G.R. No.

151895             February 16, 2005

BANK OF COMMERCE, petitioner,

DECISION

QUISUMBING, J.:

For our review on certiorari is the civil aspect of the Court of Appeals’ Decision,1 dated
September 28, 2001, in CA-G.R. CR No. 24570 as well as its Resolution,2 dated January 17,
2002, denying petitioner’s motion for reconsideration. The Court of Appeals set aside the
Decision3 dated May 31, 2000, of the Regional Trial Court (RTC) Branch 105 of Quezon
City.

The facts are as follows:

Petitioner Bank of Commerce (formerly Boston Bank of the Philippines) is a private

Via Moda International, represented by respondent, obtained an export packing loan from
petitioner, Bank of Commerce (BOC)-Diliman, Quezon City Branch, in the amount of
US$50,000 (₱1,382,250), secured by a Deed of Assignment over Irrevocable Transferable
Letter of Credit No. 100072119. Respondent Serrano executed in favor of BOC Promissory
Note No. 94/086 for US$50,000 dated May 6, 1994 with maturity date on July 14, 1994. Via
Moda then opened a deposit account for the proceeds of the said loan.4

On March 15, 1994, BOC issued to Via Moda, Irrevocable Letter of Credit No. BCZ-940051,
in the amount of US$56,735, for the purchase and importation of fabric and textile products
from Tiger Ear Fabric Co. Ltd. of Taiwan. To secure the release of the goods covered,
respondent, in representation of Via Moda, executed Trust Receipt No. 94-22221 dated
April 21, 1994 with due date on July 20, 1994 for US$55,944.73 (₱1,554,424.32).5

Under the terms of the trust receipt, Via Moda agreed to hold the goods in trust for
petitioner as the latter’s property and to sell the same for the latter’s account. In case of
sale, the proceeds are to be remitted to the bank as soon as it is received, but not later than
the maturity date. Said proceeds are to be applied to the relative acceptances, with interest
at the rate of 26% per annum, with a penalty of 36% per annum of the total amount due
until fully paid in case of non-payment of the trust receipt and relative acceptance at
maturity date or, in the alternative, to return the goods in case of non-sale.6

The goods covered by the trust receipt were shipped by Via Moda to its consignee in New
Jersey, USA, who sent an Export Letter of Credit issued by the Bank of New York, in favor of
BOC. The Regional Operations Officer of BOC signed the export declarations to show
consent to the shipment.l^vvphi1.net The total value of the entrusted goods which were
shipped per export declaration was US$81,987 (₱2,246,443.80). The proceeds of the
entrusted goods sold were not credited to the trust receipt but, were applied by the bank to
the principal, penalties and interest of the export packing loan. The excess ₱472,114.85
was applied to the trust receipt, leaving a balance of ₱1,444,802.28 as of November 15,
1994.7

On November 16, 1994, petitioner sent a demand letter to Via Moda to pay the said amount
plus interest and penalty charges, or to return the goods covered by Trust Receipt No. 94-
22221 within 5 days from receipt. The demand was not heeded. As of December 15, 1998,
the outstanding balance of Via Moda was ₱4,783,487.15.8 1ªvvphi1.nét

On March 8, 1998, respondent was charged with the crime of estafa under Article 315 (b)
of the Revised Penal Code in relation to Presidential Decree No. 115.9

On May 31, 2000, the trial court rendered judgment and the dispositive portion of which
reads:

WHEREFORE, in the light of the foregoing, the Court finds accused Teresita S. Serrano
GUILTY beyond reasonable doubt of the crime charged in the Information filed in this case
and sentences her to serve the indeterminate penalty of imprisonment from EIGHT (8)
YEARS AND ONE (1) DAY OF PRISION MAYOR, AS MINIMUM, TO TWENTY (20) YEARS OF
RECLUSION TEMPORAL, AS MAXIMUM, including the accessory penalties. She is ordered to
pay her civil liability to Bank of Commerce in the amount of P4,783,487.15, with interest
until fully paid, and the costs of this suit.

SO ORDERED.10

Respondent appealed to the Court of Appeals which rendered a decision dated September
28, 2001, reversing the trial court’s decision. The Court of Appeals held that the element of
misappropriation or conversion in violation of P.D. No. 115, in relation to the crime of
estafa, was absent in this case, thereby acquitting the respondent and deleting her civil
liability. The decretal portion of the decision reads as follows:

WHEREFORE, premises considered, the appealed decision is hereby REVERSED, and the
accused-appellant ACQUITTED of the crime charged. The civil liability adjudged by the
court a quo is hereby deleted, there being no showing that accused-appellant bound herself
personally liable with respect to the loan secured by the trust receipt.1awphi1.nét

SO ORDERED.11

Petitioner filed a Motion for Reconsideration which was denied. Petitioner now comes to
this Court submitting the following issues for our resolution:
 I. WHETHER RESPONDENT IS JOINTLY AND SEVERALLY LIABLE WITH VIA MODA
UNDER THE GUARANTEE CLAUSE OF LC NO. [BCZ-940051] (EXHIBIT A) SECURED
BY TRUST RECEIPT NO. [94-22221] (EXHIBIT C).12

II. WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN

On the first issue, petitioner contends that the Court of Appeals made a manifestly mistaken
inference from its findings or a misapprehension of facts and overlooked a vital piece of
evidence on record, particularly, the Guarantee Clause of the Letter of Credit secured by the
Trust Receipt. Petitioner further alleges that the said Guarantee Clause provides that the
liability of respondent is joint and solidary; hence, she should be held liable on the
obligation.

A letter of credit is a separate document from a trust receipt. While the trust receipt may
have been executed as a security on the letter of credit, still the two documents involve
different undertakings and obligations. A letter of credit is an engagement by a bank or
other person made at the request of a customer that the issuer will honor drafts or other
demands for payment upon compliance with the conditions specified in the credit. Through
a letter of credit, the bank merely substitutes its own promise to pay for the promise to pay
of one of its customers who in return promises to pay the bank the amount of funds
mentioned in the letter of credit plus credit or commitment fees mutually agreed upon.14
By contrast, a trust receipt transaction is one where the entruster, who holds an absolute
title or security interests over certain goods, documents or instruments, released the same
to the entrustee, who executes a trust receipt binding himself to hold the goods, documents
or instruments in trust for the entruster and to sell or otherwise dispose of the goods,
documents and instruments with the obligation to turn over to the entruster the proceeds
thereof to the extent of the amount owing to the entruster, or as appears in the trust
receipt, or return the goods, documents or instruments themselves if they are unsold, or
not otherwise disposed of, in accordance with the terms and conditions specified in the
trust receipt.15

However, the question of the liability of respondent based on the Guarantee Clause of the
Letter of Credit, was not raised either at the trial court or before the Court of Appeals . A
question that was never raised in the courts below cannot be allowed to be raised for the
first time on appeal without offending basic rules of fair play, justice and due process. Such
an issue was not brought to the fore either in the trial court or the appellate court, and
would have been disregarded by the latter tribunal for the reasons previously stated. With
more reason, the same does not deserve consideration by this Court.16

On the second issue, the Court of Appeals held that respondent Serrano cannot be held
civilly liable under the trust receipt since she was not made personally liable nor was she a
guarantor therein. The parties stipulated during the pre-trial that respondent Serrano
executed the trust receipt in representation of Via Moda, Inc., which has a separate
personality from Serrano, and petitioner BOC failed to show sufficient reason to justify the
piercing of the veil of corporate fiction. It thus ruled that this was not Serrano’s personal
obligation but that of Via Moda and there was no basis of finding her solidarily liable with
Via Moda.17

Worthy of mention at this point is the Court of Appeals’ finding that there was no
misappropriation or conversion by the respondent of the proceeds of the sale in the goods,
subject of the trust receipt since the proceeds were actually received by petitioner but the
latter applied the same to Via Moda’s other obligations under the export packing loan. It
further stated that such application of payment to another obligation was done by
petitioner on its own and should not create a criminal liability on the part of respondent
who did not take part nor had any knowledge thereof. It is on this premise that the
respondent was acquitted of the crime charged.18

Incidentally, petitioner urged this Court to review the factual findings of the case due to
contradictory findings of the trial court and the Court of Appeals arising from
misappreciation of facts by the Court of Appeals. Such plea must be rejected.l^vvphi1.net It
is a well established rule that in an appeal via certiorari, only questions of law may be
raised,19 and we find petitioner’s averments insufficient to disregard this well-entrenched
rule. This Court does not, of itself, automatically delve into the record of a case to
determine the facts anew where there is disagreement between the findings of fact by the
trial court and by the Court of Appeals. When the disagreement is merely on the probative
value of the evidence, i.e., which is more credible of two versions, we limit our review to
only ascertaining if the findings of the Court of Appeals are supported by the records. So
long as the findings of the appellate court are consistent with and not palpably contrary to
the evidence on record, we shall decline to make a review on the probative value of such
evidence. The findings of fact of the Court of Appeals, and not those of the trial court, will be
considered final and conclusive, even in this Court.20 In this case, we find no cogent reason
to disturb the foregoing factual findings of the Court of Appeals.

At any rate, petitioner BOC is not precluded from filing a separate civil action against the
responsible party where the abovementioned issues could be properly resolved or
determined. The issues raised by herein petitioner involve a determination of facts and
require the admission and examination of additional evidence for its resolution. That
cannot be done in a petition for review on certiorari by merely appealing the civil aspect of
an acquittal in a criminal case.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated September 28,
2001 and the Resolution dated January 17, 2002, of the Court of Appeals in CA-G.R. CR No.
24570, are AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.