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SIA V.

PEOPLE
G.R. No. L-30896 April 28, 1983

Petitioner: Jose O. Sia


Respondent: The People of the Philippines
Ponente: De Castro, J.

FACTS:

Petitioner was the President of Metal Manufacturing Company of the


Philippines, Inc. (MEMAP), engaged in the manufacture of steel office equipment.
Sometime in May 1963, he applied for a letter of credit to Continental Bank to
import raw materials from abroad. His application was approved and the letter
of credit was opened on June 1963 in the amount of $18,300. The goods arrived
sometime in July 1963. The date of execution of the trust receipt agreement is
disputed by both parties. However, there is no question that neither petitioner nor
his company paid the account having fallen due despite the bank’s demand.
Hence, Continental Bank filed a complaint for estafa against petitioner and the
fiscal filed the information for estafa before the CFI of Manila. The CFI convicted
petitioner and its decision was affirmed by the CA. Hence, this petition.

ISSUES:

1. Whether petitioner, having only acted for and in behalf of the Metal
Company as President thereof in dealing with the complainant Bank, may
be liable for the crime charged; and

2. Whether the violation of a trust receipt constitutes estafa under Art. 315 (1-
[2]) of the Revised Penal Code.
HELD:

1. NO, he cannot be held liable.

The principle in People vs. Tan Boon Kong that for crimes committed
by a corporation, the responsible officers thereof would personally bear the
criminal liability applies only in a situation where the corporation was
directly required by law to do an act in a given manner, and the same law
makes the person who fails to perform the act in the prescribed manner
expressly liable criminally. The performance of the act is an obligation
directly imposed by the law on the corporation. Since it is a responsible
officer who actually performs the act for the corporation, he must
necessarily be the one to assume the criminal liability; otherwise, this liability
as created by law would be illusory, and the deterrent effect of the law,
negated. Thus, it is not applicable in this case contrary to the view of the
CA.

In the case at bar, the act alleged to be a crime is not in the


performance of an act directly ordained by law to be performed by the
corporation, but rather, an act imposed by agreement of the parties which
is a usual practice in business transactions. In the absence of an express
provision of law making the petitioner liable for the criminal offense
committed by the corporation of which he is a president as in fact there is
no such provisions in the Revised Penal Code under which petitioner is
being prosecuted, the existence of a criminal liability on his part may not
be said to be beyond any doubt. The maxim that all doubts must be
resolved in favor of the accused is always of compelling force in the
prosecution of offenses.
Finally, unlike in Samo vs. People where the accused was acting for
his own behalf and not in behalf of the corporation, the Supreme Court, so
far, has not ruled on the criminal liability of an officer for a corporation
signing in behalf of said corporation a trust receipt of the same nature as
the one involved in this case.

2. NO, violation of a trust receipt does not constitute estafa under Art. 315 (1-
[2]) of the Revised Penal Code.

Since P.D. 115 (Trust Receipts Law) was not yet enacted at the time
of the commission of the offense, the more feasible view was that a trust
receipt agreement gives rise only to civil liability. The transaction being
contractual, the intent of the parties should govern. The parties are
deemed to have consciously entered into a purely commercial transaction
that could give rise only to civil liability, never to subject the "entrustee" to
criminal prosecution. Consequently, if only from the fact that the trust
receipt transaction is susceptible to two reasonable interpretation, one as
giving rise only to civil liability for the violation of the condition thereof, and
the other, as generating also criminal liability, the former should be
adopted as more favorable to the supposed offender.

Likewise, the civil liability imposed by the trust receipt is exclusively on


the Metal Company. Speaking of such liability alone, as one arising from
the contract, as distinguished from the civil liability arising out of a crime,
the petitioner was never intended to be equally liable as the corporation.
Without being made so liable personally as the corporation is, there would
then be no basis for holding him criminally liable, for any violation of the
trust receipt. In the violation of the trust agreement, only the corporation
benefited, not the petitioner personally.

PEOPLE V. QUASHA
G.R. No. L-6055 June 12, 1953

Plaintiff-Appelle: The People of the Philippines


Defendant-Appellant: William H. Quasha
Ponente: Reyes, J.

FACTS:

The accused is a lawyer entrusted with the preparation and registration of


the articles of incorporation of the Pacific Airways Corporation, a domestic
corporation organized for the purpose of engaging in business as a common
carrier.

The articles of incorporation likewise stated: that its capital stock was
P1,000,000, represented by 9,000 preferred and 100,000 common shares, each
preferred share being of the par value of P100 and entitled to 1/3 vote, and each
common share, of the par value of P1 and entitled to one vote; that the amount
capital stock actually subscribed was P200,000; that the subscribers named were
Baylon, the only Filipino, and five other Americans; that Baylon's subscription was
for 1,145 preferred shares and for 6,500 common shares, while the aggregate
subscriptions of the American subscribers were for 200 preferred shares, and
59,000 common shares. Clearly, Baylon did not have the controlling vote because
of the difference in voting power between the preferred shares and the common
shares. The articles of incorporation were accepted for registration and a
certificate of incorporation was issued by the Securities and Exchange
Commission. It is also admitted that the money paid on Baylon’s subscription did
not belong to him but to the Americans subscribers to the corporate stock. The
accused explained that in the process of organization Baylon was made a trustee
for the American incorporators.

Hence, defendant is accused under article 172 paragraph 1, in connection


with article 171, paragraph 4, of the Revised Penal Code for causing it to appear
in the article of incorporation that Baylon, a Filipino citizen, had subscribed to and
was the owner of 60.005 per cent of the subscribed capital stock of the
corporation when the truth is that, as the accused well knew, the owner of the
portion of the capital stock subscribed to by Baylon and the money paid thereon
were American citizens. Further, the purpose for making this false statement was
to circumvent the constitutional mandate that no corporation shall be authorized
to operate as a public utility in the Philippines unless 60 per cent of its capital stock
is owned by Filipinos.

The accused was found guilty after trial. Hence, this appeal.

ISSUE:

Whether the Constitution prohibits the mere formation of a public utility


without 60 per cent of its capital being owned by Filipinos

HELD:
NO. What the Constitution prohibits is the granting of a franchise or other
form of authorization for the operation of a public utility to a corporation already
in existence but without the requisite proportion of Filipino capital. This is obvious
from the context of the constitutional provision that the franchise meant is not the
"primary franchise" that invest a body of men with corporate existence but the
"secondary franchise" or the privilege to operate as a public utility after the
corporation has already come into being.

Further, for a corporation to be entitled to operate a public utility it is not


necessary that it be organized with 60 per cent of its capital owned by Filipinos
from the start. A corporation formed with capital that is entirely alien may
subsequently change the nationality of its capital through transfer of shares to
Filipino citizens. Conversely, a corporation originally formed with Filipino capital
may subsequently change the national status of said capital through transfer of
shares to foreigners. The moment for determining whether a corporation is entitled
to operate as a public utility is when it applies for a franchise, certificate, or any
other form of authorization for that purpose. And that can be done after the
corporation has already come into being and not while it is still being formed. And
at that moment, the corporation must show that it has complied not only with the
requirement of the Constitution as to the nationality of its capital, but also with
other applicable laws.

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