Case Summary (G.R. No. 135022)
Essential facts found by the trial court
Before becoming a one‑share stockholder, petitioner had initiated a series of lawsuits questioning PNB transactions (cases filed in 1967–1969). During proceedings in one case, his standing was challenged and he then arranged to acquire one share from Congressman Montano (transfer recorded August 30, 1967). On January 11, 1969 he requested inspection of PNB’s records; the bank’s legal counsel denied the request by letter dated January 23, 1969, on grounds that the request was not germane to his interest as a one‑share stockholder and raised doubts about the true motive of acquiring the share.
Issue presented
Whether a stockholder (here, a one‑share holder) is entitled under applicable law to inspect PNB’s records and whether the trial court correctly denied inspection on the ground that the petitioner’s motive was improper and that the requested inspection would violate the confidentiality provisions of PNB’s charter.
Relevant statutory framework
- Former Corporation Law (Act No. 1459, sec. 51) provided that records of business transactions and minutes shall be open to inspection by any director, member, or stockholder at reasonable hours.
- The Corporation Code (Batas Pambansa Blg. 68) preserves the inspection right in Section 74 but expressly adds conditions: inspection during business days at the principal office, written demand for copies at the requester’s expense, civil and criminal liabilities for wrongful refusal, and an express defense where the requester acted in bad faith, for illegitimate purpose, or had previously misused information obtained.
- PNB’s charter (R.A. No. 1300) contains special provisions: subject to Central Bank inspection (Sec. 15), confidentiality of inspection reports and information with limited disclosure (Sec. 16), and penal sanctions for violation of the charter (Sec. 30).
Court’s analysis on the scope of the stockholder’s inspection right
The Court observed that the plain, unqualified inspection right in the former Corporation Law was altered by the Corporation Code. Section 74 imposes explicit limits and defenses: inspection is conditioned on good faith and a legitimate purpose and there is a defense where prior misuse of inspection information is shown. Accordingly, the unqualified right under Section 51 no longer controls, and a stockholder’s right to inspect is now subject to the statutory limitations set by the Corporation Code.
Court’s findings on petitioner’s motive and good faith
The Court accepted the trial court’s factual findings that petitioner acquired the single share after he had already commenced litigation and expressly to enable him to “pry into” PNB transactions he had previously questioned while a non‑stockholder. The petitioner’s stated purpose—“to satisfy himself” of published reports and to inquire into validity—was held insufficiently specific and not necessarily germane to his interest as a stockholder. The Court concluded that the circumstances suggested the acquisition and demand were not in good faith and were instead aimed at assembling materials for use against the bank for acts occurring before he was a stockholder.
Court’s analysis regarding PNB’s charter and confidentiality
The Court emphasized that PNB is a special‑charter corporation governed primarily by its charter (R.A. No. 1300) and that the Corporation Code applies only supplementarily to the extent compatible with the charter. Sections 15 and 16 of the PNB charter impose strict confidentiality on inspection reports and banking information, and Section 30 prescribes penal sanctions for violations. The Court found that Section 74 of the Corporation Code, even if broadly permitting inspection in ordinary corporations, could not be reconciled with the charter’s confidentiality restrictions as applied to PNB. Thus, the supplemental application of the Corporation Code could not override express charter protections of confidentiality.
Interaction between statutory limitations and the bank’s refusal
Although the Corporation Code makes wrongfu
...continue readingCase Syllabus (G.R. No. 135022)
Procedural Posture
- Petition for mandamus was instituted by Ramon A. Gonzales in the Court of First Instance of Manila seeking an order compelling the Philippine National Bank (PNB) to allow inspection of its books and records.
- The trial court dismissed the petition for mandamus. The petitioner appealed to the Supreme Court to review that dismissal.
- The Supreme Court rendered a decision dismissing the petition. The judgment was delivered by Justice Vasquez, with Melencio-Herrera, Plana and Gutierrez, Jr., JJ., concurring; Teehankee (Chairman), J., concurred in the result; Relova, J., was on leave.
Facts as Found by the Trial Court (Adopted by Petitioner)
- Petitioner instituted several prior cases in the same Court challenging different transactions of the Bank, detailed in stipulations accepted by the trial court.
- Civil Case No. 69345 (filed April 27, 1967): petitioner, as a taxpayer, sued Sec. Antonio Raquiza, Commissioner of Public Highways, the Bank, and various corporations. During hearings on August 3, 1967, petitioner’s personality to sue the Bank and question letters of credit was raised.
- To acquire standing, petitioner expressed intent to acquire one share of PNB stock; on August 30, 1967, one share was transferred to his name in the Bank’s books.
- After acquisition of the single share, petitioner filed additional suits against the Bank or its directors in multiple civil cases:
- Civil Case No. 71044 (filed October 18, 1967) versus Board of Directors of the Bank, National Investment and Development Corp., Marubeni Iida Co., Ltd., and Agro-Inc. Dev. Co. or Saravia.
- Civil Case No. 72936 (filed May 11, 1968) versus Roberto Benedicto and other Directors of the Bank, Passi (Iloilo) Sugar Central, Inc., and several other sugar-related corporations.
- Civil Case No. 76427 (filed May 8, 1969) versus Alfredo Montelibano and the Directors of both the PNB and DBP.
- On January 11, 1969, petitioner wrote to the President of PNB requesting permission to look into the Bank’s records concerning:
- Purchase of a sugar central by Southern Negros Development Corporation to be financed by Japanese suppliers and financiers (US$23 million sugar-mill transaction reported);
- Financing of the P21 million Cebu-Mactan Bridge to be constructed by V. C. Ponce, Inc.;
- Construction of the Passi Sugar Mills in Iloilo by Honiron Philippines, Inc.
- On January 23, 1969, the Assistant Vice-President and Legal Counsel of PNB denied petitioner’s request on grounds that the inspection was not germane to his interest as a one-share stockholder and that there was a cloud of doubt as to petitioner’s real intention and purpose in acquiring the share.
- In view of the Bank’s refusal, petitioner instituted the mandamus action now before the Court.
Petitioner's Legal Claim and Principal Argument
- Petitioner sought relief by mandamus to compel inspection of PNB’s books and records regarding the transactions mentioned.
- He assigned a single error on appeal: that the lower court erred in ruling that his alleged improper motive in requesting inspection disqualified him from exercising the stockholder’s right of inspection under Section 51 of the former Corporation Law (Act No. 1459, as amended).
- Petitioner argued Section 51 granted an unconditional right to inspect corporate records: “Sec. 51. . . . 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.”
- He maintained that the statute did not justify denying inspection on the ground of improper motive, and alternatively, that his purpose (to satisfy himself as to truth of published reports and to inquire into validity of the transactions) was proper.
Trial Court’s Reasons for Dismissal (as stated and adopted)
- The trial court denied inspection on several grounds:
- The stockholder’s right of inspection under Section 51 of the former Corporation Law is not absolute; it is limited to purposes reasonably related to the stockholder’s interest, must be asked in good faith, and must not gratify curiosity or be for speculative or vicious purposes.
- Inspection would violate the confidentiality provisions of PNB’s charter (Republic Act No. 1300, as amended).
- Petitioner had not exhausted administrative remedies.
Relevant Statutory Provisions Quoted in the Decision
- Section 51, former Corporation Law (Act No. 1459, as amended) (excerpt quoted by Court and petitioner):
- “Sec. 51. . . . 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.”
- Section 74, Batas Pambansa Blg. 68 (Corporation Code of the Philippines) — second and third paragraphs quoted in full as appearing in the source:
- “The records of all business transactions of the corporation and the minutes of any meeting shall be open to inspection by any director, trustee, stockholder or member of the corporation at reasonable hours on business days and he may demand, in writing, for a copy of exc