REPUBLIC OF THE PHILIPPINES

NATIONAL CAPITAL JUDICIAL REGION

REGIONAL TRIAL COURT
BRANCH 46, Manila

PAR DROVERE, INC., ET AL.,

Plaintiffs,

- versus - CIVIL CASE NO. 01-102066

(SEC CASE NO. 11-99-6465)
RODRIGO C. REYES, ET AL.,
Defendants.
x ---------------------------------------------- x

DRAFT ORDER

For resolution is plaintiffs’ application for the issuance of a writ

of preliminary injunction, praying that writ of preliminary injunction be

issued directed against the defendants and all persons deriving

authority therefrom, ordering them to cease and desist from

purporting themselves to the public at large to be the directors and

officers of Par Drovere, Inc. and from performing their illegally

obtained powers and authority to manage the daily business affairs of

Par Drovere, Inc.

The facts are as follows:

The instant case originated from SEC Case No. 11-99-6465

filed with the SEC. In essence, plaintiffs in their complaint averred

that the individual plaintiffs are the real majority stockholders of Par

Drovere; that defendants Rodrigo Reyes and Emerenciana Gungab

have illegally manipulated the Board proceedings and installed

themselves and their nominees as directors and officers of Par

Drovere, thereby depriving the plaintiffs of their valid right to elect

their representatives to the Board of Directors; and that the

defendants were illegally holding office and do not have the right to

manage the affairs of the corporation. The complaint alleges in part:

3. The complainants and respondents Rodrigo C.

Reyes and Emerenciana R. Gungab (Rodrigo and Emerenciana,
for brevity) together with Reynaldo C. Reyes, are siblings and
the sole legal heirs of the deceased spouses Pedro and
Anastacia Reyes. In March, 1965, upon the death of Pedro
Reyes, his surviving spouse, his children and Anastacia’s sister,
Eduarda C. de Castro, incorporated Par Drovere, Inc. (Par
Drovere) for purposes of managing the properties to be
acquired subsequently by the late Pedro Reyes and his wife.
The corporation was capitalized at Five Million Pesos,
composed of Ten Thousand Shares, pegged at One Hundred
Pesos per share. The shareholdings were as follows:
Name Number of Subscribed
Shares Amount

Anastacia C. Reyes 7600 P 760,000.00

Emerenciana R. Gungab 343 P 34,300.00
Victoria R. Arambulo 343 P 34,300.00
Reynaldo C. Reyes 343 P 34,300.00
Domingo C. Reyes 343 P 34,300.00
Rodrigo C. Reyes 343 P 34,300.00
Oscar C. Reyes 343 P 34,300.00
Eduarda C. de Castro 342 P 34,200.00

Total 10,000 P1,000,000.00

Par Drovere’s Certificate of Registration and Articles of

Incorporation are attached as Annexes A and A-1, respectively, and
made an integral part hereof.

4. Among the properties of the corporation is a

commercial apartment located in Caloocan City with an area of 773
square meters and covered by TCT No. 268823. A photo-copy of
the said certificate of title is attached as Annex B and made an
integral part hereof.

5. This commercial apartment has been leased for

several years to a number of tenants. In the collection of rentals
from these tenants, complainant Victoria R. Arambulo was the one

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designated by the Reyes family to do so, which task she has
diligently undertaken for the past 35 years until recently.

6. Towards the end of 1998, complainants were

furnished the Agenda of a “Special Stockholders’ Meeting of Par
Drovere, Inc.”, which was to be held on December 10, 1998 at the
Sulo Hotel in Quezon City. The said Agenda was signed and
apparently sent by was purportedly issued by respondent Jose
Buban (Buban), in his supposed capacity as Acting Corporate
secretary of Par Drovere. Among the items scheduled in the
Agenda was “6. Re-activate Business activities.” A photo-copy of
the said Agenda is attached as Annex C and made an integral part
hereof.

7. This Agenda aroused the suspicions of the

complainants, for they knew as a matter of fact that the corporation
had continuously been doing business through the years, that is,
the leasing of commercial properties. Thus, they could not discern
the reason for the so-called re-activation of business activities.
Furthermore, no formal stockholders’ meeting had been held since
1985. A review of the corporate records obtained from the records
office of this Honorable Commission, disclosed a General
Information Sheet (G.I.S.) dated May 28, 1997 and filed by
respondent Buban with the Commission sometime in July 1997. In
said G.I.S., the complainants discovered that by some manipulative
scheme, the share-holdings of their mother, Anastacia Reyes,
consisting of 7600 shares and valued in the corporate books at
P760,000.00, had been transferred exclusively to the names of the
respondents Emerenciana and Rodrigo in equal halves. By such
fraudulent conveyance, the share-holdings of said respondents
increased from 343 shares, that held originally by each and every
sibling, to 4143 shares. This G.I.S. purports the new shareholding
structure to be as follows:

Name Number of Subscribed

Shares Amount

Emerenciana R. Gungab 4143 P 414,300.00

Victoria R. Arambulo 343 P 34,300.00
Reynaldo C. Reyes 343 P 34,300.00
Domingo C. Reyes 343 P 34,300.00
Rodrigo C. Reyes 4143 P 414,300.00
Oscar C. Reyes 343 P 34,300.00
Eduarda C. de Castro 342 P 34,200.00

Total 10,000 P1,000,000.00

A copy of the afore-mentioned General Information Sheet is

attached as Annex D and made an integral part hereof.

8. Complainants had absolutely no knowledge of such

transfer of shares from their mother to their two siblings, much less
had consented to the same, for had they known of any plans to
undertake such conveyance, they would have readily opposed the
same. Moreover, there exists no legal basis for the purported
transfer of Anastacia Reyes’ shares to respondents Rodrigo and
Emerenciana. Said respondents have not submitted any document

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or sought approval for the purported transfer and registration of the
subject shares. By such machinations on the part of the
respondents Rodrigo and Emerenciana, it appears from Par
Drovere’s books that they, in the aggregate, own a majority of its
stocks.

9. In the guise of such majority ownership, obtained

through the fraudulent conveyance of their late mother’s share-
holdings, respondents Rodrigo and Emerenciana were able to have
themselves and their lackeys elected in a newly constituted Board
of Directors during the Special Stockholders Meeting held last
December 10, 1998, which meeting was illegally conducted, the
results of which complainants did not and continue not to
recognize.

10. Moreover, emboldened by this cloak of purported

authority as Par Drovere’s directors and officers, respondents
Emerenciana and Rodrigo, as well as individuals deriving authority
from them have attempted to represent themselves as the
authorized collector of the rentals from the afore-mentioned
Caloocan property of Par Drovere, and in some instances, have
intimidated said tenants to recognize their authority.

11. These tenants have nonetheless, rebuffed the

respondents’ demands and have refused to remit their rental
payments to them. However, while still acknowledging the sole
authority of complainant, Arambulo, to collect the rentals, the
tenants have hesitated to remit payments to her due to these
machinations of the respondents. This has caused extreme
damage and prejudice to the corporation and the complainants, for
these accrued rental payments are necessary for the continuing
operations and earnings of the corporation, as well as all the
stockholders.

12. Rodrigo and Emerenciana’s acts of manipulation and

control of the stockholdings of Par Drovere have led and will
continue to result in the dissipation and wastage of corporate
assets, if not enjoined by this Honorable Commission.

13. As members of the same family, complainants have

exhausted all peaceful and amicable means of resolving the
dispute in the hope that the respondents will ultimately see the error
of their ways, yet all conciliatory moves of the complainants have
been rebuffed and have been to no avail.

CAUSES OF ACTION

14. The allegations of the foregoing paragraphs are hereby

repleaded insofar as pertinent hereto.

15. The monthly rentals from the commercial property in

Caloocan, as well as other sources of revenue, accrue as business
income for Par Drovere. However, as a result of the criminal
manipulation by the respondents of the share-holdings of their late
mother Anastacia, as well as their intimidation and threats directed
at the tenants of the corporation’s commercial properties, no
revenue has been remitted to the corporate coffers for the past five

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(5) months. This has resulted in a cessation of much needed
repairs on the premises of the corporation’s commercial properties.
In addition, because of these threats and intimidation, a number of
tenants have terminated their lease contracts and have left for other
locations. This has thereby deprived the complainants of their
legitimate and lawful income as stockholders in the amount of more
than P200,000.00 a month, or a total of P1,000,000.00.

II.

16. The allegations of the foregoing paragraphs are hereby

repleaded insofar as pertinent hereto.

17. By having made it appear that they jointly hold the

majority of Par Drovere’s outstanding capitals stock, without the
consent and conformity of the real majority stockholders of Par
Drovere, the respondents Rodrigo and Emerenciana have illegally
manipulated the Board proceedings and installed themselves and
their nominees as directors and officers of Par Drovere, thereby
depriving the complainants of their valid right to elect their
representatives to the Board of Directors.

18. The present Board of Directors and officers of Par

Drovere are therefore illegally holding office and do not have the
right to manage the affairs of the corporation, and must therefore
be ousted therefrom.

Plaintiffs thus prayed for the following reliefs:

WHEREFORE, it is respectfully prayed that:

I. Immediately upon the filing hereof, a temporary restraining
order (TRO) be issued by this Commission, directed against the
respondents and all persons deriving authority therefrom, and
ordering them to cease and desist from purporting themselves to
the public at large to be the directors and officers performing their
illegally obtained powers and authority to manage the daily
business affairs of Par Drovere, Inc.
II. A Management Committee be immediately appointed to
manage and oversee the daily and regular business activities of
Par Drovere, Inc., including but not limited to the collection of rental
payments from all tenants of the corporation’s commercial
properties and the regular maintenance of the physical premises
thereof.
III. After due proceedings hereon, the Commission order:
a. that the respondents Emerenciana R. Gungab and
Rodrigo C. Reyes, as well as all persons deriving authority from
them, be permanently enjoined from purporting themselves to the
public at large to be the directors and officers performing their
illegally obtained powers and authority to manage the daily
business affairs of Par Drovere, Inc.;
b. that the respondents Emerenciana R. Gungab and
Rodrigo C. Reyes make an accounting of all the monies that may
have been collected by them from any of the commercial tenants

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 leasing Par Drovere’s commercial lot in Caloocan City, during the
period that they presented themselves to be the corporation’s
authorized party to collect such rental payments;
c. annul any deed of conveyance, contract or other
instrument which purports to transfer the 7600 shares of Anastacia
Reyes to Emerenciana R. Gungab and Rodrigo C. Reyes;
d. that respondents Rodrigo C. Reyes and Jose Buban
immediately disclose the true and accurate shareholdings of all
parties hereto so that the same may be recorded in the corporate
books of Par Drovere, Inc., and;
e. the respondents Emerenciana R. Gungab and Rodrigo C.
Reyes to pay the amount of One Million Pesos (P1,000,000.00) for
actual damages, One Hundred Thousand Pesos (P100,000.00) as
attorney’s fees, and the costs of this suit.
Other reliefs as may be just and equitable under the
premises are likewise prayed for.

In their Answer with Counterclaim, defendants alleged in part

as follows:

7. Par Drovers, Inc. was incorporated sometime in 1965

with its stockholders, numbers of shares and amount
subscribed, as follows:
STOCKHOLDERS NO. OF SHARES AMOUNT SUBSCRIBED
Anastacia C. Reyes 7600 P 760,000.00
Emerenciana R. Gungab 343 34,300.00
Victoria R. Arambulo 343 34,300.00
Reynaldo C. Reyes 343 34,300.00
Domingo C. Reyes 343 34,300.00
Rodrigo C. Reyes 343 34,300.00
Oscar C. Reyes 343 34,300.00
TOTAL 10,000.00

8. As early as December 21, 1984 manifestation was

filed before this honorable Commission that it was suspending
operations as early as January 01, 1985 in view of the absence of
the principal stockholders/directors of the corporation who migrated
abroad;

9. Since that date (January 01, 1985) even during the

previous years, complainant Victoria Arambulo has been collecting
rentals from the tenants of the commercial apartments located at
Caloocan City and owned by the corporation without any authority
from anybody much less from the corporation. The rental she had
collected were never deposited to the account of the corporation
but instead applied to her own use and benefit.

10. Par Drovere, Inc. also owns prime property located at

Cubao, Quezon City covered by TCT No. 96119 consisting of
5,444 square meters but which property was fraudulently
transferred by Reynaldo Reyes one of the stockholders, to himself

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on December 05, 1983 through a stimulated deed of sale. Said
property was later sold to Robinson Land Corporation sometime in
1992 for 90 million, more or less without the consent and authority
of the corporation.

11. The corporation likewise owns another prime property

located at Caloocan City covered by TCT No. 36740 consisting 694
square meters but which property was fraudulently mortgaged by
complainant Domingo Reyes to the Development Bank of the
Philippines for Seven Million Five Hundred Thousand
(7,500,000.00) Pesos December 05, 1992 without the counsel and
authority of Par Drovere, Inc. The loan pocketed by Doming Reyes
has never been paid and the property is now in danger of being
foreclosed;

12. Aforementioned transactions perpetrated by

complainants and other stockholders of the corporation during the
time that it was not in operation all worked to the damage and
prejudice of Par Drovere, Inc. and the respondents, for which
reasons respondent Rodrigo C. Reyes decided to call a
stockholders meeting on February 16, 1999 for the purpose of
electing members to the Board of Directors and the officers of the
corporation;

13. In said meeting duly and validly held at Sulo Hotel,

Quezon City the following were elected as members of the Board:

Rodrigo C. Reyes
Emerenciana R. Gungab
Jose A. Buban
Atty. Orlando Catral
Ronald Allan Go

And on the subsequent meeting held by the elected members, the

following were elected as officers of the corporation:

Rodrigo C. Reyes - President

Emerenciana R. Gungab - Vice President
Ronald Allan Go - Treasurer
Jose A. Buban - Secretary

14. While at present the majority stockholders are

respondent Rodrigo C. Reyes and Emerenciana Gungab this is due
to the fact that the shares of Anastacia Reyes were transferred to
said respondents in 1987 before her demise Contrary to the claim
of complainants the transfer of shares was valid, legal and binding.

15. Sometimes in February 11, 1998 respondents sent

formal letter to complainant Victoria Arambulo to account for her
collection of rentals during the time that Par Drovere, Inc. were not
in operation but up to now she ignored the letter. Starting 1998 Par
Drovere, Inc. through respondents in their capacity as the officers
of the corporation decided to collect rentals from some of the
tenants of the commercial apartments at Caloocan City but which
rentals collected were all deposited to the account of the
corporation. It should be emphasized that it was the corporation

7
 who collected the rentals not herein respondents. Because of
complainants’ prodding, however, some of the tenants refused to
pay rentals to Par Drovere, Inc.;

16. Respondents being the duly elected officers of the

corporation has the legal authority to manage the affairs of the
corporation which management is in accord with law and for the
benefits of the corporation and its stockholders, hence,
complainants have no basis in fact and in law to ask for the
appointments of a management committee.

Plaintiffs subsequently filed their Reply to the defendants’

Answer. The parties likewise filed affidavits of their respective

witnesses, in support of their positions.

Some proceedings were conducted by the SEC, particularly on

the application by plaintiffs for the issuance of a writ of preliminary

injunction. However, due to the effectivity of R.A. No. 8799, the

proceedings before the SEC and all pending incidents were

suspended,1 and the above case was thus transferred from the SEC

to the Regional Trial Court, originally with Branch 93 of Quezon City,

and eventually to this Court.2

Following the transfer of the instant case to this Court, plaintiffs

filed on 05 February 2002, an “Urgent Motion for Issuance of

Temporary Restraining Order,” praying that (1) a temporary

1
The main incident pending at the time was the plaintiffs’ application for a writ of
preliminary injunction, while the other incident pending concerned the directive for the
parties to appear at a preliminary conference to explore the possibility of amicable
settlement.
2
The case was set for “status” hearing before the said Branch on two (2)
occasions and the complaint was dismissed per Order dated 25 June 2001 for plaintiffs’
alleged lack of interest to prosecute. However, the Order of dismissal was set aside
upon motion for reconsideration by the plaintiffs, as stated in an Order dated 09 July
2001. Thereafter, upon inquiry into the proper venue of the instant case, the RTC of
Quezon City issued an Order on 19 September 2001 transmitting the records of the
instant case to this Court. Thus, on 22 October 2001, the Court issued an Order
informing the parties that the instant case has been turned over to it sitting as a
corporate court pursuant to Administrative Circular AM No. 00-11-03 of the Supreme
Court dated 21 November 2000.

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restraining order be issued immediately, enjoining the defendants

from holding the purported Annual Stockholders Meeting on 12

February 2002, or any date thereafter; (2) the instant case be set at

the soonest possible time for the resumption of proceedings originally

commenced before the SEC, especially on the application by

plaintiffs for the issuance of a writ of preliminary injunction and for the

creation and appointment of a Management Committee; and (3)

thereafter, a writ of preliminary injunction be issued directed against

the defendants and all persons deriving authority therefrom, ordering

them to cease and desist from purporting themselves to the public at

large to be the directors and officers of Par Drovere, Inc. and from

performing their illegally obtained powers and authority to manage

the daily business affairs of Par Drovere, Inc. On 07 February 2002,

defendants filed their Opposition to the above Urgent Motion, to

which plaintiffs filed their Reply on 08 February 2002.

On 11 February 2002, the Court issued a temporary restraining

order enjoining the defendants from holding the purported Annual

Stockholders Meeting on 12 February 2002, or any date thereafter

during the twenty (20) day effectivity of the TRO.

On 14 February 2002, plaintiffs filed an “Ex-Parte Motion to Set

for Hearing Incident for Issuance of Writ of Preliminary Injunction,”

praying that the pending incident for issuance of Writ of Preliminary

Injunction, more specifically the completion of the cross-examination

9
of plaintiff Victoria R. Arambulo be set at the earliest convenience,

preferably on 19 and 21 February 2002 at 8:30 a.m.

On 18 February 2002, the Court issued an Order setting the

case for hearing on 19, 21 and 22 February 2002 for the following

purposes:

1. To determine whether a writ of preliminary injunction

should be issued pending the hearing of the main issues, among

which is the validity of the transfer of stocks from Anastacia Reyes to

defendant Rodrigo C. Reyes and Emerenciana R. Gungab;

2. Whether a management committee or receiver be

appointed; and

3. Cross-examination of Victoria R. Arambulo.

At the hearing on 19 February 2002, defendants failed to

appear and were thus deemed to have waived their right to cross-

examine Victoria R. Arambulo. On the same date, the Court issued

an Order giving plaintiffs a period of five (5) days to file their

supplemental offer of evidence and the defendants a similar period to

comment thereto, after which the offer would be deemed submitted

for resolution.

On 26 February 2002, plaintiffs filed their “Supplemental Formal

Offer of Evidence,” for the admission of certain documents marked as

Exhibits G to G-3, in addition to those subject of their 24 January

2000 “Formal Offer of Evidence” filed with the SEC.

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 On 14 March 2002, the Court issued an Order resolving to

admit Exhibits G to G-3 set forth in plaintiffs’ Supplemental Formal

Offer of Evidence and giving the parties fifteen (15) days from receipt

of the Order to submit their respective draft orders in support

of/opposition to the issuance of a writ of preliminary injunction.

Under date of 14 March 2002, defendants filed their

“Opposition” to plaintiffs’ Supplemental Formal Offer of Evidence.

Under date of 25 March 2002, defendants through new

collaborating counsel filed a “Motion for Reconsideration (Of the

Order dated 14 March 2002).”

On 23 April 2002, plaintiffs filed their “Opposition” to the above

Motion.

On 02 May 2002, the Court issued an Order denying

defendants’ “Motion for Reconsideration (Of the Order dated 14

March 2002),” giving the parties until 15 May 2002 to file submit their

respective draft orders in support of/opposition to the issuance of a

writ of preliminary injunction, and setting the case for trial on 06 and

07 June 2002 for the resolution of the other issues.

Under date of 15 May 2002, defendants filed an “Omnibus

Motion” alleging that the Court erred in finding that defendants waived

their right to cross-examine Victoria R. Arambulo and in finding that

defendants did not comment on plaintiffs’ Supplemental Offer of

Evidence. Defendants thus prayed that they be allowed to cross-

11
examine Victoria R. Arambulo; their comment on the Supplemental

Offer of Evidence be noted; the submission of memoranda be held in

abeyance; and that they be allowed to present their own evidence on

the injunction incident.

On 04 June 2002, plaintiffs filed their “Opposition to Omnibus

Motion.”

On 05 June 2002, the court issued an Order denying

defendants’ “Omnibus Motion” for lack of merit and giving the parties

until 14 June 2002 to file submit their respective draft orders. The

Order stated in full:

Submitted for resolution is an “Omnibus Motion” asking that

the Order issued on May 2, 2002 denying for lack of merit
defendants’ “Motion for Reconsideration” be reconsidered on the
ground allegedly that the Court erred in finding that the defendants
have waived their right to cross-examine the witness Victoria R.
Arambulo.
Defendants claim that they were not duly notified of the
hearing scheduled on Feb. 19, 2002 because they only received on
March 12, 2002 the Order of Feb. 18, 2002 setting the case for trial
on Feb. 19, 2002.
Another ground for the reconsideration of said Order of May
2, 2002 is that they filed an objection on the admission of Exhibit G,
G-1, G-2 and G-3 as evidenced by a pleading filed on March 15,
2002.
The plaintiffs opposed the “Omnibus Motion” alleging that
defendants waived their right to cross-examine the witness Victoria
R. Arambulo as shown by the transcript of stenographic notes
taken on April 17, 2000 when this case was still with the SEC which
the plaintiffs stressed during the hearing on Feb. 19, 2002.
A close look at the transcript of stenographic notes clearly
shows that defendants’ counsel Eduardo B. Tampoc had not only
finished his cross-examination but also recross-examination of the
witness when he declared:
“NO FURTHER QUESTIONS, YOUR HONOR.”
What useful purpose will it serve to reopen the proceedings
for the cross-examination of the witness when Atty. Tampoc
dramatically proclaimed that he has no more questions to ask.

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 In respect of Exhibits G-1 to G-3, inclusive, it appears that
defendants really objected to their admission on the ground that
they are self-serving.
Nonetheless, the Court reiterates the admission of said
exhibits for whatever they may be worth.
WHEREFORE, the “Omnibus Motion” is hereby denied for
lack of merit.
The parties are given until June 14, 2002 to submit their
respective Draft-Order.
IT IS SO ORDERED.
June 5, 2002 at Manila, Philippines.

After seeking extensions of time, the parties filed their

respective Draft Orders.

The issue to be resolved is whether plaintiffs are entitled to a

writ of preliminary injunction against the defendants and all persons

deriving authority therefrom, ordering them to cease and desist from

purporting themselves to the public at large to be the directors and

officers of Par Drovere, Inc. and from performing their illegally

obtained powers and authority to manage the daily business affairs of

Par Drovere, Inc.

In their complaint, plaintiffs made the following allegations in

support of their application for the writ:

21. Complainants incorporate herein by reference all the

foregoing allegations insofar as they are material and pertinent
thereto.
22. Emerenciana and Rodrigo, have arrogated and continue
to arrogate to themselves, the power of control and management
over the affairs of the corporation, to the exclusion of complainants,
who on account of their present stockholdings are lawfully entitled
to be elected as members of the Board of Directors. The exclusion
has caused and threatened to further injure complainant’s
legitimate proprietary rights as shareholders of Par Drovere.
23. Emerenciana and Rodrigo publicly purport themselves
and their nominees and lackeys as the duly elected directors and
officers of Par Drovere, and in this supposed capacity, have
wrested from complainant Victoria R. Arambulo, the right to collect

13
 the rentals payments from the tenants presently leasing Par
Drovere’s commercial property in Caloocan. Such income, which is
supposed to accrue to Par Drovere and ultimately, to all
shareholders thereof, is being exclusively used up by the
respondents Emerenciana and Rodrigo, without accountability to
the rest of the shareholders and naturally to their utmost prejudice
and damage.
24. Complainants are ready and willing to post a bond
executed to respondents in an amount this Commission may fix, to
the effect that complainants will pay respondents all damages
which they may sustain by reason of the injunction if the
Commission should finally decide that the complainants are not
entitled thereto.
25. Great and irreparable damage would result to
complainants before this matter can be heard unless this
Commission issue a Temporary Restraining Order requiring
respondents to desist and refrain from doing any acts tending to
disturb the rights of the complainants as the rightful majority
stockholders of Par Drovere.

At the proceedings before the SEC, plaintiffs submitted the

Affidavit of their witnesses, Domingo C. Reyes and Victoria R.

Arambulo, which affidavit was treated as constituting their direct

examination. They alleged as follows:

We , Domingo C. Reyes and Victoria R. Arambulo, both of

legal age, Filipinos, married and with postal address at 402 E.
Rodriguez Avenue, Quezon City, Metro Manila and 91 11 th St., New
Manila, Quezon City, Metro Manila, respectively, depose and state
the following as our direct examination in behalf of the
complainants:
1. We are two of the complainants in the above-
captioned case filed before the Securities and Exchange
Commission.
2. Together with the other complainant, Oscar C. Reyes,
respondents Rodrigo C. Reyes and Emerenciana R. Gungab, as
well as Reynaldo C. Reyes, we are siblings and the sole legal heirs
of our parents, deceased spouses Pedro and Anastacia Reyes.
3. In March, 1965, upon the death of our father,
Pedro Reyes, our mother, Anastacia Reyes, with her sister,
Eduarda C. de Castro, and we the children, incorporated and
subscribed to Par Drovere, Inc. (Par Drovere) for purposes of
managing the properties acquired by our parents. The
corporation was capitalized at Five Million Pesos, composed of
Ten Thousand Shares, pegged at One Hundred Pesos per share.
The share-holdings were as follows:
Name Number of Subscribed

14
 Shares Amount

Anastacia C. Reyes 7600 P 760,000.00

Emerenciana R. Gungab 343 P 34,300.00
Victoria R. Arambulo 343 P 34,300.00
Reynaldo C. Reyes 343 P 34,300.00
Domingo C. Reyes 343 P 34,300.00
Rodrigo C. Reyes 343 P 34,300.00
Oscar C. Reyes 343 P 34,300.00
Eduarda C. de Castro 342 P 34,200.00

Total 10,000 P1,000,000.00

A copy pf the Articles of Incorporation is attached as Annex

A and made an integral part hereof.
4. Save for our mother, who had the controlling interest
in the corporation, all of us siblings had the same and equal
number of shares of stock in the corporation.
5. The corporation owned and subsequently owned
several real estate properties in Quezon City, Manila and Caloocan
City. Among the properties of the corporation is a parcel of land
located in Caloocan City with an area of 773 square meters and
covered by TCT No. 268823, on which is erected a 9-door
commercial apartment. A copy of TCT No. 268823 is attached as
Annex B and made an integral part hereof.
6. This commercial apartment has been leased for
several years to a number of commercial tenants, such as Leonila
de la Cruz and Barbara Villamor. Copies of Contracts of Lease are
attached as Annexes C and D, respectively, and made an integral
part hereof.
7. In the management of these property, our mother
authorized me (Victoria C. Arambulo), to be the one responsible for
the collection of the rental payments. These collections were then
remitted to our mother who would then disburse the same as she
saw fit. In addition, all expenses, such as repairs, maintenance and
renovation on the properties, and the payment of real estate taxes
thereon, were also sourced from these rental payments and were
attended to by myself.
8. After the death of my mother, it was our
understanding among the siblings that I (Victoria R. Arambulo)
would continue in the collection of these rental payments on the
Corporation’s behalf. On or about February-March 1999, however,
I had been unable to fulfill such task because respondent Rodrigo
Reyes maliciously, malevolently and unlawfully notified all of the
tenants falsely purporting that my authority to collect the rentals had
been withdrawn since I had ceased to be a stockholder of the
Corporation and that he would henceforth undertake the collection
of rentals.
9. Towards the end of 1998, we were furnished the
Agenda of a “Special Stockholders’ meeting of Par Drovere, Inc.”,
which was to be held on December 10, 1998 at the Sulo Hotel in
Quezon City. The said Agenda was signed and purportedly issued
by respondent Jose Buban (Buban), in his supposed capacity as

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Acting Corporate Secretary of Par Drovere. Among the items
scheduled in the Agenda was “6. Re-activate Business activities.”
A copy of the Agenda is attached as Annex E and made an
integral part hereof.
10. This Agenda aroused our suspicions, for we knew as
a matter of fact that the corporation had continuously been doing
business through the years, that is, the leasing of commercial
properties. Thus, I could not discern the reason for the so-called
re-activation of business activities. Furthermore, no formal
stockholders’ meeting had been held since 1985. A review of the
corporate records I (Domingo C. Reyes) obtained from the records
office of this Honorable Commission, disclosed a General
Information Sheet (G.I.S.) dated May 28, 1997 and filed by
respondent Buban with the Commission sometime in July 1997. In
said G.I.S., we discovered that the share-holdings of our mother,
Anastacia Reyes, consisting of 7600 shares and valued in the
corporate books at P760,000.00, had been transferred exclusively
to the names of the respondents Emerenciana R. Gungab and
Rodrigo C. Reyes in equal halves. By such conveyance, the share-
holdings of said respondents increased from 343 shares, that held
originally by each and every sibling, to 4113 shares. This G.I.S.
disclosed the new shareholding structure to be as follows:
Name Number of Subscribed
Shares Amount

Emerenciana R. Gungab 4143 P 414,300.00

Victoria R. Arambulo 343 P 34,300.00
Reynaldo C. Reyes 343 P 34,300.00
Domingo C. Reyes 343 P 34,300.00
Rodrigo C. Reyes 4143 P 414,300.00
Oscar C. Reyes 343 P 34,300.00
Eduarda C. de Castro 342 P 34,200.00

Total 10,000 P1,000,000.00

A copy of the General Information Sheet is attached as

Annex F and made an integral part hereof.
11. We, had absolutely no knowledge of such transfer of
shares from our mother to Emerenciana R. Gungab and Rodrigo C.
Reyes, much less had consented to the same, for had we known of
any plans to undertake such conveyance, we would have readily
opposed the same. Moreover, respondents have not submitted any
document or sought approval for the purported transfer and
registration of the subject shares. By such conveyance, it appears
from Par Drovere’s books that they, in the aggregate, own a
majority of its stocks.
12. During such December 1998 meeting, by some
machination, Rodrigo Reyes and Emerenciana Gungab installed
themselves and their nominees as alleged elected members of the
Corporation’s Board of Directors to the exclusion of ourselves and
the other complainants
13. By virtue of this cloak of authority as Par Drovere’s
directors and officers, Emerenciana Gungab and Rodrigo Reyes,

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 as well as individuals deriving authority from them have
represented themselves as the authorized collector of the rentals
from the aforementioned Caloocan property of Par Drovere, and in
some instances, have intimidated said tenants to recognize their
authority by threats and in some cases, of actions of ejectment.
14. The monthly rentals from the commercial property in
Caloocan, as well as other sources of revenue, accrue as business
income for Par Drovere. However, because of this cloud of doubt
cast upon my (Victoria R. Arambulo) authority to collect these
rental payments, the tenants have manifested their reluctance in
remitting the rental payments due. This has in turn caused the
Corporation grave damage and injury because it has not been able
to derive income from its properties which are necessary and
desirable in preserving the same.
15. Moreover, respondent Rodrigo Reyes had resorted to
accepting reduced amount of rentals from some tenants to coax
and cajole the tenants to deliver the rentals to him. This has
thereby deprived the corporation and all the stockholders of
legitimate and lawful income in the amount of more One Million
Five Hundred Thousand Pesos (P1,500,000.00) by way of
additional lost income.
16. Despite all our conciliatory moves, we have failed to
resolve the conflict and have been constrained to engage the
services of legal counsel for the amount of P100,000.00, exclusive
of appearance fees of P3,000.00 for every hearing to be conducted
by this Commission.

The witnesses were subjected to cross-examination, re-direct

and re-cross examination at the hearing before the SEC on 17 April

2000. In her testimony, plaintiff Victoria R. Arambulo stated inter alia

that as early as 1965, she had been authorized by her mother,

Anastacia C. Reyes, to collect the lease rentals on behalf of the

plaintiff corporation, and had in fact been doing so continuously for

several years even after the death of Anastacia C. Reyes in June

1993 (TSN dated 17 April 2000, pp. 14-18, 25), until respondents

Rodrigo Reyes and Emerenciana Gungab prevented her from

collecting the rentals purportedly because they now owned the leased

properties (ibid, pp. 40-43). In his testimony, plaintiff Domingo Reyes

stated inter alia that all six (6) Reyes siblings had equal shares in the

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corporation while their mother Anastacia C. Reyes was the majority

owner who exercised complete control of the company (ibid, at pp.

61-62, 65); that plaintiff Victoria R. Arambulo had been authorized by

their mother, Anastacia C. Reyes, to collect the lease rentals on

behalf of the plaintiff corporation; that after the death of Anastacia C.

Reyes, plaintiff Victoria R. Arambulo continued collecting the rentals

on behalf of the corporation with the consent of Oscar, Reynaldo and

Domingo Reyes (ibid, pp. 67-69; Exhibits G to G-3); and that the

corporation was incorporated by the heirs of Pedro Reyes and

Anastacia Reyes for purposes of estate planning of the properties of

the latter, including those of Par Drovere and Anaped, since no

settlement, judicial or extrajudicial, was made of the estate of

Anastacia Reyes (ibid, pp. 90-91, 93).

Two requisites are necessary if a preliminary injunction is to

issue, namely: (1) the existence of a right to be protected, and (2) the

facts against which the injunction is to be directed are violative of said

right (Development Bank of the Philippines v. Court of Appeals,

344 SCRA 492 [2000]).

Prescinding from the foregoing, the Court finds merit in the

application. It has been established that as early as 1965, plaintiff

Victoria R. Arambulo had been authorized by Anastacia C. Reyes to

collect the lease rentals on behalf of the plaintiff corporation, and had

in fact been doing so continuously for several years even after the

death of Anastacia C. Reyes in June 1993, with the verbal and written

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consent of her brothers Oscar, Reynaldo and Domingo Reyes

(Exhibits G to G-3), until around February or March 1999, when

respondent Rodrigo Reyes, purportedly on behalf of the corporation,

notified the tenants of the revocation of authority of Victoria R.

Arambulo to collect such rentals. The act of respondent Rodrigo

Reyes has thus resulted in depriving the corporation and the plaintiffs

as individual stockholders, of the rental income which Victoria R.

Arambulo had been collecting since the inception of the corporation

on its behalf, and with the consent of the (presumptive) majority

owners of the corporation. On the other hand, the evidence discloses

that there appears to be no basis for the transfer to respondents

Rodrigo Reyes and Emerenciana Gungab of the shares belonging to

Anastacia C. Reyes, upon which they premise their action of revoking

Victoria R. Arambulo’s authority. No settlement of estate was made of

Anastacia C. Reyes’ properties, including the controlling shares in the

plaintiff corporation. No showing has been made as to whether the

purported transfer, if in fact made, has been done in accordance with

the requirements of law, and/or whether the same was made for

genuine consideration.

Based on the evidence presented, the Court finds that great

and irreparable damage would result to the plaintiffs unless a writ of

preliminary injunction be issued enjoining defendants from purporting

themselves to the public at large to be the directors and officers of

Par Drovere, Inc., pending resolution of the issue as to who among

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the parties are truly entitled to exercise control and management of

plaintiff corporation. It is thus undeniable that a genuine controversy

exists as to who among the parties should be entitled to the control

and management of the plaintiff corporation, and consequently, who

may carry out the principal business of the corporation of leasing real

properties and collecting the rentals therefrom. All other issues of

conflict between the parties, including the issue as to who the

legitimate board of directors and officers of the corporation are, have

arisen from the controversy as to who may rightfully lay claim to the

control of the plaintiff corporation. Until these issues are resolved

after trial on the merits, there exists a paramount necessity for the

issuance of the writ to protect plaintiffs’ rights as the presumptive

majority owners of the plaintiff corporation over the properties and

rental income belonging to the latter.

WHEREFORE, premises considered, plaintiffs’ application for

the issuance of a writ of preliminary injunction is granted.

Thereafter, upon the posting of a bond in the amount of

P____________, executed to the defendants to the effect that

plaintiffs will pay defendants all damages which the latter may sustain

by reason of the injunction in the event that the Court should finally

decide that plaintiffs are not entitled thereto, let a writ of preliminary

injunction be issued directed against the defendants and all persons

deriving authority therefrom, ordering them to cease and desist from

purporting themselves to the public at large to be the directors and

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officers of Par Drovere, Inc. and from performing any powers and

authority to manage the daily business affairs of Par Drovere, Inc.

The case is hereby set for trial on _________ 2002 at 8:30 a.m.

for the resolution of the other issues.

SO ORDERED.

City of Manila, 10 July 2002.

ARTEMIO S. TIPON
Judge

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