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SECTION 74 Corporation Code

GONZALES vs PNB
FACTS:
Gonzales instituted several actions against PNB questioning different transactions
entered into by PNB with other parties. He impugns the validity of the letters of credit
extended by PNB for the importation by the Republic of the Philippines of public works
equipment intended for the massive development program of the President. HIs legal
standing to maintain a suit against the Bank was raised since he was not a stockholder.
As such, he acquire one share of stock from Congressman Justiniano Montano.
Thereafter, Gonzales addressed a letter to the President of the Bank requesting
submission to look into the records of its transactions covering the purchase of a sugar
central and construction of the Cebu-Mactan Bridge.
The Asst. Vice-President and Legal Counsel of the Bank answered petitioner's letter
denying his request for being not germane to his interest as a one-share stockholder and
for the cloud of doubt as to his real intention and purpose in acquiring said share. PNB
also contended that the inspection sought to be exercised by Gonzales is violative of its
charter.
Gonzales contends that Sec. 51 of the Corporation Law(old), the law granted the
stockholder the right to inspect the books of the corporation in clear and unconditional
terms.
Sec. 51. ... 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.
Hence a special civil action for mandammus was filed by Gonzales to compel the bank to
produce its books and records.
Trial court denied the petition. It held that the right of a stockholder to inspect the
record of the business transactions of a corporation is not absolute, but is limited to
purposes reasonably related to the interest of the stockholder, must be asked for in good
faith for a specific and honest purpose and not gratify curiosity or for speculative or
vicious purposes;
ISSUE/S
1. Whether or not Gonzales has the right to examine the books and records of PNB.
2. Whether or not the inspection sought would violate PNB's charter.
RULING
1. NO. Petitioner may no longer insist on his interpretation of Section 51 of the

Corporation Law. The former Corporation Law has been replaced by Corporation Code
of the Philippines. under the Corporation Code the one requesting the inspection of
records must not have been guilty of using improperly any information through a prior
examination, and that the person asking for such examination must be acting in good
faith and for a legitimate purpose in making his demand.
Although the petitioner has claimed that he has justifiable motives in seeking the
inspection of the books of the respondent bank, he has not set forth the reasons and the
purposes for which he desires such inspection, except to satisfy himself as to the truth of
published reports regarding certain transactions entered into by the respondent bank
and to inquire into their validity. The circumstances under which he acquired one share
of stock in the respondent bank purposely to exercise the right of inspection do not
argue in favor of his good faith and proper motivation.
2. YES. The Philippine National Bank is not an ordinary corporation. Having a charter of
its own, it is not governed, as a rule, by the Corporation Code of the Philippines.
Under PNB's charter, officers designated by law to inspect or investigate the condition of
the National Bank, shall not reveal to any person other than the President of the
Philippines, the Secretary of Finance, and the Board of Directors the details of the
inspection or investigation, nor shall they give any information relative to the funds in
its custody, its current accounts or deposits belonging to private individuals,
corporations, or any other entity, except by order of a Court of competent jurisdiction.