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4) Veraguth v. Isabela Sugar Co., Inc.

4 Oct 1932 (CARO) shall be set forth in detail the time and place of holding the meeting, how
Petitioner: Eugenio Veraguth (director and SH of ISC) authorized, the notice given, whether the meeting was regular or special,
Respondents: ISC, Gil Montilla (Acting President), and Agustin Montilla (Secretary) if special its object, those present and absent, and every act done or
Corporate Governance: Information Rights ordered done at the meeting. * * *. "The record of all business
*it’s an old case so I had to tweak the format of the digest so it’s easier to understand transactions of the corporation and the minutes of any meeting shall be
open to the inspection of any director, member, or stockholder of the
Veraguth’s prayer and ISSUES: corporation at reasonable hours."
1. That Gil and Agustin be required to o Directors of a corporation have the unqualified right to inspect the books
a. explain why they did not notify Veraguth of the regular and special and records of the corporation at all reasonable times  this means that
meetings of the BOD any director should NOT have to make a request to any officer to inspect
b. to place at his disposal the minutes, documents, and books of the records of the corporation. Any such obstacle is illegal and cannot be
Isabela Sugar for his inspection as director and SH, and enforced against anyone
c. to issue upon payment of fees, certified copies of any o The right of inspection is not to be denied on the ground that the director
documentation in connection with said documents or shareholder is on unfriendly terms with the officers of the corporation
2. That a writ of mandamus be issued in pursuance to the above whose records are sought to be inspected
o A director or SH can make copies, abstracts, and memoranda of the
Facts with Held [more facts in dissent] documents as an incident to the right of inspection, but cannot be
On notification of the special meeting permitted to take books from the corporation’s office without court
- According to Veraguth, Agustin (Secretary) failed to notify him in due time of a order. [so inspecting is an act different from taking]
special meeting in which a resolution was passed on the fixing of lawyers’ o Also, a director of SH has no absolute right to secure certified copies of
compensation of Isabela Sugar the minutes of the meetings until these have been written up and
o SC could not say whether or not there was bad faith approved by the directors
o SC used the by laws and a resolution passed by the BOD providing for the o Thus, there was nothing wrong with Agustin refusing to furnish Veraguth
holding of ordinary and special meetings as basis for their ruling a certified copy of the minutes which was not approved
o This issue has become moot because there was no damage caused to o This is actually a FAMILY DISPUTE in that Veraguth and the Montillas are
Veraguth by the action taken at the special meeting which he didn’t of the same family.
attend because his interests were fully protected by the PNB o Veraguth’s petition for mandamus cannot lie. Denied.
o As to future meetings, it is presumed that Agustin will fulfill the
requirements of the company pertaining to regular and special meetings J. Vickers Dissent
 if will then be Veraguth’s responsibility to give formal notice to - As to Agustin’s refusal to allow Veraguth read the resolution adopted on April
Agustin if he desires that notice be sent to a particular residence 21, 1932, on the ground that it had not been signed by the directors, Veraguth
was clearly within his rights in demanding that he be given an opportunity to
On right of inspection of Isabela Sugar’s books, this is the main issue examine said resolution  there wasn’t any necessity for the directors to sign
- Veraguth telegraphed Agustin asking the latter to forward a certified copy of the resolution in question
the resolution of the BOD concerning the payment of attorney’s fees in a case - Such resolution was part of the secretary’s minutes which would ordinarily be
against Isabela Sugar reported for approval at the next meeting.
- Agustin replied via letter: the minutes of the meeting were not signed by the - But in any event, whether the resolution was signed or not, Veraguth had a right
directors present thus a certified copy could not be furnished to Veraguth, and to see it.
that requests such as this should be made to the President of Isabela Sugar. - As to the fact that ill-feeling exists between the parties and another suit
- BOD adopted a resolution providing for the inspection of the books and the between them is now pending, that seems to me only an additional reason why
taking of copies by authority of the President. the plaintiff should be protected in the lawful rights which he now seeks to en-
o Sec. 51 of the Corporation Law provides: "All business corporations shall force.
keep and carefully preserve a record of all business transactions, and a
minute of all meetings of directors, members, or stockholders, in which