266 PHILIPPINE REPORTS ANNOTATED

Veraguth vs. Isabela Sugar Co.

(estimated at 12 per cent); customs duties, 25 per cent ad

valorem; discounts on sales, 1 per cent to 8 per cent (on
basis of 2 per cent on selling price); overhead ex­penses for
selling, etc. based on average of 5 per cent, sales taxes, 1
per cent.
According to appellant's own admission, the only
evidence concerning these expenses is the oral testimony of
the defendant's manager, part of which is quoted in appel­-
lant's brief. We have read the complete testimony and find
nowhere any reference to a specific amount actually paid
for any of the expenses above listed. The manager's
testimony is confined to general estimates. The profits
found by the court below were realized upon the sale of
1,828 dozen of underwear specifically set out in the defend­-
ant's invoices shown in Exhibits K to K-12. The books and
receipts kept by the defendant should, and doubtless do,
show the exact amount paid, if any, on the items of expense
above listed. This conclusive evidence was in the possession
of the defendant and should have been produced, if the
defendant honestly desired to enlighten the court as to the
correct amount of the necessary and proper expenses that
were actually paid.
The judgment below is affirmed with costs against the
appellant. So ordered.

Malcolm, Ostrand, Villa-Real, Abad Santos, Hull,

Vickers, and Imperial, JJ., concur.

Judgment affirmed.

 
——————
   

[No. 37064. October 4, 1932]

Eugenio Veraguth, Director and Stockholder of the Isa­bela
Sugar Company, Inc., petitioner, vs. Isabela Sugar
Company, Inc., Gil Montilla, Acting President, and
Agustin B. Montilla, Secretary of the same corporation,
respondents.
1.Special Proceedings; Mandamus; Cognizance of Special Pro­ceedings by

Supreme Court or Courts of First Instance.—Where the Supreme

Court has concurrent jurisdiction with

267

VOL. 57, OCTOBER 4, 1932 267

Veraguth vs. Isabela Sugar Co.

      Courts of First Instance of special proceedings, except for sufficient

reasons being shown, the action will be left for de­termination by the
Court of First Instance. This practice is especially to be commended
where questions of fact are in­volved, since the Court of First Instance
is better equipped for the taking of testimony and the resolution of
questions of fact than is the appellate court.
2.Corporations; Corporation Law, Section 51 Applied and Con­strued;
Right of Inspection of the Books and Minutes of a Corporation;
Mandamus.—Directors of a corporation have the unqualified right to
inspect the books and records of the corporation at all reasonable
times.
3.Id.; Id.; Id.; Id.—Pretexts may not be put forward by the officers of a
corporation 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.
4.Id.; Id.; Id.; Id.—A director or shareholder can make copies, abstracts,
and memoranda of documents, books, and papers as an incident to
the right of inspection, but cannot, without an order of a court, be
permitted to take books from the office of the corporation.
5.Id.; Id.; Id.; Id.—A director or stockholder has no absolute right to
secure certified copies of the minutes of a corporation until these
minutes have been written up and approved by the di­rectors.
6.Id.; Id.; Id.; Id.—On the facts and the law, it is ruled that the petitioner
has not made out a case for relief by mandamus.

ORIGINAL ACTION in the Supreme Court. Mandamus.

The facts are stated in the opinion of the court.
Jose B. Gamboa for petitioner.
Agustin P. Seva for respondents.

Malcolm, J.:
The parties to this action are Eugenio Veraguth, a
director and stockholder of the Isabela Sugar Company,
Inc., who is the petitioner, and the Isabela Sugar Company,
Inc., Gil Montilla, acting president of the company, and
Agustin B. Montilla, secretary of the company, who are
268
268 PHILIPPINE REPORTS ANNOTATED
Veraguth vs. Isabela Sugar Co.

the respondents. The petitioner prays: (a) That the

respondents be required within five days from receipt of
notice of this petition to show cause why they refuse to
notify the petitioner, as director, of the regular and spe­cial
meetings of the board of directors, and to place at his
disposal at reasonable hours, the minutes, documents, and
books of the aforesaid corporation, for his inspection as
director and stockholder, and to issue, upon payment of the
fees, certified copies of any documentation in con­nection
with said minutes, documents, and books of the
corporation; and (b) that, in view of the memoranda and
hearing of the parties, a final and absolute writ of manda­-
mus be issued to each and all of the respondents to notify
immediately the petitioner within the reglamentary period,
of all regular and special meetings of the board of directors
of the Isabela Sugar Central Company, Inc., and to place at
his disposal at reasonable hours the minutes, documents,
and books of said corporation for his inspection as direc­tor
and stockholder, and to is§ue immediately, upon pay­ment
of the fees, certified copies of any documentation in
connection with said minutes, documents, and books of the
aforesaid corporation. To the petition an answer has been
interposed by the respondents, too long to be here sum­-
marized, which raised questions of fact and law. Follow­ing
the taking of considerable testimony before the clerk as
commissioner, the case has been submitted on memo­randa.
It should first be observed that when the case was filed
here, it was, in accordance with settled practice, dismissed
without prejudice to the right of the petitioner to present
the action before the Court of First Instance of Occidental
Negros. Thereafter, on a motion of reconsideration being
presented, this order was set aside and the case was
permitted to continue in this court. On further reflection,
we now feel that this was error, and that it would have
been the correct practice to have required the petitioner to
present the action in a Court of First Instance which

269

VOL. 57, OCTOBER 4, 1932 269

Veraguth vs. Isabela Sugar Co.

is better equipped for the taking of testimony and the

resolution of questions of fact than is the appellate court.
Only with considerable difficulty, therefore, can we decide
the issues of fact, since none of the members of the court
saw or heard the witnesses testify.
Speaking to the first point with which the petition is
concerned, relating to the alleged failure of the secretary of
the company to notify the petitioner in due time of a special
meeting of the company, we find the by-laws, together with
a resolution of the board of directors, providing for the
holding of ordinary and special meetings. Whether there
was a malicious attempt to keep Director Veraguth from
attending a special meeting of the board of directors at
which the compensation of the attorneys of the company
was fixed, or whether Director Veraguth, in a spirit of
antagonism, has made this merely a pretext to cause
trouble, we are unable definitely to say. This much,
however, can appropriately be stated and is decisive, and
this is that the meeting in question is in the past and,
therefore, now1 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 that as to meetings in the future it is
to be presumed that the secretary of the company will
fulfill the requirements of the resolutions of the company
per­taining to regular and special meetings. It will, of
course, be incumbent upon Veraguth to give formal notice
to the secretary of his post-office address if he desires
notice sent to a particular residence.
On the second question pertaining to the right of in­-
spection of the books of the company, we find Director
Veraguth telegraphing the secretary of the company, ask­-
ing the latter to forward in the shortest possible time a
certified copy of the resolution of the board of directors
concerning the payment of attorney's fees in the case
against the Isabela Sugar Company and others. To this
270

270 PHILIPPINE REPORTS ANNOTATED

Veraguth vs. Isabela, Sugar Co.

the secretary made answer by letter stating that, since the

minutes of the meeting in question had not been signed by
the directors present, a certified copy could not be
furnished, and that as to other proceedings of the stock­-
holders a request should be made to the president of the
Isabela Sugar Company, Inc. It further appears that the
board of directors adopted a resolution providing for
inspection of the books and the taking of copies uby
authority of the President of the corporation previously
obtained in each case."
The Corporation Law, section 51, provides that:

"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. * * *.
"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."

The above puts in statutory form the general principles

of Corporation Law. Directors of a corporation have the
unqualified right to inspect the books and records of the
corporation at all reasonable times. 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. A director or
stockholder can of course make copies, abstracts, and
memoranda of documents, books, and papers as an incident
to the right of inspection, but cannot, without an order of a
court, be permitted to take books from the office of
271

VOL. 57, OCTOBER 4, 1932 271

Veraguth vs. Isabela Sugar Co.

the corporation. We do not conceive, however, that a

director or stockholder has any absolute right to secure
certified copies of the minutes of the corporation until these
minutes have been written up and approved by the
directors. (See Fisher's Philippine Law of Stock
Corporations, sec. 153, and Fletcher Cyclopedia
Corporations, vol. 4, Chap. 45.)
Combining the facts and the law, we do not think that
anything improper occurred when the secretary declined to
furnish certified copies of minutes which had not been
approved by the board of directors, and that while so much
of the last resolution of the board of directors as provides
for the prior approval of the president of the corporation
before the books of the corporation can be inspected puts an
illegal obstacle in the way of a stockholder or director, that
resolution, so far as we are aware, has not been enforced to
the detriment of anyone. In addition, it should be said that
this is a family dispute, the petitioner and the individual
respondents belonging to the same fam­ily; that a test case
between the petitioner and the re­spondents has been begun
in the Court of First Instance of Occidental Negros
involving hundreds of thousands of pesos, and that the
appellate court should not intrude its views to give an
advantage to either party. We rule that the petitioner has
not made out a case for relief by man­damus.
Petition denied, with costs.

Avancena, C. J., Villamor, Villa-Real, Hull, and

Imperial, J J., concur.

Vickers, J., dissenting:
I dissent.
An extraordinary meeting of the directors of the de­-
fendant corporation was held at Isabela, Occidental
Negros, on April 21, 1932. A notice of this meeting was sent
to the plaintiff by registered letter, but the notice was not

272

272 PHILIPPINE REPORTS ANNOTATED

Veraguth vs. Isabela Sugar Co.

received by him until May 4th, because the letter was

addressed to the plaintiff at Isabela. The post-office address
of the plaintiff at that time was Pulupandan, Occidental
Negros, and this fact was known to the defendant officers
of the corporation, as is evidenced by the notices of ex­-
traordinary meetings dated February 23 and March 11,
1932, which were sent to the plaintiff at Pulupandan. The
plaintiff complains that he was not given timely notice of
the extraordinary meetings to which these notices refer,
because these notices Were not mailed until the day of the
respective meetings, although the notices were dated three
days prior to the dates when they were mailed. These
notices of February 23 and March 11, 1932 were not ad­-
missible over the objection of the attorney for the defend­-
ants for the purpose of proving that the plaintiff was not
notified of those two meetings, because there is no allega­-
tion to that effect in the complaint. They were, however,
admissible for the purpose of showing that the defendant
officers of the corporation knew the plaintiff's post-office
address to be Pulupandan. It is clear, therefore, that no
notice of the meeting of April 21, 1932 was given the plain­-
tiff, because the notice of said meeting was sent to Isabela
instead of Pulupandan. Taking into consideration the re­-
lations existing between the parties, I am satisfied that
this notice was addressed to Isabela instead of Pulupandan
for the purpose of depriving the plaintiff of an opportunity
of attending the meeting.
In the majority opinion it is stated that the meeting in
question having already been held, the failure of the
defendants to notify the plaintiff of said meeting is now
merely an academic question. I cannot agree with that
conclusion. The plaintiff seeks the protection of his right to
a notice of all meetings of the board of directors, and prays
that the defendant officers be required to perform their
duties in accordance with the law. It is obvious that if the
defendant officers should again fail to notify the
273

VOL. 57, OCTOBER 4, 1932 273

Veraguth vs. Isabela, Sugar Co.

plaintiff of any meeting of the board of directors, he would

be in no better position than he is at the present time.
Under the theory of the majority opinion the plaintiff
would have no redress.
As to the second ground of plaintiff's complaint, or the
refusal of the secretary of the corporation to allow the
plaintiff to read the resolution adopted on April 21, 1932,
on the ground that it had not been signed by the directors,
the plaintiff was clearly within his rights in demanding
that he be given an opportunity to examine said resolution.
It does not appear that there was any necessity for the
directors to sign the resolution in question. Such a reso­-
lution was a part of the secretary's minutes of the meet­ing,
which would ordinarily be reported for approval at the next
meeting. In any event the directors had adopted the
resolution, and whether it was to be signed or not, the
plaintiff as a director of the corporation had a right to see
it.
As to the fact that ill-feeling exists between the parties
and another suit between them is now pending, that seems
to me only an additional reason why the plaintiff should be
protected in the lawful rights which he now seeks to en­-
force.
For the foregoing reasons, the writ prayed for should be
granted.
Street, J.,
I concur in the dissenting opinion of Justice Vickers.
 Ostrand and Abad Santos, JJ.:
We concur in the dissenting, opinion of Justice Vickers.
Butte, J., dissenting:
I concur in the foregoing dissent insofar as it relates to
the actions of the respondent corporation and its officers in
denying to the petitioner, as stockholder and as director,
the rights which the statutes confer upon him to examine
288641——18

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