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1 | A G E N C Y F U L L C a s e s A P R e l o x

EUROTECH INDUSTRIAL TECHNOLOGIES, INC., Petitioner, vs.EDWIN CUIZON and ERWINCUIZON, Respondents.

CHICO-NAZARIO, J.: G.R. No. 167552 April 23, 2007

Before Us is a petition for review by certiorari assailing the Decision1 of the Court of Appeals dated

10 August 2004 and its Resolution2 dated 17 March 2005 in CA-G.R. SP No. 71397 entitled,"Eurotech Industrial Technologies, Inc. v. Hon. Antonio T. Echavez." The assailed Decision andResolution affirmed the Order 3 dated 29 January 2002 rendered by Judge Antonio T. Echavezordering the dropping of respondent EDWIN Cuizon (EDWIN) as a party defendant in Civil CaseNo. CEB-19672.

The generative facts of the case are as follows:

Petitioner is engaged in the business of importation and distribution of various European industrialequipment for customers here in the Philippines. It has as one of its customers Impact SystemsSales ("Impact Systems") which is a sole proprietorship owned by respondent ERWIN Cuizon

(ERWIN). Respondent EDWIN is the sales manager of Impact Systems and was impleaded in thecourt a quo in said capacity.

From January to April 1995, petitioner sold to Impact Systems various products allegedlyamounting to ninety-one thousand three hundred thirty-eight (P91,338.00) pesos. Subsequently,respondents sought to buy from petitioner one unit of sludge pump valued at P250,000.00 withrespondents making a down payment of fifty thousand pesos (P50,000.00).4 When the sludgepump arrived from the United Kingdom, petitioner refused to deliver the same to respondentswithout their having fully settled their indebtedness to petitioner. Thus, on 28 June 1995,respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of

Assignment of receivables in favor of petitioner, the pertinent part of which states:

1.) That ASSIGNOR5 has an outstanding receivables from Toledo Power Corporation in theamount of THREE HUNDRED SIXTY FIVE THOUSAND (P365,000.00) PESOS as paymentfor the purchase of one unit of Selwood Spate 100D Sludge Pump;

2.) That said ASSIGNOR does hereby ASSIGN, TRANSFER, and CONVEY unto the ASSIGNEE6 the said receivables from Toledo Power Corporation in the amount of THREEHUNDRED SIXTY FIVE THOUSAND (P365,000.00) PESOS which receivables the

ASSIGNOR is the lawful recipient;

3.) That the ASSIGNEE does hereby accept this assignment.7

Following the execution of the Deed of Assignment, petitioner delivered to respondents the sludgepump as shown by Invoice No. 12034 dated 30 June 1995.8

Allegedly unbeknownst to petitioner, respondents, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power Company the amount of P365,135.29 asevidenced by Check Voucher No. 09339prepared by said power company and an official receiptdated 15 August 1995 issued by Impact Systems.10 Alarmed by this development, petitioner madeseveral demands upon respondents to pay their obligations. As a result, respondents were able tomake partial payments to petitioner. On 7 October 1996, petitioner’s counsel sent respondents a

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final demand letter wherein it was stated that as of 11 June 1996, respondents’ total obligationsstood at P295,000.00 excluding interests and attorney’s fees.11 Because of respondents’ failure toabide by said final demand letter, petitioner instituted a complaint for sum of money, damages, withapplication for preliminary attachment against herein respondents before the Regional Trial Courtof Cebu City.12

On 8 January 1997, the trial court granted petitioner’s prayer for the issuance of writ of preliminaryattachment.13

On 25 June 1997, respondent EDWIN filed his Answer 14 wherein he admitted petitioner’sallegations with respect to the sale transactions entered into by Impact Systems and petitionerbetween January and April 1995.15 He, however, disputed the total amount of Impact Systems’indebtedness to petitioner which, according to him, amounted to only P220,000.00.16

By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real partyin interest in this case. According to him, he was acting as mere agent of his principal, which wasthe Impact Systems, in his transaction with petitioner and the latter was very much aware of this

fact. In support of this argument, petitioner points to paragraphs 1.2 and 1.3 o f petitioner’sComplaint stating –

1.2. Defendant Erwin H. Cuizon, is of legal age, married, a resident of Cebu City. He is theproprietor of a single proprietorship business known as Impact Systems Sales ("ImpactSystems" for brevity), with office located at 46-A del Rosario Street, Cebu City, where hemay be served summons and other processes of the Honorable Court.

1.3. Defendant Edwin B. Cuizon is of legal age, Filipino, married, a resident of Cebu City. Heis the Sales Manager of Impact Systems and is sued in this action in such capacity.17

On 26 June 1998, petitioner filed a Motion to Declare Defendant ERWIN in Default with Motion forSummary Judgment. The trial court granted petitioner’s motion to declare respondent ERWIN indefault "for his failure to answer within the prescribed period despite the opportunity granted" 18 butit denied petitioner’s motion for summary judgment in its Order of 31 August 2001 and scheduledthe pre-trial of the case on 16 October 2001.19However, the conduct of the pre-trial conference wasdeferred pending the resolution by the trial court of the special and affirmative defenses raised byrespondent EDWIN.20

After the filing of respondent EDWIN’s Memorandum21 in support of his special and affirmativedefenses and petitioner’s opposition22 thereto, the trial court rendered its assailed Order dated 29January 2002 dropping respondent EDWIN as a party defendant in this case. According to the trial

court –

A study of Annex "G" to the complaint shows that in the Deed of Assignment, defendant Edwin B.Cuizon acted in behalf of or represented [Impact] Systems Sales; that [Impact] Systems Sale is asingle proprietorship entity and the complaint shows that defendant Erwin H. Cuizon is theproprietor; that plaintiff corporation is represented by its general manager Alberto de Jesus in thecontract which is dated June 28, 1995. A study of Annex "H" to the complaint reveals that [Impact]Systems Sales which is owned solely by defendant Erwin H. Cuizon, made a down paymentof P50,000.00 that Annex "H" is dated June 30, 1995 or two days after the execution of Annex "G",thereby showing that [Impact] Systems Sales ratified the act of Edwin B. Cuizon; the records

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further show that plaintiff knew that [Impact] Systems Sales, the principal, ratified the act of EdwinB. Cuizon, the agent, when it accepted the down payment of P50,000.00. Plaintiff, therefore,cannot say that it was deceived by defendant Edwin B. Cuizon, since in the instant case theprincipal has ratified the act of its agent and plaintiff knew about said ratification. Plaintiff could notsay that the subject contract was entered into by Edwin B. Cuizon in excess of his powers since[Impact] Systems Sales made a down payment of P50,000.00 two days later.

In view of the Foregoing, the Court directs that defendant Edwin B. Cuizon be dropped as partydefendant.23

Aggrieved by the adverse ruling of the trial court, petitioner brought the matter to the Court of Appeals which, however, affirmed the 29 January 2002 Order of the court a quo. The dispositiveportion of the now assailed Decision of the Court of Appeals states:

WHEREFORE, finding no viable legal ground to reverse or modify the conclusions reached by thepublic respondent in his Order dated January 29, 2002, it is hereby AFFIRMED.24

Petitioner’s motion for reconsideration was denied by the appellate court in its Resolutionpromulgated on 17 March 2005. Hence, the present petition raising, as sole ground for itsallowance, the following:

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT RULED THATRESPONDENT EDWIN CUIZON, AS AGENT OF IMPACT SYSTEMS SALES/ERWIN CUIZON, ISNOT PERSONALLY LIABLE, BECAUSE HE HAS NEITHER ACTED BEYOND THE SCOPE OFHIS AGENCY NOR DID HE PARTICIPATE IN THE PERPETUATION OF A FRAUD.25

To support its argument, petitioner points to Article 1897 of the New Civil Code which states:

Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts,unless he expressly binds himself or exceeds the limits of his authority without giving such partysufficient notice of his powers.

Petitioner contends that the Court of Appeals failed to appreciate the effect of ERWIN’s act ofcollecting the receivables from the Toledo Power Corporation notwithstanding the existence of theDeed of Assignment signed by EDWIN on behalf of Impact Systems. While said collection did notrevoke the agency relations of respondents, petitioner insists that ERWIN ’s action repudiatedEDWIN’s power to sign the Deed of Assignment. As EDWIN did not sufficiently notify it of theextent of his powers as an agent, petitioner claims that he should be made personally liable for theobligations of his principal.26

Petitioner also contends that it fell victim to the fraudulent scheme of respondents who induced itinto selling the one unit of sludge pump to Impact Systems and signing the Deed of Assignment.Petitioner directs the attention of this Court to the fact that respondents are bound not only by theirprincipal and agent relationship but are in fact full-blooded brothers whose successivecontravening acts bore the obvious signs of conspiracy to defraud petitioner .27

In his Comment,28 respondent EDWIN again posits the argument that he is not a real party ininterest in this case and it was proper for the trial court to have him dropped as a defendant. Heinsists that he was a mere agent of Impact Systems which is owned by ERWIN and that his status

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as such is known even to petitioner as it is alleged in the Complaint that he is being sued in hiscapacity as the sales manager of the said business venture. Likewise, respondent EDWIN points tothe Deed of Assignment which clearly states that he was acting as a representative of ImpactSystems in said transaction.

We do not find merit in the petition.

In a contract of agency, a person binds himself to render some service or to do something inrepresentation or on behalf of another with the latter’s consent.29 The underlying principle of thecontract of agency is to accomplish results by using the services of others – to do a great variety ofthings like selling, buying, manufacturing, and transporting.30 Its purpose is to extend thepersonality of the principal or the party for whom another acts and from whom he or she derivesthe authority to act.31 It is said that the basis of agency is representation, that is, the agent acts forand on behalf of the principal on matters within the scope of his authority and said acts have thesame legal effect as if they were personally executed by the principal.32 By this legal fiction, theactual or real absence of the principal is converted into his legal or juridical presence – qui facit peralium facit per se.33

The elements of the contract of agency are: (1) consent, express or implied, of the parties toestablish the relationship; (2) the object is the execution of a juridical act in relation to a thirdperson; (3) the agent acts as a representative and not for himself; (4) the agent acts within thescope of his authority.34

In this case, the parties do not dispute the existence of the agency relationship betweenrespondents ERWIN as principal and EDWIN as agent. The only cause of the present dispute iswhether respondent EDWIN exceeded his authority when he signed the Deed of Assignmentthereby binding himself personally to pay the obligations to petitioner. Petitioner firmly believes thatrespondent EDWIN acted beyond the authority granted by his principal and he should therefore

bear the effect of his deed pursuant to Article 1897 of the New Civil Code. We disagree.

Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally liableto the party with whom he contracts. The same provision, however, presents two instances whenan agent becomes personally liable to a third person. The first is when he expressly binds himselfto the obligation and the second is when he exceeds his authority. In the last instance, the agentcan be held liable if he does not give the third party sufficient notice of his powers. We hold thatrespondent EDWIN does not fall within any of the exceptions contained in this provision.

The Deed of Assignment clearly states that respondent EDWIN signed thereon as the salesmanager of Impact Systems. As discussed elsewhere, the position of manager is unique in that it

presupposes the grant of broad powers with which to conduct the business of the principal, thus:

The powers of an agent are particularly broad in the case of one acting as a general agent ormanager; such a position presupposes a degree of confidence reposed and investiture with liberalpowers for the exercise of judgment and discretion in transactions and concerns which areincidental or appurtenant to the business entrusted to his care and management. In the absence ofan agreement to the contrary, a managing agent may enter into any contracts that he deemsreasonably necessary or requisite for the protection of the interests of his principal entrusted to hismanagement. x x x.35

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Applying the foregoing to the present case, we hold that Edwin Cuizon acted well-within hisauthority when he signed the Deed of Assignment. To recall, petitioner refused to deliver the oneunit of sludge pump unless it received, in full, the payment for Impact Systems’ indebtedness.36 Wemay very well assume that Impact Systems desperately needed the sludge pump for its businesssince after it paid the amount of fifty thousand pesos (P50,000.00) as down payment on 3 March1995,37 it still persisted in negotiating with petitioner which culminated in the execution of the Deed

of Assignment of its receivables from Toledo Power Company on 28 June 1995.38The significantamount of time spent on the negotiation for the sale of the sludge pump underscores ImpactSystems’ perseverance to get hold of the said equipment. There is, therefore, no doubt in our mindthat respondent EDWIN’s participation in the Deed of Assignment was "reasonably necessary" orwas required in order for him to protect the business of his principal. Had he not acted in the wayhe did, the business of his principal would have been adversely affected and he would haveviolated his fiduciary relation with his principal.

We likewise take note of the fact that in this case, petitioner is seeking to recover both fromrespondents ERWIN, the principal, and EDWIN, the agent. It is well to state here that Article 1897of the New Civil Code upon which petitioner anchors its claim against respondent EDWIN "does

not hold that in case of excess of authority, both the agent and the principal are liable to the othercontracting party."39 To reiterate, the first part of Article 1897 declares that the principal is liable incases when the agent acted within the bounds of his authority. Under this, the agent is completelyabsolved of any liability. The second part of the said provision presents the situations when theagent himself becomes liable to a third party when he expressly binds himself or he exceeds thelimits of his authority without giving notice of his powers to the third person. However, it must bepointed out that in case of excess of authority by the agent, like what petitioner claims exists here,the law does not say that a third person can recover from both the principal and the agent.40

As we declare that respondent EDWIN acted within his authority as an agent, who did not acquireany right nor incur any liability arising from the Deed of Assignment, it follows that he is not a real

party in interest who should be impleaded in this case. A real party in interest is one who "stands tobe benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit."41 Inthis respect, we sustain his exclusion as a defendant in the suit before the court a quo.

WHEREFORE, premises considered, the present petition is DENIED and the Decision dated 10 August 2004 and Resolution dated 17 March 2005 of the Court of Appeals in CA-G.R. SP No.71397, affirming the Order dated 29 January 2002 of the Regional Trial Court, Branch 8, CebuCity, is AFFIRMED.

Let the records of this case be remanded to the Regional Trial Court, Branch 8, Cebu City, for thecontinuation of the proceedings against respondent Erwin Cuizon. SO ORDERED.

ANTONIO B. BALTAZAR, petitioner,vs.

HONORABLE OMBUDSMAN, EULOGIO M. MARIANO, JOSE D. JIMENEZ, JR., TORIBIO E.ILAO, JR. and ERNESTO R. SALENGA, respondents.

VELASCO, JR., J .: G.R. No. 136433 December 6, 2006

Ascribing grave abuse of discretion to respondent Ombudsman, this Petition for Review onCertiorari,1 under Rule 45 pursuant to Section 27 of RA 6770,2 seeks to reverse and set aside the

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November 26, 1997 Order 3 of the Office of the Special Prosecutor (OSP) in OMB-1-94-3425 dulyapproved by then Ombudsman Aniano Desierto on August 21, 1998, which recommended thedismissal of the Information4 in Criminal Case No. 23661 filed before the Sandiganbayan againstrespondents Pampanga Provincial Adjudicator Toribio E. Ilao, Jr., Chief Legal Officer Eulogio M.Mariano and Legal Officer Jose D. Jimenez, Jr. (both of the DAR Legal Division in San Fernando,Pampanga), and Ernesto R. Salenga. The petition likewise seeks to set aside the October 30, 1998

Memorandum5 of the OSP duly approved by the Ombudsman on November 27, 1998 which deniedpetitioner's Motion for Reconsideration.6 Previously, the filing of the Information against saidrespondents was authorized by the May 10, 1996 Resolution7 and October 3, 1996 Order 8 of theOmbudsman which found probable cause that they granted unwarranted benefits, advantage, andpreference to respondent Salenga in violation of Section 3 (e) of RA 3019.9

The Facts

Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorney-in-Fact Faustino R. Mercado leased the fishpond for PhP 230,000.00 to Eduardo Lapid fora three (3)-year period, that is, from August 7, 1990 to August 7, 1993.10 Lessee Eduardo Lapid in

turn sub-leased the fishpond to Rafael Lopez for PhP 50,000.00 during the last seven (7) monthsof the original lease, that is, from January 10, 1993 to August 7, 1993.11 Respondent ErnestoSalenga was hired by Eduardo Lapid as fishpond watchman (bante-encargado). In the sub-lease,Rafael Lopez rehired respondent Salenga.

Meanwhile, on March 11, 1993, respondent Salenga, through a certain Francis Lagman, sent hisJanuary 28, 1993 demand letter 12 to Rafael Lopez and Lourdes Lapid for unpaid salaries and non-payment of the 10% share in the harvest.

On June 5, 1993, sub-lessee Rafael Lopez wrote a letter to respondent Salenga informing thelatter that for the last two (2) months of the sub-lease, he had given the rights over the fishpond to

Mario Palad and Ambit Perez for PhP 20,000.00.13 This prompted respondent Salenga to file aComplaint14 before the Provincial Agrarian Reform Adjudication Board (PARAB), Region III, SanFernando, Pampanga docketed as DARAB Case No. 552-P’93 entitled Ernesto R. Salenga v.Rafael L. Lopez and Lourdes L. Lapid for Maintenance of Peaceful Possession, Collection of Sumof Money and Supervision of Harvest. The Complaint was signed by respondent Jose D. Jimenez,Jr., Legal Officer of the Department of Agrarian Reform (DAR) Region III Office in San Fernando,Pampanga, as counsel for respondent Salenga; whereas respondent Eulogio M. Mariano was theChief Legal Officer of DAR Region III. The case was assigned to respondent Toribio E. Ilao, Jr.,Provincial Adjudicator of DARAB, Pampanga.

On May 10, 1993, respondent Salenga amended his complaint.15 The amendments included a

prayer for the issuance of a temporary restraining order (TRO) and preliminary injunction.However, before the prayer for the issuance of a TRO could be acted upon, on June 16, 1993,respondent Salenga filed a Motion to Maintain Status Quo and to Issue Restraining Order 16 whichwas set for hearing on June 22, 1993. In the hearing, however, only respondent Salenga with hiscounsel appeared despite notice to the other parties. Consequently, the ex-partepresentation ofrespondent Salenga’s evidence in support of the prayer for the issuance of a restraining order wasallowed, since the motion was unopposed, and on July 21, 1993, respondent Ilao, Jr. issued aTRO.17

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Petitioner’s Motion for Reconsideration27 was likewise denied by the OSP through the October 30,1998 Memorandum28 which was approved by the Ombudsman on November 27, 1998.Consequently, the trial prosecutor moved orally before the Sandiganbayan for the dismissal ofCriminal Case No. 23661 which was granted through the December 11, 1998 Order .29

Thus, the instant petition is before us.

The Issues

Petitioner raises two assignments of errors, to wit:

THE HONORABLE OMBUDSMAN ERRED IN GIVING DUE COURSE A MISPLACEDCOUNTER-AFFIDAVIT FILED AFTER THE TERMINATION OF THE PRELIMINARYINVESTIGATION AND/OR THE CASE WAS ALREADY FILED BEFORE THESANDIGANBAYAN.

ASSUMING OTHERWISE, THE HONORABLE OMBUDSMAN LIKEWISE ERRED IN

REVERSING HIS OWN RESOLUTION WHERE IT WAS RESOLVED THAT ACCUSED ASPROVINCIAL AGRARIAN ADJUDICATOR HAS NO JURISDICTION OVER A COMPLAINTWHERE THERE EXIST [sic] NO TENANCY RELATIONSHIP CONSIDERING [sic]COMPLAINANT IS NOT A TENANT BUT A "BANTE-ENCARGADO" OR WATCHMAN-OVERSEER HIRED FOR A SALARY OF P3,000.00 PER MONTH AS ALLEGED IN HISOWN COMPLAINT.30

Before delving into the errors raised by petitioner, we first address the preliminary procedural issueof the authority and locus standi of petitioner to pursue the instant petition.

Preliminary Issue: Legal Standing

Locus standi is defined as "a right of appearance in a court of justice x x x on a givenquestion."31 In private suits, standing is governed by the "real-parties-in interest" rule found inSection 2, Rule 3 of the 1997 Rules of Civil Procedure which provides that "every action must beprosecuted or defended in the name of the real party in interest." Accordingly, the "real-party-ininterest" is "the party who stands to be benefited or injured by the judgment in the suit or the partyentitled to the avails of the suit."32 Succinctly put, the plaintiffs’ standing is based on their own rightto the relief sought.

The records show that petitioner is a non-lawyer appearing for himself and conducting litigation inperson. Petitioner instituted the instant case before the Ombudsman in his own name. In so far as

the Complaint-Affidavit filed before the Office of the Ombudsman is concerned, there is no questionon his authority and legal standing. Indeed, the Office of the Ombudsman is mandated to"investigate and prosecute on its own or on complaint by any person, any act or omission of anypublic officer or employee, office or agency, when such act or omission appears to be illegal,unjust, improper or inefficient (emphasis supplied)."33 The Ombudsman can act on anonymouscomplaints and motu proprio inquire into alleged improper official acts or omissions from whateversource, e.g., a newspaper .34 Thus, any complainant may be entertained by the Ombudsman for thelatter to initiate an inquiry and investigation for alleged irregularities.

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However, filing the petition in person before this Court is another matter. The Rules allow a non-lawyer to conduct litigation in person and appear for oneself only when he is a party to a legalcontroversy. Section 34 of Rule 138 pertinently provides, thus:

SEC. 34. By whom litigation conducted . – In the court of a justice of the peace a party mayconduct his litigation in person, with the aid of an agent or friend appointed by him for that

purpose, or with the aid of an attorney. In any other court, a party may conduct his litigationpersonally or by aid of an attorney, and hisappearance must be either personal or by aduly authorized member of the bar (emphases supplied).

Petitioner has no legal standing

Is petitioner a party or a real party in interest to have the locus standi to pursue the instant petition?We answer in the negative.

While petitioner may be the complainant in OMB-1-94-3425, he is not a real party in interest.Section 2, Rule 3 of the 1997 Rules of Civil Procedure stipulates, thus:

SEC. 2. Parties in interest. – A real party in interest is the party who stands to be benefitedor injured by the judgment in the suit, or the party entitled to the avails of the suit. Unlessotherwise authorized by law or these Rules, every action must be prosecuted or defended inthe name of the real party in interest.

The same concept is applied in criminal and administrative cases.

In the case at bar which involves a criminal proceeding stemming from a civil (agrarian) case, it isclear that petitioner is not a real party in interest. Except being the complainant, the records showthat petitioner is a stranger to the agrarian case. It must be recalled that the undisputed owner of

the fishpond is Paciencia Regala, who intervened in DARAB Case No. 552-P’93 through her Attorney-in-Fact Faustino Mercado in order to protect her interest. The motion for intervention filedby Faustino Mercado, as agent of Paciencia Regala, was granted by respondent Provincial

Adjudicator Ilao, Jr. through the November 15, 1993 Order in DARAB Case No. 552-P’93.

Agency cannot be further delegated

Petitioner asserts that he is duly authorized by Faustino Mercado to institute the suit and presenteda Special Power of Attorney35 (SPA) from Faustino Mercado. However, such SPA is unavailing forpetitioner. For one, petitioner’s principal, Faustino Mercado, is an agent himself and as suchcannot further delegate his agency to another. Otherwise put, an agent cannot delegate to another

the same agency. The legal maxim potestas delegata non delegare potest ; a power oncedelegated cannot be re-delegated, while applied primarily in political law to the exercise oflegislative power, is a principle of agency.36 For another, a re-delegation of the agency would bedetrimental to the principal as the second agent has no privity of contract with the former. In theinstant case, petitioner has no privity of contract with Paciencia Regala, owner of the fishpond andprincipal of Faustino Mercado.

Moreover, while the Civil Code under Article 189237 allows the agent to appoint a substitute, suchis not the situation in the instant case. The SPA clearly delegates the agency to petitioner to pursue

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the case and not merely as a substitute. Besides, it is clear in the aforecited Article that what isallowed is a substitute and not a delegation of the agency.

Clearly, petitioner is neither a real party in interest with regard to the agrarian case, nor is he a realparty in interest in the criminal proceedings conducted by the Ombudsman as elevated to theSandiganbayan. He is not a party who will be benefited or injured by the results of both cases.

Petitioner: a stranger and not an injured private complainant

Petitioner only surfaced in November 1994 as complainant before the Ombudsman. Aside fromthat, not being an agent of the parties in the agrarian case, he has no locus standi to pursue thispetition. He cannot be likened to an injured private complainant in a criminal complaint who hasdirect interest in the outcome of the criminal case.

More so, we note that the petition is not pursued as a public suit with petitioner asserting a "publicright" in assailing an allegedly illegal official action, and doing so as a representative of the generalpublic. He is pursuing the instant case as an agent of an ineffective agency.

Petitioner has not shown entitlement to judicial protection

Even if we consider the instant petition as a public suit, where we may consider petitioner suing asa "stranger," or in the category of a "citizen," or "taxpayer," still petitioner has not adequately shownthat he is entitled to seek judicial protection. In other words, petitioner has not made out a sufficientinterest in the vindication of the public order and the securing of relief as a "citizen" or "taxpayer";more so when there is no showing that he was injured by the dismissal of the criminal complaintbefore the Sandiganbayan.

Based on the foregoing discussion, petitioner indubitably does not have locus standi to pursue this

action and the instant petition must be forthwith dismissed on that score. Evengranting arguendo that he has locus standi , nonetheless, petitioner fails to show grave abuse ofdiscretion of respondent Ombudsman to warrant a reversal of the assailed November 26, 1997Order and the October 30, 1998 Memorandum.

First Issue: Submission of Counter-Affidavit

The Sandiganbayan, not the Ombudsman, ordered re-investigation

On the substantive aspect, in the first assignment of error, petitioner imputes grave abuse ofdiscretion on public respondent Ombudsman for allowing respondent Ilao, Jr. to submit his

Counter-Affidavit when the preliminary investigation was already concluded and an Informationfiled with the Sandiganbayan which assumed jurisdiction over the criminal case. This contention isutterly erroneous.

The facts clearly show that it was not the Ombudsman through the OSP who allowed respondentIlao, Jr. to submit his Counter-Affidavit. It was the Sandiganbayan who granted the prayed for re-investigation and ordered the OSP to conduct the re-investigation through its August 29, 1997Order, as follows:


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Considering the manifestation of Prosecutor Cicero Jurado, Jr. that accused Toribio E. Ilao,Jr. was not able to file his counter-affidavit in the preliminary investigation, there appears tobe some basis for granting the motion of said accused for reinvestigation.

WHEREFORE, accused Toribio E. Ilao, Jr. may file his counter-affidavit, with documentaryevidence attached, if any, with the Office of the Special Prosecutor within then (10) days

from today. Theprosecution is ordered to conduct a reinvestigation within a period ofthirty (30) days.38 (Emphases supplied.)

As it is, public respondent Ombudsman through the OSP did not exercise any discretion in allowingrespondent Ilao, Jr. to submit his Counter-Affidavit. The OSP simply followed the graft court’sdirective to conduct the re-investigation after the Counter-Affidavit of respondent Ilao, Jr. was filed.Indeed, petitioner did not contest nor question the August 29, 1997 Order of the graft court.Moreover, petitioner did not file any reply-affidavit in the re-investigation despite notice.

Re-investigation upon sound discretion of graft court

Furthermore, neither can we fault the graft court in granting the prayed for re-investigation as it canreadily be seen from the antecedent facts that respondent Ilao, Jr. was not given the opportunity tofile his Counter-Affidavit. Respondent Ilao, Jr. filed a motion to dismiss with the Ombudsman butsuch was not resolved before the Resolution—finding cause to bring respondents to trial—wasissued. In fact, respondent Ilao, Jr.’s motion to dismiss was resolved only through the May 10,1996 Resolution which recommended the filing of an Information. Respondent Ilao, Jr.’s Motion forReconsideration and/or Re-investigation was denied and the Information was filed with the graftcourt.

Verily, courts are given wide latitude to accord the accused ample opportunity to presentcontroverting evidence even before trial as demanded by due process. Thus, we held in Villaflor v.

Vivar that "[a] component part of due process in criminal justice, preliminary investigation is astatutory and substantive right accorded to the accused before trial. To deny their claim to apreliminary investigation would be to deprive them of the full measure of their right to dueprocess."39

Second Issue: Agrarian Dispute

Anent the second assignment of error, petitioner contends that DARAB Case No. 552-P’93 is notan agrarian dispute and therefore outside the jurisdiction of the DARAB. He maintains thatrespondent Salenga is not an agricultural tenant but a mere watchman of the fishpond owned byPaciencia Regala. Moreover, petitioner further argues that Rafael Lopez and Lourdes Lapid, the

respondents in the DARAB case, are not the owners of the fishpond.

Nature of the case determined by allegations in the complaint

This argument is likewise bereft of merit. Indeed, as aptly pointed out by respondents and as borneout by the antecedent facts, respondent Ilao, Jr. could not have acted otherwise. It is a settled rulethat jurisdiction over the subject matter is determined by the allegations of the complaint.40 Thenature of an action is determined by the material averments in the complaint and the character ofthe relief sought,41 not by the defenses asserted in the answer or motion to dismiss.42 Given thatrespondent Salenga’s complaint and its attachment clearly spells out the jurisdictional allegations

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that he is an agricultural tenant in possession of the fishpond and is about to be ejected from it,clearly, respondent Ilao, Jr. could not be faulted in assuming jurisdiction as said allegationscharacterize an agricultural dispute. Besides, whatever defense asserted in an answer or motion todismiss is not to be considered in resolving the issue on jurisdiction as it cannot be madedependent upon the allegations of the defendant.

Issuance of TRO upon the sound discretion of hearing officer

As regards the issuance of the TRO, considering the proper assumption of jurisdiction byrespondent Ilao, Jr., it can be readily culled from the antecedent facts that his issuance of the TROwas a proper exercise of discretion. Firstly, the averments with evidence as to the existence of theneed for the issuance of the restraining order were manifest in respondent Salenga’s Motion toMaintain Status Quo and to Issue Restraining Order ,43 the attached Police InvestigationReport,44 and Medical Certificate.45 Secondly, only respondent Salenga attended the June 22,1993 hearing despite notice to parties. Hence, Salenga’s motion was not only unopposed but hisevidence adduced ex-parte also adequately supported the issuance of the restraining order.

Premises considered, respondent Ilao, Jr. has correctly assumed jurisdiction and properlyexercised his discretion in issuing the TRO—as respondent Ilao, Jr. aptly maintained that givingdue course to the complaint and issuing the TRO do not reflect the final determination of the meritsof the case. Indeed, after hearing the case, respondent Ilao, Jr. rendered a Decision on May 29,1995 dismissing DARAB Case No. 552-P’93 for lack of merit.

Court will not review prosecutor’s determination of probable cause

Finally, we will not delve into the merits of the Ombudsman’s reversal of its initial finding ofprobable cause or cause to bring respondents to trial. Firstly, petitioner has not shown that theOmbudsman committed grave abuse of discretion in rendering such reversal. Secondly, it is clear

from the records that the initial finding embodied in the May 10, 1996 Resolution was arrived atbefore the filing of respondent Ilao, Jr.’s Counter -Affidavit. Thirdly, it is the responsibility of thepublic prosecutor, in this case the Ombudsman, to uphold the law, to prosecute the guilty, and toprotect the innocent. Lastly, the function of determining the existence of probable cause is properfor the Ombudsman in this case and we will not tread on the realm of this executive function toexamine and assess evidence supplied by the parties, which is supposed to be exercised at thestart of criminal proceedings. In Perez v. Hagonoy Rural Bank, Inc .,46 as cited in Longos RuralWaterworks and Sanitation Association, Inc. v. Hon. Desierto,47 we had occasion to rule that wecannot pass upon the sufficiency or insufficiency of evidence to determine the existence ofprobable cause.48

WHEREFORE, the instant petition is DENIED for lack of merit, and the November 26, 1997 Orderand the October 30, 1998 Memorandum of the Office of the Special Prosecutor in Criminal CaseNo. 23661 (OMB-1-94-3425) are hereby AFFIRMED IN TOTO , with costs against petitioner.

SO ORDERED.

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EDWARD C. ONG, petitioner, vs. COURT OF APPEALS AND THE PEOPLE OF THEPHILIPPINES, respondents.

G.R. No. 119858 April 29, 2003 CARPIO, J .:

Petitioner Edward C. Ong ("petitioner") filed this petition for review on certiorari1 to nullify theDecision2 dated 27 October 1994 of the Court of Appeals in CA-G.R. C.R. No. 14031, and itsResolution3 dated 18 April 1995, denying petitioner's motion for reconsideration. The assailed

Decision affirmed in toto petitioner's conviction4 by the Regional Trial Court of Manila, Branch35,5 on two counts of estafa for violation of the Trust Receipts Law,6as follows:

WHEREFORE, judgment is rendered: (1) pronouncing accused EDWARD C. ONG guiltybeyond reasonable doubt on two counts, as principal on both counts, of ESTAFA definedunder No. 1 (b) of Article 315 of the Revised Penal Code in relation to Section 13 ofPresidential Decree No. 115, and penalized under the 1st paragraph of the same Article315, and sentenced said accused in each count to TEN (10) YEARS of prision mayor , asminimum, 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 theaggregate sum of P2,976,576.37 as reparation for the damages said accused caused to theprivate complainant, plus the interest thereon at the legal rate and the penalty of 1% permonth, both interest and penalty computed from July 15, 1991, until the principal obligationis fully paid;

(4) Ordering Benito Ong to pay, jointly and severally with Edward C. Ong, the privatecomplainant the legal interest and the penalty of 1% per month due and accruing on the


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unpaid amount of P1,449,395.71, still owing to the private offended under the trust receiptExhibit C, computed from 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.

SO ORDERED.7

The Charge

Assistant City Prosecutor Dina P. Teves of the City of Manila charged petitioner and Benito Ongwith 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 crimeof estafacommitted 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 Corporationrepresented by its Accountant, DEMETRIO LAZARO, a corporation duly organized andexisting under the laws of the Philippines located at Juan Luna Street, Binondo, this City, inthe following manner, to wit: the said accused received in trust from said SOLIDBANKCorporation 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 ofCredit No. DOM GD 90-009 in favor of the Fertiphil Corporation; under the expressobligation 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 andrefused and still fails and refuses to do so despite repeated demands made upon him to thateffect and with intent to defraud, willfully, unlawfully and feloniously misapplied,misappropriated and converted the same or the value thereof to his own personal use andbenefit, to the damage and prejudice of the said Solidbank Corporation in the aforesaidamount of P2,050,000.00 Philippine Currency.

Contrary to law.

In Criminal Case No. 92-101990, the Information likewise charges petitioner of the crimeof 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 andfeloniously defraud the SOLIDBANK Corporation represented by its Accountant,DEMETRIO LAZARO, a corporation duly organized and existing under the laws of thePhilippines 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:


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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 aDomestic Letter of Credit No. DOM GD 90-006 in favor of the Metropole Industrial Saleswith address at P.O. Box AC 219, Quezon City; under the express obligation on the part ofthe said accused to account for said goods to Solidbank Corporation and/or remit theproceeds of the sale thereof within the period specified in the Agreement or return thegoods, if unsold immediately or upon demand; but said accused, once in possession of saidgoods, far from complying with the aforesaid obligation failed and refused and still fails andrefuses to do so despite repeated demands made upon him to that effect and with intent todefraud, willfully, unlawfully and feloniously misapplied, misappropriated and converted thesame or the value thereof to his own personal use and benefit, to the damage and prejudiceof 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.

Version of the Prosecution

The prosecution's evidence disclosed that on 22 June 1990, petitioner, representing ARMAGRIInternational Corporation8 ("ARMAGRI"), applied for a letter of credit for P2,532,500.00 withSOLIDBANK Corporation ("Bank") to finance the purchase of differential assemblies fromMetropole Industrial Sales. On 6 July 1990, petitioner, representing ARMAGRI, executed a trustreceipt9 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 ofcredit for P2,050,000.00 to finance the purchase of merchandise from Fertiphil Corporation. TheBank approved the application, opened the letter of credit and paid to Fertiphil Corporation theamount of P2,050,000.00. On 23 July 1990, petitioner, signing for ARMAGRI, executed anothertrust receipt10 in favor of the Bank acknowledging receipt of the merchandise.

Both trust receipts contained the same stipulations. Under the trust receipts, ARMAGRI undertookto account for the goods held in trust for the Bank, or if the goods are sold, to turn over theproceeds to the Bank. ARMAGRI also undertook the obligation to keep the proceeds in the form ofmoney, bills or receivables as the separate property of the Bank or to return the goods upondemand by the Bank, if not sold. In addition, petitioner executed the following additionalundertaking 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 mayoccur after July 1, 1981, when the Central Bank floated the interest rates, and to pay


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additionally the penalty of 1% per month until the amount/s or installment/s due and unpaidunder the trust receipt on the reverse side hereof is/are fully paid. 11

Petitioner signed alone the foregoing additional undertaking in the Trust Receipt for P2,253,500.00,while both petitioner and Benito Ong 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 the goodsto the Bank despite several demand letters.12 Consequently, as of 31 May 1991, the unpaidaccount under the first trust receipt amounted to P1,527,180.66,13 while the unpaid account underthe second trust receipt amounted to P1,449,395.71.14

Version of the Defense

After the prosecution rested its case, petitioner and Benito Ong, through counsel, manifested inopen court that they were waiving their right to present evidence. The trial court then consideredthe case submitted for decision.15

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 butthe 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 theoffense" 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. Thisis because the Corporation cannot by itself transact business or sign documents it being anartificial person. It has to accomplish these through its agents. A corporation has apersonality distinct and separate from those acting on its behalf. In the fulfillment of itspurpose, 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 ofimposing the penalty of imprisonment on the corporation itself. For this reason, it is theofficers or employees or other persons whom the law holds responsible. 16

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 heldthat ARMAGRI, which petitioner represented, could not itself negotiate the execution of the trustreceipts, go to the Bank to receive, return or account for the entrusted goods. Based on therepresentations of petitioner, the Bank accepted the trust receipts and, consequently, expectedpetitioner to return or account for the goods entrusted.17

The Court of Appeals also ruled that the prosecution need not prove that petitioner is occupying aposition 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 hisparticipation was merely incidental still makes him fall within the purview of the law as one of the


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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'sdecision when he signed the trust receipts.

The Court of Appeals further ruled that the prosecution need not prove that petitioner personallyreceived and misappropriated the goods subject of the trust receipts. Evidence of misappropriation

is not required under the Trust Receipts Law. To establish the crime of estafa, it is sufficient toshow failure by the entrustee to turn over the goods or the proceeds of the sale of the goodscovered by a trust receipt. Moreover, the bank is not obliged to determine if the goods came intothe actual possession of the entrustee. Trust receipts are issued to facilitate the purchase ofmerchandise. To obligate the bank to examine the fact of actual possession by the entrustee of thegoods subject of every trust receipt will greatly impede commercial transactions.

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 WASNECESSARILY THE ONE RESPONSIBLE FOR THE OFFENSE; AND

2. IN CONVICTING PETITIONER UNDER SPECIFICATIONS NOT ALLEGED IN THEINFORMATION.

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.

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 theundertakings 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 theTrust 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, withoutprejudice 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.


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The relevant penal provision of the Trust Receipts Law reads:

SEC. 13. Penalty Clause. - The failure of the entrustee to turn over the proceeds of the saleof the goods, documents or instruments covered by a trust receipt to the extent of theamount 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 ThousandEight Hundred and Fifteen, as amended, otherwise known as the Revised Penal Code. Ifthe 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, withoutprejudice 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 ofthe sale of the goods, or (2) return the goods covered by the trust receipts if the goods are notsold.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.20

The Trust Receipts Law recognizes the impossibility of imposing the penalty of imprisonment on acorporation. Hence, if the entrustee is a corporation, the law makes the officers or employeesor other persons responsible for the offense liable to suffer the penalty of imprisonment. Thereason is obvious: corporations, partnerships, associations and other juridical entities cannot beput to jail. Hence, the criminal liability falls on the human agent responsible for the violation of theTrust Receipts Law.

In the instant case, the Bank was the entruster while ARMAGRI was the entrustee. Being theentrustee, 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 agentresponsible for the violation. Petitioner, who admits being the agent of ARMAGRI, is the personresponsible for the offense for two reasons. First, petitioner is the signatory to the trust receipts, theloan applications and the letters of credit. Second, despite being the signatory to the trust receiptsand the other documents, petitioner did not explain or show why he is not responsible for the failureto 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 theloan transactions of ARMAGRI. The Bank had a right to demand from ARMAGRI payment or atleast a return of the goods. ARMAGRI failed to pay or return the goods despite repeated demandsby the Bank.

It is a well-settled doctrine long before the enactment of the Trust Receipts Law, that the failure toaccount, upon demand, for funds or property held in trust is evidence of conversion ormisappropriation.21 Under the law, mere failure by the entrustee to account for the goods receivedin trust constitutes estafa. The Trust Receipts Law punishes dishonesty and abuse of confidence inthe handling of money or goods to the prejudice of public order. 22 The mere failure to deliver theproceeds of the sale or the goods if not sold constitutes a criminal offense that causes prejudicenot only to the creditor, but also to the public interest.23 Evidently, the Bank suffered prejudice forneither money nor the goods were turned over to the Bank.


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The Trust Receipts Law expressly makes the corporation's officers or employees or other personstherein 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 actthrough its agents. When petitioner signed the trust receipts, he acknowledged receipt of the goodscovered by the trust receipts. In addition, petitioner was fully aware of the terms and conditionsstated in the trust receipts, including the obligation to turn over the proceeds of the sale or return

the goods to the Bank, to wit:

Received, upon the TRUST hereinafter mentioned from SOLIDBANK CORPORATION(hereafter referred to as the BANK), the following goods and merchandise, the property ofsaid BANK specified in the bill of lading as follows: x x x and in consideration thereof, I/wehereby agree to hold said goods in Trust for the said BANK and as its property with liberty tosell the same for its account but without authority to make any other disposition whatsoeverof the said goods or any part thereof (or the proceeds thereof) either by way of conditionalsale, 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 described above) and for the payment of any otherindebtedness of mine/ours to SOLIDBANK CORPORATION.

xxx xxx xxx.

I/we agree to keep said goods, manufactured products, or proceeds thereof, whether in theform of money or bills, receivables, or accounts, separate and capable of identification asthe 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 the BANK .

xxx xxx xxx. (Emphasis supplied)25

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

Petitioner could have raised the defense that he had nothing to do with the failure to account forthe proceeds or to return the goods. Petitioner could have shown that he had severed hisrelationship 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 notresponsible for the violation of the Trust Receipts Law.

There is no dispute that on 6 July 1990 and on 23 July 1990, petitioner signed the two trustreceipts27 on behalf of ARMAGRI. Petitioner, acting on behalf of ARMAGRI, expresslyacknowledged receipt of the goods in trust for the Bank. ARMAGRI failed to comply with itsundertakings under the trust receipts. On the other hand, petitioner failed to explain and


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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 toP1,527,180.60 and P1,449,395.71, respectively.28

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 theBank, acting through petitioner as its agent. Petitioner asserts that this contradicts the specificallegation in the Informations that it was petitioner who was constituted as the entrustee and wasthus obligated to account for the goods or its proceeds if sold. Petitioner maintains that thisabsolves 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 goodsdespite demands by the Bank, to the latter's prejudice. As an essential element of estafa withabuse of confidence, it is sufficient that the Informations specifically allege that the entrusteereceived 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 thesale or to return the goods upon demand by the Bank. There is no need to allege in theInformations in what capacity petitioner participated to hold him responsible for the offense. Underthe Trust Receipts Law, it is sufficient to allege and establish the failure of ARMAGRI, whompetitioner 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 agentswhich the law must deter.29 The existence of the corporate entity does not shield from prosecutionthe agent who knowingly and intentionally commits a crime at the instance of a corporation. 30

Penalty for the crime of Estafa.

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

1st. The penalty of prision correccional in its maximum period to prision mayor in itsminimum 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 thisparagraph shall be imposed in its maximum period, adding one year for each additional10,000 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. InCriminal Case No. 92-101990, the amount of the fraud is P1,449,395.71. Since the amounts of thefraud in each estafa exceeds P22,000.00, the penalty of prision correccional maximum to prisionmayor minimum should be imposed in its maximum period as prescribed in Article 315 of theRevised Penal Code. The maximum indeterminate sentence should be taken from this maximum


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period which has a duration of 6 years, 8 months and 21 days to 8 years. One year is then addedfor each additional P10,000.00, but the total penalty should not exceed 20 years. Thus, themaximum penalty for each count of estafa in this case should be 20 years.

Under the Indeterminate Sentence Law, the minimum indeterminate sentence can be anywherewithin 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 modifyingcircumstance attendant to the commission of the crime and without reference to the periods intowhich it may be subdivided.31 The modifying circumstances are considered only in the imposition ofthe maximum term of the indeterminate sentence.32 Since the penalty prescribed in Article 315is prision correccional maximum to prision mayor minimum, the penalty next lower in degree wouldbe prision correccional minimum to medium. Thus, the minimum term of the indeterminate penaltyshould be anywhere within 6 months and 1 day to 4 years and 2 months.33

Accordingly, the Court finds a need to modify in part the penalties imposed by the trial court. Theminimum penalty for each count of estafa should be reduced to four (4) years and two (2) monthsof 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 TrustReceipts Law.

In Prudential Bank v. Intermediate Appellate Court ,34 the Court discussed the imposition of civilliability 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 fraudas 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 criminaloffense. This is the import of the clause 'without prejudice to the civil liabilities arising fromthe criminal offense'. (Emphasis supplied)

In Prudential Bank , the Court ruled that the person signing the trust receipt for the corporation isnot solidarily liable with the entrustee-corporation for the civil liability arising from the criminaloffense. He may, however, be personally liable if he bound himself to pay the debt of thecorporation under a separate contract of surety or guaranty.

In the instant case, petitioner did not sign in his personal capacity the solidary guarantee clause 35found on the dorsal portion of the trust receipts. Petitioner placed his signature after the typewrittenwords "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 andinterest of ARMAGRI's debt under the two trust receipts.

In contrast, petitioner signed the stamped additional undertaking without any indication he wassigning for ARMAGRI. Petitioner merely placed his signature after the additional undertaking.


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Clearly, what petitioner signed in his personal capacity was the stamped additional undertaking top

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