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TOPIC:TrustReceipts

HurTinYangv.PeopleofthePhilippines
G.R.No.195117,August14,2013
Facts:SupermaxPhilippines,Inc.(Supermax)isadomesticcorporationengagedinthe
construction business. Metropolitan Bank and Trust Company (Metrobank), extended
severalcommercialletters ofcredit(LCs)toSupermax.ThesecommercialLCswere
usedbySupermaxtopayforthedeliveryofseveralconstructionmaterials,whichwillbe
used in their construction business. Thereafter, Metrobank required petitioner, as
representativeandVicePresidentforInternalAffairsofSupermax,tosigntwentyfour
(24)trustreceiptsassecurityfortheconstructionmaterialsandtoholdthosematerialsor
theproceedsofthesalesintrustforMetrobanktotheextentoftheamountstatedinthe
trustreceipts.Whenthe24trustreceiptsfelldueanddespitethereceiptofademand
letter,SupermaxfailedtopayordeliverthegoodsorproceedstoMetrobank.Instead,
Supermax,throughpetitioner,requestedtherestructuringoftheloan.Whentheintended
restructuringoftheloandidnotmaterialize,Metrobanksentanotherdemandletter.As
the demands fell on deaf ears, Metrobank, through its representative, Winnie M.
Villanueva,filedtheinstantcriminalcomplaintsagainstpetitioner.
Forhisdefense,whileadmittingsigningthetrustreceipts,petitionerarguedthatsaidtrust
receiptsweredemandedbyMetrobankasadditionalsecurityfortheloansextendedto
Supermaxforthepurchaseofconstructionequipmentandmaterials.Insupportofthis
argument, petitioner presented as witness, Priscila Alfonso, who testified that the
constructionmaterialscoveredbythetrustreceiptsweredeliveredwaybeforepetitioner
signedthecorrespondingtrustreceipts.Further,petitionerarguedthatMetrobankknew
allalongthattheconstructionmaterialssubjectofthetrustreceiptswerenotintendedfor
resalebutforpersonaluseofSupermaxrelatingtoitsconstructionbusiness.
ThetrialcourtandtheCAfoundpetitionerguiltyofthecrimeEstafa.
Issue: Whetherornotthetrialcourtandtheappellatecourtcorrectlyheldpetitioner
guiltyofEstafaundertheTrustReceiptsLaw
Held: No. Indeterminingthenatureofacontract,courtsarenotboundbythetitleor
name given by the parties. The decisive factor in evaluating such agreement is the
intentionoftheparties,asshownnotnecessarilybytheterminologyusedinthecontract
butbytheirconduct,words,actionsanddeedspriorto,duringandimmediatelyafter
executingtheagreement.Assuch,therefore,documentaryandparolevidencemaybe
submittedandadmittedtoprovesuchintention.

Intheinstantcase,thefactualfindingsofthetrialandappellatecourtsrevealthatthe
dealingbetweenpetitionerandMetrobankwasnotatrustreceipttransactionbutoneof
simple loan. Petitioners admissionthat he signed the trust receipts on behalf of
Supermax,whichfailedtopaytheloanorturnovertheproceedsofthesaleorthegoods

to Metrobank upon demanddoes not conclusively prove that the transaction was,
indeed,atrustreceiptstransaction.Incontrasttothenomenclatureofthetransaction,the
partiesreallyintendedacontractofloan.
Atrustreceipttransactionisonewheretheentrusteehastheobligationtodelivertothe
entrusterthepriceofthesale,orifthemerchandiseisnotsold,toreturnthemerchandise
totheentruster.Thereare,therefore,twoobligationsinatrustreceipttransaction:the
firstreferstomoneyreceivedundertheobligationinvolvingthedutytoturnitover
(entregarla) to the owner of the merchandise sold, while the second refers to the
merchandisereceivedundertheobligationtoreturnit(devolvera)totheowner.A
violationofanyoftheseundertakingsconstitutesEstafadefinedunderArt.315,par.1(b)
oftheRPC,asprovidedinSec.13ofPD115(TrustReceiptsLaw).
Nonetheless,whenbothpartiesenterintoanagreementknowingfullywellthatthereturn
ofthegoodssubjectofthetrustreceiptisnotpossibleevenwithoutanyfaultonthepart
ofthetrustee,itisnotatrustreceipttransactionpenalizedunderSec.13ofPD115in
relationtoArt.315,par.1(b)oftheRPC,astheonlyobligationactuallyagreeduponby
thepartieswouldbethereturnoftheproceedsofthesaletransaction. Thistransaction
becomesamereloan,wheretheborrowerisobligatedtopaythebanktheamountspent
forthepurchaseofthegoods. Thefactthattheentrusterbank,Metrobankinthiscase,
knewevenbeforetheexecutionoftheallegedtrustreceiptagreementsthatthecovered
constructionmaterialswereneverintendedbytheentrustee(petitioner)forresaleorfor
themanufactureofitemstobesoldwouldtakethetransactionbetweenpetitionerand
MetrobankoutsidetheambitoftheTrustReceiptsLaw.