Roxas v. Mel-Rox Realty Corp.

[SEC-SICD * CASE NO. 4090. April 4, 1994.] MELANIA A. ROXAS , petitioner , vs . MEL-ROX REALTY CORPORATION, ET AL. , respondents . D E C I S I O N This is, originally a petition specific performance that is: for the respondents to return, reconvey and/or revert to the spouses Melania and Antonio S. Roxas real estate properties of the said spouses which were conveyed to the respondent corporation by virtue of the compromise agreement executed by the said spouses in CLD Case No. 127 and later on, when amended, was expanded to include accounting and/or return of income of the conjugal properties to the spouses, parties herein. Petitioner; in her subject amended petition, alleges that: sometime in July 1988, she filed a petition, with prayer for issuance of a Writ of Preliminary Injunction, before this Commission for the annulment of the Compromise Agreement dated April 7, 1987, she entered into with her husband, respondent Antonio S. Roxas, which compromise agreement was approved by the SEC Legal Officer, Atty. Rosalina T. Tesorio, per order issued on April 15, 1987; that during the hearing of her prayer for issuance of a writ of preliminary injunction in the said petition, respondent Antonio S. Roxas, thru his counsel, Atty. Jesus de Vega, made a formal commitment on record before the Hearing Officer, Alberto P. Atas, that respondent corporation would not without previous authority by this Commission, make any transaction with any third person nor dispose the property that would be assigned and/or transferred to the respondent corporation by virtue of the compromise agreement where she and respondent husband would assign, as in fact, they (spouses) executed a deed of assignment on April 7, 1987 of all their conjugal properties to the respondent corporation; that after hearing, an Order (Annex "C") was issued on September 20, 1990; that clearly admitted on the respondent Antonio's answer to the aforementioned petition she earlier filed against the said respondent that all their conjugal properties had been transferred in favor of the respondent Mel-Rox Realty Corporation and which admission was also confirmed by respondent Mel-Rox Realty Corporation, thru its President Conrado A. Roxas, as evidenced by a certification (Annex "E") issued by the latter; that in order to implement the Order of this Commission dated September 20, 1990, respondents herein should be ordered by this Commission to reconvey and/or return all the conjugal real properties that were assigned and/or transferred to the respondent corporation to them (spouses); that said conjugal properties having been assigned and/or transferred in favor and in the name of respondent corporation by virtue of the compromise agreement (Annex "A") and the Order dated April 15, 1987 issued by the Hearing Officer, Atty. Rosalina T. Tesorio, which was both declared as null and void by this Commission in its Order of September 20, 1990 (Annex "C"), it is only just and proper that the same be reverted, reconveyed and/or returned to the original owners who are, the assignors thereof, she and respondent Antonio S. Roxas, with expenses to be entailed in such reconveyance to be shouldered by all the respondents proportionately; that despite the Order of the SEC on September 20, 1990, the Compromise Agreement of April 15, 1987 between her and her husband Antonio S. Roxas, as well as the Order of SEC Hearing Officer, Atty. Tesorio, dated April 15, 1987, the respondent corporation and its management have not, up to the present, increased their (petitioner and respondent husband) stockholdings corresponding to the value of their assigned conjugal real estate properties in addition to their original stockholdings in the corporation, hence, for lack of consideration the subject assignment and/or transfer be considered as null and void ipso facto and without effect; that on October 2, 1991, she thru counsel, sent a letter to respondent Conrado A. Roxas reminding him about the reconveyance and/or reversion of said conjugal properties from respondent corporation to the original owners if the same respondent has not yet started to move for the return of the said properties as the result of the earlier annulment; that despite receipt on October 4, 1991 of said letter respondent Conrado A. Roxas failed, neglected and refused and still fails, neglects and refuses to reconvey or revert the titles and possession of said parcels of land to her prejudice and damage; that due to respondent's failure to reconvey or revert the titles of said parcels of land to her, she was compelled to file this petition; that as admitted by respondent Antonio S. Roxas, respondent Mel-Rox Realty Corporation, having been the assignee and transferee of the conjugal lots by virtue of the Deed of Assignment (Annex "A") of April 7, 1987, takes the place of the former (respondent Antonio S. Roxas) who had leased without her marital consent to Antonio M. Cayetano the lots covered by TCT No. 378197 (formerly TCT No. 23881) as well as the lot covered by TCT No. 79171 which both leases, having been executed by her husband without her marital consent, have been declared as void by the Supreme Court in the case of "Melania A. Roxas versus Hon. Court of Appeals and Antonio M. Cayetano, G.R. No. 92245, promulgated on June 26, 1991; that under the above ruling of the Supreme Court, the lease covering the lots aforementioned, if still subsisting, necessarily must be annulled and if assigned to respondent corporation, said contract between the latter and Antonio M. Cayetano must be annulled too; that during the period of lease of the lots covered by TCT No. 378177 (formerly TCT No. 23881) as well as TCT No. 79171 the lessor, either respondent Antonio S. Roxas or Mel-Rox, derived income from such contract of lease since 1987 up to the present, that in order to determine the financial standing of respondent Mel-Rox Realty Corporation, it is imperative that a complete accounting and auditing of income and disbursement be rendered periodically, effective 1987 up to the present, by the respondent corporation; that all incomes derived from the lease contract between respondent Mel-Rox Realty Corporation and Antonio M. Cayetano or any other third persons shall be deposited with the designated depository bank of respondent corporation which deposit may not be withdrawn without previous application with and approval by this Office; that after an accounting by respondents of the income of the conjugal properties assigned to the corporation, respondents should turn over/return to her and respondent Antonio S. Roxas the net income of the said conjugal properties. Petitioner prayed that an order be issued by this Office directing all the respondents in this case to return, reconvey and/or revert to her and Antonio S. Roxas all their conjugal real properties that were transferred to the respondents corporation and for the respondents to render an accounting of the income of the subject conjugal properties and then return the same to her and Antonio S. Roxas for them to divide the same. In their answer to the amended petition, respondents made certain admissions as well as specific and general denials of the material allegations in petitioner's petition and allege that there was no such commitment made during the hearing mentioned by petitioner before Hearing Officer Alberto P. Atas that respondent Mel-Rox Realty Corp. would not make any transaction with any third person nor dispose the property that would be assigned and/or transferred to the respondent corporation by virtue of the compromise agreement; that misleading and incorrect is the alleged failure of Antonio S. Roxas to transfer all of the registered conjugal parcels of land to the family corporation in accordance with the compromise agreement, leaving the registered conjugal parcels of land in the Province of Bulacan; that there is no factual and legal basis of the demand of petitioner to reconvey all the conjugal real estate properties to her and husband Antonio S. Roxas considering that newly impleaded respondents Mel-Rox Realty Corp. and its President and General Manager were not parties to and therefore not bound by the proceedings in this case; that the records will bear out the fact that this case is brought about by a complaint for annulment of the compromise agreement of April 7, 1987 against petitioner's husband, Antonio S. Roxas, only, which was originally docketed as CLD 127 , under which the spouses Antonio S. Roxas and Melania A. Roxas, incorporators/stockholders and the only contending parties, executed the compromise agreement of April 8, 1987, which was approved in the April 15, 1987 Order of Hearing Officer Rosalina T. Tesorio; that the same case was subsequently recaptioned or redocketed as Melania A. Roxas, petitioner, vs. Antonio S. Roxas SEC Case No. 3401 the same spouses and only parties referred to in the Order dated September 20, 1990 of Hearing Officer Alberto P. Atas; that the terms and conditions of the compromise agreement of April 7, 1987 and the Order of September 20, 1990 cannot be legally enforced against Mel-Rox Realty Corporation and its President and General Manager, Conrado A. Roxas; that the reconveyance of the conjugal properties is designed to cripple and infirm the family corporation, which would inevitably be deprived of its life giving source of income and financing and force its eventual dissolution; that being counter productive, prejudicial to and because it directly affects the interest and welfare of the incorporators and stockholders, including the herein estranged spouses and contending parties and their eleven (11) children who hold 60% of the total number of shares of the capital stock of the corporation and most of whom are also members of the board of directors, they certainly have the legal right to be sounded out and heard on their side of this petition; that reconveyance is therefore a questionable move obviously resorted to on account of the dissatisfaction of the petitioner with the results of the election of officers of the corporation held on September 24, 1990 in compliance with the Order of September 20, 1990; that the alleged nullity of the assignments made on the conjugal properties of the Roxas spouses for which there should be corresponding increase in the stocks of said spouses is without basis; that respondent Conrado A. Roxas' refusal to comply with petitioner counsel's letter dated October 2, 1991 requesting for reconveyance of the conjugal properties was for justifiable reasons; that there was no pronouncement by the Supreme Court in G.R. No. 92345 that the lease of certain properties by Antonio S. Roxas without marital consent to a certain Antonio M. Cayetano was null and void for the decision merely set aside the ruling of the trial court and the Court of Appeals which dismissed the complaint of Melania A. Roxas for insufficiency of cause of action and accordingly remanded the case to the said trial court for further proceedings; that the case cited by petitioner is still pending (pre-trial stage) in the RTC, Branch 84, Quezon City (Civil Q-89-2899); that insofar as accounting and auditing of income and expenses of the corporation are concerned, the same may be amicably arranged provided they (respondents) are given sufficient time and cooperation; that petitioner's suggestion that all income of the corporation be deposited in a depository bank is already being done, but the requirement that withdrawals therefrom may not be made without previous approval of this Commission is opposed as undue, impractical and unreasonable interference with the internal management, affairs and operations of the corporation. aisadc Respondents prayed that this petition be denied and dismissed for lack of merit. As can be gleaned from the record of this case, the issues to be resolved in this case are the following: 1. Whether or not respondents herein can be compelled by petitioner to return, reconvey and/or revert to her (petitioner) and husband their (spouses) conjugal properties that were conveyed to the respondent corporation by virtue of the compromise agreement they (spouses) executed in CLD Case No. 127 ; 2. Whether or not respondents can be compelled to render an accounting; 3. Whether or not respondents can be compelled to turn over and/or return the income of the conjugal properties that were conveyed and/or transferred to the respondent corporation by the petitioner and her husband. This Hearing Officer deems it proper to discuss jointly the first and third issues considering that they are interrelated with each other. Insofar as the first issue is concerned, this Hearing Officer resolves the same in the negative for lack of merit. Herein complainant cannot compel the herein respondent corporation to reconvey to her and her husband, Antonio Roxas, their conjugal real properties because herein respondent corporation is not a party to their (spouses) agreement to nullify and not to implement the Order dated April 15, 1987 issued by the Corporate and Legal Department in CLD Case No. 127 which agreement was one of the basis of hearing Officer Alberto Atas' dismissal of SEC Case No. 3401 (See Annex "C" of the Petition): "Contracts take effect only between the parties, their assigns and heirs, except in cases where the rights and obligations arising from the contracts are not transmissible by their nature, or by stipulation or by provision of law." (Art. 1311 Civil Code) Our Supreme Court, citing the aforesaid provision of law, in the cases of Bautista, et al. vs. Judge Piguing, L-10006, Oct. 31, 1957, Phil. National Bank vs. Luzon Surety Co., Inc., L-11112, May 28, 1958; and National Labor Union vs. International Oil Factory, L-13845, May 20, 1960, has ruled that: "Contracts take effect only between the parties, their assigns, and heirs, and therefore generally its terms cannot determine the rights of third persons. The same Supreme Court also ruled: "A contract cannot be binding upon and cannot be enforced against one who is not a party to it (Lopez vs. Enriquez, G.R. No. 4968, August 3, 1910, 16 Phil. 336; Ibaez vs. Rodriguez, G.R. No. 23153, March 7, 1925, 47 Phil. 554) even if he is aware of such contract and has acted with knowledge thereof." (Manila Port Service, et al. vs. Court of Appeals, et al., 205 SCRA 1214) lexlibris Ownership of the subject conjugal properties passes from the spouses herein to the respondent corporation from the time titles of the said conjugal properties were delivered to the latter. So, the respondent corporation being already the owner of the subject real properties at the time when the spouses herein agreed to nullify and not to implement the Order dated April 15, 1987 issued by the Corporate and Legal Department of this Commission in CLD Case No. 137 that approves their Compromise Agreement transferring all their conjugal real properties to the herein respondent corporation, the same can no longer be the object of any agreement, contract, stipulation, etc. by the herein spouses. Whatever agreement, contract, stipulation etc. made and entered into by and between the herein spouses with regards to the said real properties at the time when they were no longer the owners of the same cannot be binding on the said real properties and to their new owner, respondent corporation herein. From the above-discussion, considering that petitioner has no right to compel respondents to reconvey the conjugal properties back to her and her husband, Antonio S. Roxas, it follows also that she has no right to compel respondents to turn over to her and her subject husband the income of the said conjugal properties for to the owner belongs the fruits (natural, industrial and civil) in accordance with Articles 441 of the Civil Code.Fruits, as defined in the said Civil Code provision, include income from rent, etc. Thus, clearly from the foregoing reasons, it can be inferred that the issues number III should also be, as it is hereby resolved in the negative. liblex Anent the second issue, that is whether or not respondents can be compelled to render an accounting, considering that the same was never rebutted by the respondents but, to the contrary, the latter manifested their willingness to do so, the same should be resolved in the affirmative. Wherefore, premises considered, judgment is hereby rendered as follows: 1. dismissing petitioner's petition for specific performance for lack of merit; 2. dismissing petitioner's petition for the return of the income of the conjugal real properties for lack of merit; 3. ordering respondents to render and submit to the petitioner a detailed accounting of all receipts and disbursements of Mel-Rox Realty Corporation from the year 1987 up to the present together with supporting vouchers, receipts and bank books, documents and papers of Mel-Rox Realty Corporation within five (5) days from receipt hereof. No costs. SO ORDERED. (SGD.) ROGELIO C. SESCON Hearing Officer