Gosiaco vs. Ching

A corporation cannot be impleaded as an accused or defendant in a B.P. Blg. 22 case, even for the civil aspect, but the creditor’s substantive right to recover the corporation’s due and demandable obligation on the check may be enforced in a separate civil action; the corporate signatory’s civil liability in the B.P. Blg. 22 case is extinguished by acquittal.

Petitioner Jaime U. Gosiaco placed an ₱8,000,000.00 loan with ASB Holdings, Inc., a corporation, and received two DBS checks signed by respondent Leticia Ching, ASB’s Business Development Operation Group manager, for the principal and interest. The dispute concerns the checks issued for that loan and the procedural question of whether a corporation may be impleaded in a B.P. Blg. 22 prosecution and whether its signatory may be held civilly liable after acquittal. Under B.P. Blg. 22, a person who signs a check for a corporation may be liable under the Act, while Rule 111, Section 1(b) of the Revised Rules on Criminal Procedure deems the criminal action for B.P. Blg. 22 to include the corresponding civil action and prohibits reservation of a separate civil action.

On 16 February 2000, petitioner Jaime U. Gosiaco invested ₱8,000,000.00 with ASB Holdings, Inc. by way of loan. The money was loaned to ASB for a period of 48 days with interest at 10.5%, equivalent to ₱112,000.00. In exchange, ASB, through its Business Development Operation Group manager Leticia Ching, issued DBS checks no. 0009980577 and 0009980578 for ₱8,000,000.00 and ₱112,000.00, respectively. Both checks were signed by Ching and drawn against the DBS Bank Makati Head Office branch. ASB, through a letter dated 31 March 2000 signed by Luke Roxas, acknowledged that it owed petitioner the abovementioned amounts.

Upon maturity of the ASB checks, petitioner went to the DBS Bank San Juan Branch to deposit the two checks. Upon presentment, the checks were dishonored and payment was refused because of a stop payment order and for insufficiency of funds. Petitioner informed respondents, through letters dated 6 and 10 April 2000, about the dishonor of the checks and demanded replacement checks or the return of the money placement, but no replacement or return followed. Petitioner then filed a criminal complaint for violation of B.P. Blg. 22 before the Metropolitan Trial Court of San Juan against Ching and Casta.

Ching was arraigned and tried, while Casta remained at large. Ching denied liability and claimed that she was a mere employee of ASB. She asserted that she did not have knowledge as to how much money ASB had in the banks, and that such responsibility belonged to another department. On 15 December 2000, petitioner moved that ASB and its president, Luke Roxas, be impleaded as party defendants, and he paid the corresponding docket fees. The MTC denied the motion because the case had already been submitted for final decision.

On 8 February 2001, the MTC acquitted Ching of criminal liability but did not absolve her from civil liability. The MTC ruled that Ching, as a corporate officer of ASB, was civilly liable since she was a signatory to the checks. Both petitioner and Ching appealed the ruling to the RTC. Petitioner appealed on the ground that the MTC failed to hold ASB and Roxas either jointly or severally liable with Ching. Ching moved for reconsideration, which was subsequently denied, and thereafter filed her notice of appeal on the ground that she should not be held civilly liable for the bouncing checks because they were contractual obligations of ASB.

The RTC and the Court of Appeals later found that the amount petitioner sought to recover was a loan made to ASB and not to Ching, and that the checks issued by Ching were for and in behalf of ASB. Roxas’s testimony further bolstered the fact that the checks issued by Ching were for and in behalf of ASB. These findings framed the Supreme Court’s resolution of the procedural and substantive questions raised by petitioner.

• Civil Liability of Ching: Petitioner argued that the RTC erred in absolving Ching from civil liability, maintaining that as the corporate officer who actually signed the bouncing checks, she should be held civilly liable under B.P. Blg. 22.
• Impleader of ASB and Roxas: Petitioner maintained that the RTC erred in upholding the MTC’s refusal to implead ASB and its president, Luke Roxas, as party defendants, and that they should be held jointly or severally liable with Ching.
• Piercing the Corporate Veil: Petitioner argued that the RTC erred in refusing to pierce the corporate veil of ASB and hold Roxas liable.
• Inability to Pursue a Separate Civil Action: Petitioner proceeded from the premise that he was unable to pursue a separate civil action against ASB because Rule 111, Section 1(b) of the Revised Rules on Criminal Procedure deems the B.P. Blg. 22 criminal action to include the corresponding civil action and prohibits reservation of a separate civil action.

• Ching’s Denial of Liability: Ching denied liability and claimed that she was a mere employee of ASB, that she did not have knowledge as to how much money ASB had in the banks, and that such responsibility belonged to another department.
• No Civil Liability on Appeal: Ching argued that she should not be held civilly liable for the bouncing checks because they were contractual obligations of ASB.
• Casta: No arguments are recounted in the decision; he remained at large.

• Civil Liability of Corporate Officer: Whether a corporate officer who signed a bouncing check is civilly liable under B.P. Blg. 22.
• Impleader of Corporation in B.P. Blg. 22 Case: Whether a corporation can be impleaded in a B.P. Blg. 22 case.
• Piercing the Corporate Veil: Whether there is a basis to pierce the corporate veil of ASB.
• Separate Civil Action Against Corporation: Whether petitioner may pursue an independent civil action against ASB for the amount of the checks despite the denial of impleader and the rules on B.P. Blg. 22.

• Civil Liability of Corporate Officer: Only upon conviction. The civil liability of a corporate officer in a B.P. Blg. 22 case is extinguished with criminal liability; because Ching was acquitted, she could not be held civilly liable in that case.
• Impleader of Corporation in B.P. Blg. 22 Case: No. Nowhere in B.P. Blg. 22 is a juridical person allowed to be impleaded as an accused or defendant, even in the litigation of the civil aspect; penal laws are strictly construed against the State and liberally in favor of the accused.
• Piercing the Corporate Veil: No. The Court did not disturb the finding that none of the requisites for piercing the corporate veil were present; the obligation was ASB’s, and petitioner’s remedy was a separate civil action against ASB.
• Separate Civil Action Against Corporation: Yes, without prejudice. The substantive right of a creditor to recover due and demandable obligations from a debtor-corporation cannot be denied or diminished by procedural rules; nothing in Rule 111, Section 1(b) prohibits a separate civil action against the juridical person on whose behalf the check was issued.

• Civil Liability of Corporate Officer: B.P. Blg. 22, Section 1, third paragraph, provides that where the check is drawn by a corporation, company or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under the Act. The law punishes the act of making and issuing bouncing checks as malum prohibitum, an offense against public order and not against property, and it covers all types of checks, including those issued as a form of deposit or guarantee. The statute imposes criminal penalties on anyone who, with intent to defraud another of money or property, draws or issues a check on any bank with knowledge that he has no sufficient funds in such bank to meet the check on presentment. A corporate officer who issues a worthless check in the corporate name may be held personally liable because he cannot shield himself from liability for his own acts on the ground that it was a corporate act. As held in Llamado vs. Court of Appeals, a corporate officer who signs a bouncing corporate check cannot avoid personal liability by claiming he signed only as a corporate officer. The Court nevertheless applied the general rule that a corporate officer who issues a bouncing corporate check can only be held civilly liable when he is convicted. Under Bautista vs. Auto Plus Traders Inc., the civil liability of a corporate officer in a B.P. Blg. 22 case is extinguished with the criminal liability. Because Ching was acquitted, and the Court declined to revisit Bautista under stare decisis, she could not be held civilly liable in the B.P. Blg. 22 case.
• Impleader of Corporation in B.P. Blg. 22 Case: The Court held that petitioner was not entitled to implead ASB, or any other corporation, in the B.P. Blg. 22 case, even if the Rules require the joint trial of both the criminal and civil liability. A basic maxim in statutory construction is that the interpretation of penal laws is strictly construed against the State and liberally construed against the accused. Nowhere in B.P. Blg. 22 is it provided that a juridical person may be impleaded as an accused or defendant in the prosecution for violations of that law, even in the litigation of the civil aspect thereof. The corporation therefore cannot be made a party to the criminal case.
• Piercing the Corporate Veil: The petition was denied, and the Court did not disturb the Court of Appeals’ conclusion that there was no need to pierce the corporate veil of ASB because none of the requisites were present. The records showed that ASB was civilly obligated to petitioner and that the checks were issued for and in behalf of ASB. The Court instead recognized ASB’s distinct civil liability and allowed petitioner to pursue it directly in a separate civil action.
• Separate Civil Action Against Corporation: Although a corporation cannot be impleaded in the B.P. Blg. 22 case, the substantive right of a creditor to recover due and demandable obligations against a debtor-corporation cannot be denied or diminished by a rule of procedure. Technically, nothing in Section 1(b) of Rule 111 prohibits the reservation of a separate civil action against the juridical person on whose behalf the check was issued; what the rules prohibit is the reservation of a separate civil action against the natural person charged with violating B.P. Blg. 22, including the corporate officer who signed the bounced check. In theory, the B.P. Blg. 22 criminal liability of the person who issued the bouncing check in behalf of a corporation stands independent of the civil liability of the corporation itself, which arises from the Civil Code. The civil liability of the signatory arises from the wrongful act of signing the check despite the insufficiency of funds, while the civil liability of the corporation is the very obligation covered by the check or the consideration for its execution. Under the current Rules, the civil action impliedly instituted in the B.P. Blg. 22 action is only the civil liability of the signatory, not that of the corporation. The two liabilities are distinct and should be adjudged according to their respective standards and merits. The Court also noted that if the signatory lacks sufficient assets, the corporation would not be subsidiarily liable because Revised Penal Code Article 103 applies only to felonies, not to special laws such as B.P. Blg. 22, and B.P. Blg. 22 imposes no such subsidiary liability. Thus, the creditor must be allowed to pursue the corporation’s civil liability. To prevent double recovery, the Court referred the matter to the Committee on Rules for the formulation of proper guidelines. On filing fees, while a plaintiff who files two separate cases may generally be required to pay filing fees based on the amount of the check in both cases, petitioner was exempted as a matter of equity because of the previous legal confusion on whether he could file the civil case against ASB. Similarly, prescription should not bar the civil action; the period should run not from the date the checks were issued but from the date this decision attains finality, because courts should not be bound strictly by the statute of limitations or the doctrine of laches when to do so would result in manifest wrong or injustice.

• Corporate officer’s personal liability under B.P. Blg. 22 — Section 1, third paragraph, provides that where a check is drawn by a corporation, company or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under the Act. A corporate officer who issues a worthless check in the corporate name may be held personally liable because he cannot shield himself from liability for his own acts on the ground that it was a corporate act. However, the civil liability of a corporate officer in a B.P. Blg. 22 case is extinguished with the criminal liability; he can only be held civilly liable when convicted. In this case, Ching’s acquittal extinguished her civil liability in the B.P. Blg. 22 case.
• Non-impleading of juridical persons in B.P. Blg. 22 prosecutions — A corporation cannot be impleaded as an accused or defendant in a B.P. Blg. 22 case, even in the litigation of the civil aspect. Penal laws are strictly construed against the State and liberally construed in favor of the accused, and B.P. Blg. 22 contains no provision allowing a juridical person to be impleaded. The Court applied this to deny petitioner’s attempt to implead ASB.
• Distinct civil liabilities of the signatory and the corporation — B.P. Blg. 22 imposes a distinct civil liability on the signatory of the check, arising from the wrongful act of signing despite insufficiency of funds, separate from the civil liability of the corporation, which is the very obligation covered by the check or the consideration for its execution. The civil action impliedly instituted in the B.P. Blg. 22 case is only the signatory’s civil liability, not the corporation’s. The corporation’s liability arises from the Civil Code and may be pursued in a separate civil action.
• Substantive rights cannot be impaired by procedural rules — The substantive right of a creditor to recover due and demandable pecuniary obligations from a debtor-corporation cannot be denied or diminished by procedural rules. Rule 111, Section 1(b) does not prohibit a separate civil action against the juridical person on whose behalf the check was issued; the prohibition on reservation applies to the natural person charged with violating B.P. Blg. 22. The Court allowed petitioner to pursue an independent civil action against ASB.
• Equity exceptions to filing fees and prescription — In petitioner’s case, because of previous legal confusion on whether he could file a civil case against ASB, he was exempted from paying filing fees based on the amount of the checks should he pursue the civil action. For the same reason, prescription should not bar the civil action; the period should run from the date the decision attains finality, not from the date the checks were issued. Courts should not be bound strictly by the statute of limitations or the doctrine of laches when manifest wrong or injustice would result.
• No subsidiary liability of corporations under B.P. Blg. 22 — The subsidiary civil liability of corporations under Article 103 of the Revised Penal Code applies only to felonies, not to crimes penalized by special laws such as B.P. Blg. 22. B.P. Blg. 22 imposes no subsidiary liability on the corporation in whose name the check was issued. Thus, if the signatory cannot pay, the creditor must be allowed to pursue the corporation’s separate civil liability.
• Piercing the corporate veil not warranted — The Court did not find a basis to pierce ASB’s corporate veil; the Court of Appeals’ finding that none of the requisites were present was not disturbed. The obligation was ASB’s, and the remedy was a separate civil action against ASB.

• "Where the check is drawn by a corporation, company or entity, the person or persons, who actually signed the check in behalf of such drawer shall be liable under this Act." — This is the statutory basis for the personal liability of a corporate officer who signs a bouncing corporate check, quoted from Section 1 of B.P. Blg. 22.
• "The general rule is that a corporate officer who issues a bouncing corporate check can only be held civilly liable when he is convicted. In the recent case of Bautista v. Auto Plus Traders Inc., the Court ruled decisively that the civil liability of a corporate officer in a B.P. Blg. 22 case is extinguished with the criminal liability." — This states the ratio for denying Ching’s civil liability in the B.P. Blg. 22 case after her acquittal.
• "Nowhere in B.P. Blg. 22 is it provided that a juridical person may be impleaded as an accused or defendant in the prosecution for violations of that law, even in the litigation of the civil aspect thereof." — This is the Court’s holding that a corporation cannot be impleaded in a B.P. Blg. 22 case.
• "Nonetheless, the substantive right of a creditor to recover due and demandable obligations against a debtor-corporation cannot be denied or diminished by a rule of procedure." — This is the key principle allowing petitioner to pursue a separate civil action against ASB despite the denial of impleader.

• Llamado vs. Court of Appeals, G.R. No. 99032, 26 March 1997, 270 SCRA 423 — Cited to support the rule that a corporate officer who signs a bouncing corporate check cannot avoid personal liability by claiming he signed only as a corporate officer; the third paragraph of Section 1 of B.P. Blg. 22 makes the signer liable.
• Bautista vs. Auto Plus Traders Inc., G.R. No. 166405, 6 August 2008 — Controlling recent precedent applied by the Court: the civil liability of a corporate officer in a B.P. Blg. 22 case is extinguished with the criminal liability. The Court declined to revisit it under stare decisis, leading to Ching’s exoneration from civil liability.
• Lozano vs. Martinez, Nos. L-63419, L-66839-42, L-71654, 74524-25, L-75122-49, L-75812-13, 75765-67, L-75789, 18 December 1986, 146 SCRA 323 — Cited for the nature of B.P. Blg. 22 as an offense against public order, not against property, and for the rule that the act of issuing bouncing checks is malum prohibitum.
• Que vs. People, Nos. L-75217-18, 21 September 1987, 154 SCRA 160 — Cited to show that B.P. Blg. 22 covers all types of checks, including those issued as a form of deposit or guarantee.
• Santiago vs. Court of Appeals, G.R. No. 103959, 21 August 1997, 278 SCRA 98, 113 — Cited for the principle that courts should not be bound strictly by the statute of limitations or the doctrine of laches when to do so would result in manifest wrong or injustice; applied to allow petitioner’s civil action despite prescription concerns.

• B.P. Blg. 22, Section 1, third paragraph — Provides that where the check is drawn by a corporation, company or entity, the person or persons who actually signed the check in behalf of such drawer shall be liable under the Act. The Court used this as the statutory basis for the signatory’s personal liability, but held that civil liability in the B.P. Blg. 22 case is extinguished by acquittal.
• Rule 111, Section 1(b), Revised Rules on Criminal Procedure (2000 Rules of Criminal Procedure) — States that the criminal action for violation of B.P. Blg. 22 shall be deemed to include the corresponding civil action, and no reservation to file such civil action separately shall be allowed; it also governs filing fees and consolidation. The Court interpreted it as not prohibiting a separate civil action against the juridical person on whose behalf the check was issued; the prohibition applies to the natural person charged.
• Revised Penal Code, Article 103 — Provides subsidiary civil liability of employers and corporations for felonies committed by their employees in the discharge of their duties. The Court cited it to explain that such subsidiary liability does not apply to B.P. Blg. 22, which is a special law, so the corporation cannot be held subsidiarily liable under that provision.

Leonardo A. Quisumbing, Conchita Carpio Morales, Presbitero J. Velasco, Jr., and Arturo D. Brion concurred. No separate concurring opinions are recounted in the text.