Case Summary (G.R. No. 189158)
Key Dates
• August 2008 – Petitioners tasked to establish Tradition Philippines in Manila.
• September 19, 2008 – SEC registration of Tradition Philippines.
• October 15, 2008 – Tullett files Complaint–Affidavit alleging conspiracy and corporate-code violations.
• April 23 & May 15, 2009 – Secretary of Justice resolutions finding probable cause.
• August 12, 2009 – Court of Appeals affirms the Secretary’s resolutions.
• January 11, 2017 – Supreme Court final decision (applying the 1987 Constitution).
Applicable Law
• 1987 Constitution (post-1990 decision).
• Corporation Code: Section 31 (liability of directors/trustees for bad faith/gross negligence), Section 34 (duty of loyalty/corporate-opportunity doctrine), Section 144 (penalties for Code provisions “not otherwise specifically penalized”).
• Revised Penal Code Article 8 (conspiracy).
• Rule 45, Rules of Court (Petitions for Review).
Factual Background
Tullett alleged that Villalon and Chuidian, then officers/directors, secretly convened its brokering staff in August 2008 to induce mass resignations and client solicitation, distributing employment and indemnity contracts on behalf of Tradition Philippines. Tullett claimed petitioners Ient and Schulze conspired to sabotage Tullett’s business by facilitating these acts.
Counter-Affidavits by Accused
Villalon and Chuidian maintained they resigned lawfully, informed brokers as courtesy, and acted within fundamental rights to employment. Both argued Sections 31 and 34 impose civil remedies (damages, restitution) only, and Section 144 applies to Code provisions lacking their own penalties. Petitioners Ient and Schulze similarly denied coercion, asserted free-will resignations, and contended the Revised Penal Code does not suppletorily apply to the Corporation Code for conspiracy charges.
Prosecutorial and Appellate Rulings
- City Prosecutor (Feb 17, 2009) dismissed the complaint, finding no coercion or bad faith under Sections 31/34 and deeming Section 144 inapplicable to provisions with their own remedies.
- Secretary of Justice (Apr 23 & May 15, 2009) reversed, finding prima facie bad-faith acts and conspiracy, applying Section 144’s general penal sanction to Sections 31 and 34.
- Court of Appeals (Aug 12, 2009) affirmed, emphasizing breach of fiduciary duty and that probable cause does not require sufficiency of evidence for conviction.
Issue on Certiorari
Whether Sections 31 and 34 of the Corporation Code, which prescribe civil liabilities, are criminalized by Section 144’s penal sanction for all “violations not otherwise specifically penalized,” thereby justifying indictments for conspiracy in relation to those sections.
Supreme Court Analysis
• Penal statutes require clear and certain liability; ambiguous provisions are construed in favor of the accused (in dubio pro reo) under the rule of lenity.
• Section 144 is not purely criminal: it imposes administrative remedies (involuntary dissolution) and references both fines and dissolution.
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Case Syllabus (G.R. No. 189158)
Case Title and Procedural Posture
- Consolidated Petitions for Review under Rule 45 filed by James A. Ient and Maharlika C. Schulze
- Assailed the Court of Appeals Decision dated August 12, 2009 in CA-G.R. SP No. 109094
- CA had affirmed the Secretary of Justice Resolutions of April 23 and May 15 2009 in I.S. No. 08-J-8651
- Resolutions had found probable cause to indict for violation of Sections 31 and 34 in relation to Section 144 of the Corporation Code
Parties and Corporate Affiliations
- Petitioners:
• James A. Ient, British national, Chief Financial Officer of Tradition Asia Pacific Pte. Ltd. in Singapore
• Maharlika C. Schulze, Filipino/German, Application Support for Tradition Financial Services Ltd. in London - Tradition Group: Third largest inter-dealer broker group globally (parent: Compagnie Financiere Tradition)
- Respondent: Tullett Prebon (Philippines), Inc., part of the second largest inter-dealer broker group worldwide
- Co-respondents impleaded in criminal complaints: Jaime Villalon, Mercedes Chuidian, Leonard Harvey, and other John and Jane Does
Industry Background and Competitive Context
- Inter-Dealer Brokers (IDBs) execute banks’ secondary fixed-income and foreign exchange orders, trade for profit, and manage credit, interest-rate, and exchange-rate risk
- Philippine IDB clientele: banks and financial institutions
- Tullett Prebon began voice brokerage in the Philippines in 1995; other local IDBs: Amstel, Icap
- Tradition Group’s Philippine clients were served from Singapore until the establishment of a local subsidiary in 2008
Establishment of Tradition Philippines
- August 2008: Tradition Group tasked Ient and Schulze to form a Philippine subsidiary, Tradition Financial Services Philippines, Inc.
- SEC registration dated September 19, 2008; petitioners named as incorporators and directors in its Articles of Incorporation
Complaint-Affidavit: Allegations of Conspiracy and Sabotage
- October 15, 2008: Tullett Prebon’s Complaint-Affidavit filed in Makati City against Tradition Group officers
- Allegations: Villalon and Chuidian used former Tullett positions to orchestrate mass resignation of brokers to join Tradition Philippines
- Specific acts: private meetings, non-renewal of contracts, distribution of employment and indemnity contracts, orchestrated resignations and client inducement via emails
- Ient and Schulze accused of conspiring with Villalon and Chuidian to violate fiduciary duties under Sections 31 and 34, with criminal liability under Section 144 of the Corporation Code
Respondents’ Counter-Affidavits and Defenses
- Villalon: acted on management frustration, no bad faith, shared plans as courtesy, fundamental rights over employment, Sections 31 and 34 provide civil, not crim