G.R. No. 195117 ; August 14, 2013
HUR TIN YANG, PETITIONER vs. PEOPLE OF THE PHILIPPINES, RESPONDENT

FACTS

Petitioner Hur Tin Yang, as Vice-President for Internal Affairs of Supermax Philippines, Inc., was charged with twenty-four (24) counts of Estafa under Article 315, paragraph 1(b) of the Revised Penal Code in relation to Presidential Decree No. 115 (Trust Receipts Law). The Informations alleged that on various dates in 1998, he received in trust from Metropolitan Bank and Trust Company (Metrobank) construction materials (e.g., reinforcing bars) specified in trust receipt agreements, with the obligation to turn over the proceeds of their sale or return the goods, but he misappropriated or converted them. The facts are undisputed: Metrobank extended letters of credit to Supermax for the purchase of construction materials. Petitioner signed twenty-four trust receipts as security. When the trust receipts fell due, Supermax failed to pay or deliver the goods/proceeds despite demands. For his defense, petitioner admitted signing the trust receipts but argued they were demanded as additional security for loans, and that Metrobank knew the construction materials were for Supermax’s own use in its construction business, not for resale. The trial court convicted him. The Court of Appeals affirmed, ruling the offense under P.D. 115 is malum prohibitum, where mere failure to deliver is sufficient for conviction. The Supreme Court initially dismissed his petition via a Minute Resolution but granted his Motion for Reconsideration.

ISSUE

Whether or not petitioner is liable for Estafa under Art. 315, par. 1(b) of the RPC in relation to P.D. 115, even if it was sufficiently proved that the entruster (Metrobank) knew beforehand that the goods subject of the trust receipts were never intended to be sold but only for use in the entrustee’s construction business.

RULING

No. The Supreme Court granted the Motion for Reconsideration and acquitted petitioner. The Court ruled that the transaction between the parties was not a true trust receipt transaction but a simple loan. In determining the nature of a contract, the intention of the parties is decisive, as shown by their conduct, words, and deeds. The factual findings revealed that Metrobank knew, even before the execution of the trust receipts, that the construction materials were intended for Supermax’s own use in its construction business and not for resale. Citing precedents (Ng v. People and Land Bank of the Philippines v. Perez), the Court held that where the entruster knows the goods are not for resale, the transaction is essentially a loan secured by a trust receipt, and the violation is not criminal but merely a breach of a civil obligation to pay the loan. The doctrine that the offense under P.D. 115 is malum prohibitum was deemed inapplicable when the trust receipt was used merely as a security device for a loan and not for the intended fiduciary purpose of holding goods for sale. Consequently, petitioner’s failure to pay constituted a civil liability for non-payment of a debt, not a criminal offense.