This Supreme Court decision affirms the right of a corporation’s member to access corporate records, even if the corporation’s registration was temporarily revoked. The ruling underscores that the revocation of a corporation’s registration does not automatically extinguish the rights and liabilities of the entity or its members. It emphasizes the importance of transparency and accountability within corporations, ensuring that officers cannot evade their responsibilities by citing temporary changes in the corporation’s status. This has implications for corporate governance and protects the rights of stakeholders to stay informed.
Access Denied: Can Corporate Officers Hide Behind Revoked Registrations?
The case of Alejandro D.C. Roque v. People of the Philippines revolves around Alejandro Roque, the president of Barangay Mulawin Tricycle Operators and Drivers Association, Inc. (BMTODA), and Rosalyn Singson, its secretary. Oscar Ongjoco, a member of BMTODA, sought access to the association’s records, including financial documents and membership lists. When Roque and Singson denied his requests, citing a period when BMTODA’s registration was revoked, Ongjoco filed a complaint for violation of Section 74 in relation to Section 144 of the Corporation Code of the Philippines. The central legal question is whether the revocation of a corporation’s registration suspends the rights of its members to access corporate information and absolves its officers of their duties to provide it.
The Regional Trial Court initially sided with Roque and Singson, dismissing the case based on the premise that BMTODA’s corporate existence was not adequately proven. However, the Court of Appeals reversed this decision, asserting that BMTODA was indeed a duly registered corporation and that the temporary revocation of its registration did not negate the members’ rights to access information. This decision led Roque to file a Petition for Review on Certiorari before the Supreme Court, arguing that without a valid corporate existence, he could not be prosecuted under the Corporation Code. The Supreme Court, however, upheld the Court of Appeals’ decision, reinforcing the importance of corporate transparency and accountability.
The Supreme Court grounded its decision in Section 74 of the Corporation Code, which mandates that any officer or agent of a corporation who refuses to allow a director, trustee, stockholder, or member to examine and copy excerpts from its records or minutes shall be liable for damages and subject to penalties under Section 144 of the same Code. To establish a violation of these provisions, several elements must be present. First, a director, trustee, stockholder, or member must make a written demand for a copy of excerpts from the corporation’s records or minutes. Second, an officer or agent of the corporation must refuse to allow the examination and copying of said excerpts. Third, if the refusal is based on a board resolution or order, the liability falls upon the directors or trustees who voted for the refusal. Finally, the burden of proof lies with the officer or agent to demonstrate that the person demanding access acted improperly or in bad faith.
In this case, Ongjoco, as a member of BMTODA, clearly possessed the right to examine the association’s documents and records. He made prior written demands to Roque and Singson, requesting copies of pertinent records. However, both Roque and Singson denied his requests, triggering the legal scrutiny that ultimately reached the Supreme Court. Roque’s primary defense centered on the argument that BMTODA’s registration was revoked when Ongjoco sent his letters, effectively nullifying his right to access the information. The Supreme Court, however, rejected this argument, citing that the revocation was already lifted when the request was received.
The Supreme Court emphasized that the revocation of a corporation’s Certificate of Registration does not automatically extinguish the corporation itself, nor does it eliminate the rights and liabilities of the entity or its stakeholders. This principle was affirmed in the case of Clemente v. Court of Appeals, where the Court explained that the termination of a juridical entity’s life does not, by itself, cause the extinction or diminution of the rights and liabilities of such entity nor those of its owners and creditors. Therefore, the revocation of BMTODA’s registration did not strip Ongjoco of his right to examine pertinent documents and records.
Moreover, Roque’s admission of the revocation of BMTODA’s registration further weakened his defense. The Court reasoned that the act of revocation presupposes a valid registration in the first place. As such, Roque could not simultaneously acknowledge the revocation and disclaim BMTODA’s registration with the SEC. The Court also dismissed Roque’s attempt to shift the blame to Singson, noting that Roque independently denied Ongjoco’s request for specific documents. Thus, Roque’s individual act of denial constituted a violation of the Corporation Code, making him accountable for his actions.
This case serves as a significant reminder of the duties and responsibilities of corporate officers under the Corporation Code. It reinforces the principle that transparency and accountability are paramount in corporate governance. Corporate officers cannot use temporary changes in the corporation’s status, such as a revoked registration, as a shield to evade their obligations to provide information to legitimate stakeholders. The ruling underscores that the rights of members and stockholders to access corporate records are protected, even during periods of corporate uncertainty.
FAQs
| What was the key issue in this case? | The key issue was whether a corporate officer could be held liable for denying a member access to corporate records when the corporation’s registration was temporarily revoked. |
| What is Section 74 of the Corporation Code? | Section 74 of the Corporation Code grants directors, trustees, stockholders, or members the right to examine and copy excerpts from a corporation’s records and minutes. It also imposes penalties on officers or agents who refuse such access. |
| Did the Supreme Court rule in favor of the corporate officer? | No, the Supreme Court denied Roque’s petition and affirmed the Court of Appeals’ decision, holding him liable for violating the Corporation Code. |
| Does the revocation of a corporation’s registration extinguish its liabilities? | No, the Supreme Court clarified that the revocation of a corporation’s registration does not automatically extinguish the rights and liabilities of the corporation or its members. |
| What was Ongjoco’s role in this case? | Ongjoco was a member of BMTODA who requested access to the association’s records but was denied by Roque and Singson, leading him to file a complaint. |
| What specific documents did Ongjoco request? | Ongjoco requested copies of the Association’s documents and a copy of the list of its members with the corresponding franchise numbers of their respective tricycle fees and the franchise fees paid by each member. |
| What was Roque’s defense in denying access to the records? | Roque argued that BMTODA’s registration was revoked when Ongjoco requested the documents, thus relieving him of any obligation to provide them. |
| How does this case affect corporate governance? | This case reinforces the importance of corporate transparency and accountability, ensuring that corporate officers cannot evade their responsibilities by citing temporary changes in the corporation’s status. |
| What is the significance of the Clemente v. Court of Appeals case mentioned in the decision? | The Clemente v. Court of Appeals case established that the termination of a juridical entity’s life does not automatically extinguish its rights and liabilities. |
In conclusion, the Supreme Court’s decision in Alejandro D.C. Roque v. People of the Philippines underscores the enduring rights of corporate members to access information and holds corporate officers accountable for upholding transparency. The ruling serves as a cautionary tale for those who might seek to exploit temporary corporate status changes to evade their duties. Ultimately, the case reinforces the importance of good corporate governance and the protection of stakeholder rights.
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Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Alejandro D.C. Roque v. People, G.R. No. 211108, June 07, 2017