ANG-ABAYA vs ANG FACTS Vibelle Manufacturing Corporation and Genato Investments, Inc. are family-owned corporations, corporations, where petitioners Ma. Belen Flordeliza C. AngAn g-Ab Abay aya a , Jaso Jason n A. An Ang, g, Vinc Vincen entt G. Gena Genato to,, Hann Hanna a An Ang g and and privat private e respon responden dentt Eduard Eduardo o G. Ang (Eduar (Eduardo) do) are shareh sharehol older ders, s, officers and members of the board of directors. Pri Prior to the the instan stantt cont contrrover overs sy, VMC, VMC, Gen Genato ato, and and Oriana ana Manufacturing Corporation (Oriana) filed a case for damages with prayer for issuance of a TRO and/or writ of preliminary injunction agai agains nstt Edua Eduard rdo o for for alle allege gedl dly y conn conniv ivin ing g to frau fraudu dule lent ntly ly wres wrestt cont contro rol/ l/ma mana nage gem ment ent of the the corp corpor orat atio ions ns.. Edua Eduard rdo o alle allege gedl dly y borrowed substantial amounts of money from the said corporations without any intention to repay; that he repeatedly demanded for increa increases ses in his month monthly ly allowa allowance nce and for more more cash cash advanc advances es contrary to existing corporate policies; that he harassed petitioner Florde Flordeliz liza a to transf transfer er and/or and/or sell sell certai certain n corpor corporate ate and person personal al properties in order to pay off his personal obligations etc. Eduardo sought permission to inspect the corporate books of VMC and Genato on account of petitioners’ alleged failure and/or refusal to update update him him on the financ financial ial and busine business ss activi activiti ties es of these these family family corporat corporations ions.. Petition Petitioners ers denied denied the request request claimin claiming g that Eduardo would use the information information obtained from said inspection for purposes inimical to the corporations’ interests, considering that: a) he is harassing the corporation into writing off his advances; b) he is unjust unjustly ly demand demandin ing g that that he be given given an office office/p /posi ositio tion n alread already y occu occupi pied ed and and us usur urpi ping ng corp corpor orat ate e powe powers rs as well well as makin aking g demands with regard to corporate properties. Because of petitioners’ refusal to grant his request to inspect the corpor corporate ate books books of VMC VMC and Genato Genato,, Eduard Eduardo o filed filed an Affid Affidavi avittComplaint against petitioners Flordeliza and Jason, charging them with violation (two counts) of Section 74, in relation to Section 144, of the Corporation Code of the Philippines. The The City City Pros Prosec ecut utor or iss ssue ued d a Reso Resolu luti tion on reco recomm mmen endi ding ng that that petitioners be charged with two counts of violation of Section 74 of the Corporation Code, but dismissed the complaint against Belinda for lack of evidence. Petitioners filed a Petition for Review before the DOJ, which reversed reversed the recommend recommendatio ation n of the City Prosecutor. Prosecutor. The DOJ denied Eduardo’s Motion for Reconsideration. The Court of Appeals reversed the DOJ.
ISSUE
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Whet Whethe herr or not not the the DOJ DOJ comm commit itte ted d GADA GADALE LEJJ in reve revers rsin ing g the the reso resolu luti tion on of the the pros prosec ecut utor or find findin ing g prob probab able le caus cause e agai agains nstt petitioners after preliminary investigation for violation of section 74 of the corporation code of the Philippines HELD: NO RATIO In order for the penal provision under Section 144 of the Corporation Code to apply in a case of violation of a stockholder or member’s right to inspect the corporate books/records as provided for under Section 74 of the Corporation Code, the following elements must be present: First. A director, trustee, stockholder or member has made a prio prior r dema demand nd in writ writin ing g fo for r a copy copy of ex exce cerp rpts ts from from the the corporation’s records or minutes; Second. Any officer or agent of the concerned corporation shall refuse to allow the said director, trustee, stockholder or memb member er of the the corp corpor orat atio ion n to ex exam amin ine e and and copy copy said said excerpts; Third. If such refusal is made pursuant to a resolution or orde order r of the the boar board d of dire direct ctor ors s or trus truste tees es,, the the liab liabili ility ty under this section for such action shall be imposed upon the directors or trustees who voted for such refusal; and, Fourth. Where the officer or agent of the corporation sets up the defense that the person demanding to examine and copy excerpts from the corporation’s records and minutes has improperly used any information secured through any prio prior r examination of the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making his demand, the contrary must be shown or proved. Thu Thus, s, in a crim crimin inal al comp compla lain intt for for viol violat atio ion n of Sect Sectio ion n 74 of the the Corporation Code, the defense of improper use or motive is in the nature of a justifying circumstance that would exonerate those who rais raise e and and are are able able to prov prove e the the same same.. Ac Acco cord rdin ingl gly, y, wher where e the the corporation denies inspection on the ground of improper motive or purpose, the burden of proof is taken from the shareholder and placed on the corporation. This being the case, it would be improper
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Thus, Thus, contrary contrary to Eduardo’ Eduardo’s s insistenc insistence, e, the stockhol stockholder’s der’s right to insp inspec ectt corp corpor orat ate e book books s is not not with withou outt limi limita tati tion ons. s. It is now now expressly required as a condition for such examination that the one requesting it must not have been guilty of using improperly any information secured through a prior examination, or that the person asking for such examination must be acting in good faith and for a legitimate purpose in making his demand. The serious serious allegatio allegations ns against against Eduardo Eduardo are supporte supported d by official official and and othe otherr docu docume ment nts, s, su such ch as boar board d reso resolu luti tion ons, s, trea treasu sure rer’ r’s s affidavits and written communication from the respondent Eduardo hims himsel elf, f, who who appe appear ars s to have have with withhe held ld his his obje object ctio ions ns to thes these e charges. His silence virtually amounts to an acquiescence. Taken toge togeth ther er,, all all thes these e serv serve e to just justif ify y peti petiti tion oner ers’ s’ alle allega gati tion on that that Eduardo was not acting in good faith and for a legitimate purpose in making his demand for inspection of the corporate books. Otherwise stated, there is lack of probable cause to support the allegation that petitioners violated Section 74 of the Corporation Code in refusing respondent’s request for examination of the corporation books.
