Commercial Law Case Digest:

EDWARD C. ONG, Petitioner, vs. THE COURT OF APPEALS AND THE PEOPLE OF THE PHILIPPINES, Respondents.

Principle:

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.

Facts:

Petitioner Edward C. Ong filed this petition for review on certiorari to nullify the Decision of the Court of Appeals. The assailed Decision affirmed in toto petitioner’s conviction by the Regional Trial Court of Manila, on two counts of estafa for violation of the Trust Receipts Law, to wit:

In Criminal Case No. 92-101989:

The accused, 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, a corporation duly organized and existing under the laws of the Philippines, that the said accused received in trust from said SOLIDBANK amounting to P2,050,000.00 specified in a Trust Receipt Agreement and covered by a Letter of Credit 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; but said accused, 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.

In Criminal Case No. 92-101990:

The accused, representing ARMAGRI International Corporation, did then and there willfully, unlawfully and feloniously defraud the SOLIDBANK Corporation represented by its Accountant, DEMETRIO LAZARO, a corporation duly organized and existing under the laws of the Philippines, that the said accused received in trust from said SOLIDBANK Corporation the goods, all valued at P2,532,500.00 specified in a Trust Receipt Agreement and covered by a Domestic Letter of Credit in favor of the Metropole Industrial Sales; 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; but said accused, 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 P2,532,500.00 Philippine Currency.

The Court of Appeals ruled that the prosecution need not prove that petitioner is occupying a position in ARMAGRI in the nature of an officer or similar position to hold him the “person(s) therein responsible for the offense.” The Court of Appeals held that petitioner’s admission that his participation was merely incidental still makes him fall within the purview of the law as one of the corporation’s “employees or other officials or persons therein responsible for the offense.” Incidental or not, petitioner was then acting on behalf of ARMAGRI, carrying out the corporation’s decision when he signed the trust receipts.

Issue:

Whether the mere circumstance that petitioner acted as agent and signed for the entrustee corporation, petitioner was necessarily the one responsible for the offense

Ruling:

The Court sustains the conviction of petitioner.

The pivotal issue for resolution is whether petitioner comes within the purview of Section 13 of the Trust Receipts Law which provides:

x x x . If the violation is committed by a corporation, partnership, association or other juridical entities, the penalty provided for in this Decree shall be imposed upon the directors, officers, employees or other officials or persons therein responsible for the offense, without prejudice to the civil liabilities arising from the offense. (Emphasis supplied)

The Court held that petitioner is a person responsible for violation of the Trust Receipts Law.

The Trust Receipts Law is violated whenever the entrustee fails to: (1) turn over the proceeds of the sale of the goods, or (2) return the goods covered by the trust receipts if the goods are not sold.¹⁸ The mere failure to account or return gives rise to the crime which is malum prohibitum.¹⁹ There is no requirement to prove intent to defraud.

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, and 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.

The Trust Receipts Law expressly makes the corporation’s officers or employees or other persons therein responsible for the offense liable to suffer the penalty of imprisonment. In the instant case, petitioner signed the two trust receipts on behalf of ARMAGRI 24 as the latter could only act through its agents. When petitioner signed the trust receipts, he acknowledged receipt of the goods covered by the trust receipts. In addition, petitioner was fully aware of the terms and conditions stated in the trust receipts, including the obligation to turn over the proceeds of the sale or return the goods to the Bank.

True, petitioner acted on behalf of ARMAGRI. However, it is a well-settled rule that the law of agency governing civil cases has no application in criminal cases. When a person participates in the commission of a crime, he cannot escape punishment on the ground that he simply acted as an agent of another party.²⁶ In the instant case, the Bank accepted the trust receipts signed by petitioner based on petitioner’s representations. It is the fact of being the signatory to the two trust receipts, and thus a direct participant to the crime, which makes petitioner a person responsible for the offense.

Petitioner could have raised the defense that he had nothing to do with the failure to account for the proceeds or to return the goods. Petitioner could have shown that he had severed his relationship with ARMAGRI prior to the loss of the proceeds or the disappearance of the goods. Petitioner, however, waived his right to present any evidence, and thus failed to show that he is not responsible for the violation of the Trust Receipts Law.