REPUBLIC OF THE PHILIPPINES, (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT) vs. THE HONORABLE SANDIGANBAYAN (FIRST DIVISION) AND EDUARDO COJUANGCO, JR.,
G.R. No. 88809
July 10, 1991
REPUBLIC OF THE PHILIPPINES, (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT) vs. THE HONORABLE SANDIGANBAYAN (FIRST DIVISION) AND EDUARDO COJUANGCO, JR.,
G.R. No. 88858
July 10, 1991
Corporation Law, Right of Inspection of a Stockholder, Corporation Code of the Philippines
Facts:
Private respondent who is a stockholder of SMC sought to the production, inspection, examination/verification and/or photocopying of the SMC corporate records to inform him of the decisions, policies, acts and performance of the management of the SMC under the PCGG-Board. In another case, same private respondent who was a stockholder of record sought authority to inspect and examine the corporate records of United Coconut Planters Bank. Both requests were denied by PCGG.
At the time of the request, SMC and UCPB Shares were sequestered by the PCGG.
Issue:
Whether or not sequestration automatically deprives a stockholder of his right of inspection?
Ruling:
No. The right of a stockholder to inspect and/or examine the records of a corporation is explicitly provided in Section 74 of the Corporation Code, the pertinent portion of which reads:
Sec. 74. Books to be kept; stock transfer agent. “The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense.”
Records indicate that private respondent is the ostensible owner of a substantial number of shares and is a stockholder of record in SMC and UCPB. * Being a stockholder beyond doubt, there is therefore no reason why private respondent may not exercise his statutory right of inspection in accordance with Sec. 74 of the Corporation Code, the only express limitation being that:
1) the right of inspection should be exercised at reasonable hours on business days;
2) the person demanding to examine and copy excerpts from the corporation's records and minutes has not improperly used any information secured through any previous examination of the records of such corporation; and
3) the demand is made in good faith or for a legitimate purpose.
The latter two limitations, however, must be set up as a defense by the corporation if it is to merit judicial cognizance. As such, and in the absence of evidence, the PCGG cannot unilaterally deny a stockholder from exercising his statutory right of inspection based on an unsupported and naked assertion that private respondent's motive is improper or merely for curiosity or on the ground that the stockholder is not in friendly terms with the corporation's officers.
G.R. No. 88809
July 10, 1991
REPUBLIC OF THE PHILIPPINES, (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT) vs. THE HONORABLE SANDIGANBAYAN (FIRST DIVISION) AND EDUARDO COJUANGCO, JR.,
G.R. No. 88858
July 10, 1991
Corporation Law, Right of Inspection of a Stockholder, Corporation Code of the Philippines
Facts:
Private respondent who is a stockholder of SMC sought to the production, inspection, examination/verification and/or photocopying of the SMC corporate records to inform him of the decisions, policies, acts and performance of the management of the SMC under the PCGG-Board. In another case, same private respondent who was a stockholder of record sought authority to inspect and examine the corporate records of United Coconut Planters Bank. Both requests were denied by PCGG.
At the time of the request, SMC and UCPB Shares were sequestered by the PCGG.
Issue:
Whether or not sequestration automatically deprives a stockholder of his right of inspection?
Ruling:
No. The right of a stockholder to inspect and/or examine the records of a corporation is explicitly provided in Section 74 of the Corporation Code, the pertinent portion of which reads:
Sec. 74. Books to be kept; stock transfer agent. “The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said records or minutes, at his expense.”
Records indicate that private respondent is the ostensible owner of a substantial number of shares and is a stockholder of record in SMC and UCPB. * Being a stockholder beyond doubt, there is therefore no reason why private respondent may not exercise his statutory right of inspection in accordance with Sec. 74 of the Corporation Code, the only express limitation being that:
1) the right of inspection should be exercised at reasonable hours on business days;
2) the person demanding to examine and copy excerpts from the corporation's records and minutes has not improperly used any information secured through any previous examination of the records of such corporation; and
3) the demand is made in good faith or for a legitimate purpose.
The latter two limitations, however, must be set up as a defense by the corporation if it is to merit judicial cognizance. As such, and in the absence of evidence, the PCGG cannot unilaterally deny a stockholder from exercising his statutory right of inspection based on an unsupported and naked assertion that private respondent's motive is improper or merely for curiosity or on the ground that the stockholder is not in friendly terms with the corporation's officers.
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