PARDO v. HERCULES LUMBER 2.

It will be noted that our statute declares that the right of inspection can be
August 1, 1924.| Street, J. | Right of Inspection exercised "at reasonable hours." This means at reasonable hours on business
PETITIONERS: Antonio Pardo days throughout the year, and not merely during some arbitrary period of a
RESPONDENTS: The Hercules Lumber Co., Inc. and Ignacio Ferrer few days chosen by the directors.
SUMMARY: The petitioner alleged that respondents refuse to allow him to 3. In addition to relying upon the by-law, the answer of the respondents calls
inspect company records pursuant to a board resolution limiting the right of in question the motive which is supposed to prompt the petitioner to make
inspection to 10 days prior the general meeting scheduled on March 30 of the inspection; and in this connection it is alleged that the information which
same year. The Court ruled against the respondents. the petitioner seeks is desired for ulterior purposes in connection with a
DOCTRINE: See Ratio 2. competitive firm with which the petitioner is alleged to be connected. It is
also insisted that one of the purposes of the petitioner is to obtain evidence
FACTS:
preparatory to the institution of an action which he means to bring against
1. Petitioner initiated an original proceeding in the SC against one of the
the corporation by reason of a contract of employment which once existed
respondents to obtain a writ of mandamus to compel the latter to permit the
between the corporation and himself. These suggestions are entirely apart
plaintiff and his duly authorized representative to examine the records and
from the issue, as, generally speaking, the motive of the shareholder
business transactions of said company.
exercising the right is immaterial.
2. It is admitted that petitioner is a shareholder and respondent Ferrer, as
acting secretary, refused to permit the petitioner or his agent to inspect the
records and business transactions of respondent company at times desired
by petitioner.
3. Respondents cite article 10 of the By-laws which declares that “every
shareholder may examine the books of the company and other documents
pertaining to the same upon the days which the board of directors shall
annually fix.”
4. Pursuant to said article, board passed a resolution on Feb 16, 1924 declaring
that: A general meeting shall be held on March 30 of the same year with
notice to the SHs that the books of the company are at their disposition from
15th to 25th of the same month for examination, in appropriate hours.
5. The respondents contend that this resolution constitutes a lawful restriction
on the right to inspection and insisted that petitioner has not availed himself
of the permission to inspect the books and transactions within 10 days
defined. Hence, right to inspection and examination is lost, as least for this
year.

ISSUES: WoN the resolution is a valid restriction on petitioner’s right of inspection?

- NO

RULING: Writ of mandamus prayed for is GRANTED.

RATIO:
1. The general right given by the statue may not be lawfully abridged to the
extent attempted in the resolution. It may be admitted that the officials in
charge of a corporation may deny inspection when sought at unusual hours
or under other improper conditions; but neither the executive officers nor
the board of directors have the power to deprive a stockholder of the right
altogether. A by-law unduly restricting the right of inspection is
undoubtedly invalid. Authorities to this effect are too numerous and direct
to require extended comment.