PILIPINAS SHELL PETROLEUM CORPORATION, PETITIONER, VS. CARLOS DUQUE & TERESA DUQUE, RESPONDENTS.

Pilipinas Shell Petroleum versus Duque

The Case

This is a petition for review on certiorari brought by Pilipinas Shell Petroleum Corporation against Carlos Duque and Teresa Duque, the proprietor and the corporate secretary of Fitness Consultants, Incorporated. The respondents had been charged with violating Batas Pambansa Blg. 22, the Bouncing Checks Law, for a corporate check that was dishonored because the account was closed. They were acquitted, yet the trial court at one point held them civilly liable for the value of the check. The case matters because it fixes a clean rule for the Bar: the civil liability of a corporate officer who signs a bouncing corporate check rises and falls with his criminal conviction.

Procedural History

An Information for violation of Batas Pambansa Blg. 22 was filed with the Metropolitan Trial Court of Makati City. After trial, the Metropolitan Trial Court found the Duques guilty and sentenced them to pay a fine, to indemnify Pilipinas Shell, to pay attorney's fees, and to pay the costs. The Duques appealed to the Regional Trial Court of Makati City.

The Regional Trial Court acquitted them of the offense but maintained the award of civil indemnity, attorney's fees, and costs. On the Duques' motion for partial reconsideration, the Regional Trial Court reversed itself and ruled that, having been acquitted, they could not be held civilly liable, since the obligation was a corporate debt. On Pilipinas Shell's motion for reconsideration, the Regional Trial Court revived its earlier decision and held the Duques civilly liable.

The Duques went up to the Court of Appeals by petition for review. The Court of Appeals granted the petition, reversed and set aside the revival order, and reinstated the order absolving the Duques from civil liability, without prejudice to an independent civil action against the corporation. The Court of Appeals denied reconsideration. Pilipinas Shell then filed the present petition for review on certiorari before the Supreme Court.

Facts

Pilipinas Shell was a lessee of a building known as Shell House in Makati City. It subleased a portion of the second floor to The Fitness Center. When The Fitness Center met business problems, it assigned, with Pilipinas Shell's conformity, all its rights and obligations under the sublease to Fitness Consultants, Incorporated. Carlos Duque was the proprietor and Teresa Duque the corporate secretary of that corporation.

Fitness Consultants, Incorporated failed to pay its rentals. It then issued a check, signed by the Duques, meant to cover its obligation to Pilipinas Shell. The check was drawn against the corporation's account and was payable to Pilipinas Shell.

When presented, the check was dishonored because the account was closed. Despite notice of dishonor, no payment or arrangement for full payment was made within five banking days. A criminal complaint for violation of Batas Pambansa Blg. 22 followed, and the case travelled through the courts as described above.

Issues

• Whether or not the respondents, as corporate officers who signed a bouncing corporate check, may still be held civilly liable despite their acquittal from the criminal charge of violating Batas Pambansa Blg. 22.
• Whether or not the acquittal of the corporate officers, whatever its ground, extinguishes their civil liability arising from the issuance of the worthless corporate check.

Applicable Provisions

Section 1 of Batas Pambansa Blg. 22, as cited by the trial court, provides:

Any person who makes or draws and issues any check to apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment, which check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment, shall be punished by imprisonment of not less than thirty days but not more than one year or by a fine of not less than but not more than double the amount of the check which fine shall in no case exceed Two Hundred Thousand Pesos, or both such fine and imprisonment at the discretion of the court.

This is the penal statute under which the Duques were charged and acquitted, and it is the source of the criminal liability that the Court holds carries the civil liability with it.

Ruling

On the first issue, the Court ruled in the negative. It held that the matter had already been settled by jurisprudence. In Gosiaco versus Ching, the Court had ruled that a corporate officer who issues a bouncing corporate check can be held civilly liable only when he is convicted. The Court quoted its earlier ruling:

When a corporate officer issues a worthless check in the corporate name he may be held personally liable for violating a penal statute.

Citing Bautista versus Auto Plus Traders, Incorporated, the Court categorically held that the civil liability of a corporate officer in a Batas Pambansa Blg. 22 case is extinguished with the criminal liability. The Court reiterated the rule from Navarra versus People, where it said:

The general rule is that a corporate officer who issues a bouncing corporate check can be held civilly liable when he is convicted.

The Court explained that Batas Pambansa Blg. 22 itself fused the criminal liability with the corresponding civil liability of the corporation by allowing the complainant to recover that civil liability, not from the corporation, but from the person who signed the check in its behalf. It follows that the civil liability attaches only upon conviction.

On the second issue, the Court held that once a corporate officer is acquitted of violating Batas Pambansa Blg. 22, he is discharged from any civil liability arising from the issuance of the worthless check in the name of the corporation he represents. This holds without regard to whether the acquittal rested on reasonable doubt or on a pronouncement that the act or omission from which civil liability might arise did not exist. The Court added that nothing in the records showed the Duques made themselves personally or solidarily liable as accommodation parties or sureties. They signed as corporate officers, the check was drawn in the corporation's name to pay a corporate obligation, and there was neither allegation nor proof that the veil of corporate fiction was used for fraud. Juridical entities have personalities separate and distinct from their officers, and stockholders and officers are generally not personally liable for corporate obligations.

The Court distinguished the cases cited by Pilipinas Shell. In Mitra versus People and Llamado versus Court of Appeals, the accused were convicted, so the general rule applied. In Alferez versus People, the accused, though acquitted, had issued the checks in his personal capacity for his personal obligations.

Doctrine

A corporate officer who issues a bouncing corporate check may be held civilly liable only when he is convicted of violating Batas Pambansa Blg. 22. His civil liability is fused with his criminal liability under the statute, and it is extinguished by acquittal, whether the acquittal rests on reasonable doubt or on a finding that the facts giving rise to civil liability did not exist. Absent proof that he bound himself personally or solidarily, or that the corporate veil was used to cloak fraud or illegality, the corporate officer is not personally liable for the corporation's debts, because the corporation has a personality separate and distinct from its officers.

Disposition

The petition was denied, and the Decision and Resolution of the Court of Appeals were affirmed; the Duques won, and their acquittal carried with it the extinction of their civil liability for the dishonored corporate check.

Remember This

Memorize the line: the civil liability of a corporate officer who signs a bouncing corporate check attaches only upon conviction and is extinguished by acquittal. Examiners use this case to test the fusion of criminal and civil liability under Batas Pambansa Blg. 22 and the separate personality of the corporation.