Andres F. Dela cruz vs. Industrial Woods, Phil. Inc., et al.

[SEC-SICD * CASE NO. 2889. January 31, 1989.] ANDRES F. DELA CRUZ , complainant , vs .INDUSTRIAL WOODS, PHIL.,INC.,ET AL. , respondents . D E C I S I O N In the complaint filed with the Commission for mandamus and damages, complainant prayed that respondents be directed to furnish him the financial statements and the balance sheet as of the end of each taxable year from 1977 to 1984 and to deliver to him the stock dividends declared in favor of all the stockholders, and in support thereof, alleged that Industrial Woods, Philippines Inc.,(Corporation, for brevity) is a corporation duly organized and existing under the laws of the Philippines and is engaged in the sawmill business, and Margarita Suria is the President and Managing Director thereof; that he is the owner of two hundred (200) shares of the capital stock of respondent Corporation; in 1975, he was elected director and enjoyed all the rights of a stockholder like being notified of stockholders' meetings, being furnished with the audited financial statement and the balance sheet. In 1977, he sued Margarita Suria for the recovery or collection of a personal loan and as a result thereof, their relationship, as friends, became estranged. From then on up to the present, he did not anymore receive and/or was furnished notices of stockholders' meeting, financial statements and balance sheets. On July 22, 1985, he wrote the corporation requesting that he be furnished the financial statements for 1984 but he did not receive any reply. In their answer, respondents denied the material allegations of the complaint and by way of Special and Affirmative Defenses alleged that there was a misjoinder of party in that the President of respondent Corporation is Don Alviar and not Margarita H. Suria; that a corporation is under no obligation to a stockholder upon becoming financially embarrassed; the fact that Corporation has accumulated profits does not of itself entitle the shareholders to a dividend; and that dividends are declared by the board of Directors; At the hearing, aside from the testimony of the complainant, his counsel marked and formally offered Exhibits "A" to "D".On the part of the respondents, the affidavit of Margarita H. Suria was submitted to constitute her direct testimony. However, notwithstanding due notice, she repeatedly failed to appear at the scheduled hearings in order to be cross-examined. And so, upon motion by counsel for the complainant, her affidavit was expunged from the records and respondents were considered to have waived their right to present evidence and in the Order dated September 1, 1988, the case was considered submitted for decision. From the evidence submitted by the complainant, the following facts were duly established: 1. That complainant is the owner of two hundred (200) shares of the capital stock of the respondent corporation (Exh. "A"); dctai 2. That from 1977 up to 1984, complainant was never notified of any stockholders' meeting and was never furnished with financial statement and balance sheet for the same period of time, notwithstanding request to that effect (Exh. "B") The right of a stockholder to be furnished financial statements, including the balance sheet, upon request, is clearly provided for under the Corporation Code. Thus, Section 75 thereof reads as follows: "SECTION 75. Right to financial statements . 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, 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. However, if the paid-up capital of the corporation is less than P50,000.00 the financial statements may be certified under oath by the treasurer or any responsible officer of the corporation." Considering that it has been clearly established that complainant is a stockholder of respondent corporation and a request for the financial statements and balance sheet has been made, the respondent corporation is duty bound to furnish the complainant with said financial statements and balance sheet. Complainant, however failed to present any evidence to support his claim for damages and that dividends were ever declared by the respondent corporation. WHEREFORE, judgment is hereby rendered directing respondents to furnish the complainant, within ten (10) days from the finality of the decision, the financial statements and balance sheets of the respondent corporation for the period covering 1977 to 1984. Respondents' counterclaim is hereby dismissed for lack of evidence to support the same. SO ORDERED. (SGD.) MACARIO P. MALLARI Hearing Officer