LAND BANK OF THE PHILIPPINES vs PEREZ goods placed in trust, the invoice values, their maturity dates which
d in trust, the invoice values, their maturity dates which is in violation of Sec
LAND BANK OF THE PHILIPPINES, petitioner,
vs.
LAMBERTO C. PEREZ, et al., respondent.
G.R. No. 166884
13 June 2012
Case Brief:
Petition for review on certiorari under Rule 45 of the ROC assailing the decision of the CA
which dismissed the petition for estafa against the respondents who allegedly violated
Article 315 (b) of the Revised Penal Code, in relation with Section 13 of PD 115 of the Trust
Receipts Law.
Facts:
Petitioner Bank, a governmental financial institution and the official depository of the
Philippines filed an estafa case before the City Prosecutor’s Office in Makati against
respondents who are officers of Asian Construction and Development Corporation
(ACDC), which is incorporated under Philippine law and engaged in the construction
business.
LBP extended a credit accommodation to ACDC through an Omnibus Credi Line
Agreement which ACDC Letters of Credit/Trust Receipts Facility to buy construction
materials. The respondents executed Trust Receipts in the amount of P52,344,096.32 in
connection with the construction materials to be used for construction projects that
belong to the Philippine government (Metro Rail Transit and Clark Centennial Exposition
Project). The trust receipts matured but ACDC failed to proceeds of the construction
materials subject of the trust receipts thus LBP issued a demand letter to ACDC to pay its
debts including those covered in the Trust Facility in the amount of P66, 425,924.39.
When ACDC failed to comply with the demand letter, the complaint-affidavit was filed.
The respondents alleged that there was no misappropriation for the estafa case to lie as
they merely acted as a subcontractor for the government projects and that the general
contractors have not paid them thus there was no misappropriation for the case to
prosper. They also alleged that the trust receipts did not contain the description of
Rule 98: Trustees
5(a) of the Trust Receipts Law. The Asst. Prosecutor then dismissed the case stating that
the evidence presented by LBP did not state the date when the goods described in the
Letters of Credit were actually released to the possession of the respondents which is a
requirement under Section 4 of PD 115. Thus an MR was filed but was denied. LBP
appealed to the Secretary of Justice who reversed the ruling and directed that Office of
the Prosecutor to file an information for estafa against the respondents. The Secretary of
Justice explained that there was no question that the goods were received by ACDC and
that although the goods were not described in the Trust Receipts, these were listed in
the attached Letters of Credit. The DOJ Secretary also rejected the defense of the
respondents that ACDC failed to remit payments due to the failure of its clients to pay.
An MR was submitted but the DOJ Secretary denied it. Thus, a petition for review before
the CA was filed.
Actions of the Court:
CA: The Petition was granted and given due course which reversed and set aside the
ruling of the Secretary of Justice. The CA explained that there was no trust receipt
transaction but a mere loan. It also adopted the argument of respondent that since no
payment was received for the construction projects had been received, its officers could
not have been guilty of misappropriating any payment.
Issue/s:
1. WON the CA erred in reversing the resolutions of the Secretary of Justice who
ruled that the disputed transactions were trust receipts transactions.
Ruling:
1. The court ruled affirmed the decision of CA that there was no trust receipts
transaction. It explained that in a trust receipts transaction, there are two
obligations: First, which refers to the money under the obligation to deliver it to
the owner of the merchandise sold, and Second, which refers to the
merchandise under the obligation to return it to owner. The court explained that
in the present case there could be no trust receipt transaction because the
parties were aware that ACDC could not possibly be obligated to reconvey to
LBP the materials or the end product for which they were used and from the
moment the materials were used for government projects, they became public
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 and not LBP’s property. Thus, the action for estafa cannot progress as the
respondents can only be held liable for a loan.

(Note: During the pendency of the appeal, a motion to dismiss was filed by the
respondents which stated that LBP already assigned its rights title and interest
in the load subject of the case to Philippine Opportunities and Growth for
Income, Inc. and ACDC’s obligation was settled by Avent Holdings Corporation.)

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Rule 98: Trustees