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Vibelle Manufacturing Corporation (VMC) and Genato Investments, Inc. (Genato) are family-owned
corporations, where petitioners and private respondent Eduardo G. Ang are shareholders, officers and
members of the board of directors.
VMC and Genato filed an action for damages with prayer for issuance of a writ of preliminary injunction
against Eduardo for allegedly conniving to fraudulently wrest control and management of the
corporations. Eduardo allegedly borrowed substantial amounts of money from the said corporations
without any intention to repay; that he harassed petitioner Flordeliza to transfer and/or sell certain
corporate and personal properties in order to pay off his personal obligations; that he attempted to
forcibly evict petitioner Jason from his office and claim it as his own, and; that he interfered with and
disrupted the daily business operations of the corporations.
During the pendency of the case Eduardo sought permission to inspect the corporate books of VMC and
Genato. Petitioners denied the request claiming that Eduardo would use the information obtained from
said inspection for purposes inimical to the corporations interests.
The case was eventually decided in Eduardo's favor. Thereafter, he filed a complaint against petitioners
for violation of Section 74, in relation to Section 144, of the Corporation Code of the Philippines.
Petitioners denied violating Section 74 of the Corporation Code. Petitioners blamed Eduardos lavish
lifestyle, which is funded by personal loans and cash advances from the family corporations. They alleged
that Eduardo consistently pressured petitioner Flordeliza, his daughter, to improperly transfer ownership
of the corporations V.A.G. Building to him.
The City Prosecutor found probable cause and recommended that petitioners be charged with two counts
of violation of Section 74 of the Corporation Code.
Department of Justice reversed the recommendation of the Prosecutor.
CA reversed DOJ decision.
1. Whether or not there is probable cause.
2. Whether or not Eduardo is guilty of bad faith.
3. Whether or not Eduardo can demand inspection of books
1. NO. Probable cause, for purposes of filing a criminal information, has been defined as such facts as are
sufficient to engender a well-founded belief that a crime has been committed and that respondent is
probably guilty thereof.
In order therefore for the penal provision under Section 144 of the Corporation Code to apply, 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 corporations 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 corporations 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.
Eduardo failed to comply with the fourth requisite.
2. YES. Petitioners serious allegations are supported by official and other documents, such as board
resolutions, treasurers 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.
3. Contrary to Eduardos insistence, the stockholders right to inspect corporate books is not without
In the instant case, the Court finds that the Court of Appeals erred in declaring that the Secretary of
Justice exceeded his authority when he conducted an inquiry on the petitioners defense of improper use
and motive on Eduardos part.
In the instant case, requires that an inquiry into the motive behind Eduardos attempt at inspection
should have been made even during the preliminary investigation stage, just as soon as petitioners set up
the defense of improper use and motive.
Specifically, petitioners accuse Eduardo of the following:
1. He is a spendthrift, using the family corporations resources to sustain his extravagant lifestyle.
2. He is exercising undue pressure upon petitioners in order to acquire ownership, through the forced
execution of a deed of donation,
4. At one time, he coerced Flordeliza for the latter to sell her Wack-Wack Golf Proprietary Share;
(Out of many accusations)
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 respondents request for examination of the corporation books.
WHEREFORE, the Petition for Review on Certiorari is GRANTED.