FACTS : Marilyn Nite, President of Bancapital Development Corporation (Bancap), was charged with (1) violation of Section 19 of Batas Pambansa Blg. 178 for selling ₱250 million worth of treasury bills to Bank of Commerce (Bancom) without being registered as a broker, dealer, or salesman, and (2) Estafa for allegedly deceiving Bancom into paying ₱243.2 million for treasury bills that Bancap did not possess, delivering only ₱88 million worth of substitute treasury bills and failing to deliver the remaining ₱162 million. After a separate trial, the Regional Trial Court acquitted Nite of both criminal charges, finding that Bancap acted only as a secondary dealer, which did not require registration under Section 19 of BP Blg. 178, and that the element of deceit required for estafa was absent because Bancom knew the treasury bills were not yet in Bancap’s possession at the time of the transaction.
Although the RTC initially held Nite civilly liable for the ₱162 million undelivered treasury bills as Bancap’s responsible officer, it later reversed itself upon reconsideration. The court ruled that Bancap’s Articles of Incorporation authorized it to engage in the buying and selling of government securities as a secondary purpose, and that even if the transaction were ultra vires, it was not illegal. Applying the doctrine of separate corporate personality, the RTC held that there was no sufficient basis to pierce the corporate veil, as there was no evidence that Bancap was merely used to perpetrate fraud or injustice. Consequently, Nite was absolved of civil liability.
On appeal, the Court of Appeals affirmed the RTC. It held that Bancom’s claim arose from Bancap’s contractual obligation, not Nite’s personal liability, and that the corporation’s separate juridical personality could not be disregarded absent grounds for piercing the corporate veil. The CA further noted that Bancap itself and its other officers were not impleaded, making it improper to impose the corporation’s obligations solely upon Nite. It ruled that Bancom’s proper remedy was to file a separate civil action against Bancap and the appropriate parties, prompting Bancom to elevate the case to the Supreme Court.
ISSUE : WON the CA is correct
HELD : The Supreme Court denied Bancom’s petition and upheld the Court of Appeals’ ruling that Marilyn Nite was not personally liable for Bancap’s contractual obligation. The Court reiterated the rule that a corporation has a separate and distinct juridical personality, and under Section 31 of the Corporation Code, a director or officer may be held personally liable only if it is clearly alleged and convincingly proven that they assented to patently unlawful acts, or acted with gross negligence or bad faith. Since these requisites were not established, the corporate obligation could not be imposed on Nite personally.
The Court emphasized that the transaction between Bancom and Bancap was an ordinary contract of sale of treasury bills, from which Bancap’s liability arose. Nite’s signing of the Confirmation of Sale as Bancap’s President did not, by itself, make her personally liable. Moreover, her acquittal for estafa, which had become final, conclusively established the absence of deceit or fraud, thereby foreclosing any claim that she acted in bad faith. The Court also agreed with the lower courts that Bancap acted as a secondary dealer, which did not require accreditation under Section 19 of BP Blg. 178; thus, the sale was, at most, ultra vires and not patently unlawful. Accordingly, there was no basis to pierce the corporate veil or hold Nite personally liable for Bancap’s debt.
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