Landicho v. Aquino

[SEC-SICD * CASE NO. 4243. March 10, 1994.] DOLORES C. LANDICHO, ET AL. , plaintiffs , vs .ARKI M. AQUINO, ET AL. , defendants . D E C I S I O N In the instant complaint, plaintiff Dolores C. Landicho alleges that she is a stockholder, member of the board of directors and chairman of Royal Power Credit Corporation; that all the plaintiffs and defendants except Aurelio Landicho and defendant Godofredo Macasaet were subscribers, incorporators and members of the board of directors of the corporation; that in the organizational meeting of the corporation sometime in September 1990, the following were elected officers of the corporation: LLpr Name Position 1. Dolores C. Landicho Chairman of the Board of Directors 2. Arki M. Aquino President 3. Juanita M. Sarmiento Vice-President 4. Lina C. Caraos Treasurer 5. Leody Villaviciencio Secretary and General Manager It appears that on November 9, 1991, the board of directors held a regular meeting and the following were elected officers of the corporation: Name Position 1. Belen S. Balbacal Chairman of the Board of Directors 2. Arki M. Aquino President 3. Juanito M. Sarmiento Vice-President 4. Lina C. Caraos Treasurer 5. Cress R. Lontoc Auditor 6. Alona C. Landicho Corporate Secretary 7. Araceli A. Carnero Press Relation Officer 8. Dolores C. Landicho Press Relation Officer Plaintiff Dolores C. Landicho claims that her removal from her position as Chairman of the Board of Directors of the corporation and relegated to the position as Press Relation Officer is illegal and, therefore, null and void for the following reasons: a) She was not informed nor was she given a prior written notice about the regular board meeting and the subsequent election held therein. b) Even assuming that she was advised about the regular meeting, the election of officers was not included in the agenda to be taken up during that meeting, a very important matter which could not just be ignored and taken for granted. c) The position of Press Relation Officer is not provided in the by-laws of the corporation nor created in any regular or special meeting of the board of directors of the corporation. Moreover, on November 16, 1991, after the plaintiff Dolores C. Landicho was removed as Chairman of the Board of Directors, defendant Arki M. Aquino rediscounted a Check in the amount of P300,000.00 with the corporation, putting up as collateral a post-dated check for the same amount and an alleged mortgage on his house and lot in Lipa City which was not duly registered in the Register of Deeds of Lipa City, and the post-dated check which was put up as collateral bounced and was dishonored by the drawee bank; that the aforesaid act of defendant Arki M. Aquino which was acquiesced in with the other defendants is not only violative of his sworn duty to protect the interest of the corporation being a director and officer therein but it is also in violation of the directive of the board of directors taken up during its regular meeting on June 8, 1991 to the effect that a stockholder of the corporation can be granted a check rediscounting with the corporation up to a maximum amount of only P20,000.00 for directors without any deposit in the corporation. Plaintiff Dolores C. Landicho further avers that as a stockholder, director and officer of the corporation, she has not been informed, notified verbally or in writing, about the holding of special meetings on regular stockholders' and directors meeting; that despite her demands for inspection of the books of account, minutes, resolutions and other pertinent records of the corporation, the defendants refused and ignored her demands in either, violation of her right as a stockholder under the Corporation Code; Likewise, despite the election of Alona C. Landicho as Secretary of the corporation, she was not able to perform the functions of the office and her duties and position was taken over assumed and performed by defendant Godofredo Macasaet who was not duly elected to the said position. Defendants filed their answer with counterclaim and by way of affirmative defenses, allege among others, the following: 1. That plaintiff Aurelio Landicho has no legal capacity to sue the defendants because he is not in any manner privy or a stockholder of the corporation. 2. That plaintiff Dolores Landicho has absolutely no right whatsoever, to reclaim the position of Chairman of the Board of the Corporation because her term of office as chairman expired on September 15, 1991. 3. That though some other members of the board of directors of the corporation were admittedly granted loans by the corporation, the plaintiffs are in "pari-delicto" because they were also granted several credit accommodations; Dolores Landicho had rediscounted several checks on various occasions with an aggregate sum of P498,400.00 from June 4, 1991 to December 5, 1991. 4. That there was no valid demand and the certificate of stock to be allegedly transferred was never surrendered nor presented for cancellation and substitution in the stock and transfer book, and besides it has been the subject of litigation in Civil Case now pending with the Regional Trial Court of Lemery, Batangas. During the preliminary conference, the issues raised are the following: 1. Whether or not the alleged removal of plaintiff Dolores Landicho as Chairman of the Board of Directors of Royal Power Credit Corporation is valid, and if so, whether or not she should be reinstated to said position. 2. Whether or not the respondents Arki M. Aquino's, Cress Lontoc's and Belen Balbacal's acts of rediscounting checks and securing loans from Royal Power Credit Corporation are unlawful and immoral; 3. Whether or not the respondents are legally justified in allegedly refusing to transfer and register in the stock and transfer book of the corporation the shares of stock purchased in the name of complainant Alona C. Landicho. 4. Whether or not respondents have denied the plaintiffs' right to inspect and conduct an audit of the books and records of the corporation and, if so, whether or not the respondents are legally justified in refusing complainants' right of inspection and 5. Who should be entitled to the claim for damages and attorney's fees. Anent the first issue, plaintiff Dolores C. Landicho alleged in her complaint that all her motions, suggestions and opposition to the actions and/or matters taken up in the questioned meeting of November 9, 1991 were all ignored and not given due consideration by the defendants. Admittedly, plaintiff Dolores C. Landicho was present during the meeting on November 9, 1991 and conversely she cannot therefore ignore the fact that she was not informed nor notified of the said meeting. As to the propriety of her restoration to her former position as Chairman of the Board of Directors, this issue has become already moot. Besides, even in quo warranto proceedings instituted for the sole purpose of questioning the legality of the election of the directors of a corporation and of the election of officers thereof held by the board of directors all in the performance of their respective functions, a preliminary injunction does not even lie to prevent said directors and officers from discharging their offices and to restore the former directors and the issuance thereof constitutes an excess of jurisdiction and on abuse of discretion. (Silen vs. Vera, G.R. No. 45574, October 27, 1937, 64 Phil. Reports page 86). With respect to the issue of rediscounting for possible violation of the Financing Company Act, this Hearing Officer is not in a position to pass upon nor make any pronouncement therein considering that this matter is being supervised and regulated by the Money Market Operations Department of this Commission after conducting an audit on the books of the corporation. As regards the third issue, defendant Atty. Godofredo Macasaet asserted that he was misled by the misrepresentation of the plaintiff spouses Landicho that it was plaintiff Aurelio Landicho who bought the shares of stock of Eleodoro Villavicencio, only to discover later that the stock certificate was indorsed in favor of plaintiff Alona Landicho but the said certificate of stock was never presented nor delivered to the Corporate Secretary for registration of the transfer in the stock and transfer book of the corporation. The rule is well settled, that shares of stock which have been issued "are personal property and may be transferred by delivery of the certificate indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer".Being personal property, shares of stock may be transferred and disposed of at will of the owner thereof except when such right is restricted by the charter of the corporation or the general law. Under the facts and circumstances obtaining in this case, there is no legal impediment on the part of the corporation to refuse the registration of the stock certificate to its present holder plaintiff Alona Landicho. Plaintiffs' rebuttal evidence (Exhibit "M") shows that the Corporate Secretary of the corporation already made a verbal assurance to transfer the subject shares of stock in the name of Alona C. Landicho. It appears that the stock certificate was surrendered for cancellation in order that a new stock certificate be issued to plaintiff Alona Landicho and that the same be recorded in the stock and transfer book of the corporation. It is a well settled doctrine in this jurisdiction that, " a bonafide transfer as in this case by a stockholder thereto does not require the consent of the corporation and cannot be prevented by its officers". Regarding the plaintiffs' right to inspect the corporate books, the same is governed by Section 74 of the Corporation Code which states: "SECTION 74. The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing for a copy of excerpts from said records or minutes at his expense".... Furthermore, Section 75 of the Corporation Code provides: "SECTION 75. Right to financial statements . within ten (10) days from receipt of a written requests of any stockholder or member, the corporation shall furnish him its most recent financial statement, which shall include a balance sheet as of the end of the last taxable year and a profit and loss statement for said taxable year showing in reasonable detail the assets and liabilities and the result of its operations." The right of inspection therefore, is very broad in scope limited only by the time and place of inspection and the purpose thereof. Plaintiff Dolores C. Landicho has requested and demanded to inspect the corporate records. Despite this, respondents refused to show plaintiff the records/documents requested. As to the issues of damages, this Hearing Officer finds no factual and legal basis to grant the same there being no convincing proof to support both allegations. WHEREFORE, judgment is hereby rendered 1. Ordering the Corporate Secretary of Royal Power Credit Corporation to transfer and register in the Stock and Transfer Book the shares of stock of Alona C. Landicho and to issue the corresponding Stock Certificate in her name. 2. Ordering the respondent to allow plaintiff Dolores C. Landicho or her duly authorized representative to inspect, examine and audit the corporate records/documents of this corporation at a reasonable hour during business day at the principal office of the corporation. NO COSTS. LLphil SO ORDERED. (SGD.) ENRIQUE L. FLORES, JR. Hearing Officer