This case clarifies that while a corporate officer who signs a bouncing check may face criminal liability under Batas Pambansa Blg. 22 (B.P. 22), the corporation itself cannot be charged in the criminal case. However, this ruling also affirms that the creditor retains the right to pursue a separate civil action against the corporation to recover the debt. This distinction is crucial for creditors seeking to recover funds from bounced checks issued by corporations, ensuring that their right to recovery is not diminished by procedural technicalities.

The Case of the Bouncing Checks: Can a Corporation Be Held Liable?

In Jaime U. Gosiaco v. Leticia Ching and Edwin Casta, the central issue revolved around recovering funds from bouncing checks issued by ASB Holdings, Inc. (ASB). Petitioner Jaime Gosiaco loaned P8,000,000.00 to ASB, and in return, received checks signed by Leticia Ching, ASB’s Business Development Operation Group Manager. When the checks bounced due to a stop payment order and insufficient funds, Gosiaco filed a criminal complaint for violation of B.P. Blg. 22 against Ching and Edwin Casta. The Metropolitan Trial Court (MTC) acquitted Ching of criminal liability but held her civilly liable as a corporate officer. On appeal, the Regional Trial Court (RTC) exonerated Ching, placing the obligation squarely on ASB. The Court of Appeals (CA) affirmed the RTC’s decision, leading Gosiaco to elevate the case to the Supreme Court.

At the heart of the matter was whether a corporate officer who signed a bouncing check could be held civilly liable under B.P. Blg. 22, and whether a corporation itself could be impleaded in such a case. The petitioner also sought to pierce the corporate veil of ASB, holding its president, Luke Roxas, liable. B.P. Blg. 22, also known as the Bouncing Checks Law, aims to address the issuance of worthless checks, which adversely affects trade and commerce. Section 1 of B.P. Blg. 22 states:

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.

The law penalizes the act of issuing a check without sufficient funds, making it a crime against public order. When a corporate officer issues a worthless check in the corporate name, they may be held personally liable for violating this penal statute. The personal liability of the corporate officer arises from the principle that they cannot hide behind the corporate veil to evade responsibility for their actions. However, the general rule is that a corporate officer who issues a bouncing corporate check can only be held civilly liable if they are convicted in the criminal case.

The Supreme Court recognized that ASB was the entity truly obligated to the petitioner, but the question remained whether ASB could be impleaded in the B.P. Blg. 22 case, given its criminal nature. The Revised Rules on Criminal Procedure state that a criminal action for violation of B.P. Blg. 22 is deemed to include the corresponding civil action, with no separate reservation allowed. However, the Court clarified that these rules do not permit impleading a corporation as an accused in a B.P. Blg. 22 case, as the law does not explicitly provide for it. The Supreme Court emphasized a basic maxim of statutory interpretation, stating that penal laws must be strictly construed against the State and liberally in favor of the accused.

Building on this principle, the Court affirmed that the substantive right of a creditor to recover due and demandable obligations against a debtor-corporation cannot be denied or diminished by procedural rules. While the rules prohibit reserving a separate civil action against the natural person charged with violating B.P. Blg. 22, they do not prohibit such an action against the juridical person (the corporation) on whose behalf the check was issued. Thus, the B.P. Blg. 22 criminal liability of the person who issued the bouncing check is separate from the civil liability of the corporation, arising from the Civil Code. The Court reasoned that B.P. Blg. 22 imposes a civil liability on the signatory distinct from the corporation’s liability for the amount represented by the check, with the confusion arising from the same amount being involved.

To avoid unjust enrichment and ensure fairness, the Supreme Court acknowledged the potential for a plaintiff to recover the check amount in both the B.P. Blg. 22 case and a separate civil action against the corporation. While that was not the case here, the court advised that the Committee on Rules should formulate guidelines to prevent this. Furthermore, the Court acknowledged that the petitioner’s confusion regarding their right to file a civil case against ASB warranted equitable consideration. As such, the petitioner should be exempt from paying filing fees in the civil case against ASB, and prescription should not bar the action if filed promptly after the decision becomes final.

FAQs

What was the key issue in this case?	The key issue was whether a corporate officer who signed a bouncing check could be held civilly liable under B.P. Blg. 22, and whether a corporation itself could be impleaded in a B.P. Blg. 22 case.
Can a corporation be charged in a B.P. Blg. 22 case?	No, the Supreme Court clarified that B.P. Blg. 22 does not provide for the criminal prosecution of a corporation. However, the individual who signed the check on behalf of the corporation can be held liable.
Can a creditor still recover the debt from a corporation if the check bounces?	Yes, despite the inability to implead the corporation in the criminal case, the creditor retains the right to pursue a separate civil action against the corporation to recover the debt.
What is the basis for the civil liability of the corporation?	The civil liability of the corporation arises from the underlying contractual obligation or debt that the check was intended to settle. It’s separate from any civil liability that might be imposed on the signatory of the check under B.P. Blg. 22.
Are there concerns about double recovery?	Yes, the Supreme Court acknowledged the possibility of double recovery (i.e., recovering the check amount in both the B.P. Blg. 22 case against the signatory and a civil case against the corporation). It directed the Committee on Rules to formulate guidelines to prevent this.
What did the Supreme Court say about filing fees in this situation?	Because of previous confusion on the law, the Court waived the filing fees for Gosiaco if he decided to pursue a civil case against ASB. It also ruled the prescriptive period would be counted from the date the decision becomes final.
What does the Bouncing Checks Law aim to do?	B.P. Blg. 22 (Bouncing Checks Law) was enacted to address the circulation of bouncing checks, which adversely affects trade and commerce. It criminalizes the act of issuing checks without sufficient funds.
Can a corporate officer avoid liability by claiming they signed on behalf of the corporation?	No, the Supreme Court has made it clear that a corporate officer who issues a bouncing check in the corporate name may be held personally liable under B.P. Blg. 22.

In conclusion, this case underscores the importance of understanding the distinct liabilities in bouncing check situations involving corporations. While B.P. Blg. 22 primarily targets the individual signatory of the check, creditors are not left without recourse against the corporation itself. They can pursue separate civil actions to recover the amounts owed. This clarification helps ensure that substantive rights to recovery are not hindered by procedural limitations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Gosiaco v. Ching, G.R. No. 173807, April 16, 2009