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Corporate Law Case Digest: Ching v. Sec. of Justice (2006)

G. R. No. 164317   February 6, 2006
Lessons Applicable: Corp. Officers or employees, through whose act, default or omission the corp. commits a crime, are themselves individually guilty of the crime (Corporate Law)


  • Sept-Oct 1980: PBMI, through Ching, Senior VP of Philippine Blooming Mills, Inc. (PBMI), applied with the Rizal Commercial Banking Corporation (RCBC) for the issuance of commercial letters of credit to finance its importation of assorted goods
  • RCBC approved the application, and irrevocable letters of credit were issued in favor of Ching. 
  • The goods were purchased and delivered in trust to PBMI.  
    • Ching signed 13 trust receipts as surety, acknowledging delivery of the goods
    • Under the receipts, Ching agreed to hold the goods in trust for RCBC, with authority to sell but not by way of conditional sale, pledge or otherwise
      • In case such goods were sold, to turn over the proceeds thereof as soon as received, to apply against the relative acceptances and payment of other indebtedness to respondent bank.
      • In case the goods remained unsold within the specified period, the goods were to be returned to RCBC without any need of demand. 
      • goods, manufactured products or proceeds thereof, whether in the form of money or bills, receivables, or accounts separate and capable of identification - RCBC’s property
  • When the trust receipts matured, Ching failed to return the goods to RCBC, or to return their value amounting toP6,940,280.66 despite demands.
    • RCBC filed a criminal complaint for estafa against petitioner in the Office of the City Prosecutor of Manila.
      • December 8, 1995: no probable cause to charge petitioner with violating P.D. No. 115, as petitioner’s liability was only civil, not criminal, having signed the trust receipts as surety
  • RCBC appealed the resolution to the Department of Justice (DOJ) via petition for review
    • On July 13, 1999:  reversed the assailed resolution of the City Prosecutor
    • execution of said receipts is enough to indict the Ching as the official responsible for violation of P.D. No. 115
  • April 22, 2004: CA dismissed the petition for lack of merit and on procedural grounds
  • Ching filed a petition for certiorari, prohibition and mandamus with the CA
ISSUE: W/N Ching should be held criminally liable.

HELD: YES.  DENIED for lack of merit
  • There is no dispute that it was the Ching executed the 13 trust receipts.  
    • 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
    • execution by Ching of receipts is enough to indict him as the official responsible for violation of PD 115
    • RCBC is estopped to still contend that PD 115 covers only goods which are ultimately destined for sale and not goods, like those imported by PBM, for use in manufacture. 
    • Moreover, PD 115 explicitly allows the prosecution of corporate officers ‘without prejudice to the civil liabilities arising from the criminal offense’ thus, the civil liability imposed on respondent in RCBC vs. Court of Appeals case is clearly separate and distinct from his criminal liability under PD 115
  • Ching’s being a Senior Vice-President of the Philippine Blooming Mills does not exculpate him from any liability
  • 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 for the periods provided in said Article 315.
  • 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 
    • rationale: 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
  • When a criminal statute designates an act of a corporation or a crime and prescribes punishment therefor, it creates a criminal offense which, otherwise, would not exist and such can be committed only by the corporation. But when a penal statute does not expressly apply to corporations, it does not create an offense for which a corporation may be punished.  On the other hand, 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.  The principle applies whether or not the crime requires the consciousness of wrongdoing. 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 the power to prevent the act.  Benefit is not an operative fact.