Philpotts V Phil Manufacturing

8/12/2016
PHILIPPINEREPORTSANNOTATEDVOLUME040
[No. 15568. November 8, 1919.]

W. G. PHILPOTTS, petitioner, vs. PHILIPPINE
MANUFACTURING COMPANY and F. N. BERRY,
respondents.
CORPORATIONS EXAMINATION OF COMPANY'S
AFFAIRS BY STOCKHOLDER RIGHT OF STOCKHOLDER
TO ACT THROUGH REPRESENTATIVE.The right of
examination into corporate affairs which is conceded to the
stockholder by section 51 of the Corporation Law may be
exercised either by the stockholder in person or by any duly
authorized representative.
ORIGINAL ACTION in the Supreme Court. Mandamus.

The facts are stated in the opinion of the court.
Lawrence & Ross for petitioner.
Crossfield & O'Brien for defendants.
STREET, J.:
The petitioner, W. G. Philpotts, a stockholder in the
Philippine Manufacturing Company, one of the
respondents herein, seeks by this proceeding to obtain a
writ of mandamus to compel the respondents to permit the
plaintiff, in per
472
472
PHILIPPINE REPORTS ANNOTATED
Philpotts vs. Philippine Manufacturing Co. and Berry.
son or by some authorized agent or attorney, to inspect and

examine the records of the business transacted by said
company since January 1, 1918. The petition is filed
originally in this court under the authority of section 515 of
the Code of Civil Procedure, which gives to this tribunal
concurrent jurisdiction with the Court of First Instance in
cases, among others, where any corporation or person
unlawfully excludes the plaintiff from the use and
enjoyment of some right to which he is entitled. The
http://central.com.ph/sfsreader/session/000001567f7dcee09790d9d8003600fb002c009e/t/?o=False
1/5
8/12/2016
respondents interposed a demurrer, and the controversy is

now before us for the determination of the questions thus
presented.
The first point made has reference to a supposed defect
of parties, and it is said that the action can not be
maintained jointly against the corporation and its secretary
without the addition of the allegation that the latter is the
custodian of the business records of the respondent
company. By the plain language of sections 515 and 222 of
our Code of Civil Procedure, the right of action in such a
proceeding as this is given against the corporation and the
respondent corporation in this case was the only absolutely
necessary party. In the Ohio case of Cincinnati Volksblatt
Co. vs. Hoffmister (61 Ohio St., 432 48 L. R. A., 735), only
the corporation was named as defendant, while the
complaint, in language almost identical with that in the
case at bar, alleged a demand upon and refusal by the
corporation.
Nevertheless the propriety of naming the secretary of
the corporation as a codefendant cannot be questioned,
sincesuch official is customarily charged with the custody
of all documents, correspondence, and records of a
corporation, and he is presumably the person against
whom the personal orders of the court would be made
effective in case the relief sought should be granted.
Certainly there is nothing in the complaint to indicate that
the secretary is an improper person to be joined. The
petitioner might have named the president of the
corporation as a respondent also and this official might be
brought in later, even after judgment rendered, if
necessary to the effectuation of the order of the court.
473
VOL. 40, NOVEMBER 8, 1919.
473
Section 222 of our Code of Civil Procedure is taken from the

California Code, and a decision of the California Supreme
CourtBarber vs. Mulford (117 Cal., 356)is quite clear
upon the point that both the corporation and its officers
may be joined as defendants.
The real controversy which has brought these litigants
into court is upon the question argued in connection with
the second ground of demurrer, namely, whether the right
which the law concedes to a stockholder to inspect the
records can be exercised by a proper agent or attorney of
the stockholder as well as by the stockholder in person.
2/5
8/12/2016
There is no pretense that the respondent corporation or

any of its officials has refused to allow the petitioner
himself to examine anything relating to the affairs of the
company, and the petition prays for a peremptory order
commanding the respondents to place the records of all
business transactions of the company, during a specified
period, at the disposal of the plaintiff or his duly authorized
agent or attorney, it being evident that the petitioner
desires to exercise said right through an agent or attorney.
In the argument in support of the demurrer it is conceded
by counsel for the respondents that there is a right of
examination in the stockholder granted under section 51 of
the Corporation Law, but it is insisted that this right must
be exercised in person.
The pertinent provision of our law is found in the second
paragraph of section 51 of Act No. 1459, which reads as
follows: "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."
This provision is to be read of course in connection with
the related provisions of sections 51 and 52, defining the
duty of the corporation in respect to the keeping of its
records.
Now it is our opinion, and we accordingly hold, that the
right of inspection given to a stockholder in the provision
above quoted can be exercised either by himself or by any
proper representative or attorney in fact, and either with
474
474
PHILIPPINE REPORTS ANNOTATED
or without the attendance of the stockholder. This is in

conformity with the general rule that what a man may do
in person he may do through another and we find nothing
in the statute that would justify us in qualifying the right
in the manner suggested by the respondents.
This conclusion is supported by the undoubted weight of
authority in the United States, where it is generally held
that the provisions of law conceding the right of inspection
to stockholders of corporations are to be liberally construed
and that said right may be exercised through any other
properly authorized person. As was said in Foster vs. White
(86 Ala., 467), "The right may be regarded as personal, in
the sense that only a stockholder may enjoy it but the
inspection and examination may be made by another.
3/5
8/12/2016
Otherwise it would be unavailing in many instances." An

observation to the same effect is' contained in Martin vs.
Bienville Oil Works Co. (28 La., 204), where it is said: "The
possession of the right in question would be futile if the
possessor of it, through lack of knowledge necessary to
exercise it, were debarred the right of procuring in his
behalf the services of one who could exercise it." In
Deadreck vs. Wilson (8 Baxt. [Tenn.], 108), the court said:
"That stockholders have the right to inspect the books of
the corporation, taking minutes from the same, at all
reasonable times, and may be aided in this by experts and
counsel, so as to make the inspection valuable to them, is a
principle too well settled to need discussion." Authorities on
this point could be accumulated in great abundance, but as
they may be found cited in any legal encyclopedia or
treaties devoted to the subject of corporations, it is
unnecessary here to refer to other cases announcing the
same rule.
In order that the rule above stated may not be taken in
too sweeping a sense, we deem it advisable to say that
there are some things which a corporation may
undoubtedly keep secret, notwithstanding the right of
inspection given by law to the stockholder as, for instance,
where a corporation, engaged in the business of
manufacture, has acquired a formula or process, not
generally known, which has proved
475
VOL. 40, NOVEMBER 11, 1919.
475
Arevalo vs. Dalandan.
of utility to it in the manufacture of its products. It is not

our intention to declare that the authorities of the
corporation, and more particularly the Board of Directors,
might not adopt measures for the protection of such process
from publicity. There is, however, nothing in the petition
which would indicate that the petitioner in this case is
seeking to discover anything which the corporation is
entitled to keep secret .and if anything of the sort is
involved in the case it may be brought out at a more
advanced stage of the proceedings.
The demurrer is overruled and it is ordered that the
writ of mandamus shall issue as prayed, unless within 5
days from notification hereof the respondents answer to the
merits. So ordered.
4/5
8/12/2016
Arellano, C. J., Torres, Johnson, Araullo, Malcolm, and

Avancea, JJ., concur.
Demurrer overruled.
___________
Copyright2016CentralBookSupply,Inc.Allrightsreserved.
5/5

Philpotts V Phil Manufacturing

Uploaded by

Copyright:

Available Formats

Philpotts V Phil Manufacturing

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Philpotts V Phil Manufacturing

Uploaded by

Copyright:

Available Formats

8/12/2016

[No. 15568. November 8, 1919.]

ORIGINAL ACTION in the Supreme Court. Mandamus.

PHILIPPINE REPORTS ANNOTATED

Philpotts vs. Philippine Manufacturing Co. and Berry.

son or by some authorized agent or attorney, to inspect and

respondents interposed a demurrer, and the controversy is

VOL. 40, NOVEMBER 8, 1919.

Philpotts vs. Philippine Manufacturing Co. and Berry.

Section 222 of our Code of Civil Procedure is taken from the

There is no pretense that the respondent corporation or

PHILIPPINE REPORTS ANNOTATED

Philpotts vs. Philippine Manufacturing Co. and Berry.

or without the attendance of the stockholder. This is in

Otherwise it would be unavailing in many instances." An

VOL. 40, NOVEMBER 11, 1919.

Arevalo vs. Dalandan.

of utility to it in the manufacture of its products. It is not

Arellano, C. J., Torres, Johnson, Araullo, Malcolm, and

You might also like