Bienvenido C. Sison, Sr. vs. Demetrio R. Bautista, Sr., et al.

[SEC-SICD * CASE NO. 2453. January 29, 1985.] BIENVENIDO C. SISON, JR. , petitioner , vs .DEMETRIO R. BAUTISTA, SR.,ET AL. , respondent . D E C I S I O N This is a petition for mandamus filed by Bienvenido C. Sison who seeks to examine the books and records of Fortune Coconut Products Corporation (corporation, for brevity) and to compel the respondents-officers of the corporation to produce the documents evidencing the sale of the assets of the corporation to Philippine Coconut Authority (hereinafter referred to as Authority). Petitioner claims that he is one of the original stockholders of the corporation, previously with fifteen (15) fully paid shares in his name, and presently the registered owner of eight (8) shares of stock in the corporation, of which two shares are fully paid; that on January 10, 1983, the corporation authorized the Chairman of the Board, respondent Demetrio R. Bautista, Sr.,to sell and dispose the entire assets in its name; that in a meeting held on March 9, 1983, respondent John A. Bautista reported that the sale has already been consummated in favor of the Authority; that in the same meeting, both respondents presented a financial statements depicting a net loss for the corporation; that the petitioner requested from the respondents a copy of the agreement or contract evidencing the sale of the corporation's assets where the exact purchase price is reflected, including any supporting vouchers or receipts showing the actual amount paid by the buyer, the Authority, to determine the veracity of the financial statement; that despite repeated demands, respondents failed and refused to heed the same. Respondents oppose the petition alleging, substantially, that petitioner has no cause of action since on March 8, 1983, he ceased to be a stockholder of the corporation as he sold, transferred, ceded and conveyed all his stockholdings of 64 shares in the corporation for and in consideration of P54,996.65 in favor of respondent Demetrio R. Bautista, Sr.;that prior to the execution of the Deed of Assignment dated March 8, 1983 (Exh. "1"),petitioner did not make any written request from the corporation to secure copies of the financial statements or to examine the books and records of the latter; that petitioner is now barred by estoppel and laches from exercising the right of inspection; that petitioner is acting in bad faith and does not have a good cause to demand copies of the documents regarding the transaction in question. The sole issue raised by the parties in this case is whether or not the petitioner has the right to examine and/or inspect the records of the corporation including the financial statements, books of accounts and the documents evidencing the sale of the assets of the corporation. And as an ancillary issue, whether or not petitioner is still a stockholder of the corporation. In the case at bar, respondents claim that the petitioner is no longer a stockholder of the corporation. To support their contention, their lone witness, Mr. Alex Maniquis, testified that on March 8, 1983, petitioner and his wife, Cecilia E. Sison, sold sixty-four (64) shares of stock of the corporation to respondent Demetrio R. Bautista (Exh. 1);that out of the said sixty-four (64) shares, fifty-two (52) shares belonged to Bienvenido C. Sison and the remaining twelve (12) shares belonged to his wife; (T.S.N.,June 4, 1984, p. 22);that the fifty-two (52) shares sold by petitioner were the only shares remaining under the latter' s name in the Stock and Transfer Book of the corporation on the date of sale on March 8, 1983; that before said transaction took place, the Stock and Transfer Book of the Corporation was examined by witness Alex Maniquis sometime in February, 1983 which showed that fifty-two (52) shares were registered under the name of petitioner as of March 5, 1982 (T.S.N. June 4, 1984, p. 26; Exhs. 4 and 4-a).Clearly, respondents are trying to imply that petitioner has no more shares left in his name after the latter had sold fifty two (52) shares in favor of herein respondent Demetrio R. Bautista on March 8, 1983; We disagree with respondents' contention. It should be borne in mind that in any corporation, changes in the ownership of shares of stock or stockholders may occur from time to time. The fact that petitioner had fifty-two (52) shares as of March 5, 1982 does not mean that he will have the same number of shares as of March 5, 1983 when the sale of fifty-two (52) shares in favor of respondent Demetrio R. Bautista was consummated. We find and so hold that petitioner is still a stockholder of record of the Corporation. The best evidence of this fact is the Stock and Transfer Book which was even placed in the possession of Mr. Alex Maniquis, accountant of respondents. The page of said Stock and Transfer Book, reflecting the Stockholdings of petitioner, (Exh. "C") reveals that petitioner is a registered owner of eight (8) subscribed shares (Exh. "C-1") with a value of P8,000.00 (Exh "C-2").Of this total subscription, petitioner has paid two (2) shares (Exh. "C-3") in the amount of P2,000.00 (Exh. "C-4").These facts and figures were affirmed by the former Corporate Secretary Jose O. Sison through his testimony and certification (Exh. "A") made under oath. LexLib Section 74 of Batas Pambansa Blg. 68 otherwise known as "The Corporation Code of the Philippines" provides for the right of a stockholder to inspect and examine the books and records of the corporation. The second and third paragraphs thereof read: "The records of all business transactions 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 he may demand, in writing, for a copy of excerpts from said records of minutes, at his expense. Any officer or agent of the corporation who shall refuse to allow any director, trustee, stockholder or member of the corporation to examine and copy excerpts from its records or minutes, in accordance with the provisions of this Code, shall be liable to such director, trustee, stockholder or member for damages, and in addition, shall be guilty of an offense which shall be punishable under Section 144 of this Code: Provided, That if such refusal is 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 Provided, further, That it shall be a defense to any action under this section 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." Under this provision, any director, trustee, stockholder or member may inspect the records of all business transactions of the corporation and may demand in writing for a copy of excerpts from said records or minutes at his expense. This right embraces books and records of the corporation long before the stockholder became such. The right of inspection given to a stockholder can be exercised either by himself or by any proper representatives or attorney in fact, and either with or without the attendance of the stockholder. (Philpotts vs. Philippine Manufacturing Company, et al., G.R. No. 15568, November 8, 1919, 40 Phil. 471). And in the very recent case of Gonzales vs. PNB, G.R. No. L-33320, May 30, 1983, it was held: "While seemingly enlarging the right of inspection, the new Code has prescribed limitations to the same. 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, and that the person asking for such examination must be "acting in good faith and for a legitimate purpose in making his demand." Although the respondents have claimed that petitioner is acting in bad faith and that the latter has no justifiable motives in seeking the inspection of the books and records of the corporation, these facts, however, were not proven during the trial. On the other hand, evidence shows that petitioner had requested for a copy of the pertinent documents evidencing the sale of the assets of the corporation to the Authority (Exh. "B"). Also this statutory right of a member or stockholder to inspect and examine the books and records of the corporation may be enforced by mandamus where an opportunity to exercise the right has been wrongfully refused by the corporation or its officers or agents. And in order to entitle a stockholder or member to the writ, his status as a stockholder or member must be sufficiently established, his right of inspection must be clear, and he must have exhausted any remedies within the corporation that may be prescribed by statute or by law. These requirements have been squarely met by the petitioner. WHEREFORE, the petition is hereby GRANTED, and the respondents are hereby ordered to allow the petitioner to examine the books and records of the corporation and to furnish petitioner with such documents evidencing the sale of assets of the corporation to the Authority at the expense of the petitioner. Without pronouncement as to costs. LibLex SO ORDERED. (SGD.) ROLANDO C. MALABONGA Hearing Officer