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648 SUPREME COURT REPORTS ANNOTATED

Ong vs. Court of Appeals

*
G.R. No. 119858. April 29, 2003.

EDWARD C. ONG, petitioner, vs. THE COURT OF

APPEALS AND THE PEOPLE OF THE PHILIPPINES,
respondents.

Criminal Law; Trust Receipts Law; Elements.—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. The mere
failure to account or return gives rise to the crime which is malum
prohibitum. There is no requirement to prove intent to defraud.
Same; Same; Corporation Law; 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 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

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responsible for the failure to turn over the proceeds of the sale or
account for the goods covered by the trust receipts.

_______________

* FIRST DIVISION.

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Ong vs. Court of Appeals

Same; Same; Same; Estafa; Mere failure by the entrustee to

account for the goods received in trust constitutes estafa; It is a
well-settled doctrine long before the enactment of the Trust
Receipts Law, that the failure to account, upon demand, for funds
or property held in trust is evidence of conversion or
misappropriation.—It is a well-settled doctrine long before the
enactment of the Trust Receipts Law, that the failure to account,
upon demand, for funds or property held in trust is evidence of
conversion or misappropriation. Under the law, mere failure by
the entrustee to account for the goods received in trust constitutes
estafa. The Trust Receipts Law punishes dishonesty and abuse of
confidence in the handling of money or goods to the prejudice of
public order. The mere failure to deliver the proceeds of the sale
or the goods if not sold constitutes a criminal offense that causes
prejudice not only to the creditor, but also to the public interest.
Evidently, the Bank suffered prejudice for neither money nor the
goods were turned over to the Bank.
Same; Same; Same; Same; Agency; It is a well-settled rule
that the law of agency governing civil cases has no application in
criminal cases.—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. 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.
Same; Same; Same; Evidence; An agent could raise the
defense that he had nothing to do with the failure of the
corporation to account for the proceeds or to return the goods, or
could show that he had severed his relationship with the

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corporation prior to the loss of the proceeds or the disappearance of

the goods.—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.
Same; Same; Same; Pleadings and Practice; As an essential
element of estafa with abuse of confidence, it is sufficient that the
Informations specifically allege that the entrustee received the
goods; There is no need to allege in the Informations in what
capacity an agent participated to hold him responsible for the
offense—under the Trust Receipts Law, it is sufficient to allege and
establish the failure of the corporation, whom the agent

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650 SUPREME COURT REPORTS ANNOTATED

Ong vs. Court of Appeals

represented, to remit the proceeds or to return the goods to the

Bank; The existence of the corporate entity does not shield from
prosecution the agent who knowingly and intentionally commits a
crime at the instance of a corporation.—Contrary to petitioner’s
assertions, the Informations explicitly allege that petitioner,
representing ARMAGRI, defrauded the Bank by failing to remit
the proceeds of the sale or to return the goods despite demands by
the Bank, to the latter’s prejudice. As an essential element of
estafa with abuse of confidence, it is sufficient that the
Informations specifically allege that the entrustee received the
goods. The Informations expressly state that ARMAGRI,
represented by petitioner, received the goods in trust for the Bank
under the express obligation to remit the proceeds of the sale or to
return the goods upon demand by the Bank. There is no need to
allege in the Informations in what capacity petitioner participated
to hold him responsible for the offense. Under the Trust Receipts
Law, it is sufficient to allege and establish the failure of
ARMAGRI, whom petitioner represented, to remit the proceeds or
to return the goods to the Bank. When petitioner signed the trust
receipts, he claimed he was representing ARMAGRI. The
corporation obviously acts only through its human agents and it is
the conduct of such agents which the law must deter. The
existence of the corporate entity does not shield from prosecution
the agent who knowingly and intentionally commits a crime at
the instance of a corporation.
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Same; Same; Same; Damages; The person signing the trust

receipt for the corporation is not solidarily liable with the
entrustee-corporation for the civil liability arising from the
criminal offense.—As for the civil liability arising from the
criminal offense, the question is whether as the signatory for
ARMAGRI, petitioner is personally liable pursuant to the
provision of Section 13 of the Trust Receipts Law. In Prudential
Bank v. Intermediate Appellate Court, the Court discussed the
imposition of civil liability for violation of the Trust Receipts Law
in this wise: It is clear that if the violation or offense is committed
by a corporation, partnership, association or other juridical
entities, the penalty shall be imposed upon the directors, officers,
employees or other officials or persons responsible for the offense.
The penalty referred to is imprisonment, the duration of which
would depend on the amount of the fraud as provided for in
Article 315 of the Revised Penal Code. The reason for this is
obvious: corporation, partnership, association or other juridical
entities cannot be put in jail. However, it is these entities which
are made liable for the civil liabilities arising from the criminal
offense. This is the import of the clause ‘without prejudice to the
civil liabilities arising from the criminal offense’. (Emphasis
supplied) In Prudential Bank, the Court ruled that the person
signing the trust receipt for the corporation is not solidarily liable
with the entrustee-corporation for the civil liability arising from
the criminal offense. He may, however, be personally liable if he
bound himself to pay the debt of the corporation under a separate
contract of surety or guaranty.

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Ong vs. Court of Appeals

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

     Barbers, Molina & Tamargo for petitioner.
     The Solicitor General for the People.

CARPIO, J.:

The Case

Petitioner Edward C. Ong1

(“petitioner”) filed this
2
petition
for review on certiorari to nullify the Decision dated 27
October 1994 of the Court3 of Appeals in CA-G.R. C.R. No.
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3
14031, and its Resolution dated 18 April 1995, denying
petitioner’s motion for reconsideration. The 4 assailed
Decision affirmed in toto petitioner’s conviction
5
by the
Regional Trial Court of Manila, Branch 35, on6 two counts
of estafa for violation of the Trust Receipts Law, as follows:

“WHEREFORE, judgment is rendered: (1) pronouncing accused

EDWARD C. ONG guilty beyond reasonable doubt on two counts,
as principal on both counts, of ESTAFA defined under No. 1 (b) of
Article 315 of the Revised Penal Code in relation to Section 13 of
Presidential Decree No. 115, and penalized under the 1st
paragraph of the same Article 315, and sentenced said accused in
each count to TEN (10) YEARS of prision mayor, as minimum, to
TWENTY (20) YEARS of reclusion temporal, as maximum;

(2) ACQUITTING accused BENITO ONG of the crime

charged against him, his guilt thereof not having been
established by the People beyond reasonable doubt;
(3) Ordering accused Edward C. Ong to pay private
complainant Solid Bank Corporation the aggregate sum of
P2,976,576.37 as reparation for the damages said accused
caused to the private complainant, plus the

_______________

1 Under Rule 45 of the Rules of Court.

2 Penned by Associate Justice Antonio M. Martinez with Associate Justices
Fermin A. Martin, Jr. and Conrado M. Vasquez, Jr. concurring, Rollo, pp. 19-29.
3 Rollo, p. 31.
4 In Criminal Case Nos. 92-101989 & 92-101990, entitled “People v. Benito Ong
& Edward C. Ong.”
5 Penned by Judge Ramon Makasiar, CA Records, pp. 10-16.
6 Section 13 of PD No. 115, the Trust Receipts Law.

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Ong vs. Court of Appeals

interest thereon at the legal rate and the penalty of 1%

per month, both interest and penalty computed from July
15, 1991, until the principal obligation is fully paid;
(4) Ordering Benito Ong to pay, jointly and severally with
Edward C. Ong, the private complainant the legal interest
and the penalty of 1% per month due and accruing on the
unpaid amount of P1,449,395.71, still owing to the private
offended under the trust receipt Exhibit C, computed from

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July 15, 1991, until the said unpaid obligation is fully

paid;
(5) Ordering accused Edward C. Ong to pay the costs of these
two actions.
7
SO ORDERED.”

The Charge

Assistant City Prosecutor Dina P. Teves of the City of

Manila charged petitioner and Benito Ong with two counts
of estafa under separate Informations dated 11 October
1991.
In Criminal Case No. 92-101989, the Information indicts
petitioner and Benito Ong of the crime of estafa committed
as follows:

“That on or about July 23, 1990, in the City of Manila,

Philippines, the said 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 located at Juan Luna Street,
Binondo, this City, in the following manner, to wit: the said
accused received in trust from said SOLIDBANK Corporation the
following, to wit:
     10,000 bags of urea
valued at P2,050,000.00 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; 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

_______________

7 CA Records, p. 16.

653

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VOL. 401, APRIL 29, 2003 653

Ong vs. Court of Appeals

benefit, to the damage and prejudice of the said Solidbank

Corporation in the aforesaid amount of P2,050,000.00 Philippine
Currency.
Contrary to law.”

In Criminal Case No. 92-101990, the Information likewise

charges petitioner of the crime of estafa committed as
follows:

“That on or about July 6, 1990, in the City of Manila, Philippines,

the said 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 located
at Juan Luna Street, Binondo, this City, in the following manner,
to wit: the said accused received in trust from said SOLIDBANK
Corporation the following goods, to wit:
     125 pcs. Rear diff. assy RNZO 49”
     50 pcs. Front & Rear diff assy. Isuzu Elof
     85 units 1-Beam assy. Isuzu Spz
all valued at P2,532,500.00 specified in a Trust Receipt
Agreement and covered by a Domestic Letter of Credit No. DOM
GD 90-006 in favor of the Metropole Industrial Sales with address
at P.O. Box AC 219, Quezon City; 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.
Contrary to law.”

Arraignment and Plea

With the assistance of counsel, petitioner and Benito Ong

both pleaded not guilty when arraigned. Thereafter, trial
ensued.

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Version of the Prosecution

The prosecution’s evidence disclosed that on 22 June 1990,

petitioner, 8 representing ARMAGRI International
Corporation (“ARMAGRI”), applied for a letter of credit for
P2,532,500.00 with SOLIDBANK Corporation (“Bank”) to
finance the purchase of differential assemblies from
Metropole Industrial Sales. On 6 July 1990, petitioner,9
representing ARMAGRI, executed a trust receipt
acknowledging receipt from the Bank of the goods valued
at P2,532,500.00.
On 12 July 1990, petitioner and Benito Ong,
representing ARMAGRI, applied for another letter of credit
for P2,050,000.00 to finance the purchase of merchandise
from Fertiphil Corporation. The Bank approved the
application, opened the letter of credit and paid to Fertiphil
Corporation the amount of P2,050,000.00. On 23 July 1990,
petitioner,
10
signing for ARMAGRI, executed another trust
receipt in favor of the Bank acknowledging receipt of the
merchandise.
Both trust receipts contained the same stipulations.
Under the trust receipts, ARMAGRI undertook to account
for the goods held in trust for the Bank, or if the goods are
sold, to turn over the proceeds to the Bank. ARMAGRI also
undertook the obligation to keep the proceeds in the form of
money, bills or receivables as the separate property of the
Bank or to return the goods upon demand by the Bank, if
not sold. In addition, petitioner executed the following
additional undertaking stamped on the dorsal portion of
both trust receipts:

I/We jointly and severally agreed to any increase or decrease in

the interest rate which may occur after July 1, 1981, when the
Central Bank floated the interest rates, and to pay additionally
the penalty of 1% per month until the amount/s or installment/s
due and unpaid 11under the trust receipt on the reverse side hereof
is/are fully paid.

_______________

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8 Formerly ARMCO Industrial Corporation, Rollo, p. 21, CA Decision,

p. 3.
9 Exhibit “B”, Records, p. 103.
10 Exhibit “C”, ibid., p. 104.
11 Exhibits “B-3” & “B-4”, Records, p. 103; Exhibits “C-3” & “C-4”,
Records, p. 104.

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Petitioner signed alone the foregoing additional

undertaking in theTrust Receipt for P2,253,500.00, while
both petitioner and BenitoOng signed the additional
undertaking in the Trust Receipt forP2,050,000.00.
When the trust receipts became due and demandable,
ARMAGRI failed to pay or deliver 12
the goods to the Bank
despite several demand letters. Consequently, as of 31
May 1991, the unpaid account 13
under the first trust receipt
amounted to P1,527,180.66, while the unpaid account 14
under the second trust receipt amounted to P1,449,395.71.

Version of the Defense

After the prosecution rested its case, petitioner and Benito

Ong, through counsel, manifested in open court that they
were waiving their right to present evidence. The15 trial
court then considered the case submitted for decision.

The Ruling of the Court of Appeals

Petitioner appealed his conviction to the Court of Appeals.

On 27 October 1994, the Court of Appeals affirmed the trial
court’s decision in toto. Petitioner filed a motion for
reconsideration but the same was denied by the Court of
Appeals in the Resolution dated 18 April 1995.
The Court of Appeals held that although petitioner is
neither a director nor an officer of ARMAGRI, he certainly
comes within the term “employees or other x x x persons
therein responsible for the offense” in Section 13 of the
Trust Receipts Law. The Court of Appeals explained as
follows:

It is not disputed that appellant transacted with the Solid Bank

on behalf of ARMAGRI. This is because the Corporation cannot by
itself transact business or sign documents it being an artificial

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person. It has to accomplish these through its agents. A

corporation has a personality distinct and separate from those
acting on its behalf. In the fulfillment of its

_______________

12 Exhibits “D”, “H” & “I”, ibid., pp. 105 & 108-A.
13 Exhibit “E”, ibid., p. 106.
14 Exhibit “F”, ibid., p. 107.
15 Records, p. 116.

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purpose, the corporation by necessity has to employ persons to act

on its behalf.
Being a mere artificial person, the law (Section 13, P.D. 115)
recognizes the impossibility of imposing the penalty of
imprisonment on the corporation itself. For this reason, it is the
officers or 16employees or other persons whom the law holds
responsible.

The Court of Appeals ruled that what made petitioner

liable was his failure to account to the entruster Bank what
he undertook to perform under the trust receipts. The
Court of Appeals held that ARMAGRI, which petitioner
represented, could not itself negotiate the execution of the
trust receipts, go to the Bank to receive, return or account
for the entrusted goods. Based on the representations of
petitioner, the Bank accepted the trust receipts and,
consequently, expected17
petitioner to return or account for
the goods entrusted.
The Court of Appeals also 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.
The Court of Appeals further ruled that the prosecution
need not prove that petitioner personally received and
misappropriated the goods subject of the trust receipts.
Evidence of misappropriation is not required under the
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Trust Receipts Law. To establish the crime of estafa, it is

sufficient to show failure by the entrustee to turn over the
goods or the proceeds of the sale of the goods covered by a
trust receipt. Moreover, the bank is not obliged to
determine if the goods came into the actual possession of
the entrustee. Trust receipts are issued to facilitate the
purchase of merchandise. To obligate the bank to examine
the fact of actual possession by the entrustee of the goods
subject of every trust receipt will greatly impede
commercial transactions.

_______________

16 Rollo, pp. 24-25.

17 Ibid., p. 25.

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Hence, this petition.

The Issues

Petitioner seeks to reverse his conviction by contending

that the Court of Appeals erred:

1. IN RULING THAT, BY THE MERE

CIRCUMSTANCE THAT PETITIONER ACTED
AS AGENT AND SIGNED FOR THE ENTRUSTEE
CORPORATION, PETITIONER WAS
NECESSARILY THE ONE RESPONSIBLE FOR
THE OFFENSE; AND
2. IN CONVICTING PETITIONER UNDER
SPECIFICATIONS NOT ALLEGED IN THE
INFORMATION.

The Ruling of the Court

The Court sustains the conviction of petitioner.

First Assigned Error: Petitioner comes within

the purview of Section 13 of the Trust Receipts Law.

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Petitioner contends that the Court of Appeals erred in

finding him liable for the default of ARMAGRI, arguing
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.
Petitioner’s arguments fail to persuade us.
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)

We hold that petitioner is a person responsible for violation

of the Trust Receipts Law.
The relevant penal provision of the Trust Receipts Law
reads:
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658 SUPREME COURT REPORTS ANNOTATED

Ong vs. Court of Appeals

SEC. 13. Penalty Clause.—The failure of the 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 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
criminal offense. (Emphasis supplied)

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
18
covered by the trust receipts if the
goods are not sold. The mere failure to account or return
19
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19
gives rise to the crime which is malum prohibitum.
20
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

_______________

18 Metropolitan Bank and Trust Company v. Tonda, G.R. No. 134436,

16 August 2000, 338 SCRA 254.
19 People v. Nitafan, G.R. Nos. 81559-60, 6 April 1992, 207 SCRA 726.
20 Colinares v. Court of Appeals, G.R. No. 90828, 5 September 2000, 339
SCRA 609.

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VOL. 401, APRIL 29, 2003 659

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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.
The Bank released the goods to ARMAGRI upon
execution of the trust receipts and as part of the loan
transactions of ARMAGRI. The Bank had a right to
demand from ARMAGRI payment or at least a return of
the goods. ARMAGRI failed to pay or return the goods
despite repeated demands by the Bank.
It is a well-settled doctrine long before the enactment of
the Trust Receipts Law, that the failure to account, upon
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demand, for funds or property held 21

in trust is evidence of
conversion or misappropriation. Under the law, mere
failure by the entrustee to account for the goods received in
trust constitutes estafa. The Trust Receipts Law punishes
dishonesty and abuse of confidence in the handling 22
of
money or goods to the prejudice of public order. The mere
failure to deliver the proceeds of the sale or the goods if not
sold constitutes a criminal offense that causes prejudice not 23
only to the creditor, but also to the public interest.
Evidently, the Bank suffered prejudice for neither money
nor the goods were turned over to the Bank.
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 24
signed the
two trust receipts on behalf of ARMAGRI 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, to wit:

_______________

21 Hayco v. Court of Appeals, Nos. L-55775-86, 26 August 1995, 138

SCRA 227; Dayawon v. Badilla, A.M. No. MTJ-00-1309, 6 September
2000, 339 SCRA 702.
22 Supra, see note 18.
23 Supra, see note 20.
24 Exhibits “B-1” & “C-2”, Records, pp. 103 & 104.

660

660 SUPREME COURT REPORTS ANNOTATED

Ong vs. Court of Appeals

Received, upon the TRUST hereinafter mentioned from SOLID-

BANK CORPORATION (hereafter referred to as the BANK), the
following goods and merchandise, the property of said BANK
specified in the bill of lading as follows: x x x and in consideration
thereof, I/we hereby agree to hold said goods in Trust for the said
BANK and as its property with liberty to sell the same for its
account but without authority to make any other disposition
whatsoever of the said goods or any part thereof (or the proceeds
thereof) either by way of conditional sale, pledge, or otherwise.
In case of sale I/we agree to hand the proceeds as soon as
received to the BANK to apply against the relative acceptance (as
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described above) and for the payment of any other indebtedness of

mine/ours to SOLID-BANK CORPORATION.
x x x.
I/we agree to keep said goods, manufactured products, or
proceeds thereof, whether in the form of money or bills,
receivables, or accounts, separate and capable of identification as
the property of the BANK.
I/we further agree to return the goods, documents, or
instruments in the event of their non-sale, upon demand or within
_______ days, at the option of 25the BANK.
x x x. (Emphasis supplied)

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 26
that he simply acted as an
agent of another party. 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.

_______________

25 Exhibits “B” & “C”, Records, pp. 103 & 104.

26 People v. Chowdury, G.R. Nos. 129577-80, 15 February 2000, 325
SCRA 572.

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VOL. 401, APRIL 29, 2003 661

Ong vs. Court of Appeals

There is no dispute that on 6 July 1990 and 27

on 23 July
1990, petitioner signed the two trust receipts on behalf of
ARMAGI. Petitioner, acting on behalf of ARMAGRI,
expressly acknowledged receipt of the goods in trust for the
Bank. ARMAGRI failed to comply with its undertakings
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under the trust receipts. On the other hand, petitioner

failed to explain and communicate to the Bank what
happened to the goods despite repeated demands from the
Bank, As of 13 May 1991, the unpaid account under the
first and second trust receipts amounted
28
to P1,527,180.60
and P1,449,395.71, respectively.

Second Assigned Error: Petitioner’s conviction under

the
allegations in the two Informations for Estafa.

Petitioner argues that he cannot be convicted on a new set

of facts not alleged in the Informations. Petitioner claims
that the trial court’s decision found that it was ARMAGRI
that transacted with the Bank, acting through petitioner as
its agent. Petitioner asserts that this contradicts the
specific allegation in the Informations that it was
petitioner who was constituted as the entrustee and was
thus obligated to account for the goods or its proceeds if
sold. Petitioner maintains that this absolves him from
criminal liability.
We find no merit in petitioner’s arguments.
Contrary to petitioner’s assertions, the Informations
explicitly allege that petitioner, representing ARMAGRI,
defrauded the Bank by failing to remit the proceeds of the
sale or to return the goods despite demands by the Bank, to
the latter’s prejudice. As an essential element of estafa with
abuse of confidence, it is sufficient that the Informations
specifically allege that the entrustee received the goods.
The Informations expressly state that ARMAGRI,
represented by petitioner, received the goods in trust for
the Bank under the express obligation to remit the
proceeds of the sale or to return the goods upon demand by
the Bank. There is no need to allege in the Informations in
what capacity petitioner participated to hold him
responsible for the offense. Under the Trust Receipts Law,
it is sufficient to allege and establish the failure of
ARMAGRI, whom

_______________

27 Supra, see notes 9 & 10.

28 Supra, see notes 13 & 14.

662

662 SUPREME COURT REPORTS ANNOTATED

Ong vs. Court of Appeals
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petitioner represented, to remit the proceeds or to return

the goods to the Bank.
When petitioner signed the trust receipts, he claimed he
was representing ARMAGRI. The corporation obviously
acts only through its human agents and 29it is the conduct of
such agents which the law must deter. The existence of
the corporate entity does not shield from prosecution the
agent who knowingly and intentionally
30
commits a crime at
the instance of a corporation.

Penalty for the crime of Estafa.

The penalty for the crime of estafa is prescribed in Article
315 of the Revised Penal Code, as follows:

1st. The penalty of prision correccional in its maximum period to

prision mayor in its minimum period, if the amount of the fraud is
over 12,000 pesos but does not exceed 22,000 pesos; and if such
amount exceeds the latter sum, the penalty provided in this
paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos; but the total penalty which
may be imposed should not exceed twenty years. x x x.

In the instant case, the amount of the fraud in Criminal

Case No. 92-101989 is P1,527,180.66. In Criminal Case No.
92-101990, the amount of the fraud is P1,449,395.71. Since
the amounts of the fraud in each estafa exceeds P22,000.00,
the penalty of prision correccional maximum to prision
mayor minimum should be imposed in its maximum period
as prescribed in Article 315 of the Revised Penal Code. The
maximum indeterminate sentence should be taken from
this maximum period which has a duration of 6 years, 8
months and 21 days to 8 years. One year is then added for
each additional P10,000.00, but the total penalty should
not exceed 20 years. Thus, the maximum penalty for each
count of estafa in this case should be 20 years.
Under the Indeterminate Sentence Law, the minimum
indeterminate sentence can be anywhere within the range
of the penalty next lower in degree to the penalty
prescribed by the Code for the offense. The minimum range
of the penalty is determined without first considering any
modifying circumstance attendant to the

_______________

29 Supra, see note 26.

30 Supra, see note 26.

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VOL. 401, APRIL 29, 2003 663

Ong vs. Court of Appeals

commission of the crime and without reference 31

to the
periods into which it may be subdivided. The modifying
circumstances are considered only in the imposition 32
of the
maximum term of the indeterminate sentence. Since the
penalty prescribed in Article 315 is prision correccional
maximum to prision mayor minimum, the penalty next
lower in degree would be prision correccional minimum to
medium. Thus, the minimum term of the indeterminate
penalty should be anywhere
33
within 6 months and 1 day to
4 years and 2 months.
Accordingly, the Court finds a need to modify in part the
penalties imposed by the trial court. The minimum penalty
for each count of estafa should be reduced to four (4) years
and two (2) months of prision correccional.
As for the civil liability arising from the criminal offense,
the question is whether as the signatory for ARMAGRI,
petitioner is personally liable pursuant to the provision of
Section 13 of the Trust Receipts Law. 34
In Prudential Bank v. Intermediate Appellate Court,
the Court discussed the imposition of civil liability for
violation of the Trust Receipts Law in this wise:

It is clear that if the violation or offense is committed by a

corporation, partnership, association or other juridical entities, the
penalty shall be imposed upon the directors, officers, employees or
other officials or persons responsible for the offense. The penalty
referred to is imprisonment, the duration of which would depend
on the amount of the fraud as provided for in Article 315 of the
Revised Penal Code. The reason for this is obvious: corporation,
partnership, association or other juridical entities cannot be put
in jail. However, it is these entities which are made liable for the
civil liabilities arising from the criminal offense. This is the
import of the clause ‘without prejudice to the civil liabilities
arising from the criminal offense’. (Emphasis supplied)

_______________

31 People v. Gabres, 335 Phil. 242; 267 SCRA 581 (1997).

32 Ibid.
33 People v. Bautista, 311 Phil. 227; 241 SCRA 216 (1995); Dela Cruz v.
CA, 333 Phil. 126; 265 SCRA 299 (1996); People v. Ortiz-Miyake, 344 Phil.
598; 279 SCRA 180 (1997); People v. Saley, 353 Phil. 897; 291 SCRA 715
(1998).
34 G.R. No. 74886, 8 December 1992, 216 SCRA 257.

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664

664 SUPREME COURT REPORTS ANNOTATED

Ong vs. Court of Appeals

In Prudential Bank, the Court ruled that the person

signing the trust receipt for the corporation is not solidarily
liable with the entrustee-corporation for the civil liability
arising from the criminal offense. He may, however, be
personally liable if he bound himself to pay the debt of the
corporation under a separate contract of surety or
guaranty.
In the instant case, petitioner did not sign 35
in his
personal capacity the solidary guarantee clause found on
the dorsal portion of the trust receipts. Petitioner placed
his signature after the typewritten words “ARMCO
INDUSTRIAL CORPORATION” found at the end of the
solidary guarantee clause. Evidently, petitioner did not
undertake to guaranty personally the payment of the
principal and interest of ARMAGRI’s debt under the two
trust receipts.
In contrast, petitioner signed the stamped additional
undertaking without any indication he was signing for
ARMAGRI. Petitioner merely placed his signature after the
additional undertaking. Clearly, what petitioner signed in
his personal capacity was the stamped additional
undertaking to pay a monthly penalty of 1% of the total
obligation in case of ARMAGRI’s default.
In the additional undertaking, petitioner bound himself
to pay “jointly and severally” 36
a monthly penalty of 1% in
case of ARMAGRI’s default. Thus, petitioner is liable to
the Bank for the stipulated monthly penalty of 1% on the
outstanding amount of each trust receipt. The penalty shall
be computed from3715 July 1991, when petitioner received
the demand letter, until the debt is fully paid.
WHEREFORE, the assailed Decision is AFFIRMED
with MODIFICATION. In Criminal Case No. 92-101989
and in Criminal Case No. 92-101990, for each count of
estafa, petitioner ED-

_______________

35 This clause states: “In consideration of SOLIDBANK

CORPORATION complying with the foregoing, we jointly and severally
agree and undertake to pay on demand to SOLIDBANK CORPORATION,
all sums of money which the said SOLIDBANK CORPORATION may call
upon us to pay arising out of or pertaining to, and/or in any event

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connected with the default of and/or non-fulfillment in any respect of the

undertaking of the aforesaid: x x x.”
36 Supra, see note 11.
37 Supra, see note 12.

665

VOL. 401, APRIL 29, 2003 665

Ong vs. Court of Appeals

WARD C. ONG is sentenced to an indeterminate penalty of

imprisonment from four (4) years and two (2) months of
prision correccional as MINIMUM, to twenty (20) years of
reclusion temporal as MAXIMUM. Petitioner is ordered to
pay SOLIDBANK CORPORATION the stipulated penalty
of 1% per month on the outstanding balance of the two
trust receipts to be computed from 15 July 1991 until the
debt is fully paid.
SO ORDERED.

          Davide, Jr. (C.J., Chairman), Vitug, Ynares-

Santiago and Azcuna, JJ., concur.

Judgment affirmed with modification.

Notes.—A trust receipt is “a security transaction

intended to aid in financing importers and retail dealers
who do not have sufficient funds or resources to finance the
importation or purchase of merchandise, and who may not
be able to acquire credit except thru utilization, as
collateral, of the merchandise imported or purchased.”
(Rizal Commercial Banking Corporation vs. Alfa RTW
Manufacturing Corporation, 368 SCRA 611 [2001])
In the event of default by the entrustee on his
obligations under the trust receipt agreement, it is not
absolutely necessary that the entruster cancel the trust
and take possession of the goods to be able to enforce his
rights thereunder. (South City Homes, Inc. vs. BA Finance
Corporation, 371 SCRA 603 [2001])

——o0o——

666

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