Eugenio VERAGUTH v. ISABELA SUGAR COMPANY, INC.

2) Directors of a corporation have the unqualified right to inspect the books

G.R. No. L-37064 | 4 October 1932
FACTS
1. The directors of Isabela Sugar Co. conducted a special meeting, where
the compensation of the attorneys of the company was fixed.
2. However, Veraguth, a director and stockholder of the Isabela Sugar Co.,
was not around during the special meeting due to the secretary’s failure to
notify him of the said special meeting.
and records of the corporation at all reasonable times. The act of the
directors in approving a resolution providing for inspection of the book and
the taking of the copies “by authority of the president of the Corporation
previous obtained in each case” is void. Pretexts may not be put forward by
officers of corporations to keep a director or shareholder from inspecting
the books and minutes of the corporation, and the right of inspection is not
to be denied on the ground that the director or shareholder is on unfriendly
terms with the officers of the corporation whose records are sought to be
inspected.

3. Hence, Veraguth prays that: However, a director cannot take copies of books and papers as an incident
(1) Respondents be required to show cause why they refuse to notify him of to the right of inspection, without a court order, outside of the corporation’s
the regular and special meetings of the board of directors, AND to place at premises.
his disposal at reasonable hours, minutes and documents, and books of the
corporation, for his inspection as director and stockholder, and to issue 3) Director or stockholder has no absolute right to secure certified copies of
certified copies of documents in connection to the said meeting; the minutes of the corporation until these have been written up and
approved by the directors present during the meeting.
(2) Writ of mandamus be issued against respondents to notify him of all
regular and special meetings of the board of directors and issue certified
copies of documents, minutes and books of the corporation or any
documentation in connection with such meetings.

ISSUE
1) W/N there was malicious attempt to keep Director Veraguth from
attending special meeting - NO
2) W/N a director has an unqualified right to inspect books and records of
the company - YES
3) W/N the secretary is wrong when it refuse to hand over certified copies
of the minutes to petitioner – NO

HELD
1) The meeting in question is in the past and, therefore, now merely
presents an academic question; that no damage was caused to Veraguth by
the action taken at the special meeting which he did not attend, since his
interests were fully protected by the Philippine National Bank; and should
he wish to receive notifications of the meeting sin the future, it is incumbent
upon him to give a formal notice to the secretary of his post-office.