USA College of Law

RICAMONTE JD-3D

Case Name JAMES IENT, ET AL VS. TULLET PREBON (PHILIPPINES) INC.

Topic Liability of Directors, trustees or Officers
Case No. | Date G.R. No. 189158 |January 11, 2017
Ponente Leonardo-De Castro, J.
Section 144 speaks in the imposition
of criminal penalties, the Court is guided by the elementary rules of statutory
Doctrine construction of penal provisions in which provides that in all criminal prosecutions, the
existence of criminal liability for which the accused is made answerable must be CLEAR
AND CERTAIN

RELEVANT FACTS
● Petitioner Ient is a British National and the Chief Financial Officer of Tradition Asia Pacific TRadition
Asia in Singapore.
● The Tradition Group and Tullet are competitors in the inter-dealer broking business.
● Aug. 2008-petitioners Ient and Schulze were tasked with the establishment of Tradition Philippines
and was registered with the SEC on Sept. 19, 2008.
● Oct. 15, 2008- Gordon Buchan, one of the directors of Tullett filed a complaint against officers or
employees of the tradition group including Villalon and Chuidian who were former directors of Tullett,
and petitioners (ient and Schulze for violating Sections 31, 34, and 144 of the Corporation Code
because they allegedly induced the mass resignation of Tullett brokers and their transfer to Tradition
Philippines.
● State Prosecutor Delos Trinos dismissed the complaints because respondednts Villalon and Chuidian
did not constitute any prohibited acts of directors of trustees enunciated under Sectiin 31 for the
following reasons.
◆ The actuations cited did not involve voting for assenting to patently unlawful acts of Tullett
◆ No gross negligence or bad faith was construed in directing the affairs of Tullet.
◆ No showing that they acquired personal or pecuniary interest in conflict with their duty as
directs of Tullett.
◆ No showing that they attempted to acquire or acquired, in violation of their duty as directors,
any interest adverse to Tullet in respect to any matter which has been reposed in them in
confidence.
● According to Tullett, respondents Villalon and Chuidian violated Sec. 31 and 34 of the Corporation
Code which made them criminally liable under Sec. 144. Tullett also allege that Ient and Schulze
conspired with Villalon and CHuidian for their acts of disloyalty against the company.
 USA College of Law
RICAMONTE JD-3D
● Both Villalon and Chuidian filed their counter affidavit. Villalon claimed that the DOJ proclaimed that
sec. 31 is not a penal provision of law but only a basis of a cause of action for civil liability. Hence, he
contends that there is no probable cause that he violated the corporation code nor was the charge of
conspiracy tenable.
● Chuidian on the other hand claimed that she left to seek greener pastures. She further argued that
Sec. 144 as a penal provision should strictly be construed against the state and liberally in favore of
the accused. She also contends that Tullet failed to substatntiate its charge of bad faith on her part.
● Petitioner, Schulze, denied the charges against her. Her contention was that the charge of conspiracy
based on Art. 8 of the RPC cannot be made applicable to the Corporate Code.
● Petitioner, Ient, contends that charges against him were merely filed to harass tradition Phil. And
prevent it from penetrating the Ph market.
● Petitoners contentions that Sec. 144 only applies to the provisions of the Corporation Code or its
amendments “not otherwise specifically penalized”by said statute and should not cover Sec. 31 and
34 which both prescribe the penalties for their violation namely damages accounting and resolution of
profits.

ISSUE:
Whether or not Section 144 of the Corporation Code is applicable to Sections 31 and 34 of
the same statute such that violations of Sections 31 and 34 effects criminal liability.

RULING:
NO.

Section 144 of the Corporation Code is not applicable to Sections 31 and 34 of the
same and does not effect criminal liability because as Section 144 speaks in the imposition
of criminal penalties, the Court is guided by the elementary rules of statutory construction of
penal provisions in which provides that in all criminal prosecutions, the existence of criminal
liability for which the accused is made answerable must be CLEAR AND CERTAIN.

The Court has 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. ( in dubio pro reo) 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.”After a meticulous consideration of the arguments
presented by both sides, the Court comes to the conclusion that there is textual ambiguity in
Section 144; moreover, such ambiguity remains even after an examination of its legislative
history and the use of other aids to statutory construction, necessitating the application of the
 USA College of Law
RICAMONTE JD-3D
rule of lenity in the case at bar

RULING

WHEREFORE, the consolidated petitions are GRANTED. The Decision dated August 12, 2009 of the Court
of Appeals in CA-G.R. SP No. 109094 and the Resolutions dated April 23, 2009 and May 15, 2009 of the
Secretary of Justice in I.S. No. 08-J-8651 are REVERSED and SET ASIDE.

NOTES
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 (₱1,000.00) pesos
but not more than ten thousand (₱10,000.00) pesos or by imprisonment for not Jess 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.

rule of lenity. The rule applies when the court is faced with two possible interpretations of a penal statute,
one that is prejudicial to the accused and another that is favorable to him. The rule calls for the adoption
of an interpretation which is more lenient to the accused