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    ANG-Abaya Vs ANG

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    Rv Tenorio
    This case involves a dispute between shareholders of family-owned corporations over one shareholder's request to inspect corporate books. [1] The petitioners refused the request, claiming the shareholder would misuse the information and was not acting in good faith. [2] The Department of Justice reversed the finding of probable cause against the petitioners. [3] The Supreme Court upheld the DOJ's decision, finding the petitioners presented evidence that the shareholder was not acting with a legitimate purpose, so their refusal was allowed under the statute.

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    ANG-Abaya Vs ANG

    Uploaded by

    Rv Tenorio
    1K views3 pages
    This case involves a dispute between shareholders of family-owned corporations over one shareholder's request to inspect corporate books. [1] The petitioners refused the request, claiming the shareholder would misuse the information and was not acting in good faith. [2] The Department of Justice reversed the finding of probable cause against the petitioners. [3] The Supreme Court upheld the DOJ's decision, finding the petitioners presented evidence that the shareholder was not acting with a legitimate purpose, so their refusal was allowed under the statute.

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    ANG-Abaya vs ANG

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    This case involves a dispute between shareholders of family-owned corporations over one shareholder's request to inspect corporate books. [1] The petitioners refused the request, claiming the shareholder would misuse the information and was not acting in good faith. [2] The Department of Justice reversed the finding of probable cause against the petitioners. [3] The Supreme Court upheld the DOJ's decision, finding the petitioners presented evidence that the shareholder was not acting with a legitimate purpose, so their refusal was allowed under the statute.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    1K views3 pages

    ANG-Abaya Vs ANG

    Uploaded by

    Rv Tenorio
    This case involves a dispute between shareholders of family-owned corporations over one shareholder's request to inspect corporate books. [1] The petitioners refused the request, claiming the shareholder would misuse the information and was not acting in good faith. [2] The Department of Justice reversed the finding of probable cause against the petitioners. [3] The Supreme Court upheld the DOJ's decision, finding the petitioners presented evidence that the shareholder was not acting with a legitimate purpose, so their refusal was allowed under the statute.

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    of 3

    ANG-ABAYA vs ANG

    FACTS

    Vibelle Manufacturing Corporation and Genato Investments, Inc. are


    family-owned corporations, where petitioners Ma. Belen Flordeliza C.
    Ang-Abaya , Jason A. Ang, Vincent G. Genato, Hanna Ang and
    private respondent Eduardo G. Ang (Eduardo) are shareholders,
    officers and members of the board of directors.

    Prior to the instant controversy, VMC, Genato, and Oriana


    Manufacturing Corporation (Oriana) filed a case for damages with
    prayer for issuance of a TRO and/or writ of preliminary injunction
    against Eduardo for allegedly conniving to fraudulently wrest
    control/management of the corporations. Eduardo allegedly
    borrowed substantial amounts of money from the said corporations
    without any intention to repay; that he repeatedly demanded for
    increases in his monthly allowance and for more cash advances
    contrary to existing corporate policies; that he harassed petitioner
    Flordeliza to transfer and/or sell certain corporate and personal
    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 him on the financial and business activities of these
    family corporations. Petitioners denied the request claiming that
    Eduardo would use the 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
    unjustly demanding that he be given an office/position already
    occupied and usurping corporate powers as well as making
    demands with regard to corporate properties.

    Because of petitioners’ refusal to grant his request to inspect the


    corporate books of VMC and Genato, Eduardo filed an Affidavit-
    Complaint 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 City Prosecutor issued a Resolution recommending 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 the recommendation of the City Prosecutor.
    The DOJ denied Eduardo’s Motion for Reconsideration. The Court of
    Appeals reversed the DOJ.

    ISSUE
    Whether or not the DOJ committed GADALEJ in reversing the
    resolution of the prosecutor finding probable cause against
    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


    prior demand in writing for a copy of excerpts from 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 member of the corporation to examine and copy said
    excerpts;

    Third. If such refusal is made pursuant to a resolution or


    order of the board of directors or trustees, the liability
    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
    prior 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.

    Thus, in a criminal complaint for violation of Section 74 of the


    Corporation Code, the defense of improper use or motive is in the
    nature of a justifying circumstance that would exonerate those who
    raise and are able to prove the same. Accordingly, where 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
    for the prosecutor, during preliminary investigation, to refuse or fail
    to address the defense of improper use or motive, given its express
    statutory recognition.
    Thus, contrary to Eduardo’s insistence, the stockholder’s right to
    inspect corporate books is not without limitations. It is 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 allegations against Eduardo are supported by official


    and other documents, such as board resolutions, treasurer’s
    affidavits and written communication from the respondent Eduardo
    himself, who appears to have withheld his objections to these
    charges. His silence virtually amounts to an acquiescence. Taken
    together, all these serve to justify petitioners’ allegation 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.

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