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[ GR Nos.

189158, January 11, 2017]


Ient. v. Tullett

http://lawyerly.ph/juris/view/cf425

FACTS: Sometime in August 2008, in line with Tradition Group's motive of expansion and diversification in Asia, petitioners Ient and Schulze were
tasked with the establishment of a Philippine subsidiary of Tradition Asia to be known as Tradition Financial Services Philippines, Inc. (Tradition
Philippines).[9] Tradition Philippines was registered with the Securities and Exchange Commission (SEC) on September 19, 2008.

Tradition Group and Tullett are competitors in the inter-dealer broking business.

Tullett accused their former officers who resigned and transferred to Tradition of sabotaging their company. On October 15, 2008, Tullett, through
one of its directors, Gordon Buchan, filed a Complaint-Affidavit... against the officers/employees of the Tradition Group for violation of the
Corporation Code.

Villalon (President) and Chuidian (Director)were charged with using their former positions in Tullett to sabotage said company by orchestrating the
mass resignation of its entire brokering staff in order for them to join Tradition Philippines.

Tullett alleges that Section 144 of the Corporation Code applicability to Sections 31 and 34 of the same statute attaches criminal liability to violations
of Sections 31 and 34. For convenient reference, we quote the contentious provisions here:

SECTION 31. Liability of Directors, Trustees or Officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts
of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary
interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the
corporation, its stockholders or members and other persons.

When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation in respect of any
matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a
trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation.

SECTION 34. Disloyalty of a Director. - Where a director, by virtue of his office, acquires for himself a business opportunity which should belong to the
corporation, thereby obtaining profits to the prejudice of such corporation, he must account to the latter for all such profits by refunding the same,
unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds (2/3) of the outstanding capital stock. This
provision shall be applicable, notwithstanding the fact that the director risked his own funds in the venture.

SECTION 144. Violations of the Code. - Violations of any of the provisions of this Code or its amendments not otherwise specifically penalized therein
shall be punished by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos or by imprisonment
for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the court. If the violation is committed by a corporation,
the same may, after notice and hearing, be dissolved in appropriate proceedings before the Securities and Exchange Commission: Provided, That such
dissolution shall not preclude the institution of appropriate action against the director, trustee or officer of the corporation responsible for said
violation: Provided, further, That nothing in this section shall be construed to repeal the other causes for dissolution of a corporation provided in this
Code.

ISSUE: WON Section 144 as applied to violations of Sections 31 and 34 attaches a criminal liability.

Ruling: NO. As Section 144 speaks, among others, of the imposition of criminal penalties, the Court is guided by the elementary rules of statutory
construction of penal provisions. First, in all criminal prosecutions, the existence of criminal liability for which the accused is made answerable must be
clear and certain. We have consistently held that "penal statutes are construed strictly against the State and liberally in favor of the accused. When
there is doubt on the interpretation of criminal laws, all must be resolved in favor of the accused. Since penal laws should not be applied mechanically,
the Court must determine whether their application is consistent with the purpose and reason of the law."

The Corporation Code was intended as a regulatory measure, not primarily as a penal statute. Sections 31 to 34 in particular were intended to impose
exacting standards of fidelity on corporate officers and directors but without unduly impeding them in the discharge of their work with concerns of
litigation. Considering the object and policy of the Corporation Code to encourage the use of the corporate entity as a vehicle for economic growth,
we cannot espouse a strict construction of Sections 31 and 34 as penal offenses in relation to Section 144 in the absence of unambiguous statutory
language and legislative intent to that effect.

When Congress intends to criminalize certain acts it does so in plain, categorical language, otherwise such a statute would be susceptible to
constitutional attack. As earlier discussed, this can be readily seen from the text of Section 45G) of Republic Act No. 8189 and Section 74 of the
Corporation Code.
We stress that had the Legislature intended to attach penal sanctions to Sections 31 and 34 of the Corporation Code it could have expressly
stated such intent in the same manner that it did for Section 74 of the same Code.