Pardo v.

Hercules Lumber
47 Phil 965 1924 J. Street Tiangco
summary Action for mandamus to compel the corp to let petitioner examine its books despite its by-
law provision imposing certain dates for inspection. The court held that the by law prov is
void for removing the right of stockholder to examine the books of corp. The law qualifies
this right to be exercised at reasonable hours only, meaning that the corp can't impose
arbitrary period for its exercise which if not will bar the stockholder from doing so.

facts of the case

Pardo as stockholder of the respondent corporation filed an action for mandamus to compel the latter to
permit him to examine the records of its business transactions. However Ignacio Ferrer, the corporate
secretary, refused his request, because:
1. Art. 10 of its by-laws states that every SH may examine the books of the company and other docs upon
the days which the board shall annually fix. The board then passed a resolution designating March 15-25 for
examination in appropriate hours. The pet was not able to exercise his right within the period therefore he
waived his right to do so for that year.
2. Pet's motive was questioned alleging that he wants to examine the books for the benefit of a competitor
firm, to which he is allegedly connected, and to obtain evidence against the corp as preparation for a suit he
wants to file against it for a previous employment contract.

issue
WON the by-law prov is a valid restriction on the SH's right to examine the books of corp? NO. The provision
is invalid.

ratio
The general right given by the statute may not be lawfully abridged as to the extent attempted by the by-
laws and board resolution. The court conceded that officers of the corp may refuse the SH's right to inspect the
books, but only if exercised at unusual hours or under improper conditions (the court did not expound). But
the officers or the board don’t have the power to deprive the SH of this right altogether. Such is not a lawful
restriction on the right of stockholder to inspect the books of corp as provided by the statute.
Under the law, this right is not absolute but is qualified only by when it can be exercised - at reasonable
hours on business days throughout the year. This is not to be restricted by some arbitrary period fixed by
directors.
As to the motive argument, the court held that it is immaterial and entirely apart from the issue.
The court thus issued writ of mandamus against corp and invalidated the by-law prov and board reso.