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Ang-Abaya vs.

Ang
GR 178511 December 4, 2008
Facts:
Vibelle Manufacturing Corporation (VMC) and Genato Investments, Inc. (Genato)
are family-owned corporations, where petitioners Flordeliza C. Ang-Abaya, Jason A. Ang,
Vincent G. Genato, Hanna A. Ang and private respondent Eduardo G. Ang are
shareholders, officers and members of the board of directors. Prior to the controversy, the
family corporations filed a civil case for damages with prayer for issuance of a temporary
restraining order (TRO) and/or writ of preliminary injunction against herein respondent
Eduardo for allegedly conniving to fraudulently wrest control/management of the
corporations; that he interfered with and disrupted the daily business operations of the
corporations. During the pendency of Civil Case, Eduardo sought permission to inspect the
corporate books on account of petitioners alleged failure and/or refusal to update him on
the financial and business activities of these family corporations. Petitioners denied the
request claiming that Eduardo would use the information obtained from said inspection for
purposes inimical to the corporations interests, considering the acts he committed as
stated in the complaint for damages. Because of petitioners refusal, Eduardo filed a
complaint, charging petitioners with violation of Section 74, in relation to Section 144, of
the Corporation Code of the Philippines.
On February 3, 2005, the City Prosecutors Office of Malabon City issued a
Resolution recommending that petitioners be charged with two counts of violation of
Section 74 of the Corporation Code. Petitioners filed a Petition for Review before the
Department of Justice (DOJ), which reversed the recommendation of the City Prosecutor
of Malabon City.
Issue: Whether or not there was a violation of Section 74 of the Corporation Code
Held: NO.
Petitioners argue that Eduardos demand for an inspection of the corporations
books is based on the latters attempt in bad faith at having his more than P165 million
advances from the corporations written off; that Eduardo is unjustly demanding that he be
given the office of Jason, or the Vice Presidency for Finance and Corporate Secretary; that
Eduardo is usurping rights belonging exclusively to the corporations; and Eduardos
attempts at coercing the corporations, their directors and officers into giving in to his
baseless demands involving specific corporate assets
The serious allegations made by petitioners 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. 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.
It is necessary that there be good faith and legitimate purpose on the part of the
one demanding the documents.

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