Benico v. Unidad

[SEC-SICD * CASE NO. 04-96-5322. September 13, 1999.] CELIA S. BENICO , petitioner , vs .MA. SALOME L UNIDAD, ET AL. , respondents . D E C I S I O N This is a petition for accounting of the business affairs of Unishoppe Supermarket Management Corporation filed against the corporate President, Treasurer, and Auditor. Petitioner likewise prays for such other relief as payment of her shares of stocks, damages and attorney's fees. Petitioner alleges that the business of Unishoppe Supermarket Management Corp. started successfully due to effective and orderly management by both the respondents officers and the employees which resulted to million of pesos in profits; that by reason of such success, petitioner accordingly demanded respondents for a complete accounting of the business affairs of said company and of her share in the profits thereof; that because of said demand petitioner is now pressured to go out of the company and she is in fact terminated as employee of Unishoppe; and that by reason of respondents' failure to account, she suffered actual and moral damages and she is compelled to engage the services of a counsel for the protection of her rights. Respondents, on the other hand, allege that petitioner has not demanded for accounting as she in fact, has been regularly provided during Board meetings with up-dated reports on the affairs of Unishoppe; that petitioner simply abandoned her job after serving two suspensions for repeatedly violating company rules and after consuming a 15-day vacation leave; that to respondents' surprise, petitioner's counsel sent them a grievance letter on the alleged termination of petitioner or for alleged failure to account as a preliminary act in filing this case; that neither respondents are the real parties in interest but Unishoppe nor petitioner has a cause of action against them; and that the filing of this case resulted to respondents' suffering of moral damages and payment of attorney's fees. The following are the relevant facts of the case: Petitioner as well as respondents Ma. Salome L. Unidad and Ma. Teresa U. Saguinsin are stockholders and members of the Board of Directors of Unishoppe Supermarket Management Corp. (Unishoppe for brevity) which is a corporation duly organized and registered with this Commission (Exhs. "A" to "A-7",and "B").In addition, respondent Salome L. Unidad is the President of Unishoppe while respondent Ma. Teresa U Saguinsin is the Treasurer. Beside being a stockholder and director of Unishoppe, petitioner also worked as storekeeper (Exhs. "C" to "C-1") until she ceased reporting to her work just after consuming her March 5 to 19, 1996 vacation leave (Annex "Y") llcd Prior to her severance as storekeeper of Unishoppe however, petitioner appeared to have been notified in and attended all board meetings of Unishoppe (Annexes "A" to, "K" of the answer) Likewise as admitted in the answer, Unishoppe is financially successful in its operation and thus it maintained a total surplus profit of P1,214,136.00 as of December 31, 1996 (Exhs. "1" to "1-C-1"). Petitioner testified that she made repeated oral demands to the Corporate Secretary and Accountant Miss Vina Fundamera for accounting and copying company records and minutes of meeting. (TSN June 17, 1997, pp. 29 to 32 and July 9, 1997, pp. 10 to 15). On March 23, 1996 petitioner's counsel also sent to respondents a letter, requiring for an explanation about petitioner's severance from Unishoppe as storekeeper and respondents' failure to heed the oral demand for accounting (Annex "Z"). Evidence also show that Unishoppe has not filed any Financial Statements with the Commission since its registration in 1992. (Exhs "D") The issues to be resolved are: 1. Whether or not respondents can be ordered to furnish petitioner with full and complete accounting of the business affairs of Unishoppe Supermarket Management Corporation; 2. Whether or not petitioner is entitled to payment for her shares in Unishoppe; and 3. Whether or not petitioner is entitled to actual/moral damages and attorney's fees. The resolution of the first issue above may be had on the basis of the following provisions of the Corporation Code of the Philippines, to wit: "SECTION 74. Books to be kept; stock transfer agent . ...The records of all business transaction of the corporation and the minutes of any meeting shall be open to the inspection of any director, trustee, stockholder or member of the corporation at reasonable hours on business days and be may demand in writing, for a copy of excerpts from said records or minutes at his expense. xxx xxx xxx "SECTION 75. Right to Financial Statement . Within ten (10) days from receipt of a written request of any stockholder or member, the corporation shall furnish to him its, most recent financial statement which shall include a balance sheet as of the end of the last taxable year and a profit or loss statement for said taxable year showing in reasonable detail its assets and liabilities and the result of its operations. At the regular meeting of stockholders or members the board of directors or trustees shall present to such stockholders or members a financial report of the operations of the corporation for the preceding year, which shall include financial statements, duly signed and certified by an independent certified public accountant. ...";and "SECTION 141. Annual reports of corporations . Every corporation, domestic or foreign, lawfully doing business in the Philippines shall submit to the Securities and Exchange Commission an annual report of its operations, together with a financial statement of its assets and liabilities, certified by any independent certified public accountant in appropriate cases, covering the preceding fiscal year and such other requirements as the Securities and Exchange Commission may require. ...." Undoubtedly thus, herein petitioner, for having been admittedly a stockholder of Unishoppe, is vested of a right of inspection or copying of corporate records, or of being informed about the financial status, affairs, and operation of Unishoppe, or of being furnished upon demand in writing of a copy of the said company's most recent audited financial statements. Under the same provision, it is an obligation of Unishoppe, by and through herein respondents who actually control the whole management, to accordingly act in case such a right is being exercised. Respondents cannot defeat this right of petitioner nor can they escape these obligations by the simple expediency of throwing the obligations to Unishoppe which cannot act by itself except through them. LLphil Respondents' defense allegations to the effect that petitioner has no cause of action against them in their personal capacity but against Unishoppe and that she had not demanded for accounting or in fact she had been regularly up-dated of the business affairs during board meeting do not deserve merit nor vest upon the Commission with sufficient reasons in denying petitioner's right to accounting or inspection and copying of books and records. Unishoppe cannot by itself act except by and through herein respondents officers who are in actual control of its management and have custody of its books and records. Likewise, while there was legal infirmity in petitioner's original demand for accounting, being oral, the same had been substantially corrected when her counsel subsequently sent a letter demanding for an explanation on respondents' refusal to account and/or by the filing of this case. In fact, should respondents be willing and ready to furnish petitioner with copies of Unishoppe's most recent audited financial statements, they could have done so just after receiving the said demand letter or at the preliminary conference scheduled for this case. Beside, respondents' failure to comply with this Commission's reportorial requirements is a clear indication of their or Unishoppe's refusal to her demand for accounting regardless of whether the demand is in writing or not. With respect to the second issue, the same is in the negative. A stockholder's appraisal right may be exercised only in the following instances, such as: (1) when the amendment to the articles of Incorporation has the effect of changing or restricting the right of any stockholder or class of shares or of authorizing preferences in any respect superior to those of outstanding shares of any class or of extending or shortening the term of corporate evidence; (2) in case of sale, lease, exchange, transfer, mortgage, pledge or disposition of all of the corporate property and assets as provided in this code; (3) in case of merger or consolidation; and (4) when corporate funds are invested in another corporation or business (Secs. 42 and 81 of the Corporation Code) Petitioner's demand or relief for the payment of her share on the contrary is basically grounded upon allegations that respondents terminated her as storekeeper of Unishoppe and/or they failed to heed to her request for accounting, or that Unishoppe has raked in millions of pesos. These are not:,however, covered by the foregoing instances wherein a stockholder may demand payment or the fair value of her shares. Petitioner similarly had not established sufficient basis for the award of actual and moral damages. On the other hand, attorney's fees may nonetheless be awarded because it appears that petitioner was compelled to litigate, and hire the services of a counsel on account of respondents obstinate failure to account or to furnish her with a copy of Unishoppe's audited financial statement and records. WHEREFORE, premises considered, judgment is hereby rendered ordering respondents (1) to immediately furnish petitioner with Unishoppe's most recent financial statement:,which shall include a balance sheet as of the end or the last taxable year and a profit and loss statement for said taxable year, showing in reasonable detail its assets and liabilities, and the result of its operation; (2) to allow petitioner to inspect and copy corporate books and records in accordance with the By-laws; and (3) to pay P30,000.00 in attorney's fees. The Supervision and Monitoring Department of this Commission is moreover requested to take the appropriate action against respondents and Unishoppe for their failure to comply with this Commission's reportorial requirements and for apparent transgression of the second paragraph of Sec. 45 of the Corporation Code on declaration of dividends. No pronouncement as to costs. SO ORDERED. (SGD.) PAULINO Q. GALLEGOS Hearing Officer