Atrium Management Corp. v. Court of Appeals

Atrium Management Corporation vs. Court of Appeals

G.R. No. 109491

FACTS OF THE CASE

On January 3, 1983, Atrium Management Corporation filed with the Regional Trial Court, Manila an action for collection of the proceeds of four postdated checks in the total amount of P2 million.  Hi-Cement Corporation through its corporate signatories, petitioner Lourdes M. de Leon,  treasurer, and the late Antonio de las Alas, Chairman, issued checks in favor of E.T. Henry and Co. Inc., as payee. E.T. Henry and Co., Inc., in turn, endorsed the four checks to petitioner Atrium Management Corporation for valuable consideration.

Upon presentment for payment, the drawee bank dishonored all four checks for the common reason “payment stopped”.  Atrium, thus, instituted this action after its demand for payment of the value of the checks was denied.

After due proceedings, on July 20, 1989, the trial court rendered a decision ordering Lourdes M. de Leon, her husband Rafael de Leon, E.T. Henry and Co., Inc. and Hi-Cement Corporation to pay petitioner Atrium, jointly and severally, the amount of P2 million corresponding to the value of the four checks, plus interest and attorney’s fees.

On appeal to the Court of Appeals, on March 17, 1993, the Court of Appeals promulgated its decision modifying the decision of the trial court, absolving Hi-Cement Corporation from liability and dismissing the complaint as against it.  The appellate court ruled that:  Lourdes M. de Leon was not authorized to issue the subject checks in favor of E.T. Henry, Inc.

ISSUE

Whether Lourdes de Leon and Antonio delas Alas should be held personally liable for the checks issued as corporate officers and authorized signatories of the check.

RULING

"Personal liability of a corporate director, trustee or officer along (although not necessarily) with the corporation may so validly attach, as a rule, only when:

“1. He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross negligence in directing its affairs, or (c) for conflict of interest, resulting in damages to the corporation, its stockholders or other persons;

“2. He consents to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto;

“3. He agrees to hold himself personally and solidarily liable  with the corporation; or

“4. He is made, by a specific provision of law, to personally answer for his corporate action.”

In the case at bar, Lourdes M. de Leon and Antonio de las Alas as treasurer and Chairman of Hi-Cement were authorized to issue the checks.  However, Ms. de Leon was negligent when she signed the confirmation letter requested by Mr. Yap of Atrium and Mr. Henry of E.T. Henry for the rediscounting of the crossed checks issued in favor of E.T. Henry.  She was aware that the checks were strictly endorsed for deposit only to the payee’s account and not to be further negotiated.  What is more, the confirmation letter contained a clause that was not true, that is, “that the checks issued to E.T. Henry were in payment of Hydro oil bought by Hi-Cement from E.T. Henry”.  Her negligence resulted in damage to the corporation.  Hence, Ms. de Leon may be held personally liable therefor.