Yujuico v. Quiambao; G.R. No.

180416

Facts:
This case is a petition for review on certiorari assailing the order of the Regional Trial Court of Pasig. On
March 1, 2004, petitioner Yujuico was elected as president and chairman of Strategic Alliance Development
Corporation (STRADEC) during the annual stockholder’s meeting. He replaced the respondent Quiambao.
Subsequently, Yujuico appointed petitioner Sumbilla as treasurer and Blando as corporate secretary. The latter
replaced respondent Pilapil. On August 12, 2005, petitioners Yujuico and Sumbilla filed a complaint against the
respondents and one Casanova before the Office of the City Prosecutor of Pasig City for violating Section 74 in
relation to Section 144 of BP 68 or the Corporation Code. They allege that: During the March 2004 meeting,
Yujuico as newly elected president and chairman demanded Quiambao to turn over the corporate records of the
company but Quiambao refused.
Apparently, the corporate records were in Casanova’s possession as the accountant of STRADEC and that
consequently, after the March 2004 stockholder’s meeting, Quiambao and Casanova caused the removal of these
records from the company’s office in Pasig.
On a similar note, on June 21, 2004, Blando as newly appointed corporate secretary demanded Pilapil to turn
over the stock and transfer book of STRADEC but Pilapil refused and proposed that the stock and transfer book be
deposited in a safety deposit box with the Equitable-PCI Bank in Quezon City. Blando acceded and it was agreed
that it would only be opened in the presence of Quiambao and Blando.
On June 30, 2004, however, Quiambao and Pilapil withdrew the stock and transfer book from the safety deposit
box and brought it to STRADEC’s office in Quezon City and later requested Blando to come by and once there,
pressured Blando to make certain entries in the book. After doing this, Quiambao still refused to surrender the stock
and transfer book.
On July 1, 2004, Blando received an order form the RTC Pasig directing him to cancel the entries he made in
the stock and transfer book and subsequently wrote letters to Quiamba and Pilapil demanding them to turn over the
stock and transfer book but the latter refused. The petitioners argue that their right as stockholders, directors, and
officers of the corporation, to isnepct such records and book under Section 74 of the Corporation code was violated
with the respondent’s insistent refusal to turn over the corporate records. Preliminary investigations ensued.
The OCP issued a resolution absolving Casanova but found probable cause against the respondents for two
offenses: For removing the stock and transfer book from STRADEC’s principal office (docketed as Criminal Case
89723); For refusing to access to, and examination of, the corporate records and the stock and transfer book
(docketed as Criminal Case No. 89724).
Following an Urgent Omnibus Motion and Dismissal of Criminal Case No. 89723 (Removal of records from
principal office), the MeTC dismissed the same but ordered the issuance of warrants of arrest against the
respondents in Criminal Case No. 89724 (refusal to access to and examine the corporate records).
In dismissing the prior case, the MeTC held that Section 74 in relation to Section 144 only penalizes the act of
refusing to allow any director, trustee, stockholder or member of the corporation to examine the records or minutes
of the corporation. It does not penalize removing the stock and transfer book from STRADEC’s principal office.
When the MeTC denied the respondent’s motion for partial reconsideration, they filed a petition for certiorari
praying for the issuance of a Temporary Restraining Order before the RTC Pasig. The RTC Pasig issued the
temporary restraining order and subsequently granted as well the certiorari directing the second criminal case to be
dismissed. The RTC held that the finding of probable cause against the respondents was not supported by the
evidence presented during the preliminary investigation. It held that, at most, the evidence on record only supports
probable cause that the respondents were withholding the stock and transfer book of STRADEC. It further held that
refusing to allow inspection of the stock and transfer book, as opposed to refusing examination of other corporation
records is not punishable under the Corporate Code.
Issue:
Whether or not the act of the respondents in refusing to allow the petitioners access to the stock and transfer
book of STRADEC is a punishable offense under the Corporation Code.

Ruling:
The Supreme Court held in the negative. A criminal action based on the violation of a stockholder’s right to
examine or inspect the corporate records and the stock and transfer book of a corporation under Section 74 of the
Corporation Code can only be maintained against corporate officers or any other persons acting on behalf of such
corporation. The respondents in this case are neither in relation to STRADEC.
 The Supreme Court discussed the erroneous conclusion made by the RTC but nevertheless affirmed its
decision. The RTC made an inaccurate pronouncement that the act of refusing to allow inspection of the stock and
transfer book is not a punishable offense under the Corporation Code because such refusal, when done in violation
of Section 74 (4) of the Corporation Code, properly falls within the purview of Section 144 and may thus be
penalized as an offense.
In Criminal Case No. 89724, the petitioners accuse the respondents of denying their right to examine or
inspect the corporate records and the stock and transfer book of STRADEC and is thus a criminal action based on
violations of the Corporation Code, specifically of the 2nd and 4th paragraph of Section 74 which reads:
Paragraph 2 - The records of all business transactions of the corporation and the minutes of any meetings
shall be open to inspection by 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.
Paragraph 4 - Stock corporations must also keep a book to be known as the "stock and transfer book", in
which must be kept a record of all stocks in the names of the stockholders alphabetically arranged; the installments
paid and unpaid on all stock for which subscription has been made, and the date of payment of any installment; a
statement of every alienation, sale or transfer of stock made, the date thereof, and by and to whom made; and such
other entries as the by-laws may prescribe. The stock and transfer book shall be kept in the principal office of the
corporation or in the office of its stock transfer agent and shall be open for inspection by any director or stockholder
of the corporation at reasonable hours on business days.
Again, It is clear that a criminal action based on the above provisions can only be maintained against a
corporate officers or such other persons acting on behalf of the corporation. Violations of paragraphs 2 and 4 of
Section 74 above contemplates a situation where a corporation, acting through one of its officers or agents, denies
the right of any of its stockholders to inspect the records, minutes, and the stock and transfer book of such
corporation. In this case, the evidence do not establish that the respondents were acting on behalf of STRADEC
whereas these respondents were actually and merely outgoing officers who withheld and refused to turn over the
company records. Properly put, the petitioners are not invoking their right to inspect the records and the stock and
transfer book of STRADEC under Section 74. What they seek is to enforce the proprietary right of STRADEC to be
in possession of such record and book. Such right, though certainly enforceable, cannot be enforced by a criminal
prosecution based on violations of paragraphs 2 and 4 of Section 74 of the Corporation Code.

Doctrine: A criminal action based on the violation of a stockholder’s right to examine or inspect the corporate
records and the stock and transfer book of a corporation under Section 74 of the Corporation Code can only be
maintained against corporate officers or any other persons acting on behalf of such corporation.