Case Summary (G.R. No. 209601)
Factual and Procedural Background
UCPB charged its former officers, Antiporda and Carreon, with willful and grossly negligent payment of Php 117,872,269.43 in bonuses without board approval, resulting in claimed losses tied to UCPB Capital, Inc. The DOJ Task Force found probable cause under Section 31 (civil liability for directors’ bad faith or gross negligence) in relation to Section 144 (general penal sanction) of the Corporation Code and filed an Information in Makati RTC (Criminal Case No. 08-1106). The DOJ Secretary reversed this finding, ruling Section 144 does not apply to Section 31 and that the action had prescribed. UCPB’s Rule 65 petition in the Court of Appeals and its motion for partial reconsideration were both denied. UCPB elevated the matter via a Rule 45 petition to the Supreme Court.
Issue 1 – Applicability of Section 144 to Section 31
Section 31 imposes civil liability on directors or officers guilty of bad faith or gross negligence, prescribing joint and several liability for all resulting damages. Section 144 generally penalizes code violations not otherwise specifically penalized, with fines or imprisonment. UCPB contended that damages under Section 31 are not a “penalty” and thus Section 31 is not “specifically penalized,” invoking Section 144. The Supreme Court, citing its decision in Ient v. Tullett Prebon, applied the rule of lenity to resolve textual ambiguity in Section 144. It held that Sections 31 and 34 of the Corporation Code were deliberately framed as civil remedies, not criminal offenses, consistent with common law fiduciary duties and legislative history, and without express penal language. Consequently, Section 144 does not extend to Section 31.
Issue 2 – Prescriptive Period for Section 31 Claims
UCPB argued that, if Section 144 applied, the offense would carry imprisonment and trigger an eight-year prescription under Act No. 3326, beginning upon discovery in 2003. The Court rejected this premise, reiterating that Section 31 imposes purely civil liability governed by the Civil Code. Under Article 1146, actions for injury to rights must be instituted within four years from the wrongful act or discovery. The bonus
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Facts and Antecedent Proceedings
- In July 2007, UCPB’s Legal Services Division filed a Complaint-Affidavit with the DOJ against its former Chairman/CEO Tirso Antiporda and former President/COO Gloria Carreon for violation of Section 31 (civil liability for bad faith or gross negligence) in relation to Section 144 (penal sanctions) of the Corporation Code.
- The complaint alleged that in 1998, despite known substantial losses of its subsidiary UCAP, Antiporda and Carreon authorized and released 50 manager’s checks totaling ₱117,872,269.43 as bonuses without prior board approval and in bad faith or with gross negligence.
- Antiporda and Carreon filed counter- and rejoinder affidavits contesting bad faith, asserting compliance with by-laws, long-standing practice, reliance on audited financial statements showing consolidated net income, absence of board objections by BSP examiners, and prescription of action.
- UCPB replied that the bonus payments were clandestine, defendants were aware of losses, and prescription did not run until discovery via a KPMG special audit report dated June 30, 2003.
- On April 8, 2008, the DOJ Task Force found probable cause for violation of Section 31 with penal sanctions under Section 144, and an Information was filed in RTC Makati.
- Antiporda sought review before the DOJ Secretary, who on July 30, 2008, held that Section 144 did not apply to Section 31, that officers (not directors/trustees) could not incur Section 31 liability, and that the action had prescribed. The Information was ordered withdrawn.
- UCPB’s motion for reconsideration was denied on March 1, 2010, prompting UCPB to file a Rule 65 certiorari petition with the Court of Appeals (CA).
Procedural History and CA Ruling
- The CA, in a May 24, 2013 Decision, dismissed UCPB’s Rule 65 petition, affirming the DOJ Secretary’s resolutions of July 30, 2008 and