G.R. No. 216146 - Chua vs. People

The petitioners – Alfredo L. Chua (president and chairman), Tomas L. Chua (corporate secretary and board member), and Mercedes P. Diaz (accountant/bookkeeper) – were key officers of Chua Tee Corporation of Manila (CTCM).
Joselyn Chua, a stockholder of CTCM, sought to exercise her right to inspect the corporation’s records, including financial statements, minutes of board and stockholders’ meetings, and other business transaction documents.

On or about August 24, 2000, Joselyn, asserting her right under Section 74 of the Corporation Code, demanded in writing that the petitioners allow her to inspect the corporate records.
Despite engaging legal counsel and hiring an accountant (Mr. Abednego Velayo) to assist with the inspection, Joselyn’s request was not effectively facilitated; the records were not formally presented, and the schedules for audit materials were not supplied.

Joselyn filed a Complaint-Affidavit alleging that the petitioners conspired to deny her statutory inspection right.
Consequently, on July 4, 2001, an Information charging the petitioners with violation of Section 74 (in relation to Section 144) of the Corporation Code was filed before the Metropolitan Trial Court (MeTC) of Quezon City (Criminal Case No. 107079).

On January 30, 2002, the petitioners moved to quash the Information claiming that CTCM had ceased to exist as a corporate entity (ceased operations in May 1999), arguing that no duty to allow inspection existed.
The MeTC denied the motion, leading to arraignment, pre-trial, and trial proceedings.

The prosecution presented the testimonies of Joselyn and Mr. Velayo, establishing the elements of the offense.
The petitioners failed to produce rebutting evidence or witnesses.
On November 23, 2012, the MeTC rendered a judgment convicting the petitioners and sentencing them to 30 days of imprisonment, alongside the payment of court costs.

The RTC affirmed the MeTC’s judgment on March 27, 2014.
The petitioners then appealed to the Court of Appeals (CA), where on September 23, 2014, the CA dismissed their petition on technical grounds (deficiencies in submission of required documents such as authentic copies of judgments, orders, and the Special Power of Attorney).
A Motion for Reconsideration was subsequently filed, and after the petitioners complied belatedly with the requirements, the CA issued a second resolution on January 6, 2015, denying the motion.

Testimonies revealed that while a letter requesting inspection was served to the Accounting Department, the actual presentation of records never fully occurred.
During cross-examination, Joselyn admitted that permission to view the documents was ostensibly granted; however, since her designated accountant conducted the inspection, she lacked personal knowledge on whether the request was truly satisfied.
An Affidavit of Desistance filed by Rosario Sui Lian Chua—mother of the now-deceased Joselyn—later indicated that family members condoned any alleged wrongdoings by the petitioners, attributing the criminal action to a misunderstanding regarding the status of CTCM.

Although CTCM ceased operational activities in May 1999, under Section 122 of the Corporation Code, it continued as a body corporate for three years for the purpose of settling its affairs.
As such, the statutory duty of corporate officers to allow stockholder inspection of records remained in force during the liquidation period, forming the crux of the dispute regarding the petitioners’ liability.

Whether the conviction of the petitioners for violation of Section 74 in relation to Section 144 of the Corporation Code is proper despite arguments that CTCM had ceased operations prior to Joselyn’s filing.
Whether the right of a stockholder to inspect the corporation’s records persists during the period of liquidation following cessation of business operations.
Whether the evidence presented by the prosecution is sufficient to establish that the petitioners effectively prevented Joselyn from exercising her right to inspect the corporate records.
Whether the procedural irregularities (such as the belated submission of required documents and the CA’s initial dismissal on technical grounds) justify reversing the conviction.