KARYL MAE B.

OTAZA LLB-IV September 21, 2016

Can a Corporation be held criminally liable?

Can a Corporation be held criminally liable?--- Just like looking for that one
forever is hard to find, and as finding that one fish in the sea in moving on, one
could hardly find the best authority to cover the point at hand. In early cases
dating back to the nineteen hundreds, while the Court admits that there are
various penal laws which corporations as such may violate, yet there were no
provisions in the law relating to the practice and procedure in criminal actions
whereby a corporation may be brought to court to be proceeded against criminal
liability1. In the words of Blackstone, that a corporation cannot commit treason,
felony or other crimes by its corporate capacity for the reason that a corporation
in its inherent nature cannot commit a crime, it being incapable of entertaining a
specific evil intent.2 In our jurisdiction, it is important to determine the mens rea or
the guilty mind to incur criminal liability. Therefore, to formulate the idea of
corporate criminal in our jurisdiction is quite impossible.

Perhaps, the rule is not absolute. More so, if corporations today will be
granted immunity due to the fact of its separate personality from its individual
corporators. Such absolute impunity for all wrongs that it may cause would
produce greater injustice to its individuals as well as to its market--- the
public.The corporation being an attractive medium in the business community in
the present time, is a realization of it being so dynamic and recent developments
in the field of corporate law had acknowledge the existence or rather, the
possibility of it being held criminally liable. Ordinarily, if a law seeks a corporation
to be criminally liable for an act, there is no reason why it should not be
considered as a perpetrator when the very object of the law is to forbid the act
absolutely. Still, the impossibility of determining its guilt as well as the imposition
of the penalty, if it is not a fine, is becoming impossible. Jurisprudence however
has settled partially this matter. The Court clarified in The Executive Secretary v.
Court of Appeals3, that a corporation obviously acts, and can act only by and
through its human agents, and it is their conduct which the law must deter. It
should rather be the policy of the law rather to look rather to the principal than the
agent, especially so in the case of corporations for whose benefit the act is done,
or being connected with its business is negligently omitted to be done. 4 Public
policy also suggests that a crime committed in the name of a corporation is
actually committed by the individuals who act for and in behalf of such
corporation. The liability now would mean that, where the business itself involves
a violation of the law, the correct rule is that all who participate in it are liable. 5

It can also be said that the recognition of the actors or individuals behind the
corporation as the one being liable is an acknowledgment in our corporate law of
1
Villanueva-Tiansay, PHILIPPINE CORPORATE LAW (REX BOOK STORE, 2013 ed.), pp.43-44.
2
See Sagalongos, Corporate Criminal Liabilty, 9 PHIL. L.J. Vol. XI (1932).
3
429 SCRA 81 (2004).
4
Sagalongos, Corporate Criminal Liabilty, 9 PHIL. L.J. Vol. XI (1932).
5
Peple v. Tan Boon Kong, 54 Phil. 607 (1930).
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the doctrine of piercing the veil of corporate fiction. The principle gives way to the
attachment of liability to the aggregate of individuals being one with the
corporation or treating them as one and the same entity. The corporate
personality cannot be used as a cloak to hide criminal act done in behalf of the
corporation. This does not mean that while the power to bind the corporation into
certain acts is vested in the Board of Directors, and as a consequence, the Board
shall suffer. The Court however ruled that only those who had personally
participated in the criminal act should be held liable.

It has been held previously that corporations cannot be held criminally liable,
however, with the arguments presented above, it can also be said that the
impossibility of it being held as criminal has now been aided by the our courts
through developing jurisprudence. Recently, some laws were already recognizing
corporate criminals in our jurisdiction. One of the most common corporate crimes
being committed in Philippines is tax evasion wherein the fiction of corporate
entity was being used as a shield for tax evasion by making it appear that the
original sale was made by the parent corporation to the subsidiary corporation in
order to gain tax advantage. The legislature has also enacted special criminal
laws to penalize corporate criminals and one of these is PD 715 otherwise known
as the Anti-Dummy Law which penalizes foreign investors who exceed in their
representation in the governing board or body of corporations or associations in
proportion to their allowable participation in the equity of the said entities. Another
special penal law is R.A. 9160, as amended by R.A. 9194, otherwise known as
the Anti-Money Laundering Act of 2001. 6 The Corporation Code however,
merely provided for a general penal clause under Section 144.

Finally, the correct rule in addressing the question at hand is this: Yes, a
corporation can be held criminally liable through the acts of its agents--- its being
a corporation is only a fiction of law and the persons behind it are regarded as
being one with the corporation. Such is necessary, the corporation being merely
an association of individuals. As the Court ruled in Cometa v. Court of Appeals7, a
criminal case can only be filed against the officers of a corporation and not
against the corporation itself.

6
LABADOR, Corporate Crime and the Criminal Liability of Corporate Entities, 137th International Training Course
Participants Paper, p. 75.
7
301 SCRA 459 (1999).