G.R. No. 180416 June 2, 2014
ADERITO Z. YUJUICO and BONIFACIO C. SUMBILLA, Petitioners, vs. CEZAR T. QUIAMBAO and ERIC C. PILAPIL, Respondents.

FACTS

Petitioners Aderito Z. Yujuico and Bonifacio C. Sumbilla, along with Joselito John G. Blando, were elected as the new president/chairman, treasurer, and corporate secretary, respectively, of Strategic Alliance Development Corporation (STRADEC) during the annual stockholders’ meeting on March 1, 2004, replacing respondents Cezar T. Quiambao (president/chairman) and Eric C. Pilapil (corporate secretary). Petitioners filed a criminal complaint against respondents and accountant Giovanni T. Casanova before the Office of the City Prosecutor (OCP) of Pasig City for alleged violations of Section 74 in relation to Section 144 of the Corporation Code. The complaint alleged that respondents refused to turn over STRADEC’s corporate records and stock and transfer book to the new officers, removed these records from the company’s principal office, and repeatedly refused demands for access and examination, instead proposing various alternative custody arrangements like bank safety deposit boxes.
The OCP found probable cause and filed two Informations before the Metropolitan Trial Court (MeTC): Criminal Case No. 89723 for removing the stock and transfer book from the principal office, and Criminal Case No. 89724 for refusing access to and examination of the corporate records and stock and transfer book. The MeTC dismissed Criminal Case No. 89723, ruling that the charged act of mere removal was not penalized under the cited law, but ordered the issuance of warrants of arrest in Criminal Case No. 89724. Respondents filed a petition for certiorari before the Regional Trial Court (RTC), which granted it and dismissed Criminal Case No. 89724, finding no probable cause and that the MeTC committed grave abuse of discretion. The RTC noted a lack of evidence for the alleged refusal during the specified period and that evidence, including a sworn statement by Blando, indicated a turnover of some records. Petitioners elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the RTC committed reversible error in dismissing Criminal Case No. 89724 for lack of probable cause against respondents for allegedly violating Section 74 of the Corporation Code by refusing petitioners, as stockholders and directors, access to and examination of corporate records and the stock and transfer book.

RULING

No, the Supreme Court affirmed the RTC’s dismissal of Criminal Case No. 89724. The Court held that the allegations in the complaint and the evidence presented did not establish probable cause for a violation of Section 74 of the Corporation Code. The Court clarified that the second and fourth paragraphs of Section 74, which grant the right of inspection and penalize its refusal, pertain to a specific scenario: when a director, trustee, stockholder, or member seeks to exercise the right of inspection for a legitimate purpose in the interest of the corporation, and the demand is made upon the corporation itself, which then refuses through its responsible officers. In this case, the complaint depicted a dispute between outgoing and incoming corporate officers over the possession and turnover of corporate records, not a stockholder or director demanding inspection from the corporation. The petitioners were acting on behalf of STRADEC to recover custody of its records, not invoking their personal inspection rights under Section 74. Therefore, the factual allegations did not fall within the situation contemplated by the penal provision of the Corporation Code. The Supreme Court denied the petition and affirmed the RTC orders dismissing Criminal Case No. 89724.