CASE DIGEST : Alejandro D.C. Roque v. People of the Philippines G.R. No. 211108, June 7, 2017 Third Division — Tijam, J.

 

FACTS

Barangay Mulawin Tricycle Operators and Drivers Association, Inc. (BMTODA) became a corporation duly registered with the Securities and Exchange Commission (SEC) on November 17, 1993. In August 2003, Oscar Ongjoco, a member of BMTODA, learned that funds of the association were missing. He requested copies of the association's documents pursuant to his right to examine corporate records under Section 74 of the Corporation Code. Rosalyn Singson, BMTODA's Secretary, denied his request. Ongjoco also learned that the incumbent officers had already been holding office for three years, despite the association's by-laws providing for a one-year term. He then requested from Alejandro D.C. Roque, BMTODA's President, a copy of the list of members, the franchise numbers of their tricycles, and the franchise fees paid by each member. Roque likewise denied the request. 

Ongjoco subsequently filed an affidavit-complaint against Roque and Singson for violation of Section 74 in relation to Section 144 of the Corporation Code. The prosecution alleged that, despite written demands, Roque and Singson willfully refused to allow a member of BMTODA to examine and copy the association's records and minutes. The Office of the City Prosecutor found probable cause and an Information was filed against both officers. After the prosecution rested its case, Roque and Singson filed a motion for leave to file a demurrer to evidence, together with a motion to dismiss by way of demurrer.

The Regional Trial Court (RTC) granted the demurrer and dismissed the criminal case. It reasoned that the prosecution had failed to prove that BMTODA was a corporation, and therefore a violation of the Corporation Code could not be committed by its officers. On petition, however, the Court of Appeals (CA) reversed the RTC. The CA found that BMTODA was a duly registered corporation, relying on the documentary evidence showing that its registration had previously been revoked and was subsequently lifted. The case was remanded to the RTC for the presentation of the defense evidence.

Roque then went to the Supreme Court, arguing that there was insufficient evidence proving BMTODA's corporate existence and that he therefore could not be prosecuted under the penal provisions of the Corporation Code. He also argued that BMTODA's registration had already been revoked when Ongjoco made his request and that Singson, rather than he, had denied Ongjoco's request. The Supreme Court rejected these arguments.

ISSUE

The principal issue was whether Roque could be prosecuted under Section 74 in relation to Section 144 of the Corporation Code for refusing a member's written request to examine and obtain copies of BMTODA's corporate records. This required the Court to determine whether the prosecution had sufficiently established the existence of BMTODA as a corporation and whether the statutory requisites for a violation of Section 74 were present.

Under Section 74 of the Corporation Code, a director, trustee, stockholder, or member has the right to examine and copy excerpts from the corporation's records and minutes, subject to the conditions provided by law. An officer or agent who refuses such examination or copying may be held liable for damages and may also be guilty of an offense punishable under Section 144. Section 144 provides the applicable penalties for violations of the Corporation Code.

The Court identified the requisites for liability under Section 74: (1) a director, trustee, stockholder, or member must make a prior demand in writing for copies of excerpts from the corporation's records or minutes; (2) an officer or agent must refuse to allow the examination and copying; (3) if the refusal is pursuant to a resolution or order of the board, liability is imposed upon the directors or trustees who voted for the refusal; and (4) if the officer or agent claims that the requesting person was acting in bad faith, for an illegitimate purpose, or had improperly used information obtained from a prior examination, the contrary must be shown or proved.

The Court also had to resolve whether BMTODA's revocation of registration prevented the enforcement of the member's right to inspect its records. Roque argued that BMTODA had ceased to exist as a corporation when its registration was revoked. The Court therefore considered the effect of the revocation, particularly because the SEC subsequently lifted the revocation and restored BMTODA's active status.

HELD

The Supreme Court DENIED the petition and AFFIRMED in toto the Decision and Resolution of the Court of Appeals. The Court held that Ongjoco, as a member of BMTODA, had the right under Section 74 of the Corporation Code to examine and obtain copies of the association's pertinent records. The Court found that the statutory requisites were present: Ongjoco made written demands, and Roque and Singson refused to furnish the requested records. Thus, the refusal constituted a violation contemplated by Section 74, with the applicable penalty provided under Section 144.

The Court rejected Roque's argument that BMTODA was not proven to be a corporation. BMTODA had been registered with the SEC on November 17, 1993. Although its registration was revoked on September 30, 2003, the SEC subsequently lifted the revocation on August 30, 2004. The Court noted that Singson's letter-request was actually received on September 23, 2004, when BMTODA had already regained its active status. The Court further held that revocation of a corporation's Certificate of Registration does not automatically extinguish the corporation's rights and liabilities. Citing Clemente v. Court of Appeals, the Court explained that termination of the life of a juridical entity does not by itself extinguish or diminish its rights and liabilities or those of its owners and creditors.

The Court also rejected Roque's attempt to avoid liability by pointing to Singson's refusal. Roque himself admitted that he had denied Ongjoco's request for the list of BMTODA members, their corresponding tricycle franchise numbers, and the franchise fees paid by each member. The request made to Singson involved a different document. Consequently, Singson's denial did not detract from Roque's own separate and individual refusal. The Court therefore held Roque accountable for his own violation of Section 74 of the Corporation Code.

Accordingly, the Supreme Court DENIED the petition and AFFIRMED in toto the Court of Appeals' Decision dated August 31, 2012 and Resolution dated January 22, 2014. The case was therefore remanded to the RTC for the presentation of the defense evidence, consistent with the CA's ruling