ANTONIO PARDO v.

THE HERCULES LUMBER and IGNACIO FERRER 1924 / Street / Rights and obligations of the partners among themselves > Books, information, accounts FACTS Antonio Pardo [Hercules Lumber Company stockholder] seeks to obtain a writ of mandamus to compel the company and its acting secretary Ignacio Ferrer to permit him [Pardo] and his duly authorized agent and representative to examine the companys records and business transactions. The main ground upon which the defense of the company appears to be rested has reference to the time, or times, within which the right of inspection may be exercised. Article 10 of the By-laws of the company o "Every shareholder may examine the books of the company and other documents pertaining to the same upon the days which the board of directors shall annually fix." Board Resolution passed at the directors' meeting held on 16 February 1924 o The board also resolved to call the usual general (meeting of shareholders) for March 30 of the present year, with notice to the shareholders that the books of the company are at their disposition from the 15th to 25th of the same month for examination, in appropriate hours. ISSUES & HOLDING WON the board resolution constitutes a lawful restriction on the right conferred by statute. NO WON Pardo lost his right to inspection and examination for the year, since he has not availed himself of the permission [to inspect the companys books and transactions within the 10 days defined in the board resolution. NO WON the shareholders motive in exercising this right is material. NO RATIO 1 The basis of right of inspection is Sec. 51 of Act No. 1459 [Corporation Law]. In Philpotts v. Philippine Manufacturing Co., and Berry, it was held that the right of examination there conceded to the stockholder may be exercised either by a stockholder in person or by any duly authorized agent or representative. It may be admitted that the officials in charge of a corporation may deny inspection when sought at unusual hours or under other improper conditions; but neither the executive officers nor the board of directors have the power to deprive a stockholder of the right altogether. A by-law unduly restricting the right of inspection is undoubtedly invalid. Under a statute similar to our own it has been held that the statutory right of inspection is not affected by the adoption by the board of directors of a resolution providing for the closing of transfer books thirty days before an election. Our statute declares that the right of inspection can be exercised "at reasonable hours." This means at reasonable hours on business days throughout the year, and not merely during some arbitrary period of a few days chosen by the directors. Additional issue: The motives that prompted Pardo to make inspection It is alleged that the information which Pardo seeks is desired for ulterior purposes in connection with a competitive firm with which Pardo is alleged to be connected. It is also insisted that one of Pardos purposes is to obtain evidence preparatory to the institution of an action, which he means to bring against the company re: a contract of employment which once existed between the corporation and himself. These suggestions are entirely apart from the issue the motive of the shareholder exercising the right is immaterial. Writ of mandamus will issue

Section 51. All business corporations shall keep and carefully preserve a record of all business transactions, and a minute of all meetings of directors, members, or stockholders, in which shall be set forth in detail the time and place of holding the meeting, how authorized, the notice given, whether the meeting was regular or special, if special its object, those present and absent, and every act done or ordered done at the meeting. On the demand of any director, member, or stockholder, the time when any director, member, or stockholder entered or left the meeting must be noted on the minutes, and on a similar demand, the yeas and nays must be taken on any motion or proposition and a record thereof carefully made. The protest of any director, member, or stockholder on any action or proposed action must be recorded in full on his demand. The record of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member, or stockholder of the corporation at reasonable hours.