G.R. No. 80544. July 5, 1989.
ROSEMARIE M. LEE, petitioner, vs. HON. JOSEFINA CRUZ RODIL, Judge of Regional Trial Court, Branch X, Manila and PEOPLE OF THE PHILIPPINES, respondents.

FACTS

Petitioner Rosemarie M. Lee, as a representative of C.S. Lee Enterprises, Inc., was charged with estafa. The information alleged that after opening a letter of credit with the Philippine Bank of Communications for the importation of merchandise, she executed a trust receipt covering the goods. Under the terms of the trust receipt, she obligated herself to hold the merchandise in trust for the bank, with the liberty to sell it for the bank’s account and to remit the proceeds, or to return the goods if unsold, by a specified date. The prosecution charged that she instead misappropriated the merchandise or its value, failing to account for the proceeds or return the goods despite demands.
Lee moved to quash the information, arguing that the facts alleged did not constitute estafa. She contended that a violation of a trust receipt agreement gives rise only to civil liability and attacked the constitutionality of Presidential Decree No. 115 (the Trust Receipts Law), specifically Section 13, which expressly provides that such a failure constitutes the crime of estafa. The trial court denied her motion and upheld the constitutionality of P.D. 115, prompting this petition.

ISSUE

Whether the violation of a trust receipt agreement, as defined under P.D. No. 115, constitutes the crime of estafa.

RULING

Yes. The Supreme Court affirmed the trial court’s orders, ruling that the failure of an entrustee to turn over the proceeds of the sale or to return the goods covered by a trust receipt constitutes estafa under Article 315(1)(b) of the Revised Penal Code. The Court clarified that this ruling is firmly grounded in Section 13 of P.D. 115, which explicitly characterizes such acts as estafa. This legislative declaration confirms and codifies existing jurisprudence, such as People v. Yu Chai Ho and Samo v. People, which had long held that conversion under a trust receipt transaction falls under the penal provisions on misappropriation.
The Court rejected the petitioner’s reliance on People v. Cuevo and Sia v. People, noting that in Cuevo, a majority of the Court actually held the view that such a violation was estafa, and the Sia decision was based on specific factual circumstances and preceded the clear legislative intent embodied in P.D. 115. The Court further upheld the constitutionality of P.D. 115 as a valid exercise of the State’s police power. The law addresses a pressing commercial need by safeguarding financial transactions and declaring acts that undermine the integrity of trust receipts as public nuisances subject to penal sanction (malum prohibitum). The penalty is imposed for the criminal act of misappropriation, not for the mere non-payment of a debt, thus not violating the constitutional prohibition against imprisonment for debt. The case was remanded to the trial court for further proceedings.