1. HUR TIN YANG vs.

PEOPLE OF THE PHILIPPINES

G.R. No. 195117; August 14, 2013; Velasco Jr., J.

A trust receipt transaction is one where the entrustee has the obligation to deliver
to the entruster the price of the sale, or if the merchandise is not sold, to return the
merchandise to the entruster. There are, therefore, two obligations in a trust receipt
transaction: the first refers to money received under the obligation involving the duty to
turn it over (entregarla) to the owner of the merchandise sold, while the second refers to
the merchandise received under the obligation to "return" it (devolvera) to the owner.

When both parties enter into an agreement knowing fully well that the return of the
goods subject of the trust receipt is not possible even without any fault on the part of the
trustee, it is not a trust receipt transaction penalized under Sec. 13 of PD 115 in relation
to Art. 315, par. 1(b) of the RPC, as the only obligation actually agreed upon by the
parties would be the return of the proceeds of the sale transaction. This transaction
becomes a mere loan, where the borrower is obligated to pay the bank the amount
spent for the purchase of the goods.

FACTS:

Supermax Philippines, Inc. (Supermax) is a domestic corporation

engaged in the construction business. On various occasions, Metropolitan Bank and
Trust Company (Metrobank), extended several commercial letters of credit (LCs) to
Supermax. These commercial LCs were used by Supermax to pay for the delivery of
several construction materials which will be used in their construction business.
Thereafter, Metrobank required petitioner, as representative of Supermax, to sign

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trust receipts as security for the construction materials and to hold those materials or
the proceeds of the sales in trust for Metrobank to the extent of the amount stated in
the trust receipts.

When the trust receipts fell due and despite the receipt of a
demand letter, Supermax failed to pay or deliver the goods or proceeds to
Metrobank. Instead, Supermaxrequested the restructuring of the loan. When the
intended restructuring of the loan did not materialize, Metrobank sent another
demand letter. As the demands fell on deaf ears, Metrobank, filed the instant criminal
complaints against petitioner.

For his defense, while admitting signing the trust receipts, petitioner
argued that said trust receipts were demanded by Metrobank as additional security
for the loans extended to Supermax for the purchase of construction equipment and
materials.

In support of this argument, petitioner presented a witness who

testified that the construction materials covered by the trust receipts were delivered
way before petitioner signed the corresponding trust receipts. Further, petitioner
argued that Metrobank knew all along that the construction materials subject of the

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trust receipts were not intended for resale but for personal use of Supermax relating
to its construction business.

The trial court rendered judgment convicting accused Hur Tin Yang
of the crime of estafa under Article 315 paragraph 1 (a) of the Revised Penal Code.

Petitioner appealed to the CA. CA rendered a Decision, upholding

the findings of the RTC. The CA ruled that since the offense punished under PD 115
is in the nature of malumprohibitum, a mere failure to deliver the proceeds of the
sale or goods, if not sold, is sufficient to justify a conviction under PD 115.

Petitioner filed a MR, but it was denied. Not satisfied, petitioner filed
a petition for review under Rule 45 of the Rules of Court.

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 SC dismissed the Petition on the ground that the CA committed no
reversible error in the assailed decision. Hence, petitioner filed the present MR
contending that the transactions between the parties do not constitute trust receipt
agreements but rather of simple loans.

ISSUE:

Whether or not petitioner is liable for Estafa under Art. 315, par. 1(b) of the RPC
in relation to PD 115, even if it was sufficiently proved that the entruster (Metrobank)
knew beforehand that the goods (construction materials) subject of the trust receipts
were never intended to be sold but only for use in the entrustees construction business.

HELD:

In determining the nature of a contract, courts are not bound by the title or name
given by the parties. The decisive factor in evaluating such agreement is the intention of
the parties, as shown not necessarily by the terminology used in the contract but by
their conduct, words, actions and deeds prior to, during and immediately after executing
the agreement. As such, therefore, documentary and parol evidence may be submitted
and admitted to prove such intention.

In the instant case, the factual findings of the trial and appellate courts reveal that
the dealing between petitioner and Metrobank was not a trust receipt transaction but
one of simple loan. Petitioners admissionthat he signed the trust receipts on behalf of
Supermax, which failed to pay the loan or turn over the proceeds of the sale or the
goods to Metrobank upon demanddoes not conclusively prove that the transaction

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was, indeed, a trust receipts transaction. In contrast to the nomenclature of the
transaction, the parties really intended a contract of loan.

In Ng v. People and Land Bank of the Philippines v. Perez, cases which are in all
four corners the same as the instant caseruled that the fact that the entruster bank
knew even before the execution of the trust receipt agreements that the construction
materials covered were never intended by the entrustee for resale or for the
manufacture of items to be sold is sufficient to prove that the transaction was a simple
loan and not a trust receipts transaction.

The petitioner was charged with Estafa committed in what is called, under PD
115, a "trust receipt transaction.

A trust receipt transaction is one where the entrustee has the obligation to deliver
to the entruster the price of the sale, or if the merchandise is not sold, to return the
merchandise to the entruster. There are, therefore, two obligations in a trust receipt
transaction: the first refers to money received under the obligation involving the duty to
turn it over (entregarla) to the owner of the merchandise sold, while the second refers to
the merchandise received under the obligation to "return" it (devolvera) to the owner. A
violation of any of these undertakings constitutes Estafa defined under Art. 315, par.
1(b) of the RPC, as provided in Sec. 13 of PD 115.

Nonetheless, when both parties enter into an agreement knowing fully well that
the return of the goods subject of the trust receipt is not possible even without any fault
on the part of the trustee, it is not a trust receipt transaction penalized under Sec. 13 of
PD 115 in relation to Art. 315, par. 1(b) of the RPC, as the only obligation actually
agreed upon by the parties would be the return of the proceeds of the sale transaction.
This transaction becomes a mere loan, where the borrower is obligated to pay the bank
the amount spent for the purchase of the goods.

2. Land Bankof the Philippines v. Perez

Erwin Fuentes
G.R. No. 166884
June 13, 2012

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Art. 445. Whatever is built, planted or sown on the land of another and the
improvements or repairs made thereon, belong to the owner of the land, subject
to the provisions of the following articles. (358)

FACTS:
Petitioner Land Bank of the Philippines (LBP) is a government financial institution and
the official depository of the Philippines. Respondents were officers of Asian
Construction and Development Corporation (ACDC), a corporation engaged in the
construction business. On several occasions, respondents executed in favor of Land
Bank of the Philippines (LBP) trust receipts to secure the purchase of construction
materials that they will need in their construction projects. When the trust receipts
matured, ACDC failed to return to LBP the proceeds of the construction projects or the
construction materials subject of the trust receipts. After several demands went
unheeded, LBP filed a complaint for Estafa or violation of Art. 315, par. 1(b) of the RPC,
in relation to PD 115, against the respondent officers of ACDC.

ISSUE:
1. WONthe disputed transactions is a trust receipt or a loan?
HELD:
1. TRUST RECEIPT.

There are two obligations in a trust receipt transaction. The first is covered by the
provision that refers to money under the obligation to deliver it (entregarla) to the owner
of the merchandise sold. The second is covered by the provision referring to
merchandise received under the obligation to return it (devolvera) to the owner. Thus,
under the Trust Receipts Law,] intent to defraud is presumed when (1) the entrustee
fails to turn over the proceeds of the sale of goods covered by the trust receipt to the
entruster; or (2) when the entrustee fails to return the goods under trust, if they are not
disposed of in accordance with the terms of the trust receipts.

In all trust receipt transactions, both obligations on the part of the trustee exist in the
alternative the return of the proceeds of the sale or the return or recovery of the goods,
whether raw or processed. When both parties enter into an agreement knowing that the
return of the goods subject of the trust receipt is not possible even without any fault on
the part of the trustee, it is not a trust receipt transaction penalized under Section 13 of
P.D. 115; the only obligation actually agreed upon by the parties would be the return of
the proceeds of the sale transaction. This transaction becomes a mere loan, where the
borrower is obligated to pay the bank the amount spent for the purchase of the goods.

Article 1371 of the Civil Code provides that [i]n order to judge the intention of the

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contracting parties, their contemporaneous and subsequent acts shall be principally
considered. Under this provision, we can examine the contemporaneous actions of the
parties rather than rely purely on the trust receipts that they signed in order to
understand the transaction through their intent.

We note in this regard that at the onset of these transactions, LBP knew that ACDC was
in the construction business and that the materials that it sought to buy under the letters
of credit were to be used for the following projects: the Metro Rail Transit Project and
the Clark Centennial Exposition Project. LBP had in fact authorized the delivery of the
materials on the construction sites for these projects, as seen in the letters of credit it
attached to its complaint. Clearly, they were aware of the fact that there was no way
they could recover the buildings or constructions for which the materials subject of the
alleged trust receipts had been used. Notably, despite the allegations in the affidavit-
complaint wherein LBP sought the return of the construction materials, its demand letter
dated May 4, 1999 sought the payment of the balance but failed to ask, as an
alternative, for the return of the construction materials or the buildings where these
materials had been used.

The fact that LBP had knowingly authorized the delivery of construction materials
to a construction site of two government projects, as well as unspecified
construction sites, repudiates the idea that LBP intended to be the owner of those
construction materials. As a government financial institution, LBP should have
been aware that the materials were to be used for the construction of an
immovable property, as well as a property of the public domain. As an immovable
property, the ownership of whatever was constructed with those materials would
presumably belong to the owner of the land, under Article 445 of the Civil Code.

Even if we consider the vague possibility that the materials, consisting of cement, bolts
and reinforcing steel bars, would be used for the construction of a movable property, the
ownership of these properties would still pertain to the government and not remain with
the bank as they would be classified as property of the public domain, which is defined
by the Civil Code as:

In contrast with the present situation, it is fundamental in a trust receipt transaction that
the person who advanced payment for the merchandise becomes the absolute owner of
said merchandise and continues as owner until he or she is paid in full, or if the goods
had already been sold, the proceeds should be turned over to him or to her.

WHEREFORE, we DENY the petition and AFFIRM the January 20, 2005 decision of
the Court of Appeals in CA-G.R. SP No. 76588. No costs.

3. Ng vs People

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Facts:
Anthony Ng was engaged in the business of building and fabricating telecommunication
towers under the trade name Capitol Blacksmith and Builders. Petitioner applied for a
credit line of Php 3,000,000 with Asia trust. In support of Asiatrusts credit investigation,
petitioner voluntarily submitted the following documents: (1) the contracts he had with
Islacom, Smart, and Infocom; (2) the list of projects wherein he was commissioned by
the said telecommunication companies to build several steel towers; and (3) the
collectible amounts he has with the said companies.
Asiatrust approved petitioners loan application. Petitioner was then required to sign
several documents, among which are the Credit Line Agreement, Application and
Agreement for Irrevocable L/C, Trust Receipt Agreements,[4] and Promissory Notes.
Though the Promissory Notes had maturity dates,the two Trust Receipt Agreements did
not bear any maturitydates.
After petitioner received the goods, consisting of chemicals and metal plates from his
suppliers, he utilized them to fabricate the communication towers ordered from him by
his clients. As petitioner realized difficulty in collecting from his client Islacom, he failed
to pay his loan to Asiatrust. Asiatrustsrepresentative appraiser, reported that
approximately 97% of the subject goods of the Trust Receipts were sold-out and that
only 3 % of the goods remained. Efforts towards a settlement failed to be reached.
Asiatrust Account Officer filed a Complaint-Affidavit for Estafa, as defined and penalized
under Art. 315, par. 1(b) of the RPC in relation to Sec. 3, PD 115 or the Trust Receipts
Law.
Issue:
Whether the petitioner is liable for Estafa under Art. 315, par. 1(b) of the RPC in relation
to PD 115.
Ruling:
A trust receipt transaction is one where the entrustee has the obligation to deliver to the
entruster the price of the sale, or if the merchandise is not sold, to return the
merchandise to the entruster. There are, therefore, two obligations in a trust receipt
transaction: the first refers to money received under the obligation involving the duty to
turn it over (entregarla) to the owner of the merchandise sold, while the second refers
to the merchandise received under the obligation to return it (devolvera) to the owner. A
violation of any of these undertakings constitutes Estafadefined under Art. 315, par. 1(b)
of the RPC, as provided in Sec. 13 of PD 115, viz:

Section 13. Penalty Clause.The failure of an entrustee to turn over the proceeds of
the sale of the goods, documents or instruments covered by a trust receipt to the
extent of the amount owing to the entruster or as appears in the trust receipt or to return
said goods, documents or instruments if they were not sold or disposed of in
accordance with the terms of the trust receiptshall constitute the crime of estafa,

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punishable under the provisions of Article Three hundred fifteen, paragraph one (b) of
Act Numbered Three thousand eight hundred and fifteen, as amended, otherwise
known as the Revised Penal Code.
A trust receipt is considered 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 throughutilization, as collateral, of the merchandise imported or purchased.The
principle is of course not limited in its application to financing importations, since the
principle is equally applicable to domestic transactions. Regardless of whether the
transaction is foreign or domestic, it is important to note that the transactions discussed
in relation to trust receipts mainly involved sales.
The release of such goods to the entrustee is conditioned upon his execution and
delivery to the entruster of a trust receipt wherein the former binds himself to hold the
specific goods in trust for the entruster and to sell or otherwise dispose of the goods
with the obligation to turn over to the entruster the proceeds to the extent of the amount
owing to the entruster or the goods themselves if they are unsold.
Considering that the goods in this case were never intended for sale but for use in the
fabrication of steel communication towers, the trial court erred in ruling that the
agreement is a trust receipt transaction.
Petitioner is correct that there was no misappropriation or conversion on his part,
because his liability for the amount of the goods subject of the trust receipts arises and
becomes due only upon receipt of the proceeds of the sale and not prior to the receipt
of the full price of the goods. PD 115 provides that an entrustee is only liable for Estafa
when he fails to turn over the proceeds of the sale of the goods covered by a trust
receipt to the extent of the amount owing to the entruster or as appears in the trust
receipt in accordance with the terms of the trust receipt.

4. PNB vs Catipon

Torts and Damages Effect of Acquittal

Catipon bought onions from Ramirez in 1951. The son of Ramirez told Catipon that the
only way he could get the onions is for him to sign a trust receipt from PNB. Catipon at
that time had no knowledge or intention to be bound by the trust receipt but he signed it
anyway so that he could get the onions he already paid for. Catipon subsequently
disposed of the onions by selling them. Ramirez later became insolvent and the trust
receipt went unpaid and since it was in Catipons name, PNB sued him for estafa for
misappropriating the merchandise (onions). The lower court acquitted Catipon because
his guilt was not satisfactorily established. Now PNB filed an action for recovery against

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Catipon. Catipon assailed the civil suit and he argues that PNB did not reserve its right
to file a separate civil action.

ISSUE: Whether or not Catipon is still liable regardless of his acquittal in the criminal
case.

HELD: Yes. The acquittal was because of the fact that his guilt was not satisfactorily
established hence his acquittal was based on reasonable doubt and under the law, such
acquittal does not preclude a suit to enforce the civil liability for the same act or
omission, under Article 29 of the new Civil Code. This is even if there was no prior
reservation by PNB to file a civil suit. Catipon is ordered to pay PNB without prejudice to
Catipons rights against Ramirez.

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