United Coconut Planters Bank v. Antiporda
REITERATIONFacts
The Antecedents: United Coconut Planters Bank (UCPB), through its Legal Services Division Head, filed a Complaint-Affidavit against its former Chairman and Chief Executive Officer, Tirso Antiporda Jr., and its former President and Chief Operating Officer, Gloria Carreon. The complaint alleged that Antiporda and Carreon authorized the payment of bonuses totaling Php 117,872,269.43 to corporate officers and directors between April and July 1998, despite knowledge of substantial losses incurred by UCAP, a subsidiary absorbed by UCPB. UCPB contended that this action was taken in bad faith, with gross negligence, and in violation of UCPB's by-laws, making Antiporda and Carreon liable under Section 31 of the Corporation Code and criminally liable under Section 144. Procedural History: The Department of Justice (DOJ) Task Force initially found probable cause against Antiporda and Carreon. However, the DOJ Secretary, in a Resolution dated July 30, 2008, set aside the Task Force's resolution, finding Section 144 of the Corporation Code inapplicable to Section 31 and that the action had prescribed. The DOJ Secretary directed the withdrawal of the Information filed before the Regional Trial Court. UCPB's motion for reconsideration was denied. UCPB then filed a Petition for Certiorari with the Court of Appeals (CA), which dismissed the petition, affirming the DOJ Secretary's resolutions. The CA also ruled that the action had prescribed under Article 1146 of the Civil Code. UCPB's subsequent motion for partial reconsideration was denied by the CA. The Petition: UCPB filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's Decision and Resolution. The petition raises two main issues: (1) whether the CA erred in ruling that Section 144 of the Corporation Code does not apply to Section 31 thereof; and (2) whether the CA erred in ruling that the action based on Section 31 of the Corporation Code had prescribed. UCPB argues that Section 144, which provides for criminal penalties, should apply because the civil indemnity provided in Section 31 is not a specific penalty within that section. UCPB also contends that the prescriptive period should have commenced from the discovery of the alleged violation through a KPMG audit report in 2003, not from the commission of the act in 1998.
Issue(s)
Whether Section 144 of the Corporation Code applies to violations of Section 31 of the same Code. Whether the action for violation of Section 31 of the Corporation Code had prescribed.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that Section 144 of the Corporation Code does not apply to violations of Section 31, and that the action had prescribed under Article 1146 of the Civil Code. Dispositive Portion: WHEREFORE, the Petition is hereby DENIED. The Decision dated May 24, 2013 and the Resolution dated October 17, 2013 of the Court of Appeals in CA-G.R. S.P. No. 114184 are AFFIRMED.
Ratio Decidendi
On the issue of whether Section 144 of the Corporation Code applies to Section 31 thereof: The Court reiterated its ruling in Ient v. Tullett Prebon (Philippines), Inc., holding that Section 144, which provides penal sanctions for violations of the Corporation Code not otherwise specifically penalized, does not apply to Section 31. Section 31 explicitly provides for civil liability for damages suffered by the corporation, its stockholders, or members. The Court reasoned that the absence of specific language imposing criminal liability in Section 31, and the explicit provision for civil remedies, indicates a legislative intent to limit the consequences of violations of Section 31 to civil actions. Applying the rule of lenity due to textual ambiguity, the Court concluded that Section 144 was not intended to cover Section 31 violations. The Court noted that the Revised Corporation Code (RCC) also maintains similar distinctions, with Section 30 (counterpart of Section 31) providing for civil liability and Section 170 (counterpart of Section 144) covering other violations not specifically penalized, while introducing administrative sanctions under Section 158. On the issue of prescription: The Court affirmed the CA's ruling that the action had prescribed under Article 1146 of the Civil Code. Since the liability under Section 31 is purely civil, the prescriptive period is four years from the commission of the injury. The questioned bonuses were paid in 1998. Even if the Court considered UCPB's theory of actual discovery in 2003 through the KPMG report, the four-year prescriptive period would have lapsed by July 1, 2007. Furthermore, the Court found no factual basis for UCPB's claim of discovery in 2003, as the provided "Executive Summary" of the KPMG report did not mention the unauthorized payment of bonuses. The Court also noted that the payment of bonuses was publicly known, negating the applicability of the discovery rule. Therefore, the filing of the Complaint-Affidavit on July 23, 2007, was beyond the prescriptive period, which had already lapsed 48 calendar months or 4 years from July 31, 1998, the latest release date of the checks.
Main Doctrine
Violations of Section 31 of the Corporation Code, which provide for civil liability for damages, are not covered by the penal sanctions under Section 144 of the same Code. Actions for violations of Section 31 are governed by the prescriptive periods under the Civil Code, specifically Article 1146, which provides for a four-year prescriptive period.