TESTATE ESTATE OF IDONAH SLADE PERKINS, deceased. RENATO D.
On June 30 1989, petitioner International Express Travel and Tour
TAYAG, vs. BENGUET CONSOLIDATED, INC.
Idonah Perkins died in New York and left behind her properties.
One of which were two stock certificates covering her shares of stocks of the
Benguet Consolidated Inc (BCI). Said stock certificates were in the
possession of the Country Trust Company of New York, which was the
domiciliary administrator of the Perkin’s estate. Renato Tayag was
appointed the ancillary administrator of Perkin’s properties in the
Philippines.
A dispute arose between Tayag and County Trust as to whom
between them is entitled to possess the stock certificates covering Perkin’s
shares of stocks in BCI. RTC ordered County Trust to turn over the stock
certificates to Tayag, however they refused. Tayag filed in court a petition
to have said stock certificates be declared lost and compel BCI issue new
stock certificates in replacement thereof. RTC granted Tayag’s petition.
BCI assailed RTC’s order because said stock certificates are not
really lost, also that according to BCI’s by-laws, it can only issue new stock
certificates in lieu of lost, stolen, or destroyed certificates of stocks, only
after court has issued a final and executory order as to who really owns the
certificates.
Whether BCI can refuse RTC’s orders?
No. BCI is a corporation who owes its existence to the state, to the Philippine
laws. Court held that a corporation is a creature without any existence until
it has received imprimatur of the state acting according to law. It is not
immune from judicial control. To assert that it can choose w/c court order
to follow and w/c to disregard is to confer upon it not autonomy w/c may
be conceded but license w/c cannot be tolerated. It may overrule the state,
the source of its existence.
INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC., petitioner,
vs. HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINE FOOTBALL
FEDERATION, respondents.
KAPUNAN, J.:
Services, Inc., through its managing director, wrote a letter to the Philippine
Football Federation (Federation), through its president private respondent
Henri Kahn, offering its services as a travel agency to the latter. The offer
was accepted.
Petitioner secured the airline tickets for the trips of the athletes
and officials of the Federation to the South East Asian Games in Kuala
Lumpur as well as various other trips to the People's Republic of China and
Brisbane. The total cost of the tickets amounted to P449,654.83. For the
tickets received, the Federation made two partial payments, both in
September of 1989, in the total amount of P176,467.50.
Petitioner wrote the Federation, requesting payment for the
remaining amount of P265,894.33. On 30 October 1989, the Federation,
through the Project Gintong Alay, paid the amount of P31,603.00.
On 27 December 1989, Henri Kahn issued a personal check in the
amount of P50,000 as partial payment for the outstanding balance of the
Federation. Thereafter, no further payments were made despite repeated
demands.
This prompted petitioner to file a civil case before the Regional Trial
Court of Manila. Petitioner sued Henri Kahn in his personal capacity and as
President of the Federation and impleaded the Federation as an alternative
defendant. Petitioner sought to hold Henri Kahn liable for the unpaid
balance for the tickets purchased by the Federation on the ground that
Henri Kahn allegedly guaranteed the said obligation.
Henri Kahn filed his answer with counterclaim. While not denying
the allegation that the Federation owed the amount P207,524.20,
representing the unpaid balance for the plane tickets, he averred that the
petitioner has no cause of action against him either in his personal capacity
or in his official capacity as president of the Federation. He maintained that
he did not guarantee payment but merely acted as an agent of the
Federation which has a separate and distinct juridical personality.
RTC ruled in favor of the petitioner and declared Henri
Kahn personally liable for the unpaid obligation of the Federation.
Defendant Henri Kahn would have been correct in his contentions
had it been duly established that defendant Federation is a
corporation. The trouble is that neither the plaintiff nor the
defendant Henri Kahn has adduced any evidence proving the
corporate existence of the defendant Federation.
 A voluntary unincorporated association, like defendant Federation
has no power to enter into, or to ratify, a contract. The contract
entered into by its officers or agents on behalf of such association
is not binding on, or enforceable against it. The officers or agents
are themselves personally liable.
Court of Appeals reversed the RTC decision. In finding for Henri Kahn, the
Court of Appeals recognized the juridical existence of the Federation. It
rationalized that since petitioner failed to prove that Henri Kahn guaranteed
the obligation of the Federation, he should not be held liable for the same
as said entity has a separate and distinct personality from its officers.
Whether the Philippine Football Federation is a juridical person?
The CA correctly observed that both R.A. 3135 and P.D. No. 604 recognized
the juridical existence of national sports associations. The powers and
functions granted by RA 3135 and PD 604 to national sports associations
clearly indicate that these entities may acquire a juridical personality. The
power to purchase, sell, lease and encumber property are acts which may
only be done by persons, whether natural or artificial, with juridical
capacity. However, while we agree with the appellate court that national
sports associations may be accorded corporate status, such does not
automatically take place by the mere passage of these laws.
It is a basic postulate that before a corporation may acquire
juridical personality, the State must give its consent either in the form of a
special law or a general enabling act. We cannot agree with the view of the
appellate court and the private respondent that the Philippine Football
Federation came into existence upon the passage of these laws. Nowhere
can it be found in R.A. 3135 or P.D. 604 any provision creating the Philippine
Football Federation. These laws merely recognized the existence of national
sports associations and provided the manner by which these entities may
acquire juridical personality, in Section 11 of R.A. 3135.
The law requires that before an entity may be considered as a
national sports association, such entity must be recognized by the
accrediting organization, the Philippine Amateur Athletic Federation under
R.A. 3135, and the Department of Youth and Sports Development under P.D.
604. This fact of recognition, however, Henri Kahn failed to substantiate.
The attached copy of the constitution and by-laws of the Philippine
Football Federation does not prove that said Federation has indeed been
recognized and accredited by either the Philippine Amateur Athletic
Federation or the Department of Youth and Sports Development.
Accordingly, we rule that the Philippine Football Federation is not
a national sports association within the purview of the aforementioned laws
and does not have corporate existence of its own.
It follows that private respondent Henry Kahn should be held liable
for the unpaid obligations of the unincorporated Philippine Football
Federation. It is a settled principal in corporation law that any person acting
or purporting to act on behalf of a corporation which has no valid existence
assumes such privileges and becomes personally liable for contract entered
into or for other acts performed as such agent. As president of the
Federation, Henri Kahn is presumed to have known about the corporate
existence or non-existence of the Federation.
The doctrine of corporation by estoppel is mistakenly applied by
the CA. The application of the doctrine applies to a third party only when he
tries to escape liability on a contract from which he has benefited on the
irrelevant ground of defective incorporation. In the case at bar, the
petitioner is not trying to escape liability from the contract but rather is the
one claiming from the contract. We cannot subscribe to the position taken
by the appellate court that even assuming that the Federation was
defectively incorporated, the petitioner cannot deny the corporate
existence of the Federation because it had contracted and dealt with the
Federation in such a manner as to recognize and in effect admit its existence.
WEST COAST LIFE INSURANCE CO., vs.
GEO N. HURD, Judge of Court of First Instance
This is an action for the issuance of a writ of prohibition against the
defendant to desist or refrain from further proceedings in a criminal action
pending in that court.
West Coast Life Insurance Co. is a foreign life-insurance
corporation, duly organized under and by virtue of the laws of the State of
California, doing business regularly and legally in the Philippine Islands
pursuant to its laws.
 The assistant prosecuting attorney of Manila filed an information
in a criminal action in the CFI against West Coast and also against John
Northcott and Manuel C. Grey, charging them with libel. The CFI judge issued
a process directed to the plaintiff and the other accused in said criminal
action, summoning them to appear before CFI of Manila to answer the
charge made against them.
Defendant John Nortcott is the general agent and manager for the
Philippine Islands of West Coast Life Insurance Company, and Manuel C.
Grey is the treasurer. West Coast Life Insurance Company, John Northcott,
and Manuel C. Grey, published and distributed to policy holders and
prospective policy holders of Insular Life Insurance Company a malicious
defamation and libel in the Spanish language saying that Insular is in bad
shape.
Whether the Court of First Instance has no power or authority, under the
laws of the Philippine Islands, to proceed against a corporation criminally,
to bring it into court for the purpose of making it amenable to the criminal
laws?
The court does not believe that the authority of the courts of the Philippine
Islands extends so far. Under the circumstances of West Coast Insurance’s
creation, they have only such authority in criminal matters as is expressly
conferred upon them by statute or which it is necessary to imply from such
authority in order to carry out fully and adequately the express authority
conferred. The Courts of First Instance have no authority to create new
procedure and new processes in criminal law. The exercise of such power
verges too closely on legislation.
No case has been cited to the court where a corporation has been
proceeded against under a criminal statute where the court did not exercise
its common law powers or where there was not in force a special procedure
applicable to corporations. The courts of the Philippine Islands are creatures
of statute and, as we have said, have only those powers conferred upon
them by statute and those which are required to exercise that authority fully
and adequately. The courts here have no common law jurisdiction or
powers. If they have any powers not conferred by statute, expressly or
impliedly, they would naturally come from Spanish and not from common
law sources. It is undoubted that, under the Spanish criminal law and
procedure, a corporation could not have been proceeded against criminally,
as such. The courts derive no authority to bring corporations before them in
criminal actions, nor to issue processes for that purpose.
The case was submitted to this Court on an agreed statement of facts with
a stipulation for a decision upon the merits. We are of the opinion that the
plaintiff is entitled, under that stipulation, to the remedy prayed for.
THE PEOPLE OF THE PHILIPPINE ISLANDS vs.
TAN BOON KONG
This is an appeal from an order charging defendant Tan Boon Kong with the
violation of section 1458 of Act No. 2711 as amended.
In 1924, Tan Boon Kong, as corporation organized under the laws of the
Philippine Islands and engaged in the purchase and the sale of sugar,
"bayon," coprax, and other native products voluntarily, illegally, and
criminally failed to declare for the purpose of taxation the amount of
P190,541.50, and voluntarily and illegally not paying the Government as
internal-revenue percentage taxes the sum of P2,960.12, corresponding to
1½ per cent of said undeclared sales.
Whether the defendant, as manager of the corporation, can be held
criminally liable under section 2723 of Act No. 2711 for violation of section
1458 of the same act for the benefit of said corporation?
SEC. 2723. Failure to make true return of receipts and sales. — Any person
who, being required by law to make a return of the amount of his receipts,
sales, or business, shall fail or neglect to make such return within the time
required, shall be punished by a fine not exceeding two thousand pesos or
by imprisonment for a term not exceeding one year, or both.
And any such person who shall make a false or fraudulent return shall be
punished by a fine not exceeding ten thousand pesos or by imprisonment
for a term not exceeding two years, or both. (Act No. 2711.)
Apparently, the appellate court based its appealed ruling on the ground that
the offense charged must be regarded as committed by the corporation and
not by its officials or agents. This view is in direct conflict with the great
weight of authority. A corporation can act only through its officers and
agents, and where the business itself involves a violation of the law, the
correct rule is that all who participate in it are liable.
PEOPLE OF THE PHILIPPINES vs. BULU CHOWDURY
PUNO, J.:
Bulu Chowdury and Josephine Ong were charged before the RTC of
Manila with the crime of illegal recruitment in large scale, three counts of
estafa committed against private complainants. The State Prosecutor,
however, later dismissed the estafa charges against Chowdury and filed an
amended information indicting only Ong for the offense.
The prosecution presented four witnesses: Aser Sasis, Estrella Calleja and
Melvin Miranda, and Labor Employment Officer Abbelyn Caguitla.
For his defense, Chowdury testified that he worked as interviewer
at Craftrade from 1990 until 1994. His primary duty was to interview job
applicants for abroad. As a mere employee, he only followed the
instructions given by his superiors, Mr. Emmanuel Geslani, the agencys
President and General Manager, and Mr. Utkal Chowdury, the agency's
Managing Director. Chowdury admitted that he interviewed private
complainants on different dates. Their office secretary handed him their bio-
data and thereafter he led them to his room where he conducted the
interviews. During the interviews, he had with him a form containing the
qualifications for the job and he filled out this form based on the applicant's
responses to his questions. He then submitted them to Mr. Utkal Chowdury
who in turn evaluated his findings. He never received money from the
applicants. He resigned from Craftrade on November 12, 1994.
Another defense witness, Emelita Masangkay who worked at the
The trial court found Chowdury guilty beyond reasonable doubt of the
crime of illegal recruitment in large scale. Chowdury appealed.
The last paragraph of Section 6 of Republic Act (RA) 8042
states who shall be held liable for the offense, thus:
"The persons criminally liable for the above offenses are the
principals, accomplices and accessories. In case of juridical
persons, the officers having control, management or direction of
their business shall be liable."
The Revised Penal Code which supplements the law on illegal recruitment
defines who are the principals, accomplices and accessories. Citing the
second sentence of the last paragraph of Section 6 of RA 8042, accused-
appellant contends that he may not be held liable for the offense as he was
merely an employee of Craftrade and he only performed the tasks assigned
to him by his superiors. He argues that the ones who should be held liable
for the offense are the officers having control, management and direction
of the agency.
As stated in the first sentence of Section 6 of RA 8042, the persons who may
be held liable for illegal recruitment are the principals, accomplices and
accessories. An employee of a company or corporation engaged in illegal
recruitment may be held liable as principal, together with his employer, if it
is shown that he actively and consciously participated in illegal recruitment.
It has been held that the existence of the corporate entity does not shield
from prosecution the corporate agent who knowingly and intentionally
causes the corporation to commit a crime. The corporation obviously acts,
and can act, only by and through its human agents, and it is their conduct
which the law must deter. The employee or agent of a corporation engaged
in unlawful business naturally aids and abets in the carrying on of such
business and will be prosecuted as principal if, with knowledge of the
business, its purpose and effect, he consciously contributes his efforts to its
conduct and promotion, however slight his contribution may be. No man
can escape punishment when he participates in the commission of a crime
upon the ground that he simply acted as an agent of any party. The
culpability of the employee therefore hinges on his knowledge of the
offense and his active participation in its commission. Where it is shown that
the employee was merely acting under the direction of his superiors and was
unaware that his acts constituted a crime, he may not be held criminally
liable for an act done for and in behalf of his employer.
Whether Chowdury knowingly and intentionally participated in the
commission of the crime charged?
No. At that time, Chowdury interviewed private complainants, he was
employed as interviewer of Craftrade which was then operating under a
temporary authority given by the POEA pending renewal of its license, which
included the authority to recruit workers. He was convicted based on the
fact that he was not registered with the POEA as employee of Craftrade.
Neither was he, in his personal capacity, licensed to recruit overseas
workers.
Prosecution failed to prove that Chowdury was aware of
Craftrade's failure to register his name with the POEA and that he actively
engaged in recruitment despite this knowledge. The obligation to register its
personnel with the POEA belongs to the officers of the agency. A mere
employee of the agency cannot be expected to know the legal requirements
for its operation. The evidence at hand shows that accused-appellant carried
out his duties as interviewer of Craftrade believing that the agency was duly
licensed by the POEA and he, in turn, was duly authorized by his agency to
deal with the applicants in its behalf. Applicants’ payments were received by
the agency's cashier, Josephine Ong. Furthermore, he performed his tasks
under the supervision of its president and managing director.
ALFREDO CHING vs.
THE SECRETARY OF JUSTICE, ASST. CITY PROSECUTOR ECILYN BURGOS-
VILLAVERT, JUDGE EDGARDO SUDIAM, RCBC and THE PEOPLE OF THE
PHILIPPINES
Alfredo Ching was the Senior Vice-President of Philippine Blooming
Mills, Inc. (PBMI). PBMI, through Ching, applied with the RCBC for the
issuance of commercial letters of credit to finance its importation of
assorted goods, w/c RCBC approved. Letters of credit were issued in favor
of petitioner. The goods were purchased and delivered in trust to PBMI.
Petitioner signed 13 trust receipts, as surety.
Under the receipts, petitioner agreed to hold the goods in trust for
the said bank. In case the goods remained unsold within the specified
period, the goods were to be returned to respondent bank without any need
of demand.
When the trust receipts matured, petitioner failed to return the
goods or their value to RCBC. Thus, RCBC filed a criminal complaint for estafa
against Ching.
In the meantime, the Court rendered judgment in Allied Banking
Corporation v. Ordoñez, holding that the penal provision of P.D. No. 115
encompasses any act violative of an obligation covered by the trust receipt.
The Court also ruled that "the non-payment of the amount covered by a
trust receipt is an act violative of the obligation of the entrustee to pay.
Second time around, the Secretary of Justice issued Resolution No. 250
granting RCBC’s petition stating that the petitioner, as Senior Vice-President
of PBMI, executed the 13 trust receipts and as such, was the one responsible
for the offense. Thus, the execution of said receipts is enough to indict the
Ching as the official responsible for violation of P.D. No. 115.
The Justice Secretary further stated that the respondent bound
himself under the terms of the trust receipts not only as a corporate official
of PBMI but also as its surety; hence, he could be proceeded against in two
(2) ways: first, as surety as determined by the Supreme Court in its decision
in Rizal Commercial Banking Corporation v. Court of Appeals and second, as
the corporate official responsible for the offense under P.D. No. 115, via
criminal prosecution. Moreover, P.D. No. 115 explicitly allows the
prosecution of corporate officers "without prejudice to the civil liabilities
arising from the criminal offense." Thus, according to the Justice Secretary,
following Rizal Commercial Banking Corporation, the civil liability imposed is
clearly separate and distinct from the criminal liability of the accused under
P.D. No. 115.
Whether Ching can be held criminally liable?
Yes. There is no dispute that it was Ching, who as senior vice-president of
PBM, executed the thirteen (13) trust receipts. As such, the law points to
him as the official responsible for the offense. Since a corporation cannot be
proceeded against criminally because it cannot commit crime in which
personal violence or malicious intent is required, criminal action is limited
to the corporate agents guilty of an act amounting to a crime and never
against the corporation itself. Thus, the execution by respondent of said
receipts is enough to indict him as the official responsible for violation of PD
115.
The Court rules that although petitioner signed the trust receipts
merely as Senior Vice-President of PBMI and had no physical possession of
the goods, he cannot avoid prosecution for violation of P.D. No. 115.
The penalty clause of the law, Section 13 of P.D. No. 115 reads:
Section 13. Penalty Clause. The failure of an entrustee to turn over
the proceeds of the sale of the goods, documents or instruments
covered by a trust receipt to the extent of the amount owing to the
entruster or as appears in the trust receipt or to return said goods,
documents or instruments if they were not sold or disposed of in
accordance with the terms of the trust receipt shall constitute the
crime of estafa, punishable under the provisions of Article Three
hundred and fifteen, paragraph one (b) of Act Numbered Three
thousand eight hundred and fifteen, as amended, otherwise known
as the Revised Penal Code. If the violation or offense is committed
 by a corporation, partnership, association or other juridical entities, the power to prevent the act. Moreover, all parties active in promoting a
the penalty provided for in this Decree shall be imposed upon the crime, whether agents or not, are principals.
directors, officers, employees or other officials or persons therein
responsible for the offense, without prejudice to the civil liabilities
arising from the criminal offense.
The crime defined in P.D. No. 115 is malum prohibitum but is classified as
estafa under paragraph 1(b), Article 315 of the Revised Penal Code, or estafa
with abuse of confidence. It may be committed by a corporation or other
juridical entity or by natural persons. However, the penalty for the crime is
imprisonment.
Though the entrustee is a corporation, nevertheless, the law
specifically makes the officers, employees or other officers or persons
responsible for the offense, without prejudice to the civil liabilities of such
corporation and/or board of directors, officers, or other officials or
employees responsible for the offense. The rationale is that such officers or
employees are vested with the authority and responsibility to devise means
necessary to ensure compliance with the law and, if they fail to do so, are
held criminally accountable; thus, they have a responsible share in the
violations of the law.
If the crime is committed by a corporation or other juridical entity, the
directors, officers, employees or other officers thereof responsible for the
offense shall be charged and penalized for the crime, precisely because of
the nature of the crime and the penalty therefor. A corporation cannot be
arrested and imprisoned; hence, cannot be penalized for a crime punishable
by imprisonment. However, a corporation may be charged and prosecuted
for a crime if the imposable penalty is fine. Even if the statute prescribes
both fine and imprisonment as penalty, a corporation may be prosecuted
and, if found guilty, may be fined.
If the State, by statute, defines a crime that may be committed by
a corporation but prescribes the penalty therefor to be suffered by the
officers, directors, or employees of such corporation or other persons
responsible for the offense, only such individuals will suffer such penalty.
Corporate officers or employees, through whose act, default or omission the
corporation commits a crime, are themselves individually guilty of the crime.
It applies to those corporate agents who themselves commit the crime and
to those, who, by virtue of their managerial positions or other similar
relation to the corporation, could be deemed responsible for its
commission, if by virtue of their relationship to the corporation, they had