Masbate Consolidated Arrastre, Inc., et al. vs. Avelino J. Aguilar, et al.

[SEC-SICD * CASE NO. 4071. March 17, 1998.] MASBATE CONSOLIDATED ARRASTRE, INC.,ET AL. , petitioners , vs .AVELINO J. AGUILAR, ET AL. , respondents . D E C I S I O N This is an amended petition for accounting of corporate funds, reinstatement of petitioners as directors, officers and stockholders of the Corporation and for annulment of sale or transfer of shares of stocks of the Petitioners with a prayer for the issuance of a restraining order and/or a writ of preliminary injunction. LexLib Petitioners alleged, among others, that Masbate Consolidated Arrastre, Inc. herein after referred to as MASCAI, is a corporation duly organized and registered under the laws of the Republic of the Philippines with office address at Port Area Masbate, Masbate; that petitioner corporation has continuously conducted its business as general stevedoring and Arrastre Services since 1987 up to the present with an authorized capital stock of One Million (P 1,000,000.00) Pesos divided into Ten Thousand (10,000) shares with a par value of One Hundred (P100.00) Pesos per share; that petitioners are all original incorporators/stockholders and directors of the corporation since Incorporation; that respondents Avelino Aguilar and Roger Dugan, who are the Manager and Secretary, respectively, and together with respondents Minerva Concepcion, Bernadette Ting and Manuel San Pablo composed the incumbent Board of Directors of petitioner corporation; that individual .petitioners collectively subscribed one thousand shares of stock in the corporation with an aggregate value of One Hundred Thousand (P100,000.00) Pesos and paid their subscription in the amount of Twenty Five Thousand (P25,000.00) Pesos distributed as follows: Name Shares Amount Paid Antonio L. Magallanes 400 P40,000.00 P10,000.00 Benjamin M Magallanes 150 15,000.00 13,700.00 Jesus B. Merioles 125 12,500.00 3,125.00 Minviluz A. Magallanes 125 12,500.00 3,125.00 Nelia M. Estrella 125 12,500.00 3,125.00 Manuel Almario 75 7,500.00 1,875.00 That since its incorporation or registration of the corporation in 1977, petitioners never sold, transferred, conveyed and/or encumbered their subscribed shares in the corporation; that the affairs and business operations of petitioner corporation were subsequently, continuously, and actively managed and controlled by respondents since 1979 up to the present; that upon inquiry and investigation, petitioners found out that they were unceremoniously ousted as members of the Board of Directors and that their shareholdings were written off from the corporation; that respondents, without authority and proper observance of legal procedure declared petitioners' shares as delinquent shares: that respondents illegally created a Interim Board of Directors for the corporation without convening a stockholders meeting and without complying the required election process provided for under Section 23 and 50 of the Corporation Code of the Philippines and its By-laws; that the interim Board should be considered void ab initio since they intentionally violated the Corporation Code and the By- laws of the corporation and that all actions taken by the respondents or incumbent board should likewise be considered null and void; that despite oral demands made by herein petitioners upon respondents to explain on their status as directors and stockholders as well as to account their shareholdings, respondents have whimsically and arbitrarily failed and refused and still fail and refused to do the same; that the deletion of the names of the herein petitioners as directors and stockholders of the petitioner corporation is in violation of the Corporation Code of the Philippines; that respondents managed the business of the petitioner corporation with enormous control and influence over its business affairs, and as such, there exists actual and eminent danger to cover up their malfeasance in office as responsible officers of the corporation and that considering the acts complained of by petitioners, there is an imperative need that respondents be suspended from their office and enjoined them from performing acts that would derail an impartial accounting of shares of the petitioners. Records show that, except the respondents' written opposition to the petitioners' application for preliminary injunction, respondents failed to file their answer and to appear on the preliminary conference hearing held on April 18, 1997. Upon motion of petitioners, respondents were declared as in default per Order dated April 18, 1997. Likewise, records also show that an Order was issued on June 13, 1994 granting petitioners' application for issuance of writ of preliminary injunction and on August 15, 1995, after petitioners' filing of the injunction bond in the amount of One hundred Thousand (P100,000.00) Pesos, a writ of preliminary injunction was issued enjoining the respondents and all other persons acting in their behalf from (a) not recognizing, ousting and/or deleting the petitioners as stockholders and directors of Masbate Consolidated Arrastre, Inc. (b) further dissipating the funds and assets of the corporation. The issues to be resolved in this case are: 1. Whether or not petitioner are still considered stockholders of the corporation. 2. Whether or not the ouster of petitioners as directors of the corporation are valid and 3. Whether or not respondents can be compelled to render an accounting of the corporate funds of the corporation. From the evidence adduced by the petitioners and the corporate record on file with the Commission of which this Hearing Officer takes judicial notice of the undisputed facts and/or uncontroverted evidence are as follows. 1. Petitioner corporation was registered with the Commission on November 11, 1977 with an Authorized Capital Stock of One Million Pesos (P1,000,000.00) divided into Ten Thousand (10,000) shares with a par value of One Hundred (P100.00) pesos per share. It has a subscribed capital stock of P200,000.00 pesos with a paid up capital stock of P25,000.00 pesos distributed to the following incorporators/stockholders as follows: Name No. of Shares Amount Subscribed Amount Paid Moises R. Espinosa 600 P60,000.00 P15,000.00 Antonio L. Magallanes 400 40,000.00 10,000.00 Avelino Aguilar 150 15,000.00 3,750.00 Benjamin Magallanes 125 12,500.00 3,175.00 Minviluz Magallanes 125 12,500.00 2,500.00 Roger Pugun 100 10,000.00 2,500.00 Jesus B. Merioles 125 12,500.00 3,125.00 Manuel San Pablo 100 10,000.00 2,500.00 Nelia M .Estrella 125 12,500.00 3,125.00 Jorge Saberon 50 5,000.00 1,250.00 Manuel Almario 75 7,500.00 1,875.00 2,000 P200,000.00 50,000.00 2. Petitioners Jesus B. Merioles, Benjamin M. Magallanes, Antonio L. Magallanes Minviluz A. Magallanes, Nelia M. Estrella, Manuel Almario together with respondents Avelino Aguilar, Roger Dugan and Manuel San Pablo were the original stockholders and incorporating directors of MASCAI. 3. No meeting (stockholders or directors) has been held by the respondents and/or the corporation since 1979. 4. Since incorporation in 1977 petitioners have been stockholders of the corporation and that they have never sold, conveyed and/or transferred their shareholdings to anybody. 5. Under the management of the respondents petitioner corporation has continuously conducted its business as general stevedoring and Arrastre Services since 1977 up to the present. 6. Respondents who are the officers managing the corporation failed to submit the reportorial requirements required by the Commission such as the General Information Sheet and Financial Statements. 7. That the affairs and business operation of petitioner corporation have been continuously and actively managed and controlled by respondents Avelino J. Aguilar and Roger Dugan as General Manager and Secretary respectively since 1979 up to the present. It was also established that the alleged declaration of petitioners' shareholding as delinquent and the subsequent sale of the shares by respondents have been made without observing the legal requirements under the law. Considering these undisputed facts which remain uncontroverted, it follows that petitioners are entitled to the relief prayed for. WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. Declaring petitioners still stockholders of Masbate Consolidated Arrastre, Inc. since 1979. 2. Declaring the ouster of petitioners as Directors of the corporation by respondents in 1979 illegal and hereby ordered respondents to reinstate petitioners as directors until a new Board of Directors has been elected. 3. Ordering respondents to render an accounting on all the corporate funds and assets of the corporation. Further, the writ of preliminary injunction issued by this Honorable Commission against the respondents on August 15, 1995 is hereby made Permanent. Likewise, respondents are hereby directed to conduct and hold a stockholders' meeting to elect new members of the Board of Directors of Masbate Consolidated Arrastre, Inc. within thirty (30) days from the finality of the Decision. prcd SO ORDERED. (SGD.) JAMES K. ABUGAN Hearing Officer