Vous êtes sur la page 1sur 9

-1-

5. ABAD V. CA
4. CONSOLIDATED BANK & TRUST CORPORATION v. CA
Doctrine: Where the debtor received the goods subject of the trust receipt before the trust
itself was entered into, the transaction in question is a simple loan and not a trust receipt
agreement.

Trust Receipt Doctrine: A trust receipt is a security transaction in favor of the bank for the
fulfillment of the debtors obligation to the bank in a letter-of-credit. It is a security
agreement pursuant to which a bank acquires a security interest in the goods.The bank does
not own the goods subject of the trust receipt. Apart from trust receipt, a marginal deposit
can be required from the debtor as security thereof.

Facts:
Continental Cement Corporation (Continental) and Lim obtained from Consolidated
Bank and Trust Corporation (CBTC) an LC in the amount of P1,068,150 to purchase
around 500,000 liters of bunker fuel oil from Petrophil Corporation (Petrophil).
Continental paid a marginal deposit of P320,445 to CBTC.
Petrophil directlydeliveredtheoilinCBTCsplantinBulacan.Continentalexecuted
a trust receipt for P1,001,520.93, with Lim as signatory.
CBTC filed a complaint in the RTC for sum of money with application of preliminary
attachment, alleging that Continental failed to turn over the goods covered by the
trust receipt.
Continental argued that the transaction was a simple loan and not a trust receipt
transactionaswellasCBTCsallegedamountdidnttakeintoaccountpaymentsit
already made.
Lim denied any personal liability and Continental even prayed for a reimbursement
as it claimed to have over paid P490,228.90.
Trial court dismissed the complaint and ruled it was a simple loan. CA affirmed.

Case Doctrine: A marginal deposit must be deducted from the principal obligation in a letter
of credit and to have charges computed only on the balance of the said obligation
Facts:
TOMCO, Inc., (now known as Southeast Timber Co. (Phils.), Inc.) applied for, and
was granted a domestic letter of credit by PCIB
TheletterofcreditwasinfavorofTOMCOssupplier,OregonIndustries,Inc.topay
for machinery (one Skagit Yarder with accessories).
PCIB paid to Oregon the price of the machinery at 80,000php against a bill of
exchange with recourse, presentment and notice of dishonor waived.
TOMCO made a marginal deposit of 28,000php and signed a trust receipt for the
same machinery delivered to the bank.
At the same time, Ramon Abad signed a Deed of Continuing Guaranty at the back
of the trust receipt, whereby he promisedtopayTOMCOsobligationjointlyand
severally.
However, no payment was made by TOMCO to PCIB, which prompted the latter to
file a collection suit against TOMCO and Abad as surety.
TOMCO admitted its liability to PCIB but alleged that the amount of the marginal
deposit (28k) should be deducted first from the principal obligation before PCIB
computes the interest charges on the balance.
Trial Court, however, ruled in favor of PCIB and made TOMCO pay the principal
obligation with charges without deducting the marginal deposit
AbadappealedthedecisionbutCAaffirmedtrialcourtsdecision.Thus,this
petition.

Issue:
WoN the transaction was a simple loan or a trust receipt transaction.
Held:
Petition is denied. The subject transaction is a simple loan.
Ratio:
As held in Colinares v. CA, a transaction is a simple loan when ownership over the
goods was already transferred to the debtor prior to the execution of a trust
receipt. In pure trust receipt transaction, ownership over the goods is transferred
after the execution of a trust receipt. The delivery to Continental of the goods
subject of the trust receipt occurred long before the trust receipt itself was
executed. The delivery commenced and completed on July 1982. The trust receipt
was only executed 2 months after full delivery of the oil.
- Cruz

Issue:
WoN the marginal deposit of Php28,000 in the possession of the bank should first
be deducted from its principal debt before computing the interest and other
charges due.
Held:
YES. Petition granted. Marginal deposit should be deducted first from the principal
debt.

CRUZ | MUTI | RAZON

NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-2-

WoN, in a case of estafa filed in violation of the terms of trust receipt, the person
prejudiced need necessarily be the owner of the property

Ratio:
Marginal deposit is a collateral security given by the debtor and is supposed to be
returned upon compliance with the obligation. The bank pays no interest on the
deposit, unlike ordinary deposit in a bank
It is only fair that the marginal deposit should be set-offagainstthedebtorsdebt,
for while the debtor earns no interest on the deposit, the bank, apart from being
able to use the said deposit, earns interest on the money it loaned to the debtor.
The bank would be unjustly enriched if the interest charges shall be computed from
the principal without deducting the marginal deposit
- Razon
6. PEOPLE VS. YU CHAI HO
Doctrine: In estafa based upon the conversion or misapproproation of money, goods, or
other personal property, it is essential that a person other than the accused is prejudiced by
such conversion or misappropriation, but the person so prejudiced need not necessarily be
the legal owner of the goods or property.
Facts:
Yu Chai Ho, in representation of his firm, Gui Sing & Co.(GSC), placed an order with
Wm. H. Anderson & Co.(WHAC) for a quantity of Colgate perfumes and soap to be
shipped from New York to Cebu.
The merchandise was shipped to Cebu with GSC as the consignee. The bill of lading and
the invoices were forwarded to the International Banking Corporation(IBC), subject to
delivery to GSC on payment of the purchase price.
The shipping documents were accompanied by a draft on GSC, who accepted the draft
but was unable to pay.
IBC, therefore, retained the shipping documents and invoices, without which the
merchandise could not be cleared through the customhouse and delivered to the
defendant or his firm. Through the intervention of WHAC, the IBC agreed to deliver the
documents to GSC upon their giving a trust receipt.
GSC executed a trust receipt in favor of IBC. GSC obtained and sold the merchandise
but, in violation of the terms of the trust receipt, failed to make payment to the IBC.
WHAC, as guarantors, were compelled to pay the amount of the draft.
Yu Chai Ho was found guilty for the crime of estafa. Yu Chai Ho argues that IBC had
suffered no loss, and that, therefore, an essential element of the crime of estafa was
lacking; that the only party prejudiced by the actions of the defendant was WHAC and
that as to the latter, the defendant had incurred a civil obligation
Issue:
CRUZ | MUTI | RAZON

Held:
No. Judgment modified by ordering the defendant to indemnify WHAC with subsidiary
imprisonment in case of insolvency
Ratio:
The person whose interests are prejudiced through the conversion or misappropriation
of the money, goods, or other personal property need not necessarily be the owner
thereof; if such had been the intention of the authors of the Code, the phrase "to the
prejudice of another" would have read "to the prejudice of the owner."
The action is not one between the defendant and WHAC or between the defendant
and the IBC; it deals with a public offense and is brought against the defendant by the
People of the Philippine Islands. The very evident object of the article of the Penal Code
is to discourage dishonesty and unfaithfulness in the administration or care of money,
goods, or other personal property received for such purposes. The object is not simply
to enforce payment of indemnities.
The fact that the defendant gave surety for the fulfillment of his obligations under the
trust receipt, is of no consequence and does not alter the case.
DISSENT: The information is defective in alleging that the offense was committed in
prejudice of WHAC, when the facts show that the person truly prejudiced was IBC.
The judgment should be reversed, and the accused should be held to answer to a
new information in which it should be stated that the offense was committed to the
prejudice of IBC.
- Muti
7. PEOPLE v. CUEVO
Doctrine: One who was issued a trust receipt for imported goods who fails to deliver to the
bank or financial institution which issued the trust receipt the money covered thereby is
guilty of estafa. It does not matter that the money was received from the purchase of the
goods and not from the bank.
Facts:
Cuevo received 1,000 bags of grind yellow corn and 1,000 bags of palay specified in
a trust receipt in trust from Prudential Bank. Cuevo executed an LC in favor or
Prudential Bank for P24,000 to cover this transaction.
Cuevo had the obligation to sell, account for the merchandise, or to deliver and
turn over to Prudential Bank the sale proceeds.
NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-3-

Despite repeated demands, Cuevo misappropriated, misapplied and converted the


merchandise or the value to his own personal use and benefit to the damage and
prejudice of Prudential Bank.
Upon arraignment, Cuevo pleaded not guilty. He filed a Motion to Dismiss on the
ground that the facts alleged in the Information did not constitute an offense.
Judge Kapunan granted the motion and dismissed the complaint. He believed that
Cuevo could not have committed estafa under Art 315 (1) (b) because the Spanish
version of (b) wherein the expression used is resibido en deposito was not an
accurate translation of in trust, hence it did not cover the conversion or
misappropriation of the goods covered by a trust receipt. However, Judge Kapunan
also ruled that the dismissal was not to prejudice whatever civil action Prudential
Bank may take to recover P24,000 advanced to cover the price of the merchandise.
Prosecution appealed. Appeal was granted. The lower court ruled that the contract
covered by a trust receipt is merely a secured loan where the borrower is allowed
to dispose of the collateral, while in a deposit, the depositary is not empowered to
dispose the deposited property. Hence, the lower court concluded that the
violation of the provisions of the trust receipt gives rise to a civil action and not to a
criminal prosecution for estafa. Also, the lower court observed that the framers of
the Spanish Penal Code could not have contemplated the inclusion of the trust
th
receipt in Art 315 (1) (b) because that transaction did not exist in the 19 century.

One of the objectives of the Trust Receipts Law is to declare the misuse and/or
misappropriation of goods or proceeds realized from the sale of goods, documents
or instruments released under trust receipts as a criminal offense punishable
underArt315.(seeSec13oftheTrustReceiptsLaw).
Dissent:
A trust receipt transaction gives rise to a civil liability only based on the very
definition of a trust receipt which is a security arrangement. The liberal view that a
trust receipt violation gives rise to a civil liability only before the promulgation of
PD 115 when there was a highly debatable question about it under Art 315 of RPC,
is the more acceptable view because the transaction is a purely commercial one.
The transaction being contractual, the intent of the parties should govern. Since
the trust receipt has to be executed upon the arrival of the imported goods, and
acquires legal standing as such receipt transaction itself, the antecedent acts
consisting of the application and approval of the LC, the making of the marginal
deposit, and the effective importation of the goods--all through the efforts of the
importer---would negate any intent of subjecting the importer to criminal
prosecution.
- Cruz
8. SIA V. PEOPLE

Issue:
WoN violation of the terms of a trust receipt would constitute estafa.

Doctrine: Trust receipt transaction is a security of loan transaction only and thus, its breach
will give rise to a civil liability only

As seven justices voted to reverse the order of dismissal, the same has to be
affirmed. Hence, yes. A violation of the terms of a trust receipt constitutes estafa.

Facts:

Held:

Ratio:
Even if the accused did not receive the merchandise for deposit, Cuevo is covered
by Art 315 (1) (b) because after receiving the price of the sale, Cuevo did not
deliver the money to Prudential bank, or if he did not sell the merchandise, he did
st
not return it to bank. The 2 situations is covered by Art 315 (1) (b): 1 situation is
covered by the provision which refers to money received under the obligation
nd
involving the duty to deliver it to the owner of the merchandise sold; and the 2
situation is covered by the provision which refers to merchandise received under
st
the obligation to return it to the owner. The fact that the 1 case the money was
received from the purchaser of the merchandise and not from the bank does not
remove it from the operations of Art 315 (1) (b). Cuevo failed to either turn over
the sale proceeds or return said goods, hence he is liable for estafa.

CRUZ | MUTI | RAZON

Jose Sia, as General Manager of Metal Manufacturing Company of the Phils., Inc.,
applied for a letter of credit from the Continental Bank, to import steel sheets from
Japan
Application was approved and the letter of credit was opened in favor of the
supplier.
Siassideofstory:Thetrustreceiptwasexecutedlongaftertheimportedmaterials
were delivered to the company
ContinentalBanksstory:materialswerepermitteddeliveryonlyuponexecutionof
the trust receipt
The debt having fallen due, and the company not having paid the debt to
Continental Bank, the latter filed a complaint and Sia was charged with estafa.
Continental Bank alleged that Sia failed and refused to return the materials or
account for the proceeds thereof, if sold.
CFI convicted SIA, which was affirmed by CA.

NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-4-

price of a certain merchandise consisting of 23 ctns. Lab. Culture Media. She


executed trust receipt for the merchandise in favor of the bank.
An information was filed against Lee for violation of the trust receipt agreement in
relation to PD 115(estafa). Lee moved to quash the information on the ground that
the facts charged do not constitute an offense.
Lee questions the constitutionality of Sec. 13 of P.D. 115. She contends that it is
violative of the constitutional right that "No person shall be imprisoned for debt or
non-payment of a poll tax". She also cites the cases of People vs. Cuevo and Sia vs.
People where the accused was held civilly liable only.

Thus this petition. Sia contends that he should not be convicted of estafa, as he was
merely acting on behalf of the company and that the acts committed merely
constitute civil liability and not a criminal offense.
Issue:
WoN the violation of a trust receipt constitutes estafa under Art 315 1b of the RPC,
thus Sia could be convicted of estafa for failure of the company where he is an
officer, to settle its indebtedness, secured by a trust receipt, to Continental Bank.
Held:
No. ACQUITTED.
Ratio:
The court considers the view that the transaction on the trust receipt was merely
one of a security of a loan, and that the trust element is but an inherent feature of
the security aspect of the arrangement where the goods were placed in the
possession of the entrustee.
The violation of the element of trust is not being intended to be in the same
concept as how it is understood in the criminal case.
The transaction being contractual, the intent of the parties should govern.
The court opines that unlike in the case of estafa, the entruster has the free
disposal of the goods held in trust by the entrustee. In the case of trust receipt, the
entruster does not have that free disposal of the goods, as the importer is the one
who has the free disposal of the same.
The trust receipt therefore, in the view that is only one of a security for a loan
transaction, breach of the same, would result to a civil liability only.
One DISSENT says this decision on the nature of the trust receipt, as the same in
estafa is contrary to previous decisions.

Issue:
1. WoN not the violation of a trust receipt agreement after the effectivity of PD 115
constitutes the crime of estafa. YES
2. WoN PD 115 is unconstitutional for being violative of the right against imprisonment for
non-payment of debt. NO
Held:
Trial court's orders are AFFIRMED and the case is remanded to the trial court for further
proceedings
Ratio:
1.

2.

- Razon
9. LEE VS. RODIL
Doctrine: Acts involving the violation of trust receipt agreements occurring after 29 January
1973 would make the accused criminally liable for estafa under RPC, pursuant to the explicit
provision in PD 115. It does not conflict with the constitutional prohibition against
imprisonment for non-payment of debt because the criminal liability springs from the
violation of of the trust receipt which is separate and distinct from the loan feature of letter
of credit-trust receipt arrangements.
Facts:
Lee, being then the duly authorized representative of C.S. Lee Enterprises, Inc.,
opened a letter of credit with Philippine Bank of Communications for the purchase
CRUZ | MUTI | RAZON

A closer look at the two decisions(Cuevo and Sia) cited by the petitioner shows
attendant facts that are different from those in the instant case. While those cases
were decided when PD 115 had already been promulgated, the decree was not
applied in either of the cases because the questioned acts were committed
before its effectivity.
Lee has failed to make out a strong case that P.D. 115 conflicts with the
constitutional prohibition against imprisonment for non-payment of debt. The
criminal liability springs from the violation of of the trust receipt. The nature of a
letter of credit-trust receipt arrangement is that the transaction involves a loan
feature represented by the letter of credit, and a security feature which is in the
covering trust receipt. Therefore, the loan feature is separate and distinct from the
trust receipt. PD 115 is a valid exercise of police power and the legislative intent is
to regulate the enforcement of rights arising from violations of trust receipt
arrangement.

- Muti
10. ALLIED BANKING CORPORATION v. ORDONEZ
Doctrine: The penal provision of PD 115 encompasses any act violative of an obligation
covered by a trust receipt. It is not limited to transactions of goods which are to be sold
(retailed), reshipped, stored or processed as a component of a product ultimately sold.
NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-5-

In an attempt to escape criminal liability, Ching claims: (a) PD 115 covers goods
which are ultimately destined for sale and not goods for use in manufacture; (b)
PBM is not in the business of selling the subject merchandise as it is a manufacturer
of steel and steel products; thus (c) PBM is not liable under PD 115. But the
wording of Sec 13 of PD 115 covers failure to turn over the proceeds of the sale of
entrusted goods, or to return said goods if unsold or disposed in accordance with
the terms of the trust receipts. The non-payment of the amount covered by a trust
receiptisanactviolativeoftheentrusteesobligationtopay.

Facts:
Philippine Blooming Mills (PBM), through its officer, Ching, applied for the issuance
of commercial LCs with Allied Bank to finance the purchase of 500 M/T Magtar
Branch Dolomites and a Lot High Fired Refractory Sliding Nozzle Bricks.
Allied Bank issued a revocable LC in favor of Nikko Industry (Nikko). Nikko drew 4
drafts which PBM accepted and duly honored. Allied Bank paid for the drafts.
Tosecurepaymentofthe drafts,andinconsiderationofAllied Bankstransferof
the possession of the goods to PBM, through Ching, the latter as entrustee,
executed4TrustReceiptArrangements,acknowledgingAlliedBanksownershipof
thegoodsandPBMsobligationtoturnovertheproceedsofthesaleifsold,orto
return the same if unsold within the stated period.
There was an overdue amount of P1,475,274.09. Despite written demands, PBM
failed to pay the amount or return the goods.
Allied Bank filed a criminal complaint against Ching for violation of PD 115. The
Fiscal found a prima facie case for violation of PD 115 on 4 counts and filed the
information in court.
ChingappealedtheFiscalsResolutiontotheDOJ.Chingclaimsthatatthetimeof
PBMsapplicationfortheissuanceoftheLCs,itwasnotrepresentedthattheitems
were intended for sale, hence there was no deceit resulting in a violation of the
trust receipt which would constitute a criminal liability.
DOJdeniedappeal.However,DOJSecretaryOrdonezrectifiedhispredecessors
supposed reversible error and said that what the law contemplates or covers are
goods which have, for their ultimate destination, their sale or if unsold, their
surrender to the entrustor, whether the goods are in their original form or in their
manufactured/processed state. Ordonez also said that since the goods covered by
the trust receipts are to be utilized in the operation of the equipment and
machineries of a corporation, they could not have been contemplated as being
covered by PD 115.
Allied Bank appealed but the appeal was denied.
Issue:

- Cruz
11. PEOPLE V. NITAFAN
Doctrine: The violation of the Trust Receipts Law is punishable under Art 315 1b of the RPC
as expressly provided by Sec. 13 of the said law. What it punishes is the dishonesty and abuse
of confidence and not the non-payment of loan.
Facts:
Betty Sia Ang allegedly received from Allied Banking Corporation goods (Gordon
Plastics, plastic sheeting) in the amount of Php398,000.00 specified in a trust receipt
and covered by a letter of credit, under the obligation to sell the same and account
for the proceeds of the sale if sold.
Betty Ang was able to pay only the amount of 20ok plus, with the remaining balance
of 114k, which she failed to account for.
Allied Bank then filed a complaint against Betty for the crime of estafa.
Betty filed a motion to quash on the ground that the complaint does not constitute
an offense
Trial court granted the motion in light of the decisions in Sia v. People and People v.
Cuevo, which laid down the rule that violation of trust receipt gives rise to civil
liability only.
Thus, Allied Bank and People interposed this petition for certiorari.
Issue:

WoN the penal provision of PD 115 apply when the goods covered by a trust
receipt do not form part of the finished products which are ultimately sold but are
instead, utilized/used up in the operation of the equipment and machineries of the
entrustee-manufacturer.

WoN an entrustee in a trust receipt agreement who fails to deliver the proceeds of
the sale or to return the goods if not sold to the entruster-bank is liable for the crime
of estafa
Held:

Held:

YES. PETITION GRANTED. Betty Ang must be convicted of estafa.

Yes. The penal provision of PD 115 applies. Petition is granted.


Ratio:
CRUZ | MUTI | RAZON

Ratio:

NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-6-

Sec. 13 of PD 115 expressly provides that violation of the trust receipts law is
punishable under Art 315 1b of RPC.
The enactment of PD 115 is a valid exercise of police power by the State.
The offense is mala prohibitum.
What the law punishes is the dishonesty and abuse of confidence in handling of
money or goods to the prejudice of the bank.
What it seeks to recover is not the payment of the loan but rather the accounting of
the proceeds of the goods delivered to entrustee to hold in trust for the entruster.
The decisions in Sia was reached because the offense was committed prior to the
effectivity of PD 115
Unless repealed, the law must be applied.
- Razon
12. PRUDENTIAL BANK VS. NLRC
Doctrine: Security interest of the entruster becomesalien onthegoodsastheentrusters
advances will have to be settled first before the entrustee can consolidate his ownership over
the goods. Entruster has discretion to avail or seek alternative action at any time upon
default or failure of entrustee to comply with any of the terms and conditions of trust
arrangement.
Facts:
Interasia Container Industries, Inc.(INTERASIA), was embroiled in 3 labor cases
which were eventually resolved against it. Labor Arbiter declared the closure or
shutdown of operations effected by INTERASIA as illegal and awarded to
complainants wage differentials, separation pay and other benefits.
The Sheriff levied on execution personal properties located in the factory of
INTERASIA. Prudential Bank(bank) filed an Affidavit of Third-Party Claim asserting
ownership over the seized properties on the strength of trust receipts executed by
INTERASIA in its favor. Labor Arbiter denied the claim of petitioner and directed the
Sheriff to proceed with the levy of the properties. Sheriff declared Peliglorio the
highest bidder in the public auction sale.
The bank assails the sale and raises issue on the extent of its security title over the
properties subject of the levy on execution, submitting that while it may not have
absolute ownership over the properties, still it has right, interest and ownership
consisting of a security title which attaches to the properties. The bank maintains
that it is a preferred claimant to the proceeds from the foreclosure to the extent of
its security title in the goods
NLRC claims to rely on the pronouncement on trust receipts in the Vintola case
where the court held that trust receipts are mere security transactions which do
NOT vest upon petitioner any title of ownership.
CRUZ | MUTI | RAZON

NLRC also argues that inasmuch as the bank did not cancel the Trust Receipt
Agreements and took possession of the properties it could not claim ownership of
the properties
Issue:
1.
2.

WoN the entruster/banks claim from a trust receipt is a preferred claim on the
proceeds from the foreclosure of the property covered by the trust receipt. YES
WoN the cancellation of trust receipt and possession of goods is an obligation of
the entruster, failure of which is fatal to its claim over the property. NO

Held:
Petition GRANTED. Resolutions of NLRC are are SET ASIDE and a new judgment is
entered GRANTING the Third-Party Claim and ORDERING the Sheriff or his
representative to immediately deliver to petitioner PRUDENTIAL BANK the
properties subject of the Trust Receipt Agreements.
Ratio:
st
On the 1 ISSUE:
Sec. 12. Validity of entruster's security interest as against creditors. The
entruster's security interest in goods, documents, or instruments pursuant to the
written terms of a trust receipt shall be valid as against all creditors of the
entrustee for the duration of the trust receipt agreement.
The security interest of the entruster becomes a "lien" on the goods because the
entruster's advances will have to be settled first before the entrustee can
consolidate his ownership over the goods. A contrary view would be disastrous. For
to refuse to recognize the title of the banker under the trust receipt as security for
the advance of the purchase price would be to strike down a bona fide and honest
transaction of great commercial benefit and advantage.
The only exception to the rule is when the properties are in the hands of an
innocent purchaser for value and in good faith. The records however do NOT show
that the winning bidder is such purchaser.
nd
On the 2 ISSUE:
Sec. 7. Rights of the entruster. The entruster may cancel the trust and take
possession of the goods, documents or instruments subject of the trust or of the
proceeds realized therefrom xxxx
The law uses the word "may" in granting to the entruster the right to cancel the
trust and take possession of the goods. The bank has the discretion to avail of such
right or seek any alternative action, such as a third-party claim or a separate civil
action which it deems best to protect its right, at anytime upon default or failure of
the entrustee to comply with any of the terms and conditions of the trust
agreement.
NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-7-

- Muti

one on reasonable doubt and does not preclude a suit to enforce the civil liability
for the same act or omission under Art 29 of the Civil Code.
By signing a trust receipt, Catipon caused PNB to believe he assumed the
obligations provided with his co-signor. PNB acted on this assumption. Catipon
induced PNB to believe such, hence Catipon cannot deny liability for equity
purposes. Catipon is estopped.
Catipons payment to his co-signor cannot diminish PNBs rights since the trust
receipt expressly obligated Catipon to pay PNB and not to his co-signor.

13. PNB v. CATIPON


Doctrine: The decision of acquittal on the charge of estafa does not preclude or bar the filing
of this action to enforce liability of one of the signors of the trust receipt because the
execution of a trust receipt makes the signors liable ex contractu for its breach, whether he
did or did not misappropriate, misapply or convert the said merchandise.
- Cruz
Facts:
Catipon bought onions from J.V. Ramirez & Co. Catipon signed a trust receipt.
Catipon claimed that he paid J.V. Ramirez Co. and not PNB for the onions. There
werereceiptstoprovethatCatiponssignaturewasaffixedattheDivsioriaMarket
when a son of Ramirez came to Catipon and explained that the only way to get the
onions was to sign said trust receipt. Catipons signature was affixed long after
Ramirez signed.
PNB filed a complaint charging Catipon with estafa for having misappropriated,
misapplied and converted the merchandise covered by the trust receipt.
Ramirez on the other hand claimed that PNB filed this complaint because PNB did
not realize any cent out of its claim filed in a previous insolvency proceeding of J.V.
Ramirez and Co.
The trial court acquitted Catipon.
Hence this action to recover the value of the goods. PNB won, hence Catipon
appealed. Catipon claimed that: (a) his acquittal in theestafacaseisabartoPNBs
instituting the present civil action as PNB did not reserve the right to separate the
enforcement of civil liability from the criminal case; and (b) should he be held
liable, he should only be liable for one-half of the value of the goods under trust,
there being no stipulation that he would be solidarily liable with his co-signer.

14. ONG V. CA
Doctrine: Sec. 13 of the Trust Receipts Law, in case of violation of such, makes an officer of a
corporation liable for the crime of estafa even if he is signing merely on behalf of the
corporation, but the civil obligation shall be imposed upon the corporation as the entrustee,
unless the officer made himself liable in his personal capacity.
Facts:
Edward Ong, as representative of ARMAGRI was charged with 2 counts of estafa for
violation of the trust receipts law, for the failure of ARMAGRI to account for the
proceeds of the goods (urea) covered by 2 trust receipts signed by Ong on behalf of
ARMAGRI in favor of SOLIDBANK.
After trial, the court convicted Ong of the charges.
On appeal, Ong contends that he merely signed the same on behalf of ARMAGRI,
and there was no evidence that he personally received the goods subject of the
trust receipts. He insisted that it was ARMAGRI that is liable as the goods were
received by the corporation and it was ARMAGRI which failed to turn over the
balance of the proceeds of the sale of the goods.
CA however affirmed the conviction. Thus, this appeal

Issue:
WoN Catipon is liable to PNB; and
Assuming arguendo that Catipon is liable, WoN he is solidarily liable.

Issue:
WoN Ong can be held liable for estafa by merely signing as agent of ARMAGRI

Held:
Yes. Catipon is solidarily liable to PNB but he has the right to claim from his cosignor, Ramirez. PNB wins.

Held:
YES. Conviction is affirmed.

Ratio:
Catipons acquittal in the estafa case was predicated on the conclusion that the
guiltofthedefendanthasnotbeensatisfactorilyestablished.Thisisequivalentto

CRUZ | MUTI | RAZON

Ratio:

NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-8-

Sec. 13 if the Trust Receipts Law expressly provides that if a corporation committed
the violation, its officers, employees or persons therein responsible for the offense
shall be held liable to answer for the criminal offense.
Ong, by signing the trust receipts, was the person responsible for the acts of the
corporation.
It was held that the reason for the same was that a corporation, being a juridical
entity, cannot be subject to the punishment of imprisonment, thus its officers or
employees are the ones subjected to criminal prosecution.
The corporation, being the real entrustee, however, in such a case, must shoulder
the civil liability. The only exception is when the employee makes himself
personally liable for such.
- Razon
15. CHING VS. CA
Doctrine: A civil action for declaration of nullity of documents(trust receipt) and for
damages does not constitute a prejudicial question to a criminal case for estafa where the
alleged prejudicial question in the civil case does not juris et de jure determine the guilt or
innocence of the accused in the criminal action.
Facts:
Ching executed a trust receipt agreement in favor of Allied Banking
Corporation(Allied) for certain goods(dolomites and refractory sliding nozzle bricks).
Allied filed informations against Ching for violation of the trust receipt agreement.
Ching, together with Philippine Blooming Mills Co. Inc.(PBMC), filed a case for
declaration of nullity of documents and for damages. Ching also filed for the
suspension of the criminal proceedings on the ground of prejudicial question in a civil
action. The petition for suspension was denied. Ching brought the petition to CA.
CA ruled that the declaration of nullity of the trust receipts in question is not a
prejudicial question to the Criminal Case.
Chingsfirstcomplaint in RTC: the documents were intended as collateral or security.
Chingsamendedcomplaint:thedocumentsareevidenceofsimpleloans.
Notwithstanding CAs decision, the RTC admitted Chings amended complaint and
declared the trust receipts null and void for failure to express the true intent and
agreement of the parties. RTC declared it as one of simple and pure loan.
Allied filed an amended answer to RTC that the transaction was a letter of
credit/trust receipt accommodation and not a pure and simple loan.
Pending the civil case, Ching seeked the intervention of SC.
Issue:

CRUZ | MUTI | RAZON

WoN the pendency of a civil action for damages and declaration of nullity of
documents, specifically trust receipts, warrants the suspension of criminal
proceedings for estafa in relation to PD 115
Held:
No. Petition DISMISSED and RTC directed to proceed with the hearings of crim. case.
Ratio:
The alleged prejudicial question in the civil case for declaration of nullity of
documents and for damages, does not juris et de jure determine the guilt or
innocence of the accused in the criminal action for estafa.
The criminal liability of the acacused for violation of Article 315 of RPC, may still be
shown through the presentation of evidence to the effect that: (a) the accused
received the subject goods in trust or under the obligation to sell the same and to
remit the proceeds thereof to Allied, or to return the goods, if not sold; (b) that Ching
misappropriated or converted the goods and/or the proceeds of the sale; (c) that
Ching performed such acts with abuse of confidence to the damage and prejudice of
Allied; and (d) that demand was made by the bank to herein petitioner.
Even on the assumption that the documents are declared of null, it does not ipso
facto follow that such declaration of nullity shall exonerate the accused from criminal
prosecution and liability.
An act violative of a trust receipt agreement is only one mode of committing estafa
under the abovementioned provision of the Revised Penal Code. Stated differently, a
violation of a trust receipt arrangement is not the sole basis for incurring liability
under Article 315 1 (b) of the RPC.
- Muti
16. PILIPINAS BANK v. ONG
Doctrine: Mere failure to deliver the proceeds of the sale or the goods, if not sold,
constitutes violation of PD No. 115. However, what is being punished by the law is the
dishonesty and abuse of confidence in the handling of money or goods to the prejudice of
another regardless of whether the latter is the owner.
Facts:
Baliwag Mahogany Corporation (BMC), through its President, Ong, applied for a
domestic commercial LC with Pilipinas Bank to finance the purchase of about
100,000 board feet of air dried, dark red Lauan sawn lumber.
Pilipinas Bank approved the application and issued the LC for P3.5M. To secure
payment, BMC, through Ong, executed 2 trust receipts providing that it shall turn

NEGOTIABLE INSTRUMENTS | ATTY. AMPIL

-9-

over the proceeds of the goods to Pilipinas Bank, if sold, or return the goods, if
unsold, upon dates of maturity.
BMC failed to comply with the trust receipt agreement. BMC filed with SEC a
Petition for Rehabilitation and for a Declaration in a State of Suspension of
Payments under Sec 6 (c) of PD 902-A. BMCs creditors, including Pilipinas Bank,
heldacreditorsmeetingtoavertanyactionwhichwouldaffectBMCsoperations
and decide on a common course of action to restore BMC to sound financial
footing.
SEC issued an order creating a Management Committee wherein Pilipinas Bank is
represented. The Committee shall undertake BMCs management, take custody
and control of all its existing assets and liabilities, study, review and evaluate its
operation and/or feasibility of its being restructured.
BMC and 14 of its creditor banks entered into a MPA rescheduling payment of
BMCsexistingdebts.
SEC approved the rehabilitation plan and declared BMC is a state of suspension of
payments.
BMC and Ong defaulted in the payments. Hence, Pilipinas Bank filed a complaint
against BMC and Ong because they failed to pay their obligations under the trust
receipts despite demand.
Assistant Prosecutor Bautista issued a Resolution recommending the dismissal of
the complaint. This was approved. Pilipinas Bank filed an MR but this was denied.
Pilipinas Bank filed a petition for certiorari and mandamus seeking to annul DOJ
resolution. CA ruled for Pilipinas Bank.
BMC and Ong filed an MR and was granted on the ground that the MOA
constituted a novation which placed Pilipinas Bank in estoppels to insist on the
original trust relation and constitutes a bar to the filing of any criminal information
for violation of PD 115.

Rehabilitation and Declaration in a State of Suspension of Payments. Also, when


Pilipinas Bank made a demand upon BMC, the SEC Managmenet Committee
already had control and custody of BMCs assets and liabilities, including the
lumber subject of the trust receipts, and authorized their use in the ordinary course
of business operations. It was the Management Committee which could settle
BMCsobligations.
The court also discovered that Ong paid P21M in compliance with the equity
infusion required by the MOA. The mala prohibita nature of the offense
notwithstanding, Ongs intent to misuse or misappropriate the goods or their
proceeds has not been established by the records.
TheMOAdidnotonlyrescheduleBMCsdebts,butmoreimportantly,itprovided
principal conditions which are incompatible with the trust agreement. Hence, the
MOA novated and effectively extinguished BMC's obligations under the trust
receipt agreement.
What is automatically terminated in case BMC failed to comply with the conditions
under the MOA is not the MOA itself but merely the obligation of the lender (the
bank) to reschedule the existing credits. Moreover, it is erroneous to assume that
the revesting of "all the rights of lenders against the borrower" means that Pilipinas
Bank can charge BMC and Ong for violation of the Trust Receipts Law under the
original trust receipt agreement. The execution of the MOA extinguished BMC and
Ongsobligationunderthetrustreceipts,andifthereisliability,itwillonlybecivil
in nature since the trust receipts were transformed into mere loan documents after
the execution of the MOA. This is reinforced by the fact that the mortgage
contracts executed by the BMC survive despite its non-compliance with the
conditions set forth in the MOA.
- Cruz

Issue:
WoN the MOA was a novation of the trust agreement between the parties.
Held:
Yes.TheMOAnovatesthetrustagreement.PilipinasBankspetitionisdenied.
Ratio:
Mere failure to deliver the proceeds of the sale or the goods, if not sold,
constitutes violation of PD No. 115. However, what is being punished by the law is
the dishonesty and abuse of confidence in the handling of money or goods to the
prejudice of another regardless of whether the latter is the owner. In the case at
bar, no dishonesty nor abuse of confidence can be attributed to BMC and Ong.
Record shows that BMC failed to comply with its obligations upon maturity of the
trust receipts due to serious liquidity problems, prompting it to file a Petition for
CRUZ | MUTI | RAZON

NEGOTIABLE INSTRUMENTS | ATTY. AMPIL