Title
Supreme Court
Dee Ping Wee vs. Lee Hiong Wee
Case
G.R. No. 169345
Decision Date
Aug 25, 2010
Shareholders dispute corporate records inspection; RTC grants access, CA partially annuls, SC denies suspension of execution, affirms RTC decision.

Case Digest (G.R. No. 169345)
Expanded Legal Reasoning Model

Facts:

  • Parties and Corporate Background
    • Petitioners:
      • Dee Ping Wee – brother of respondent Lee Hiong Wee
      • Marina U. Tan – sister of respondent Lee Hiong Wee
      • Araceli Wee – spouse of Dee Ping Wee
    • Respondents:
      • Lee Hiong Wee – brother of petitioner Dee Ping Wee
      • Rosalind Wee – spouse of Lee Hiong Wee
    • Corporate Interests:
      • Petitioners were majority stockholders of three domestic corporations:
        • Marcel Trading Corporation – engaged in seaweed cultivation, buying, selling (wholesale), exporting, and manufacturing
ii. Marine Resources Development Corporation – engaged in cultivating, buying, selling, and exporting seaweeds, seashells, and other marine products iii. First Marcel Properties, Inc. – engaged in acquisition, development, and disposition of real estate and other structures
  • Respondents held minority stock interests in these corporations
  • Pre-Litigation Events and Correspondence
    • On April 16, 2004, respondents’ counsel sent a demand letter to petitioner Dee Ping Wee requesting:
      • Inspection and reproduction of corporate records maintained at Marcel Tower
      • Availability of financial statements for the years ending 2002 and 2003
      • A warning that failure to comply would compel respondents to file legal suits for enforcement of their rights as stockholders
    • On April 22, 2004, petitioner Dee Ping Wee responded with conditions:
      • Request for respondents (Lee Hiong Wee and Rosalind Wee) to first furnish complete and true financial reports of Rico Philippines Industrial Corporation, including:
        • 2003 Balance Sheet, Income Statement, and Cash Flow Statements
ii. Detailed account of disbursements of deposits by Lee Hiong Wee iii. Reimbursement of cash advances and allocation of bank loan proceeds iv. Accounting of export sales directed to a Hong Kong bank account
  • Assertion that the directors of Marcel Trading Corporation and Marine Resources Development Corporation had equal or better rights to make such demands
  • Initiation of Litigation
    • Respondents filed three separate complaints before the RTC of Quezon City on May 12, 2004:
      • Civil Case No. Q-04-091 – involving Marcel Trading Corporation
      • Civil Case No. Q-04-092 – involving Marine Resources Development Corporation
      • Civil Case No. Q-04-093 – involving First Marcel Properties, Inc.
    • Claims Made:
      • Alleged violation of respondents’ rights to inspect corporate books and obtain copies of financial statements under Sections 74 and 75 of the Corporation Code
      • Sought moral and exemplary damages, attorney’s fees, and costs for what were claimed to be illegal and vexatious acts by the petitioners
  • Trial Court Proceedings and Decisions
    • On May 31, 2004, petitioners filed separate Answers, moving for the dismissal of the complaints:
      • Arguing the demand letter lacked specificity regarding documents and purpose
      • Contending respondents’ complaints were ill-motivated, intended for harassment or to obtain evidence to regain management control
    • On June 23, 2004, the RTC (Branch 93, special commercial court) rendered three separate decisions (with uniform language aside from the names of the corporations):
      • Found respondents were legitimate stockholders with the inherent right to inspect corporate records
      • Determined that no valid ground was advanced by petitioners to deny the statutory right
      • Provided specific conditions for the exercise of inspection rights, including a requirement for written notice, deposit of inspection costs, and adherence to business hours
      • Denied any award for damages
  • Appellate Proceedings
    • Petitioners filed petitions for certiorari with the Court of Appeals on August 23, 2004 (docketed separately under CA-G.R. SP Nos. 85878, 85880, and 85879):
      • Argued that an appeal was not plain, speedy, or adequate given the immediate executory nature of the RTC decisions
      • Asserted that the RTC erred in ruling out the defenses of lack of good faith or improper motive on the part of the respondents
    • Developments in the Court of Appeals:
      • CA-G.R. SP No. 85878 was dismissed on technical grounds as petitioners allegedly had the remedy of appeal
      • CA-G.R. SP Nos. 85880 and 85879:
        • The Fourth Division annulled the RTC decision in Civil Case No. Q-04-092 due to lack of proper motive by respondents
ii. The Eighth Division adopted the ruling of the Fourth Division for the inspection issue in Civil Case No. Q-04-093
  • Petitioners’ subsequent motions for reconsideration were denied in both instances
  • Motion for Execution and Subsequent Litigation
    • Respondents filed a Motion for Execution on September 15, 2004 for the RTC decisions
    • RTC granted execution in Civil Case No. Q-04-091 but denied it in 092 and 093 due to pending appeals before the Court of Appeals
    • On March 9, 2005, a Writ of Execution in Civil Case No. Q-04-091 was issued
    • Petitioners filed an omnibus motion on March 22, 2005 to quash or suspend execution, arguing that the ruling in CA-G.R. SP No. 85880 (March 11, 2005) which annulled the RTC decision in Civil Case No. Q-04-092, constituted a supervening event
  • Further Appellate and Consolidation Proceedings
    • Petitioners consolidated their petitions for preliminary injunction or TRO (CA-G.R. SP No. 90024) alleging grave abuse of discretion in the RTC’s denial of their motion
    • Court of Appeals (First Division) in Resolution dated June 29, 2005 denied their petition, holding:
      • There was no grave abuse of discretion in the RTC’s decision
      • No subsequent event justified the quashing or suspension of execution of RTC Decision in Civil Case No. Q-04-091
    • Petitioners’ Motion for Reconsideration was similarly denied on August 18, 2005
    • Meanwhile, on October 17, 2005, the Court issued a temporary restraining order (TRO) against the execution in Civil Case No. Q-04-091
  • Supreme Court Petition for Review on Certiorari
    • Petitioners ultimately elevated the case to the Supreme Court seeking:
      • Issuance of a writ of preliminary injunction and/or TRO to enjoin the enforcement of the RTC’s Writ of Execution in Civil Case No. Q-04-091
      • The argument that the decision in CA-G.R. SP No. 85880 was a supervening event warranting a suspension of execution
    • The sole issue in the Supreme Court petition revolved around the alleged supervening event and its effect on the pending execution

Issues:

  • Whether the decisions rendered by the Court of Appeals in CA-G.R. SP Nos. 85880 and 85879, which annulled or modified the inspection orders in Civil Cases Nos. Q-04-092 and Q-04-093, respectively, constitute a supervening event that would warrant the suspension of execution of the RTC decision in Civil Case No. Q-04-091.
    • Whether the issue of separate corporate records (Marcel Trading Corporation versus Marine Resources Development Corporation/First Marcel Properties, Inc.) negates the argument for a supervening event.
    • Whether petitioners pursued the proper remedial process given that the remedy by appeal was still available and had been lost due to delay.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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