ACQUITTAL: TRUST RECEIPT, ESTAFA

G.R. No. 195117 August 14, 2013

HUR TIN YANG, PETITIONER

vs.
PEOPLE OF THE PHILIPPINES, RESPONDENT.

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.

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.17

The true nature of a trust receipt transaction can be found in the "whereas"
clause of PD 115 which states that a trust receipt is to be utilized "as a convenient
business device to assist importers and merchants solve their financing
problems." Obviously, the State, in enacting the law, sought to find a way to
assist importers and merchants in their financing in order to encourage
commerce in the Philippines.

The practice of banks of making borrowers sign trust receipts to facilitate

collection of loans and place them under the threats of criminal prosecution
should they be unable to pay it may be unjust and inequitable. if not
reprehensible. Such agreements are contracts of adhesion which borrowers have
no option but to sign lest their loan be disapproved. The resort to this scheme
leaves poor and hapless borrowers at the mercy of banks and is prone to
misinterpretation x x x.

**** DEMAND LETTER

LAND BANK OF THE PHILIPPINES, G.R. No. 166884
Petitioner,
Present:
 - versus - CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
LAMBERTO C. PEREZ, NESTOR C. KUN, REYES, JJ.
MA. ESTELITA P. ANGELES-PANLILIO, and
NAPOLEON O. GARCIA, Promulgated:
Respondents.
June 13, 2012

x------------------------------------------------------------------------------------x

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.[24] 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,[25] where the borrower is
obligated to pay the bank the amount spent for the purchase of the goods.

In passing, it is useful to note that this is the threat held against

borrowers that Retired Justice Claudio Teehankee emphatically opposed in his
dissent in People v. Cuevo,[32] restated in Ong v. CA, et al.:[33]

The very definition of trust receipt x x x sustains the lower courts

rationale in dismissing the information that the contract covered
by a trust receipt is merely a secured loan. The goods imported by
the small importer and retail dealer through the banks financing
remain of their own property and risk and the old capitalist
orientation of putting them in jail for estafa for non-payment of the
secured loan (granted after they had been fully investigated by the
bank as good credit risks) through the fiction of the trust receipt
device should no longer be permitted in this day and age.

As the law stands today, violations of Trust Receipts Law are criminally
punishable, but no criminal complaint for violation of Article 315, paragraph 1(b)
of the Revised Penal Code, in relation with P.D. 115, should prosper against a
borrower who was not part of a genuine trust receipt transaction.

In order that the respondents may be validly prosecuted for estafa under Article
315, paragraph 1(b) of the Revised Penal Code,[35] in relation with Section 13 of
the Trust Receipts Law, the following elements must be established: (a) they
received the subject goods in trust or under the obligation to sell the same and
to remit the proceeds thereof to [the trustor], or to return the goods if not sold;
(b) they misappropriated or converted the goods and/or the proceeds of the sale;
(c) they performed such acts with abuse of confidence to the damage and
prejudice of Metrobank; and (d) demand was made on them by [the trustor]
for the remittance of the proceeds or the return of the unsold goods.

**** DEMAND IS AN ELEMENT. AND IT MUST BE IN THE ALTERNATIVE

(PROCEEDS OR UNSOLD GOODS)

In Metropolitan Bank,[37] we affirmed the city prosecutors dismissal of a

complaint for violation of the Trust Receipts Law. In dismissing the complaint,
we took note of the Court of Appeals finding that the bank was interested only in
collecting its money and not in the return of the goods. Apart from the bare
allegation that demand was made for the return of the goods (raw materials that
were manufactured into textiles), the bank had not accompanied its complaint
with a demand letter. In addition, there was no evidence offered that the
respondents therein had misappropriated or misused the goods in question.