Mr. Manuel J. Miraflores

August 23, 1999 Mr. Manuel J. Miraflores Trenas, Trenas & Rubias Law Offices Second Floor, Golder Commercial Center Iznart Street, Iloilo City S i r : This refers to your letter dated August 17, 1999 requesting opinion on the query posed therein. As stated, the board of directors of Queen City Development Bank, Inc. passed and approved the following Board Resolution: "The President suggested to the Board that the agenda as well as the minutes of meeting of the Board be made available to the directors only at the Queen Bank branch at the Sky City Tower in order to preserve the confidentiality thereof. Any director may inspect and study the same by calling the corporate office beforehand, at reasonable hours. Furthermore, it was suggested that all folders of the directors containing the minutes and agenda be left after each meeting for safekeeping. Upon motion, duly seconded, the said suggestions of the President were approved without objection. APPROVED. " (Emphasis supplied) On the basis of the above board resolution, you pose the following query: "It is it legal to refuse a member of the Board of Directors from securing certified copies of the entire minutes of all the meetings of the Board in view of the provisions of Section 74 of the Corporation Code? "Section 74 of the Corporation Code provides in part: "SECTION 74. Books to be kept ; ..Every corporation shall at its principal office .keep and carefully preserve a record of all business transactions, and minutes of all meetings of stockholders or members, or of the board of directors or trustees, .... 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. ...:Provided, further, That it shall be a defense to any action under this section that the person demanding to examine and copy excerpts from the corporation's records and minutes has improperly used any information secured through any prior examination of the records or minutes of such corporation or of any other corporation, or was not acting in good faith or for a legitimate purpose in making his demand. " ...(Emphasis supplied) It is clear from the aforecited provision that the directors are entitled under the law to inspect the corporate records which should be kept at the principal office of the corporation and request for copies thereof if necessary. This privilege, however, is not absolute and the corporation may show in defense that the stockholder is acting from wrongful motives The exercise of the right of inspection of corporate books and records should be for a legitimate purpose. While the board of directors has the authority to adopt rules in the form of Board Resolutions, the same, to be valid, must not be contrary to the provisions of the Corporation Code. A Board Resolution which unreasonably restricts the above statutory right of the stockholder/director is unenforceable. Please be advised accordingly. Very truly yours, (SGD.) PERFECTO R. YASAY, JR. Chairman