7/20/2015

G.R.No.90828

TodayisMonday,July20,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION
G.R.No.90828September5,2000
MELVINCOLINARESandLORDINOVELOSO,petitioners,
vs.
HONORABLECOURTOFAPPEALS,andTHEPEOPLEOFTHEPHILIPPINES,respondents.
DECISION
DAVIDE,JR.,C.J.:
In 1979 Melvin Colinares and Lordino Veloso (hereafter Petitioners) were contracted for a consideration of
P40,000 by the Carmelite Sisters of Cagayan de Oro City to renovate the latters convent at Camamanan,
CagayandeOroCity.
On 30 October 1979, Petitioners obtained 5,376 SF Solatone acoustical board 2x4x", 300 SF tanguile wood
tiles12"x12",260SFMarceloeconomytilesand2gallonsUMYLINcementadhesivefromCMBuildersCentrefor
the construction project.1 The following day, 31 October 1979, Petitioners applied for a commercial letter of
credit2 with the Philippine Banking Corporation, Cagayan de Oro City branch (hereafter PBC) in favor of CM
Builders Centre. PBC approved the letter of credit3 for P22,389.80 to cover the full invoice value of the goods.
Petitionerssignedaproformatrustreceipt4assecurity.Theloanwasdueon29January1980.
On31October1979,PBCdebitedP6,720fromPetitionersmarginaldepositaspartialpaymentoftheloan.5
On 7 May 1980, PBC wrote6 to Petitioners demanding that the amount be paid within seven days from notice.
InsteadofcomplyingwithPBCsdemand,VelosoconfessedthattheylostP19,195.83intheCarmeliteMonastery
Projectandrequestedforagraceperiodofuntil15June1980tosettletheaccount.7
PBC sent a new demand letter8 to Petitioners on 16 October 1980 and informed them that their outstanding
balanceasof17November1979wasP20,824.40exclusiveofattorneysfeesof25%.9
On 2 December 1980, Petitioners proposed10 that the terms of payment of the loan be modified as follows:
P2,000onorbefore3December1980,andP1,000permonthstarting31January1980untiltheaccountisfully
paid. Pending approval of the proposal, Petitioners paid P1,000 to PBC on 4 December 1980,11 and thereafter
P500on11February1981,1216March1981,13and20April1981.14Concurrentlywiththeseparatedemandfor
attorneysfeesbyPBCslegalcounsel,PBCcontinuedtodemandpaymentofthebalance.15
On14January1983,PetitionerswerechargedwiththeviolationofP.D.No.115(TrustReceiptsLaw)inrelation
toArticle315oftheRevisedPenalCodeinanInformationwhichwasfiledwithBranch18,RegionalTrialCourtof
CagayandeOroCity.TheaccusatoryportionoftheInformationreads:
ThatonoraboutOctober31,1979,intheCityofCagayandeOro,Philippines,andwithinthejurisdictionofthis
Honorable Court, the abovenamed accused entered into a trust receipt agreement with the Philippine Banking
CorporationatCagayandeOroCitywhereintheaccused,asentrustee,receivedfromtheentrusterthefollowing
goodstowit:
SolatoneAcousticalboard
TanguileWoodTiles
MarceloCementTiles
UmylinCementAdhesive
with a total value of P22,389.80, with the obligation on the part of the accusedentrustee to hold the aforesaid
http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html

1/7

7/20/2015

G.R.No.90828

itemsintrustfortheentrusterand/ortoselloncashbasisorotherwisedisposeofthesaiditemsandtoturnover
totheentrustertheproceedsofthesaleofsaidgoodsoriftherebenosaletoreturnsaiditemstotheentruster
on or before January 29, 1980 but that the said accused after receipt of the goods, with intent to defraud and
cause damage to the entruster, conspiring, confederating together and mutually helping one another, did then
andtherewilfully,unlawfullyandfeloniouslyfailandrefusetoremittheproceedsofthesaleofthegoodstothe
entrusterdespiterepeateddemandsbutinsteadconverted,misappropriatedandmisappliedtheproceedstotheir
own personal use, benefit and gain, to the damage and prejudice of the Philippine Banking Corporation, in the
aforesaidsumofP22,389.80,PhilippineCurrency.
ContrarytoPD115inrelationtoArticle315oftheRevisedPenalCode.16
ThecasewasdocketedasCriminalCaseNo.1390.
During trial, petitioner Veloso insisted that the transaction was a "clean loan" as per verbal guarantee of Cayo
GarciaTuiza,PBCsformermanager.HeandpetitionerColinaressignedthedocumentswithoutreadingthefine
print,onlylearningofthetrustreceiptimplicationmuchlater.WhenhebroughtthistotheattentionofPBC,Mr.
Tuizaassuredhimthatthetrustreceiptwasamereformality.17
On7July1986,thetrialcourtpromulgateditsdecision18convictingPetitionersofestafaforviolatingP.D.No.115
inrelationtoArticle315oftheRevisedPenalCodeandsentencingeachofthemtosufferimprisonmentoftwo
yearsandonedayofprisioncorreccional as minimum to six years and one day of prisionmayor as maximum,
andtosolidarilyindemnifyPBCtheamountofP20,824.44,withlegalinterestfrom29January1980,12%penalty
chargeperannum,25%ofthesumsdueasattorneysfees,andcosts.
The trial court considered the transaction between PBC and Petitioners as a trust receipt transaction under
Section4,P.D.No.115.ItconsideredPetitionersuseofthegoodsintheirCarmelitemonasteryprojectanactof
"disposing"ascontemplatedunderSection13,P.D.No.115,andtreatedthechargeinvoice19forgoodsissued
byCMBuildersCentreasa"document"withinthemeaningofSection3thereof.Itconcludedthatthefailureof
PetitionerstoturnovertheamounttheyowedtoPBCconstitutedestafa.
PetitionersappealedfromthejudgmenttotheCourtofAppealswhichwasdocketedasCAG.R.CRNo.05408.
Petitioners asserted therein that the trial court erred in ruling that they violated the Trust Receipt Law, and in
holdingthemcriminallyliabletherefor.Inthealternative,theycontendthatatmosttheycanonlybemadecivilly
liableforpaymentoftheloan.
In its decision20 6 March 1989, the Court of Appeals modified the judgment of the trial court by increasing the
penalty to six years and one day of prisionmayor as minimum to fourteen years eight months and one day of
reclusiontemporalasmaximum.ItheldthatthedocumentaryevidenceoftheprosecutionprevailsoverVelosos
testimony,discreditedPetitionersclaimthatthedocumentstheysignedwereinblank,anddisbelievedthatthey
werecoercedintosigningthem.
On 25 March 1989, Petitioners filed a Motion for New Trial/Reconsideration21 alleging that the "Disclosure
Statement on Loan/Credit Transaction"22 (hereafter Disclosure Statement) signed by them and Tuiza was
suppressedbyPBCduringthetrial.Thatdocumentwouldhaveprovedthatthetransactionwasindeedaloanas
itbearsa14%interestasopposedtothetrustreceiptwhichdoesnotatallbearanyinterest.Petitionersfurther
maintainedthatwhenPBCallowedthemtopayininstallment,theagreementwasnovatedandacreditordebtor
relationshipwascreated.
In its resolution23 of 16 October 1989 the Court of Appeals denied the Motion for New Trial/Reconsideration
becausetheallegednewlydiscoveredevidencewasactuallyforgottenevidencealreadyinexistenceduringthe
trial,andwouldnotaltertheresultofthecase.
Hence,Petitionersfiledwithusthepetitioninthiscaseon16November1989.Theyraisedthefollowingissues:
1.WHETHERORNOTTHEDENIALOFTHEMOTIONFORNEWTRIALONTHEGROUNDOFNEWLY
DISCOVERED EVIDENCE, NAMELY, "DISCLOSURE ON LOAN/CREDIT TRANSACTION," WHICH IF
INTRODUCED AND ADMITTED, WOULD CHANGE THE JUDGMENT, DOES NOT CONSTITUTE A
DENIALOFDUEPROCESS.
2. ASSUMING THERE WAS A VALID TRUST RECEIPT, WHETHER OR NOT THE ACCUSED WERE
PROPERLY CHARGED, TRIED AND CONVICTED FOR VIOLATION OF SEC. 13, PD NO. 115 IN
RELATION TO ARTICLE 315 PARAGRAPH (I) (B) NOTWITHSTANDING THE NOVATION OF THE SO
CALLED TRUST RECEIPT CONVERTING THE TRUSTORTRUSTEE RELATIONSHIP TO CREDITOR
DEBTORSITUATION.
In its Comment of 22 January 1990, the Office of the Solicitor General urged us to deny the petition for lack of
http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html

2/7

7/20/2015

G.R.No.90828

merit.
On28February1990PetitionersfiledaMotiontoDismissthecaseonthegroundthattheyhadalreadyfullypaid
PBCon2February1990theamountofP70,000forthebalanceoftheloan,includinginterestandothercharges,
asevidencedbythedifferentreceiptsissuedbyPBC,24andthatthePBCexecutedanAffidavitofdesistance.25
WerequiredtheSolicitorGeneraltocommentontheMotiontoDismiss.
In its Comment of 30 July 1990, the Solicitor General opined that payment of the loan was akin to a voluntary
surrender or plea of guilty which merely serves to mitigate Petitioners culpability, but does not in any way
extinguishtheircriminalliability.
In the Resolution of 13 August 1990, we gave due course to the Petition and required the parties to file their
respectivememoranda.
Thepartiessubsequentlyfiledtheirrespectivememoranda.
Itwasonlyon18May1999whenthiscasewasassignedtotheponente.Thereafter,werequiredthepartiesto
move in the premises and for Petitioners to manifest if they are still interested in the further prosecution of this
caseandinformusoftheirpresentwhereaboutsandwhethertheirbailbondsarestillvalid.
PetitionerssubmittedtheirCompliance.
ThecoreissuesraisedinthepetitionarethedenialbytheCourtofAppealsofPetitionersMotionforNewTrial
andthetruenatureofthecontractbetweenPetitionersandthePBC.Astothelatter,Petitionersassertthatitwas
anordinaryloan,notatrustreceiptagreementundertheTrustReceiptsLaw.
Thegrantordenialofamotionfornewtrialrestsuponthediscretionofthejudge.Newtrialmaybegrantedif:(1)
errors of law or irregularities have been committed during the trial prejudicial to the substantial rights of the
accused or (2) new and material evidence has been discovered which the accused could not with reasonable
diligence have discovered and produced at the trial, and which, if introduced and admitted, would probably
changethejudgment.26
Fornewlydiscoveredevidencetobeagroundfornewtrial,suchevidencemustbe(1)discoveredaftertrial(2)
couldnothavebeendiscoveredandproducedatthetrialevenwiththeexerciseofreasonablediligenceand(3)
material, not merely cumulative, corroborative, or impeaching, and of such weight that, if admitted, would
probablychangethejudgment.27Itisessentialthattheofferingpartyexercisedreasonablediligenceinseeking
tolocatetheevidencebeforeorduringtrialbutnonethelessfailedtosecureit.28
WefindnoindicationinthepleadingsthattheDisclosureStatementisanewlydiscoveredevidence.
Petitioners could not have been unaware that the twopage document exists. The Disclosure Statement itself
states, "NOTICE TO BORROWER: YOU ARE ENTITLED TO A COPY OF THIS PAPER WHICH YOU SHALL
SIGN."29AssumingPetitionerscopywasthenunavailable,theycouldhavecompelleditsproductionincourt,30
which they never did. Petitioners have miserably failed to establish the second requisite of the rule on newly
discoveredevidence.
Petitioners themselves admitted that "they searched again their voluminous records, meticulously and patiently,
until they discovered this new and material evidence" only upon learning of the Court of Appeals decision and
after they were "shocked by the penalty imposed."31 Clearly, the alleged newly discovered evidence is mere
forgottenevidencethatjurisprudenceexcludesasagroundfornewtrial.32
However,thesecondissueshouldberesolvedinfavorofPetitioners.
Section 4, P.D. No. 115, the Trust Receipts Law, defines a trust receipt transaction as any transaction by and
between a person referred to as the entruster, and another person referred to as the entrustee, whereby the
entruster who owns or holds absolute title or security interest over certain specified goods, documents or
instruments,releasesthesametothepossessionoftheentrusteeuponthelattersexecutionanddeliverytothe
entrusterofasigneddocumentcalleda"trustreceipt"whereintheentrusteebindshimselftoholdthedesignated
goods, documents or 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 the goods, documents or
instruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms and
conditionsspecifiedinthetrustreceipt.
Therearetwopossiblesituationsinatrustreceipttransaction.Thefirstiscoveredbytheprovisionwhichrefersto
moneyreceivedundertheobligationinvolvingthedutytodeliverit(entregarla)totheownerofthemerchandise
http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html

3/7

7/20/2015

G.R.No.90828

sold. The second is covered by the provision which refers to merchandise received under the obligation to
"return"it(devolvera)totheowner.33
Failure of the entrustee to turn over the proceeds of the sale of the goods, covered by the trust receipt to the
entruster or to return said goods if they were not disposed of in accordance with the terms of the trust receipt
shallbepunishableasestafaunderArticle315(1)oftheRevisedPenalCode,34withoutneedofprovingintentto
defraud.
A thorough examination of the facts obtaining in the case at bar reveals that the transaction intended by the
partieswasasimpleloan,notatrustreceiptagreement.
PetitionersreceivedthemerchandisefromCMBuildersCentreon30October1979.Onthatday,ownershipover
the merchandise was already transferred to Petitioners who were to use the materials for their construction
project. It was only a day later, 31 October 1979, that they went to the bank to apply for a loan to pay for the
merchandise.
Thissituationbelieswhatnormallyobtainsinapuretrustreceipttransactionwheregoodsareownedbythebank
and only released to the importer in trust subsequent to the grant of the loan. The bank acquires a "security
interest"inthegoodsasholderofasecuritytitlefortheadvancesithadmadetotheentrustee.35Theownership
ofthemerchandisecontinuestobevestedinthepersonwhohadadvancedpaymentuntilhehasbeenpaidin
full,orifthemerchandisehasalreadybeensold,theproceedsofthesaleshouldbeturnedovertohimbythe
importerorbyhisrepresentativeorsuccessorininterest.36Tosecurethatthebankshallbepaid,ittakesfulltitle
tothegoodsattheverybeginningandcontinuestoholdthattitleashisindispensablesecurityuntilthegoodsare
soldandthevendeeiscalledupontopayforthemhence,theimporterhasneverownedthegoodsandisnot
abletodeliverpossession.37Inacertainmanner,trustreceiptspartakeofthenatureofaconditionalsalewhere
theimporterbecomesabsoluteowneroftheimportedmerchandiseassoonashehaspaiditsprice.38
Trustreceipttransactionsareintendedtoaidinfinancingimportersandretaildealerswhodonothavesufficient
fundsorresourcestofinancetheimportationorpurchaseofmerchandise,andwhomaynotbeabletoacquire
creditexceptthroughutilization,ascollateral,ofthemerchandiseimportedorpurchased.39
Theantecedentactsinatrustreceipttransactionconsistoftheapplicationandapprovaloftheletterofcredit,the
makingofthemarginaldepositandtheeffectiveimportationofgoodsthroughtheeffortsoftheimporter.40
PBCattemptedtocoverupthetruedeliverydateofthemerchandise,yetthetrialcourttooknoticeeventhoughit
failedtoattachanysignificancetosuchfactinthejudgment.DespitetheCourtofAppealscontraryviewthatthe
goodsweredeliveredtoPetitionersprevioustotheexecutionoftheletterofcreditandtrustreceipt,wefindthat
therecordsofthecasespeakvolublyandthisfactremainsuncontroverted.Itisnotuncommonforustoperuse
throughthetranscriptofthestenographicnotesoftheproceedingstobesatisfiedthattherecordsofthecasedo
support the conclusions of the trial court.41 After such perusal Grego Mutia, PBCs credit investigator, admitted
thus:
ATTY.CABANLET:(continuing)
QDoyouknowifthegoodssubjectmatterofthisletterofcreditandtrustreceiptagreementwerereceivedbythe
accused?
AYes,sir
QDoyouhaveevidencetoshowthatthesegoodssubjectmatterofthisletterofcreditandtrustreceiptwere
deliveredtotheaccused?
AYes,sir.
QIamshowingtoyouthischargeinvoice,areyoureferringtothisdocument?
AYes,sir.
xxx
QWhatisthedateofthechargeinvoice?
AOctober31,1979.
COURT:
http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html

4/7

7/20/2015

G.R.No.90828

MakeitofrecordasappearinginExhibitD,thezeroin30hasbeensuperimposedwithnumeral1.42
Duringthecrossandredirectexaminationshealsoimpliedlyadmittedthatthetransactionwasindeedaloan.
Thus:
QInshorttheamountstatedinyourExhibitC,thetrustreceiptwasaloantotheaccusedyouadmitthat?
ABecauseinthebanktheloanisconsideredpartoftheloan.
xxx
REDIRECTBYATTY.CABANLET:
ATTY.CABANLET(tothewitness)
QWhatdoyouunderstandbyloanwhenyouwereasked?
ALoanisapromiseofaborrowerfromthevaluereceived.Theborrowerwillpaythebankonacertainspecified
datewithinterest43
SuchstatementisakintoanadmissionagainstinterestbindinguponPBC.
PetitionerVelososclaimthattheyweremadetobelievethatthetransactionwasaloanwasalsonotdeniedby
PBC.Hedeclared:
QTestimonywasgivenherethatthatwascoveredbytrustreceipt.Inshortitwasaspecialkindofloan. What
canyousayastothat?
1 w p h i1

A I dont think that would be a trust receipt because we were made to understand by the manager who
encouragedustoavailoftheirfacilitiesthattheywillbegrantingusaloan44
PBC could have presented its former bank manager, Cayo Garcia Tuiza, who contracted with Petitioners, to
refuteVelosostestimony,yetitonlypresentedcreditinvestigatorGregoMutia.NowherefromMutiastestimony
canitbegleanedthatPBCrepresentedtoPetitionersthatthetransactiontheywereenteringintowasnotapure
loanbuthadtrustreceiptimplications.
The Trust Receipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty and
abuse of confidence in the handling of money or goods to the prejudice of another regardless of whether the
latteristheowner.45Here,itiscrystalclearthatonthepartofPetitionerstherewasneitherdishonestynorabuse
ofconfidenceinthehandlingofmoneytotheprejudiceofPBC.Petitionerscontinuallyendeavoredtomeettheir
obligations,asshownbyseveralreceiptsissuedbyPBCacknowledgingpaymentoftheloan.
TheInformationchargesPetitionerswithintenttodefraudandmisappropriatingthemoneyfortheirpersonaluse.
Themalaprohibitanatureoftheallegedoffensenotwithstanding,intentasastateofmindwasnotprovedtobe
present in Petitioners situation. Petitioners employed no artifice in dealing with PBC and never did they evade
paymentoftheirobligationnorattempttoabscond.Instead,Petitionerssoughtfavorabletermspreciselytomeet
theirobligation.
Also noteworthy is the fact that Petitioners are not importers acquiring the goods for resale, contrary to the
express provision embodied in the trust receipt. They are contractors who obtained the fungible goods for their
construction project. At no time did title over the construction materials pass to the bank, but directly to the
PetitionersfromCMBuildersCentre.Thisimpressesuponthetrustreceiptinquestionvaguenessandambiguity,
whichshouldnotbethebasisforcriminalprosecutionintheeventofviolationofitsprovisions.46
Thepracticeofbanksofmakingborrowerssigntrustreceiptstofacilitatecollectionofloansandplacethemunder
the threats of criminal prosecution should they be unable to pay it may be unjust and inequitable, if not
reprehensible.Suchagreementsarecontractsofadhesionwhichborrowershavenooptionbuttosignlesttheir
loanbedisapproved.Theresorttothisschemeleavespoorandhaplessborrowersatthemercyofbanks,andis
prone to misinterpretation, as had happened in this case. Eventually, PBC showed its true colors and admitted
thatitwasonlyaftercollectionofthemoney,asmanifestedbyitsAffidavitofDesistance.
WHEREFORE,thechallengedDecisionof6March1989andtheResolutionof16October1989oftheCourtof
AppealsinCAGR.No.05408areREVERSEDandSETASIDE.PetitionersareherebyACQUITTEDofthecrime
charged,i.e.,forviolationofP.D.No.115inrelationtoArticle315oftheRevisedPenalCode.
Nocosts.
http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html

5/7

7/20/2015

G.R.No.90828

SOORDERED.
Kapunan,andPardo,JJ.,concur.
Puno,J.,nopart.
YnaresSantiago,J.,onleave.

Footnotes
1Exhibit"D,"OriginalRecord(OR),115.
2Exhibit"A,"Id.,112.
3Exhibit"B,"OR,113.
4Exhibit"C,"Id.,114.
5Exhibit"8C,"Id.,181.
6Exhibit"4,"Id.,160.
7Exhibits"3,I,"Id.,153.
8Exhibit"E,"Id.,116.
9Exhibit"5,"Id.,161.
10Exhibit"F,"Id.,117.
11Exhibit"7,"Id.,167.
12Exhibit"7A,"Id.,168.
13Exhibit"7B,"Id.,169.
14Exhibit"7C,"Id.,170.
15Exhibit"G,"Id.,118.
16OR,33.
17TSN,21May1986,2122,30.
18PerJudgeSenenC.Pearanda.Rollo1217.
19Exhibit"D,"supranote1.
20Annex"A"ofPetition,Rollo,310.PerImperial,J.,J.,withtheconcurrenceofPuno,R.andFrancisco,

C.,JJ.
21Rollo,2739.
22Id.,177178.
23Id.,45.
24Rollo,127.
25Id.,128.
26Section2,Rule121,RevisedRulesofCriminalProcedure.
27 See People v. Excija, 258 SCRA 424, 443 [1996] People v. Tirona, 300 SCRA 431, 440 [1998]
http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html

6/7

7/20/2015

G.R.No.90828

Villanuevav.People,G.R.No.135098,12April2000,7.
28 Tumang v. Court of Appeals, etal., 172 SCRA 328, 334 [1989]. See Garrido v. CA, et al., 236 SCRA

450,456[1994].
29Rollo,178.
30Peoplev.Ducay,etal.,225SCRA1[1993].
31MotionforNewTrial/ReconsiderationRollo,28.
32Peoplev.Hernando,etal.,108SCRA121[1981]Peoplev.Ducay,supranote30Peoplev.Penones,

200SCRA624[1991].
33Peoplev.Cuevo,104SCRA312,318[1981].
34Section13,P.D.No.115.
35Vintolav.IBAA,150SCRA578,583[1987].
36PrudentialBankv.NLRC,251SCRA421[1995],quotingNationalBankv.Vda.deHijosdeAngelJose,

63Phil.814,821[1936].
37Peoplev.YuChaiHo,53Phil.874[1928],quotingInre:DunlapCarpetCo.,207Fed.726.
38PrudentialBankv.NLRC,supranote36.
39 Ceferina Samo v. People, 115 Phil. 346, 349350 [1962], citing 53 Am Jur. 961. See also Prudential

Bankv.NLRC,supranote36.
40Siav.People,121SCRA655[1983].
41Peoplev.Vergara,etal.,270SCRA624[1997].
42TSN,18December1986,1011.
43Id.,2122.
44TSN,21May1986,34
45Peoplev.Nitafan,etal.,207SCRA726[1992].
46Siav.People,supranote40.
TheLawphilProjectArellanoLawFoundation

http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html

7/7