Sarthou v. Aquino

[SEC-SICD * CASE NO. 4144. March 8, 1994.] ESTEBAN M. SARTHOU, ET AL. , petitioners , vs .ROBERTO (BOBB) AQUINO, ET AL. , respondents . D E C I S I O N This is an amended Petition for quo warranto with prayer for preliminary injunction and temporary restraining order. Petitioners, in support of their aforestated amended petition, allege that: they and respondents are bonafide members of Geriatic Health Clinic Patients Association, Inc.,a non-profit association duly organized and existing under the laws of the Philippines; that since October 1990, they (petitioners) were already the duly elected and qualified officers of the aforesaid association holding offices as follows: 1. Esther M. Sarthou President 2. Julieta G. Nepomuceno Vice-President 3. Anita Besabe Secretary 4. Rosa C. Zamora Treasurer 5. Marta S. Cornelio Auditor that being the duly elected, qualified and incumbent officers of the association, they, as a matter of fact and without objection from the respondents, have been faithfully discharging the duties and functions of their respective offices, served for over one (1) year as such, and, under their association's by-laws, are entitled to and are mandated to serve for a term of three (3) years from the date of their election and until their respective successors shall have been duly elected and qualified to replace them; that under Section 1 of Article X of their association's by-laws, it is expressly provided that the election of officers shall be held on the last Tuesday of August after every third year; that in wanton violation of the express provision of their association's by laws with respect to their term of office and the date of election of the officers and even as they have only served for over one (1) year of their term, on December 18, 1991, the respondents illegally and clandestinely called a membership meeting (with only twenty-three (23) members attending) and caused themselves to be elected officers as follows: 1. Roberto (Bobby) Aquino President 2. Dalmacio Aguila Vice-President 3. Pilar Rivera Secretary 4. Feliza Ochoa Treasurer 5. Paz Cruz Asst. Treasurer 6. Jose (Peping) de Guzman Auditor that immediately after their (respondents) aforesaid unauthorized election, respondents arbitrarily assumed, usurped the offices, positions, rights and unlawfully discharged the functions of the said offices to their (petitioners) exclusion and to the great damage and prejudice of interest, peace, harmony and smooth functioning and/or operation of the activities and business of the association; that while they (petitioners) are the duly constituted officers of the association, as explained above, they are now excluded or prevented from discharging the duties and functions of their respective positions by the respondents who have in wanton bad faith taken the law into their hands and on the basis of an unlawful and unauthorized election, they now claim to be the real officers of the association and have unilaterally, arbitrarily and illegally usurped, taken over and are discharging the duties and functions of their (petitioners) respective positions; that, in sum, as a result of respondent's illegal acts, there are now two sets of officers in the association, the duly constituted one the one they (petitioners) represent and the false one represented by the respondents; that to seek redress for such injustice and anomalous state of affairs and to uphold the rule of law and order, they (petitioners) are hereby invoking the authority and power of this Commission to put an end to the pretensions of respondents and uphold their (petitioners) rights; that there is no other plain and speedy remedy in the ordinary course of law except through the instant petition. Petitioners pray that after due notice, hearing and/or trial on the merits of this petition, this Commission shall declare and/or order the following: a) the election of respondents on December 18, 1991 illegal, null and void or of no legal force and effect whatsoever; b) to declare them (petitioners) as the duly constituted officers of the association, and; dctai c) to order the respondents to pay litigation expenses and costs of suit to them (petitioners) In their answer dated February 6, 1992, respondents made certain admissions as well as specific and general denials of the material allegations in petitioners' petition and alleged that, as averred by petitioners in paragraph 3 of their pleading they (petitioners) were allegedly elected to the positions set forth opposite their names in October 1990 or before the incorporation of their association on September 12, 1991 and approval of their association's Amended By-Laws on September 17, 1991; that neither the Articles of Incorporation nor the aforesaid amended by-laws authorizes the officers elected prior to said incorporation and approval of the By-Laws to hold over before the regular meeting of the members pursuant to said By-Laws; that in December, 1991, after the approval of the Articles of Incorporation and By-Laws of their association, Dr. Imelda Sunico, Head of the Maternal Child Health, City Health Dept.,Manila, under whom the association then operates, directed, thru Mrs. Esther Sarthou, one of the petitioners herein, for the holding of an election on December 18, 1991; that with the knowledge of the herein petitioners, an election was held on the aforesaid date under the supervision of a COMELEC and where representatives/observers from the Manila Health Dept.,as well as Dr. Lourdes Trinidad, Physician-in-charge of Lanuza Health Center, were present and at which 15 members of the Board of Trustees were elected who in turn elected, from among themselves, the respondents as corporate officers; that after their said election, they were duly and publicly sworn into and took therein oath of office; that as admitted in petitioners' pleading, they (petitioners) are allegedly holding offices on the basis of an election that took place before the approval of the articles and amended by-laws of the association and therefore, they cannot assert or claim any right thereunder; that before quo warranto may prosper, a clear right to the offices allegedly usurped must be shown; that in the same token, before the grant of an injunction, petitioners must demonstrate a clear right that was violated by the respondents; that in this case, petitioners were not elected or are not holding offices pursuant to or by virtue of the Articles of Incorporation and/or amended by-laws of the association perforce, they can not claim any right to office, thereunder; that without any such right, how could it be claimed that they (respondents) transgressed the same; that assuming, argumenti gratia, without necessarily admitting that there may have been defects in the election conducted on December 18, 1991 or after the approval of the Articles and By-Laws and at which the respondents were elected, considering that petitioners are evidently without right under the association's articles and/or amended by-laws, the appropriate remedy should be the calling and holding of an election under the supervision of this Commission; that petitioners cannot avail of quo warranto to properly install them in office; that neither can they (petitioners) plea to be installed by this Commission considering that there is no showing that they were elected thereto pursuant to the articles and/or by-laws of the association. Hearings were conducted in this case on the petitioners' application for issuance of a writ of preliminary injunction and the former Hearing Officer of this case, Atty. Silvino T. Pampilo, Jr.,per Order dated March 9, 1992, denied herein petitioners' subject application for injunctive relief. On March 20, 1992, petitioners filed an Urgent Motion For Reconsideration of the denial of their application for injunctive relief which motion was also denied by the aforenamed previous Hearing Officer of this case per Order dated April 28, 1992. On September 22, 1992, respondents filed a Motion to Dismiss and respondents, on September 30, 1992, filed an Urgent Opposition thereto. Per Order dated January 26, 1993, issued by the aforenamed previous Hearing Officer of this case, the said motion of respondents was denied. This case was again set for hearings for the herein parties to present their respective evidence in chief. Petitioners, instead of presenting another or additional evidence in support of their case opted instead to adopt their evidence presented during the hearing of their application for an injunctive relief as their evidence in chief whereas the respondents, for their repeated failure to attend the scheduled hearing of this case despite due notice, were declared to have waived their right to present evidence per Order issued by this Hearing Officer dated October 11, 1993. llcd The issues to be resolved in this case are the following: 1. Who among the herein parties are entitled to the respective corporate positions they adversely claim and; 2. Who as between the parties are entitled to damages? After a careful examination of the herein parties allegations, counter-allegation and evidence, this Hearing Officer resolves the aforestated issues as follows: Before discussing the principal issues of this case, there is a need to discuss first the corollary issue of whether or not the election of the members of the board of trustees and/or corporate officers of the association made on December 18, 1991 is valid or in accordance with the association's by-laws. Section 1 of Article I of the association's by-laws provides, to wit: "SECTION 1. Annual meetings . The annual meetings of the members shall be held at the principal office of the association on last Tuesday of November" Sections 1 and 2 of Article III of the same by-laws also provide: "SECTION 1. Officers . The officers of the association shall be a President, a Vice-President, a Secretary and an Auditor. They shall be elected by the Board of Trustees from among themselves. The Board may combine compatible offices in a single person." "SECTION 2. Term of Office of Officers . all officers of the association shall hold office for one year and until their successors are duly elected and qualified." It is undeniable fact that the election of the members of the board and/or corporate officers of the subject association was held, if not exactly on the date as provided for in the aforementioned Section 1 of Article I of the said association, on December 18, 1991, or immediately after the aforedescribed date of annual meeting. Hence, the same is in accordance with the aforementioned provision, particularly Section 1, Article I of the Subject association's by-laws. Likewise, there is no denial in this case from both parties that before the conduct of the subject election, notice for the said election was given to the members of the association. What has been questioned by the herein petitioners about the subject election is the alleged absence of quorum. But the same can not be given any consideration at all for the petitioners herein failed to adduce even an iota of evidence in support thereof, hence, the presumption that it was regularly made and that all the necessary requisites like quorum, etc. were attendant holds true. Forthwith, the conclusion that the subject election of the association is valid is inevitable. Anent the first principal issues of this case, there is no dispute here that herein petitioners were elected as members of the board of directors and/or corporate officers of Geriatrics Health Clinic Patients Association, Inc. in October, 1990, or before the incorporation of the subject association on September 12, 1991 per Certificate of Registration issued by this Commission on even date. There is also no dispute that respondents were elected to office of the same association on December 18, 1991, or after its incorporation. Petitioners claim their alleged rights to the contested positions or offices based on their notion that they ought to hold office of their respective positions for three (3) years from their election in October, 1990, in accordance with Section 1 of Article II of their association's amended by-laws which was approved by this Commission on September 17, 1991 per Certificate of Filing of Amended By-Laws issued on even date. Petitioners' claim to the contested positions or offices is baseless. As pre-incorporating directors/officers of the association, petitioners herein have to hold office until their successors are duly elected and qualified in accordance with paragraph 7 of Section 14 of the Corporation Code, to wit: "SECTION 14. Contents of articles of incorporation . All corporations organized under this code shall file with the Securities and Exchange Commission articles of incorporation in any of the official languages duly signed and acknowledged by all of the incorporators, containing substantially the following matters, except as otherwise prescribed by this Code of by special law; cdll (1) ... (2) ... xxx xxx xxx (7) The names, nationalities and residences of the persons who shall act as directors or trustees until the first regular directors or trustees are duly elected and qualified in accordance with this Code;" xxx xxx xxx Being the pre-incorporating directors/officers of the subject association petitioners herein are intended to be replaced by the regularly elected directors/officers at the first annual meeting of members. The supposed first annual meeting of members of the subject association, in accordance with Section 1 of Article I of the association's original by-laws as approved by this Commission on September 12, 1991, is on the last Tuesday of November, 1991. It had been an admitted fact by both parties here that on December 18, 1991, or less than a month after the association's first supposed annual membership meeting, an election of the members of trustees was finally made and immediately thereafter, the newly and regularly elected members of the board of trustees, including herein respondents, elected from among themselves the corporate officers of the association. Respondents, being the regularly elected members of the board of trustees and/or officers of the association during its first annual membership meeting in accordance to the aforecited provision of law, have to replace the herein petitioners as members of the board of trustees and/or corporate officers of the said association. The claim of the herein petitioners that they ought to hold office in the association for a period of three (3) years in accordance with the provisions (Section 1 of Article II and Section 2 of Article III) of their association's amended by-laws deserves no credence. Petitioners herein never deny that they were elected to office prior to the incorporation of their association, hence, they are the so called pre-incorporating members of the board of trustees and/or officers of their association. As such and as discussed earlier, their term of office is until such time that the first regular trustees and/or officers are duly elected and qualified in accordance with the Corporation Code (Art. 1, par. 1). As discussed earlier also, the first regular election of their association was made in accordance with the association's by laws, on December 18, 1991 wherein the respondents herein were elected as the first regular trustees and/or officers of the association. Petitioners cannot claim that they have a term of three (3) years in accordance with their association's by-laws because, aside from their being pre-incorporating members of the board of trustees and/or officers whose terms of office is until the first regular trustees and/or officers are duly elected and qualified, they were not elected to office also under the subject amendment. The amendment of the association's by-laws, extending the term of office of the members of the board of trustees and corporate officers from one (1) year to three (3) years was made on September 13, 1991 and was approved only by this Commission on September 17, 1991 per certification it issued on said date. Therefore, the same amendment takes effect only on the same date of its approval or issuance of a certificate by this Commission that the same is not inconsistent with the Corporation Code, in accordance with Section 48 (third paragraph of the Corporation Code), to wit: "SECTION 48. Amendment to by-laws . ... The amended or new by-laws shall only be effective upon the issuance of the Securities and Exchange Commission of a Certification that the same are not inconsistent with this Code." Thus, clearly from all the foregoing, it can be inferred that petitioners, being the pre-incorporating members of the board of trustees and/or officers of the association and not being elected under the same amendment, cannot avail of the same amendment. dctai Insofar as the issue of who between the herein parties are entitled to damages, for failure of the herein parties to adduce even an iota of evidence to support their subject claim, this Hearing Officer deems it proper to deny the same to both parties herein. Wherefore, premises considered, judgment is hereby rendered as follows: 1. Declaring respondents herein as the duly elected officers of the contested positions of the association and as such are entitled to hold office thereto and; 2. Dismissing the claim of the herein parties for damages for lack of merit. No costs. SO ORDERED. (SGD.) ROGELIO C. SESCON Hearing Officer