Republic v. Sandiganbayan

REPUBLIC vs. SANDIGANBAYAN

199 SCRA 39 (1991)

FACTS OF THE CASE

This case gave rise to two petitions for certiorari assailing the resolution of respondent Sandiganbayan in allowing respondent Eduardo Cojuangco, Jr., to inspect the corporate records of United Coconut Planters Bank.

In the first petition, private respondent-stockholder Cojuangco requested the San Miguel Corporation (SMC) and its corporate secretary the production, inspection, examination/verification and/or photocopying of the SMC corporate records to inform him of the decisions, policies, acts and performance of the management of the SMC under the PCGG-Board. Since the shares of private respondent in the SMC have been sequestered by the PCGG, the former (SMC) sought advice from the latter on the effect of such sequestration. Subsequently, private respondent was informed by the SMC that all requests for the examination, inspection and photocopying of its corporate records should be coursed through the PCGG. The facts in second petition were substantially similar to above case except that in the latter case, private respondent as stockholder of record seeks authority to inspect and examine the corporate records of United Coconut Planters Bank.

The request of private respondent for the inspection/examination of SMC's corporate records was denied by the PCGG. As regards the corporate records of URPB, private respondent was likewise advised to course his request through the PCGG. Private respondent filed two separate petitions for prohibition and mandamus before the Sandiganbayan seeking to enforce his stockholder's right to inspect the corporate records of SMC and the UCPB. Subsequently, respondent Sandiganbayan rendered the assailed resolutions. Hence, this petition.

ISSUE

Whether sequestration automatically deprive a stockholder of his right of inspection.

RULING

No. The Supreme Court quoted Section 74 of the Corporation Code which states that “The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of 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 excerpts from said records or minutes, at his expense.” 

Petitioners argued, however, that the Corporation Code has to give way to, as having been amended by, Executive Orders Nos. 1, 2, 14 and related issuances as well as the pronouncement laid down by this Court in Bataan Shipyard and Engineering Corporation v. Presidential Commission on Good Government on the effects of sequestration. The Court held that nothing therein to indicate that the Corporation Code has been deemed amended, much less an implied modification of a stockholder's right to inspection as guaranteed by Sec. 74 thereof. The PCGG does not become, ipso facto, the owner of the shares just because the same have been sequestered; nor does it become the stockholder of record by virtue of such sequestration.