ALFREDO L. CHUA, et al. vs. PEOPLE OF THE PHILIPPINES

ALFREDO L. CHUA, et al. vs. PEOPLE OF THE PHILIPPINES

   April 25, 2018       FJ

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ALFREDO L. CHUA, TOMAS L. CHUA and MERCEDES P. DIAZ vs. PEOPLE OF THE PHILIPPINES

G.R. No. 216146. August 24, 2016.

FACTS:

Joselyn was a stockholder of Chua Tee Corporation of Manila. Alfredo was the president and chairman of the board, while Tomas was the corporate secretary and also a member of the board of the same corporation. Mercedes was the accountant/bookkeeper tasked with the physical custody of the corporate records.

On or about August 24, 2000, Joselyn invoked her right as a stockholder pursuant to Sec 74 of the Corporation Code to inspect the records of the books of the business transactions of the corporation, the minutes of the meetings of the board of directors and stockholders, as well as the financial statements of the corporation. She hired a lawyer to send demand letters to each of the petitioners for her right to inspect to be heeded. However, she was denied of such right to inspect.

Joselyn likewise hired the services of Mr. Velayo from the accounting firm to assist her in examining the books of the corporation. Armed with a letter request, together with the list of schedules of audit materials, Mr. Velayo and his group visited the corporation's premises for the supposed examination of the accounts. However, the books of accounts were not formally presented to them and there was no list of schedules, which would allow them to pursue their inspection. Mr. Velayo testified that they failed to complete their objective of inspecting the books of accounts and examine the recorded documents.

In the Complaint-Affidavit, Joselyn alleged that despite written demands, the petitioners conspired in refusing without valid cause the exercise of her right to inspect CTCM records.

The petitioners attested, they did not prevent Joselyn from inspecting the records. What happened was that Mercedes was severely occupied with winding up the affairs of CTCM after it ceased operations. Joselyn and her lawyers then failed to set up an appointment with Mercedes.

An Information indicting the petitioners for alleged violation of Sec 74, in relation to Sec 144, of the Corporation Code was filed before the MeTC.

The petitioners filed a Motion to Quash, they argued that CTCM had ceased to exist as a corporate entity since May 26, 1999. Consequently, when the acts complained of by Joselyn were allegedly committed in August of 2000, the petitioners cannot be considered anymore as responsible officers of CTCM. The MeTC rendered convicting the petitioners as charged. In appeal, the RTC affirmed the MeTC.

In pending resolution of the motion, Rosario Sui Lian Chua, mother of the now deceased Joselyn, filed an Affidavit of Desistance, stated that  the reason to believe that the filing of the instant criminal case was merely the result of serious misunderstanding anent the management and operation of CTCM, which had long ceased to exist as a corporate entity even prior to the alleged commission of the crime in question, rather than by reason of any criminal intent or actuation on the part of the petitioners.

ISSUE/s:

Whether or not Joselyn, as a stockholder has the right to inspect the records of the books of the business transactions, the minutes of the meetings of the BOD and stockholders, and the financial statements of the corporation

HELD:

YES. The corporation continues to be a body corporate for three (3) years after its dissolution for purposes of prosecuting and defending suits by and against it and for enabling it to settle and close its affairs, culminating in the disposition and distribution of its remaining assets.

The termination of the life of a juridical entity does not by itself cause the extinction or diminution of the rights and liabilities of such entity nor those of its owners and creditors.

Further, as correctly pointed out by the OSG, Sections 122 and 145 of the Corporation Code explicitly provide for the continuation of the body corporate for three years after dissolution. The rights and remedies against, or liabilities of, the officers shall not be removed or impaired by reason of the dissolution of the corporation. Corollarily then, a stockholder's right to inspect corporate records subsists during the period of liquidation. Hence, Joselyn, as a stockholder, had the right to demand for the inspection of records. Lodged upon the corporation is the corresponding duty to allow the said inspection.