of Directors. LLjur SO ORDERED." On the same day (October 16, 1992),a Writ of Preliminary Injunction was issued. The motion filed by the respondents seeking a reconsideration of the aforestated Order were also denied in the Order dated November 3, 1992, pertinent portion of which is quoted hereunder, to writ: On October 20, 1992, respondents filed their "Triple Motions: For Dissolution of preliminary injunction (under Sec. 5, Rule XVIII, P.D. 902-A) * For Reconsideration, Alternative Justification of Dissolution by Counterbond" of the Order dated October 16, 1992. In support thereof, respondents aver that the said Order should be reconsidered and modified by deleting the portion stated hereunder: "and from holding any convention, or general or special membership meeting as well as election of the members of the LCP Board of Directors." as the same does not appear in the petition, and the SICD did not acquire jurisdiction on any question of LCP convention, general or special membership meeting as well as election of the LCP Board of Directors; that the "holding of a convention is (1st) the right of the members of the LCP Corporation, the members are not the respondents herein but the officers and board of directors; and (2nd) the question/issue is based on the LCP By-laws, while the holding of the LCP convention scheduled for October 26-30, 1992, is covered by the Constitution/Articles of Incorporation of the LCP, of which there is no question raised in the Petition, ...The holding of regular election/convention under the "legal" constitution of LCP, dated October 1968, is found in Section 1, Articles Seven: Convention, LCP Constitution as follows: "SECTION 1. The Lutheran Church in the Philippines shall meet in regular convention during the month of October of an even numbered years." and that 1992 is an even numbered year, 26th to 30th is the end of the month, and October is the regular convention month for LCP, called by the LCP members wherein these members from all over the Philippines, send their delegates to the regular convention; that no LCP officers or Board members can stop this regular convention even if he receives a copy of the writ of preliminary injunction, as they had become powerless because of their being "illegally" constituted, and besides the trigger that started the ball rolling for this regular convention was pulled or announced in May 1992 ,six (6) months before the SICD "order" came into effect on the writ of preliminary injunction dated October 16, 1992, as provided in the LCP By-laws: "SECTION 2. The exact date of regular convention shall be determined by the LCP Board of Directors and shall be announced at least six months in advance."; that in the alternative, herein respondents are willing and able to post a counter-bond of twice the amount of P50,000.00 or P100,000.00 under ,to dissolve the Writ of Preliminary Injunction conditioned that respondents will pay all damages which the petitioners may suffer by the dissolution of the injunction. In opposition thereto, petitioners asserted that the Supreme Court has ruled that the mere posting of a bond is not sufficient to lift or dissolve a writ or injunction. The movant must also show a good and valid ground (Vda. de la Cruz vs. Tan Torres, et al.,G.R. No. L-14925, April 30, 1960, 107 Phil. 1163, at p.1168).In their "Triple Motions",respondents have failed to demonstrate such good and valid grounds sufficient to dissolve the writ of injunction. Moreover, petitioners argued that the September 3, 1992 Order created the Management Committee for the LCP because it had determined that: (a) the Board of Directors was illegally constituted, (b) all its resolutions were, and accordingly have been declared, null and void ab initio. Despite the determination of its illegality and the creation and constitution of the Management Committee, this same Board of Directors has called and notified certain members of the LCP about the holding of an LCP convention and the election of the Board of Directors. But since said board cannot act legally as such, necessarily the calling of the LCP convention as well as the intended election to be held during said convention would be illegal. Such acts, which are but part of the continuing illegal acts of the illegally constituted Board, are the acts being enjoined by the writ of injunction. And that the Management Committee which shall take over the Management of the LCP has already been constituted on September 29, 1992. After a through examination of the respondents motions as well as petitioners opposition thereto, this Hearing Officer rules for the petitioners. LibLex The right of the members of LCP to hold a convention is not controverted. However, such convention should be called by the legally authorized body and conducted in the manner as provided for in its Articles of Incorporation and By-laws to be valid. It must be emphasized that in the Order dated September 3, 1992, a Management Committee was created, and majority of its members have already been appointed and qualified as of October 12, 1992. "to undertake the management of the Lutheran Church in the Philippines until such time that new members of the LCP Board of Directors shall have been elected and qualified in the election to be called and conducted by the Management Committee in accordance with the LCP's Articles of Incorporation and By-Laws preferably in October, 1992".This Order expressly declared that the election of the new members of the Board of Directors of the LCP who will replace those who have been declared illegally constituted shall be called and conducted by the Management Committee. Accordingly, the convention and elections of the LCP's Board of Directors allegedly to be held on October 26-30, 1992 having been determined and called by the LCP Board of Directors which has been called declared illegally constituted deserves to be enjoined for the said Board is powerless to pass upon any act or resolution to bind the corporation The respondents having failed to show any good and valid reason for the lifting of the Writ of Preliminary Injunction, their "Triple Motions:" should be, as they are hereby, DENIED. SO ORDERED." By agreement of the parties, the preliminary conference was terminated on January 19, 1993. On January 25-27, 1993, the Management Committee convened the LCP National Convention in Cagayan de Oro City. During the said convention, and in accordance with the By-laws of the LCP, the following were elected members of the LCP Board of Directors: Eduardo Ladlad, Jose Laking, Luis Ao-as, Teodorico Taran II, Antonio Fuliga, Julio Bantail and Bernardo Abadiano. This convention was observed by the official representatives of this Commission. On August 25, 1993, a Resolution in SEC-EB No. 330 was rendered by the Commission en banc on the respondents' petition for certiorari with prayer for a temporary restraining order alleging that this Hearing Officer has acted without or in excess of its jurisdiction, or with abuse of discretion by issuing the September 3, 1992 Order and other previous Orders in the exercise of its quasi-judicial functions. The meat of the said resolution is quoted hereunder, to wit: "The issue to be resolved here is whether or not the Hearing Officer acted without or in excess of his jurisdiction, or with grave abuse of discretion in creating a Management Committee "to undertake the management of the Lutheran Church in the Philippines".The question of whether or not the petitioners have to account for all funds, properties and assets of LCP which may have come into their possession as directors and/or officers of LCP is still to be resolved by the hearing officer after trial on the merits. The questioned order is clearly interlocutory, and generally interlocutory orders may not be raised on certiorari: "The order which is the subject of this petition is an interlocutory order which cannot be a proper object of review on certiorari. It did not put an end to the controversy. If every error committed by the trial court were to be a proper object of review on certiorari, the trial would never come to an end and the appellate court's docket would be clogged ad infinitum with the aggrieved parties-litigants filing petitions after petition for writs of certiorari against every interlocutory order of the trial court. ..." (Young, etc. et al. vs. Hon. Julio A. Sulit, Jr.,etc. et al.,G.R. No. L-57839, June 27, 1988). However, this general rule admits of an exception and the only exception is where there is grave abuse of discretion. "Grave abuse" has been defined as follows: For certiorari to lie, there must be capricious, arbitrary and whimsical exercise of power, the very anti-thesis of the judicial prerogative in accordance with centuries of our civil law and common law traditions." (Young, et al. vs. Sulit, G.R. No. L-57839, June 27, 1988). Thus, for certiorari to lie, not only must simple error of judgment be shown, but that the orders complained of must be clearly devoid of any legal or factual basis. This does not appear to be the case. The hearing officer in the questioned September 3, 1992 order opined: LLphil "...And worse, several resolutions or Board's actions are not only (deemed) null and void but have caused irreparable damage to the corporation such as termination of all LCP staff and employees (LCP-BD-29-90);dissolution of LCP Business Office (LCP-BD-37-90);termination of the partner-church relationship between LCP and the Lutheran Church-Missouri Synod which is the major benefactor and source of funds of LCP (LCP-BD-28-90);forcible taking of almost all official records and equipment of LCP by respondent Thomas P. Batong and transferring the same from the LCP business office at 4461 Old Sta. Mesa to his residence in Caloocan City, Metro Manila and to the offices of the Immanuel Lutheran Church in Malabon, Metro Manila; acquisition of some lands using the corporate funds were in the name of some person other than the LCP, and various cash advances of corporate funds by the respondents are not liquidated up to the present. Needless to say, all these acts of respondents caused not only chaos among the LCP membership but paralization of business operations of the corporation. In order, therefore, to forestall any further dissipation, loss or wastage or destruction of assets or other properties or paralization of business operations of the LCP to the prejudice of its corporate existence, members and the public, the petitioners' application for the creation and/or appointment of a Management Committee should be, as it is hereby GRANTED. WHEREFORE, premises considered, A MANAGEMENT COMMITTEE is hereby created to undertake the management of Lutheran Church in the Philippines until such time that new members of the Board of Directors shall have been elected and qualified in the election to be called and conducted by the Management Committee in accordance with the LCP's Article of Incorporation and By-laws preferably in October, 1992. xxx xxx xxx We find no sufficient reason why the En Banc should disregard the opinion of its hearing officer: "We have thus ruled, and we so rule again, that the hearing officer is the person directly confronted with the facts and pieces of evidence attending a particular case, and that it is within his domain to be confronted with the circumstances directly, which calls for the exercise of his discretion as to what action should be properly taken. Absent any showing of abuse of discretion, the hearing officer's decision based on his findings deserves our respect." (Fr. Francisco Tuano, O.P.,vs. Fr. Francisco Testera, O.P.,et al., SEC-AC No. 155, January 21, 1987 ;Laxamana, et al.,vs. Mendoza, et al., SEC-AC No. 126, September 4, 1986) . The strict requisite of grave abuse to warrant the issuance of the extraordinary writ of certiorari has not been clearly shown in the instant petition. WHEREFORE, premises considered, the instant petition is hereby DENIED. SO ORDERED." Petitioners' applications for writ of preliminary injunction and creation and/or appointment of a Management Committee having been resolved, the remaining questions posed for resolution are: (a) Whether or not the respondents have to account for all funds, properties and assets of LCP which may have come into their possession as directors and officers of LCP, and (b) Which of the parties is entitled to damages? Specifically, petitioners are demanding for the accounting and/for return to the LCP of the following funds or properties: (a) The balance of P64,000.00 from the sale of the Old Trinidad Land and cash advances in the sum of P323,750.00, by respondent Thomas Batong, (1st and 2nd causes of action); (b) The sum of P 4,920,815.52 in grants, gifts, donations and subsidies per Trial Balance of September 30, 1989, (3rd cause of action); (c) The amount of P150,000.00 used by respondent Victorio Y. Saquilayan to purchase the 6,593 square meters of land in Albuera, Leyte in his name instead of the LCP, (4th cause of action); (d) All official records and equipment of LCP such as, but not limited to books of account, title to property, official receipts, checks, journal vouchers, typewriters, computers, mimeograph machine and postage meter. (6th cause of action). LexLib Evidence adduced by the petitioners established that sometime in October of 1983, respondent Thomas P. Batong sold parcel of land measuring 975 square meters in area, located at the Municipality of La Trinidad, Province of Benguet (the "Old Trinidad Land") to Aurea T. Benito for a total consideration of P195,000.00. (Exh. "L").Batong was paid on October 3, 1983 in the following manner: P45,000.00 in cash and P150,000.00 in manager's check (p. 60, TSN of September 11, 1990).After Batong received these amounts from Ms. Benito, he did not turn over to the LCP Business Office the documents evidencing the transaction or any portion of the proceeds of the sale but simply withheld and kept the full amount in his possession despite subsequent and repeated demands from the LCP Business Manager (P. 61. TSN of September 11, 1990).On May 28, 1984, the LCP, represented by respondent Thomas P. Batong, purchased from Mally Palasca a 300 square meter parcel of land, covered by Certificate of Title No. T-15155, likewise situated in the Municipality of La Trinidad, Province of Benguet (the "New trinidad Land").The Deed of Absolute Sale (Exhibit "M") stipulated a purchase price of P 32,000.00 for the New Trinidad Land although, in reality, the amount of P 75,000.00 was given in payment for said property (p. 62, TSN of September 11, 1990).The acquisition cost of P 75,000.00 of the New Trinidad Land was paid by respondent Batong out of the LCP funds of P195,000.00, which was the proceeds of the sale of the Old Trinidad Land. (pp. 63-65, TBN of September 11, 1990).On September 7, 1984, the LCP Business Manager Excelsio J. Hipe, wrote and requested respondent Batong to turn over to the Business Office all documents evidencing the sale of the Old Trinidad Land and the balance of the money from such sale after the purchase of the New Trinidad Land. (Exh. "N").When Batong failed to account and remit the funds to the Business Office, Mr. Hipe again wrote to Batong to remind him of his obligation and duty to remit to LCP the aforementioned P120,000.00 in his possession and "to reconcile and account fully for all the interest income which may have properly accrued to this particular amount. " (Exh. "O").Respondent Batong responded two (2) weeks later by turning over the amount of P56,000.00 to the LCP treasury. He failed, however, to account for or turn over the residual amount of P64,000.00 (P120,000.00 less P56,000.00). In the meantime, Batong has done nothing to effect transfer of registration of the New Trinidad Land to the name of LCP (p.69, TSN of September 11, 1990). Petitioners' evidence further show that as of October 10, 1989, respondent Batong's unliquidated cash advances amounted to P153,802.04. (Exhs. Q, Q-1, pp. 74-75, TSN of September 11, 1990). Furthermore, petitioners' evidence disclosed that from time to time, LCP received from different sources various grants, gifts and donations which it uses to fund and support specific church properties. (pp. 80-81, TSN of September 11, 1990).These donations, collectively, constitute the "Restricted Funds" of LCP and are classified more particularly in the books of LCP under the following items: Church Extension Funds (CEF),Capital Development Fund (CDF),Trust Fund (TF),Forward-in-Remembrance Fund (FIR) and Specific Funds (SF).The Trial Balance of LCP prepared by the Business Office as of 30 September 1989, showed the total Restriction Funds of P4,920,815.52 broken down as follows: Church Extension Fund (CEF) P537,242.29 Capital Development Fund (CDF) 571,821.45 Trust Fund (TF) 530,675.78 Forward-in-Remembrance Fund (FRF) 52,237.67 Specific Fund (SF) 3,228,838.33 TOTAL P4,920,815.52 However, the same Trial Balance reveals that a total cash and bank balance of only P81,776.23 remains in the LCP's coffers, a discrepancy of P4, 839,039.29. (Exhs. "U" and "U-1").Respondent Batong had authorized the disbursement or use of such "Restricted Funds" and had deprived the Business Manager of any opportunity to audit the use of the same. (pp. 96-98, TSN of September 11, 1990). Sometime in 1989, LCP, through respondent Victorio Y. Saquilayan, purchased a parcel of untitled land measuring 6,593 square meters situated in Barangay Mahayag, Albuera, Leyte (the "Leyte Land"),for development into a church site (pp. 82-84 TSN of September 11, 1990) in the sum of P150,000.00 However despite the fact that LCP funds were used, respondent Saquilayan did not purchase the Leyte Land on behalf of LCP. The Deed of Sale covering the transfer of the land identified respondent Saquilayan as vendee of the Leyte Land. (Exh. R.).Moreover, the corresponding tax declaration covering the same property likewise identified respondent Saquilayan as the declarant-owner thereof. (Exh. S). With regard to the taking of the LCP documents and equipment, petitioner's evidence disclosed that on March 19, 1990, respondent Batong, accompanied by other respondents and about fifteen (15) armed security guards, barged into the premises of LCP at LCP at 4461 Old Sta. Mesa, Manila and forcibly prevented the employees of LCP and staff members of the Lutheran Church-Missouri Synod and Lutheran Hour (which are housed inside the LCP building) from entering the said premises. Respondent Batong later informed the employees of LCP that they had all been terminated from their jobs and that the LCP Business Office had already been abolished. Respondent Batong then caused the removal of all of the official records and documents of LCP such as books of account, official receipts, checks, and journal vouchers, official papers, titles to property, etc.,kept within LCP premises and had the same relocated to his residence in Caloocan City, and to the offices of the Immanuel Lutheran Church in Malabon, Metro Manila. Also relocated to these two places were various LCP office equipment, which included typewriters, computers, office desks and chairs, mimeograph machines, and a postage meter. (pp. 12-15, TSN of February 4, 1993). On the matter of severance of sister church relationship, petitioners' evidence show that in 1972, during a national convention of LCP, a partner-church relationship was formally established between LCP and the Lutheran Church-Missouri Synod (LCMS),which LCMS had been the major benefactor and source of funds of LCP (pp. 26-31, TSN of September 11, 1990).Under LCP Board Resolution No. LCP-BD-33-70, "all actions taken by LCP in convention can only be amended, modified or changed by LCP in convention." (Exh. C-2 and pp. 32-35, TSN of September 11, 1990).On March 15, 1990, and despite their knowledge of the above resolution, respondents passed LCP Board Resolution No. LCP-BD-28-90 severing all relations with LCMS. (Exhibit B).This resolution (LCP-BD-28-90) was never taken up and/or ratified by LCP in convention. Respondent Thomas P. Batong's defense, presented through his affidavit-testimony on August 20, 1991, was that he had liquidated the advances made to him for the sales and purchase of the "Old and New Trinidad Land",respectively. At the time that this testimony was given, no documentary exhibit was ever presented to substantiate his alleged liquidation. Subsequently, respondent Batong presented his defense through the affidavit-testimony of Victorio Saquilayan. (Exhibit 2).In said affidavit, it was alleged that Batong's B-2 reports liquidated the advances for the sale and purchase of the (old and new) Trinidad Land. An evaluation of his B-2 reports (Exhibits 9-A to 9-E) show that what Batong has partially liquidated are the advances regularly made to him. The B-2 reports did not refer to the funds withheld by Batong specifically the balance of the proceeds of the sale of the Old Trinidad Land. In fact, the only documentary exhibit of respondents that could show the liquidation of the withheld funds was an unsigned photocopy of the reconciliation of the remaining balance of the proceeds from the sale and purchase of the (old and new) Trinidad Land. This document which tried to link the advances to the liquidation was excluded in evidence. Consequently, no proof has been presented to show liquidation of the balance of P64,000.00. Despite being given every opportunity to present his evidence, respondent Batong has failed to present any other evidence, such as receipt(s),evidencing the turnover of the balance of the proceeds of the sale of the Old Trinidad Land. No evidence was adduced to prove that respondent Batong has liquidated the balance of his other unliquidated various cash advances in the sum of P153,802.04. (Exh. Q-1). This Hearing Officer finds also respondent Victorio Y. Saquilayan's defense unmeritorious. Respondent Saquilayan did not deny that despite that the funds used for the purchase originated from the LCP, he purchased the Leyte Land in his name on January 10, 1989. (Exh. 2-E).His only defense is that he had donated the Leyte Land to the LCP on September 10, 1991. Assuming, the donation to be valid, it was made only after one year and ten months from the questioned purchase. Respondent Saquilayan enjoyed the Leyte Land for the entire period of one year and ten months and he gave no explanation as to why he retained it in his name during such a long period of time. By all means, respondent Saquilayan should now endeavor to completely turn over the title and possession of the Leyte Land to the LCP. Moreover, there has been no accounting of how the amount of P 4,920,815.52 representing the "Restricted Funds" was spent by the respondents, as Members of the Board of Directors in 1989. It was established that there was only a balance of P81,776.23 at the LCP coffers at the time that the respondents carted away the LCP books of account. There was likewise an attempt on the part of the respondents to prevent any accounting of such funds. In 1989, at the time that the aforementioned amount was being spent by respondents, Excelsio Hipe, the Business Manager, was barred from performing his work and from auditing such funds. (pp. 22-23, TSN of February 4, 1993).Respondent's defense [set out in Saquilayan's affidavit-testimony (Exh. 2)] was that "these funds were applied to their intended purposes in the year 1989". Beyond the above bare allegation, no proof was ever presented to show how the funds were utilized or accounted for by the respondents. The only document presented by the respondents to show that the funds were, according to them, "not lost" is an income tax return for the fiscal year ending June 30, 1989. This is untenable. The income tax return presented only shows the amounts received by the LCP as non-taxable income for the fiscal year, July 1988 to June 1989. The amounts stated in an income tax return are not accounting entries that will, in any way, show how funds were utilized or disbursed by the respondents as members of the Board of Directors and Officers of LCP. The forcible taking of the LCP books of account, documents, etc. and equipment has been repeatedly testified to by the petitioners' witnesses. (TSN of September 11, 1990 and February 4, 1992).Respondents have in fact admitted having taken such books of account, documents and equipment, and keeping them up to the present to the exclusion of the LCP Business Manager. (pp. 32-37, TSN of August 20, 1991). The only defense presented by the respondents was that the matter was the subject of Civil Case No. 131879-CV pending before the Metropolitan Trial Court of Manila (p. 13 Affidavit of respondent Saquilayan, Exh. 2.) This is unavailing. The civil case referred to address the matter of forcibly entry, while the instant case is for accounting, among other reliefs. Petitioners, like other members of the LCP, are entitled to such an accounting but cannot have one because the books of account, documents, etc. and equipment were taken by respondents. LexLib From the foregoing, it is clear that respondents have unjustifiably withheld the books of account, documents, etc. and equipment, and dissipated, lost and wasted the assets and funds of the LCP which were sufficient grounds for the issuance of the Order dated September 3, 1992, creating the Management Committee, under P.D. 902-A, as amended. This Order was affirmed by the Commission en banc in its Resolution dated August 25, 1993. Moreover, with the constitution of the Management Committee, respondents, as members of the board of directors and officers of the LCP, have become functus officio and have lost all authority to act as such. Respondents could not call for the election of new members of the board to take their place because of the writ of preliminary injunction issued against them. Consequently, respondents should be made to account or return all the assets or properties of the LCP which are now held or controlled by them. At any rate, the legitimately elected members of the Board of Directors of the LCP are presently holding office as such, having been elected and qualified to their posts during the LCP National Convention on January 24-27, 1993 held in Cagayan de Oro City under the auspices of the Management Committee created per Order dated September 3, 1992. For insufficiency of evidence, petitioners claim for damages should not be given due course. WHEREFORE, premises considered, decision is hereby rendered as follows: (a) Making the writ of preliminary injunction issued on October 16, 1992 permanent; (b) Declaring the validity of the LCP National Convention called by the Management Committee on January 25-27, 1993 in Cagayan de Oro City together with the election of members of the Board of Directors of the LCP held thereat; (c) Declaring all acts and/or resolutions passed by the respondents invalid and of no legal effect; (d) Ordering respondent Thomas P. Batong to pay the sum of Sixty Four Thousand Pesos (P 64,000.00) representing the balance of the proceeds of the sale of the Old Trinidad Land, and One Hundred Fifty Three Thousand Eight Hundred Two and 04/100 Pesos (P153,802.04) representing his unliquidated various cash advances to the LCP plus legal interest thereof from the filing of this petition until the same are fully paid; (e) Ordering respondent Victorio Y. Saquilayan to turn over the title and possession of the "Leyte Land" to the LCP; (f) Ordering the respondents, jointly and severally, to pay the sum of Four Million Eight Hundred Thirty Nine Thousand Thirty Nine and 29/100 Pesos (P4,839,039.29) representing the unaccounted "Restricted Funds" to the LCP plus legal rate of interest thereof from the filing of this petition until the same is fully paid; (g) Ordering the respondents, their successors, assignees, representatives or all persons acting for and/or in their behalf, jointly and severally, to account and/or return to the LCP all its funds, official records and documents, such as books of account, official receipts, check and journal vouchers, official papers, titles to property, etc. and office equipment such as typewriters, computers, office desks and chairs, mimeograph machines, postage meter, and all its assets or properties, real or personal; and (h) Ordering the respondents, jointly and severally, to pay the cost of suits. cdll SO ORDERED. (SGD.) ELPIDIO S. SALGADO Hearing Officer * Copied verbatim from documents obtained directly from the Securities and Exchange Commission .