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Case 117 James Ient and Maharlika Schulze Versus Tullett Prebon (Philippines) Inc.

The Supreme Court ruled that Sections 31 and 34 of the Corporation Code do not prescribe criminal liability for the actions of James Ient and Maharlika Schulze, emphasizing the rule of lenity in favor of the accused. The Court found that the provisions primarily impose civil liability and that there was no legislative intent to criminalize the actions in question. The ruling highlighted that violations typically result in civil remedies rather than penal sanctions.

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Gia Aliana Maria Perete
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24 views2 pages

Case 117 James Ient and Maharlika Schulze Versus Tullett Prebon (Philippines) Inc.

The Supreme Court ruled that Sections 31 and 34 of the Corporation Code do not prescribe criminal liability for the actions of James Ient and Maharlika Schulze, emphasizing the rule of lenity in favor of the accused. The Court found that the provisions primarily impose civil liability and that there was no legislative intent to criminalize the actions in question. The ruling highlighted that violations typically result in civil remedies rather than penal sanctions.

Uploaded by

Gia Aliana Maria Perete
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Case No.

: 117
Case Title: James Ient and Maharlika Schulze versus Tullett Prebon (Philippines) Inc.
Docket No.: G.R. No. 189158
Date: January 11, 2017
Topic: Liability of Directors, Trusties or Officers

FACTS:
Ient is a British national affiliated with Tradition Asia as CFO, while Schulze is of
Filipino/German descent working for Tradition London. These entities are part of the
Tradition Group, an Inter-dealer Broker (IDB) and a direct competitor of Tullett Prebon
(respondent).
In August 2008, Ient and Schulze were directed to establish Tradition Financial Services
Philippines, Inc. (Tradition Philippines). By September 19, 2008, Tradition Philippines
was registered, signaling the Tradition Group’s market expansion, already being
serviced out of Singapore for its Philippine clientele.
The dispute ignited when Tullett, through Gordon Buchan, filed a Complaint-
Affidavit accusing Villalon (former Managing Director of Tullett), Chuidian (ex-Tullett
board member), along with Ient, Schulze, and others, of orchestrating a mass
resignation of Tullett’s brokering staff to cripple the company and benefit Tradition
Philippines. This event allegedly transpired due to several covert meetings led by
Villalon and others.
Initial determinations by the Makati City Prosecution Office dismissed the criminal
complaint due to insufficient evidence of coercion or inducement by the accused parties
to resign from Tullett or to engage with Tradition Philippines. However, upon review, the
Secretary of Justice reversed this decision, finding probable cause for violations against
Sections 31 and 34, in relation to Section 144 of the Corporation Code. This led to the
filing of Informations for these alleged violations.
Subsequently, Ient and Schulze challenged this decision through a petition for
certiorari in the Court of Appeals (CA-G.R. SP No. 109094), which was subsequently
dismissed, upholding the Secretary of Justice’s resolution to indict. The case was then
escalated to the Supreme Court for final adjudication.

ISSUES:
1. Whether Sections 31 and 34 of the Corporation Code, in relation to Section
144, prescribe criminal liability for actions allegedly committed by the
petitioners.

RULING:
No. The Supreme Court applied rule of lenity as a principle related to liberal
interpretation in favor of the accused in criminal cases. 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.
According to SC, a close reading Section 144 shows that it is not purely a penal
provision because it provides that when the violator is a corporation, an administrative
penalty is imposed in form of dissolution, which is not a criminal sanction. The Court
also added that there is no provision in the Corporation Code using an emphatic
language to compel the SC to construe the provision as a penal offense. SC held that
through a thorough scrutinizing of the different provisions in the Corporation Code
including Sections 31 and 34, they only impose civil liability aside from Section 74. SC
concludes that had it been the intention of the drafters of the la to define Sections 31
and 34 as offenses, they could have easily included similar language as that found in
Section 74. The intention can also be gleaned from the floor deliberations of its
proponents. Quite apart that no legislative intent to criminalize Sections 31 and 34 was
manifested in the deliberations on the Corporation Code, it is noteworthy from the same
deliberations that legislators intended to codify the common law concepts of corporate
opportunity and fiduciary obligations of corporate officers as found in American
jurisprudence into said provisions. In common law, the remedies available in the event
of a breach of director's fiduciary duties to the corporation are civil remedies. If a
director or officer is found to have breached his duty of loyalty, an injunction may be
issued or damages may be awarded.
A corporate officer guilty of fraud or mismanagement may be held liable for lost
profits. A disloyal agent may also suffer forfeiture of his compensation. There is nothing
in the deliberations to indicate that drafters of the Corporation Code intended to deviate
from common law practice and enforce the fiduciary obligations of directors and
corporate officers through penal sanction aside from civil liability.

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