G.R. No. 216146 , August 24, 2016
ALFREDO L. CHUA, TOMAS L. CHUA and MERCEDES P. DIAZ, Petitioners, vs. PEOPLE OF THE PHILIPPINES, Respondent.

FACTS

Petitioners Alfredo L. Chua (President and Chairman), Tomas L. Chua (Corporate Secretary and Board Member), and Mercedes P. Diaz (Accountant/Bookkeeper) were officers of Chua Tee Corporation of Manila (CTCM). Stockholder Joselyn Chua, through counsel, sent written demands on or about August 24, 2000, to inspect corporate records pursuant to Section 74 of the Corporation Code. She also hired accountant Abednego Velayo to assist. Despite demands, the inspection was denied; Velayo testified the books were not formally presented and no schedule for inspection was provided. An Information was filed charging petitioners with violating Section 74 in relation to Section 144 of the Corporation Code. Petitioners moved to quash, arguing CTCM had ceased to exist as of May 26, 1999, thus no duty existed by August 2000. The MeTC denied the motion. After trial where the prosecution presented Joselyn and Velayo, and petitioners presented no evidence, the MeTC convicted petitioners, sentencing them to 30 days imprisonment. The RTC and CA affirmed. Petitioners elevated the case to the Supreme Court, reiterating their defense and adding that Joselyn’s mother, Rosario Sui Lian Chua, filed an Affidavit of Desistance.

ISSUE

Whether the petitioners are criminally liable for violation of Section 74, in relation to Section 144, of the Corporation Code for refusing a stockholder’s demand to inspect corporate records.

RULING

Yes, the petitioners are criminally liable. The Supreme Court affirmed the conviction but modified the penalty to a fine in lieu of imprisonment. The Court held that: (1) Under Section 122 of the Corporation Code, a corporation continues to exist for three years after dissolution for the purpose of settling its affairs; thus, CTCM was still a body corporate until May 2002, and the stockholder’s right to inspect subsisted during liquidation. (2) The prosecution established all elements of the offense: a written demand by a stockholder, refusal by the corporate officers, and no proof of improper or malicious use by the stockholder. The petitioners’ claim that they did not prevent inspection was belied by Velayo’s testimony that the books were not presented. Their failure to present evidence was fatal. (3) The Affidavit of Desistance did not exonerate them, as criminal liability is public in nature and cannot be extinguished by mere desistance. The penalty was modified pursuant to Act No. 4103 , as amended, imposing a fine ranging from ₱200 to ₱1,000, considering the offense did not involve moral turpitude.