CORPO WEEK 6

5) Gonzales vs. PNB, G.R. No. L-33320, 30 May 1983 Inc. and the construction of the Passi Sugar Mills in Iloilo.
On January 23, 1969, the Asst. Vice-President and Legal
Counsel of the Bank answered petitioner's letter denying
his request for being not germane to his interest as a
G.R. No. L-33320 May 30, 1983
one-share stockholder and for the cloud of doubt as to
his real intention and purpose in acquiring said share.
RAMON A. GONZALES, petitioner, (Annex B, Pet.) In view of the Bank's refusal the
vs. petitioner instituted this action.' (Rollo, pp. 16-18.)
THE PHILIPPINE NATIONAL BANK, respondent.
The petitioner has adopted the above finding of facts made by the trial court
Ramon A. Gonzales in his own behalf. in its brief which he characterized as having been "correctly stated."
(Petitioner-Appellant"s Brief, pp. 57.)
Juan Diaz for respondent.
The court a quo denied the prayer of the petitioner that he be allowed to
examine and inspect the books and records of the respondent bank regarding
the transactions mentioned on the grounds that the right of a stockholder to
inspect the record of the business transactions of a corporation granted under
VASQUEZ, J.: Section 51 of the former Corporation Law (Act No. 1459, as amended) is not
absolute, but is limited to purposes reasonably related to the interest of the
stockholder, must be asked for in good faith for a specific and honest purpose
Petitioner Ramon A. Gonzales instituted in the erstwhile Court of First and not gratify curiosity or for speculative or vicious purposes; that such
Instance of Manila a special civil action for mandamus against the herein examination would violate the confidentiality of the records of the respondent
respondent praying that the latter be ordered to allow him to look into the bank as provided in Section 16 of its charter, Republic Act No. 1300, as
books and records of the respondent bank in order to satisfy himself as to the amended; and that the petitioner has not exhausted his administrative
truth of the published reports that the respondent has guaranteed the remedies.
obligation of Southern Negros Development Corporation in the purchase of a
US$ 23 million sugar-mill to be financed by Japanese suppliers and
financiers; that the respondent is financing the construction of the P 21 million Assailing the conclusions of the lower court, the petitioner has assigned the
Cebu-Mactan Bridge to be constructed by V.C. Ponce, Inc., and the single error to the lower court of having ruled that his alleged improper motive
construction of Passi Sugar Mill at Iloilo by the Honiron Philippines, Inc., as in asking for an examination of the books and records of the respondent bank
well as to inquire into the validity of Id transactions. The petitioner has alleged disqualifies him to exercise the right of a stockholder to such inspection under
hat his written request for such examination was denied by the respondent. Section 51 of Act No. 1459, as amended. Said provision reads in part as
The trial court having dismissed the petition for mandamus, the instant appeal follows:
to review the said dismissal was filed.
Sec. 51. ... The record of all business transactions of the
The facts that gave rise to the subject controversy have been set forth by the corporation and the minutes of any meeting shall be
trial court in the decision herein sought to be reviewed, as follows: open to the inspection of any director, member or
stockholder of the corporation at reasonable hours.
Briefly stated, the following facts gathered from the
stipulation of the parties served as the backdrop of this Petitioner maintains that the above-quoted provision does not justify the
proceeding. qualification made by the lower court that the inspection of corporate records
may be denied on the ground that it is intended for an improper motive or
purpose, the law having granted such right to a stockholder in clear and
Previous to the present action, the petitioner instituted unconditional terms. He further argues that, assuming that a proper motive or
several cases in this Court questioning different purpose for the desired examination is necessary for its exercise, there is
transactions entered into by the Bark with other parties. nothing improper in his purpose for asking for the examination and inspection
First among them is Civil Case No. 69345 filed on April herein involved.
27, 1967, by petitioner as a taxpayer versus Sec. Antonio
Raquiza of Public Works and Communications, the
Commissioner of Public Highways, the Bank, Continental Petitioner may no longer insist on his interpretation of Section 51 of Act No.
Ore Phil., Inc., Continental Ore, Huber Corporation, Allis 1459, as amended, regarding the right of a stockholder to inspect and
Chalmers and General Motors Corporation In the course examine the books and records of a corporation. The former Corporation Law
of the hearing of said case on August 3, 1967, the (Act No. 1459, as amended) has been replaced by Batas Pambansa Blg. 68,
personality of herein petitioner to sue the bank and otherwise known as the "Corporation Code of the Philippines."
question the letters of credit it has extended for the
importation by the Republic of the Philippines of public The right of inspection granted to a stockholder under Section 51 of Act No.
works equipment intended for the massive development 1459 has been retained, but with some modifications. The second and third
program of the President was raised. In view thereof, he paragraphs of Section 74 of Batas Pambansa Blg. 68 provide the following:
expressed and made known his intention to acquire one
share of stock from Congressman Justiniano Montano
which, on the following day, August 30, 1967, was The records of all business transactions of the
transferred in his name in the books of the Bank. corporation and the minutes of any meeting shag be
open to inspection by any director, trustee, stockholder or
member of the corporation at reasonable hours on
Subsequent to his aforementioned acquisition of one business days and he may demand, in writing, for a copy
share of stock of the Bank, petitioner, in his dual capacity of excerpts from said records or minutes, at his expense.
as a taxpayer and stockholder, filed the following cases
involving the bank or the members of its Board of
Directors to wit: Any officer or agent of the corporation who shall refuse to
allow any director, trustee, stockholder or member of the
corporation to examine and copy excerpts from its
l. On October l8,1967, Civil Case No. 71044 versus the records or minutes, in accordance with the provisions of
Board of Directors of the Bank; the National Investment this Code, shall be liable to such director, trustee,
and Development Corp., Marubeni Iida Co., Ltd., and stockholder or member for damages, and in addition,
Agro-Inc. Dev. Co. or Saravia; shall be guilty of an offense which shall be punishable
under Section 144 of this Code: Provided, That if such
2. On May 11, 1968, Civil Case No. 72936 versus refusal is made pursuant to a resolution or order of the
Roberto Benedicto and other Directors of the Bank, Passi board of directors or trustees, the liability under this
(Iloilo) Sugar Central, Inc., Calinog-Lambunao Sugar Mill section for such action shall be imposed upon the
Integrated Farming, Inc., Talog sugar Milling Co., Inc., directors or trustees who voted for such refusal; and
Safary Central, Inc., and Batangas Sugar Central Inc.; Provided, further, That it shall be a defense to any action
under this section that the person demanding to examine
and copy excerpts from the corporation's records and
3. On May 8, 1969, Civil Case No. 76427 versus Alfredo minutes has improperly used any information secured
Montelibano and the Directors of both the PNB and DBP; through any prior examination of the records or minutes
of such corporation or of any other corporation, or was
On January 11, 1969, however, petitioner addressed a not acting in good faith or for a legitimate purpose in
letter to the President of the Bank (Annex A, Pet.), making his demand.
requesting submission to look into the records of its
transactions covering the purchase of a sugar central by As may be noted from the above-quoted provisions, among the changes
the Southern Negros Development Corp. to be financed introduced in the new Code with respect to the right of inspection granted to a
by Japanese suppliers and financiers; its financing of the stockholder are the following the records must be kept at the principal office
Cebu-Mactan Bridge to be constructed by V.C. Ponce, of the corporation; the inspection must be made on business days; the
Page 1 of 2
CORPO WEEK 6

stockholder may demand a copy of the excerpts of the records or minutes;

and the refusal to allow such inspection shall subject the erring officer or
agent of the corporation to civil and criminal liabilities. However, while
seemingly enlarging the right of inspection, the new Code has prescribed
limitations to the same. It is now expressly required as a condition for such
examination that the one requesting it must not have been guilty of using
improperly any information through a prior examination, and that the person
asking for such examination must be "acting in good faith and for a legitimate
purpose in making his demand."

The unqualified provision on the right of inspection previously contained in

Section 51, Act No. 1459, as amended, no longer holds true under the
provisions of the present law. The argument of the petitioner that the right
granted to him under Section 51 of the former Corporation Law should not be
dependent on the propriety of his motive or purpose in asking for the
inspection of the books of the respondent bank loses whatever validity it
might have had before the amendment of the law. If there is any doubt in the
correctness of the ruling of the trial court that the right of inspection granted
under Section 51 of the old Corporation Law must be dependent on a
showing of proper motive on the part of the stockholder demanding the same,
it is now dissipated by the clear language of the pertinent provision contained
in Section 74 of Batas Pambansa Blg. 68.

Although the petitioner has claimed that he has justifiable motives in seeking
the inspection of the books of the respondent bank, he has not set forth the
reasons and the purposes for which he desires such inspection, except to
satisfy himself as to the truth of published reports regarding certain
transactions entered into by the respondent bank and to inquire into their
validity. The circumstances under which he acquired one share of stock in the
respondent bank purposely to exercise the right of inspection do not argue in
favor of his good faith and proper motivation. Admittedly he sought to be a
stockholder in order to pry into transactions entered into by the respondent
bank even before he became a stockholder. His obvious purpose was to arm
himself with materials which he can use against the respondent bank for acts
done by the latter when the petitioner was a total stranger to the same. He
could have been impelled by a laudable sense of civic consciousness, but it
could not be said that his purpose is germane to his interest as a stockholder.

We also find merit in the contention of the respondent bank that the
inspection sought to be exercised by the petitioner would be violative of the
provisions of its charter. (Republic Act No. 1300, as amended.) Sections 15,
16 and 30 of the said charter provide respectively as follows:

Sec. 15. Inspection by Department of Supervision and

Examination of the Central Bank. — The National Bank
shall be subject to inspection by the Department of
Supervision and Examination of the Central Bank'

Sec. 16. Confidential information. —The Superintendent

of Banks and the Auditor General, or other officers
designated by law to inspect or investigate the condition
of the National Bank, shall not reveal to any person other
than the President of the Philippines, the Secretary of
Finance, and the Board of Directors the details of the
inspection or investigation, nor shall they give any
information relative to the funds in its custody, its current
accounts or deposits belonging to private individuals,
corporations, or any other entity, except by order of a
Court of competent jurisdiction,'

Sec. 30. Penalties for violation of the provisions of this

Act.— Any director, officer, employee, or agent of the
Bank, who violates or permits the violation of any of the
provisions of this Act, or any person aiding or abetting
the violations of any of the provisions of this Act, shall be
punished by a fine not to exceed ten thousand pesos or
by imprisonment of not more than five years, or both
such fine and imprisonment.

The Philippine National Bank is not an ordinary corporation. Having a charter

of its own, it is not governed, as a rule, by the Corporation Code of the
Philippines. Section 4 of the said Code provides:

SEC. 4. Corporations created by special laws or charters.

— Corporations created by special laws or charters shall
be governed primarily by the provisions of the special law
or charter creating them or applicable to them.
supplemented by the provisions of this Code, insofar as
they are applicable.

The provision of Section 74 of Batas Pambansa Blg. 68 of the new

Corporation Code with respect to the right of a stockholder to demand an
inspection or examination of the books of the corporation may not be
reconciled with the abovequoted provisions of the charter of the respondent
bank. It is not correct to claim, therefore, that the right of inspection under
Section 74 of the new Corporation Code may apply in a supplementary
capacity to the charter of the respondent bank.

WHEREFORE, the petition is hereby DISMISSED, without costs.

Page 2 of 2