Redentor T. Roa, et al. vs. Jose C. Cristobal, et al.

[SEC-SICD * CASE NO. 3971. January 8, 1992.] REDENTOR T. ROA, ET AL. , petitioners , vs .JOSE C. CRISTOBAL, ET AL. , respondents . D E C I S I O N In a petition for Annulment, Quo Warranto With a Prayer for Issuance of a Writ of Preliminary and Mandatory Injunction and Temporary Restraining Order, petitioners prayed for the following: 1. Upon filing of this petition and before the matter can be heard on notice, a temporary restraining order be immediately issued ex-parte prohibiting respondents from performing any act as directors, officers, and members of the Association; from collecting membership fees/dues; from disbursing Association funds; and, from appropriating/selling/disposing of subdivision lots owned by the Association to their purported members; 2. A Writ of preliminary prohibitory and mandatory injunction be issued immediately on the basis of Section 5, Rule 58 of the Rules of Court; 3. Declaring as null and void all Board Resolutions passed and approved by the respondents; 4. Declaring as unlawful and illegal the assumption into office by the respondents and likewise the officials/officers who may have been appointed and/or placed in office by the respondents; 5. Declaring the herein petitioners as the legitimate members of the Board of Directors and officers of the Association; 6. Ordering respondents solidarily to pay the amount of P100,000.00 as moral damages; the amount of P50,000.00 as exemplary damages; the amount of P50,000.00 by way of attorney's fees; and, costs of suit; and, 7. After presentation of evidence, a writ of preliminary injunction be issued enjoining the respondents and/or their agents, assigns and representatives from performing any act as directors, officers or members of the Association; disbursing Association funds, collecting membership fees or dues; appropriating/selling/disposing real estate properties of the Association; entering into corporate transactions and passing Board Resolutions which affect both financial and organizational structure of the Association. Petitioners alleged, inter alia, that St. Mary's Village Association, (the association to which the parties herein belong) was incorporated and registered on January 10, 1986 under SEC Reg. No. 130541 with the following incorporators and directors: 1. Redentor T. Roa 2. Marcelino C. Tiburcio 3. Petronila Garcia 4. Reldy A. Roa 5. Domingo V. Estrada Records of the case reveal that from its incorporation in 1986 up to 1990, no annual meeting of the members of the Association for the election of the members of the board of directors was ever held; although over the years the incorporating directors made several appointments to the Board and then together with the appointees conducted among themselves elections of the officers. Petitioners and respondents were members of the "board of directors" who at one time or another had been the elected or appointed officers thereof. Petitioners claim that when the association became involved in the court litigations over a property donated to it by Marcelino Tiburcio, a polarization of the members of the board of directors developed; with the group of the petitioners, on one hand and the other group represented by the group headed by Jose C. Cristobal, Jr. both claiming to be the legitimate members of the Board of Directors and Officers of the Association; that in order to consolidate power and facilitate their scheme of appropriating unto themselves the assets and properties of the Association, respondents usurped the positions of the legally and validly elected directors/officers. Petitioners presented several minutes of the Board of Directors' meeting of respondents' group showing: 1. respondents' decision to appropriate for themselves 1,000 square meters of land each and sell portions of the property and invest 70% of the proceeds in another corporation and to divide 30% thereof among themselves. 2. decision to increase the number of the members of the Board of Directors by mere suggestion (Exh. G) without amendment of the Articles of Incorporation; prLL 3. decision to cancel from the list of the Board of Directors the following: a. On November 8, 1990 (Exh. F) Teodoro Profeta Maria Marita Uson Romel Manalo Wilfredo Carpio Jaime Borjal b. On November 16, 1990 (Exh. F-1) Redentor T. Roa Jesus Dionisio Felixberto Villarubia Reldy Roa c. On December 1, 1990 Virginia Silva Domingo Estrada, Jr. Domingo Estrada, Sr. 4. Takeover of respondent Jose C. Cristobal as President without election and declaration of the appointment of respondent Clerma C. Domingo as Vice-President of the association and respondents Soledad Valdez, Estela Dimarucat, Amelia Marquez and Benifredo Dognidon as new members of the Board of Directors (Exh. H). On January 27, 1991, an annual meeting of the members of the Association was held as scheduled in the corporation's by-laws, where respondent's group was absent and did not participate. Petitioners asserted that of the 5,190 members whose names were included in the list submitted to the SEC prior to the scheduled meeting, 2,700 members were present in person and by proxy (Exh. B). Elected as members of the board for the year 1991 in the said meeting were: Redentor T. Roa Domingo Estrada, Sr. Reldy A. Roa Romel A. Manalo Randy M. Roa This board of directors held on January 29, 1991 an organizational meeting for the election of officers and the following were alleged to have been elected: Redentor T. Roa President Reldy A. Roa Vice-President/Secretary Jaime Borjal Treasurer Romel R. Manalo Asst. Treasurer Domingo Estrada, Sr. 1st Auditor Randy M. Roa 2nd Auditor Petitioners group again held a meeting on February 3, 1991 where the following were expelled (p. 4. Case Records, Annex G-2 of the Petition) Jose C. Cristobal Felix Sapan Avelino Dognidon Primo Tan Ernesto Deala Oscar Gesmundo Norma Amparo Dolores Carandang Ma. Teresa Magisa Estela Dimarucut Adelaida Sauza Soledad Valdez Ana Marie Hermosa Godofredo Antonio Clerma Domingo Amalia Marquez In view of the foregoing, petitioners impute that respondents have no legal and valid right to hold board meetings as they are not the legitimate members of the Board of Directors of the Association they, not having been elected during the annual meeting of the members of the association; whereas, petitioners were the ones elected during the January 27, 1991 annual meeting. On the other hand, granting without admitting that respondents are members of the Board, petitioners still posit that respondents have no legal and valid right to hold board meetings without complying with the provisions of the Association's By-laws as to required notices, quorum, etc.,hence, all meetings and resolutions passed by respondents were void ab initio. Petitioners plead that respondents committed acts of falsifying documents by preparing fictitious meetings and resolutions when in truth and in fact no such meetings or elections were held, that the purported appointments and the alleged members of the board participating thereat are all inexistent and simulated, and void for being bereft of any factual or legal basis; that despite lack of authority, respondents made it appear that the number of the members of the Board of Directors had been increased by mere "suggestion" without first amending the Articles of Incorporation and by-laws of the association; that the cancellation of the names of the legitimate members of the Board and some members of the Association was without lawful authority and, therefore, said acts are null and void for being violative of the provisions of the Corporation Code; that "additional members" were accepted as members of the board when they have no valid right or title to be members thereof; that the officers "appointed" by respondents and appearing in the Board Resolutions now act as corporate officials; that as a consequence of these unlawful acts committed, the respondents have exhausted and are still exhausting all the assets of the association inclusive of membership fees to the detriment of the petitioners and other members of the association; that the enumerated unlawful acts of the respondents tailored or meant to oust and deprive the petitioners of their right as members of the Board/Officers of the Association shocked the petitioners and caused the latter to suffer mental anguish and sleepless nights; that by way of example to the public good, respondents must be solidarily slapped exemplary damages and pay for the services of petitioner's counsel. By way of answer to the petition, respondents submitted a Joint Affidavit which essentially illustrated the circumstances surrounding their complaint regarding the alleged issuance of a fake preliminary Injunction Order imputed to have been authored by Atty. Manuel L. Guatlo and Rolando P. Cayton whose services were engaged by Mr. Redentor T. Roa, one of the petitioners in this case. They did not refute any of the petitioners' allegations. Anent the petitioners prayer for the issuance of a writ of preliminary injunction, a hearing of the said ancillary remedy was conducted, albeit ex-parte, as respondents did not appear at the scheduled hearings and neither did they retain the services of a counsel despite several opportunities given them by this Hearing Officer. Petitioner Redentor T. Roa testified and presented documents in support of their prayer for the ancillary remedy. Before a resolution on the prayer for the issuance of a writ of preliminary injunction was made, however, petitioners reiterated their previous motion dated April 15, 1991, praying for a judgment on the pleadings averring that the respondents' answer failed to tender an issue or did not deny any of the material allegations of the petition, and therefore, pursuant to the provisions of Section 1, Rule XIII of the SEC Rules of Procedure, a judgment on the pleadings is in order. In an order dated November 11, 1991, the aforesaid motion was granted with the condition that the resolution on the injunctive relief be embodied in the decision. We are now faced with the question of whether based on the facts stated in the complaint, the petitioners are entitled to the reliefs prayed Petitioners espouse the theory that they are the valid and legitimately elected members of the board of directors, hence, they are the officers who ought to run the corporate affairs of the association. They pointed out as the source of their title to legitimacy, the annual meeting of the general membership comprised of 2,700 members who voted for them as the members of the board. We tempered our tendency to rush and give our imprimatur to this unchallenged and uncontroverted assertion. At first blush, petitioner's right appear to be indubitable, especially when it was reinforced by election in the annual membership meeting of the members and the subsequent election of the officers of the Board of Directors. Minutes of the Annual Meeting (Exh. B) of the bonafide members for the election of the Board of Directors of the Saint Mary Village Association, Inc. held at Soriano Memorial Park at Julugan, Tanza, Cavite on January 27, 1991 show that the results of the election were as follows: 1. Redentor T. Roa got 2,700 votes and therefore elected by the majority members of the Association as Board of Director of the Association for the year 1991. 2. Domingo V. Estrada, Sr. got 2,700 votes, and therefore, elected by the majority members of the Association as Board of Director of the Association for the year 1991. 3. Reldy A. Roa got 2,700 votes, and therefore, elected by the majority members of the Association as Board of Director of the Association for the year 1991. 4. Romel R. Manalo got 2,700 votes, and therefore, elected by the majority members of the Association as Board of Director of the Association for the year 1991. 5. Randy M. Roa got 2,700 votes, and therefore, elected by the majority members of the Association as Board of Director of the Association for the year 1991. The minutes state that present during the said meeting were Two Thousand Seven Hundred (2,700) bonafide members through proxies of letter forms with signatures of bonafide members of the Association given to the Corporate Secretary Reldy A. Roa authorizing and empowering Mr. Redentor T. Roa the President and Chairman of the Board to fully exercise all rights given to the proxies, because of the non-attendance of the proxies, after submitting the proxies letter forms to the Corporate Secretary; and that absent therefrom were Two Thousand Four Hundred Ninety (2,490) Bonafide members. It appears that the aforesaid minutes of the Annual Meeting was "attested by Redentor T. Roa; and read and approved by the same person, Mr. Redentor T. Roa; President and Chairman of the Board, through authorities given by the bonafide members of the association, authorizing and empowering the president of the Association to fully exercise all rights given to the proxies letter forms to the Corporate Secretary. Two Thousand Seven hundred (2,700) bonafide Members thru proxies letter forms." A verification of the by-laws of St. Mary's Village Association expressly provides, as follows: LLpr SECTION 6. VOTE : PROXY : Members shall be entitled to one (1) vote, and they may vote either in person or by proxy, who must be the husband, or the wife or any immediate member of the family of a member. The provision is quite clear, specific and exclusive; it limits proxy voting to the husband, wife or immediate member of the family. To be able therefore, to validly vote the proxies sent in by the members, Mr. Redentor T. Roa would have to be either a husband, wife or immediate member of the family of each member who issued the proxies. We cannot by any stretch of the imagination, subscribe to the absurd hypothesis that he is an immediate member of the family of some 2,700 members of the association. This circumstance nullifies the proxy letter forms sent by the absent members and in effect invalidates the elections held last January 27, 1991. Petitioners, therefore, have not shown that they have a clear legal right to enable them to be entitled to the reliefs prayed for, as they had failed to prove that they are the legitimate members of the board of directors. Considering the invalidation of the elections held by the petitioners last January 27, 1991 in view of the finding that the petitioners were not duly elected by the members/proxies in accordance with the by-laws, and it appearing that the respondents are similarly lacking in legal basis to the title of officers and members of the Board of Directors, they not having been duly elected to the said office by the general membership; both the petitioners and the respondents are hereby enjoined from acting and representing themselves as members of the board of directors of the association. However, in order to avoid any controversy in the forthcoming elections of the association on the third Sunday of January 1992, this Hearing Officer hereby directs that the same be conducted under the supervision of this Commission. Further, the parties are directed to create an Accreditation Committee for the said elections to be composed by the following: 1. one member from the petitioners' group; 2. one member from the respondent's group; and 3. a third member who will act as Chairman to be chosen from a list to be submitted by the parties. Accordingly, the parties are given five (5) days from receipt hereof to submit their respective nominees to the Accreditation Committee. The members of the committee are hereby directed to meet for a conference at the SEC Building, 11th Floor, Greenhills, Mandaluyong, Metro Manila on January 15, 1992 at 9:00 in the morning to discuss the mechanics of the committee function. WHEREFORE, in view of the foregoing, the petitioners' application for preliminary injunction is hereby DENIED, and this case is hereby DISMISSED. No pronouncement as to costs. LLjur SO ORDERED. (SGD.) KIRTH S. BANSUELO Hearing Officer