G.R. No. 244213 - Land Bank of the Philippines vs. De Jesus-Macaraeg

Case Summary (G.R. No. 244213)

Petitioner and Respondents

Petitioner: United Coconut Planters Bank (UCPB). Respondents: Secretary of Justice (Office of the Chief Prosecutor), and private individuals Tirso Antiporda, Jr. and Gloria Carreon, who were sued in their capacities as corporate officers/directors of UCPB at the time of the alleged conduct.

Key Dates

Alleged wrongful payments: 6 April to 31 July 1998 (50 manager’s checks totaling Php 117,872,269.43). KPMG special audit report (cover/executive summary attached in record): 30 June 2003. UCPB Complaint‑Affidavit filed with DOJ: 23 July 2007. DOJ Task Force Resolution finding probable cause: 8 April 2008; Information filed as Criminal Case No. 08‑1106 before the RTC, Makati. DOJ Secretary’s resolution setting aside Task Force and directing withdrawal of Information: 30 July 2008; denial of reconsideration: 1 March 2010. Court of Appeals decision dismissing UCPB’s certiorari petition: 24 May 2013; CA denial of partial reconsideration: 17 October 2013. UCPB’s Petition for Review on Certiorari (Rule 45) to the Supreme Court: filed 13 December 2013. Supreme Court decision: January 12, 2021.

Applicable Law and Legal Framework

Constitution applicable per instruction and decision date: 1987 Philippine Constitution.
Corporation Code (Batas Pambansa Blg. 68) — provisions at issue: Section 31 (liability of directors/trustees/officers; civil liability for damages) and Section 144 (penalties for violations of the Code not otherwise specifically penalized).
Revised Corporation Code (Republic Act No. 11232) repealed the old Corporation Code effective 23 February 2019; counterparts: Section 30 (liability) and Section 170 (other violations; separate liability).
Civil Code: Article 1146 (four‑year prescriptive period for actions upon an injury to rights).
Act No. 3326 (1926): prescriptive rules for violations penalized by special acts (differentials depending on imprisonment/fine).
Under the RCC, SEC administrative sanctions: Section 158.

Factual Background and Procedural History

UCPB alleged that Antiporda and Carreon, top officers of UCPB, authorized and caused release of 50 manager’s checks as bonuses in 1998 despite UCAP (a wholly owned subsidiary) suffering substantial losses and despite bylaws requiring board authority for bonus declarations. UCPB contended the payments were made in bad faith and with gross negligence, invoking Section 31 of the Corporation Code and seeking application of Section 144 for criminal penalties. Antiporda and Carreon submitted counter- and rejoinder affidavits asserting good faith reliance on financial statements, long‑standing bank practice of paying bonuses without board resolutions, lack of knowledge of the losses, and prescription. UCPB relied on a special audit (KPMG) dated June 30, 2003 as basis for discovery. The DOJ Task Force found probable cause and an Information was filed; Antiporda sought administrative relief from the DOJ Secretary, who ruled (30 July 2008) that Section 144 did not apply to Section 31 and that the action had prescribed, directing withdrawal of the Information; denial of reconsideration followed (1 March 2010). UCPB’s certiorari to the CA was dismissed (24 May 2013) and motion for partial reconsideration denied (17 October 2013). UCPB then filed a Rule 45 petition to the Supreme Court.

Issues Presented

Whether Section 144 of the Corporation Code applies to violations of Section 31 (i.e., whether the civil remedy under Section 31 is a penalty “specifically penalized” so as to exclude application of Section 144).
Whether the action based on Section 31 had prescribed.

Supreme Court’s Holding — Overview

The Supreme Court affirmed the Court of Appeals and the DOJ Secretary: (1) Section 144 of the Corporation Code does not apply to Section 31; Section 31 imposes civil liability (damages) and is not “specifically penalized” in the criminal sense such that Section 144 should reach it; (2) the action based on Section 31 had prescribed under Article 1146 (Civil Code) and UCPB’s complaint was time‑barred.

Legal Analysis — Applicability of Section 144 to Section 31

Precedent: The Court relied on its prior decision in Ient v. Tullett Prebon (Philippines), Inc. where it interpreted Section 144 as ambiguous and applied the rule of lenity to conclude Section 144 does not encompass Section 31 (and Section 34) violations. The rationale emphasized textual ambiguity, legislative history, and common‑law origins of fiduciary duties where remedies are civil rather than penal.
Statutory construction: Sections 31–34 were enacted to define fiduciary duties and civil consequences (damages, accounting for profits). The legislative deliberations showed focus on civil liabilities and did not manifest intent to criminalize such breaches. Where penalization is intended, Congress uses clear categorical language (illustrated by other provisions of the Code, e.g., Section 74). Applying Section 144 to Section 31 would be an unwarranted extension inconsistent with strict construction of penal laws.
Effect of the Revised Corporation Code: The RCC retains the operative phrase “not otherwise specifically penalized therein” in Section 170 and similarly frames Section 30’s civil liabilities; the Court observed RCC’s Section 158 now authorizes SEC administrative sanctions, but this statutory evolution does not alter the Court’s interpretation that Section 144 (and its RCC counterpart) do not subsume Section 31 (Section 30 RCC) so as to convert civil liabilities into criminal penalties without clear legislative intent.

Legal Analysis — Prescription (Statute of Limitations)

Nature of liability: Because Section 31 imposes civil liability (damages) rather than criminal punishment, the prescriptive period is governed by the Civil Code (Article 1146) and not by Act No. 3326’s criminal prescription scheme which would apply if Section 144 (with imprisonment) had applied. Article 1146 prescribes a four‑year period for actions “upon an injury to the rights of the plaintiff.”
Computation: The manager’s checks were last released on 31 July 1998. Applying Article 1146, the action would have prescribed four years from the date of injury; UCPB filed its Complaint‑Affidavit on 23 July 2007, well beyond the four‑year period. Even accepting UCPB’s assertion that it only discovered the wrongful payments upon the KPMG special audit (dated 30 June 2003), four years from that discovery would have run by 30 June/1 July 2007, and the complaint filed 23 July 2007 was still beyond the four‑year window.
Interruption: The filing of a Complaint‑Affidavit with the DOJ did not interrupt prescription under Article 1155 because: (a) it was filed with the prosecutorial office,

Case Syllabus (G.R. No. 244213)

Procedural Posture

Petition for Review on Certiorari under Rule 45 filed by United Coconut Planters Bank (UCPB) assailing: (a) Decision dated May 24, 2013 and (b) Resolution dated October 17, 2013 of the Court of Appeals (CA) in CA-G.R. S.P. No. 114184.
The CA Decision dismissed UCPB’s Rule 65 petition for certiorari, affirmed the Department of Justice (DOJ) Secretary’s Resolutions dated July 30, 2008 and March 1, 2010; the CA Resolution denied UCPB’s motion for partial reconsideration.
Background administrative criminal proceedings: Complaint-affidavit filed with DOJ on July 23, 2007 (I.S. No. 2007-633) resulting in a DOJ Task Force Resolution dated April 8, 2008 finding probable cause; corresponding Information filed as Criminal Case No. 08-1106 before the Regional Trial Court, Makati.
UCPB sought review of the DOJ Task Force Resolution before the DOJ Secretary; DOJ Secretary issued Resolution dated July 30, 2008 setting aside the Task Force Resolution and ordering withdrawal of the Information; Motion for Reconsideration denied in Resolution dated March 1, 2010.
UCPB filed Rule 65 certiorari petition before the Court of Appeals; CA dismissed petition and affirmed DOJ Secretary’s resolutions; CA denied UCPB’s partial reconsideration in its October 17, 2013 Resolution.
UCPB filed Rule 45 certiorari petition before the Supreme Court (G.R. No. 209601); parties filed comments, rejoinders, and memoranda before the Supreme Court.

Parties and Roles

Petitioner: United Coconut Planters Bank (UCPB).
Respondents: Secretary of Justice, Office of the Chief Prosecutor, and private respondents Tirso Antiporda, Jr. (Antiporda) and Gloria Carreon (Carreon).
Antiporda: formerly UCPB’s Chairman and Chief Executive Officer (Chairman/CEO) at time of alleged acts.
Carreon: formerly UCPB’s President and Chief Operating Officer (President/COO) at time of alleged acts.
UCPB Capital, Inc. (UCAP): wholly owned subsidiary of UCPB engaged in trading, underwriting of securities and syndication of loans from 1996 to 1998; absorbed by UCPB by board resolution effective March 31, 1998.

Facts (as narrated by the CA and in the record)

UCAP had liabilities (alleged figures vary in the record): UCPB alleged liabilities amounted to Php 4.4 billion when UCAP was absorbed; Antiporda and Carreon disputed an immediate loss of that magnitude in 1997-1998 and referred to other figures and accounting treatments.
In 1998, Antiporda and Carreon allegedly authorized payment of bonuses to some UCPB corporate officers and directors through 50 manager’s checks amounting to Php 117,872,269.43, released from April 6 to July 31, 1998.
UCPB alleged bonuses were declared in bad faith, with gross negligence, and in violation of UCPB by-laws requiring board authority prior to declaration, rendering Antiporda and Carreon liable under Section 31 in relation to Section 144 of the Corporation Code.
Antiporda’s factual and legal contentions included: actions were in good faith; reliance on audited financial statements, by-laws and policies; longstanding bank practice of paying bonuses without board resolution; 1997 consolidated net income of Php 2.115 billion provided basis for bonuses; absence of evidence that losses of Php 4.4 billion existed in 1997; prescription defense.
Carreon’s contentions included: by-laws expressly authorized bonuses; long-established policy and practice justified grant; financial statements for 1997-1998 contradicted alleged substantial losses; she had limited participation in bonus approval and distribution; auditors and BSP examiners never questioned lack of board resolution; presumption of regular performance of duties; prescription defense.
UCPB’s consolidated reply alleged surreptitious release of bonuses without board approval; Antiporda and Carreon were aware of UCAP’s losses and participated in relevant board meetings; denial of factual defenses; assertion that action had not prescribed because reckoning should be from discovery via KPMG special audit report dated June 30, 2003.
Antiporda and Carreon filed rejoinders reiterating long-standing practice, reliance on 1997 profits, lack of auditors’ findings against them, and prescription arguments; Carreon specifically maintained the action had prescribed because records would have been available in October 1998.

Issues Presented to the Supreme Court

Whether the Court of Appeals erred in ruling that Section 144 of the Corporation Code does not apply to Section 31 thereof (i.e., whether Section 144’s penal sanctions can be applied to alleged violations under Section 31).
Whether the Court of Appeals erred in ruling that the action based on Section 31 of the Corporation Code had prescribed.

Statutory Provisions at Issue (as quoted in the decision)

Section 31, Corporation Code (liability of directors, trustees or officers): prescribes joint and several civil liability for willful, knowing assent to patently unlawful acts, gross negligence or bad faith in directing corporate affairs, and liability as trustee for acquisition of adverse interests—remedies expressed in terms of damages and accounting for profits.
Section 144, Corporation Code (violations of the Code): provides penal sanctions (fine P1,000–P10,000, imprisonment 30 days–5 years, or both) for violations of the Code “not otherwise specifically penalized therein,” and authority to dissolve corporations after notice and hearing; contains provisos preserving actions against responsible directors, trustees or officers.
Revised Corporation Code (RCC) counterparts