Section
4. [PD 115] What constitutes a trust receipts transaction.—A trust receipt
transaction, within the meaning of this Decree, is any transaction by and
between a person referred to in this Decree as the entruster, and another
person referred to in this Decree as entrustee, whereby the entruster, who owns
or holds absolute title or security interests over certain specified goods,
documents or instruments, releases the same to the possession of the entrustee
upon the latter’s execution and delivery to the entruster of a signed document
called a "trust receipt" wherein the entrustee binds himself to hold
the designated goods, documents or instruments in trust for the entruster and
to sell or otherwise dispose of the goods, documents or instruments with the
obligation to turn over to the entruster the proceeds thereof to the extent of
the amount owing to the entruster or as appears in the trust receipt or the
goods, documents or instruments themselves if they are unsold or not otherwise
disposed of, in accordance with the terms and conditions specified in the trust
receipt, or for other purposes substantially equivalent to any of the
following:
1.
In the case of goods or documents: (a) to sell the goods or procure their sale;
or (b) to manufacture or process the goods with the purpose of ultimate sale:
Provided, That, in the case of goods delivered under trust receipt for the
purpose of manufacturing or processing before its ultimate sale, the entruster
shall retain its title over the goods whether in its original or processed form
until the entrustee has complied full with his obligation under the trust
receipt; or (c) to load, unload, ship or transship or otherwise deal with them
in a manner preliminary or necessary to their sale; or
2.
In the case of instruments: (a) to sell or procure their sale or exchange; or
(b) to deliver them to a principal; or (c) to effect the consummation of some
transactions involving delivery to a depository or register; or (d) to effect
their presentation, collection or renewal.
The
sale of good, documents or instruments by a person in the business of selling
goods, documents or instruments for profit who, at the outset of transaction,
has, as against the buyer, general property rights in such goods, documents or
instruments, or who sells the same to the buyer on credit, retaining title or
other interest as security for the payment of the purchase price, does not
constitute a trust receipt transaction and is outside the purview and coverage
of this Decree. (Ng vs. People, G.R.
No. 173905, April 30, 2010, [Velasco, Jr.])
Trust
Receipts Law was created to "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." (ibid)
The
Trust Receipts Law was enacted to safeguard commercial transactions and to
offer an additional layer of security to the lending bank. Trust receipts are
indispensable contracts in international and domestic business transactions.
The prevalent use of trust receipts, the danger of their misuse and/or misappropriation
of the goods or proceeds realized from the sale of goods, documents or
instruments held in trust for entruster banks, and the need for regulation of
trust receipt transactions to safeguard the rights and enforce the obligations
of the parties involved are the main thrusts of the Trust Receipts Law.[1] (Landl & Company (Phil), Inc. vs.
Metrobank, G.R. No. 159622, July 30, 2004, [Ynares-Santiago])
The
nature of trust receipt agreements and the damage caused to trade circles and
the banking community in case of violation thereof was explained in Vintola
vs. IBAA[2]
and echoed in People vs. Nitafan[3]
, as follows:
"[t]rust receipt arrangements
do not involve a simple loan transaction between a creditor and a
debtor-importer. Apart from a loan feature, the trust receipt arrangement has a
security feature that is covered by the trust receipt itself. The second
feature is what provides the much needed financial assistance to traders in the
importation or purchase of goods or merchandise through the use of those goods
or merchandise as collateral for the advancements made by the bank. The title
of the bank to the security is the one sought to be protected and not the loan
which is a separate and distinct agreement."
x x x x x x
x x x
"Trust receipts are
indispensable contracts in international and domestic business transactions.
The prevalent use of trust receipts, the danger of their misuse and/or
misappropriation of the goods or proceeds realized from the sale of goods,
documents or instruments held in trust for entruster-banks, and the need for
regulation of trust receipt transactions to safeguard the rights and enforce
the obligations of the parties involved are the main thrusts of P.D. 115. As
correctly observed by the Solicitor General, P.D. 115, like Bata Pambansa Blg.
22, punishes the act "not as an offense against property, but as an
offense against public order. x x x The misuse of trust receipts therefore
should be deterred to prevent any possible havoc in trade circles and the
banking community. (citing Lozano vs. Martinez, 146 SCRA 323 [1986]; Rollo, p.
57) It is in the context of upholding public interest that the law now
specifically designates a breach of a trust receipt agreement to be an act that
"shall" make one liable for estafa." (Metrobank vs. Tonda, G.R. No. 134436, August 16, 2000, [Gonzaga-Reyes])
The
Trust Receipts Law punishes the dishonesty and abuse of confidence in the
handling of money or goods to the prejudice of another, regardless of whether
the latter is the owner or not. The law does not singularly seek to enforce
payment of the loan, as "there can be no violation of [the] right against
imprisonment for non-payment of a debt."[4] (Landbank vs. Perez, G.R. No. 166884, June
13, 2012, [Brion])
[1]
People of the Philippines and Allied Banking Corporation v. Hon. Judge
David G. Nitafan and Betty Sia Ang, G.R. Nos. 81559-60, 6 April 1992, 207 SCRA
726, 730-31.
[2] 150
SCRA 578 (1987).
[3] 207
SCRA 726 (1992).
[4]
People v. Nitafan, G.R. Nos. 81559-60, April 6, 1992, 207 SCRA 726, 730.
[5] Ng
v. People, supra note 14, at 304
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