III. NATURE AND ATTRIBUTES OF A CORPORATION (5.

Corporate Criminal Liability)

West Coast Life Ins. Co. v. Hurd, G.R. L-8527, March 30, 1914

Facts:
 West Coast Life Insurance, a foreign life insurance corporation doing business regularly and legally in the Philippine Islands
pursuant to its laws
 Plaintiff in CFI criminal action together with:
1. John Northcott – general agent and manager for the Philippines
2. Manuel C. Grey – was an agent and employees and acting in the capacity of treasurer of the branch
 Charged for printing, publish and distributing a large number of circulars to policy holders and prospective policy holders of
Insular Life Insurance Co. stating that the rumor about it is true regarding it being in a bad shape and its capital has
diminished

Issue: WON West Coast Life Insurance should also be criminally charged.

Held: NO.
 Provisions clearly indicate that the maker of the code of Criminal Procedure had no intention that corporations would be
included
 Court only authorized to issue order of arrest; Court derives no authority to brig corporations before them in criminal
actions nor to issue processes for that purpose
 Corporation lack malicious intent

Sia v. People of the Philippines, G.R. No. L-30896, April 28, 1983

Facts:
Petitioner, Jose O. Sia, was the president and general manager of Metal Manufacturing of the Philippines (MEMAP). He was
convicted of estafa for his failure to return the cold rolled steel sheets or account for the proceeds of those which were sold, to
Continental Bank, herein complainant. Petitioner contended that he cannot be made liable for the crime charged as he only acted
for and in behalf of MEMAP as its president.

Issue: Whether petitioner could be held liable for estafa.

Held: The Court ruled in the negative.

The case of People vs. Tan Boon Kong (54 Phil. 607) provides for the general principle that for crimes committed by a corporation,
the responsible officers thereof would personally bear the criminal liability as a corporation is an artificial person, an abstract being.
However, the Court ruled that such principle is not applicable in this case because 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. The act is imposed by agreement of parties, as a
practice observed in the usual pursuit of a business or a commercial transaction. The offense may arise, if at all, from the peculiar
terms and condition agreed upon by the parties to the transaction, not by direct provision of the law. 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. In all criminal prosecutions, the existence of criminal liability for which
the accused is made answerable must be clear and certain. Further, the civil liability imposed by the trust receipt is exclusively on
the Metal Company. Speaking of such liability alone, 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.

Ong v. CA, G.R. No. 119858, April 29, 2003

Facts:
That on or about July 23, 1990, Benito Ong, representing ARMAGRI International Corporation, conspiring and confederating together
did then and there willfully, unlawfully and feloniously defraud the SOLIDBANK Corporation represented by its Accountant,
DEMETRIO LAZARO, in the following manner, to wit: the said accused received in trust from said SOLIDBANK Corporation, 10,000
bags of urea valued at P, 2,050,000 specified in a Trust Receipt Agreement and covered by a Letter of Credit No. DOM GD 90-009 in
favor of the Fertiphil Corporation.

Under the express obligation on the part of the said accused to account for said goods to Solidbank Corporation and/or remit the
proceeds of the sale thereof within the period specified in the Agreement or return the goods, if unsold immediately or upon
demand.

However, Ong, once in possession of said goods, far from complying with the aforesaid obligation failed and refused and still fails
and refuses to do so despite repeated demands made upon him to that effect and with intent to defraud, willfully, unlawfully and
feloniously misapplied, misappropriated and converted the same or the value thereof to his own personal use and benefit, to the
damage and prejudice of the said Solidbank Corporation in the aforesaid amount of P2,050,000.00 Philippine Currency.
Petitioner contends that in signing the trust receipts, he merely acted as an agent of ARMAGRI. Petitioner asserts that nowhere in
the trust receipts did he assume personal responsibility for the undertakings of ARMAGRI which was the entrustee.

Issue: Whether ARMAGRI Corp. violated the Trust Receipts Law

Held: No, ARMGAGRI Corp. did not violate the Trust Receipts Law.

The Supreme Court held that the Trust Receipts Law recognizes the impossibility of imposing the penalty of imprisonment on a
corporation. Hence, if the entrustee is a corporation, the law makes the officers or employees or other persons responsible for the
offense liable to suffer the penalty of imprisonment. The reason is obvious: corporations, partnerships, associations and other
juridical entities cannot be put to jail. Hence, the criminal liability falls on the human agent responsible for the violation of the Trust
Receipts Law.
In the instant case, the Bank was the entruster while ARMAGRI was the entrustee. Being the entrustee, ARMAGRI was the one
responsible to account for the goods or its proceeds in case of sale. However, the criminal liability for violation of the Trust Receipts
Law falls on the human agent responsible for the violation.

Petitioner, who admits being the agent of ARMAGRI, is the person responsible for the offense for two reasons. First, petitioner is the
signatory to the trust receipts, the loan applications and the letters of credit. Second, despite being the signatory to the trust
receipts and the other documents, petitioner did not explain or show why he is not responsible for the failure to turn over the
proceeds of the sale or account for the goods covered by the trust receipts.