G.R. No. 81559-60 April 6, 1992
PEOPLE OF THE PHILIPPINES and ALLIED BANKING CORPORATION, vs. HON. JUDGE DAVID G. NITAFAN and BETTY SIA ANG.

FACTS

Petitioner Allied Banking Corporation charged private respondent Betty Sia Ang with estafa in Criminal Case No. 87-53501. The information alleged that on or about July 18, 1980, in Manila, Sia Ang, as proprietress of Eckart Enterprises, received in trust from the bank plastic sheeting and hook chromed valued at P398,000.00 under a trust receipt and a domestic letter of credit. She had the express obligation to sell the goods and account for the proceeds, or to return the merchandise if not sold, on or before October 16, 1980, or upon demand. Despite repeated demands, she paid only P283,115.78, leaving an unaccounted balance of P114,884.22, which she allegedly misappropriated to the damage of the bank. Sia Ang filed a motion to quash the information on the ground that the facts charged do not constitute an offense. On January 7, 1988, respondent Judge David G. Nitafan granted the motion, ruling that a trust receipt transaction evidences a loan, creating a creditor-debtor relationship, and that the penal clause of Presidential Decree No. 115 (the Trust Receipts Law) is inoperative as it does not punish an offense mala prohibita but merely refers to the estafa provision in the Revised Penal Code. The lower court relied on People v. Cuevo and Sia v. People (1983), which held that a violation of a trust receipt agreement gives rise only to a civil obligation. The petitioners filed this petition for certiorari.

ISSUE

Whether the failure of an entrustee to turn over the proceeds of the sale or to return the goods under a trust receipt agreement constitutes the crime of estafa under Presidential Decree No. 115 and Article 315, paragraph 1(b) of the Revised Penal Code.

RULING

Yes. The Supreme Court GRANTED the petition, SET ASIDE the Order of the respondent Regional Trial Court dated January 7, 1988, and ordered the case remanded for disposition in accordance with the decision. The Court held that acts involving the violation of trust receipt agreements occurring after January 29, 1973 (the date of enactment of P.D. 115) make the accused criminally liable for estafa under Article 315, paragraph 1(b) of the Revised Penal Code, pursuant to the explicit provision in Section 13 of P.D. 115. The Court clarified that the rulings in People v. Cuevo and Sia v. People (1983), which the lower court relied upon, were inapplicable because the questioned acts in those cases were committed before the effectivity of P.D. 115. A trust receipt arrangement is not a simple loan transaction; it has both a loan feature and a security feature covered by the trust receipt itself, intended to protect the bank’s title to the goods used as collateral. The Trust Receipts Law punishes the dishonesty and abuse of confidence in the handling of money or goods to the prejudice of another, regardless of whether the latter is the owner, and does not seek to enforce payment of a loan; thus, there is no violation of the constitutional prohibition against imprisonment for debt. The enactment of P.D. 115 is a valid exercise of police power, punishing the act as an offense against public order (malum prohibitum) to deter misuse and safeguard trade and banking circles. The offense is constituted by the mere failure to deliver the proceeds or return the goods, regardless of intent or malice.