Resurrecion v. Babaran, Jr.

[SEC-SICD * CASE NO. 4459. October 21, 1994.] GLENN RESURRECION , complainant , vs .ADRIANO BABARAN, JR. , respondent . D E C I S I O N For decision by the Undersigned Hearing Officer is the above-captioned case which seeks reliefs for violation of specific provisions of the Corporation Code and the By-laws of the Queen's Row Jeepney Operators' and Drivers' Association, Inc., (QRJODAI). LLpr In support of the foregoing, complainant Glenn B. Resurrecion testified that he is a member and former president of the QRJODAI, a non-stock, non-profit association registered with this Commission under SEC Reg. No. 96592; that respondent Adriano Babaran, Jr. is the hold-over president of the afore-mentioned association; that the Operations of the QRJODAI is financed by the collection of membership and daily dues, amounting to P5,000.00 to P2.00 respectively; that respondent concurrently holds the position of president and auditor of the association and as such, he has access to the funds of the said association; that having access to such funds, respondent used the same to forward his own personal interest and to aid in the registration of an entity called Queen's Row Transport Service Cooperative; that the foregoing testimony is reinforced by documentary evidence in the form of the financial statements of the QRJODAI; that the registration of the Queen's Row Transport Service Cooperative was at the behest of the respondent Babaran and that there was no membership meeting nor board resolution approving the same; that complainant demanded that respondent account for the expenses incurred for the registration of Queen's Row Transport Service Cooperative, but the respondent made no reply thereto; that after informing the Chairman of this Commission by means of letter, complainant made an attempt to petition and ask the respondent to conduct an election and render an accounting and the same having failed, culminated into the filing of the instant complaint; that aside from the above action, complainant also requested for assistance from the Supervision and Monitoring Department (SMD) asking that an accounting be done and that the said department carry on an inquiry into the financial status, inter alia, of QRJODAI; that this request was given due course by the SMD, and that the latter audited the books of accounts of QRJODAI; that because of the persistent badgering of the complainant herein, defendant declared in a letter that complainant's membership with the QRJODAI has been terminated; and because of this arbitrary act, complainant suffered actual and moral damages. Complainant also presented as their witness Mr. Freddie Agsalon, a Senior Specialist of this Commission detailed at the Supervision and Monitoring Department who testified that his duties are to conduct audit on newly organized corporations; that he also conducts audit on stock and non-stock corporations based on verified complaints filed by interested parties; that as part of his functions as Senior Specialist at the SMD, he also monitors financial reports and statements of stock and non-stock corporation; that based on his testimony-in-chief; Mr. Agsalon is familiar with QRJODAI because of a verified complaint filed by petitioner herein requesting that an audit be conducted upon the books of account of the aforementioned corporation; that he was it who actually conducted the aforesaid audit on the association; that based on his examination of the association's book, covering January to December, 1991, Mr. Agsalon found out that there is no adequate internal control to safeguard the assets of QRJODAI, particularly in handling of cash disbursements; that this witness further testified that disbursement vouchers of, QRJODAI were not signed by the Treasurer and President of the association, including the payees of those disbursements; that no existing board resolutions were presented by the defendant regarding these disbursements; that his inquiry into the finances of QRJODAI showed missing receipts and understated collections, and a personal inquiry of some members of the QRJODAI showed that membership dues amounting to P10,000.00 were actually collected from new members but the same was not entered into the books of account of QRJODAI; that Mr. Agsalon emphasized in his testimony the recurring incidence of understatement of collections of the membership fees and dues of QRJODAI; that Mr. Agsalon further found out that of the total shortage in funds amounting to P19,281.40, the questionable disbursement of the association funds for the organization of Queen's Row Transport Service Cooperative is estimated at P13,900.00; that as appearing in the records of the association, no minutes nor resolution was presented for creation of a transport cooperative nor was it approved by the requisite vote of the members of the association; he stated that the shortages are the liabilities of the president and the treasurer, and that they should be made to account and refund the same to the QRJODAI. LibLex On the part of the respondent Adriano Babaran, Jr. the records of this case show that he has been declared in default by virtue of the Order of the undersigned Hearing Officer dated February 15, 1994, and that no motion to lift order of default was ever filed by him. Hence, the evidence presented by plaintiff is deemed ADMITTED and UNCONTROVERTED. Upon a careful study and consideration of the case and complainant's evidence, this Hearing Officer finds and so holds that this Commission has no jurisdiction to Order the annulment and registration of Queens Row Transport Service Cooperative. This power rightfully belongs to the Cooperative Development Authority. Under P.D. 902-A, as Amended, this Commission has the regulatory and adjudicative functions only over corporations, partnerships and other forms of association registered with it. Furthermore, Queen's Row Transport Service Cooperative is not impleaded as a party respondent in the instant case. However, the amounts incurred for the registration of the said cooperative should justly be reimbursed by respondent Babaran in favor of QRJODAI, because the said amount was duly proven to be an unauthorized disbursement, as no requisite vote of the board nor the members of QRJODAI was obtained. Insofar as the termination of membership of herein plaintiff Resurrecion, it does not appear in the records that defendant followed the basic requirements of due process for his removal. Expulsion of a member requires that the same must be based on reasonable and just grounds after notice and hearing of the charge against him (De Leon p. 591, Corporation Code of the Philippines, Annotated, 1993). Absent these requisites, the termination of Mr. Resurrecion's membership from QRJODAI is deemed invalid. Insofar as the prayer for an accounting of the funds of QRJODAI for the fiscal year 1990-1991 is concerned the Undersigned no longer considers the same necessary by virtue of the SMD's report on the association's funds for that year. With the report of the SMD, the prayer for an accounting has been rendered moot and academic. There being no elections of this association since 1990, a meeting for the purpose of electing a new set of directors of the QRJODAI is in order. LexLib With regard to the complainant's allegation of damages, no sufficient proof was offered to entitle him to such. Complainant's testimony regarding damages is not sufficient as a consequence the same should be denied. Considering that the respondent herein offered no sufficient explanation for the unauthorized and questionable disbursements as aforementioned and in view of SMD's findings of unaccounted collections in the QRJODAI, it would be proper to refer this matter to the Prosecution and Enforcement Department for possible prosecution of the respondent for criminal offenses in connection with the unexplained disbursements and unaccounted collections. WHEREFORE, in the light of the foregoing, judgment is hereby rendered: 1. ORDERING Adriano Babaran Jr.,respondent herein, to reimburse the amount of P13,900.00 which was spent for the registration of Queen's Row Transport Service Cooperative, to Queen's Row Jeepney Operators and Drivers Association, Inc.; 2. DECLARING the termination of the membership of complainant Glenn Resurrecion as NULL and VOID; and 3. Directing the conduct of a special meeting for the purpose of electing a new board of directors of the aforementioned association within thirty (30) days from receipt hereof. Let copy of this decision be furnished upon the Prosecution and Enforcement Department for its appropriate action. NO COSTS. SO ORDERED. (SGD.) EDUARDO P. BAROT Hearing Officer