Yujuico v. Quiambao
REITERATIONFacts
The Antecedents: This case concerns a dispute over corporate records and the stock and transfer book of Strategic Alliance Development Corporation (STRADEC). Petitioners Aderito Z. Yujuico and Bonifacio C. Sumbilla, the newly elected president/chairman and treasurer respectively, accused respondents Cezar T. Quiambao and Eric C. Pilapil, the former president/chairman and corporate secretary, of violating Section 74 in relation to Section 144 of the Corporation Code. The core of the accusation is the alleged refusal by respondents to turn over corporate records and the stock and transfer book to the petitioners, thereby impeding their right as stockholders and officers to inspect these documents. Procedural History: Following the criminal complaint filed by the petitioners, the Office of the City Prosecutor (OCP) of Pasig City found probable cause to charge the respondents with two offenses: removing the stock and transfer book from the principal office and refusing access to corporate records and the stock and transfer book. Two informations were filed before the Metropolitan Trial Court (MeTC) of Pasig City. The MeTC dismissed the charge of removing the stock and transfer book but ordered the issuance of a warrant of arrest for refusing access. The respondents then filed a petition for certiorari with the Regional Trial Court (RTC), which granted the petition and dismissed the charge of refusing access, finding no probable cause. The petitioners sought reconsideration, which was denied, leading to the present petition. The Petition: The petitioners seek a review on certiorari under Rule 45 of the Rules of Court, arguing that the RTC erred in dismissing Criminal Case No. 89724. They contend that the RTC's pronouncement that refusing inspection of the stock and transfer book is not a punishable offense under the Corporation Code is a legal error. While acknowledging that the RTC's reasoning for dismissal might be flawed, the petitioners maintain that the refusal to allow access to the stock and transfer book constitutes a violation of Section 74 of the Corporation Code, punishable under Section 144. They specifically challenge the RTC's conclusion that such refusal is not a criminal offense.
Issue(s)
Whether the RTC committed grave abuse of discretion in dismissing Criminal Case No. 89724. Whether the act of refusing to allow inspection of the stock and transfer book of a corporation is a punishable offense under the Corporation Code. Whether a criminal action for violation of the right to inspect corporate records and the stock and transfer book can be maintained against respondents who are allegedly outgoing officers withholding records, rather than corporate officers acting on behalf of the corporation.
Ruling
The Supreme Court denied the petition and affirmed the dismissal of Criminal Case No. 89724. While the Court agreed that the RTC made an inaccurate pronouncement regarding the punishability of refusing inspection of the stock and transfer book, it sustained the dismissal on other grounds.
Ratio Decidendi
On the maintainability of the dismissal of Criminal Case No. 89724: The Court sustained the dismissal of Criminal Case No. 89724. On the punishability of refusing inspection of the stock and transfer book: The Court clarified that the RTC erred in holding that the act of refusing to allow inspection of the stock and transfer book is not a punishable offense under the Corporation Code. Section 74(4) of the Corporation Code mandates that the stock and transfer book be open for inspection by any director or stockholder. Section 144 of the same code penalizes violations of any provision not otherwise specifically penalized. Therefore, refusing inspection of the stock and transfer book, in violation of Section 74(4), falls within the purview of Section 144 and may be penalized as an offense. The Court emphasized that all rights guaranteed to corporators under Section 74 are mandatory and underpinned by the policy of transparency. On the maintainability of the criminal action against the respondents: The Court explained that a criminal action based on the violation of a stockholder's right to examine corporate records and the stock and transfer book under Section 74 can only be maintained against corporate officers or persons acting on behalf of the corporation. The evidence presented by the petitioners suggested that the respondents were outgoing officers who withheld records, and that the petitioners were acting on behalf of STRADEC to recover custody of these records. This scenario does not contemplate a violation of Section 74, which deals with the denial of inspection rights by the corporation through its officers. Instead, it points to a proprietary right of STRADEC to possess its records, which is enforceable through other legal means, not criminal prosecution under Section 74.
Main Doctrine
While the act of refusing to allow inspection of the stock and transfer book is punishable under Section 144 of the Corporation Code when done in violation of Section 74(4), a criminal action based on such violation can only be maintained against corporate officers or persons acting on behalf of the corporation. If the respondents are merely outgoing officers withholding records, the remedy is not a criminal prosecution under Section 74 but other appropriate civil actions to recover possession.