GR 119858; (April, 2003) (Digest)
G.R. No. 119858 ; April 29, 2003
EDWARD C. ONG, petitioner, vs. THE COURT OF APPEALS AND THE PEOPLE OF THE PHILIPPINES, respondents.
FACTS
Petitioner Edward C. Ong, representing ARMAGRI International Corporation, obtained two letters of credit from SOLIDBANK Corporation to finance the purchase of goods. For each transaction, he executed a trust receipt in favor of the bank, acknowledging receipt of the goods in trust and undertaking to either account for the proceeds of their sale or return the goods themselves if unsold. The bank fully paid the suppliers. Petitioner, however, failed to comply with his obligations under the trust receipts despite repeated demands.
Consequently, petitioner was charged with two counts of estafa under Article 315(1)(b) of the Revised Penal Code in relation to the Trust Receipts Law (PD 115). The Regional Trial Court convicted him, a decision affirmed by the Court of Appeals. Petitioner elevated the case to the Supreme Court via a petition for review on certiorari, arguing that the transaction was a simple loan and that his liability was merely civil.
ISSUE
Whether petitioner Edward C. Ong is criminally liable for estafa under the Trust Receipts Law for his failure to account for the goods covered by the trust receipts or remit their proceeds to the bank.
RULING
Yes, petitioner is criminally liable. The Supreme Court affirmed the conviction but modified the penalty. The legal logic is anchored on the nature of a trust receipt transaction under PD 115. The law creates a fiduciary relationship where the entrustee (the borrower) holds the goods, documents, or instruments with the obligation to sell them and remit the proceeds, or to return the goods if not sold. The failure to account for the goods or the proceeds constitutes criminal misappropriation or conversion.
The Court rejected petitioner’s argument that the transaction was a simple loan, emphasizing that the execution of the trust receipt is crucial. By signing the trust receipts, petitioner explicitly acknowledged holding the goods in trust for the bank. His subsequent failure to fulfill the undertakings specified therein—despite demands—converted the obligation from a purely civil debt into a criminal act of estafa. The law precisely seeks to punish the abuse of confidence in such financial arrangements. The penalty was modified to an indeterminate sentence of four years and two months of prision correccional as minimum to twenty years of reclusion temporal as maximum for each count, in accordance with the Indeterminate Sentence Law.