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http://www.lawphil.net/judjuris/juri2000/sep2000/gr_90828_2000.html 1/7

TodayisMonday,July20,2015

RepublicofthePhilippinesSUPREMECOURT

Manila

FIRSTDIVISION

G.R.No.90828September5,2000

MELVINCOLINARESandLORDINOVELOSO,petitioners,vs.HONORABLECOURTOFAPPEALS,andTHEPEOPLEOFTHEPHILIPPINES,respondents.

DECISION

DAVIDE,JR.,C.J.:

In 1979 Melvin Colinares and Lordino Veloso (hereafter Petitioners) were contracted for a consideration ofP40,000 by the Carmelite Sisters of Cagayan de Oro City to renovate the latters convent at Camamanan,CagayandeOroCity.

On30October1979,Petitionersobtained5,376SFSolatoneacousticalboard2x4x",300SF tanguilewoodtiles12"x12",260SFMarceloeconomytilesand2gallonsUMYLINcementadhesivefromCMBuildersCentreforthe construction project.1 The following day, 31 October 1979, Petitioners applied for a commercial letter ofcredit2 with the Philippine Banking Corporation, Cagayan de Oro City branch (hereafter PBC) in favor of CMBuildersCentre.PBCapproved the letterofcredit3 forP22,389.80 tocover the full invoicevalueof thegoods.Petitionerssignedaproformatrustreceipt4assecurity.Theloanwasdueon29January1980.

On31October1979,PBCdebitedP6,720fromPetitionersmarginaldepositaspartialpaymentoftheloan.5

On7May1980,PBCwrote6 toPetitionersdemanding that theamountbepaidwithinsevendays fromnotice.InsteadofcomplyingwithPBCsdemand,VelosoconfessedthattheylostP19,195.83intheCarmeliteMonasteryProjectandrequestedforagraceperiodofuntil15June1980tosettletheaccount.7

PBC sent a new demand letter8 to Petitioners on 16 October 1980 and informed them that their outstandingbalanceasof17November1979wasP20,824.40exclusiveofattorneysfeesof25%.9

On 2 December 1980, Petitioners proposed10 that the terms of payment of the loan be modified as follows:P2,000onorbefore3December1980,andP1,000permonthstarting31January1980untiltheaccountisfullypaid.Pendingapprovalof theproposal,PetitionerspaidP1,000 toPBCon4December1980,11and thereafterP500on11February1981,1216March1981,13and20April1981.14ConcurrentlywiththeseparatedemandforattorneysfeesbyPBCslegalcounsel,PBCcontinuedtodemandpaymentofthebalance.15

On14January1983,PetitionerswerechargedwiththeviolationofP.D.No.115(TrustReceiptsLaw)inrelationtoArticle315oftheRevisedPenalCodeinanInformationwhichwasfiledwithBranch18,RegionalTrialCourtofCagayandeOroCity.TheaccusatoryportionoftheInformationreads:

ThatonoraboutOctober31,1979,intheCityofCagayandeOro,Philippines,andwithinthejurisdictionofthisHonorableCourt, theabovenamedaccusedentered intoa trust receiptagreementwith thePhilippineBankingCorporationatCagayandeOroCitywhereintheaccused,asentrustee,receivedfromtheentrusterthefollowinggoodstowit:

SolatoneAcousticalboardTanguileWoodTilesMarceloCementTilesUmylinCementAdhesive

witha total valueofP22,389.80,with theobligationon thepartof theaccusedentrustee tohold theaforesaid

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itemsintrustfortheentrusterand/ortoselloncashbasisorotherwisedisposeofthesaiditemsandtoturnovertotheentrustertheproceedsofthesaleofsaidgoodsoriftherebenosaletoreturnsaiditemstotheentrusteronorbeforeJanuary29,1980but that thesaidaccusedafter receiptof thegoods,with intent todefraudandcausedamage to theentruster, conspiring, confederating togetherandmutually helpingoneanother, did thenandtherewilfully,unlawfullyandfeloniouslyfailandrefusetoremittheproceedsofthesaleofthegoodstotheentrusterdespiterepeateddemandsbutinsteadconverted,misappropriatedandmisappliedtheproceedstotheirownpersonaluse,benefitandgain, to thedamageandprejudiceof thePhilippineBankingCorporation, in theaforesaidsumofP22,389.80,PhilippineCurrency.

ContrarytoPD115inrelationtoArticle315oftheRevisedPenalCode.16

ThecasewasdocketedasCriminalCaseNo.1390.

During trial, petitionerVeloso insisted that the transactionwasa "clean loan"asper verbal guaranteeofCayoGarciaTuiza,PBCsformermanager.HeandpetitionerColinaressignedthedocumentswithoutreadingthefineprint,only learningofthetrustreceipt implicationmuchlater.WhenhebroughtthistotheattentionofPBC,Mr.Tuizaassuredhimthatthetrustreceiptwasamereformality.17

On7July1986,thetrialcourtpromulgateditsdecision18convictingPetitionersofestafaforviolatingP.D.No.115inrelationtoArticle315oftheRevisedPenalCodeandsentencingeachofthemtosuffer imprisonmentof twoyearsandonedayofprisioncorreccionalasminimumtosixyearsandonedayofprisionmayorasmaximum,andtosolidarilyindemnifyPBCtheamountofP20,824.44,withlegalinterestfrom29January1980,12%penaltychargeperannum,25%ofthesumsdueasattorneysfees,andcosts.

The trial court considered the transaction between PBC and Petitioners as a trust receipt transaction underSection4,P.D.No.115.ItconsideredPetitionersuseofthegoodsintheirCarmelitemonasteryprojectanactof"disposing"ascontemplatedunderSection13,P.D.No.115,andtreatedthechargeinvoice19forgoodsissuedbyCMBuildersCentreasa"document"withinthemeaningofSection3thereof. ItconcludedthatthefailureofPetitionerstoturnovertheamounttheyowedtoPBCconstitutedestafa.

PetitionersappealedfromthejudgmenttotheCourtofAppealswhichwasdocketedasCAG.R.CRNo.05408.Petitioners asserted therein that the trial court erred in ruling that they violated the TrustReceipt Law, and inholdingthemcriminallyliabletherefor.Inthealternative,theycontendthatatmosttheycanonlybemadecivillyliableforpaymentoftheloan.

In itsdecision206March1989, theCourtofAppealsmodified the judgmentof the trial courtby increasing thepenalty tosixyearsandonedayofprisionmayorasminimum to fourteenyearseightmonthsandonedayofreclusiontemporalasmaximum.ItheldthatthedocumentaryevidenceoftheprosecutionprevailsoverVelosostestimony,discreditedPetitionersclaimthatthedocumentstheysignedwereinblank,anddisbelievedthattheywerecoercedintosigningthem.

On 25 March 1989, Petitioners filed a Motion for New Trial/Reconsideration21 alleging that the "DisclosureStatement on Loan/Credit Transaction"22 (hereafter Disclosure Statement) signed by them and Tuiza wassuppressedbyPBCduringthetrial.Thatdocumentwouldhaveprovedthatthetransactionwasindeedaloanasitbearsa14%interestasopposedtothetrustreceiptwhichdoesnotatallbearanyinterest.PetitionersfurthermaintainedthatwhenPBCallowedthemtopayininstallment,theagreementwasnovatedandacreditordebtorrelationshipwascreated.

In its resolution23 of 16 October 1989 the Court of Appeals denied the Motion for New Trial/Reconsiderationbecausetheallegednewlydiscoveredevidencewasactually forgottenevidencealready inexistenceduringthetrial,andwouldnotaltertheresultofthecase.

Hence,Petitionersfiledwithusthepetitioninthiscaseon16November1989.Theyraisedthefollowingissues:

1.WHETHERORNOTTHEDENIALOFTHEMOTIONFORNEWTRIALONTHEGROUNDOFNEWLYDISCOVERED EVIDENCE, NAMELY, "DISCLOSURE ON LOAN/CREDIT TRANSACTION," WHICH IFINTRODUCED AND ADMITTED, WOULD CHANGE THE JUDGMENT, DOES NOT CONSTITUTE ADENIALOFDUEPROCESS.

2. ASSUMING THERE WAS A VALID TRUST RECEIPT, WHETHER OR NOT THE ACCUSED WEREPROPERLY CHARGED, TRIED AND CONVICTED FOR VIOLATION OF SEC. 13, PD NO. 115 INRELATION TO ARTICLE 315 PARAGRAPH (I) (B) NOTWITHSTANDING THENOVATIONOF THE SOCALLED TRUST RECEIPT CONVERTING THE TRUSTORTRUSTEE RELATIONSHIP TO CREDITORDEBTORSITUATION.

In itsCommentof22January1990, theOfficeof theSolicitorGeneralurgedus todeny thepetition for lackof

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merit.

On28February1990PetitionersfiledaMotiontoDismissthecaseonthegroundthattheyhadalreadyfullypaidPBCon2February1990theamountofP70,000forthebalanceoftheloan,includinginterestandothercharges,asevidencedbythedifferentreceiptsissuedbyPBC,24andthatthePBCexecutedanAffidavitofdesistance.25

WerequiredtheSolicitorGeneraltocommentontheMotiontoDismiss.

In itsCommentof30July1990, theSolicitorGeneralopined thatpaymentof the loanwasakin toavoluntarysurrender or plea of guilty which merely serves to mitigate Petitioners culpability, but does not in any wayextinguishtheircriminalliability.

In theResolution of 13August 1990,we gave due course to thePetition and required the parties to file theirrespectivememoranda.

Thepartiessubsequentlyfiledtheirrespectivememoranda.

Itwasonlyon18May1999whenthiscasewasassignedtotheponente.Thereafter,werequiredthepartiestomove in thepremisesand forPetitioners tomanifest if theyarestill interested in the furtherprosecutionof thiscaseandinformusoftheirpresentwhereaboutsandwhethertheirbailbondsarestillvalid.

PetitionerssubmittedtheirCompliance.

ThecoreissuesraisedinthepetitionarethedenialbytheCourtofAppealsofPetitionersMotionforNewTrialandthetruenatureofthecontractbetweenPetitionersandthePBC.Astothelatter,Petitionersassertthatitwasanordinaryloan,notatrustreceiptagreementundertheTrustReceiptsLaw.

Thegrantordenialofamotionfornewtrialrestsuponthediscretionofthejudge.Newtrialmaybegrantedif:(1)errors of law or irregularities have been committed during the trial prejudicial to the substantial rights of theaccusedor (2)newandmaterialevidencehasbeendiscoveredwhich theaccusedcouldnotwith reasonablediligence have discovered and produced at the trial, and which, if introduced and admitted, would probablychangethejudgment.26

Fornewlydiscoveredevidencetobeagroundfornewtrial,suchevidencemustbe(1)discoveredaftertrial(2)couldnothavebeendiscoveredandproducedatthetrialevenwiththeexerciseofreasonablediligenceand(3)material, not merely cumulative, corroborative, or impeaching, and of such weight that, if admitted, wouldprobablychangethejudgment.27It isessentialthattheofferingpartyexercisedreasonablediligenceinseekingtolocatetheevidencebeforeorduringtrialbutnonethelessfailedtosecureit.28

WefindnoindicationinthepleadingsthattheDisclosureStatementisanewlydiscoveredevidence.

Petitioners could not have been unaware that the twopage document exists. The Disclosure Statement itselfstates, "NOTICE TO BORROWER: YOU ARE ENTITLED TO A COPY OF THIS PAPERWHICH YOU SHALLSIGN."29AssumingPetitionerscopywasthenunavailable, theycouldhavecompelled itsproduction incourt,30which they never did. Petitioners havemiserably failed to establish the second requisite of the rule on newlydiscoveredevidence.

Petitioners themselvesadmitted that "theysearchedagain theirvoluminousrecords,meticulouslyandpatiently,until theydiscovered thisnewandmaterialevidence"onlyupon learningof theCourtofAppealsdecisionandafter they were "shocked by the penalty imposed."31 Clearly, the alleged newly discovered evidence is mereforgottenevidencethatjurisprudenceexcludesasagroundfornewtrial.32

However,thesecondissueshouldberesolvedinfavorofPetitioners.

Section4,P.D.No.115, theTrustReceiptsLaw,definesa trust receipt transactionasany transactionbyandbetween a person referred to as the entruster, and another person referred to as the entrustee,whereby theentruster who owns or holds absolute title or security interest over certain specified goods, documents orinstruments,releasesthesametothepossessionoftheentrusteeuponthelattersexecutionanddeliverytotheentrusterofasigneddocumentcalleda"trustreceipt"whereintheentrusteebindshimselftoholdthedesignatedgoods, documents or instrumentswith the obligation to turn over to the entruster the proceeds thereof to theextent of the amount owing to the entruster or as appears in the trust receipt or the goods, documents orinstruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms andconditionsspecifiedinthetrustreceipt.

Therearetwopossiblesituationsinatrustreceipttransaction.Thefirstiscoveredbytheprovisionwhichreferstomoneyreceivedundertheobligationinvolvingthedutytodeliverit(entregarla)totheownerofthemerchandise

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sold. The second is covered by the provision which refers to merchandise received under the obligation to"return"it(devolvera)totheowner.33

Failureof theentrustee to turnover theproceedsof thesaleof thegoods,coveredby the trust receipt to theentrusteror to returnsaidgoods if theywerenotdisposedof inaccordancewith the termsof the trust receiptshallbepunishableasestafaunderArticle315(1)oftheRevisedPenalCode,34withoutneedofprovingintenttodefraud.

A thorough examination of the facts obtaining in the case at bar reveals that the transaction intended by thepartieswasasimpleloan,notatrustreceiptagreement.

PetitionersreceivedthemerchandisefromCMBuildersCentreon30October1979.Onthatday,ownershipoverthe merchandise was already transferred to Petitioners who were to use the materials for their constructionproject. Itwasonlyaday later,31October1979, that theywent to thebank toapply fora loan topay for themerchandise.

Thissituationbelieswhatnormallyobtainsinapuretrustreceipttransactionwheregoodsareownedbythebankand only released to the importer in trust subsequent to the grant of the loan. The bank acquires a "securityinterest"inthegoodsasholderofasecuritytitlefortheadvancesithadmadetotheentrustee.35Theownershipofthemerchandisecontinuestobevestedinthepersonwhohadadvancedpaymentuntilhehasbeenpaid infull,or if themerchandisehasalreadybeensold, theproceedsof thesaleshouldbeturnedover tohimbytheimporterorbyhisrepresentativeorsuccessorininterest.36Tosecurethatthebankshallbepaid,ittakesfulltitletothegoodsattheverybeginningandcontinuestoholdthattitleashisindispensablesecurityuntilthegoodsaresoldandthevendeeiscalledupontopayforthemhence,theimporterhasneverownedthegoodsandisnotabletodeliverpossession.37Inacertainmanner,trustreceiptspartakeofthenatureofaconditionalsalewheretheimporterbecomesabsoluteowneroftheimportedmerchandiseassoonashehaspaiditsprice.38

Trustreceipttransactionsareintendedtoaidinfinancingimportersandretaildealerswhodonothavesufficientfundsorresourcestofinancetheimportationorpurchaseofmerchandise,andwhomaynotbeabletoacquirecreditexceptthroughutilization,ascollateral,ofthemerchandiseimportedorpurchased.39

Theantecedentactsinatrustreceipttransactionconsistoftheapplicationandapprovaloftheletterofcredit,themakingofthemarginaldepositandtheeffectiveimportationofgoodsthroughtheeffortsoftheimporter.40

PBCattemptedtocoverupthetruedeliverydateofthemerchandise,yetthetrialcourttooknoticeeventhoughitfailedtoattachanysignificancetosuchfactinthejudgment.DespitetheCourtofAppealscontraryviewthatthegoodsweredeliveredtoPetitionersprevioustotheexecutionoftheletterofcreditandtrustreceipt,wefindthattherecordsofthecasespeakvolublyandthisfactremainsuncontroverted.Itisnotuncommonforustoperusethroughthetranscriptofthestenographicnotesoftheproceedingstobesatisfiedthattherecordsofthecasedosupport theconclusionsof the trialcourt.41AftersuchperusalGregoMutia,PBCscredit investigator,admittedthus:

ATTY.CABANLET:(continuing)

QDoyouknowifthegoodssubjectmatterofthisletterofcreditandtrustreceiptagreementwerereceivedbytheaccused?

AYes,sir

QDoyouhaveevidencetoshowthatthesegoodssubjectmatterofthisletterofcreditandtrustreceiptweredeliveredtotheaccused?

AYes,sir.

QIamshowingtoyouthischargeinvoice,areyoureferringtothisdocument?

AYes,sir.

xxx

QWhatisthedateofthechargeinvoice?

AOctober31,1979.

COURT:

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MakeitofrecordasappearinginExhibitD,thezeroin30hasbeensuperimposedwithnumeral1.42

Duringthecrossandredirectexaminationshealsoimpliedlyadmittedthatthetransactionwasindeedaloan.Thus:

QInshorttheamountstatedinyourExhibitC,thetrustreceiptwasaloantotheaccusedyouadmitthat?

ABecauseinthebanktheloanisconsideredpartoftheloan.

xxx

REDIRECTBYATTY.CABANLET:

ATTY.CABANLET(tothewitness)

QWhatdoyouunderstandbyloanwhenyouwereasked?

ALoanisapromiseofaborrowerfromthevaluereceived.Theborrowerwillpaythebankonacertainspecifieddatewithinterest43

SuchstatementisakintoanadmissionagainstinterestbindinguponPBC.

PetitionerVelososclaimthattheyweremadetobelievethatthetransactionwasaloanwasalsonotdeniedbyPBC.Hedeclared:

QTestimonywasgivenherethatthatwascoveredbytrustreceipt.Inshortitwasaspecialkindofloan.1 w p h i1Whatcanyousayastothat?

A I dont think that would be a trust receipt because we were made to understand by the manager whoencouragedustoavailoftheirfacilitiesthattheywillbegrantingusaloan44

PBC could have presented its former bank manager, Cayo Garcia Tuiza, who contracted with Petitioners, torefuteVelosostestimony,yetitonlypresentedcredit investigatorGregoMutia.NowherefromMutiastestimonycanitbegleanedthatPBCrepresentedtoPetitionersthatthetransactiontheywereenteringintowasnotapureloanbuthadtrustreceiptimplications.

TheTrustReceipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty andabuse of confidence in the handling ofmoney or goods to the prejudice of another regardless ofwhether thelatteristheowner.45Here,itiscrystalclearthatonthepartofPetitionerstherewasneitherdishonestynorabuseofconfidenceinthehandlingofmoneytotheprejudiceofPBC.Petitionerscontinuallyendeavoredtomeettheirobligations,asshownbyseveralreceiptsissuedbyPBCacknowledgingpaymentoftheloan.

TheInformationchargesPetitionerswithintenttodefraudandmisappropriatingthemoneyfortheirpersonaluse.Themalaprohibitanatureoftheallegedoffensenotwithstanding,intentasastateofmindwasnotprovedtobepresent inPetitioners situation.Petitionersemployednoartifice indealingwithPBCandneverdid theyevadepaymentoftheirobligationnorattempttoabscond.Instead,Petitionerssoughtfavorabletermspreciselytomeettheirobligation.

Also noteworthy is the fact that Petitioners are not importers acquiring the goods for resale, contrary to theexpressprovisionembodied in the trust receipt.Theyarecontractorswhoobtainedthe fungiblegoodsfor theirconstruction project. At no time did title over the construction materials pass to the bank, but directly to thePetitionersfromCMBuildersCentre.Thisimpressesuponthetrustreceiptinquestionvaguenessandambiguity,whichshouldnotbethebasisforcriminalprosecutionintheeventofviolationofitsprovisions.46

Thepracticeofbanksofmakingborrowerssigntrustreceiptstofacilitatecollectionofloansandplacethemunderthe threats of criminal prosecution should they be unable to pay it may be unjust and inequitable, if notreprehensible.Suchagreementsarecontractsofadhesionwhichborrowershavenooptionbuttosignlesttheirloanbedisapproved.Theresorttothisschemeleavespoorandhaplessborrowersatthemercyofbanks,andisprone tomisinterpretation,ashadhappened in thiscase.Eventually,PBCshowed its truecolorsandadmittedthatitwasonlyaftercollectionofthemoney,asmanifestedbyitsAffidavitofDesistance.

WHEREFORE,thechallengedDecisionof6March1989andtheResolutionof16October1989oftheCourtofAppealsinCAGR.No.05408areREVERSEDandSETASIDE.PetitionersareherebyACQUITTEDofthecrimecharged,i.e.,forviolationofP.D.No.115inrelationtoArticle315oftheRevisedPenalCode.

Nocosts.

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SOORDERED.

Kapunan,andPardo,JJ.,concur.Puno,J.,nopart.YnaresSantiago,J.,onleave.

Footnotes

1Exhibit"D,"OriginalRecord(OR),115.

2Exhibit"A,"Id.,112.

3Exhibit"B,"OR,113.

4Exhibit"C,"Id.,114.

5Exhibit"8C,"Id.,181.

6Exhibit"4,"Id.,160.

7Exhibits"3,I,"Id.,153.

8Exhibit"E,"Id.,116.


10Exhibit"F,"Id.,117.


12Exhibit"7A,"Id.,168.

13Exhibit"7B,"Id.,169.

14Exhibit"7C,"Id.,170.

15Exhibit"G,"Id.,118.

16OR,33.

17TSN,21May1986,2122,30.

18PerJudgeSenenC.Pearanda.Rollo1217.

19Exhibit"D,"supranote1.

20Annex"A"ofPetition,Rollo,310.PerImperial,J.,J.,withtheconcurrenceofPuno,R.andFrancisco,C.,JJ.

21Rollo,2739.

22Id.,177178.

23Id.,45.

24Rollo,127.

25Id.,128.

26Section2,Rule121,RevisedRulesofCriminalProcedure.

27 See People v. Excija, 258 SCRA 424, 443 [1996] People v. Tirona, 300 SCRA 431, 440 [1998]

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Villanuevav.People,G.R.No.135098,12April2000,7.

28Tumangv.CourtofAppeals,etal.,172SCRA328,334 [1989].SeeGarridov.CA,et al., 236SCRA450,456[1994].

29Rollo,178.

30Peoplev.Ducay,etal.,225SCRA1[1993].

31MotionforNewTrial/ReconsiderationRollo,28.

32Peoplev.Hernando,etal.,108SCRA121[1981]Peoplev.Ducay,supranote30Peoplev.Penones,200SCRA624[1991].

33Peoplev.Cuevo,104SCRA312,318[1981].

34Section13,P.D.No.115.

35Vintolav.IBAA,150SCRA578,583[1987].

36PrudentialBankv.NLRC,251SCRA421[1995],quotingNationalBankv.Vda.deHijosdeAngelJose,63Phil.814,821[1936].

37Peoplev.YuChaiHo,53Phil.874[1928],quotingInre:DunlapCarpetCo.,207Fed.726.

38PrudentialBankv.NLRC,supranote36.

39 CeferinaSamo v. People, 115Phil. 346, 349350 [1962], citing 53Am Jur. 961.Seealso PrudentialBankv.NLRC,supranote36.

40Siav.People,121SCRA655[1983].

41Peoplev.Vergara,etal.,270SCRA624[1997].

42TSN,18December1986,1011.

43Id.,2122.

44TSN,21May1986,34

45Peoplev.Nitafan,etal.,207SCRA726[1992].

46Siav.People,supranote40.

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