4) Veraguth v. Isabela Sugar Co., Inc.
4 Oct 1932 (CARO) shall be set forth in detail the time and place of holding the meeting, how
Petitioner: Eugenio Veraguth (director and SH of ISC)
Respondents: ISC, Gil Montilla (Acting President), and Agustin Montilla (Secretary)
Corporate Governance: Information Rights
*it’s an old case so I had to tweak the format of the digest so it’s easier to understand
Veraguth’s prayer and ISSUES:
1. That Gil and Agustin be required to
a. explain why they did not notify Veraguth of the regular and special
meetings of the BOD
b. to place at his disposal the minutes, documents, and books of
Isabela Sugar for his inspection as director and SH, and
c. to issue upon payment of fees, certified copies of any
documentation in connection with said documents
2. That a writ of mandamus be issued in pursuance to the above
Facts with Held [more facts in dissent]
On notification of the special meeting
- According to Veraguth, Agustin (Secretary) failed to notify him in due time of a
special meeting in which a resolution was passed on the fixing of lawyers’
compensation of Isabela Sugar
o SC could not say whether or not there was bad faith
o SC used the by laws and a resolution passed by the BOD providing for the
holding of ordinary and special meetings as basis for their ruling
o This issue has become moot because there was no damage caused to
Veraguth by the action taken at the special meeting which he didn’t
attend because his interests were fully protected by the PNB
o As to future meetings, it is presumed that Agustin will fulfill the
requirements of the company pertaining to regular and special meetings
 if will then be Veraguth’s responsibility to give formal notice to
Agustin if he desires that notice be sent to a particular residence
On right of inspection of Isabela Sugar’s books, this is the main issue
- Veraguth telegraphed Agustin asking the latter to forward a certified copy of
the resolution of the BOD concerning the payment of attorney’s fees in a case
against Isabela Sugar
- Agustin replied via letter: the minutes of the meeting were not signed by the
directors present thus a certified copy could not be furnished to Veraguth, and
that requests such as this should be made to the President of Isabela Sugar.
- BOD adopted a resolution providing for the inspection of the books and the
taking of copies by authority of the President.
o Sec. 51 of the Corporation Law provides: "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
authorized, the notice given, whether 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."
o Directors of a corporation have the unqualified right to inspect the books
and records of the corporation at all reasonable times  this means that
any director should NOT have to make a request to any officer to inspect
the records of the corporation. Any such obstacle is illegal and cannot be
enforced against anyone
o The right of inspection is not to be denied on the ground that the director
or shareholder is on unfriendly terms with the officers of the corporation
whose records are sought to be inspected
o A director or SH can make copies, abstracts, and memoranda of the
documents as an incident to the right of inspection, but cannot be
permitted to take books from the corporation’s office without court
order. [so inspecting is an act different from taking]
o Also, a director of SH has no absolute right to secure certified copies of
the minutes of the meetings until these have been written up and
approved by the directors
o Thus, there was nothing wrong with Agustin refusing to furnish Veraguth
a certified copy of the minutes which was not approved
o This is actually a FAMILY DISPUTE in that Veraguth and the Montillas are
of the same family.
o Veraguth’s petition for mandamus cannot lie. Denied.
J. Vickers Dissent
- As to Agustin’s refusal to allow Veraguth read the resolution adopted on April
21, 1932, on the ground that it had not been signed by the directors, Veraguth
was clearly within his rights in demanding that he be given an opportunity to
examine said resolution  there wasn’t any necessity for the directors to sign
the resolution in question
- Such resolution was part of the secretary’s minutes which would ordinarily be
reported for approval at the next meeting.
- But in any event, whether the resolution was signed or not, Veraguth had a right
to see it.
- As to the fact that ill-feeling exists between the parties and another suit
between them is now pending, that seems to me only an additional reason why
the plaintiff should be protected in the lawful rights which he now seeks to en-
force.