G.R. No.

L-30896 April 28, 1983

JOSE O. SIA, petitioner,
vs.
THE PEOPLE OF THE PHILIPPINES, respondent.

DE CASTRO, J.:
Petition for review of the decision of the Court of Appeals affirming
the decision of the Court of First Instance of Manila convicting the
appellant of estafa, under an information which reads:
That in, about or during the period comprised' between July 24,
1963 and December 31, 1963, both dates inclusive, in the City of
Manila, Philippines, the said accused did then and there willfully,
unlawfully and feloniously defraud the Continental Bank, a banking
institution duly organized and doing business in the City of Manila,
in the following manner, to wit: the said accused, in his capacity as
president and general manager of the Metal Manufacturing of the
Philippines, Inc. (MEMAP) and on behalf of said company, obtained
delivery of 150 M/T Cold Rolled Steel Sheets valued at P 71,023.60
under a trust receipt agreement under L/C No. 63/109, which cold
rolled steel sheets were consigned to the Continental Bank, under
the express obligation on the part of said accused of holding the said
steel sheets in trust and selling them and turning over the proceeds
of the sale to the Continental Bank; but the said accused, once in
possession of the said goods, far from complying with his aforesaid
obligation and despite demands made upon him to do so, with intent
to defraud, failed and refused to return the said cold rolled sheets or
account for the proceeds thereof, if sold, which the said accused
willfully, unlawfully and feloniously misappropriated, misapplied
and converted to his own personal use and benefit, to the damage
and prejudice of the said Continental Bank in the total amount of
P146,818.68, that is the balance including the interest after
deducting the sum of P28,736.47 deposited by the said accused with
the bank as marginal deposit and forfeited by the said from the value
of the said goods, in the said sum of P71,023.60. (Original Records,
p. 1).
In reviewing the evidence, the Court of Appeals came up with the
following findings of facts which the Solicitor General alleges should
be conclusive upon this Court:
There is no debate on certain antecedents: Accused Jose 0. Sia
sometime prior to 24 May, 1963, was General Manager of the Metal
Manufacturing Company of the Philippines, Inc. engaged in the
manufacture of steel office equipment; on 31 May, 1963, because his
company was in need of raw materials to be imported from abroad,
he applied for a letter of credit to import steel sheets from Mitsui
Bussan Kaisha, Ltd. of Tokyo, Japan, the application being directed to
the Continental Bank, herein complainant, Exhibit B and his
application having been approved, the letter of credit was opened on
5 June, 1963 in the amount of $18,300, Exhibit D; and the goods
arrived sometime in July, 1963 according to accused himself, tsn.
II:7; now from here on there is some debate on the evidence;
according to Complainant Bank, there was permitted delivery of the
steel sheets only upon execution of a trust receipt, Exhibit A; while
according to the accused, the goods were delivered to him sometime
before he executed that trust receipt in fact they had already been
converted into steel office equipment by the time he signed said
trust receipt, tsn. II:8; but there is no question - and this is not
debated - that the bill of exchange issued for the purpose of
collecting the unpaid account thereon having fallen due (see Exh. B)
neither accused nor his company having made payment thereon
notwithstanding demands, Exh. C and C-1, dated 17 and 27
December, 1963, and the accounts having reached the sum in pesos
of P46,818.68 after deducting his deposit valued at P28,736.47; that
was the reason why upon complaint by Continental Bank, the Fiscal
filed the information after preliminary investigation as has been said
on 22 October, 1964. (Rollo [CA], pp. 103- 104).
The first issue raised, which in effect combines the first three errors
assigned, is whether petitioner Jose O. Sia, having only acted for and
in behalf of the Metal Manufacturing Company of the Philippines
(Metal Company, for short) as President thereof in dealing with the
complainant, the Continental Bank, (Bank for short) he may be liable
for the crime charged.
In discussing this question, petitioner proceeds, in the meantime, on
the assumption that the acts imputed to him would constitute the
crime of estafa, which he also disputes, but seeks to avoid liability on
his theory that the Bank knew all along that petitioner was dealing
with him only as an officer of the Metal Company which was the true
and actual applicant for the letter of credit (Exhibit B) and which,
accordingly, assumed sole obligation under the trust receipt (Exhibit
A). In disputing the theory of petitioner, the Solicitor General relies
on the general principle that when a corporation commits an act
which would constitute a punishable offense under the law, it is the
responsible officers thereof, acting for the corporation, who would
be punished for the crime, The Court of Appeals has subscribed to
this view when it quoted approvingly from the decision of the trial
court the following:
A corporation is an artificial person, an abstract being. If the defense
theory is followed unscrupulously legions would form corporations
to commit swindle right and left where nobody could be convicted,
for it would be futile and ridiculous to convict an abstract being that
can not be pinched and confined in jail like a natural, living person,
hence the result of the defense theory would be hopeless chose in
business and finance. It is completely untenable. (Rollo [CA], p. 108.)
The above-quoted observation of the trial court would seem to be
merely restating a general principle that for crimes committed by a
corporation, the responsible officers thereof would personally bear
the criminal liability. (People vs. Tan Boon Kong, 54 Phil. 607. See
also Tolentino, Commercial Laws of the Philippines, p. 625, citing
cases.)
The case cited by the Court of Appeals in support of its stand-Tan
Boon Kong case, supra-may however not be squarely applicable to
the instant case in that the corporation was directly required by law
to do an act in a given manner, and the same law makes the person
who fails to perform the act in the prescribed manner expressly
liable criminally. The performance of the act is an obligation directly
imposed by the law on the corporation. Since it is a responsible
officer or officers of the corporation who actually perform the act for
the corporation, they must of necessity be the ones to assume the
criminal liability; otherwise this liability as created by the law would
be illusory, and the deterrent effect of the law, negated.
In the present case, a distinction is to be found with the Tan Boon
Kong case in that the act alleged to be a crime is not in the
performance of an act directly ordained by law to be performed by
the corporation. The act is imposed by agreement of parties, as a
practice observed in the usual pursuit of a business or a commercial
transaction. The offense may arise, if at all, from the peculiar terms
and condition agreed upon by the parties to the transaction, not by
direct provision of the law. The intention of the parties, therefore, is
a factor determinant of whether a crime was committed or whether
a civil obligation alone intended by the parties. With this
explanation, the distinction adverted to between the Tan Boon Kong
case and the case at bar should come out clear and meaningful. In
the absence of an express provision of law making the petitioner
liable for the criminal offense committed by the corporation of
which he is a president as in fact there is no such provisions in the
Revised Penal Code under which petitioner is being prosecuted, the
existence of a criminal liability on his part may not be said to be
beyond any doubt. In all criminal prosecutions, the existence of
criminal liability for which the accused is made answerable must be
clear and certain. The maxim that all doubts must be resolved in
favor of the accused is always of compelling force in the prosecution
of offenses. This Court has thus far not ruled on the criminal liability
of an officer of a corporation signing in behalf of said corporation a
trust receipt of the same nature as that involved herein. In the case
of Samo vs. People, L-17603-04, May 31, 1962, the accused was not
clearly shown to be acting other than in his own behalf, not in behalf
of a corporation.
The next question is whether the violation of a trust receipt
constitutes estafa under Art. 315 (1-[2]) of the Revised Penal Code,
as also raised by the petitioner. We now entertain grave doubts, in
the light of the promulgation of P.D. 115 providing for the regulation
of trust receipts transaction, which is a very comprehensive piece of
legislation, and includes an express provision that if the violation or
offense is committed by a corporation, partnership, association or
other juridical entities the penalty provided for in this Decree shall
be imposed upon the directors, officers, employees or other officials
or persons therein responsible for the offense, without prejudice to
civil liabilities arising from the criminal offense. The question that
suggests itself is, therefore, whether the provisions of the Revised
Penal Code, Article 315, par. 1 (b) are not adequate to justify the
punishment of the act made punishable by P.D. 115, that the
necessity was felt for the promulgation of the decree. To answer this
question, it is imperative to make an indepth analysis of the
conditions usually embodied in a trust receipt to best their legal
sufficiency to constitute the basis for holding the violation of said
conditions as estafa under Article 315 of the Revised Penal Code
which P.D. 115 now seeks to punish expressly.
As executed, the trust receipt in question reads:
I/WE HEREBY AGREE TO HOLD SAID GOODS IN TRUST FOR THE
SAID BANK as its property with liberty to sell the same for its
account but without authority to make any other disposition
whatsoever of the said goods or any part thereof (or the proceeds
thereof) either 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 BANK to apply against the relative acceptance (as
described above) and for the payment of any other indebtedness of
mine/ours to CONTINENTAL BANK. (Original Records, p. 108)
One view is to consider the transaction as merely that of a security
of a loan, and that the trust element is but and inherent feature of
the security aspect of the arrangement where the goods are placed
in the possession of the "entrustee," to use the term used in P.D. 115,
violation of the element of trust not being intended to be in the same
concept as how it is understood in the criminal sense. The other
view is that the bank as the owner and "entrustor" delivers the
goods to the "entrustee, " with the authority to sell the goods, but
with the obligation to give the proceeds to the "entrustor" or return
the goods themselves if not sold, a trust being thus created in the full
sense as contemplated by Art. 315, par. 1 (b).
We consider the view that the trust receipt arrangement gives rise
only to civil liability as the more feasible, before the promulgation of
P.D. 115. The transaction being contractual, the intent of the parties
should govern. Since the trust receipt has, by its nature, to be
executed upon the arrival of the goods imported, and acquires legal
standing as such receipt only upon acceptance by the "entrustee,"
the trust receipt transaction itself, the antecedent acts consisting of
the application of the L/C, the approval of the L/C and the making of
the marginal deposit and the effective importation of the goods, all
through the efforts of the importer who has to find his supplier,
arrange for the payment and shipment of the imported goods-all
these circumstances would negate any intent of subjecting the
importer to criminal prosecution, which could possibly give rise to a
case of imprisonment for non-payment of a debt. The parties,
therefore, are deemed to have consciously entered into a purely
commercial transaction that could give rise only to civil liability,
never to subject the "entrustee" to criminal prosecution. Unlike, for
instance, when several pieces of jewelry are received by a person
from the owner for sale on commission, and the former
misappropriates for his personal use and benefit, either the
jewelries or the proceeds of the sale, instead of returning them to
the owner as is his obligation, the bank is not in the same concept as
the jewelry owner with full power of disposition of the goods, which
the bank does not have, for the bank has previously extended a loan
which the L/C represents to the importer, and by that loan, the
importer should be the real owner of the goods. If under the trust
receipt the bank is made to appear as the owner, it was but an
artificial expedient, more of a legal fiction than fact, for if it were
really so, it could dispose of the goods in any manner it wants, which
it cannot do, just to give consistency with the purpose of the trust
receipt of giving a stronger security for the loan obtained by the
importer. To consider the bank as the true owner from the inception
of the transaction would be to disregard the loan feature thereof, a
feature totally absent in the case of the transaction between the
jewel-owner and his agent.
Consequently, if only from the fact that the trust receipt transaction
is susceptible to two reasonable interpretation, one as giving rise
only to civil liability for the violation of the condition thereof, and
the other, as generating also criminal liability, the former should be
adopted as more favorable to the supposed offender. (Duran vs. CA,
L-39758, May 7, 1976, 71 SCRA 68; People vs. Parayno, L-24804, July
5, 1968, 24 SCRA 3; People vs. Abendan, L-1481, January 28,1949,82
Phil. 711; People vs. Bautista, L-1502, May 24, 1948, 81 Phil. 78;
People vs. Abana, L-39, February 1, 1946, 76 Phil. 1.)
There is, moreover, one circumstance appearing on record, the
significance of which should be properly evaluated. As stated in
petitioner's brief (page 2), not denied by the People, "before the
Continental Bank approved the application for a letter of credit
(Exhibit 'D'), subsequently covered by the trust receipt, the
Continental Bank examined the financial capabilities of the
applicant, Metal Manufacturing Company of the Philippines because
that was the bank's standard procedure (Testimony of Mr. Ernesto
Garlit, Asst. Manager of the Foreign Department, Continental Bank,
t.s.n., August 30, 1965). The Continental Bank did not examine the
financial capabilities of herein petitioner, Jose O. Sia, in connection
with the same letter of credit. (Ibid). " From this fact, it would
appear as positively established that the intention of the parties in
entering into the "trust receipt" agreement is merely to afford a
stronger security for the loan evidenced by the letter of credit, may
be not as an ordinary pledge as observed in P.N.B. vs. Viuda e Hijos
de Angel Jose, et al., 63 Phil. 814, citing In re Dunlap C (206 Fed. 726)
but neither as a transaction falling under Article 315-1 (b) of the
Revised Penal Code giving rise to criminal liability, as previously
explained and demonstrated.
It is worthy of note that the civil liability imposed by the trust
receipt is exclusively on the Metal Company. Speaking of such
liability alone, as one arising from the contract, as distinguished
from the civil liability arising out of a crime, the petitioner was never
intended to be equally liable as the corporation. Without being made
so liable personally as the corporation is, there would then be no
basis for holding him criminally liable, for any violation of the trust
receipt. This is made clearly so upon consideration of the fact that in
the violation of the trust agreement and in the absence of positive
evidence to the contrary, only the corporation benefited, not the
petitioner personally, yet, the allegation of the information is to
effect that the misappropriation or conversion was for the personal
use and benefit of the petitioner, with respect to which there is
variance between the allegation and the evidence.
It is also worthy of note that while the trust receipt speaks of
authority to sell, the fact is undisputed that the imported goods were
to be manufactured into finished products first before they could be
sold, as the Bank had full knowledge of. This fact is, however, not
embodied in the trust agreement, thus impressing on the trust
receipt vagueness and ambiguity which should not be the basis for
criminal prosecution, in the event of a violation of the terms of the
trust receipt. Again, P.D. 115 has express provision relative to the
"manufacture or process of the good with the purpose of ultimate
sale," as a distinct condition from that of "to sell the goods or
procure their sale" (Section 4, (1). Note that what is embodied in the
receipt in question is the sale of imported goods, the manufacture
thereof not having been mentioned. The requirement in criminal
prosecution, that there must be strict harmony, not variance,
between the allegation and the evidence, may therefore, not be said
to have been satisfied in the instance case.
FOR ALL THE FOREGOING, We reverse the decision of the Court of
Appeals and hereby acquit the petitioner, with costs de oficio.
SO ORDERED.
Concepcion, Jr., Guerrero, Vasquez, Relova and Gutierrez, JJ., concur.
Fernando, CJ., Escolin, Plana, Abad Santos, JJ., concur in the result.
Separate Opinions
TEEHANKEE, J., concurring:
In concur. Petitioner personally cannot be charged and convicted for
the crime of estafa for failure of the corporation (MEMAP)
represented by him as president and general manager to pay "the
balance of P46,818.68 .... including the interest after deducting the
sum of P28,736.47" which sum, according to the very information, it
was "deposited by the said accused with the [Continental] bank as
marginal deposit and forfeited by the said bank from the value of
said goods, in the said sum of P 71,023.60" representing the value of
the cold rolled steel sheets imported by the corporation with the
bank's financing under its letter of credit and released to the
importer corporation under trust receipt in favor of the bank.
All these acts were corporate acts with the accused duly
representing the corporation as its president and general manager:
the application for bank financing, the deposit (which was from
corporate funds, and not a deposit made by the petitioner, as
wrongly alleged in the information), the receipt of the steel sheets,
then manufactured into finished products (which could not
technically be done under the terms of the trust receipt required by
the bank, under which the very sheets were supposed to be sold by
the corporation) and the non-payment of the credit extended by the
bank. There is not the slightest evidence nor intimation that these
corporate acts were unauthorized or that petitioner personally had
committed any fraud or deceit in connection therewith or that he
had personally been responsible for or benefited from the
corporation's failure to pay the bank the balance due under the trust
receipt.
In the recent case of People vs. Cuevo, G. R. No. L-27607, decided by
the Court on May 7, 1981, the Court, for lack of necessary votes,
affirmed the dismissal of the same charge of estafa, for non-payment
of the debt evidenced by the trust receipt, by the trial court presided
by Judge Ruperto Kapunan, Jr. who ruled that "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" incurs only civil
and not criminal liability for non-payment of the debt thus incurred.
I reiterate my separate opinion therein supporting the more liberal
interpretation that the trust receipt transaction "gives rise only to
civil liability on the part of the offender" and holding that the very
definition of a trust receipt, to wit," ' (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. Jr. 961, cited in
Samo vs. People, 115 Phil. 346, 349), sustains the lower court's
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 bank's 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." **
The charge in the case at bar against petitioner-accused must
accordingly be dismissed.
MELENCIO-HERRERA, J., concurring and dissenting:
I dissent in so far as the Decision states that violation of the terms of
a trust receipt does not constitute Estafa under Art. 315, par. 1 (b) of
the Revised Penal Code, for being contrary to the rulings in People
vs. Yu Chai Ho, 53 Phil. 874 (1928); PNB vs. Arrozal, 103 Phil. 213
(1958), and Samo vs. People, 5 SCRA 355 (1962).
I concur in so far as the Decision holds that petitioner should not be
held liable for the crime of Estafa considering that in the cases above
enumerated, the persons who executed the trust receipts acted in
their own individual capacities unlike in this case where petitioner
acted for and on behalf of the Metal Manufacturing Company, as its
General Manager, and was presumably authorized to do so. This
Court has not as yet laid down a ruling on the criminal liability of a
corporation officer signing a trust receipt on behalf of the
corporation, a trust receipt being essentially a financing transaction.
It was only upon the promulgation of PD 115 on January 29, 1973
that responsible directors, officers, employees or other officials of a
corporation, partnership, associations or other juridical entities are
made expressly responsible for violation of the terms of a trust
receipt agreement committed by said corporation, partnership,
association or other juridical entities.
Makasiar, J., dissent. The C.A. decision should be affirmed.
Aquino, J., dissent. I vote for the affirmance of the judgement of the
C.A.
Separate Opinions
TEEHANKEE, J., concurring:
In concur. Petitioner personally cannot be charged and convicted for
the crime of estafa for failure of the corporation (MEMAP)
represented by him as president and general manager to pay "the
balance of P 46,818.68 .... including the interest after deducting the
sum of P 28,736.47" which sum, according to the very information, it
was "deposited by the said accused with the [Continental] bank as
marginal deposit and forfeited by the said bank from the value of
said goods, in the said sum of P 71,023.60" representing the value of
the cold rolled steel sheets imported by the corporation with the
bank's financing under its letter of credit and released to the
importer corporation under trust receipt in favor of the bank.
All these acts were corporate acts with the accused duly
representing the corporation as its president and general manager:
the application for bank financing, the deposit (which was from
corporate funds, and not a deposit made by the petitioner, as
wrongly alleged in the information), the receipt of the steel sheets,
then manufactured into finished products (which could not
technically be done under the terms of the trust receipt required by
the bank, under which the very sheets were supposed to be sold by
the corporation) and the non-payment of the credit extended by the
bank. There is not the slightest evidence nor intimation that these
corporate acts were unauthorized or that petitioner personally had
committed any fraud or deceit in connection therewith or that he
had personally been responsible for or benefited from the
corporation's failure to pay the bank the balance due under the trust
receipt.
In the recent case of People vs. Cuevo, G. R. No. L-27607, decided by
the Court on May 7, 1981, the Court, for lack of necessary votes,
affirmed the dismissal of the same charge of estafa, for non-payment
of the debt evidenced by the trust receipt, by the trial court presided
by Judge Ruperto Kapunan, Jr. who ruled that "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" incurs only civil
and not criminal liability for non-payment of the debt thus incurred.
I reiterate my separate opinion therein supporting the more liberal
interpretation that the trust receipt transaction "gives rise only to
civil liability on the part of the offender" and holding that the very
definition of a trust receipt, to wit," ' (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. Jr. 961, cited in
Samo vs. People, 115 Phil. 346, 349), sustains the lower court's
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 bank's 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."*
The charge in the case at bar against petitioner-accused must
accordingly be dismissed.
MELENCIO-HERRERA, J., concurring and dissenting:
I dissent in so far as the Decision states that violation of the terms of
a trust receipt does not constitute Estafa under Art. 315, par. 1 (b) of
the Revised Penal Code, for being contrary to the rulings in People
vs. Yu Chai Ho, 53 Phil. 874 (1928); PNB vs. Arrozal, 103 Phil. 213
(1958), and Samo vs. People, 5 SCRA 355 (1962).
I concur in so far as the Decision holds that petitioner should not be
held liable for the crime of Estafa considering that in the cases above
enumerated, the persons who executed the trust receipts acted in
their own individual capacities unlike in this case where petitioner
acted for and on behalf of the Metal Manufacturing Company, as its
General Manager, and was presumably authorized to do so. This
Court has not as yet laid down a ruling on the criminal liability of a
corporation officer signing a trust receipt on behalf of the
corporation, a trust receipt being essentially a financing transaction.
It was only upon the promulgation of PD 115 on January 29, 1973
that responsible directors, officers, employees or other officials of a
corporation, partnership, associations or other juridical entities are
made expressly responsible for violation of the terms of a trust
receipt agreement committed by said corporation, partnership,
association or other juridical entities.
Makasiar, J., dissent.
Aquino, J., dissent.
Separate Opinions
TEEHANKEE, J., concurring:
In concur. Petitioner personally cannot be charged and convicted for
the crime of estafa for failure of the corporation (MEMAP)
represented by him as president and general manager to pay "the
balance of P 46,818.68 .... including the interest after deducting the
sum of P 28,736.47" which sum, according to the very information, it
was "deposited by the said accused with the [Continental] bank as
marginal deposit and forfeited by the said bank from the value of
said goods, in the said sum of P 71,023.60" representing the value of
the cold rolled steel sheets imported by the corporation with the
bank's financing under its letter of credit and released to the
importer corporation under trust receipt in favor of the bank.
All these acts were corporate acts with the accused duly
representing the corporation as its president and general manager:
the application for bank financing, the deposit (which was from
corporate funds, and not a deposit made by the petitioner, as
wrongly alleged in the information), the receipt of the steel sheets,
then manufactured into finished products (which could not
technically be done under the terms of the trust receipt required by
the bank, under which the very sheets were supposed to be sold by
the corporation) and the non-payment of the credit extended by the
bank. There is not the slightest evidence nor intimation that these
corporate acts were unauthorized or that petitioner personally had
committed any fraud or deceit in connection therewith or that he
had personally been responsible for or benefited from the
corporation's failure to pay the bank the balance due under the trust
receipt.
In the recent case of People vs. Cuevo, G. R. No. L-27607, decided by
the Court on May 7, 1981, the Court, for lack of necessary votes,
affirmed the dismissal of the same charge of estafa, for non-payment
of the debt evidenced by the trust receipt, by the trial court presided
by Judge Ruperto Kapunan, Jr. who ruled that "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" incurs only civil
and not criminal liability for non-payment of the debt thus incurred.
I reiterate my separate opinion therein supporting the more liberal
interpretation that the trust receipt transaction "gives rise only to
civil liability on the part of the offender" and holding that the very
definition of a trust receipt, to wit," ' (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. Jr. 961, cited in
Samo vs. People, 115 Phil. 346, 349), sustains the lower court's
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 bank's 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."*
The charge in the case at bar against petitioner-accused must
accordingly be dismissed.
MELENCIO-HERRERA, J., concurring and dissenting:
I dissent in so far as the Decision states that violation of the terms of
a trust receipt does not constitute Estafa under Art. 315, par. 1 (b) of
the Revised Penal Code, for being contrary to the rulings in People
vs. Yu Chai Ho, 53 Phil. 874 (1928); PNB vs. Arrozal, 103 Phil. 213
(1958), and Samo vs. People, 5 SCRA 355 (1962).
I concur in so far as the Decision holds that petitioner should not be
held liable for the crime of Estafa considering that in the cases above
enumerated, the persons who executed the trust receipts acted in
their own individual capacities unlike in this case where petitioner
acted for and on behalf of the Metal Manufacturing Company, as its
General Manager, and was presumably authorized to do so. This
Court has not as yet laid down a ruling on the criminal liability of a
corporation officer signing a trust receipt on behalf of the
corporation, a trust receipt being essentially a financing transaction.
It was only upon the promulgation of PD 115 on January 29, 1973
that responsible directors, officers, employees or other officials of a
corporation, partnership, associations or other juridical entities are
made expressly responsible for violation of the terms of a trust
receipt agreement committed by said corporation, partnership,
association or other juridical entities.
Makasiar, J., dissent.
Aquino, J., dissent.

ALFREDO CHING v. SECRETARY OF JUSTICE

G. R. No. 164317, February 6, 2006

FACTS: Petitioner was the Senior Vice-President of Philippine

Blooming Mills, Inc. (PBMI). In 1980, PBMI, through petitioner,
applied with the RCBC (respondent bank) for the issuance of
commercial letters of credit to finance its importation of assorted
goods.Respondent bank approved the application, and irrevocable
letters of credit were issued in favor of petitioner. The goods
were purchased and delivered in trust to PBMI. Petitioner signed 13
trust receipts as surety, acknowledging delivery of the goods.Under
the receipts, petitioner agreed to hold the goods in trust for the said
bank, with authority to sell but not by way of conditional sale,
pledge or otherwise; and in case such goods were sold, to turn over
the proceeds thereof as soon as received, to apply against the
relative acceptances and payment of other indebtedness
to respondent bank. In case the goods remained unsold within the
specified period, the goods were to be returned to respondent bank
without any need of demand. Thus, said "goods, manufactured
products or proceeds thereof, whether in the form of money or bills,
receivables, or accounts separate and capable of identification" were
respondent bank’s property. When the trust receipts matured,
petitioner failed to return the goods to respondent bank, or
to return their value amounting to P6,940,280.66 despite demands.
Thus, the bank filed a criminal complaint for estafa against
Petitioner.(First Attempt) The City Prosecutor found probable cause
for estafa under Article 315, paragraph 1(b) of the RPC, in relation
to the Trust Receipts Law. Petitioner appealed the to the then
Minister of Justice which was first dismissed but
after MR the Minister granted the motion, reversing the previous
resolution finding probable cause against petitioner. In the
meantime, the Court rendered judgment in Allied Banking
Corporation v. Ordoñez, holding that the penal provision of P.D. No.
115 encompasses any act violative of an obligation covered by the
trust receipt; it is not limited to transactions involving goods
which are to be sold (retailed), reshipped, stored or processed as a
component of a product ultimately sold. The Court also ruled that
"the nonpayment of the amount covered by a trust receipt is an act
violative of the obligation of the entrustee to pay."(Second attempt)
The respondent bank refiled the criminal complaint for estafa
against petitioner before the Office of the City Prosecutor of Manila.
The City Prosecutor ruled that there was no probable cause to
charge petitioner with violating P.D. No. 115, as petitioner’s
liability was only civil, not criminal, having signed the trust receipts
as surety.Respondent bank appealed the resolution to the DOJ which
granted the petition and reversed the assailed resolution of the City
Prosecutor. Petitioner then filed a petition for certiorari, prohibition
and mandamus with the CA. CA dismissing the petition for lack of
merit. CA ruled that the assailed resolutions of the Secretary of
Justice were correctly issued for the following reasons: (a)
petitioner, being the Senior Vice-President of PBMI and the
signatory to thetrust receipts, is criminally liable for violation of P.D.
No. 115; (b) the issue raised by the petitioner, on whether he
violated P.D. No. 115 by his actuations, had already been resolved
and laid to rest in Allied Bank Corporation v. Ordoñez;and (c)
petitioner was estopped from raising the City Prosecutor’s delay in
the final disposition of the preliminary investigation because he
failed to do so in the DOJ.

ISSUE: WON the Secretary of Justice committed grave abuse of

discretion in finding probable cause against the petitioner for
violation of estafa under Article 315, paragraph 1(b) of the Revised
Penal Code, in relation to P.D. No. 115.

HELD: No. Petition was denied. The Court ruled that the arguments
advanced in support of the petition are not persuasive enough to
justify the desired conclusion that respondent Secretary of Justice
gravely abused its discretion in coming out with his assailed
Resolutions. Petitioner posits that, except for his being the Senior
Vice-President of the PBMI, there is no iota of evidence that he was a
participes crimines in violating the trust receipts sued upon; and
that his liability, if at all, is purely civil because he signed the said
trust receipts merely as a xxx surety and not as the entrustee.
Petitioner’s being a Senior Vice-President of the Philippine
Blooming Mills does not exculpate himfrom any liability. Petitioner’s
responsibility as the corporate official of PBM
who received the goods in trust is premised on Section 13 of P.D. No.
115, which provides: 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 receipt
shall constitute the crime of estafa, punishable under the provisions
of Article Three hundred and fifteen, paragraph one (b) of Act
Numbered Three thousand eight hundred and fifteen, as amended,
otherwise known as the Revised Penal Code. If the violation or
offense is committed by a corporation, partnership, association or
other juridical entities, the penalty provided for in this Decree shall
be imposed upon the directors, officers, employees or other officials
or persons therein responsible for the offense, without prejudice to
the civil liabilities arising from the criminal offense. Petitioner
having participated in the negotiations for the trust receipts and
having received the goods for PBM, it was inevitable that the
petitioner is the proper corporate officer to be proceeded against by
virtue of the PBM’s violation of P.D. No. 115.Inthecase at bar, the
transaction between petitioner and respondent bank falls under the
trust receipt transactions P.D. No. 115. Respondent bank imported
the goods and entrusted the same to PBMI under the trust receipts
signed by petitioner, as entrustee, with the bank as entruster. It
must be stressed that P.D. No. 115 is a declaration by legislative
authority that, as a matter of public policy, the failure of person to
turn over the proceeds of the sale of the goods covered by a trust
receipt or to return said goods, if not sold, is a public nuisance to be
abated by the imposition of penal sanctions.The Court likewise rules
that the issue of whether P.D. No. 115 encompasses transactions
involving goods procured as a component of a product ultimately
sold has been resolved in the affirmative in Allied Banking
Corporation v. Ordoñez. The law applies to goods used by the
entrustee in the operation of its machineries and equipment. The
nonpayment of the amount covered by the trust receipts or the non-
return of the goods covered by the receipts, if not sold or otherwise
not disposed of, violate the entrustee’s obligation to pay the amount
or to return the goods to
the entruster.The Court rules that although petitioner signed the
trust receipts merely as Senior Vice-President of PBMI and had no
physical possession of the goods, he cannot avoid prosecution for
violation of P.D. No. 115.The crime defined in P.D. No. 115 is malum
prohibitum but is classified as estafa under paragraph 1(b), Article
315 of the Revised Penal Code, or estafa with abuse of confidence. It
may be committed by a corporation or other juridical entity or by
natural persons. Though the entrustee is a corporation,
nevertheless, the law specifically makes the officers, employees or
other officers or persons responsible for the offense, without
prejudice to the civil liabilities of such corporation and/or board of
directors, officers, or other officials or employees responsible for the
offense. The rationale is that such officers or employees are vested
with the authority and responsibility to devise means necessary to
ensure compliance with the law and, if they fail to do so, are held
criminally accountable; thus, they have a responsible share in
the violations of the law.If the crime is committed by a corporation
or other juridical entity, the directors, officers, employees or other
officers thereof responsible for the offense shall be charged and
penalized for the crime, precisely because of the nature of the crime
and the penalty therefor. A
corporation cannot be arrested and imprisoned; hence, cannot be
penalized for a crime punishable by imprisonment. However, a
corporation may be charged and prosecuted for a crime if the
imposable penalty is fine. Even if the statute prescribes both fine
and imprisonment as penalty, a corporation may be prosecuted and,
if found guilty, may be fined.A crime is the doing of that which the
penal code forbids to be done, or omitting to do what it commands.
A necessary part of the definition of every crime is the designation
of the author of the crime upon whom the penalty is to be inflicted.
When a criminal statute designates an act of a corporation or a
crime and prescribes punishment therefor, it creates a criminal
offense which, otherwise, would not exist and such can be
committed only by the corporation. But when a penal statute does
not expressly apply to

envisaged in corporations, it does not create an offense for which a

corporation may be punished. On the other hand, if the State, by
statute, defines a crime that may be committed by a corporation but
prescribes the penalty therefor to be suffered by the officers,
directors, or employees of such corporation or other persons
responsible for the offense, only such individuals will suffer such
penalty. Corporate officers or employees, through whose act, default
or omission the corporation commits a crime, are themselves
individually guilty of the crime.The principle applies whether or not
the crime requires the consciousness of wrongdoing. It applies to
those corporate agents who themselves commit the crime and to
those, who, by virtue of their managerial positions or other similar
relation to the corporation, could be deemed responsible for its
commission, if by virtue of their relationship to the corporation,
they had the power to prevent the act. Moreover, all parties
active in promoting a crime, whether agents or not, are
principals.Whether such officers or employees are benefited by their
delictual acts is not a touchstone of their criminal liability. Benefit is
not an operative fact. In this case, petitioner signed the trust
receipts in question. He cannot, thus, hide behind the cloak of the
separate corporate personality of PBMI. In the words of Chief Justice
Earl Warren, a corporate officer cannot protect himself behind a
corporation where he is the actual, present and efficient actor.