Corona got P11-M cash from ‘dead’ firm

‘NOTICE TO THE PUBLIC’ This corporate notice appeared in the Classifieds section of the June 4, 1995, issue of the Philippine Daily Inquirer.

Prosecutors on Wednesday zeroed in on what one senator-judge described as an “unexplained inclusion” in the statements of assets, liabilities and net worth (SALNs) of Chief Justice Renato Corona.

On Day 10 of Corona’s impeachment trial, the prosecution contended that the Chief Justice could not have received an P11-million cash advance from a company owned by his wife’s family in 2003 because its certificate of registration was revoked that same year.

“Our theory is that there could not have been any transaction made by Basa-Guidote (Enterprises Inc.) with Chief Justice Renato Corona because … the corporate franchise had already been dissolved or revoked and therefore, the only action that can be taken by Basa-Guidote (was) just to liquidate and wind up the affairs of the corporation and distribute the shares,” Representative Reynaldo Umali told the impeachment court.

Prosecutors presented Director Benito Cataran of the Securities and Exchange Commission (SEC)  to show that the company was no longer in a position to release money to Corona.

The approach puzzled some of the senators, who questioned the relevance of Basa-Guidote being “dead” to the charge that Corona did not publicly disclose his SALN and because of that, should be convicted of culpable violation of the Constitution and betrayal of public trust.

“Yesterday (Tuesday), you were trying to prove … there were unexplained exclusions (in the SALN),” Senator Francis Pangilinan told prosecutors, referring to the allegation that Corona did not declare some properties in his SALN. “In this case, there is unexplained inclusion.”

Senator Joker Arroyo followed up: “If you are not sure of your evidence, do not present it.”

The P11-million cash advance from Basa-Guidote was declared as a liability in Corona’s SALNs for 2003 and 2004. It was later reduced to P10 million in the 2005 SALN, P8 million in 2006, P6.5 million in 2007, P5 million in 2008 and P3 million in 2009. The gradual decrease indicated that he was paying off the cash advance.

Cataran, head of the SEC’s company registration and monitoring department, testified that the commission revoked Basa-Guidote’s certificate of registration on May 26, 2003.

He said the company had not been submitting records such as financial reports and general information sheets from 1991 up to the year of revocation.

Cataran added that Corona’s wife, Cristina, was neither a stockholder nor a director of the company, which was registered on May 30, 1960.

Enrile lecture

Senate President Juan Ponce Enrile, the presiding officer in the impeachment trial, rebuffed Cataran when he said that Basa-Guidote lost its “corporate existence” by virtue of the revocation. Enrile questioned the SEC’s authority to “cause the dissolution of a corporation.”

“You cannot kill it, you cannot make it die. Only the stockholders can make it die or the government through the power of a quo warranto proceeding can kill it,” Enrile told the witness.

Cataran, a lawyer, said: “We consider this as involuntary dissolution of corporation through an act by the commission.” He explained that a corporation that had its registration revoked could still be revived.

To which, Enrile replied: “Therefore, it is not dissolved. If it’s dissolved, you kill it. You cannot revive it.”

The issue was so contentious that Enrile ordered Cataran to submit a legal memorandum explaining the SEC’s authority to dissolve a corporation.

“I’m not imposing my opinion on this, although I entertain a great doubt whether it has the authority to dissolve a corporation,” Enrile said.

“What will be the status of a corporation in dissolution and after the dissolution, what will be the status of the assets of the corporation? My recollection is in that event it becomes a matter of co-ownership by the stockholders.”

Relevance

Senate Minority Leader Alan Peter Cayetano and Senator Loren Legarda both questioned the relevance of the company’s supposed dissolution in 2003 to Corona’s alleged nondisclosure of his SALNs. Cayetano said that a company, even if considered “dead,” could still “lend money.”

Enrile cut Umali short when the prosecutor began explaining that the issue was related to the “truthfulness” of Corona’s disclosures in his SALNs.

“What is untruthful if the question is did that corporation or body or group of persons lend money that is reflected in the SALN of the respondent?” the senator said.

Umali explained that since Basa-Guidote’s corporate franchise had already been revoked, all it was authorized to do was to liquidate its assets. Enrile told him: “We’ve been taking your opinion into consideration. You have not established the connection of what you are saying with the present proceeding.”

Senator Panfilo Lacson called attention to the SEC order that Basa-Guidote could still file a “petition to lift revocation” until May 26, 2010.

“What is the status of the corporation between May 26, 2003, and May 26, 2010? Was it dead? Or could it still be resuscitated?” he asked.

Cataran said the company could still be revived. But he said the initial revocation was “already effective because otherwise, there was no sense revoking it.”

He said the opportunity given to a company to petition for revival was intended to “finalize the order but it’s already effective.”

Erroneous presumption

The lead defense counsel, Serafin Cuevas, cited a May 4, 1995, SEC opinion saying that a company “shall continue to exist as a juridical entity, notwithstanding its operational status, until its certificate of registration is formally revoked by the SEC after due notice and hearing.”

“This honorable court has been fed with erroneous presumption, your honor, that the moment there is a certificate of revocation, a corporation cannot do any business anymore. That is not true, even in actuality,” Cuevas said.

Umali “took exception to the statement” and cited a separate SEC opinion dated July 28, 2009.

He read the portion, which stated: “We clarified that an order of revocation is immediately effective once the revocation order is issued as such subject corporation existence is terminated at the very instance.”

In response to a question by Senator Pia Cayetano, Umali said  the prosecution was trying to establish that the P11-million cash advance was “fictitious” because the Corona couple were not shareholders of the corporation.

No formal acceptance

The prosecution also presented Nerissa Josef of Community Innovations Inc. (CII) in an attempt to show that a 48-square meter condominium unit on the 31st floor of  The Columns in Makati City belonged to Chief Justice Renato Corona and his wife Cristina.

But under questioning from defense lawyer Ramon Esguerra, Josef could not ascertain if the Corona couple had  received the key to the unit, with a selling price of P3.58 million and a market zonal value of P2.88 million,   or if they had lived there.

Esguerra took note of a letter from the CII addressed to Cristina informing her that Unit 31-B was “deemed delivered and accepted” by the purchaser as of June 7, 2008, but Josef said there was no record of formal acceptance from her.