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I.SHORT TITLE: GONZALES vs. PNB

II. FULL TITLE: Ramon Gonzales, petitioner vs. Philippine National Bank,
respondent, G.R.No. L-33320, May 30, 1983, J. Vasquez

III. TOPIC: Section 74: Books to be kept; stock transfer agent

IV. STATEMENT OF FACTS:

Previous to the present action, petitoner Gonzales instituted several
cases questioning different transactions entered into by PNB (the Bank) with
other parties. First among them is thecivil case filed by petitioner as a
taxpayer against Sec. Antonio Raquiza of Public Works and Communications,
the Commissioner of Public Highways, the Bank, Continental Ore Phil., Inc.,
Continental Ore, Huber Corporation, Allis Chalmers and General Motors
Corporation. In the course of the hearing of said case, the personality of
Gonzales to sue the bank and question the letters of credit it has extended
for the importation by the Government was raised. In view thereof, he
expressed and made known his intention to acquire one share of stock from
Cong. Justiniano Montano which was transferred in his name in the books of
the Bank.

Subsequently after his acquisition of one share of stock of the Bank,

Gonzales, in his dual capacity as a taxpayer and stockholder, filed several
cases involving the bank or the members of its Board of Directors.
Thereafter,he addressed a letter to the President of the Bankrequesting
submission to look into the records of its transactions covering the purchase
of a sugar central by the Southern Negros Development Corp. to be financed
by Japanese suppliers and financiers; its financing of the Cebu-Mactan Bridge
to be constructed by V.C. Ponce, 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 one-share stockholder and for the
cloud of doubt as to his real intention and purpose in acquiring said share. In
view of the Bank's refusal the petitioner instituted an action against the
former.

V. STATEMENT OF THE CASE:

Gonzales instituted in the Court of First Instance of Manila a special
civil action for mandamus against the Bank praying that the latter be ordered
to allow him to look into the books and records of the respondent bank in
order to satisfy himself as to the truth of the published reports regarding
certain transactions of the Bank.

The trial court denied the prayer of the petitioner on the ground that
the right of a stockholder to inspect the record of the business transactions
of a corporation granted under 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 and not gratify curiosity or for speculative or
vicious purposes; that such examination would violate the confidentiality of
the records of the respondent bank as provided in Section 16 of its charter
(RA 1300).

Assailing the conclusions of the lower court, Gonzales assigned the

single error to the lower court of having ruled that his alleged improper
motive in asking for an examination of the books and records of the
respondent bank disqualifies him to exercise the right of a stockholder to
such inspection under Section 51 of Act No. 1459. He argued that under the
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said provision, the right of a stockholder to inspect corporate records

isstatedin a clear and conditional terms.

VI. ISSUE:
Whether or notpetitioner Gonzales should be allowed to examine and look
into the books and records of the Bank

VII. RULING:

NO. HE SHOULD NOT BE ALLOWED TO LOOK INTO THE CORPORATE RECORDS

OF THE BANK.Petitioner may no longer insist on his interpretation of Section
51 of Act No. 1459 regarding the right of a stockholder to inspect and
examine the books and records of a corporation. The former Corporation Law
(Act No. 1459, as amended) has been replaced by Batas Pambansa Blg. 68,
otherwise known as the "Corporation Code of the Philippines."

The unqualified provision on the right of inspection previously contained in

Section 51, Act No. 1459no 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 Gonzales has claimed that he has justifiable motives in seeking the
inspection of the books of PNB, 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.
The Court 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
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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.

PNB 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 as provided
under Section 4 of the new Corporation Code. Hence, its provision under
Section 74 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.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the petition is hereby DISMISSED, without costs.

I. SHORT TITLE: Ang-Abaya vs.Ang

II. FULL TITLE: MA. BELEN FLORDELIZA C. ANG-ABAYA, FRANCIS JASON A.

ANG, HANNAH ZORAYDA A. ANG, and VICENTE G.
GENATO, petitioners,vs.EDUARDO G. ANGrespondents.
G.R. No. 178511. December 4, 2008. 573 SCRA 129

THIRD DIVISION.YNARES-SANTIAGO, J.

III. TOPIC: Corporation Law; Sec. 74, Corporation Code.

IV. STATEMENT OF THE FACTS:

Vibelle Manufacturing Corporation (VMC) and Genato Investments, Inc.

(Genato) are family-owned corporations, where petitionersFlordeliza C. Ang-Abaya,
Jason A. Ang, Vincent G. Genato, Hanna A. Ang and private respondentEduardo
G. Ang are shareholders, officers and members of the board of directors.

Prior to the controversy, the family corporations filed a civil case for damages
with prayer for issuance of a temporary restraining order (TRO) and/or writ of
preliminary injunction against herein respondent Eduardo for allegedly conniving to
fraudulently wrest control/management of the corporations; that he interfered with
and disrupted the daily business operations of the corporations.

During the pendency of the said Civil Case, Eduardo sought permission to
inspect the corporate books on account of petitioners alleged failure and/or refusal
to update him on the financial and business activities of these family corporations.
However, petitioners denied the request claiming that Eduardo would use the
information obtained from said inspection for purposes inimical to the corporations
interests, considering the acts he committed as stated in the complaint for
damages.
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Because of petitioners refusal, Eduardo filed a complaint, charging

petitioners with violation of Section 74, in relation to Section 144, of the Corporation
Code of the Philippines.

Petitioners prayed for the dismissal of the complaint for lack of factual and
legal basis. They denied violating Section 74 of the Corporation Code and
reiterated the allegations contained in their complaint in Civil
Case.Petitioners blamed Eduardos lavish lifestyle, which is funded by personal
loans and cash advances from the family corporations. They alleged that Eduardo
consistently pressured petitioner Flordeliza, his daughter, to improperly transfer
ownership of the corporations V.A.G. Building to him; to disregard the company
policy prohibiting advances by shareholders; to unduly increase his corporate
monthly allowance; and to sell her Wack-Wack Golf proprietary share and use the
proceeds thereof to pay his personal financial obligations. When the proposed
transfer of the V.A.G. Building did not materialize, petitioners claim that Eduardo
instituted an action to compel the donation of said property to him. Furthermore,
they claim that Eduardo attempted to forcibly evict petitioner Jason from his office
at VMC so he can occupy the same; that Eduardo and his cohorts constantly created
trouble by intervening in the daily operations of the corporations without the
knowledge or consent of the board of directors.

Meanwhile in the Civil Case, the trial court granted the permanent injunction
applied for by the corporations. However, the Court of Appeals (CA) subsequently
rendered a Decision declaring that Eduardo, his son Michael, and the other persons
impleaded in the said Civil Case were imprudently declared in default by the trial
court. The appellate court thus annulled the permanent injunction issued by the trial
court and remanded the case for further proceedings. VMC, Genato, and Oriana
corporations filed a Petition for Review on Certiorari before the SC, but the same
was denied for failure to sufficiently show any reversible error in the Decision of the
CA. The three corporations filed a Motion for Reconsideration (MR), but the same
was denied with finality on June 25, 2008.

V. STATEMENT OF THE CASE:

On February 3, 2005, the City Prosecutors Office of Malabon City issued a

Resolution recommending that petitioners be charged with two counts of violation of
Section 74 of the Corporation Code. Petitioners filed a Petition for Review before the
Department of Justice (DOJ), which reversed the recommendation of the City
Prosecutor of Malabon Citythru a Resolution dated July 26, 2005. The DOJ
denied Eduardos MR in a Resolution dated March 29, 2006.

On appeal, the Court of Appeals NULLIFIED and SET ASIDE the order, ruling
that the Secretary of Justice committed grave abuse of discretion amounting to lack
or excess of jurisdiction in reversing the Resolutions of the Malabon City Prosecutor
and in finding that Eduardo did not act in good faith when he demanded for the
examination of VMC and Genatos corporate books. It further held that Eduardo can
demand said examination as a stockholder of both corporations; that Eduardo
raised legitimate questions that necessitated inspection of the corporate books and
records; and that petitioners refusal to allow inspection created probable cause to
believe that they have committed a violation of Section 74 of the Corporation
Code. The CA denied the MRs filed by petitioners and Secretary of Justice.

Hence, this petition for Review on Certiorari.

VI. ISSUE/S:
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Whether or not the Secretary of Justice committed grave abuse of discretion in reversing
the resolution of the Malabon City Prosecutor finding probable cause against petitioners after
Preliminary Investigation for violation of Section 74 of the Corporation Code of the Philippines.

VII. RULING:

No. Probable cause, for purposes of filing criminal information, are such facts
as are sufficient to engender a well-founded belief that a crime has been
committed and that respondent is probably guilty thereof. In order that probable
cause to file a criminal case may be arrived at, the elements of the crime charged
should be present.

Thus, in order therefore for the penal provision under Section 144 of the
Corporation Code to apply in a case of violation of a stockholder or members right
to inspect the corporate books/records as provided for under Section 74 of the
Corporation Code, the following elements must be present:

First. A director, trustee, stockholder or member has made a prior demand in

writing for a copy of excerpts from the corporations records or minutes;

Second. Any officer or agent of the concerned corporation shall refuse to

allow the said director, trustee, stockholder or member of the corporation to
examine and copy said excerpts;

Third. If such refusal is made pursuant to a resolution or order of the board of

directors or trustees, the liability under this section for such action shall be
imposed upon the directors or trustees who voted for such refusal; and,

Fourth. Where the officer or agent of the corporation sets up the defense
that the person demanding to examine and copy excerpts from the
corporations records and minutes has improperly used any information
secured through any prior examination of the records or minutes of such
corporation or of any other corporation, or was not acting in good faith or for
a legitimate purpose in making his demand, the contrary must be shown or
proved.

Thus, in a criminal complaint for violation of Section 74 of the Corporation

Code, the defense of improper use or motive is in the nature of a justifying
circumstance that would exonerate those who raise and are able to prove the
same. Accordingly, where the corporation denies inspection on the ground of
improper motive or purpose, the burden of proof is taken from the shareholder and
placed on the corporation.

In the instant case, the Court finds that the Court of Appeals erred in
declaring that the Secretary of Justice exceeded his authority when he conducted an
inquiry on the petitioners defense of improper use and motive on Eduardos
part. As a necessary element in the offense of refusal to honor a
stockholder/members right to inspect the corporate books/records, it was
incumbent upon the Secretary of Justice to determine that all the
elements which constitute said offense are present. Due process requires
that inquiry into the motive behind Eduardos attempt at inspection should have
been made even during the preliminary investigation stage, just as soon as
petitioners set up the defense of improper use and motive.

Petitioners accuse Eduardo of the following:

1. He is a spendthrift, using the family corporations resources to sustain his
extravagant lifestyle. During his incumbency as officer of VMC and Genato (from
1984 to 2000), he was able to obtain massive amounts by way of cash advances
from these corporations, amounting to more than P165 million;
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2. He is exercising undue pressure upon petitioners in order to acquire

ownership, through the forced execution of a deed of donation, over the VAG
Building in San Juan, which building belongs to Genato;
3. He is putting pressure on the corporations, through their directors and
officers, for the latter to disregard their respective policies which prohibit the grant
of cash advances to stockholders.
4. At one time, he coerced Flordeliza for the latter to sell her Wack-Wack Golf
Proprietary Share;
5. In May 2003, without the requisite authority, he called a stockholders
meeting to demand an increase in his P140,000.00 monthly allowance from the
corporation to P250,000.00; demand a cash advance of US$10,000; and to demand
that the corporations shoulder the medical and educational expenses of his family
as well as those of the other stockholders;
6. In November 2003, he demanded that he be given an office within the
corporations premises. In December 2003, he stormed the corporations common
office, ordered the employees to vacate the premises, summoned the directors to a
meeting, and there he berated them for not acting on his requests. In January
2004, he returned to the office, demanding the transfer of the Accounting
Department and for Jason to vacate his office by the end of the month. He likewise
left a letter which contained his demands. At the end of January 2004, he returned,
ordered the employees to leave the premises and demanded that Jason surrender
his office and vacate his desk. He did this no less than four (4) times. As a result,
the respective boards of directors of the corporations resolved to ban him
from the corporate premises;
7. He has been interfering in the everyday operations of VMC and Genato,
usurping the duties, rights and authority of the directors and officers thereof. He
attempted to lease out a warehouse within the VMC premises without the
knowledge and consent of its directors and officers; during the wake of the former
President of VMC and Genato, he issued instructions for the employees to close
down operations for the whole duration of the wake, against the corporate officers
instructions to attend the wake by batch, so as not to hamper business operations;
he has caused chaos and confusion in VMC and Genato as a result;

These serious allegations are supported by official and other documents, such
as board resolutions, treasurers affidavits and written communication from the
respondent Eduardo himself. Taken together, all these serve to justify petitioners
allegation that Eduardo was not acting in good faith and for a legitimate purpose in
making his demand for inspection of the corporate books.

Thus, the Secretary of Justice did not commit grave abuse of discretion when
it reversed the resolution of the Malabon City Prosecutor.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The March 6,
2007 Decision and June 19, 2007 Resolution of the Court of Appeals in CA-G.R. SP No. 94708
are REVERSED and SET ASIDE. The July 26, 2005 and March 29, 2006 Resolutions of the
Secretary of Justice directing the withdrawal of the information filed against petitioners for
violation of Section 74 of the Corporation Code are accordingly REINSTATED and
AFFIRMED.SO ORDERED.

I. SHORT TITLE: Lanuza vs. CA (454 SCRA 54)

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II. FULL TITLE: JESUS V. LANUZA, MAGADYA REYES, BAYANI REYES and
ARIEL REYES, petitioners, vs. COURT OF APPEALS, SECURITIES AND
EXCHANGE COMMISSION, DOLORES ONRUBIA, ELENITA NOLASCO, JUAN O.
NOLASCO III, ESTATE OF FAUSTINA M. ONRUBIA, PHILIPPINE MERCHANT
MARINE SCHOOL, INC., respondents. G.R. No. 131394. March 28, 2005

III. TOPIC: SECTION 74 of CORPORATION CODE

IV. STATEMENT OF FACTS

Petitioners seek to nullify the Court of Appeals Decision in CAG.R. SP No.

414731 promulgated on 18 August 1997, affirming the SEC Order dated 20
June 1996, and the Resolution2 of the Court of Appeals dated 31 October
1997 which denied petitioners motion for reconsideration.

In 1952, the Philippine Merchant Marine School, Inc. (PMMSI) was

incorporated, with seven hundred (700) founders shares and seventy-six
(76) common shares as its initial capital stock subscription reflected in the
articles of incorporation. Onrubia et. al, who were in control of PMMSI
registered the companys stock and transfer book for the first time in 1978,
recording thirty-three (33) common shares as the only issued and
outstanding shares of PMMSI.

In 1979, a special stockholders meeting was called and held on the basis of
what was considered as a quorum of twenty-seven (27) common shares,
representing more than two-thirds (2/3) of the common shares issued and
outstanding.

In 1982, Juan Acayan, one of the heirs of the incorporators filed a petition for
the registration of their property rights was filed before the SEC over 120
founders shares and 12 common shares owned by their father.

V. STATEMENT OF CASE

SEC Hearing Officer: heirs of Acayan were entitled to the claimed shares
and called for a special stockholders meeting to elect a new set of officers.

SEC en banc: affirmed the decision. As a result, the shares of Acayan were
recorded in the stock and transfer book.

On May 6, 1992, a special stockholders meeting was held to elect a new set
of directors. Onrubia et al filed a petition with SEC questioning the validity of
said meeting alleging that the quorum for the said meeting should not be
based on the 165 issued and outstanding shares as per the stock and
transfer book, but on the initial subscribed capital stock of seven hundred
seventy-six (776) shares, as reflected in the 1952 Articles of Incorporation.
Petition was dismissed

SC en banc: shares of the deceased incorporators should be duly

represented by their respective administrators or heirs concerned. Called for
a stockholders meeting on the basis of the stockholdings reflected in the
articles of incorporation for the purpose of electing a new set of officers for
the corporation

Lanuza, Acayan et al, who are PMMSI stockholders, filed a petition for review
with the CA,
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CA decision

1. For purposes of transacting business, the quorum should be based on the

outstanding capital stock as found in the articles of incorporation

2. To require a separate judicial declaration to recognize the shares of the

original incorporators would entail unnecessary delay and expense. Besides.
the incorporators have already proved their stockholdings through the
provisions of the articles of incorporation.

Appeal was made by Lanuza et al before the SC.

Lanuza et al contention:

1992 stockholders meeting was valid and legal; Reliance on the 1952
articles of incorporation for determining the quorum negates the existence
and validity of the stock and transfer book Onrubia et al prepared; Onrubia et
al must show and prove entitlement to the founders and common shares in a
separate and independent action/proceeding in order to avail of the benefits
secured by the heirs of Acayan

Onrubia et als contention, based on the Memorandum: petition

should be dismissed on the ground of res judicata Another appeal was made

Lanuza et als contention: instant petition is separate and distinct

from G.R. No. 131315, there being no identity of parties, and more
importantly, the parties in the two petitions have their own distinct rights
and interests in relation to the subject matter in litigation

Onrubia et als manifestation and motion: moved for the

dismissal of the case

VI. ISSUE: What should be the basis of quorum for a stockholders meeting
the outstanding capital stock as indicated in the articles of incorporation or
that contained in the companys stock and transfer book?

VII. RULING: Articles of Incorporation. It defines the charter of the

corporation and the contractual relationships between the State and the
corporation, the stockholders and the State, and between the corporation
and its stockholders. Contents are binding, not only on the corporation, but
also on its shareholders.

Whereas in a Stock and transfer book, it is defined as a book which

records the names and addresses of all stockholders arranged alphabetically,
the installments paid and unpaid on all stock for which subscription has been
made, and the date of payment thereof; a statement of every alienation, sale
or transfer of stock made, the date thereof and by and to whom made; and
such other entries as may be prescribed by law. It is necessary as a measure
of precaution, expediency and convenience since it provides the only certain
and accurate method of establishing the various corporate acts and
transactions and of showing the ownership of stock and like matters. It is not
public record, and thus is not exclusive evidence of the matters and things
which ordinarily are or should be written therein

In this case, the articles of incorporation indicate that at the time of

incorporation, the incorporators were bona fide stockholders of 700 founders
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shares and 76 common shares. Hence, at that time, the corporation had 776
issued and outstanding shares.

According to Sec. 52 of the Corp Code, a quorum shall consist of the

stockholders representing a majority of the outstanding capital stock. As
such, quorum is based on the totality of the shares which have been
subscribed and issued, whether it be founders shares or common shares. To
base the computation of quorum solely on the obviously deficient, if not
inaccurate stock and transfer book, and completely disregarding the issued
and outstanding shares as indicated in the articles of incorporation would
work injustice to the owners and/or successors in interest of the said shares.

The stock and transfer book of PMMSI cannot be used as the sole basis
for determining the quorum as it does not reflect the totality of shares which
have been subscribed, more so when the articles of incorporation show a
significantly larger amount of shares issued and outstanding as compared to
that listed in the stock and transfer book. One who is actually a stockholder
cannot be denied his right to vote by the corporation merely because the
corporate officers failed to keep its records accurately. A corporations
records are not the only evidence of the ownership of stock in a corporation.

It is no less than the articles of incorporation that declare the

incorporators to have in their name the founders and several common
shares. Thus, to disregard the contents of the articles of incorporation would
be to pretend that the basic document which legally triggered the creation of
the corporation does not exist and accordingly to allow great injustice to be
caused to the incorporators and their heirs

VIII. DISPOSITIVE PORTION: WHEREFORE, the petition is DENIED and the

assailed Decision is AFFIRMED. Costs against petitioners

I.SHORT TITLE: Terelay Investment v. Yulo

II. FULL TITLE: TERELAY INVESTMENT AND DEVELOPMENT
CORPORATION, Petitioner, v. CECILIA TERESITA J. YULO, Respondent.

III. TOPIC: Corporation Law Section 74

IV. STATEMENT OF FACTS:

Asserting her right as a stockholder, Cecilia Teresita Yulo wrote a letter, dated September 14, 1999,
addressed to Terelay Investment and Development Corporation (TERELAY) requesting that she be
allowed to examine its books and records on September 17, 1999 at 1:30 o'clock in the afternoon at the
latter's office on the 25th floor, Citibank Tower, Makati City. In its reply-letter, dated September 15, 1999,
TERELAY denied the request for inspection and instead demanded that she show proof that she was a
bona fide stockholder.

On September 16, 1999, Cecilia Yulo again sent another letter clarifying that her request for examination
of the corporate records was for the purpose of inquiring into the financial condition of TERELAY and
the conduct of its affairs by the principal officers. The following day, Cecilia Yulo received a faxed letter
from TERELAY's counsel advising her not to continue with the inspection in order to avoid trouble.

V. STATEMENT OF THE CASE:

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Yulo then filed before the SEC a petition for the issuance of Writ of Mandamus, praying that judgment be
rendered ordering TERELAY to allow her to inspect its corporate records, books of account and other
financial records.

Following the enactment of Republic Act No. 8799 (The Securities Regulation Code), the case was
transferred from the Securities and Exchange Commission to the RTC.

RTC granted respondents application for inspection of corporate record pursuant to Rule 7 of the Interim
Rules in relation to Section 74 and 75 of the Corporation Code. CA affirmed the RTC. Hence, this petition
for review on certiorari.

VI. ISSUE:
Whether or not Yulo, as stockholder, has just and sufficient grounds to inspect Terelays corporate records

VII. RULING:
YES. Petitioner's submission that the respondent's "insignificant holding" of only .001% of the
petitioner's stockholding did not justify the granting of her application for inspection of the corporate
books and records is unwarranted. The Corporation Code has granted to all stockholders the right to
inspect the corporate books and records, and in so doing has not required any specific amount of interest
for the exercise of the right to inspect. Ubi lex non distinguit nee nosdistingueredebemos. When the law
has made no distinction, we ought not to recognize any distinction.

Neither could the petitioner arbitrarily deny the respondent's right to inspect the corporate books and
records on the basis that her inspection would be used for a doubtful or dubious reason. Under Section 74,
third paragraph, of the Corporation Code, the only time when the demand to examine and copy the
corporation's records and minutes could be refused is when the corporation puts up as a defense to any
action that "the person demanding" had "improperly used any information secured through any prior
examination of the records or minutes of such corporation or of any other corporation, or was not acting
in good faith or for a legitimate purpose in making his demand."

The right of the shareholder to inspect the books and records of the petitioner should not be made subject
to the condition of a showing of any particular dispute or of proving any mismanagement or other
occasion rendering an examination proper, but if the right is to be denied, the burden of proof is upon the
corporation to show that the purpose of the shareholder is improper, by way of defense.

Among the purposes held to justify a demand for inspection are the following: (1) To ascertain the
financial condition of the company or the propriety of dividends; (2) the value of the shares of stock for
sale or investment; (3) whether there has been mismanagement; (4) in anticipation of shareholders'
meetings to obtain a mailing list of shareholders to solicit proxies or influence voting; (5) to obtain
information in aid of litigation with the corporation or its officers as to corporate transactions. Among the
improper purposes which may justify denial of the right of inspection are: (1) Obtaining of information as
to business secrets or to aid a competitor; (2) to secure business "prospects" or investment or advertising
lists; (3) to find technical defects in corporate transactions in order to bring "strike suits" for purposes of
blackmail or extortion.

In general, however, officers and directors have no legal authority to close the office doors against
shareholders for whom they are only agents, and withhold from them the right to inspect the books which
furnishes the most effective method of gaining information which the law has provided, on mere doubt or
suspicion as to the motives of the shareholder. While there is some conflict of authority, when an
inspection by a shareholder is contested, the burden is usually held to be upon the corporation to establish
a probability that the applicant is attempting to gain inspection for a purpose not connected with his
interests as a shareholder, or that his purpose is otherwise improper. The burden is not upon the petitioner
to show the propriety of his examination or that the refusal by the officers or directors was wrongful,
except under statutory provisions. (Ballantine, Corporations, Callaghan and Company, Chicago, Rev.
Ed., 1946, pp. 377-379.)

VIII. DISPOSITIVE PORTION:

WHEREFORE, the Court AFFIRMS the judgment promulgated on September 12, 2003;
and ORDERSthe petitioner to pay the costs of suit.