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Trust Receipts Digest

Trust Receipts Digest

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Published by: jongreyes on Aug 29, 2010
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G.R. No. 81559-60 April 6, 1992PEOPLE OF THE PHILIPPINES,
(public petitioner)
(private petitioner),vs.
(public respondent)
(privaterespondent).FACTS : Petitioner Allied banking Corporation (ABC) charged private respondent, Betty SiaAng, for estafa for willfully, unlawfully and feloniously defraud ABC. Private respondentreceived a trust from ABC amounting to P398,000.00 covered by a domestic letter of credit,under the express obligation to sell the same and account for the proceeds of the sale, if sold, or to return the merchandise , if not sold. Upon demand, private respondent paid onlyP283,115.78.Betty Sia Ang filed a motion to quash the information on the grounds that the facts chargeddo not constitute an offense. Respondent judge granted the motion to quash.ISSUE : Whether or not an entrustee in a trust receipt agreement who fails to deliver theproceeds of the sale or to return the goods if not sold to the entruster-bank is liable for thecrime of estafa?RULINGS : The factual circumstances in the present case show that the alleged violationwas committed sometime in 1980 or during the effectivity of P.D. 115. The failure, therefore,to account for the P114,884.22 balance is what makes the accused-respondent criminallyliable for estafa.A trust receipt arrangement does not involve a simple loan transaction between a creditor and debtor-importer. Apart from a loan feature, the trust receipt arrangement has a securityfeature that is covered by the trust receipt itself. (Vintola v. Insular Bank of Asia and America,151 SCRA 578 [1987]) That second feature is what provides the much needed financialassistance to our traders in the importation or purchase of goods or merchandise through theuse of those goods or merchandise as collateral for the advancements made by a bank.(Samo v. People,
). The title of the bank to the security is the one sought to beprotected and not the loan which is a separate and distinct agreement.The
Trust Receipts Law punishes the dishonesty and abuse of confidence in thehandling of money or goods to the prejudice of another regardless of whether thelatter 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.Trust receipts are indispensable contracts in international and domestic businesstransactions. The prevalent use of trust receipts, the danger of their misuse and/or misappropriation of the goods or proceeds realized from the sale of goods, documents or instruments held
in trust 
for entruster-banks, and the need for regulation of trust receipttransactions to safeguard the rights and enforce the obligations of the parties involved arethe main thrusts of P.D. 115. As correctly observed by the Solicitor General, P.D. 115, likeBatas Pambansa Blg. 22, punishes the act "not as an offense against property, but as anoffense against public order. . . ." The misuse of trust receipts therefore should be deterredto prevent any possible havoc in trade circles and the banking community (citing Lozano v.Martinez, 146 SCRA 323 [1986];
, p. 57) It is in the context of upholding public interest
that the law now specifically designates a breach of a trust receipt agreement to be an actthat "shall" make one liable for estafa. 
G.R. No. L-59640 July 15, 1991DAMIAN ROBLES,
respondents.FACTS : Petitioner, Damian Robles, was charged with the crime of estafa. Petitioner,received in trust from Roberto Ng y Shiang an office equipments amounting to P14,895.00for selling the same. Under the express obligation of turning over the proceeds of the sale, if sold, or of returning the said office equipments if not sold. Despite repeated demands, herefuses to remit the proceeds of the sale or return the office equipments. The trial courtconvicted petitioner for the crime charged.Petitioner appealed the decision to the Court of Appeals. CA affirmed the decision of the trialcourt but modified the penalty.ISSUE : Whether or not petitioner is guilty of estafa?RULINGS : We note that under Section 13 of the Trust Receipts Law, the violation by anentrustee of his obligations under a trust receipt document, more specifically his failure toturnover the proceeds of the sale of the goods covered by the trust receipt, or to return saidgoods as they were not sold or disposed of, would constitute the crime of estafa under Article315 (1) (b), Revised Penal Code.It is also pertinent to point out that
quite apart from and even in the absence of the provisionsof Section 13 of the Trust Receipt Law 
, the failure of Damian Robles to comply with hisfiduciary obligation under the delivery trust receipts here involved, constituted the offense of estafa punishable under Article 315 (1) (b) of the Revised Penal Code. In other words, theelements of the offense of estafa set out in Article 315 (1) (b) are present in the instant case.Those elements are: (1) "unfaithfulness or abuse of confidence;" (2) "misappropriating . . .money or goods . . .; (3) received by the offender in trust or on commission . . . or under anyother obligation involving the duty to make delivery of or to return the same . . .;" and (4) "tothe prejudice of another." The delivery trust receipts, in the case at bar, admittedly signed bypetitioner Damian Robles imposed on him the duty to return the article or the proceedsthereof to Paramount within two (2) days from the specified dates of the trust receipts.
Thefailure to account, upon demand, for funds or property held in trust is evidence of misappropriation
which, not having been explained away or rebutted by petitioner DamianRobles, warranted his conviction for estafa under the Revised Penal Code. This was settleddoctrine long before the promulgation of the Trust Receipts Law.We note in this connection that the delivery trust receipts here involved in fact constitutedtrust receipts within the meaning of Presidential Decree No. 115, known as the "TrustReceipts Law," which took effect on 29 January 1973. Section 4 thereof defines a "trustreceipt" and a "trust receipt transaction" for purposes of the decree in the following terms:
Sec. 4.
What constitutes a trust receipt transaction
. — A trust receipt transaction, withinthe meaning of this Decree, is
any transaction
by and between a person referred to inthis Decree as the entruster, and another person referred to in this Decree as theentrustee,
whereby the entruster, who owns or holds absolute title
or security interests
over certain specified goods
documents or instruments,
releases the same to the possession of the entrustee upon the latter's execution and delivery 
to the entruster of 
asigned document 
called a "trust receipt"
wherein the entrustee binds himself to hold thedesignated goods,
documents or instruments in
trust for the entruster 
and to sell or otherwise dispose of the
, documents or instruments
with the obligation to turnover to the entruster the proceeds thereof 
to the extent of the amount owing to theentruster or as appears in the trust receipt
or the goods
, documents or instruments
themselves if they are unsold or not otherwise disposed of,
in accordance with the termsand conditions specified in the trust receipt, . . . .
 petitioner, vs.
FACTS : Private respondent filed an interpleader to the trial court to determine to whom theyshould continue paying the amounts in the promissory note whom they issued to Delta Motor Corporation (DMC), from whom they purchased a four units of M.A.N. Diesel Long DistanceTouring Coaches. The State Investment House, Inc. (SIHI) claimed that they are entitled tothe promissory note because DMC executed in favor of SIHI a deed of sale of variousaccount receivable including the subject promissory note to settle his loan to SIHI.While PNB, on the other hand, claimed over the promissory note is based on letter of creditgranted by PNB to MDC to finance the importation of 325 units of M.A.N. diesel bus chassis,which supposedly include the four units sold by DMC to the private respondent. PNB andDMC entered a Trust Receipt Agreement after DMC took possession of the units.UBP, in turn, obtained a Writ of Garnishment as a result of a judgment against DMC. UBPasserted rights over the promissory notes by virtue of said writ.The court ruled that SIHI’s claims over the promissory notes were superior to those of PNBand UBP. It does not appear that UBP questioned the decision of the RTC. PNB, for its part,appealed to the Court of Appeals. CA reversed the decision of the RTC and declared PNB’sclaims superior to those of SIHI. It held that under Section 9 of the Trust Receipts Law, DMCwas merely an entrustee of the products imported and, thus, obliged to turn over to itsentruster, PNB, the proceeds of the sale of said products. The Court of Appeals deniedSIHI’s motion for reconsideration. Hence, this petition.ISSUE : Whether or not the goods released under the trust receipt include the vehiclespurchased by the Franco spouses from DMC and for which the promissory notes wereissued?RULINGS : The evidence for PNB fails to establish that the vehicles sold to the Francoswere among those covered by the trust receipts. As petitioner points out, neither the trustreceipts covering the units imported nor the corresponding bills of lading contain the chassisand engine numbers of the vehicles in question.

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