People VS Cuervo
People VS Cuervo
People VS Cuervo
This case presents for reexamination the liability for estafa of the holder of a trust receipt who disposed of
the goods covered thereby and, in violation of its terms, failed to deliver to the bank the proceeds of the
sale as payment of the debt secured by the trust receipt.
We say reexamination because it is a well-entrenched rule in our jurisprudence that the conversion by the
importer of the goods covered by a trust receipt constitutes estafa through misappropriation under article
315(l) (b) of the Revised Penal Code, (People vs. Yu Chai Ho 53 Phil. 874 and Samo vs. People. 115 Phil. 346.
As to civil cases, see National Bank vs. Viuda e Hijos de Angel Jose, 63 Phil. 814; Philippine National Bank vs.
Catipon, 98 Phil. 286 and Philippine National Bank vs. Arrozal 103 Phil. 213).
In this case, an information dated July 27, 1966 was filed in the Court of First Instance of Manila, charging
Ben Cuevo with estafa committed as follows (Criminal Case No. 83309):
That on or about the 16th day of February, 1964 in the City of Manila, Philippines, the said accused did
then and there willfully, unlawfully and feloniously defraud the Prudential Bank and Trust Company in the
following manner, to wit: the said accused having received in trust from the Prudential Bank and Trust
Company merchandise, i.e., 1,000 bags of grind yellow corn and 1,000 bags of palay specified in a trust
receipt covered by Letter of Credit No. 5643, executed by him in favor of said bank, of the total value of
P24,000.00, to be sold by him, under the express obligation on the part of the said accused to account for
the said merchandise, or to deliver and turn over to the Prudential Bank and Trust Company the proceeds
of the sale thereof;
But said accused once in possession of said merchandise, far from complying with the aforesaid obligation,
notwithstanding repeated demands made upon him, with intent to defraud, willfully, unlawfully and
feloniously misappropriated, misapplied and converted the said merchandise or the value, thereof in the
sum of P24,000.00 to his own personal use and benefit, to the damage and prejudice of the Prudential
Bank and Trust Company in the aforesaid of P24,000.00, Philippine Currency. (p. 2, Rollo.)
Upon arraignment, the accused pleaded not guilty (p. 11, Record). Later, or on December 13, 1966, before
the trial had started, Cuevo filed a motion to dismiss on the ground that the facts alleged in the
information do not constitute an offense.
Judge Ruperto Kapunan, Jr., in his order of January 3, 1967, granted the motion and dismissed the case but
"without prejudice to whatever civil action the complaining bank may take to recover the amount of
P24,000" which it had advanced to cover the price of the merchandise delivered to the accused (p. 7,
Rollo). From that order of dismissal, the prosecution appealed to this Court.
The appeal is meritorious. Judge Kapunan, Jr. erred in holding that the accused did not commit estafa
under article 315(l) (b), which reads:
(b) By misappropriating or converting, to the prejudice of another, money, goods, or any other personal
property received by the offender in trust or on commission, or for administration, or under any other
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obligation involving the duty to make delivery of or to return the same, even though such obligation be
totally or partially guaranteed by a bond; or by denying having received such money, goods, or other
property.
Judge Kapunan, Jr., in sustaining the motion to dismiss, relied on the Spanish version of paragraph (b) of
article 315 wherein the expression used is "recibido en deposito". In his opinion, that phrase is not
accurately translated as "in trust" and, as he explained, it does not allegedly cover the conversion or
misappropriation of the goods covered by a trust receipt. The Spanish version reads:
(b) Apropiandose o distrayendo, en perjuicio de otro dinero, efectos o cualquiera otra cosa mueble, que
hubiere recibido en deposito, commission o administracion o por otro titulo que produzca obligacion de
entregarla o devolveria, aungue dicha obligacion estuviese afianzada total or parcialmente, o negando
haberla recibido.
The lower court ratiocinated that the contract covered by a trust receipt is merely a secured loan (U.S. vs.
Tan Tok, 15 Phil. 538) where the borrower is allowed to dispose of the collateral, whereas, in a deposit the
depositary is not empowered to dispose of the property deposited. 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.
The lower court also ventured the opinion that the other phrase in paragraph (b), por otro titulo que
produzca obligacion de entregarla o devolverla" ("under any other obligation involving the duty to make
delivery of or to return the same") is not applicable because that phrase allegedly refers to the very
"money, goods, or any other personal property received by the offender" as a deposit, and not to the
proceeds of the sale of the goods covered by the trust receipt.
The lower court observed further that the framers of the Spanish Penal Code could not have contemplated
the inclusion of the trust receipt in article 315(l) (b) because that transaction did not exist in the nineteenth
century. The usual form of a trust receipt is as follows:
I/We hereby agree to hold said goods in trust for the said corporation (meaning the bank as trustor), and
as its property with liberty to sell the same for its account, but without authority to make any other
disposition whatever of the said goods or any part thereof (or of proceeds thereof) either by 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 International Banking
Corporation to apply against the relative acceptances (as described above) and for the payment of any
other indebtedness of mine/ours to the International Banking Corporation. (People vs. Yu Chai Ho 53 Phil.
874, 876.)
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" (53 Am. Jur. 961, cited in Samo vs. People, 115 Phil. 346, 349).
In the instant case, it is alleged in the indictment that the accused, by means of a trust receipt, received
from the Prudential Bank and Trust Company 1,000 bags of corn and 1,000 bags of palay to be sold by him
with the express obligation to deliver the proceeds of the sale to the bank or, if not sold, to account for the
merchandise and that, instead of complying with either obligation, he misappropriated the merchandise or
the value thereof (p. 2, Rollo).
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We hold that even if the accused did not receive the merchandise for deposit, he is, nevertheless, covered
by article 315(l) (b) because after receiving the price of the sale, he did not deliver the money to the bank
or, if he did not sell the merchandise, he did not return it to the bank.
Those two situations are within the purview of article 315(l) (b). The first situation is covered by the
provision which refers to money received under the obligation involving the duty to deliver it (entregarla)
to the owner of the merchandise sold.
The other contingency is covered by the provision which refers to merchandise received under the
obligation to "return" it (devolvelra) to the owner.
The fact that in the first case the money was received from the purchaser of the merchandise and not from
the bank does not remove it from the operation of article 315(l) (b).
As noted by Justice Street in People vs. Yu Chai Ho, supra, the conversion by the trustee in a trust receipt of
the proceeds of the sale falls "most literally and directly under" the provisions of article 315(l) (b).
Thus, it was held that where, notwithstanding repeated oral and written demands by the bank, the
petitioner had failed either to turn over to the said bank the proceeds of the sale of the goods, or to return
said goods if they were not sold, the petitioner is guilty of estafa under article 315(l) (b) (Samo vs. People,
115 Phil. 346).
In this connection, it is relevant to state that Presidential Decree No. 115, the Trust Receipts Law,
regulating trust receipts transactions, was issued on January 29, 1973.
One objective of that 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 under" article 315.
Section 13 of the decree provides that "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 receipt shall constitute the crime of
estafa, punishable under the provisions" of article 315 of the Revised Penal Code.
The enactment of the said penal provision is confirmatory of existing jurisprudence and should not be
construed as meaning that, heretofore, the misappropriation of the proceeds of a sale made under a trust
receipt was not punishable under article 315. That penal provision removed any doubt as to the criminal
liability of the holder of a trust receipt who misappropriated the proceeds of the sale.
The other issue raised in the last part of accused Cuevo's brief is whether the lower court's erroneous
dismissal of the information against him amounts to an acquittal which placed him in jeopardy and
whether the return of the case to the lower court for trial would place him in double jeopardy.
No person shall be twice put in jeopardy of punishment for the same offense" (Sec. 22, Art. IV of the
Constitution). The maxim is non bis in Idem (not twice for the same). The ban against double jeopardy is
similar to the rule onres judicata in civil cases.
Jeopardy attaches when an accused was charged with an offense (a) upon a valid complaint or information
sufficient in form and substance to sustain a conviction (b) in a court of competent jurisdiction and (c) after
the accused had been arraigned and entered his plea, he was convicted or acquitted, or the case against
him was "dismissed or otherwise terminated without his express consent".
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In such a case, his conviction or acquittal (autrefois convict or autrefois acquit) is a "bar to another
prosecution for the offense charged, or for any attempt to commit the same or frustration thereof, or for
any offense charged in the former complaint or information " (Sec. 9, Rule 117, Rules of Court).
The accused invokes the ruling that "where a trial court has jurisdiction but mistakenly dismisses the
complaint or information on the ground of lack of it, the order of dismissal is, after the prosecution has
presented its evidence, unappealable because an appeal by the government therefrom would place the
accused in second jeopardy for the same offense" (People vs. Duran, Jr., 107 Phil. 979).
That ruling has no application to this case because in the Duran case (as in People vs. Caderao 69 Phil. 327,
also cited by the accused herein) the dismissal was made after the prosecution had presented its evidence.
The accused filed a demurrer to the evidence but the trial court dismissed the case, not on the ground of
insufficiency of evidence, but on the ground of lack of jurisdiction. In the instant case, the prosecution has
not commenced the presentation of its evidence. The dismissal was with the consent of the accused
because he filed a motion to dismiss.
In Esguerra vs. De la Costa, 66 Phil. 134, another case cited by the accused, the erroneous dismissal on the
ground of lack of jurisdiction was made by the lower court motu proprio. Hence, the dismissal without the
consent of the accused amounted to an acquittal which placed him in jeopardy.
Moreover, in the Duran case, it was expressly indicated that the erroneous dismissal on the ground of lack
of jurisdiction does not place the accused in jeopardy if the dismissal was made with the consent of the
accused, as held in People vs. Salico, 84 Phil. 722. As already stated, in the instant case the dismissal was
with the consent of accused Cuevo. The dismissal did not place him in jeopardy.
The Chief Justice and six Justices voted to reverse the order of dismissal. Justices Teehankee and De Castro
dissented. As only seven Justices voted to reverse the order of dismissal, the same has to be affirmed.
SO ORDERED.