Heirs of Vicente Inocalla, et al. vs. Rural Bank of Paracale, Inc., et al.

[SEC-SICD * CASE NO. 03-96-5294. January 31, 2000.] HEIRS OF VICENTE INOCALLA, ET AL. , complainants , vs . RURAL BANK OF PARACALE, INC., ET AL. , respondents . D E C I S I O N This is a petition for Mandamus and Damages filed by the heirs of Vicente Inocalla, represented herein by Casper Inocalla, a stockholder of the Rural Bank of Paracale, Inc., to compel respondent bank to allow petitioners to inspect and examine the books of accounts and records of the bank. I PETITIONERS allege among others that: Vicente Inocalla, Sr., the father of herein petitioners is a stockholder of Rural Bank of Paracale, Inc. Petitioners now assert as heirs of the deceased stockholder, their right to inspect and examine the books of the corporation They claim that after the death of their father, the financial affairs of the corporation worsened, that dividends has rarely been declared and that almost always, stockholders, including herein petitioners are required to place in additional investments. Further they allege that petitioners merely desire to bring to the attention of the stockholders alleged "unquestionably bloated" amounts and enumeration of expenses (Exhibit "A" letter to the President/General Manager of Rural Bank dated February 16, 1996) in the books of the corporation. Petitioners sent demand-letters on several dates to the bank, repeatedly requesting for inspection and examination of corporate books/accounts. However, the same were denied by the bank. RESPONDENTS argue that the right to inspection of the books of account and records of the bank is purely personal and can not be delegated to any other person considering that the records of the bank are entirely confidential They posit that the right to succeed in case of death or incapacity of a director, member, or stockholder must be supported by legal proof. In this case, Casper Inocalla claims that he is representing the heirs of Vicente Inocalla he can not present proof of such authority/representation. He was not able to present the Special Power of Attorney required of him by the bank. Respondents allege further that Casper Inocalla's authority is doubtful considering that most of the heirs of Vicente Inocalla are permanently living abroad, one is dead and that there is disagreement as to who shall represent the heirs of the deceased stockholders. Thus, for all legal intents and purposes, Casper is not the real party in interest to bring the instant suit. Further, respondents contend that petitioners' request was not made in good faith and for a legitimate purpose. Moreso, the demand is purely speculative and a mere fishing expedition. Petitioners' request allegedly did not specify the books of accounts and records of the bank to be examined and inspected. WE find no sufficient cause of action in the instant petition. Verily, under our laws, an heir of a deceased stockholder whose stock still remain pro-indiviso among the heirs, cannot be considered a stockholder of a stock corporation in his own right until the share is registered in his own name on the books of the corporation (De Leon, Corp. Code, 1993 citing SEC Opinion March 1, 1976 ). To transfer the shares of stock in favor of the heirs of the deceased stockholder, judicial or extra-judicial partition of the estate is necessary if he died intestate; otherwise, it will be necessary to wait for the termination of the testamentary proceedings and the final adjudication of the share of stock in accordance with the will of the decedent . . . (De Leon Corp.: Code, 1993 SEC Opinion, Nov. 25, 1991 ). The fact that petitioners are heirs of the deceased stockholders of record does not make them automatically stockholders of record, and therefore they do not have the right to inspect the books of the corporation. To enforce their right as stockholders of record, petitioners being legal heirs of the deceased stockholder of record, should first have the corporation register them as stockholders of record and if they are denied registry, their remedy is to file a petition for mandamus with the SEC (Lopez, Corp. Code, annotated, 1994 citing Miguel A.B. Sision et al., vs. Hon. Agellon, et al., SEC EB No. 293, Nov. 23, 1992 ). And where an administrator or executor has-been duly appointed by the court, the administrator or executor should present proof or evidence of his judicial appointment (De Leon, Corp. Code, 1993, citing SEC Opinion, May 12, 1988) before he can be allowed to exercise the rights of the deceased stockholder. In this case, petitioners, heirs of Vicente Inocalla, have not presented any proof relative to the judicial or extra-judicial settlement of their father's estate nor the appointment of any one of them as administrator of their father's estate. There is even no allegation in the complaint regarding such fact And when the respondent required petitioner Casper Inocalla to present a Special Power of Attorney authorizing him to represent the heirs of deceased stockholder Inocalla, he has not been able to present one (Exh "I" ) Contrary to petitioners' allegation that the bank outrightly denied petitioners' request for inspection. WE find from the evidence adduced that the bank did not really deny petitioners' access to the bank's records. In fact the President of the bank, in a letter dated February 14, 1996 intimated the bank's willingness to allow petitioners inspection of the records (Exhibit "B"). The bank's officers, however, only required petitioners to present proof of their authority to represent the deceased stockholder and/or the other heirs. Petitioners failed to do so. Thus, the bank's refusal. We consider the fact that the bank's records and books are delicate and important documents which should only be available for inspection to legitimate stockholders, officers or their authorized representatives. WHEREFORE, premises considered, the instant petition should be, as it is hereby. DISMISSED. SO ORDERED. (SGD.) MARCIANO S. BACALLA, JR. (SGD.) MYLA GLORIA A. AMBOY Hearing Officer Hearing Officer