#140 Veraguth vs. Isabela Sugar Co.

AUTHOR: DAYOS
G.R. No. L-37064 October 4, 1932 NOTES: short case
TOPIC: Remedies available if inspection refused Veraguth – stockholder and director
PONENTE: Malcolm, J. Gil Montilla – acting president
Agustin Montilla – secretary
FACTS:
 The directors of Isabela Sugar Co. conducted a special meeting, at which the compensation of the
attorneys of the company was fixed.

 However, Veraguth was not around during the special meeting due to the secretary’s failure to notify him
of the said special meeting.

 Hence, petitioner prays that (1) respondents be required to show cause why they refuse to notify him of
the regular and special meetings of the board of directors, AND to place at his disposal at reasonable
hours, minutes and documents, and books of the corporation, for his inspection as director and
stockholder, and to issue certified copies of documents in connection to the said meeting; (2) w 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.

 Respondent answered but it was “too long to be here summarized”

ISSUE(S):
1. W/n there was malicious attempt to keep Director Veraguth from attending special meeting?
2. W/n a director has an unqualified right to inspect books and records of the company?
3. W/n the secretary erred when it refuse to hand over certified copies of the minutes to petitioner?

HELD:
1. No
2. Yes
3. No

RATIO:

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.

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

However, a director cannot take copies of books and papers as an incident to the right of inspection, without a
court order, outside of the corporation’s premises.

3. Director or stockholder has no absolute right to secure certified copies of the minutes of the corporation until
these have been written up and approved by the directors present during the meeting.
CASE LAW/ DOCTRINE:
DISSENTING/CONCURRING OPINION(S):