West Coast Life Insurance Co. vs. Hurd

A court has no authority to issue criminal process against a corporation where the governing criminal procedure statute authorizes only an order of arrest and contains no provision for corporate criminal procedure. Courts of the Philippine Islands may not create new criminal processes or procedures on their own motion, as such power verges on legislation and exceeds the authority conferred upon them by statute.

The petitioner was a foreign life-insurance corporation organized under the laws of the State of California and doing business regularly and legally in the Philippine Islands. The respondent was the judge of the Court of First Instance of Manila presiding over a criminal action for libel. The case arose under the Code of Criminal Procedure (General Orders, No. 58), which governed criminal proceedings in the Philippine Islands at the time.

The West Coast Life Insurance Co., a foreign corporation organized under California law and doing business in the Philippine Islands, was charged with libel together with John Northcott, its general agent and manager, and Manuel C. Grey, its treasurer. The information alleged that the three defendants, conspiring together, composed, printed, and distributed circulars containing malicious defamation against the Insular Life Insurance Company, a domestic corporation, with intent to cause damage and expose it to public hatred, contempt, and ridicule. The circulars stated that the Insular Auditor had examined the Insular Life Insurance Company's books and found that its capital had diminished, and that the company had decided to double its capital and pay its reserve fund.

On December 17, 1912, respondent Judge Hurd signed and issued a summons directed to the corporation and the individual accused, commanding them to appear before the Court of First Instance on December 18, 1912, to answer the charge of libel. The summons was a mixture of civil and criminal process: it did not direct or require an arrest, but was an order to appear and answer on a date certain without restraint of the person.

On December 20, 1912, the accused, through their attorneys, served upon the prosecuting attorney and filed a motion to quash the summons and its service, on the ground that the court had no jurisdiction over the corporation, there being no authority for the issuance of the process. The court denied the motion and directed the plaintiff to appear and plead to the information, to which order the plaintiff duly excepted. The plaintiff then filed the present action for prohibition, alleging that unless restrained, the respondent would compel it to appear and submit to criminal prosecution without the court having acquired jurisdiction over it.

• Lack of Jurisdiction: Petitioner argued that the Court of First Instance had no power or authority under the laws of the Philippine Islands to proceed against a corporation, as such, criminally, or to bring it into court to make it amenable to the criminal laws.
• Void Process: Petitioner contended that the issuance and service of the process against the corporation were outside the authority and jurisdiction of the court, were authorized by no law, conferred no jurisdiction over the corporation, and were absolutely void and without force or effect.
• Defective Form: Petitioner alleged that the process was a mixture of civil and criminal process, was not properly signed, did not direct or require an arrest, was an order to appear and answer on a date certain without restraint of the person, and was not in the form required by law.

• Corporate Criminal Liability: Respondent cited many cases showing that corporations have been proceeded against criminally by indictment and otherwise and have been punished as malefactors by the courts, arguing that such proceedings were permissible.

• Jurisdiction over Corporations: Whether the Court of First Instance had jurisdiction to issue criminal process against a corporation and to proceed against it criminally under the laws of the Philippine Islands.
• Inherent Power to Create Procedure: Whether a court may, of itself and on its own motion, create not only a process but a procedure by which the process may be made effective in criminal matters.

• Jurisdiction over Corporations: No. The Court of First Instance had no authority to issue the summons against the corporation because the Code of Criminal Procedure authorizes only an order of arrest as criminal process, and no statute provides for criminal procedure against corporations.
• Inherent Power to Create Procedure: No. Courts of the Philippine Islands have only such authority in criminal matters as is expressly conferred upon them by statute or which it is necessary to imply from such authority, and they may not create new criminal processes and procedures.

• Jurisdiction over Corporations: Section 5 of General Orders, No. 58 defines an information as "accusation in writing charging a person with a public offense," and Section 6 provides that a complaint or information is sufficient if it shows "the name of the defendant." These provisions, as well as those relating to arraignment, counsel, demurrers, and pleas, indicate that the maker of the Code of Criminal Procedure had no intention or expectation that corporations would be included among those who would fall within its provisions. The only process known to the Code of Criminal Procedure, or which any court is authorized to issue, is an order of arrest. The Code provides that if the magistrate is satisfied that the crime has been committed and there is reasonable ground to believe the party charged committed it, he must issue an order for his arrest. There is no authority for the issuance of any other process than an order of arrest, and the process issued in this case was without express authorization of statute.

• Inherent Power to Create Procedure: The Court held that the authority of the courts of the Philippine Islands does not extend so far as to permit them to create new procedure and new processes in criminal law, as such power verges too closely on legislation. Even assuming that there are penal laws which corporations as such may violate, the courts are not authorized to create special procedure and special processes to carry out those penal statutes when the legislature has neglected to do so. The courts of the Philippine Islands are creatures of statute and have only those powers conferred upon them by statute and those required to exercise that authority fully and adequately. They have no common law jurisdiction or powers. Under the Spanish criminal law and procedure, a corporation could not have been proceeded against criminally, as such, particularly where a willful purpose or malicious intent was required; criminal actions would have been restricted to the officials of such corporations. The cases cited by the respondent showing corporations proceeded against criminally involved statutes that, by express words or necessary intendment, included corporations and established a procedure applicable to them; no case was cited where a corporation was proceeded against without the court exercising common law powers or without a special procedure applicable to corporations.

• Courts of the Philippine Islands have no inherent power to create criminal procedure — Courts of the Philippine Islands, being creatures of statute, have only such authority in criminal matters as is expressly conferred upon them by statute or which it is necessary to imply from such authority to carry out fully and adequately the express authority conferred. They have no common law jurisdiction or powers, and the exercise of power to create new criminal processes and procedures verges too closely on legislation. The Court applied this doctrine to hold that the summons issued against the corporation was void because no statute authorized it.

• Corporations cannot be proceeded against criminally absent statutory authority — Under the Code of Criminal Procedure, the only process authorized is an order of arrest, and the provisions of the Code indicate no intention to include corporations within its scope. Under Spanish criminal law and procedure, a corporation could not have been proceeded against criminally where a willful purpose or malicious intent was required; criminal actions would have been restricted to the officials of such corporations. The Court applied this doctrine to hold that the Court of First Instance had no jurisdiction to issue the summons against the corporation.

• "The only process known to the Code of Criminal Procedure, or which any court is by that order authorized to issue, is an order of arrest." — This passage states the controlling rule that the Code of Criminal Procedure authorizes only one form of criminal process, which the summons against the corporation was not.

• "We do not feel that Courts of First Instance have authority to create new procedure and new processes in criminal law. The exercise of such power verges too closely on legislation." — This passage articulates the Court's central reasoning that courts cannot invent criminal procedures absent statutory authorization.

• "The courts of the Philippine Islands are creatures of statute and, as we have said, have only those powers conferred upon them by statute and those which are required to exercise that authority fully and adequately. The courts here have no common law jurisdiction or powers." — This passage defines the limited jurisdiction of Philippine courts and explains why they cannot exercise common law powers to proceed against corporations criminally.

• N/A — The decision cites no specific case names; it refers generally to "many cases cited by counsel for the defendant" showing that corporations have been proceeded against criminally, but does not identify them.

• Section 5, General Orders, No. 58 — Defines an information as "accusation in writing charging a person with a public offense." The Court applied this provision to show that the Code of Criminal Procedure contemplated only natural persons as defendants, not corporations.
• Section 6, General Orders, No. 58 — Provides that a complaint or information is sufficient if it shows "the name of the defendant." The Court applied this provision to demonstrate that the Code's provisions were not designed to accommodate corporations as criminal defendants.
• Provisions on arraignment, counsel, demurrers, and pleas, General Orders, No. 58 — The Court cited these provisions collectively to show that the maker of the Code of Criminal Procedure had no intention or expectation that corporations would be included among those who would fall within its provisions.
• Provisions on order of arrest, General Orders, No. 58 — The Code provides that if the magistrate is satisfied that the crime has been committed and there is reasonable ground to believe the party charged committed it, he must issue an order for his arrest. The Court applied this provision to hold that the only process authorized in criminal cases is an order of arrest, and the summons issued against the corporation was without express authorization of statute.

• Arellano, C.J.
• Araullo, J.
• Carson, J. (concurred in the result)