Rights
of the Entruster
The
entruster shall be entitled to the proceeds from the sale of the goods,
documents or instruments released under a trust receipt to the entrustee to the
extent of the amount owed to the entruster or as appears in the trust receipt;
or to the return of the goods, documents or instruments in case of non-sale;
and to the enforcement of all other rights conferred on him in the trust
receipt, provided these are not contrary to the provisions of the document.[1]
Section
7, P.D. 115 states:
Sec. 7. Rights of the entruster.
- The entruster shall be entitled to the proceeds from the sale of the goods,
documents or instruments released under a trust receipt to the entrustee to the
extent of the amount owing to the entruster or as appears in the trust receipt,
or to the return of the goods, documents or instruments in case of non-sale,
and to the enforcement of all other rights conferred on him in the trust
receipt provided such are not contrary to the provisions of this Decree.
The entruster may cancel the trust
and take possession of the goods, documents or instruments subject of the trust
or of the proceeds realized therefrom at any time upon default or failure of
the entrustee to comply with any of the terms and conditions of the trust
receipt or any other agreement between the entruster and the entrustee, and the
entruster in possession of the goods, documents or instruments may, on or after
default, give notice to the entrustee of the intention to sell, and may, not
less than five days after serving or sending of such notice, sell the goods,
documents or instruments at public or private sale, and the entruster may, at a
public sale, become a purchaser. The proceeds of any such sale, whether public
or private, shall be applied (a) to the payment of the expenses thereof; (b) to
the payment of the expenses of re-taking, keeping and storing the goods,
documents or instruments; (c) to the satisfaction of the entrustee's
indebtedness to the entruster. The entrustee shall receive any surplus but
shall be liable to the entruster for any deficiency. Notice of sale shall be
deemed sufficiently given if in writing, and either personally served on the
entrustee or sent by post-paid ordinary mail to the entrustee's last known
business address.
The
second paragraph of Section 7 provides a statutory remedy available to an
entruster in the event of default or failure of the entrustee to comply with
any of the terms and conditions of the trust receipt or any other agreement
between the entruster and the entrustee. More specifically, the entruster
"may cancel the trust and take possession of the goods, documents or
instruments subject of the trust or of the proceeds realized therefrom at any
time". The law further provides that "the entruster in possession of
the goods, documents or instruments may, on or after default, give notice to
the entrustee of the intention to sell, and may, not less than five days after
serving or sending of such notice, sell the goods, documents or instruments at
public or private sale, and the entruster may, at a public sale, become a
purchaser. The proceeds of any such sale, whether public or private, shall be
applied (a) to the payment of the expenses thereof; (b) to the payment of the
expenses of re-taking, keeping and storing the goods, documents or instruments;
(c) to the satisfaction of the entrustee's indebtedness to the entruster. The
entrustee shall receive any surplus but shall be liable to the entruster for
any deficiency." (Landl &
Company (Phil), Inc. vs. Metrobank, citing Abad vs. CA, supra)
Thus,
the entruster has the right to:
1.
Be entitled to the proceeds from the sale of the
goods, documents or instruments released under a trust receipt to the entrustee
to the extent of the amount owing to the entruster or as appears in the trust
receipt;
2.
The return of the goods, documents or instruments
in case of non-sale;
3.
The enforcement of all other rights conferred on
him in the trust receipt provided such are not contrary to the provisions of
this Decree;
4.
Cancel the trust and take possession of the
goods, documents or instruments subject of the trust or of the proceeds
realized therefrom at any time upon default or failure of the entrustee to
comply with any of the terms and conditions of the trust receipt or any other
agreement between the entruster and the entrustee;
5.
Sell the goods, documents or instruments at
public or private sale, and the entruster may, at a public sale, become a
purchaser, when in possession of the goods, documents or instruments, on or
after default of the entrustee, and after notice to the latter of the intention
to sell, not less than five days after serving or sending of such notice,