G.R. No. 88809 & G.R. No. 88858 ; July 10, 1991
REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner, vs. THE HONORABLE SANDIGANBAYAN (FIRST DIVISION) AND EDUARDO COJUANGCO, JR., respondents.

FACTS

In G.R. No. 88809 , private respondent Eduardo Cojuangco, Jr., a stockholder of record, requested San Miguel Corporation (SMC) to allow him to inspect and copy its corporate records. SMC, noting that Cojuangco’s shares had been sequestered by the Presidential Commission on Good Government (PCGG), referred the request to the PCGG. The PCGG subsequently denied the request. In G.R. No. 88858 , a substantially similar situation arose where Cojuangco sought to inspect the records of United Coconut Planters Bank (UCPB) and was likewise advised to course his request through the PCGG.
Cojuangco then filed separate petitions for prohibition and mandamus before the Sandiganbayan to enforce his stockholder’s right of inspection. The Sandiganbayan granted both petitions, ordering the corporations to comply with the request in accordance with Section 74 of the Corporation Code. The PCGG filed these petitions for certiorari, arguing that the Sandiganbayan lacked jurisdiction, that the sequestration justified refusing the right of inspection, and that the suit was barred by state immunity.

ISSUE

The primary issue is whether a stockholder whose shares have been sequestered by the PCGG retains the right to inspect corporate records under Section 74 of the Corporation Code, and whether the Sandiganbayan correctly assumed jurisdiction over the petitions to enforce this right.

RULING

The Supreme Court dismissed the PCGG’s petitions and upheld the Sandiganbayan’s resolutions. On jurisdiction, the Court ruled that under Executive Order No. 14, the Sandiganbayan has exclusive and original jurisdiction over all cases involving the ill-gotten wealth of the Marcos administration, including incidents arising from sequestration orders. Therefore, Cojuangco’s challenge to the PCGG’s denial of his inspection right was properly filed with the Sandiganbayan. The doctrine of state immunity was also inapplicable, as the suit did not demand affirmative sovereign action but merely questioned the PCGG’s act in a matter within the Sandiganbayan’s jurisdiction.
On the substantive right of inspection, the Court held that sequestration does not automatically deprive a stockholder of record of the right to inspect corporate books under Section 74 of the Corporation Code. This right is fundamental and can only be denied if the corporation proves the stockholder is acting in bad faith or for an illegitimate purpose. The PCGG failed to discharge this burden of proof. Its bare allegations that Cojuangco’s purpose was mere curiosity were unsubstantiated, especially given his substantial shareholdings. Since the PCGG did not demonstrate any improper motive, Cojuangco’s right of inspection remained enforceable. The temporary restraining orders were lifted.