G.R. No. 182738 . February 24, 2014.
CAPITOL HILLS GOLF & COUNTRY CLUB, INC. and PABLO B. ROMAN, JR., Petitioners, vs. MANUEL O. SANCHEZ, Respondent.

FACTS

Respondent Manuel O. Sanchez, a stockholder of petitioner Capitol Hills Golf & Country Club, Inc., filed a petition to nullify the corporation’s annual and special stockholders’ meetings held in 2002. The Regional Trial Court (RTC) granted respondent’s Motion for Production and Inspection of Documents in an Order dated September 10, 2002, directing petitioners to produce and make available for inspection and photocopying: (1) the list of stockholders of record as of March 2002; (2) all proxies received; (3) specimen signatures of stockholders; and (4) tape recordings of the stockholders’ meetings on April 23 and May 21, 2002. Petitioners challenged related orders via certiorari, but the Court of Appeals and the Supreme Court denied their petitions. Despite several scheduled inspections, petitioners failed to fully comply with the September 10, 2002 Order. During an inspection on January 11, 2007, only the Stock and Transfer Book was produced, with petitioners’ representatives alleging an inability to locate the other documents. Consequently, the RTC issued a Resolution on September 3, 2007, reiterating the September 10, 2002 Order and warning that failure to comply would result in contempt citations and a solidary fine of ₱10,000 for each day of delay until full compliance. Petitioners filed a petition for certiorari with the CA, which affirmed the RTC Resolution. Petitioners’ motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s September 3, 2007 Resolution, which reiterated the order for production and inspection of documents and imposed the threat of contempt and daily fines for non-compliance.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision. The Court held that the RTC did not commit grave abuse of discretion. The September 3, 2007 Resolution was a valid reiteration of the September 10, 2002 Order, issued pursuant to Section 3, Rule 3 of the Interim Rules of Procedure Governing Intra-Corporate Controversies, with suppletory application of Rule 27 of the Rules of Civil Procedure. Petitioners had the opportunity to object to the original discovery order under the Interim Rules but did not timely do so. The threatened sanctions for non-compliance (contempt and daily fines) were in accordance with Section 4, Rule 3 of the Interim Rules, in relation to Rule 29 of the Rules of Court, which provide for sanctions for refusal to comply with discovery orders. The Court found that the RTC’s warning of sanctions was a proper exercise of its power to enforce its orders and ensure compliance with the discovery process, and petitioners were not denied due process.