Ms. Aurora O. Diezmo

June 6, 1991 Ms. Aurora O. Diezmo Rural Bank of Capalonga, Inc. Capalonga, Camarines Norte M a d a m : This refers to your letter of April 25, 1991 requesting opinion on the following queries: 1. May a corporation confiscate the paid-up shares of stock of a stockholder who has embezzled money in the corporation? 2. Will the approval of the Board of Directors in a Resolution be sufficient or will court litigation be still needed to effect the aforementioned action? Anent your first query, Article III, Section 1 of the Philippine Constitution pertinently provides: "SECTION 1. No Person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws."(Emphasis supplied). Therefore, any attempt to deprive a person of his ownership of shares of stock in a corporation under the circumstances mentioned in your letter should be done in accordance with the procedure prescribed by law. The pertinent provisions of the Rules of Court provide, thus: Rule 57 "SECTION 1. Grounds upon which attachment may issue A plaintiff or any proper party may at the commencement of the action or at any time thereafter ,have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: xxx xxx xxx b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by public officer or officer of a corporation ,or an attorney, factor, broker, agent, or a clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for willful violation of duty." (Emphasis supplied) The above rule is similarly provided under Rule 127 Section 1(b) in case of attachment based on a criminal action. Accordingly, in answer to your second query, a formal suit before a court of justice is necessary. Please be advised accordingly. LibLex Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman