ANG-ABAYA v.

ANG (2008)
G.R. No. 178511
Topic: Sec. 74 Corporation Code
ANG-ABAYA v. ANG G.R. No. 178511, December 4, 2008, Ynares-Santiago, J.:
The stockholder s right of inspection of the corporation s book and records is based
upon their ownership of the assets and property of the corporation. It is, ther
efore, an incident of ownership of the corporate property, whether this ownershi
p or interest be termed an equitable ownership, a beneficial ownership, or a qua
si-ownership. This right is predicated upon the necessity of self-protection. Th
e inspection has to be germane to the petitioner s interest as a stockholder, and
has to be proper and lawful in character and not inimical to the interest of the
corporation.
FACTS: Vibelle Manufacturing Corporation (VMC) and Genato Investments, Inc. (Gen
ato) are family-owned corporations, where petitioners and private respondent Edu
ardo Ang are shareholders, officers and members of the board of directors.
Prior to the instant controversy, VMC, Genato, and Oriano Manufacturing Corp. fi
led a Civil case 4257-MC against Eduardo, together with Michael, and some other
persons for allegedly conniving to fraudulently wrest control/management of the
corporations.
During the pendency of the above-mentioned Civil Case, particularly in July 2004
, Eduardo sought permission to inspect the corporate books of VMC and Genato on
account of petitioners alleged failure to update him on the financial and busine
ss activities of these family corporations.
Petitioners denied the request claiming that Eduardo would use the information o
btained from said inspection for purposes inimical to the corporations interests.
Because of petitioners refusal to grant Eduardo s request, the latter filed an Aff
idavit-Complaint against petitioners, charging them with violation of two counts
of Sec. 74 (Corporation Code), in relation to Sec. 144.
Petitioners denied violating Sec. 74 and reiterated the allegations contained in
their complaint in Civ. Case 4257-MC. They alleged that Eduardo consistently pr
essured petitioner Flordeliza, his daughter, to improperly transfer ownership of
the corporations V.A.G building to him. When the proposed transfer of the V.A.G.
building did not materialize, petitioners claim that Eduardo instituted an acti
on to compel donation of said property to him. Moreover, they claim that Eduardo
attempted to forcibly evict petitioner Jason from his office at VMC so he can o
ccupy the same; that Eduardo and his cohorts constantly created trouble by inter
vening in the daily operations of the corporations without the knowledge or cons
ent of the board of directors.
ISSUE: Whether the petitioners violated Sec, 74 of the Corporation Code of the P
H.
RULING: NO. The stockholders right to inspect corporate books is not without limi
tations. It is now expressly required as a condition for such examination that t
he one requesting it must not have been guilty of using improperly any informati
on secured through a prior examination, or that the person asking for such exami
nation must be acting in good faith and for a legitimate purpose in making his d
emand.
In order therefore for the penal provision under Sec 144 of the Corporation Code
to apply in a case of violation of a stockholder or members right to inspect th
e corporate books/records the elements provided for under Sec 74 must be present
.
The petition is GRANTED.