G.R. No.

L-37064

October 4, 1932 I$$UE6$5 .hether there )as a malicious attempt to keep +irector Veraguth from attending a special meeting of the $*+ at )hich the compensation of the attorneys of the company )as fi/ed, or )hether +irector Veraguth, in a spirit of antagonism, has made this merely a prete/t to cause trouble. 0 .hether a director has the un(ualified right to inspect the books and records of the corporation. RULING5 Speaking to the first point relating to the alleged failure of the secretary to notify the petitioner of a special meeting, )hether there )as a malicious attempt to keep +irector Veraguth from attending a

EUGENIO VERAGUTH, D rector !"# $toc%&o'#er o( t&e I)!be'! $*+!r ,o-.!"/, I"c., petitioner, vs. I$A0ELA $UGAR ,O12AN3, IN,., GIL 1ONTILLA, Act "+ 2re) #e"t, !"# AGU$TIN 0. 1ONTILLA, $ecret!r/ o( t&e )!-e cor.or!t o", respondents. 4A,T$5 The parties to this action are Eugenio Veraguth (director and stockholder of Isabela Sugar Company, Inc. , and the Isabela Sugar Company, Inc., !il "ontilla (acting president and #gustin $. "ontilla (secretary . %etitioner prays& ' That the respondents be re(uired )ithin five days from receipt of notice of this petition to sho) cause )hy they refuse to notify the petitioner, as director, of the regular and special meetings of the $*+, ' That a final and absolute )rit of mandamus be issued to each and all of the respondents to notify immediately the petitioner )ithin the reglamentary period, of all regular and special meetings of the board of directors of the Isabela Sugar Central Company, and ' To place at his disposal at reasonable hours the minutes, documents, and books of said corporation for his inspection as director and stockholder, and to issue immediately, upon payment of the fees, certified copies of any documentation in connection )ith said minutes, documents, and the books of the aforesaid corporation.

special meeting of the $*+ at )hich the compensation of the attorneys of the company )as fi/ed, or )hether +irector Veraguth, in a spirit of antogonism, has made this merely a prete/t to cause trouble, 7e !re *"!b'e #e( " te'/ to )!/. This much, &o7e8er, can appropriately be stated and is decisive, and this is that t&e -eet "+ " 9*e)t o" ) " t&e .!)t !"#, therefore, "o7 -ere'/ .re)e"t) !" !c!#e- c 9*e)t o", that "o #!-!+e 7!) c!*)e# to Ver!+*t& b/ t&e !ct o" t!%e" !t t&e ).ec !' -eet "+ 7& c& &e # # "ot !tte"# , since his interests )ere fully protected by the %hilippine 1ational $ank, and that as to meetings in the future it is to be presumed that the secretary of the company )ill fulfill the re(uirements of the resolutions of the company pertaining to regular and special meetings. It )ill, of course, be incumbent upon Veraguth to give formal notice to the secretary of his post'office address if he desires notice sent to a particular residence.

*n the second (uestion pertaining to the right of inspection of the books of the company, the Corporation 2a), Section 3-, provides that& All business corporations shall keep and carefully preserve a record of all business transactions, and a minute of all meetings of directors, members, or stockholders, in which shall be set forth in detail the time and place of holding the meeting was regular or special, if special its object, those present and absent, and every act done or ordered done at the meeting. . . . The record of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member, or stockholder of the corporation at reasonable hours. D rector) o( ! cor.or!t o" &!8e t&e *"9*!' ( e# r +&t to ").ect t&e boo%) !"# recor#) o( t&e cor.or!t o" !t !'' re!)o"!b'e t -e). # director or stockholder can of course make copies, abstracts, and memoranda of documents, books, and papers as an incident to the right of inspection, b*t c!""ot, 7 t&o*t !" or#er o( ! co*rt, be .er- tte# to t!%e boo%) (ro- t&e o(( ce o( t&e cor.or!t o".

:e #o "ot co"ce 8e, ho)ever, t&!t ! # rector or )toc%&o'#er &!)

!"/ !b)o'*te r +&t to )ec*re cert ( e# co. e) o( t&e - "*te) o( t&e cor.or!t o" *"t ' t&e)e - "*te) &!8e bee" 7r tte" *. !"# !..ro8e# b/ t&e # rector). (See 4isher5s %hilippine 2a) of Stock Corporations, sec. -36, and 4letcher Cyclopedia Corporations, vol. 7, Chap. 73. .hen Veraguth telegraphed the secretary, asking the latter to for)ard a certified copy of the resolution of the $*+ concerning the payment of attorney5s fees in a certain case against Isabela Sugar Company and others, the secretary ans)ered stating that, since the minutes of the meeting in (uestion had not been signed by the directors present, a certified copy could not be furnished and that as to other proceedings of the stockholders, a re(uest should be made to the president of Isabela Sugar Company. It appears that the board of directors adopted a resolution providing for inspection of the books and the taking of copies 8by authority of the %resident of the corporation previously obtained in each case.8 .e do not think that anything improper occurred )hen the secretary declined to furnish certified copies of minutes )hich had not been approved by the $*+, and that )hile so much of the last resolution of the $*+ as provides for prior approval of the president of the corporation before the books of the corporation can be inspected puts an illegal obstacle in the )ay of a stockholder or director, that resolution, so far

.e rule that the petitioner has not made out a case for relief by mandamus. %etition denied )ith costs. NOTE$ (In the event Atty. Dakanay gets finicky)5 %rete/ts may not be put for)ard by officers of corporations to keep a director or shareholder from inspecting the books and minutes of the corporation, and t&e r +&t o( ").ect o" ) "ot to be #e" e# o" t&e +ro*"# t&!t t&e # rector or )&!re&o'#er ) o" *"(r e"#'/ ter-) 7 t& t&e o(( cer) o( t&e cor.or!t o" 7&o)e recor#) !re )o*+&t to be ").ecte#.

as )e are a)are, has not been enforced to the detriment of anyone. In addition, it should be said that this is a family dispute, the petitioner and the individual respondents belonging to the same family, that a test case bet)een the petitioner and the respondents has not been begun in the Court of 4irst Instance of *ccidental 1egros involving hundreds of thousands of pesos, and that the appellate court should not intrude its vie)s to give an advantage to either party. DI$$ENTING O2INION$5 VI,;ER$, J. #n e/traordinary meeting of the directors of the corporation )as held at Isabela, *ccidental 1egros. # notice of this meeting )as sent to Veraguth by registered letter, but the notice )as not received by him until a later date, because the letter )as addressed to the plaintiff at Isabela. The post'office address of the plaintiff at that time )as %ulupandan, *ccidental 1egros, and this fact )as kno)n to the defendant officers of the corporation, as sho)n by the notices, because these notices )ere not mailed until the day of the respective meetings, although the notice )ere dated three days prior to the dates )hen they )ere mailed. It ) c'e!r, t&ere(ore, t&!t "o "ot ce o( t&e -eet "+ 7!) + 8e" to Ver!+*t&, bec!*)e t&e "ot ce o( )! # -eet "+ 7!) )e"t to I)!be'! ")te!# o( 2*'*.!"#!". Taking into consideration the relations e/isting bet)een the parties, I !- )!t )( e# t&!t t& ) "ot ce 7!) !##re))e# to I)!be'! ")te!# o( 2*'*.!"#!" (or t&e .*r.o)e o( #e.r 8 "+ t&e .'! "t (( o( !" o..ort*" t/ o( !tte"# "+ t&e -eet "+. Ver!+*t& )ee%) t&e .rotect o" o( & ) r +&t to ! "ot ce o( !'' -eet "+) o( t&e bo!r# o( # rector), !"# .r!/) t&!t t&e o(( cer) -.'e!#e# be re9* re# to .er(or- t&e r #*t e) " !ccor#!"ce 7 t& t&e '!7. It )

ob8 o*) t&!t ( t&e o(( cer) )&o*'# !+! " (! ' to "ot (/ Ver!+*t& o( !"/ -eet "+ o( t&e bo!r# o( # rector), &e 7o*'# be " "o better .o) t o" t&!" &e ) !t t&e .re)e"t t -e. 9nder the theory of the ma:ority opinion Veraguth )ould have no redress. The refusal of the secretary of the corporation to allo) Veraguth to read the resolution during the meeting on the ground that it had not been signed by the directors, Veraguth )as clearly )ithin his rights in demanding tha the be given an opportunity to e/amine said resolution. It #oe) "ot !..e!r t&!t t&ere 7!) !"/ "ece)) t/ (or t&e # rector) to ) +" t&e re)o'*t o" " 9*e)t o". $*c& !re )o'*t o" 7!) ! .!rt o( t&e )ecret!r/<) - "*te) o( t&e -eet "+, 7& c& 7o*'# or# "!r '/ be re.orte# (or !..ro8!' !t t&e "e=t -eet "+. In any event the directors had adopted the resolution, and )hether it )as to be signed or not, Veraguth as a director of the corporation had a right to see it. 0UTTE, J. I concur in the foregoing dissent insofar as it relates to the actions of the respondent corporation and its officers in denying to the petitioner, as stockholder and as director, the rights )hich statutes confer upon him to e/amine and make or receive copies of any and all of the books and papers of the corporation pertaining to the conduct of its business. The record sho)s clearly that the officers and remaining directors have adopted a policy of obstruction to)ard the petitioner in this respect and imposed for the future, by resolution, illegal conditions upon the petitioner5s e/ercise of the said right.