PCGG v. Guitierrez

DOCTRINE: As a general rule, a corporation has a separate and distinct personality from those who represent it. Its officers are solidarily liable only when exceptional circumstances exist, such as cases enumerated in Section 31 of the Corporation Code. 

FACTS: Bicolandia Sugar Development Corporation (BISUDECO) is a domestic corporation engaged in the business of sugarcane milling. BISUDECO filed a loan request with Philippine National Bank (PNB) for the issuance of a standby letter of credit which was then approved. Allegedly, at this time, BISUDECO had no sufficient capital and collateral.

When BISUDECO failed to comply with the conditions imposed on the grant of loan, that it must have sufficient capital and collateral, it requested for modifications in the guarantee conditions which PNB approved. BISUDECO still failed to submit and comply with the guarantee conditions. Nonetheless, PNB further accommodated BISUDECO’s modifications in the terms and conditions. 

PNB’s rights, titles and interests were transferred to the Philippine Government through a Deed of Transfer, including the account of BISUDECO. Presidential Ad Hoc Fact-Finding Committee  found that BISUDECO were behest loans due to the following characteristics: a) the accounts were under collateralized; and b) the borrower corporation was undercapitalized.

PCGG filed with the Ombudsman a complaint against private respondents (in their capacities as members of PNB’s Board of Directors and Officers of BISUDECO) for violation of Sections 3(e) and (g) of Republic Act (R.A.) No. 3019 or the Anti-Graft and Corrupt Practices Act but it was dismissed as well as the motion for reconsideration.

ISSUE: Whether or not the Ombudsman acted with grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing PCGG’s Complaint 

HELD: As a general rule, a corporation has a separate and distinct personality from those who represent it. Its officers are solidarily liable only when exceptional circumstances exist, such as cases enumerated in Section 31 of the Corporation Code. The liability of the officers must be proven by evidence sufficient to overcome the burden of proof borne by the plaintiff. Section 31 of the Corporation Code states: 

Sec. 31. Liability of Directors, Trustees or Officers.—Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. 

From the foregoing it can be deduced that personal liability will only attach to a director or officer if they are guilty of any of the following: (1) willfully or knowingly vote or assent to patently unlawful acts of the corporation; (2) gross negligence; or (3) bad faith. PCGG failed to allege in the complaint and in the present petition the particular acts of private respondents which constitutes a violation of Sections 3(e) and (g) of R.A. No. 3019. It is not sufficient for PCGG to merely provide a list of names of the PNB Board members for the years covering the subject loans absent proof of the latter’s individual participation in the approval thereof. 

The Court also ruled that the BISUDECO officers are not criminally liable under Section 3(g) and (e).