Digest TRL
Digest TRL
Digest TRL
The respondent judge granted the motion to quash. Contrary to the reasoning of the respondent court
The order was anchored on the premise that a trust and the accused, a trust receipt arrangement does
receipt transaction is an evidence of a loan being not involve a simple loan transaction between a
secured so that there is, as between the parties to creditor and debtor-importer. Apart from a loan
it, a creditor-debtor relationship. The court ruled that feature, the trust receipt arrangement has a security
the penal clause of Presidential Decree No. 15 on the feature that is covered by the trust receipt itself.
Trust Receipts Law is inoperative because it does not That second feature is what provides the much
actually punish an offense mala prohibita. The law needed financial assistance to our traders in the
only refers to the relevant estafa provision in the importation or purchase of goods or merchandise
through the use of those goods or merchandise as and is, thus, constitutional. The arguments of the
collateral for the advancements made by a bank. respondent are appropriate for a repeal or
The title of the bank to the security is the one sought modification of the law and should be directed to
to be protected and not the loan which is a separate Congress. But until the law is repealed, we are
and distinct agreement. constrained to apply it.
The Trust Receipts Law punishes the dishonesty and WHEREFORE, the petition is hereby GRANTED.
abuse of confidence in the handling of money or
goods to the prejudice of another regardless of
whether the latter is the owner or not. The law does
not seek to enforce payment of the loan. Thus, there
can be no violation of a right against imprisonment
for non-payment of a debt.
FACTS:
Land Bank of the Philippines v. Lamberto C. Petitioner Land Bank of the Philippines (LBP) is a
Perez, Nestor C. Kun, Ma. Estrelita Angeles- government financial institution and the official
Panlilio, and Napoleon O. Garcia (GR No. depository of the Philippines. Respondents are the
166884, June 13, 2012) officers and representatives of Asian Construction
and Development Corporation (ACDC), a corporation
In all trust receipt transactions, both obligations on incorporated under Philippine law and engaged in
the part of the trustee exist in the alternative the the construction business.
return of the proceeds of the sale or the return or On June 7, 1999, LBP filed a complaint for estafa or
recovery of the goods, whether raw or processed. violation of Article 315, paragraph 1(b) of the
When both parties enter into an agreement knowing Revised Penal Code, in relation to P.D. 115, against
that the return of the goods subject of the trust the respondents before the City Prosecutor’s Office
receipt is not possible even without any fault on the in Makati City. In the affidavit-complaint of June 7,
part of the trustee, it is not a trust receipt transaction 1999, the LBP’s Account Officer for the Account
penalized under Section 13 of P.D. 115; the only Management Development, Edna L. Juan, stated
obligation actually agreed upon by the parties would that LBP extended a credit accommodation to ACDC
be the return of the proceeds of the sale transaction. through the execution of an Omnibus Credit Line
This transaction becomes a mere loan, where the Agreement (Agreement) between LBP and ACDC on
borrower is obligated to pay the bank the amount October 29, 1996.
spent for the purchase of the goods. We note in this
regard that at the onset of these transactions, LBP Petitioner’s contention:
knew that ACDC was in the construction business In various instances, ACDC used the Letters of
and that the materials that it sought to buy under Credit/Trust Receipts Facility of the Agreement to
the letters of credit were to be used for the following buy construction materials. The respondents, as
projects: the Metro Rail Transit Project and the Clark officers and representatives of ACDC, executed trust
Centennial Exposition Project. LBP had in fact receipts in connection with the construction
authorized the delivery of the materials on the materials, with a total principal amount of
construction sites for these projects, as seen in the ₱52,344,096.32. The trust receipts matured, but
letters of credit it attached to its complaint. Clearly, ACDC failed to return to LBP the proceeds of the
they were aware of the fact that there was no way construction projects or the construction materials
they could recover the buildings or constructions for subject of the trust receipts. LBP sent ACDC a
demand letter, dated May 4, 1999, for the payment
of its debts, including those under the Trust Receipts ISSUE: Whether or not the disputed transactions
Facility in the amount of ₱66,425,924.39. When are covered by trust receipts?
ACDC failed to comply with the demand letter, LBP
filed the affidavit-complaint. RULING: No, the dispusted transactions are not
covered by trust receipts.
Respondent’s contention: There are two obligations in a trust receipt
The respondents filed a joint affidavit wherein they transaction. The first is covered by the provision that
stated that they signed the trust receipt documents refers to money under the obligation to deliver it to
on or about the same time LBP and ACDC executed the owner of the merchandise sold. The second is
the loan documents; their signatures were required covered by the provision referring to merchandise
by LBP for the release of the loans. The trust receipts received under the obligation to return it to the
in this case do not contain (1) a description of the owner.
goods placed in trust, (2) their invoice values, and Thus, under the Trust Receipts Law, intent to
(3) their maturity dates, in violation of Section 5(a) defraud is presumed when (1) the entrustee fails to
of P.D. 115. Moreover, they alleged that ACDC acted turn over the proceeds of the sale of goods covered
as a subcontractor for government projects such as by the trust receipt to the entruster; or (2) when the
the Metro Rail Transit, the Clark Centennial entrustee fails to return the goods under trust, if
Exposition and the Quezon Power Plant in Mauban, they are not disposed of in accordance with the
Quezon. Its clients for the construction projects, terms of the trust receipts.
which were the general contractors of these In all trust receipt transactions, both obligations on
projects, have not yet paid them; thus, ACDC had the part of the trustee exist in the alternative the
yet to receive the proceeds of the materials that return of the proceeds of the sale or the return or
were the subject of the trust receipts and were recovery of the goods, whether raw or processed.
allegedly used for these constructions. As there were When both parties enter into an agreement knowing
no proceeds received from these clients, no that the return of the goods subject of the trust
misappropriation thereof could have taken place receipt is not possible even without any fault on the
On September 30, 1999, Makati Assistant City part of the trustee, it is not a trust receipt transaction
Prosecutor Amador Y. Pineda issued a penalized under Section 13 of P.D. 115; the only
Resolution dismissing the complaint. He pointed out obligation actually agreed upon by the parties would
that the evidence presented by LBP failed to state be the return of the proceeds of the sale transaction.
the date when the goods described in the letters of This transaction becomes a mere loan, where the
credit were actually released to the possession of the borrower is obligated to pay the bank the amount
respondents. Section 4 of P.D. 115 requires that the spent for the purchase of the goods.
goods covered by trust receipts be released to the Article 1371 of the Civil Code provides that on order
possession of the entrustee after the latter’s to judge the intention of the contracting parties,
execution and delivery to the entruster of a signed their contemporaneous and subsequent acts shall be
trust receipt. He adds that LBP’s evidence also fails principally considered. Under this provision, we can
to show the date when the trust receipts were examine the contemporaneous actions of the parties
executed since all the trust receipts are undated. rather than rely purely on the trust receipts that they
On appeal, the Secretary of Justice reversed the signed in order to understand the transaction
Resolution of the Assistant City Prosecutor. The through their intent.
Secretary of Justice pointed out that there was no
question that the goods covered by the trust receipts We note in this regard that at the onset of these
were received by ACDC. He likewise adopted LBPs transactions, LBP knew that ACDC was in the
argument that while the subjects of the trust construction business and that the materials that it
receipts were not mentioned in the trust receipts, sought to buy under the letters of credit were to be
they were listed in the letters of credit referred to in used for the following projects: the Metro Rail
the trust receipts. Subsequently, the respondents Transit Project and the Clark Centennial Exposition
filed a petition for review before the Court of Project. LBP had in fact authorized the delivery of
Appeals. The Court of Appeals applying the Colinares the materials on the construction sites for these
doctrine ruled that this case did not involve a trust projects, as seen in the letters of credit it attached
receipt transaction, but a mere loan. LBP then filed to its complaint. Clearly, they were aware of the fact
a petition for certiorari. that there was no way they could recover the
buildings or constructions for which the materials FACTS:
subject of the alleged trust receipts had been used.
Notably, despite the allegations in the affidavit- In twenty-four 24 consolidated Informations,
complaint wherein LBP sought the return of the petitioner Hur Tin Yang was charged at the instance
construction materials, its demand letter dated May of the same complainant with the crime of Estafa
4, 1999 sought the payment of the balance but failed under Article 315, par. 1 (b) of the RPC, 4 in relation
to ask, as an alternative, for the return of the to PD 115.
construction materials or the buildings where these
Metropolitan Bank and Trust Company (Metrobank)
materials had been used.
extended several commercial letters of credit (LCs)
The fact that LBP had knowingly authorized the
to Supermax. These commercial LCs were used by
delivery of construction materials to a construction
Supermax to pay for the delivery of several
site of two government projects, as well as
construction materials which will be used in their
unspecified construction sites, repudiates the idea
construction business. Thereafter, Metrobank
that LBP intended to be the owner of those
required Hur Tin Yang (petitioner), as representative
construction materials. As a government financial
and Vice-President for Internal Affairs of Supermax,
institution, LBP should have been aware that the
to sign 24 trust receipts as security for the
materials were to be used for the construction of an
construction materials and to hold those materials or
immovable property, as well as a property of the
the proceeds of the sales in trust for Metrobank to
public domain. As an immovable property, the
the extent of the amount stated in the trust receipts.
ownership of whatever was constructed with those
materials would presumably belong to the owner of When the 24 trust receipts fell due and despite,
the land, under Article 445 of the Civil Code Supermax failed to pay or deliver the goods or
Even if we consider the vague possibility that the proceeds to Metrobank. Instead, Supermax, through
materials, consisting of cement, bolts and reinforcing petitioner, requested the restructuring of the loan.
steel bars, would be used for the construction of a When the intended restructuring of the loan did not
movable property, the ownership of these properties materialize, Metrobank sent another demand letter
would still pertain to the government and not remain dated October 11, 2001. As the demands fell on deaf
with the bank as they would be classified as property ears, Metrobank, through its representative, Winnie
of the public domain, which is defined by the Civil M. Villanueva, filed the instant criminal complaints
Code as: against petitioner.
In contrast with the present situation, it is
fundamental in a trust receipt transaction that the Petitioner’s contentions:
person who advanced payment for the merchandise
becomes the absolute owner of said merchandise - While admitting signing the trust receipts,
and continues as owner until he or she is paid in full, petitioner argued that said trust receipts
or if the goods had already been sold, the proceeds were demanded by Metrobank as additional
should be turned over to him or to her. security for the loans extended to Supermax
for the purchase of construction equipment
HUR TIN YANG , petitioner, vs. PEOPLE OF
and materials. In support of this argument,
THE PHILIPPINES, respondent
[G.R. No. 195117. August 14, 2013.] petitioner presented as witness, Priscila
Alfonso, who testified that the construction
When both parties enter into an agreement knowing materials covered by the trust receipts were
fully well that the return of the goods subject of the delivered way before petitioner signed the
trust receipt is not possible even without any fault
corresponding trust receipts.
on the part of the trustee, it is not a trust receipt
transaction penalized under Sec. 13 of PD 115 in - Petitioner argued that Metrobank knew all
relation to Art. 315, par. 1 (b) of the RPC, as the only
along that the construction materials subject
obligation actually agreed upon by the parties would
be the return of the proceeds of the sale transaction. of the trust receipts were not intended for
This transaction becomes a mere loan, where the resale but for personal use of Supermax
borrower is obligated to pay the bank the amount relating to its construction business.
spent for the purchase of the goods.
RTC found petitioner guilty as charged
CA upheld RTC’s findings that the prosecution has documents or instruments in trust for the
satisfactorily established the guilt of petitioner entruster and to sell or otherwise dispose of
beyond reasonable doubt, including the following the goods, documents or instruments with
critical facts: the obligation to turn over to the entruster
the proceeds thereof to the extent of the
- Petitioner signing the trust receipts amount owing to the entruster or as appears
agreement; Supermax failing to pay the loan; in the trust receipt or the goods, documents
and Supermax failing to turn over the or instruments themselves if they are unsold
proceeds of the sale or the goods to or not otherwise disposed of, in accordance
Metrobank upon demand with the terms and conditions specified in the
trust receipt, or for other purposes
- CA also found that even before the execution
substantially equivalent to any of the
of the trust receipts, Metrobank knew or following:
should have known that the subject
construction materials were never intended 1. In the case of goods or documents:
for resale or for the manufacture of items to (a) to sell the goods or procure their sale; or
(b) to manufacture or process the goods with
be sold.
the purpose of ultimate sale: Provided, That,
- The CA ruled that since the offense punished in the case of goods delivered under trust
under PD 115 is in the nature of malum receipt for the purpose of manufacturing or
prohibitum, a mere failure to deliver the processing before its ultimate sale, the
proceeds of the sale or goods, if not sold, is entruster shall retain its title over the goods
sufficient to justify a conviction under PD whether in its original or processed form until
115. the entrustee has complied full with his
obligation under the trust receipt; or (c) to
ISSUE: Whether petitioner is liable for Estafa under load, unload, ship or transship or otherwise
Art. 315, par. 1 (b) of the RPC in relation to PD 115, deal with them in a manner preliminary or
even if it was sufficiently proved that the entruster necessary to their sale; or
(Metrobank) knew beforehand that the goods
2. In the case of instruments: (a) to
(construction materials) subject of the trust receipts
sell or procure their sale or exchange; or (b)
were never intended to be sold but only for use in
to deliver them to a principal; or (c) to effect
the entrustee's construction business (NO)
the consummation of some transactions
RULING: involving delivery to a depository or register;
or (d) to effect their presentation, collection
The petitioner was charged with Estafa committed in or renewal.
what is called, under PD 115, a "trust receipt
transaction," which is defined as: Simply stated, a trust receipt transaction is one
where the entrustee has the obligation to deliver to
Section 4. What constitutes a the entruster the price of the sale, or if the
trust receipts transaction. — A trust merchandise is not sold, to return the merchandise
receipt transaction, within the meaning of to the entruster. There are, therefore, two
this Decree, is any transaction by and obligations in a trust receipt transaction:
between a person referred to in this Decree
as the entruster, and another person referred 1. The first refers to money received under the
to in this Decree as entrustee, whereby the obligation involving the duty to turn it over
entruster, who owns or holds absolute title (entregarla) to the owner of the merchandise
or security interests over certain specified sold
goods, documents or instruments, releases
the same to the possession of the entrustee 2. The second refers to the merchandise
upon the latter's execution and delivery to received under the obligation to "return" it
the entruster of a signed document called a (devolvera) to the owner
"trust receipt" wherein the entrustee binds
himself to hold the designated goods,
A violation of any of these undertakings constitutes the trial court erred in ruling that the
Estafa defined under Art. 315, par. 1 (b) of the RPC, agreement is a trust receipt transaction.
as provided in Sec. 13 of PD 115, viz.:
To emphasize, the Trust Receipts Law
Section 13. Penalty Clause. — The failure of was created to "to aid in financing
an entrustee to turn over the proceeds of importers and retail dealers who do not
the sale of the goods, documents or have sufficient funds or resources to
instruments covered by a trust receipt to the finance the importation or purchase of
extent of the amount owing to the entruster merchandise, and who may not be able
or as appears in the trust receipt or to return to acquire credit except through
said goods, documents or instruments if they utilization, as collateral, of the
were not sold or disposed of in accordance merchandise imported or purchased."
with the terms of the trust receipt shall Since Asiatrust knew that petitioner
constitute the crime of estafa, punishable was neither an importer nor retail
under the provisions of Article Three hundred dealer, it should have known that the
fifteen, paragraph one (b) of Act Numbered said agreement could not possibly
Three thousand eight hundred and fifteen, as apply to petitioner.
amended, otherwise known as the Revised
Penal Code 2. Land Bank of the Philippines v. Perez
When both parties enter into an agreement knowing This Court, like in Ng, acquitted all the
fully well that the return of the goods subject of the respondents on the postulate that the parties
trust receipt is not possible even without any fault really intended a simple contract of loan and not
on the part of the trustee, it is not a trust receipt a trust receipts transaction, viz.:
transaction penalized under Sec. 13 of PD 115 in
relation to Art. 315, par. 1 (b) of the RPC, as the only When both parties enter into an
obligation actually agreed upon by the parties would agreement knowing that the return
be the return of the proceeds of the sale transaction. of the goods subject of the trust
This transaction becomes a mere loan, where receipt is not possible even without
the borrower is obligated to pay the bank the any fault on the part of the trustee,
amount spent for the purchase of the goods. it is not a trust receipt transaction
penalized under Section 13 of P.D.
The Court cited 2 cases the facts of which fall 115; the only obligation actually agreed
squarely to this case: upon by the parties would be the return
of the proceeds of the sale transaction.
1. Ng v. People This transaction becomes a mere loan,
where the borrower is obligated to pay
This Court acquitted Anthony Ng and ruled the bank the amount spent for the
that the Trust Receipts Law was created to purchase of the goods.
"to aid in financing importers and retail
dealers who do not have sufficient funds or Thus, in concluding that the
resources to finance the importation or transaction was a loan and not a
purchase of merchandise, and who may not trust receipt, we noted in Colinares
be able to acquire credit except through that the industry or line of work that
utilization, as collateral, of the merchandise the borrowers were engaged in was
imported or purchased." construction. We pointed out that
the borrowers were not importers
Since Asiatrust knew that Anthony Ng was acquiring goods for resale. Indeed,
neither an importer nor retail dealer, it goods sold in retail are often within the
should have known that the said agreement custody or control of the trustee until
could not possibly apply to petitioner, viz.: they are purchased. In the case of
materials used in the manufacture of
Considering that the goods in this case were
finished products, these finished
never intended for sale but for use in the
products — if not the raw materials or
fabrication of steel communication towers,
their components — similarly remain in
the possession of the trustee until they
are sold. But the goods and the materials
that are used for a construction project
are often placed under the control and
custody of the clients employing the
contractor, who can only be compelled to
return the materials if they fail to pay the
contractor and often only after the
requisite legal proceedings. The
contractor's difficulty and
uncertainty in claiming these
materials (or the buildings and
structures which they become part
of), as soon as the bank demands
them, disqualify them from being
covered by trust receipt
agreements.
Additional notes: