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    Gidwani Vs People Jan 2014

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    yannie11
    The Supreme Court granted the petitioner's appeal and acquitted him of two remaining counts of violating the Bouncing Checks Law. While a corporate officer can generally be held criminally liable for bounced checks issued by the corporation, in this case the Securities and Exchange Commission had issued a lawful order suspending all payments and claims against the corporation prior to the checks being presented for payment. As such, there was a valid reason under the SEC order to stop payment of the checks, and the petitioner could not be held criminally liable for the corporation's civil obligations covered by the checks. However, the right of the party to pursue its claim through other legal remedies remained subject to the SEC rehabilitation proceedings.

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    Gidwani Vs People Jan 2014

    Uploaded by

    yannie11
    344 views2 pages
    The Supreme Court granted the petitioner's appeal and acquitted him of two remaining counts of violating the Bouncing Checks Law. While a corporate officer can generally be held criminally liable for bounced checks issued by the corporation, in this case the Securities and Exchange Commission had issued a lawful order suspending all payments and claims against the corporation prior to the checks being presented for payment. As such, there was a valid reason under the SEC order to stop payment of the checks, and the petitioner could not be held criminally liable for the corporation's civil obligations covered by the checks. However, the right of the party to pursue its claim through other legal remedies remained subject to the SEC rehabilitation proceedings.

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    The Supreme Court granted the petitioner's appeal and acquitted him of two remaining counts of violating the Bouncing Checks Law. While a corporate officer can generally be held criminally liable for bounced checks issued by the corporation, in this case the Securities and Exchange Commission had issued a lawful order suspending all payments and claims against the corporation prior to the checks being presented for payment. As such, there was a valid reason under the SEC order to stop payment of the checks, and the petitioner could not be held criminally liable for the corporation's civil obligations covered by the checks. However, the right of the party to pursue its claim through other legal remedies remained subject to the SEC rehabilitation proceedings.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    344 views2 pages

    Gidwani Vs People Jan 2014

    Uploaded by

    yannie11
    The Supreme Court granted the petitioner's appeal and acquitted him of two remaining counts of violating the Bouncing Checks Law. While a corporate officer can generally be held criminally liable for bounced checks issued by the corporation, in this case the Securities and Exchange Commission had issued a lawful order suspending all payments and claims against the corporation prior to the checks being presented for payment. As such, there was a valid reason under the SEC order to stop payment of the checks, and the petitioner could not be held criminally liable for the corporation's civil obligations covered by the checks. However, the right of the party to pursue its claim through other legal remedies remained subject to the SEC rehabilitation proceedings.

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    © All Rights Reserved
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    of 2

    NARI K. GIDWANI, Petitioner, vs.

    PEOPLE OF THE PHILIPPINES, Respondent.


    G.R. No. 195064; January 15, 2014
    SERENO, CJ:

    FACTS:

     Petitioner is the president of G.G. Sportswear Manufacturing Corporation (GSMC), which is engaged in the export of
    ready-to-wear clothes. GSMC secured the embroidery services of El Grande Industrial Corporation (El Grande) and
    issued on various dates from June 1997 to December 1997 a total of 10 Banco de Oro (BDO) checks as payment for
    the latter’s services worth an aggregate total of ₱1,626,707.62.
     Upon presentment, these checks were dishonored by the drawee bank - closed account.
     El Grande sent three demand letters regarding 8 of the 10 issued checks
     Petitioner wrote to El Grande’s counsel acknowledging receipt of the 8 October demand letter and informing the latter
    6

    that GSMC had filed a Petition with the SEC. It was a Petition for the Declaration of a State of Suspension of Payments,
    for the Approval of a Rehabilitation Plan and Appointment of a Management Committee. 7

     Acting on the Petition, the SEC issued an Order ordering the suspension of all actions, claims, and proceedings against
    GSMC until further order from the SEC. In short, GSMC did not pay El Grande.
     Despite its receipt of GSMC’s letter and explanation, El Grande still presented to the drawee bank BDO Check Nos.
    0000063652 and 0000063653 dated November and December 1997.
     El Grande filed a Complaint charging petitioner with eight counts of violation of B.P. 22 for the checks covering June to
    October 1997. El Grande filed a similar Complaint in December 1997, covering the checks issued in November and
    December 1997. Informations were subsequently filed
     Petitioner’s defenses: (1) the SEC Order of Suspension of Payment legally prevented him from honoring the checks; (2)
    there was no consideration for the issuance of the checks, because the embroidery services of El Grande were of poor
    quality and, hence, were rejected; and (3) he did not receive a notice of dishonor of the checks.
     MTC of Manila found petitioner guilty beyond reasonable doubt of ten counts of violation of B.P. 22.
     RTC affirmed the findings of the MTC
     Petitioner filed with the CA a Petition for Review under Rule 42. CA partly granted the appeal and acquitted petitioner of
    eight counts of violation of B.P. 22, while sustaining his conviction for the two remaining counts
     Petitioner filed his Motion for Partial Reconsideration arguing that: (1) there was no clear evidence showing that he
    acknowledged the Notice of Dishonor of the two remaining checks; (2) the suspension Order of the SEC was a valid
    reason for stopping the payment of the checks; and, (3) as a corporate officer, he could only be held civilly liable.
     CA denied. Hence, this Petition.

    ISSUES:

    A. THE COURT OF APPEALS ERRED IN RULING THAT THE ORDER FOR THE SUSPENSION OF PAYMENT
    ISSUED BY THE SECURITIES AND EXCHANGE COMMISSION IS NOT A VALID REASON TO STOP PAYMENT OF A
    CHECK EVEN IF SUCH ORDER WAS ISSUED PRIOR TO THE PRESENTMENT OF THE SUBJECT CHECKS FOR
    PAYMENT;

    B. THE COURT OF APPEALS ERRED IN FINDING A CORPORATE OFFICER PERSONALLY LIABLE FOR THE CIVIL
    OBLIGATION OF THE CORPORATION. 14

    HELD:

    We find the appeal to be meritorious.

    In convicting petitioner of two counts of violation of B.P. 22, the CA applied Tiong v. Co, in which we said:
    16

    x x x The filing of the case for violation of B.P. Blg. 22 is not a "claim" that can be enjoined within the purview of P.D. No. 902-A.
    True, although conviction of the accused for the alleged crime could result in the restitution, reparation or indemnification of the
    private offended party for the damage or injury he sustained by reason of the felonious act of the accused, nevertheless,
    prosecution for violation of B.P. Blg. 22 is a criminal action. (Emphasis supplied.) The CA furthermore cited Tiong in this wise: 17

    Hence, accused-appellant cannot be deemed excused from honoring his duly issued checks by the mere filing of the petition for
    suspension of payments before the SEC. Otherwise, an absurdity will result such that " one who has engaged in criminal
    conduct could escape punishment by the mere filing of a petition for rehabilitation by the corporation of which he is an officer."
    (Emphasis supplied.)
    However, what the CA failed to consider was that the facts of Tiong were not on all fours with those of the present case and must
    be put in the proper context. In Tiong, the presentment for payment and the dishonor of the checks took place before the
    Petition for Suspension of Payments for Rehabilitation Purposes was filed with the SEC. There was already an obligation to pay
    the amount covered by the checks. The criminal action for the violations of B.P. 22 was filed for failure to meet this obligation.
    The criminal proceedings were already underway when the SEC issued an Omnibus Order creating a Management Committee
    and consequently suspending all actions for claims against the debtor therein. Thus, in Tiong, this Court took pains to
    differentiate the criminal action, the civil liability and the administrative proceedings involved.

    In contrast, it is clear that prior to the presentment for payment and the subsequent demand letters to petitioner, there was
    already a lawful Order from the SEC suspending all payments of claims. It was incumbent on him to follow that SEC Order. He
    was able to sufficiently establish that the accounts were closed pursuant to the Order, without which a different set of
    circumstances might have dictated his liability for those checks.

    Considering that there was a lawful Order from the SEC, the contract is deemed suspended. When a contract is suspended, it
    temporarily ceases to be operative; and it again becomes operative when a condition occurs – or a situation arises – warranting
    the termination of the suspension of the contract.
    18

    In other words, the SEC Order also created a suspensive condition. When a contract is subject to a suspensive condition, its
    birth takes place or its effectivity commences only if and when the event that constitutes the condition happens or is fulfilled.
    Thus, at the time private respondent presented the September and October 1997 checks for encashment, it had no right
    to do so, as there was yet no obligation due from petitioner.

    Consequently, because there was a suspension of GSMC s obligations, petitioner may not be held liable for the civil obligations
    of the corporation covered by the bank checks at the time this case arose. However, it must be emphasized that her non-liability
    should not prejudice the right of El Grande to pursue its claim through remedies available to it, subject to the SEC proceedings
    regarding the application for corporate rehabilitation.

    WHEREFORE, the Petition is hereby GRANTED.

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