GR L 6055; (June, 1953) (Digest)
G.R. No. L-6055 June 12, 1953
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. WILLIAM H. QUASHA, defendant-appellant.
FACTS
William H. Quasha, a lawyer, was charged with falsification of a public and commercial document. He prepared and registered the articles of incorporation for the Pacific Airways Corporation, a domestic corporation intended to operate as a common carrier. The articles stated that Arsenio Baylon, a Filipino citizen, subscribed to 60.005% of the subscribed capital stock. In reality, the money for Baylon’s subscription belonged to American co-incorporators, and Baylon acted as their trustee. This arrangement was allegedly made to circumvent the constitutional requirement that at least 60% of the capital stock of a public utility corporation must be owned by Filipino citizens. Quasha was found guilty by the trial court and appealed.
ISSUE
Whether Quasha is guilty of falsification under Article 172, in relation to Article 171(4) of the Revised Penal Code, for making an untruthful statement in the articles of incorporation by not disclosing that Baylon was a mere trustee for American subscribers, with the intent to circumvent the constitutional Filipino ownership requirement for public utilities.
RULING
The Supreme Court reversed the judgment of conviction and acquitted Quasha. The Court held that the crime of falsification under the relevant provisions requires a wrongful intent to injure a third person and a legal obligation on the narrator to disclose the truth. The constitutional provision (Section 8, Article XIV) does not prohibit the mere formation of a public utility corporation without the required Filipino capital; it prohibits the granting of a franchise or authorization for operation to such a corporation. Therefore, at the time of incorporation, there was no legal obligation to disclose the nationality of the actual owners of the subscribed capital, as the Corporation Law did not require it, and no wrongful intent to circumvent a non-existent prohibition at that stage could be established. Furthermore, the Court noted that with the approval of the Parity Amendment in March 1947, which granted Americans equal rights with Filipinos regarding public utility operation, the alleged act ceased to be an offense.