BPI VS.
INTERMEDIATE APPELLATE COURT
164 SCRA 630 (1988)
Facts:  a Holdout Agreement providing that the loan was
Rizaldy T. Zshornack and his wife maintained in
COMTRUST a dollar savings account and a peso
current account. An application for a dollar drat was
accomplished by Virgillo Garcia branch manager of
COMTRUST payable to a certain Leovigilda Dizon. In
the PPLICtion, Garcia indicated that the amount was to
be charged to the dolar savings account of the
Zshornacks. There wasa no indication of the name of the
purchaser of the dollar draft. Comtrust issued a check
payable to the order of Dizon. When Zshornack noticed
the withdrawal from his account, he demanded an
explainaiton from the bank. In its answer, Comtrust
claimed that the peso value of the withdrawal was given
to Atty. Ernesto Zshornack, brother of Rizaldy. When he
encashed with COMTRUST a cashiers check for P8450
issued by the manila banking corporation payable to
Ernesto.  Eastern and/or Lim. Since the Holdout Agreement
Issue: Whether the contract between petitioner and
respondent bank is a deposit?
Held: The document which embodies the contract states
that the US$3,000.00 was received by the bank for
safekeeping. The subsequent acts of the parties also
show that the intent of the parties was really for the bank
to safely keep the dollars and to return it to Zshornack at
a later time. Thus, Zshornack demanded the return of
the money on May 10, 1976, or over five months later.
The above arrangement is that contract defined under
Article 1962, New Civil Code, which reads:
Art. 1962. A deposit is constituted from the moment a
person receives a thing belonging to another, with the
obligation of safely keeping it and of returning the same.
If the safekeeping of the thing delivered is not the
principal purpose of the contract, there isNO DEPOSIT   option under the Holdout Agreement. Therefore, its
but some other contract.
BANK OF THE PHILIPPINE ISLANDS VS. COURT OF
APPEALS
232 SCRA302 (1994 )
FACTS:  the wrong party. The law provides that payment made by
Private respondents Eastern Plywood Corporation and
Benigno Lim as officer of the corporation, had an
“AND/OR” joint account with Commercial Bank and Trust
Co (CBTC), the predecessor-in-interest of petitioner
Bank of the Philippine Islands. Lim withdraw funds from
such account and used it to open a joint checking
account (an “AND” account) with Mariano Velasco.
When Velasco died in 1977, said joint checking account
had P662,522.87. By virtue of an Indemnity Undertaking
executed by Lim and as President and General Manager
of Eastern withdrew one half of this amount and
deposited it to one of the accounts of Eastern with
CBTC.  (P150,000.00) with the respondent Overseas Bank of
Eastern obtained a loan of P73,000.00 from CBTC which
was not secured. However, Eastern and CBTC executed
secured by the “Holdout of the C/A No. 2310-001-42”
referring to the joint checking account of Velasco and
Lim. 
Meanwhile, a judicial settlement of the estate of Velasco
ordered the withdrawal of the balance of the account of
Velasco and Lim. 
Asserting that the Holdout Agreement provides for the
security of the loan obtained by Eastern and that it is the
duty of CBTC to debit the account of respondents to set
off the amount of P73,000 covered by the promissory
note, BPI filed the instant petition for recovery. Private
respondents Eastern and Lim, however, assert that the
amount deposited in the joint account of Velasco and
Lim came from Eastern and therefore rightfully belong to
covers the loan of P73,000, then petitioner can only hold
that amount against the joint checking account and must
return the rest. 
ISSUE:
 Whether BPI can demand the payment of the loan
despite the existence of the Holdout Agreement and
whether BPI is still liable to the private respondents on
the account subject of the withdrawal by the heirs of
Velasco. 
RULING: 
Yes, for both issues. Regarding the first, the Holdout
Agreement conferred on CBTC the power, not the duty,
to set off the loan from the account subject of the
Agreement. When BPI demanded payment of the loan
from Eastern, it exercised its right to collect payment
based on the promissory note, and disregarded its
demand was in the correct order. 
Regarding the second issue, BPI was the debtor and
Eastern was the creditor with respect to the joint
checking account. Therefore, BPI was obliged to return
the amount of the said account only to the creditor.
When it allowed the withdrawal of the balance of the
account by the heirs of Velasco, it made the payment to
the debtor to the wrong party does not extinguish its
obligation to the creditor who is without fault or
negligence. Therefore, BPI was still liable to the true
creditor, Eastern.
MANUEL M. SERRANO V. CENTRAL BANK OF THE
PHILIPPINES
96 SCRA 96 (1980)
Facts:
Petitioner made a time deposit, for one year with 6%
interest, of One Hundred Fifty Thousand Pesos
Manila. Concepcion Maneja also made a time deposit,
for one year with 6-½% interest, on March 6, 1967, of
Two Hundred Thousand Pesos (P200,000.00) with the
same respondent Overseas Bank of Manila.
On August 31, 1968, Concepcion Maneja, married to
Felixberto M. Serrano, assigned and conveyed to
petitioner Manuel M. Serrano, her time deposit of
P200,000.00 with respondent Overseas Bank of Manila.
Notwithstanding series of demands for encashment of
the aforementioned time deposits from the respondent
Overseas Bank of Manila, dating from December 6,
1967 up to March 4, 1968, not a single one of the time
deposit certificates was honored by respondent
Overseas Bank of Manila.
In the case of Ramos vs. Central Bank of the
Philippines,petitioner Manuel Serrano filed on
September 6, 1968, a motion to intervene on the ground
that Serrano had a real and legal interest as depositor of
the Overseas Bank of Manila in the matter in litigation in
that case. This was denied on the ground that his claim
as depositor of the Overseas Bank of Manila should
properly be ventilated in the Court of First Instance, and
if this Court were to allow Serrano to intervene as
depositor, thousands of other depositors would follow
and thus cause an avalanche of cases in this Court.
Issue:
Whether or not plaintiff is entitled to the relief sought.
Held:
This case is for the recovery of time deposits plus
interest from respondent Overseas Bank of Manila, and
recovery of damages against respondent Central Bank
for its alleged failure to strictly supervise the acts of the
other respondent Bank and protect the interests of its
depositors by virtue of the constructive trust created
when respondent Central Bank required the other
respondent to increase its collaterals for its overdrafts
said emergency loans, said collaterals allegedly
acquired through the use of depositors money.
Claims of these nature are not proper in actions for
mandamus and prohibition as there is no shown clear
abuse of discretion by the Central Bank in its exercise of
supervision over the other respondent Overseas Bank of
Manila, and if there was, petitioner here is not the proper
party to raise that question, but rather the Overseas
Bank of Manila.
Bank deposits are in the nature of irregular deposits.
They are really loans because they earn interest. All
kinds of bank deposits, whether fixed, savings, or current
are to be treated as loans and are to be covered by the
law on loans. 14 Current and savings deposit are loans
to a bank because it can use the same. The petitioner
here in making time deposits that earn interests with
respondent Overseas Bank of Manila was in reality a
creditor of the respondent Bank and not a depositor. The
respondent Bank was in turn a debtor of petitioner.
Failure of he respondent Bank to honor the time deposit
is failure to pay s obligation as a debtor and not a breach
of trust arising from depositary's failure to return the
subject matter of the deposit.
Petition is dismissed.
LUA KIAN V. MANILA RAILROAD COMPANY
19 SCRA 5, 5 January 1967
FACTS:
Manila Port Service, the arrastre operator, is a
subsidiary of defendant Manila Railroad Company.
MPS received in Jan. 1960 shipments of Carnation
evaporated milk for two consignees, Lua Kian and Cebu
United. According to their respective bills of lading, Luan
Kian was supposed to receive 2,000 cases but only
received 1,829 (171 short of 2,000) while Cebu United
was supposed to receive 3,000 cases but received
3,171. The excess 171 cases were marked "Cebu
United".
Accordingly this situation placed the defendant arrastre
operator in a dilemma, for should it deliver them to Lua
Kian the goods could be claimed by the consignee Cebu
United Enterprises whose markings they bore, and
should it deliver according to markings, to Cebu United
Enterprises, it might be sued by the consignee, Lua Kian
whose bill of lading indicated that it should receive 171
cases more. The Management Contract even exempts
exempts the arrastre operator from responsibility for
misdelivery or non-delivery due to improper or
insufficient marking.
ISSUE:
Is MPS liable for the short-delivery to Lua Kian?
HELD:
Yes.
The legal relationship between an arrastre operator and
the consignee is akin to that of a depositor and
warehouseman.  As custodian of the goods discharged
from the vessel, it was defendant arrastre operator's
duty, like that of any ordinary depositary, to take good
care of the goods and to turn them over to the party
entitled to their possession. Under this particular set of
circumstances, said defendant should have withheld
delivery because of the discrepancy between the bill of
lading and the markings and conducted its own
investigation, not unlike that under Section 18 of the
Warehouse Receipts Law, or called upon the parties, to
interplead, such as in a case under Section 17 of the
same law, in order to determine the rightful owner of the
goods.
Notwithstanding Section 12 of the Management Contract
exempting the arrastre from liability, the court cannot
excuse the defendant from liability because the bill of
lading showed that only 3,000 cases were consigned to
Cebu United Enterprises. The fact that the excess of 171
cases were marked for Cebu United Enterprises and that
the consignment to Lua Kian was 171 cases less than
the 2,000 in the bill of lading, should have been sufficient
reason for the MPS to withhold the goods pending
determination of their rightful ownership.
ANGEL JAVELLANA VS. JOSE LIM, ET AL.
11 PHIL 141 (1908)
FACTS:
Jose, Ceverino and Domingo Lim, defendants, executed
a document in favor of Angel Javellana, plaintiff-
appellee, wherein it states that:
“they, defendants, have received, as a deposit, without
interest, money from plaintiff-appellee and agreed upon
a date when they will return the money. Upon the
stipulated due date, defendants asked for an extension
to pay and binding themselves to pay 15% interest per
annum on the amount of their indebtedness, to which the
plaintiff-appellee acceded.”
The defendants were not able to pay the full amount of
their indebtedness notwithstanding the request made by
plaintiff-appellee. As they were able to pay P1,000,on
May 15, 1900 while the plaintiff incurred damages
amounting to P830 since Jaunary 20, 1898.
The lower court ruled in favor of plaintiff-appellee for the
recovery of the amount of P5,714.44. While a motion for
new trial was granted.
ISSUE:
Whether the agreement entered into by the parties is
one of loan or of deposit?
HELD:
The document executed was a contract of loan. The
court affirmed the trial court’s decision and
favoredJavellana, and directed the defendants to pay the
debt and interest.
“Moreover, for the reason above set forth it may, as a
matter of course, be inferred that there was no renewal
of the contract deposited converted into a loan, because,
as has already been stated, the defendants received
said amount by virtue of real loan contract under the
name of a deposit, since the so-called bailees were
forthwith authorized to dispose of the amount deposited.
This they have done, as has been clearly shown.”
Where money, consisting of coins of legal tender, is
deposited with a person and the latter is authorized by
the depositor to use and dispose of the same, the
agreement is not a contract of deposit, but a loan. A
subsequent agreement between the parties as to
interest on the amount said to have been deposited,
because the same could not be returned at the time
fixed therefor, does not constitute a renewal of an
agreement of deposit, but it is the best evidence that the
original contract entered into between therein was for a
loan under the guise of a deposit. In this case, the
appleants were lawfully authorized to make use of the
amount deposited, which they have done. Jose Lim
came to the plaintiff to be able to ask for an extension of
payment since he have used the amount deposited to
him, with the condition that 15% interest shall we
included in the contract.
The law provides:
Article 1767 of the Civil Code provides that —
The depository cannot make use of the thing deposited
without the express permission of the depositor.
Otherwise he shall be liable for losses and damages.
Article 1768 also provides that —
When the depository has permission to make use of the
thing deposited, the contract loses the character of a
deposit and becomes a loan or bailment.
The permission shall not be presumed, and its existence
must be proven.
SILVESTRA BARON V. PABLO DAVID
51 Phil 2 (1927)
FACTS:
The defendant owns a rice mill, which was well
patronized by the rice growers of the vicinity.
On January 17, 1921, a fire occurred that destroyed the
mill and its contents, and it was some time before the
mill could be rebuilt and put in operation again.
Silvestra Baron (P1) and Guillermo Baron (P2) each
filed an action for the recovery of the value of their palay
(P5,238 and P5,734, respectively) from the defendant,
and alleged that: the cavans of palay have been sold by
both plaintiffs to the David in the year 1920 and the
palay was delivered to him at his special request, with a
promise of compensation at the highest price per cavan.
David claims that the palay was deposited subject to
future withdrawal by the depositors or to some future
sale, which was never effected. He also contended that
in order for the plaintiffs to recover, it is necessary that
they should be able to establish that the plaintiffs' palay
was delivered in the character of a sale, and that if, on
the contrary, the defendant should prove that the
delivery was made in the character of deposit, the
defendant should be absolved.
ISSUE:
WON there was deposit.
HELD:
NO. Art. 1978 states that when the depositary has
permission to use the thing deposited, the contract loses
the concept of a deposit and becomes a loan or
commodatum, except where safekeeping is still the
principal purpose of the contract. The permission shall
not be presumed, and its existence must be proved.
When the palay in question was placed by the plaintiffs
in the defendant's mill there was the understanding that
the defendant was at liberty to convert it into rice and
dispose of it at his pleasure. The mill was actively
running during the entire season, and as palay was daily
coming in from many customers and as rice was being
constantly shipped by the defendant to Manila, or other
rice markets, it was impossible to keep the plaintiffs'
palay segregated. In fact the defendant admits that the
plaintiffs' palay was mixed with that of others.
It is quite certain that all of the plaintiffs' palay, which
was put in before June 1, 1920, been milled and
disposed of long prior to the fire of January 17, 1921.
Furthermore, the proof shows that when the fire
occurred there could not have been more than about
360 cavans of palay in the mill, none of which by any
reasonable probability could have been any part of the
palay delivered by the plaintiffs.
The defendant then is bound to account for the value of
the subject palay, and his liability was not extinguished
by the occurence of the fire.
Dissenting:
Johns dissented to the weight given by the court on the
perjured statements of David than those against the
proofs of two elderly individuals as to the price of the
palay and who reposed their trust and confidence to their
nephew.
SPOUSES TIRSO I. VINTOLA and LORETO DY
VINTOLA vs. INSULAR BANK OF ASIA AND
AMERICA
150 SCRA 578, G.R. # 73721 May 29, 1987
FACTS: 
Spouses Vintola (VINTOLAS) applied for and were
granted a domestic letter of credit by the Insular Bank
of Asia and America (IBAA). The Letter of Credit
authorized the bank to negotiate for their account drafts
drawn by their supplier, one Stalin Tan, on Dax Kin
International for the purchase of puka and olive
seashells. VINTOLAS received from Stalin Tan the puka
and olive shells and executed a Trust Receipt
agreement with IBAA. Under that Agreement, the
VINTOLAS agreed to hold the goods in trust for IBAA as
the "latter's property with liberty to sell the same for its
account, and "incase of sale" to turn over the proceeds.
Having defaulted on their obligation, IBAA demanded
payment from the VINTOLAS.
The VINTOLAS, who were unable to dispose of the
shells, responded by offering to return the goods. IBAA
refused to accept the merchandise, and due to the
continued refusal of the VINTOLAS to make good their
undertaking, IBAA charged them with Estafa for having
misappropriated, misapplied and converted for their own
personal use and benefit the aforesaid goods.
The trial court acquitted the VINTOLAS of the offense
charged as they turned over the seashells to the custody
of the trial court to disproved the claim of
misappropriation. IBAA commenced a civil action to
recover the value of the goods. At first court dismissed
the case holding that the complaint was barred by the
judgment of acquittal in the criminal but was granted
through reconsideration. The CFI-Cebu certified the
case to the SC as the issue involves a question of law.
Contention of Vintolas:
(1) The obligation to IBAA has been extinguished
since they were unable to dispose the seashells and
they have relinguished possession thereof to IBAA, as
owner of the goods, by depositing them to court.
(2) The acquittal from the estafa case, also
extinguishes civil liability since the IBAA did not reserved
their right to enforce a separate civil action.
ISSUE :
Whether or not the Vintolas can return the goods/
merchandise to IBAA as payment for the trust receipt?
RULINGS :
NO. The return or non disposal of the thing secured by
the letter of credit dies not extinguish the liability of the
borrower to pay. The court affirmed the ruling of CFI-
Cebu that favored the payment of 72,982.27 plus 14%
interest.
A letter of credit-trust receipt arrangement is
endowed with its own distinctive features and
characteristics. Under that set-up, a bank extends a loan
covered by the Letter of Credit, with the
trust receipt as a security for the loan. In other words,
the transaction involves a loan feature represented by
the letter of credit, and a security feature which is in the
covering trust receipt.
“A trust receipt, therefore, is a security agreement,
pursuant to which a bank acquires a "security interest" in
the goods. "It secures an indebtedness and there can be
no such thing as security interest that secures no
obligation.”
DEFINITION:
"Security Interest" means a property interest in goods,
documents or instruments to secure performance of
some obligations of the entrustee or of some third
persons to the entruster and includes title, whether or
not expressed to be absolute, whenever such title is in
substance taken or retained for security only. 
As elucidated in Samo vs. People "a trust receipt is
considered as a security transaction intended to aid
in financing importers and retail dealers who do not
have sufficient funds or resources to finance the
importation or purchase of merchandise, and who
may not be able to acquire credit except through
utilization, as collateral of the merchandise imported or
purchased."
The trust receipt arrangement did not convert the IBAA
into an investor; the latter remained a lender and
creditor. IBAA was merely the holder of a security title for
the advances in made to Vintolas. The property acquired
shall remain to be owned by the Vintolas and should be
disposed on their own risk. “The IBAA is not the factual
owner of the goods, the VINTOLAS cannot justifiably
claim that because they have surrendered the goods to
IBAA and subsequently deposited them in the custody of
the court, they are absolutely relieved of their obligation
to pay their loan because of their inability to dispose of
the goods. The fact that they were unable to sell the
seashells in question does not affect IBAA's right to
recover the advances it had made under the Letter of
Credit.”
JOSE O. SIA vs. THE PEOPLE OF THE PHILIPPINES
121 SCRA 661 (1983)
Petition for review of the decision of the Court of Appeals
affirming the decision of the Court of First Instance of Manila
convicting the appellant of estafa, under an information which
reads:
That in, about or during the period
comprised' between July 24, 1963 and
December 31, 1963, both dates inclusive, in
the City of Manila, Philippines, the said
accused did then and there willfully,
unlawfully and feloniously defraud the
Continental Bank, a banking institution duly
organized and doing business in the City of
Manila, in the following manner, to wit: the
said accused, in his capacity as president
and general manager of the Metal
Manufacturing of the Philippines, Inc.
(MEMAP) and on behalf of said company,
obtained delivery of 150 M/T Cold Rolled
Steel Sheets valued at P 71,023.60 under a
trust receipt agreement under L/C No.
63/109, which cold rolled steel sheets were
consigned to the Continental Bank, under
the express obligation on the part of said
accused of holding the said steel sheets in
trust and selling them and turning over the
proceeds of the sale to the Continental Bank;
but the said accused, once in possession of
the said goods, far from complying with his
aforesaid obligation and despite demands
made upon him to do so, with intent to
defraud, failed and refused to return the said
cold rolled sheets or account for the
proceeds thereof, if sold, which the said
accused willfully, unlawfully and feloniously
misappropriated, misapplied and converted
to his own personal use and benefit, to the
damage and prejudice of the said
Continental Bank in the total amount of
P146,818.68, that is the balance including
the interest after deducting the sum of
P28,736.47 deposited by the said accused
with the bank as marginal deposit and
forfeited by the said from the value of the
said goods, in the said sum of P71,023.60.
(Original Records, p. 1).
In reviewing the evidence, the Court of Appeals came up with
the following findings of facts which the Solicitor General
alleges should be conclusive upon this Court:
There is no debate on certain antecedents:
Accused Jose 0. Sia sometime prior to 24
May, 1963, was General Manager of the
Metal Manufacturing Company of the
Philippines, Inc. engaged in the manufacture
of steel office equipment; on 31 May, 1963,
because his company was in need of raw
materials to be imported from abroad, he
applied for a letter of credit to import steel
sheets from Mitsui Bussan Kaisha, Ltd. of
Tokyo, Japan, the application being directed
to the Continental Bank, herein complainant,
Exhibit B and his application having been
approved, the letter of credit was opened on
5 June, 1963 in the amount of $18,300,
Exhibit D; and the goods arrived sometime in
July, 1963 according to accused himself, tsn.
II:7; now from here on there is some debate
on the evidence; according to Complainant
Bank, there was permitted delivery of the
steel sheets only upon execution of a trust
receipt, Exhibit A; while according to the
accused, the goods were delivered to him
sometime before he executed that trust
receipt in fact they had already been
converted into steel office equipment by the
time he signed said trust receipt, tsn. II:8; but
there is no question - and this is not debated
- that the bill of exchange issued for the
purpose of collecting the unpaid account
thereon having fallen due (see Exh. B)
neither accused nor his company having
made payment thereon notwithstanding
demands, Exh. C and C-1, dated 17 and 27
December, 1963, and the accounts having
reached the sum in pesos of P46,818.68
after deducting his deposit valued at
P28,736.47; that was the reason why upon
complaint by Continental Bank, the Fiscal
filed the information after preliminary
investigation as has been said on 22
October, 1964. (Rollo [CA], pp. 103- 104).
The first issue raised, which in effect combines the first three
errors assigned, is whether petitioner Jose O. Sia, having only
acted for and in behalf of the Metal Manufacturing Company of
the Philippines (Metal Company, for short) as President thereof
in dealing with the complainant, the Continental Bank, (Bank
for short) he may be liable for the crime charged.
In discussing this question, petitioner proceeds, in the
meantime, on the assumption that the acts imputed to him
would constitute the crime of estafa, which he also disputes,
but seeks to avoid liability on his theory that the Bank knew all
along that petitioner was dealing with him only as an officer of
the Metal Company which was the true and actual applicant for
the letter of credit (Exhibit B) and which, accordingly, assumed
sole obligation under the trust receipt (Exhibit A). In disputing
the theory of petitioner, the Solicitor General relies on the
general principle that when a corporation commits an act which
would constitute a punishable offense under the law, it is the
responsible officers thereof, acting for the corporation, who
would be punished for the crime, The Court of Appeals has
subscribed to this view when it quoted approvingly from the
decision of the trial court the following:
A corporation is an artificial person, an
abstract being. If the defense theory is
followed unscrupulously legions would form
corporations to commit swindle right and left
where nobody could be convicted, for it
would be futile and ridiculous to convict an
abstract being that can not be pinched and
confined in jail like a natural, living person,
hence the result of the defense theory would
be hopeless chose in business and finance.
It is completely untenable. (Rollo [CA], p.
108.)
The above-quoted observation of the trial court would seem to
be merely restating a general principle that for crimes
committed by a corporation, the responsible officers thereof
would personally bear the criminal liability. (People vs. Tan
Boon Kong, 54 Phil. 607. See also Tolentino, Commercial
Laws of the Philippines, p. 625, citing cases.)
The case cited by the Court of Appeals in support of its stand-
Tan Boon Kong case, supra-may however not be squarely
applicable to the instant case in that the corporation was
directly required by law to do an act in a given manner, and the
same law makes the person who fails to perform the act in the
prescribed manner expressly liable criminally. The
performance of the act is an obligation directly imposed by the
law on the corporation. Since it is a responsible officer or
officers of the corporation who actually perform the act for the
corporation, they must of necessity be the ones to assume the
criminal liability; otherwise this liability as created by the law
would be illusory, and the deterrent effect of the law, negated.
In the present case, a distinction is to be found with the Tan
Boon Kong case in that the act alleged to be a crime is not in
the performance of an act directly ordained by law to be
performed by the corporation. The act is imposed by
agreement of parties, as a practice observed in the usual
pursuit of a business or a commercial transaction. The offense
may arise, if at all, from the peculiar terms and condition
agreed upon by the parties to the transaction, not by direct
provision of the law. The intention of the parties, therefore, is a
factor determinant of whether a crime was committed or
whether a civil obligation alone intended by the parties. With
this explanation, the distinction adverted to between the Tan
Boon Kong case and the case at bar should come out clear
and meaningful. In the absence of an express provision of law
making the petitioner liable for the criminal offense committed
by the corporation of which he is a president as in fact there is
no such provisions in the Revised Penal Code under which
petitioner is being prosecuted, the existence of a criminal
liability on his part may not be said to be beyond any doubt. In
all criminal prosecutions, the existence of criminal liability for
which the accused is made answerable must be clear and
certain. The maxim that all doubts must be resolved in favor of
the accused is always of compelling force in the prosecution of
offenses. This Court has thus far not ruled on the criminal
liability of an officer of a corporation signing in behalf of said
corporation a trust receipt of the same nature as that involved
herein. In the case of Samo vs. People, L-17603-04, May 31,
1962, the accused was not clearly shown to be acting other
than in his own behalf, not in behalf of a corporation.
The next question is whether the violation of a trust receipt
constitutes estafa under Art. 315 (1-[2]) of the Revised Penal
Code, as also raised by the petitioner. We now entertain grave
doubts, in the light of the promulgation of P.D. 115 providing
for the regulation of trust receipts transaction, which is a very
comprehensive piece of legislation, and includes an express
provision that if the violation or offense is committed by a
corporation, partnership, association or other juridical entities
the penalty provided for in this Decree shall be imposed upon
the directors, officers, employees or other officials or persons
therein responsible for the offense, without prejudice to civil
liabilities arising from the criminal offense. The question that
suggests itself is, therefore, whether the provisions of the
Revised Penal Code, Article 315, par. 1 (b) are not adequate to
justify the punishment of the act made punishable by P.D. 115,
that the necessity was felt for the promulgation of the decree.
To answer this question, it is imperative to make an indepth
analysis of the conditions usually embodied in a trust receipt to
best their legal sufficiency to constitute the basis for holding
the violation of said conditions as estafa under Article 315 of
the Revised Penal Code which P.D. 115 now seeks to punish
expressly.
As executed, the trust receipt in question reads:
I/WE HEREBY AGREE TO HOLD SAID
GOODS IN TRUST FOR THE SAID BANK
as its property with liberty to sell the same
for its account but without authority to make
any other disposition whatsoever of the said
goods or any part thereof (or the proceeds
thereof) either way of conditional sale,
pledge or otherwise;
In case of sale I/we further agree to hand the
proceeds as soon as received to the BANK
to apply against the relative acceptance (as
described above) and for the payment of any
other indebtedness of mine/ours to
CONTINENTAL BANK. (Original Records, p.
108)
One view is to consider the transaction as merely that of a
security of a loan, and that the trust element is but and inherent
feature of the security aspect of the arrangement where the
goods are placed in the possession of the "entrustee," to use
the term used in P.D. 115, violation of the element of trust not
being intended to be in the same concept as how it is
understood in the criminal sense. The other view is that the
bank as the owner and "entrustor" delivers the goods to the
"entrustee, " with the authority to sell the goods, but with the
obligation to give the proceeds to the "entrustor" or return the
goods themselves if not sold, a trust being thus created in the
full sense as contemplated by Art. 315, par. 1 (b).
We consider the view that the trust receipt arrangement gives
rise only to civil liability as the more feasible, before the
promulgation of P.D. 115. The transaction being contractual,
the intent of the parties should govern. Since the trust receipt
has, by its nature, to be executed upon the arrival of the goods
imported, and acquires legal standing as such receipt only
upon acceptance by the "entrustee," the trust receipt
transaction itself, the antecedent acts consisting of the
application of the L/C, the approval of the L/C and the making
of the marginal deposit and the effective importation of the
goods, all through the efforts of the importer who has to find his
supplier, arrange for the payment and shipment of the imported
goods-all these circumstances would negate any intent of
subjecting the importer to criminal prosecution, which could
possibly give rise to a case of imprisonment for non-payment
of a debt. The parties, therefore, are deemed to have
consciously entered into a purely commercial transaction that
could give rise only to civil liability, never to subject the
"entrustee" to criminal prosecution. Unlike, for instance, when
several pieces of jewelry are received by a person from the
owner for sale on commission, and the former misappropriates
for his personal use and benefit, either the jewelries or the
proceeds of the sale, instead of returning them to the owner as
is his obligation, the bank is not in the same concept as the
jewelry owner with full power of disposition of the goods, which
the bank does not have, for the bank has previously extended
a loan which the L/C represents to the importer, and by that
loan, the importer should be the real owner of the goods. If
under the trust receipt the bank is made to appear as the
owner, it was but an artificial expedient, more of a legal fiction
than fact, for if it were really so, it could dispose of the goods in
any manner it wants, which it cannot do, just to give
consistency with the purpose of the trust receipt of giving a
stronger security for the loan obtained by the importer. To
consider the bank as the true owner from the inception of the
transaction would be to disregard the loan feature thereof, a
feature totally absent in the case of the transaction between
the jewel-owner and his agent.
Consequently, if only from the fact that the trust receipt
transaction is susceptible to two reasonable interpretation, one
as giving rise only to civil liability for the violation of the
condition thereof, and the other, as generating also criminal
liability, the former should be adopted as more favorable to the
supposed offender. (Duran vs. CA, L-39758, May 7, 1976, 71
SCRA 68; People vs. Parayno, L-24804, July 5, 1968, 24
SCRA 3; People vs. Abendan, L-1481, January 28,1949,82
Phil. 711; People vs. Bautista, L-1502, May 24, 1948, 81 Phil.
78; People vs. Abana, L-39, February 1, 1946, 76 Phil. 1.)
There is, moreover, one circumstance appearing on record, the
significance of which should be properly evaluated. As stated
in petitioner's brief (page 2), not denied by the People, "before
the Continental Bank approved the application for a letter of
credit (Exhibit 'D'), subsequently covered by the trust receipt,
the Continental Bank examined the financial capabilities of the
applicant, Metal Manufacturing Company of the Philippines
because that was the bank's standard procedure (Testimony of
Mr. Ernesto Garlit, Asst. Manager of the Foreign Department,
Continental Bank, t.s.n., August 30, 1965). The Continental
Bank did not examine the financial capabilities of herein
petitioner, Jose O. Sia, in connection with the same letter of
credit. (Ibid). " From this fact, it would appear as positively
established that the intention of the parties in entering into the
"trust receipt" agreement is merely to afford a stronger security
for the loan evidenced by the letter of credit, may be not as an
ordinary pledge as observed in P.N.B. vs. Viuda e Hijos de
Angel Jose, et al.,  63 Phil. 814, citing In re Dunlap C (206 Fed.
726) but neither as a transaction falling under Article 315-1 (b)
of the Revised Penal Code giving rise to criminal liability, as
previously explained and demonstrated.
It is worthy of note that the civil liability imposed by the trust
receipt is exclusively on the Metal Company. Speaking of such
liability alone, as one arising from the contract, as
distinguished from the civil liability arising out of a crime, the
petitioner was never intended to be equally liable as the
corporation. Without being made so liable personally as the
corporation is, there would then be no basis for holding him
criminally liable, for any violation of the trust receipt. This is
made clearly so upon consideration of the fact that in the
violation of the trust agreement and in the absence of positive
evidence to the contrary, only the corporation benefited, not
the petitioner personally, yet, the allegation of the information
is to effect that the misappropriation or conversion was for the
personal use and benefit of the petitioner, with respect to which
there is variance between the allegation and the evidence.
It is also worthy of note that while the trust receipt speaks of
authority to sell, the fact is undisputed that the imported goods
were to be manufactured into finished products first before they
could be sold, as the Bank had full knowledge of. This fact is,
however, not embodied in the trust agreement, thus impressing
on the trust receipt vagueness and ambiguity which should not
be the basis for criminal prosecution, in the event of a violation
of the terms of the trust receipt. Again, P.D. 115 has express
provision relative to the "manufacture or process of the good
with the purpose of ultimate sale," as a distinct condition from
that of "to sell the goods or procure their sale" (Section 4, (1).
Note that what is embodied in the receipt in question is
the  sale of imported goods, the manufacture thereof not having
been mentioned. The requirement in criminal prosecution, that
there must be strict harmony, not variance, between the
allegation and the evidence, may therefore, not be said to have
been satisfied in the instance case.
FOR ALL THE FOREGOING, We reverse the decision of the
Court of Appeals and hereby acquit the petitioner, with
costs  de oficio.
SO ORDERED.
RAMON GONZALES V. GO TIONG,
104 PHIL 492 (1958)
FACTS:
Go Tiong owned a rice mill and warehouse, located at
Mabini, Urdaneta, Pangasinan. He obtained a license of
a bonded businessman with Luzon Surety Co., with
conditions he failed to fulfill. The warehouse and palay
deposited therein were insured with the Alliance Surety
and Insurance Company. Ramon Gonzales deposited
palay to Go Tiong even before he got the license who
later demanded the value of his deposits. But Go Tiong
failed to give him his value until fire burned down the
warehouse, with sacks in excess of that was authorized
under his license. The receipts issued to Gonzales were
ordinary receipts and not the warehouse receipts as
defined by Warehouse receipts act. Plaintiff filed their
claims with the Bureau of Commerce and with the
proceeds of the insurance policy, BOC paid off some
claims. Plaintiff’s counsel withdrew the claims, because
according to court nothing came from plaintiff's efforts to
have his claim paid, inconsistent with what Go Tiong
claimed that it was denied. Gonzales filed claims both
against Gonzales and Luzon Surety, and renewed his
claim with BOC. Gonzales and Go Tiong entered into a
contract of amicable settlement to the effect that upon
the settlement of all accounts, but upon failure to
comply, Gonzales prosecuted his court action. Court
ruled in favor of Gonzales.
Hence, this appeal.
ISSUE:
Is the plaintiff’s claim covered by the Civil Law, and not
Bonded Warehouse Act for the reason that, Go Tiong
issued to plaintiff were ordinary receipts, not the
warehouse receipts contemplated by the Warehouse
Receipts Law, and because the deposits of palay of
plaintiff were gratuitous?
RULING:
Consequently, any deposit made with him as a bonded
warehouseman must necessarily be governed by the
provisions of Act No. 3893. Though it is desirable that
receipts issued by a bonded warehouseman should
conform to the provisions of the Warehouse Receipts
Law, said provisions are not mandatory and
indispensable in the sense that if they fell short of the
requirements of the Warehouse Receipts Act, then the
commodities delivered for storage become ordinary
deposits and will not be governed by the provisions of
the Bonded Warehouse Act. As the trial court well
observed, as far as Go Tiong was concerned, the fact
that the receipts issued by him were not "quedans" is no
valid ground for defense because he was the principal
obligor. Furthermore, as found by the trial court, Go
Tiong had repeatedly promised plaintiff to issue to him
"quedans" and had assured him that he should not
worry; and that Go Tiong was in the habit of issuing
ordinary receipts (not "quedans") to his depositors.
Considering the fact, as already stated, that prior to the
burning of the warehouse, plaintiff demanded the
payment of the value of his palay from Go Tiong on two
occasions but was put off without any valid reason, it is
illogical and unreasonable to hold that the presumption
of negligence in case of this kind is rebutted by the
bailee by simply proving that the property bailed was
destroyed by an ordinary fire which broke out on the
bailee's own premises, without regard to the care
exercised by the latter to prevent the fire, or to save the
property after the commencement of the fire. Besides, as
observed by the trial court, the defendant violated the
terms of his license by accepting for deposit palay in
excess of the limit authorized by his license, which fact
must have increased the risk. Appealed decision
affirmed.
CONSOLIDATED TERMINALS INC. VS ARTEX
DEVELOPMENT CO.
63 SCRA 46 (1975)
FACTS:
Consolidated Terminals, Inc. (CTI) CTI was the operator
of a customs bonded warehouse located at Port Area,
Manila. It received on deposit one hundred ninety-three
(193) bales of high density compressed raw cotton
valued at P99,609.76. It was understood that CTI would
keep the cotton in behalf of Luzon Brokerage
Corporation until the consignee thereof, Paramount
Textile Mills, Inc., had opened the corresponding letter of
credit in favor of shipper, Adolph Hanslik Cotton of
Corpus Christi, Texas.
Allegedly by virtue of a forged permit to deliver imported
goods, purportedly issued by the Bureau of Customs,
Artex was able to obtain delivery of the bales of cotton
on November 5 and 6, 1964 after paying CTI P15,000 as
storage and handling charges. At the time the
merchandise was released to Artex, the letter of credit
had not yet been opened and the customs duties and
taxes due on the shipment had not been paid.
CTI, in its original complaint, sought to recover
possession of the cotton by means of a writ of replevin.
The writ could not be executed. CTI then filed an
amended complaint by transforming its original
complaint into an action for the recovery from Artex of
P99,609.76 as compensatory damages, P10,000 as
nominal and exemplary damages and P20,000 as
attorney's fees.
The trial judge ruled in favor of the motion to dismiss by
Artex.
CTI in this appeal contends that, as warehouseman, it
was entitled to the possession (should be repossession)
of the bales of cotton; that Artex acted wrongfully in
depriving CTI of the possession of the merchandise
because Artex presented a falsified delivery permit, and
that Artex should pay damages to CTI.
The only statutory rule cited by CTI is section 10 of the
Warehouse Receipts Law which provides that "where a
warehouseman delivers the goods to one who is not in
fact lawfully entitled to the possession of them, the
warehouseman shall be liable as for conversion to all
having a right of property or possession in the goods.”
Issue:
Whether or not CTI is entitled to the possession of the
bales of cotton, as a warehouseman.
HELD:
No. CTI's appeal has not merit. Its amended complaint
does not clearly show that, as warehouseman, it has a
cause of action for damages against Artex. The real
parties interested in the bales of cotton were Luzon
Brokerage Corporation as depositor, Paramount Textile
Mills, Inc. as consignee, Adolph Hanslik Cotton as
shipper and the Commissioners of Customs and Internal
Revenue with respect to the duties and taxes. These
parties have not sued CTI for damages or for recovery of
the bales of cotton or the corresponding taxes and
duties.
The case might have been different if it was alleged in
the amended complaint that the depositor, consignee
and shipper had required CTI to pay damages, or that
the Commissioners of Customs and Internal Revenue
had held CTI liable for the duties and taxes. In such a
case, CTI might logically and sensibly go after Artex for
having wrongfully obtained custody of the merchandise.
In other words, on the basis of the allegations of the
amended complaint, the lower court could not render a
valid judgment in accordance with the prayer thereof. It
could not render such valid judgment because the
amended complaint did not unequivocally allege what
right of CTI was violated by Artex, or, to use the familiar
language of adjective law, what delict or wrong was
committed by Artex against CTI which would justify the
latter in recovering the value of bales of cotton even if it
was not the owner thereof.
THE ROMAN CATHOLIC BISHOP OF JARO vs.
GREGORIO DE LA PEÑA, administrator of the estate of
Father Agustin de la Peña
26 PHIL 144 (1913)
This is an appeal by the defendant from a judgment of the
Court of First Instance of Iloilo, awarding to the plaintiff the sum
of P6,641, with interest at the legal rate from the beginning of
the action.
It is established in this case that the plaintiff is the trustee of a
charitable bequest made for the construction of a leper hospital
and that father Agustin de la Peña was the duly authorized
representative of the plaintiff to receive the legacy. The
defendant is the administrator of the estate of Father De la
Peña.
In the year 1898 the books Father De la Peña, as trustee,
showed that he had on hand as such trustee the sum of
P6,641, collected by him for the charitable purposes aforesaid.
In the same year he deposited in his personal account P19,000
in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter
and during the war of the revolution, Father De la Peña was
arrested by the military authorities as a political prisoner, and
while thus detained made an order on said bank in favor of the
United States Army officer under whose charge he then was
for the sum thus deposited in said bank. The arrest of Father
De la Peña and the confiscation of the funds in the bank were
the result of the claim of the military authorities that he was an
insurgent and that the funds thus deposited had been collected
by him for revolutionary purposes. The money was taken from
the bank by the military authorities by virtue of such order, was
confiscated and turned over to the Government.
to his responsibility. Such deposit did not make him a debtor
who must respond at all hazards.
We do not enter into a discussion for the purpose of
determining whether he acted more or less negligently by
depositing the money in the bank than he would if he had left it
in his home; or whether he was more or less negligent by
depositing the money in his personal account than he would
have been if he had deposited it in a separate account as
trustee. We regard such discussion as substantially fruitless,
inasmuch as the precise question is not one of negligence.
There was no law prohibiting him from depositing it as he did
and there was no law which changed his responsibility be
reason of the deposit. While it may be true that one who is
under obligation to do or give a thing is in duty bound, when he
sees events approaching the results of which will be
dangerous to his trust, to take all reasonable means and
measures to escape or, if unavoidable, to temper the effects of
those events, we do not feel constrained to hold that, in
choosing between two means equally legal, he is culpably
negligent in selecting one whereas he would not have been if
he had selected the other.
The court, therefore, finds and declares that the money which
is the subject matter of this action was deposited by Father De
la Peña in the Hongkong and Shanghai Banking Corporation of
Iloilo; that said money was forcibly taken from the bank by the
armed forces of the United States during the war of the
insurrection; and that said Father De la Peña was not
responsible for its loss.
The judgment is therefore reversed, and it is decreed that the
plaintiff shall take nothing by his complaint.
Arellano, C.J., Torres and Carson, JJ., concur.

While there is considerable dispute in the case over the

question whether the P6,641 of trust funds was included in the
P19,000 deposited as aforesaid, nevertheless, a careful
examination of the case leads us to the conclusion that said
trust funds were a part of the funds deposited and which were
removed and confiscated by the military authorities of the
United States.

That branch of the law known in England and America as the

law of trusts had no exact counterpart in the Roman law and
has none under the Spanish law. In this jurisdiction, therefore,
Father De la Peña's liability is determined by those portions of
the Civil Code which relate to obligations. (Book 4, Title 1.)

Although the Civil Code states that "a person obliged to give
something is also bound to preserve it with the diligence
pertaining to a good father of a family" (art. 1094), it also
provides, following the principle of the Roman law, major
casus est, cui humana infirmitas resistere non potest, that "no
one shall be liable for events which could not be foreseen, or
which having been foreseen were inevitable, with the exception
of the cases expressly mentioned in the law or those in which
the obligation so declares." (Art. 1105.)

By placing the money in the bank and mixing it with his

personal funds De la Peña did not thereby assume an
obligation different from that under which he would have lain if
such deposit had not been made, nor did he thereby make
himself liable to repay the money at all hazards. If the had
been forcibly taken from his pocket or from his house by the
military forces of one of the combatants during a state of war, it
is clear that under the provisions of the Civil Code he would
have been exempt from responsibility. The fact that he placed
the trust fund in the bank in his personal account does not add