SECOND DIVISION
[G.R. No. 198380. June 21, 2021.]
TIMOTHY J. DESMOND, petitioner,vs. H.S. EQUITIES LTD. and VIRGINIA S. DIO, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated 21 June 2021 which reads as follows:
"G.R. No. 198380 (Timothy J. Desmond v. H.S. Equities Ltd. and Virginia S. Dio). —
Antecedents
In their Petition 1 for contempt and damages dated June 10, 2003 against Timothy J. Desmond (petitioner), respondents H.S. Equities Ltd. (H.S. Equities) and Virginia S. Dio (Dio; collectively, respondents), essentially stated:
1. They are the respondents in the petition for injunction filed by petitioner on August 19, 2002, seeking to enjoin them, in their capacities either as corporate officers or stockholders of Subic Bay Marine Exploratorium, Inc. (SBMEI), from allegedly stalling petitioner's efforts to raise additional funds and bring in additional investors for SBMEI of which he is the Chairman and CEO, among others. The case was docketed as Civil Case No. 7572 and raffled to the Regional Trial Court of Balanga, Bataan, Branch 2 (trial court), presided by Judge Manuel M. Tan.
2. In the course of the proceedings in Civil Case No. 7572, respondents manifested their desire to exercise their right to inspect and copy some of the corporate books and records of SBMEI.
3. By Order 2 dated December 16, 2002, the trial court directed petitioner to allow respondents to inspect and copy the corporate books and records. Pursuant to this directive, the parties agreed to conduct the inspection on December 20, 2002. The inspection, however, did not push through on various grounds, i.e., Christmas holidays, absence of SBMEI's counsel, and petitioner refused to hold it because the persons who came to inspect the documents were not the independent accountants allegedly agreed upon by the parties. 3 Thus, respondents once again sought the assistance of the trial court.
4. On January 16, 2003, the court issued its second Order 4 directing petitioner to make the corporate records available for respondents' inspection. On January 20, 2003, respondents were able to conduct their initial inspection.
5. Due to the voluminous records, respondents' team was not able to finish the inspection. 5 The following day, however, petitioner refused them entry despite the presence of the trial court's Branch Sheriff. Instead, petitioner's team directed respondents to a dusty parking lot where they were expected to inspect the corporate documents under the scorching heat of the sun, while petitioner continuously hurled invectives at them. Because of this, respondents were forced to simply leave SBMEI's premises and seek, for the third time, the assistance of the trial court. 6
6. On January 22, 2003, the court issued yet another Order 7 reflecting the parties' agreement to inspect the corporate books and records that were enumerated therein. Respondents asserted, however, that despite the order, petitioner refused and continued to refuse to let them inspect fourteen (14) out of the twenty-three (23) documents listed in the said order. 8
Respondents thus prayed that petitioner be held liable for contempt of court and damages, with prayer to require petitioner to let them inspect the remaining corporate books and records. 9
The case was docketed Civil Case No. 7744 and raffled to the same trial court where Civil Case No. 7572 was also pending. Presiding Judge Manuel M. Tan later on inhibited from both cases. The two (2) cases were later re-raffled to Branch 3, presided by Judge Remigio M. Escalada, Jr.
In his Answer dated June 30, 2003, 10 petitioner denied that he disobeyed the subject court orders. He asserted that it was Dio who exhibited rude behavior during the January 20, 2002 inspection and unreasonably demanded for all corporate books and records while repeatedly saying that she owns the company. Also, some of the records are still in the possession of Atty. Winston Ginez.
Ruling of the Regional Trial Court
After due proceedings, the trial court rendered its Decision dated August 15, 2005, 11 the pertinent portion of which reads:
Insofar as the indirect contempt charge is concerned, Section 4 of Rule 71, Rules of Court requires that the charge shall be commenced by a verified petition with supporting particulars and certified true copies of documents or papers involved therein. Petitioners-plaintiffs failed to comply with the last requirement, because all documents and papers attached to the complaint/petition are not certified. Likewise, the documents submitted with, or attached to, the sworn statements of the witnesses are not certified. Accordingly, on the basis of the rule that the power to punish for contempt must be exercised in the preservative, not vindictive principle, and on the corrective, not retaliatory idea of punishment, (Oclaril vs. Paderanga, 350 SCRA 260), for which reason judges are enjoined to exercise such power judiciously and sparingly, and with utmost restraint (Ruiz vs. How, 413 SCRA 333), and that contempt proceedings may be either civil or criminal (Rosario Textile Mills, Inc. vs. Court of Appeals, 409 SCRA 515), thereby calling for strict compliance with the rules, it is the holding of the Court that the indirect contempt charge must fail.
However, the Court finds the complaint for violation of the right to inspection and copying of corporate books and records of petitioners-plaintiffs H.S. Equities, Ltd. and Virginia S. Dio impressed with merit. It should be stressed that the respondent-defendant does not deny that he refused to allow the inspection by petitioners-plaintiffs/stockholders of those documents listed in paragraph 10 of the affidavit-testimony of witness Atty. Jose Benjamin M. Panganiban and in paragraph 9 of the affidavit-testimony of witness Certified Public Accountant Darius B. Cruz, which documents are among those specifically enumerated in the Order dated January 22, 2003. The right to inspection of corporate records granted to stockholders cannot be gainsaid. 12 x x x
xxx xxx xxx
WHEREFORE, judgment is hereby rendered ordering respondent-defendant to comply with the Orders of the Regional Trial Court of Bataan in Civil Case No. 7572 dated December 16, 2002, January 16, 2003, and January 22, 2003, and to pay to [sic] petitioners-plaintiffs:
1. Actual damages in the amount of Six Hundred Eighty-One Thousand Sixty-Three and 18/100 Pesos (P681,063.18), plus interest at the legal rate from the date of judicial demand until full payment;
2. Moral damages in the amount of Two Hundred Thousand Pesos (P200,000.00);
3. Exemplary damages in the amount of Fifty Thousand Pesos (P50,000.00);
4. Attorney's fees and litigation expenses in the amount of One Hundred Fifty Thousand Pesos (P150,000.00); and
5. Cost of suit.
SO ORDERED. 13
In sum, the trial court denied the charge for indirect contempt for failure to submit certified true copies of the supporting documents. Noting, however, that petitioner did not deny that he refused respondents' inspection of the documents specified in the Petition itself, the court required petitioner to comply with the subject Orders dated December 16, 2002, January 16, 2003, and January 22, 2003 in Civil Case No. 7572. Further, the trial court directed petitioner to pay respondents actual, moral, and exemplary damages and attorney's fees and litigation expenses.
Ruling of the Court of Appeals
On petitioner's appeal, the Court of Appeals affirmed in the main but modified the award of damages under its assailed Decision dated June 19, 2007. 14 It agreed with the trial court that petitioner unjustifiably refused to allow respondents to inspect the corporate records. It dismissed petitioner's excuse that he was merely asking for clarification of the documents to be inspected. It emphasized that the documents subject of inspection were clearly enumerated in the trial court's Order dated January 22, 2003, hence, no further clarification was needed. 15 Nonetheless, finding no basis therefor, it deleted the award of actual, moral, and exemplary damages, and in lieu thereof, awarded respondents P300,000.00 nominal damages, viz.:
WHEREFORE, foregoing premises considered, the petition is hereby ordered PartiallyGranted. The award of Actual, Moral and Exemplary Damages are hereby deleted for lack of factual and legal basis. However, in lieu thereof, petitioners-appellees are hereby awarded Nominal Damages in the amount of Three Hundred Thousand Pesos (P300,000.00). All other awards given by the court a quo are hereby sustained. Resultantly, the challenged decision is hereby AFFIRMED with modifications. No costs.
SO ORDERED.16
In its assailed Resolution 17 dated August 26, 2011, the Court of Appeals denied petitioner's subsequent motion for reconsideration. 18
The Present Petition
Petitioner now prays that the assailed dispositions be reversed. He argues that the right to inspect corporate books and records must be done for proper and lawful purposes only. Here, respondents' motives are suspect. It is simply done to harass SBMEI and its officials, particularly him. 19 Too, respondents were given access to the corporate records in the company's possession. Respondents' team, however, became unreasonable and displayed offensive behaviors. This prompted the company to implement measures for the orderly inspection of corporate books and records. Considering that the company office is small, and to avoid disrupting the ordinary course of business inside the office, they decided to set up a place in the parking lot and move the records thereto, and even provided for photocopying machines. Respondents, however, refused to abide by these simple measures. Thus, it was respondents who chose to stop the inspection. 20 In light of these circumstances, he allegedly cannot be held liable for damages and attorney's fees and litigation expenses.
In their Comment 21 dated October 15, 2012, respondents counter that petitioner knowingly and purposely refused, without any valid ground, to comply with the inspection orders. Petitioner even claimed that he had the right to restrict access to corporate documents despite the clear and unambiguous directive of the trial court's orders. 22 The so called "reasonable regulations" which petitioner implemented were not reasonable at all, as it effectively restricted their entry into the SBMEI office and defeated their right as stockholders to inspect corporate books and records. 23 For petitioner's unjustified refusal to let them inspect the corporate records, they are entitled to actual damages for the expenses they incurred. Dio is also entitled to moral damages for the reckless and oppressive conduct shown to her by petitioner. Lastly, to teach petitioner a lesson, he should likewise be made to pay exemplary damages. 24
Ruling
Petitioner asks the Court to determine whether the purposes for which respondents sought to exercise their right to inspect corporate books and records are proper and lawful; whether respondents became unreasonable and displayed offensive behavior in the exercise of this right; whether the company merely implemented simple measures for the orderly inspection of corporate books and records which were not meant to prevent respondents from exercising the right in question; whether respondents refused to abide by these simple measures, for which, they themselves should be deemed to have caused their inspection of corporate books and records to stop; and whether the awards of nominal damages and attorney's fees and litigation expenses are proper. 25
Undeniably, these are all factual issues which under a Rule 45 petition for review on certiorari are not allowed. 26 Only legal questions are allowed to be brought before the Court via Rule 45, thus:
Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth. (Emphasis supplied)
Verily, the Court, not being a trier of facts, will not take cognizance of the factual issues raised herein; nor recalibrate the evidence already considered and passed upon by both the trial court and the Court of Appeals. Petitioner failed to adduce any cogent reason to deviate from this rule. Consequently, these factual findings and the assailed dispositions of the Court of Appeals based thereon must remain in place.
WHEREFORE, the petition is DENIED. The Decision dated June 19, 2007 and Resolution dated August 26, 2011 of the Court of Appeals in CA-G.R. CV No. 86136 are AFFIRMED.
SOORDERED." (J. Lopez, J., designated additional member per Special Order No. 2822 dated April 7, 2021)
By authority of the Court:
(SGD.) TERESITA AQUINO TUAZONDivision Clerk of Court
Footnotes
1.Rollo, pp. 84-109.
2. Penned by Judge Manuel M. Tan, id. at 68-69.
3.Id. at 11 and 88-89.
4.Id. at 71.
5.Id at 11 and 89-90.
6.Id. at 90-93.
7.Id. at 80-83.
8.Id. at 99.
9.Id at 93-106.
10.Id. at 110-114.
11. Penned by Presiding Judge Remigio M. Escalada, Jr. of RTC-Branch 3, Balanga, Bataan due to Judge Manuel M. Tan's inhibition from both the intra-corporate case and contempt case, id. at 116-122.
12.Id. at 120.
13.Id. at 122.
14. Penned by Associate Justice Jose L. Sabio, Jr. and concurred in by now retired SC Associate Justice Jose C. Reyes, Jr. and Associate Justice Myrna Dimaranan Vidal, id. at 26-48.
15.Id. at 37-38.
16.Id. at 48.
17. Penned by now retired SC Associate Justice Jose C. Reyes, Jr. and concurred in by Associate Justice Antonio L. Villamor and Associate Justice Ramon A. Cruz, id. at 50-51.
18.Id. at 189-198.
19.Id. at 16-17.
20Id. at 18-20.
21.Id. at 232-243.
22.Id. at 235.
23.Id. at 236-237.
24.Id. at 239-242.
25.Id at 18-20.
26.See Chua v. People, 793 Phil. 815, 828-829 (2016); and Neri v. Yu, G.R. No. 230831, September 05, 2018.