6/30/2015

G.R. No. L-22442

TodayisTuesday,June30,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.L22442August1,1924
ANTONIOPARDO,petitioner,
vs.
THEHERCULESLUMBERCO.,INC.,andIGNACIOFERRER,respondents.
W.J.O'DonovanandM.H.deJoyaforpetitioner.
SumulongandLavidesandRoss,LawrenceandSelphforrespondents.
STREET,J.:
Thepetitioner,AntonioPardo,astockholderintheHerculesLumberCompany,Inc.,oneoftherespondentsherein,
seeksbythisoriginalproceedingintheSupremeCourttoobtainawritofmandamustocompeltherespondentsto
permit the plaintiff and his duly authorized agent and representative to examine the records and business
transactions of said company. To this petition the respondents interposed an answer, in which, after admitting
certainallegationsofthepetition,therespondentssetforththefactsuponwhichtheymainlyrelyasadefensetothe
petition. To this answer the petitioner in turn interposed a demurrer, and the cause is now before us for
determinationoftheissuethuspresented.
Itisinferentially,ifnotdirectlyadmittedthatthepetitionerisinfactastockholderintheHerculesLumberCompany,
Inc., and that the respondent, Ignacio Ferrer, as acting secretary of the said company, has refused to permit the
petitionerorhisagenttoinspecttherecordsandbusinesstransactionsofthesaidHerculesLumberCompany,Inc.,
attimesdesiredbythepetitioner.Noseriousquestionisofcoursemadeastotherightofthepetitioner,byhimself
orproperrepresentative,toexercisetherightofinspectionconferredbysection51ofActNo.1459.Saidprovision
was under the consideration of this court in the case of Philpotts vs. Philippine Manufacturing Co., and Berry (40
Phil.,471),whereweheldthattherightofexaminationthereconcededtothestockholdermaybeexercisedeither
byastockholderinpersonorbyanydulyauthorizedagentorrepresentative.
Themaingrounduponwhichthedefenseappearstoberestedhasreferencetothetime,ortimes,withinwhichthe
rightofinspectionmaybeexercised.Inthisconnectiontheanswerassertsthatinarticle10oftheBylawsofthe
respondent corporation it is declared that "Every shareholder may examine the books of the company and other
documentspertainingtothesameuponthedayswhichtheboardofdirectorsshallannuallyfix."Itisfurtheraverred
that at the directors' meeting of the respondent corporation held on February 16, 1924, the board passed a
resolutiontothefollowingeffect:
Theboardalsoresolvedtocalltheusualgeneral(meetingofshareholders)forMarch30ofthepresentyear,with
noticetotheshareholdersthatthebooksofthecompanyareattheirdispositionfromthe15thto25thofthesame
monthforexamination,inappropriatehours.
The contention for the respondent is that this resolution of the board constitutes a lawful restriction on the
rightconferredbystatuteanditisinsistedthatasthepetitionerhasnotavailedhimselfofthepermissionto
inspect the books and transactions of the company within the ten days thus defined, his right to inspection
andexaminationislost,atleastforthisyear.
We are entirely unable to concur in this contention. The general right given by the statute may not be lawfully
abridgedtotheextentattemptedinthisresolution.Itmaybeadmittedthattheofficialsinchargeofacorporation
may deny inspection when sought at unusual hours or under other improper conditions but neither the executive
officersnortheboardofdirectorshavethepowertodepriveastockholderoftherightaltogether.Abylawunduly
restricting the right of inspection is undoubtedly invalid. Authorities to this effect are too numerous and direct to
require extended comment. (14 C.J., 859 7 R.C.L., 325 4 Thompson on Corporations, 2nd ed., sec. 4517
Harknessvs.Guthrie,27Utah,248107Am.,St.Rep.,664.681.)Underastatutesimilartoourownithasbeen
held that the statutory right of inspection is not affected by the adoption by the board of directors of a resolution
providingfortheclosingoftransferbooksthirtydaysbeforeanelection.(Statevs.St.LouisRailroadCo.,29Mo.,
Ap.,301.)
It will be noted that our statute declares that the right of inspection can be exercised "at reasonable hours." This
meansatreasonablehoursonbusinessdaysthroughouttheyear,andnotmerelyduringsomearbitraryperiodofa
fewdayschosenbythedirectors.
In addition to relying upon the bylaw, to which reference is above made, the answer of the respondents calls in
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question the motive which is supposed to prompt the petitioner to make inspection and in this connection it is
alleged that the information which the petitioner seeks is desired for ulterior purposes in connection with a
competitivefirmwithwhichthepetitionerisallegedtobeconnected.Itisalsoinsistedthatoneofthepurposesof
thepetitioneristoobtainevidencepreparatorytotheinstitutionofanactionwhichhemeanstobringagainstthe
corporationbyreasonofacontractofemploymentwhichonceexistedbetweenthecorporationandhimself.These
suggestionsareentirelyapartfromtheissue,as,generallyspeaking,themotiveoftheshareholderexercisingthe
rightisimmaterial.(7R.C.L.,327.)
Weareoftheopinionthat,upontheallegationsofthepetitionandtheadmissionsoftheanswer,thepetitioneris
entitledtorelief.Thedemurreris,therefore,sustainedandthewritofmandamuswillissueasprayed,withthecosts
againsttherespondent.Soordered.
Johnson,Malcolm,Villamor,Ostrand,andRomualdez,JJ.,concur.
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