G.R. No. 47027 . February 4, 1941.
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. BENITO R. PADILLA and ALFRED VON AREND, defendants-appellants.

FACTS

On October 27, 1938, Benito R. Padilla (a Filipino citizen) and Alfred Von Arend (a German citizen) were charged in the Court of First Instance of Manila with violating Commonwealth Act No. 108 in relation to Commonwealth Act No. 138 (the “Flag Law”). The information alleged that from December 1936 to August 1938, in Manila, they conspired to evade the citizenship requirements of Article 4 of Commonwealth Act No. 138 . Specifically, Padilla permitted Von Arend and his corporation, the Insular Drug Co. (a non-domestic entity as 75% of its capital was not owned by Filipinos or Americans), to use Padilla’s name and his mercantile firm, “Padilla Central Distributors,” in official government auctions for the supply of articles. Von Arend made such use for the benefit of his corporation. Both gained from the resulting transactions. After separate trials (with evidence admitted in both), the trial court found both guilty and sentenced each to an indeterminate penalty of 2 to 4 years imprisonment, a P2,000 fine, with subsidiary imprisonment, and to pay half the costs. Both appealed.
The evidence established that shortly after Commonwealth Act No. 138 was approved, Padilla resigned from the Insular Drug Company (where he was a selling agent) and organized the “Padilla Central Distributors” with a capital of P1,000. He opened a credit account with the Insular Drug Company up to P5,000, secured by his and his wife’s savings, and was allowed use of the company’s office space, telephone, warehouse, and delivery cars. Serafin Enriquez, secretary-treasurer of Insular Drug, acted as Padilla’s attorney-in-fact and prepared and submitted all bids for government pharmaceutical supplies, successfully winning most contracts as the lowest domestic bidder. Padilla’s credit limit was consistently exceeded. As awards were made to Padilla Central Distributors as the lowest domestic bidder under the law, and all supplies came from the Insular Drug Company, the latter’s sales increased. Von Arend, as president and general manager, received substantial dividends, salary, and expenses. Padilla made a net profit from the transactions.

ISSUE

The principal issue is whether a violation of Commonwealth Act No. 138 can be prosecuted under Commonwealth Act No. 108 . Other issues raised include the constitutionality of both Acts, alleged defects in the information, and the sufficiency of evidence.

RULING

The Supreme Court affirmed the conviction.
1. On Prosecution under Commonwealth Act No. 108 : The Court held that a violation of Commonwealth Act No. 138 is prosecutable under Commonwealth Act No. 108 . Commonwealth Act No. 108 punishes any Philippine or United States citizen who allows his name or citizenship to be used to evade a legal provision requiring such citizenship for a right, franchise, or privilege, and any alien profiting thereby. Commonwealth Act No. 138 requires that a “domestic entity” (as defined, including citizenship or ownership requirements) be given preference in government bidding. The acts of the appellants constituted an evasion of this preference provision. Commonwealth Act No. 108 is cumulative to Act No. 138 , and it is permissible for one statute to create an offense and another to provide its punishment.
2. On Constitutionality: The Court found both Commonwealth Acts constitutional.
* Commonwealth Act No. 108 : It is sufficiently clear, prescribes the elements of the offense with reasonable certainty, embraces only one general subject (punishing evasion of nationalization laws), and does not deprive any person of liberty or property without due process.
* Commonwealth Act No. 138 : It is not antagonistic to Act No. 428 of the 72nd Congress of the United States and is fundamentally in harmony with it.
3. On Other Assignments of Error: The Court addressed and rejected the other errors assigned by the appellants, including claims about the information charging more than one offense, violation of constitutional provisions, and findings of fact. The evidence supported the trial court’s finding that Padilla Central Distributors was used as a mere figurehead or dummy to evade the law.
DISPOSITIVE:
The judgment against Alfred Von Arend was affirmed in all respects. For Benito R. Padilla, the Court increased his penalty due to his lack of civic consciousness as a Filipino citizen, sentencing him to an indeterminate penalty of 4 to 6 years imprisonment and a fine of P4,000, with subsidiary imprisonment in case of insolvency. Both appellants were to pay the costs.