REPUBLIC OF THE PHILIPPINES, (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), PETITIONER, VS. THE HONORABLE SANDIGANBAYAN (FIRST DIVISION) AND EDUARDO COJUANGCO, JR., RESPONDENTS.

These petitions for certiorari assail the resolution of
respondent Sandiganbayan dated May 9, 1989, allowing respondent Eduardo Cojuangco, Jr., to inspect the corporate records of United
Coconut Planters Bank, the dispositive portion of
which reads:

“IN VIEW OF THE FOREGOING, the respondent UCPB and its
corporate secretary shall respond to petitioner Eduardo Cojuanco’s
request for examination and copying of corporate records in a manner consistent
with its duties to all its other
registered stockholders as described in the Corporation Code and under specific
laws governing banking institutions such as said respondent UCPB.” (Rollo, pp. 36-40, G.R. No. 88858)

and its resolution dated May 18, 1989, likewise allowing
respondent Cojuangco to examine the corporate records
of San Miguel Corporation.  It reads:

“IN VIEW OF THE FOREGOING, the petition filed by Petitioner
Eduardo Cojuangco, Jr., to examine the records of the
San Miguel Corporation is granted within the confines of Sec. 74 of the
Corporation Code.” (Rollo, pp. 36-40; G.R. No.
88809)

The facts that gave rise to the instant petitions are as follows:

In
G.R. No. 88809:

On December 26,
1988, private respondent-stockholder 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.

In
G.R. No. 88858:

The facts set forth in G.R. No. 88809 are substantially similar
in G.R. No. 88858 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 (Rollo,
p. 44, G.R. No. 88809).  As regards the
corporate records of UCPB, private respondent was likewise advised to course
his request through the PCGG (Rollo, pp. 45-46. GR
No. 88858).

Thereafter, 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 afore-quoted.

Hence, the instant petitions for certiorari with prayer
for the issuance of temporary restraining orders.  On June
13, 1989 and July 20, 1989,
the Court issued a temporary restraining order in G.R. Nos. 88809 and 88858,
respectively.

Petitioner argues, among others, that:

1)  respondent Sandiganbayan has no jurisdiction over the petition filed
by respondent Eduardo Cojuangco, Jr.;

2)  the PCGG may validly refuse
private respondent’s right to inspection; and

3)  the petition filed by private respondent before the Sandiganbayan is barred by the doctrine of state immunity
from suit.

We find the petition devoid of merit.

Nothing is more settled than this Court’s pronouncement in PCGG
v. Peña (159 SCRA 556 [1988]), where We held that:

“x x x
Under Section 2 of the President’s Executive Order No. 14 issued on May 7,
1986, all cases of the Commission regarding ‘the Funds, Moneys, Assets, and
Properties Illegally Acquired or Misappropriated by Former President Ferdinand
Marcos, Mrs. Imelda Romualdez Marcos, their Close
Relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees,’
whether civil or criminal, are lodged within the ‘exclusive and original
jurisdiction of the Sandiganbayan‘ and all incidents
arising from incidental to, or related
to, such cases necessarily fall likewise
under the Sandiganbayan’s exclusive
and original jurisdiction, subject to review on certiorari
exclusively by the Supreme Court.

“x x
x

“x x x
Executive Order No. 14, which defines the jurisdiction over cases involving the
ill-gotten wealth of former President Marcos, his wife, Imelda, members of
their immediate family, close relatives, subordinates, close and/or business
associates, dummies, agents and nominees, specifically provides in section 2
that ‘the Presidential Commission on Good Government shall file all such cases,
whether civil or criminal, with the Sandiganbayan
which shall have exclusive and original jurisdiction thereof.’  Necessarily, those who wish
to question or challenge the Commission’s
acts or orders in such cases must
seek recourse in the same court, the
Sandiganbayan, which is vested
with exclusive and original jurisdiction.  x x x” (Underscoring supplied)

The above ruling was reiterated in Soriano
v. Yuson (164 SCRA 226 [1988]) and accompanying
cases.

All matters of sequestration being within the exclusive and
original jurisdiction of the Sandiganbayan, it
follows that the propriety of petitioner’s action in denying Cojuangco’s right of inspection, ostensibly based on the
order of sequestration, may be challenged before the respondent court.

Neither may the doctrine of state immunity be properly invoked by
petitioner in the case at bar.  For one
thing, the petition filed by respondent Cojuangco,
Jr., before the Sandiganbayan demanded no affirmative
performance by the State in its political capacity which would otherwise call
for the application of immunity from suit (See Republic v. Sandiganbayan, 184 SCRA 382 [1990] and cases cited
therein).

As regards the right of inspection, it is the submission of
petitioner that the request of respondent Cojuangco, Jr., for the examination of the corporate
records of SMC and UCPB may be validly refused pending judicial determination
of respondent’s sequestered shares, i.e., whether the same are ill-gotten or
not (Rollo, p. 14, GR No. 88809; citing EO Nos. 1
& 2).  It is further argued that
respondent’s purpose in examining the corporate records of SMC and the UCPB is
merely to satisfy his curiosity regarding
the performance of said corporations (Rollo, p. 16,
GR No. 88809; Rollo, p. 17, GR No. 88858).

Does sequestration
automatically deprive a stockholder of his right of inspection?

We rule in the negative.

The right of a
stockholder to inspect and/or examine the records of a corporation is
explicitly provided in Section 74 of the Corporation Code, the pertinent
portion of which reads:

“SEC. 74.  Books to be
kept; stock transfer agent. —

“x x
x

“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 argue, 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 (150 SCRA 181 [1987]) on the effects of
sequestration (Rollo, p. 12, GR No. 88809; Rollo, p. 13, GR No. 88858).  There is mischief in this argument.  We have examined the extent of Executive
Orders Nos. 1, 2 and 14 on sequestration as well as the BASECO case relied upon
by petitioner.  Nevertheless, the Court
finds 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. 
Moreover, what is clear in the case of BASECO, supra, is the
following:

“One thing is certain, and should be stated at the
outset:   the PCGG cannot exercise acts
of dominion over property sequestered, frozen or provisionally taken over.  As already earlier stressed with no little
insistence, the act of sequestration; freezing or provisional takeover of
property does not import or bring about a divestment of title over said
property; does not make the PCGG the owner thereof.  In relation to the property sequestered,
frozen or provisionally taken over, the PCGG is a conservator, not an owner.  x x x“

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.

Just recently, We ruled that the PCGG cannot vote the sequestered
shares of respondent Cojuangco, Jr., in San Miguel
Corporation (Cojuangco, Jr., et al., v. Roxas. et al., GR No. 91925, April 16, 1991; Cojuangco, Jr., et al., v. Azcuna,
et al., GR No. 93005, April 16, 1991). 
If the PCGG cannot vote the sequestered shares of private respondent,
with much more reason it cannot restrain or prevent private respondent, as
stockholder from inspecting the corporate records of the SMC and the UCPB at
reasonable hours on business days.  The
law grants respondent/stockholder such authority.

Petitioner, in seeking to bar private respondent from exercising
his statutory right of inspection, lays emphasis on the argument that
respondent’s express purpose is to “supervise” PCGG’s
management, if not to gratify his curiosity regarding the performance of the
SMC and the UCPB.

Again, the argument is devoid of merit.  Records indicate that private respondent is
the ostensible owner of a substantial number of shares and is a stockholder of
record in SMC and UCPB.* Being a
stockholder beyond doubt, there is therefore no reason why private respondent
may not exercise his statutory right of inspection in accordance with Sec. 74
of the Corporation Code, the only express limitation being that the right of
inspection should be exercised at reasonable hours on business days; 2) the
person demanding to examine and copy excerpts from the corporation’s records
and minutes has not improperly used any information secured through any
previous examination of the records of such corporation; and 3) the demand is
made in good faith or for a
legitimate purpose.  The latter two
limitations, however, must be set up as a defense by the corporation if it is
to merit judicial cognizance.  As such,
and in the absence of evidence, the PCGG cannot unilaterally deny a stockholder
from exercising his statutory right of inspection based on an unsupported and
naked assertion that private respondent’s motive is improper or merely for
curiosity or on the ground that the
stockholder is not in friendly terms with the corporation’s officers.

Explaining the rationale behind a stockholder’s right to
inspection, this Court in the case of Gokongwei, Jr.,
v. Securities and Exchange Commission (89 SCRA 336 [1979]) held that:

“The stockholder’s right of inspection of the corporation’s
books and records is based upon their ownership of the assets and property of
the corporation.  It is, therefore, an
incident of ownership of the corporate property, whether this ownership or
interest be termed an equitable ownership, a beneficial ownership, or a quasi?ownership.  This right is predicated upon the necessity
of self-protection.  It is generally held
by majority of the courts that where the right is granted by statute to the
stockholder, it is given to him as such and must be exercised by him with
respect to his interest as a stockholder and for some purpose germane thereto
or in the interest of the corporation. 
In other words, the inspection has to be germane to the petitioner’s
interest as a stockholder, and has to be proper and lawful in character and not
inimical to the interest of the corporation.” (citing Fletcher Cyc, Private Corporations, Vol. 5, 1976 Rev. Ed., Secs. 2213, 2218 & 2222)

While it may be true that the right of inspection granted by Sec.
74 of the Corporation Code is not absolute, as when the stockholder is not
acting in good faith and for a legitimate purpose (Gonzales v. PNB, 122 SCRA
489 [1983]); or when the demand is purely speculative or merely to satisfy
curiosity (Grey v. Insular Lumber Co., 40 O.G., No.3 1st Supp. 1 [1939]; See
also State ex rel. Thiele v. Cities Service Co. (115
A. 773 [1922]), the same may not be said in the case of private
respondent.  This is because:

“x x x the
‘impropriety of purpose such as will defeat enforcement must be set up (by) the
corporation defensively if the Court is to take cognizance of it as a
qualification.  In other words, the
specific provisions take from the stockholder the burden of showing impropriety
of purpose or motive.’” (Gokongwei, Jr., v.
Securities and Exchange Commission, supra; citing State v. Monida & Yellowstone Stage Co., 110 Minn. 193, 124 NW
791; State v. Cities Service Co., 114 A 463).

In the case at bar, petitioner failed to discharge the burden of
proof to show that private respondent’s action in seeking examination of the
corporate records was moved by unlawful or ill-motivated designs which could
appropriately call for a judicial protection against the exercise of such
right.  Save for its unsubstantiated
allegations, petitioner could offer no proof, nay, not even a scintilla of
evidence that respondent Cojuangco, Jr., was
motivated by bad faith; that the demand was for an illegitimate purpose or that
the demand was impelled by speculation or idle curiosity.  Surely, respondent’s substantial
shareholdings in the SMC and UCPB cannot be an object of mere curiosity.

IN VIEW OF THE FOREGOING, the Court Resolved to
DISMISS the instant petition for lack of merit. 
The temporary restraining orders issued are hereby LIFTED and SET
ASIDE.  This Resolution is immediately executory.

SO ORDERED.

Gutierrez, Jr., Cruz, Paras, Griño-Aquino, Medialdea, and Regalado, JJ., concur.

Fernan, C.J., Narvasa,
Feliciano, and Davide,
Jr., JJ., in the result.

Melencio-Herrera, J., concur in G.R. No. 88809 but take no part in G.R. No.
88859.

Padilla, J., no part in G.R.
No. 88809 but concur in G.R. No. 88858.

Sarmiento, J., no part in any case of SMC due to conflict of
interest.

Gancayco, J., on leave.

* Private respondent owns 13,225
shares of stock in the SMC (See Cojuangco, Jr.,
et al., v. Roxas, et al., and Cojuangco, Jr., et al., v. Azcuna, et al., GR Nos. 91925 & 93005, April 16, 1991)
and 54,117,421 shares in UCPB (Resolution of respondent Sandiganbayan,
Rollo, p. 39. GR No. 88858).