Jaime T. Lucas vs. Alejandro S. Nava

[SEC-SICD * CASE NO. 3898. September 18, 1996.] JAIME T. LUCAS , petitioner , vs . ALEJANDRO S. NAVA , respondent . D E C I S I O N This is a Mandamus suit filed by petitioner, Jaime T. Lucas [Lucas] for accounting of the funds of the corporation duly received and paid by respondent Alejandro Nava [Nava] for and in behalf of Santa Rosa Mining Corporation as the treasurer thereof, with application for the issuance of a Writ of Preliminary Injunction. LLjur Petitioner avers, inter alia, that he is a duly registered stockholder, holding 3,000,000 shares of stock of Sta. Rosa Mining Company, Inc. [SRMC]; that respondent is, likewise, a stockholder therein, holding 150,000 shares and has served as its treasurer until 28 February 1990; that the SRMC is a mining company, with gold mining claims in Brgy. Sta. Rosa Norte, Jose Panganiban, Camarines Norte; that SRMC has an operating agreement with the Benguet Corporation; that in SEC Case No. 3800 respondent Nava, as treasurer of SRMC, admitted receiving the amount totaling to P5 M in 1 June 1983 [P1 M] and in March 1988 [P4 M] from Benguet Corporation categorized as earnest money and/or advance royalties/share of net profits for and in behalf of SRMC; that respondent further admitted that it is his duty to furnish financial statements to the stockholders of SRMC; that respondent failed and/or refused to do so causing great and irreparable damage to SRMC and its majority stockholders; that a writ of preliminary mandatory injunction be issued to respondent to immediately turn over to the custody of the Commission, all records, or certified xerox copies thereof of the monies received and paid by him, including used checks, bank statements, vouchers and other pertinent papers; and (b) to deposit in escrow in a bank authorized by the Commission whatever balance there is of the SRMC's funds still under his control and responsibility. Petitioner prays for the rendition of complete and accurate accounting of all the monies received and/or paid by him for and in behalf of SRMC, including but not limited to P5 M; that if respondent cannot account, he should be adjudged to return, refund or reimburse SRMC and costs. Petitioner's Amended Petition contained the allegations found in the original petition but added, among others, that four (4) disbursements made by respondent in various amounts starting 10 June 1983 to 29 March 1998 are allegedly without legal justification and/or without Board's approval; that as treasurer of the company, respondent misappropriated P500,000.00 as retainer fee for OP Case No. 3689. Further, petitioner prays for an order to be issued to Citytrust Banking Corporation, Aurora Blvd. corner Hemady Branch, Quezon City, to hold in escrow the balance of P184,172.70, covered by Time Deposit Certificate No. 04780 and a Savings Deposit Account in the name of SRMC. cdll Respondent, in his Answer, contends that' the claims of petitioner is unfounded, malicious, and denies the same; that petitioner has no cause of action; that filing of the suit violates the principle of multiplicity of suits considering the pendency of SEC Case No. 3800 wherein the same cause of action for accounting of funds, misuse and illegal appropriation of the same funds and the non-disclosure thereof to the prejudice and detriment of the stockholders of the corporation was, likewise, raised; that the filing of this suit is a form of harassment instigated by one of the respondents in SEC Case No. 3800 . Respondent prayed for the dismissal of the case with costs against herein petitioner. Respondent filed a Motion to Dismiss on 14 January 1991, citing as basis the violation of the principle on multiplicity of suits; opposed by petitioner on 28 January 1991. The same motion was denied on 26 February 1991. Subsequently, on 4 February 1991, petitioner filed for leave to amend petition which was opposed by the respondent. On 28 February 1991, the same motion was granted. A motion for reconsideration was filed, but, was denied on 4 July 1991. Extensive hearings were conducted wherein both parties presented oral and documentary evidence. On 28 January 1994, the petitioner's Manifestation and Motion to Consider case submitted for decision, based on the parties exhaustive evidence adduced in the injunctive relief hearing, was granted since no opposition/objection was filed by the respondent and/or counsel. Hence, the case is now submitted for decision. Principally, the petitioner in exercising his right as a stockholder of SRMC brought an action before this forum for the sole purpose of compelling the respondent, by way of mandamus, to render an accounting. Petitioner's action before this Forum is not in a form of a derivative suit considering that the requisites for the filing of the same was neither availed of nor so alleged in the petition [VIDE: The Corporation Code of the Philippines, Annotated, Rosario N. Lopez, Vol. II, pp. 856 to 862, 1994 Ed.]. From the evidence presented, SRMC, although a publicly listed company, was seemingly managed solely by the Nava family, controlled particularly by the late president Gonzalo Nava; more of a close corporation, whose officers and directors are either his sons, daughters, sons/daughters-in-law; that all his children/stockholders disbursed funds at his orders/direction and/or manage the corporation according to his dictates with nary a protest; and that upon the death of Gonzalo Nava, and without his unifying presence, his children were embroiled in a bitter feud against each other over SRMC's management and corporate records/funds that resulted in several cases before this Forum. LLphil Judicial notice is taken, upon due inquiry from the Commission's Financial Statement Division (where the yearly audited financial statements of all registered corporations are submitted) that except for the year 1989, SRMC did not file its audited financial statements for the years 1983 to 1991. SRMC, however, filed an Affidavit of Non-Operation encompassing the years herein-stated. The crux of the matter before the case at bar is whether or not respondent Alejandro Nava, as treasurer, be required to render an accounting of the total amount of Five Million (P5,000,000.00) Pesos received from Benguet Corporation as earnest money and/or advance royalties/share of net profits; and the corresponding disbursement of the same. As to the corresponding duty to render an accounting of cash disbursement and expenses, respondent Nava, as treasurer, has the obligation to render accounting of the same since not only are the SRMC's funds under his custody and disposal, but such duty is required by the Code and SRMC's By-Laws, particularly Article X thereof. Mandamus, however, will not lie in the case at bar in that respondent Nava have already rendered an accounting of his disbursements as shown by his initial unaudited accounting he submitted to the petitioner (Exhibit "F" petitioner; Exhibit "5", respondent), and thereafter, an audited Statement of Cash Receipts and Disbursements for the period June 2, 1983 to January 31, 1991 by CPA David Pascual and Co., (Exhibit "6" to "6 A-1" respondent). Viewed in this light, this Hearing Officer sees no further need to direct and compel the herein respondent to render an accounting; taking note, further, that the audit report conducted by the same CPAs found no anomalous nor questionable findings in the cash disbursement of the herein respondent to persuade this Hearing Officer to rule otherwise. Now, whether respondent Nava's disbursements were without legal justification, the same cannot be fully ascertained from the evidence presented to rule judiciously on the matter. Moreso, as indispensable parties [officers or directors], whose signatures were affixed and found in the disputed checks, were not impleaded as parties in the case at bar. Neither was there any compelling evidence adduced to afford the claim a favorable view. Additionally, as brought out during the trial, corporate documents were either lost, cannot be located due to transfer of SRMC's office, and/or the records are with the other corporate officers who have not returned the same to the corporation. Even the Bank's (Citytrust) manager testified that the Bank's micro-films of the SRMC's spent checks are not clear and/or cannot be even reproduced despite the directive/subpoena issued by this Hearing Officer. LexLib Upon inquiry on 04 September 1996 by this Hearing Officer with Citytrust [See Certification, 05 September 1996, attached to the expediente on 13 September 1996], SRMC has a standing account with the same Bank, under Money Market (Cityfund) CTF No. 79919, in the amount of P264,124.66, not P184,172.70 as alleged in the Amended Petition, the subject matter of the prayer for Injunctive Relief and/or Escrow, thus On the petitioner's application for an injunctive relief and the prayer for the issuance of an order to direct Citytrust Banking Corporation to hold in escrow the SRMC's Time Deposit Certificate No. 04708 and/or Savings Deposit Account, this Hearing Officer is of the opinion, and so holds, that the Commission en Banc's ruling in SEC EB No. 264 dated 13 October 1993 wherein a Committee of Receivers was created with the following powers and duties: "1.) receive all funds/monies/properties and assets belonging now and hereafter to Sta. Rosa; and 2.) authorize disbursements of fund for the due and necessary operational expenses of the corporation . . ." renders the petitioner's application mooted. Premises Considered, judgment is hereby rendered: 1. DISMISSING the suit of Mandamus against respondent Alejandro Nava; and 2. DIRECTING the Citytrust Banking Corporation to formally inform the Committee of Receivers the presence of Saving/Time Deposit including the interest thereof, in the name of Santa Rosa Mining Corporation, and to release the same upon demand by the same Committee No pronouncement as to cost. cdll SO ORDERED. (SGD.) YSOBEL S. YASAY-MURILLO Hearing Officer