G.R. No. 166884 ; June 13, 2012
Land Bank of the Philippines, Petitioner, vs. Lamberto C. Perez, Nestor C. Kun, Ma. Estelita P. Angeles-Panlilio, and Napoleon O. Garcia, Respondents.

FACTS

Petitioner Land Bank of the Philippines (LBP) extended a credit line to Asian Construction and Development Corporation (ACDC). Respondents, as corporate officers, executed trust receipts for construction materials purchased under this facility. Upon maturity, ACDC failed to account for the goods or remit the proceeds. LBP filed a criminal complaint for estafa under Article 315(1)(b) of the Revised Penal Code in relation to the Trust Receipts Law (P.D. 115). The City Prosecutor dismissed the complaint, citing insufficient evidence, particularly the lack of proof showing the date the goods were released to ACDC relative to the execution of the trust receipts, and because the receipts themselves were undated and lacked specific descriptions of the goods. The Secretary of Justice reversed this, ordering the filing of an information, prompting respondents to seek relief from the Court of Appeals.

ISSUE

Whether the transaction between LBP and ACDC constitutes a true trust receipt transaction under P.D. 115, such that a criminal prosecution for estafa can be sustained against the corporate officers.

RULING

The Supreme Court denied LBP’s petition and affirmed the Court of Appeals’ dismissal of the criminal complaint. The legal logic hinges on the essential nature of a trust receipt transaction. For a violation of P.D. 115 to give rise to criminal liability for estafa, the transaction must be a genuine trust receipt agreement where the bank retains ownership of the goods until the entrustee settles the obligation. The Court found this element absent. The evidence indicated that the construction materials were delivered to and possessed by ACDC even before the execution of the trust receipts. The trust receipts were undated and did not contain a description of the specific goods, their invoice value, or a clear maturity date, failing to comply with Section 5 of P.D. 115. Consequently, the transaction was characterized not as a trust receipt arrangement but as a simple loan or a security agreement for a pre-existing debt. In a loan, ownership of the money or goods passes to the borrower. Since the bank did not retain ownership over the materials after delivery, the respondents’ failure to pay constituted a civil obligation arising from breach of contract, not a criminal misappropriation or conversion under the Trust Receipts Law. Therefore, the elements of estafa under Article 315(1)(b) in relation to P.D. 115 were not established.