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Published by Sui

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Published by: Sui on Aug 10, 2008
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Pardo v. HERCULES LUMBER CO. et al.
(1924)1)Pardo (a stockholder in HERCULES LUMBER CO.) filed a OriginalAction for Mandamus before the SC to compel HERCULES LUMBER CO.et al. to permit him and his duly authorized agent and representativeto examine the records and business transactions of said company.2)acting secretary of the said company, has refused to permit thepetitioner or his agent to inspect the records and business transactionsof the said Hercules Lumber Company, Inc., at times desired by thepetitioner.3)C answer:a)Art. 10 of By-laws declared that"Every shareholder may examine the books of the company andother documents pertaining to the same upon the days whichthe BOD shall annually fix."b)at the directors' meeting of the respondent corporationheld on February 16, 1924, the board passed a resolution to thefollowing effect:"The board also resolved to call the usual general (meeting of shareholders) for March 30 of the present year, with notice tothe shareholders that the books of the company are at theirdisposition from the 15th to 25th of the same month forexamination, in appropriate hours."4)C contention:this resolution of the board constitutes a lawful restriction on theright conferred by statute; and it is insisted that as the petitionerhas not availed himself of the permission to inspect the booksand transactions of the company within the ten days thusdefined, his right to inspection and examination is lost, at leastfor this year.HELD:We are entirely unable to concur in this contention. Thegeneral right given by the statute may not be lawfully abridged to theextent attempted in this resolution. It may be admitted that theofficials in charge of a corporation may deny inspection when sought atunusual hours or under other improper conditions; but neither theexecutive officers nor the board of directors have the power to deprive
 
a stockholder of the right altogether. A by-law unduly restricting theright of inspection is undoubtedly invalid.RATIO:It will be noted that our statute declares that the right of inspection can be exercised
"at reasonable hours." 
 
This means atreasonable hours on business days throughout the year, andnot merely during some arbitrary period of a few days chosenby the directors.Gonzales v. PNB
(1983)1)Gonzales (has 1 share in PNB) filed a Mandamus before RTC tocompel the PNB to allow him to inspect the latter’s records so that hecould determine whether certain bank transactions entered into beforehe became a SH, whether the ff transactions were valid and:a) to satisfy himself as to the truth of the published reports thatPNB has guaranteed the obligation of' Southern Negros DevelopmentCorporation in the purchase of a US$23 million sugar-mill to befinanced by Japanese suppliers and financiersb)that PNB is financing the construction of the P21MCebu-Mactan Bridge to be constructed by V.C. Ponce, Inc., andc)the construction of Passi Sugar Mill at Iloilo by the HonironPhilippines. Inc.,2)His written request for such examination was denied by PNB.3)PNB AVP and Legal Counsel: denied his request for being notgermane to his interest as a 1-share stockholder and for the cloud of doubt as to his real intention and purpose in acquiring said share.4)Gonzales previously admitted that he acquired 1 share in thePNB precisely to exercise the right of inspection.HELD:Petition Denied.Although the petitioner has claimed thathe has justifiable motives in seeking the inspection of the books of therespondent bank, he has not set forth the reasons and the purposesfor which he desires such inspection, except to satisfy himself as to thetruth of published reports regarding certain transactions entered intoby the respondent bank and to inquire into their validity.
 
'The circumstances under which he acquired one share of stockin the respondent bank purposely to exercise the right of inspection donot argue in favor of his good faith and proper motivation. Admittedlyhe sought to be a stockholder in order to pry into transactions enteredinto by the respondent bank even before he became a stockholder. Hisobvious purpose was to arm himself with materials which he can useagainst the respondent bank for acts done by the latter when thepetitioner was a total stranger to the same. He could have beenimpelled by a laudable sense of civic consciousness,
but it could notbe said that his purpose is germane to his interest as astockholder.
RATIO:However, while seemingly enlarging the right of inspection,the new Code has prescribed limitations to the same.
It is nowexpressly required as a condition for such examination that theone requesting it must not have been guilty of using improperlyany information secured through a prior examination, and thatthe person asking for such examination must be acting in goodfaith and for a legitimate purpose in making his demand.
Campos Note: these are not requirements but defenses.
Veraguth v. ISABEL SUGAR CO., (and Pres and Sec.)
(1932)1)Veraguth is a SH and D o
ISABEL SUGAR CO.
2)Director Veraguth telegraphed the secretary of the company,asking the latter to forward in the shortest possible time a certifiedcopy of the Board resolution concerning the payment of attorney's feesin the case against the Isabela Sugar Company and others.3)The secretary answered:a)since the minutes of the meeting in question had not beensigned by the directors present, a certified copy could notbe furnished,b)as to other proceedings of the stockholders a requestshould be made to the president of the Isabela SugarCompany, Inc.4)It further appears that the BOD adopted a resolution providingfor inspection of the books and the taking of copies "by authority of the President of the corporation previously obtained in each case."

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