THE PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. BEN CUEVO, DEFENDANT-APPELLANT.

This case presents for reexamination the liability for estafa of the holder of a trust receipt who disposed of the
goods covered thereby and, in violation of its terms, failed to deliver to the
bank the proceeds of the sale as payment of the debt se­cured by the trust
receipt.

We say reexamination because it is a well-entrenched rule in our
jurisprudence that the conversion by the importer of the goods covered by a trust receipt constitutes estafa
through misappropriation under article 315(1)(b) of the Re­vised Penal Code
(People vs. Yu Chai Ho, 53 Phil. 874 and Samo vs. People, 115 Phil. 346.  As to civil cases, see National Bank vs. Viuda é Hijos de Angel Jose, 63 Phil. 814; Philippine National Bank
vs. Catipon, 98 Phil. 286 and Philippine National
Bank vs. Arrozal, 103 Phil. 213).

In this case, an information dated July 27, 1966 was filed in the Court
of First Instance of Manila, charging Ben Cuevo with estafa committed as follows (Criminal Case No. 83309):

“That on or about the 16th day of February, 1964 in the City
of Manila, Philippines, the said accused did then and there willfully,
unlawfully and feloniously defraud the Prudential Bank and Trust Company in the
following manner, to wit:  the said
accused having received in trust from the Prudential Bank and Trust Company
merchandise, i.e., 1,000 bags of grind yellow corn and 1,000 bags of palay spe­cified in a
trust receipt covered by Letter of Credit No. 5643, executed by him in favor of
said bank, of the total value of P24,000.00, to be sold by him, under the
express obligation on the part of the said accused to account for the said mer­chandise,
or to deliver and turn over to the Prudential Bank and Trust Company the
proceeds of the sale thereof;

“But said accused once in possession of said merchan­dise, far
from complying with the aforesaid obligation, not­withstanding repeated demands
made upon him, with intent to defraud, willfully, unlawfully and feloniously
misappropriated, misapplied and converted the said merchandise or the value
thereof in the sum of P24,000.00 to his own personal
use and benefit, to the damage and prejudice of the Prudential Bank and Trust
Company in the aforesaid sum of P24,000.00, Philip­pine Currency.” (p. 2, Rollo.)

Upon arraignment, the
accused pleaded not guilty (p. 11, Record). 
Later, or on December 13, 1966, before the trial had started, Cuevo filed a motion to dismiss on the ground that the
facts alleged in the information do not constitute an offense.

Judge Ruperto Kapunan,
Jr., in his order of January 3, 1967, granted the motion and dismissed the case
but “without prejudice to whatever civil action the complaining bank may
take to recover the amount of P24,000” which it had advanced to cover the
price of the merchandise delivered to the accused (p. 7, Rollo).  From that order of dismissal, the prosecution
appealed to this Court.

The appeal is meritorious. 
Judge Kapunan, Jr. erred in holding that the
accused did not commit estafa under article 315(1)(b), which reads:

“(b)    By misappropriating or converting, to the
preju­dice of another, money, goods, or any other personal property received by
the offender in trust or on commission, or for
administration, or under any other obligation involving the duty to make
delivery of or to return the same, even though such obligation be totally or
partially guaranteed by a bond; or by denying having received such money,
goods, or other property.”

Judge Kapunan, Jr., in sustaining the
motion to dismiss, relied on the Spanish version of paragraph (b) of article
315 wherein the expression used is “recibido en deposito“.  In
his opinion, that phrase is not accurately translated as “in trust” and,
as he explained, it does not allegedly cover the conversion or misappropriation
of the goods covered by a trust receipt. 
The Spanish version reads:

“(b)    Apropiándose ó distrayendo, en perjuicio de otro dinero, efectos
ó cualquiera otra cosa mueble, que
hubiere recibido en depósito, comisión ó
administración ó por otro titulo que
produzca obligación de entregarla ó devolverla, aunque dicha obligación
estuviese afianzada total
or parcial­mente, ó negando
haberla recibido.”

The lower court ratiocinated that the contract covered by a trust
receipt is merely a secured loan (U.S. vs. Tan Tok,
15 Phil. 538) where the borrower is allowed to dispose of the collateral,
whereas, in a deposit the depositary is not empowered to dispose of the
property deposited.  Hence, the lower
court concluded that the violation of the provisions of the trust receipt gives
rise to a civil action and not to a criminal prosecution for estafa.

The lower court also ventured the opinion that the other phrase
in paragraph (b), “por otro
titulo que produz­ca obligación de entregarla ó devolverla”
(“under any other obligation involving the duty to make delivery of or to
return the same”) is not applicable because that phrase allegedly refers
to the very “money, goods, or any other personal property received by the
offender” as a deposit, and not to the proceeds of the sale of the goods
covered by the trust receipt.

The lower court observed further that the framers of the Spanish
Penal Code could not have contemplated the inclusion of the trust receipt in
article 315(1)(b) because that transaction did not
exist in the nineteenth century.

The usual form of a trust receipt is as follows:

“I/We hereby agree to hold said goods in trust for the said
corporation (meaning the bank as trustor), and as its
property with liberty to sell the same for its account, but without authority
to make any other disposition whatever of the said goods or any part thereof
(or of proceeds thereof) either by way of conditional sale, pledge or
otherwise.

“In case of sale I/We further agree to hand the pro­ceeds, as soon as received, to the International Banking Corporation
to apply against the relative acceptances (as described above) and for the
payment of any other indeb­tedness of mine/ours to the International Banking
Corpora­tion.” (People vs. Yu Chai Ho, 53 Phil.
874, 876.)

“A trust receipt is considered as a security transac­tion
intended to aid in financing importers and retail dealers who do not have
sufficient funds or resources to finance the importation or purchase of
merchandise, and who may not be able to acquire credit except through
utilization, as colla­teral, of the merchandise imported or purchased” (53
Am. Jur. 961, cited in Samo
vs. People, 115 Phil. 346, 349).

In the instant case, it is alleged in the indictment that the
accused, by means of a trust
receipt, received from the Prudential Bank and Trust Company 1,000 bags of corn
and 1,000 bags of palay to be sold by him with the
express obligation to deliver the proceeds of the sale to the bank or, if not
sold, to account for the merchandise and that, instead of complying with either
obligation, he misappropriated the merchandise or the value thereof (p. 2, Rollo).

We hold that even if the accused did not receive the merchandise
for deposit, he is, nevertheless, covered by article 315(1)(b)
because after receiving the price of the sale, he did not deliver the money to
the bank or, if he did not sell the merchandise, he did not return it to the
bank.

Those two situations are within the purview of article 315(1)(b).  The first
situation is covered by the provision which refers to money received under the obligation
involving the duty to deliver it (entregarla) to the owner of the merchan­dise
sold.

The other contingency is covered by the provision which refers to
merchandise received under the obligation to “return” it (devolverla)
to the owner.

The fact that in the first case the money was received from the
purchaser of the merchandise and not from the bank does not remove it from the
operation of article 315(1)(b).

As noted by Justice Street in People vs. Yu Chai
Ho, supra, the conversion by the trustee in a trust receipt of the pro­ceeds
of the sale falls “most literally and directly under” the provisions
of article 315(1)(b).

Thus, it was held that where, notwithstanding repeated oral and
written demands by the bank, the petitioner had failed either to turn over to
the said bank the proceeds of the sale of the goods, or to return said goods if
they were not sold, the petitioner is guilty of estafa
under article 315(1)(b) (Samo
vs. People, 115 Phil. 346).

In this connection, it is relevant to state that Presi­dential
Decree No. 115, the Trust Receipts Law, regulating trust receipts transactions,
was issued on January 29, 1973.

One objective of that law is “to declare the misuse and/or
misappropriation of goods or proceeds realized from the sale of goods,
documents or instruments released under trust receipts as a criminal offense
punishable under” article 315.

Section 13 of the decree provides that “the failure of an entrustee to turn over the proceeds of the sale of the
goods, documents or instruments covered by a trust receipt to the extent of the
amount owing to the entruster or as appears in the
trust receipt or to return said goods, documents or ins­truments if they were
not sold or disposed of in accordance with the terms of the trust receipt shall
constitute the crime of estafa, punishable under the
provisions” of article 315 of the Revised Penal Code.

The enactment of the said penal provision is confir­matory of
existing jurisprudence and should not be construed as meaning that, heretofore, the misappropriation of the proceeds of a sale
made under a trust receipt was not punishable under article 315.  That penal provision removed any doubt as to
the criminal liability of the holder of a trust receipt who misappropriated the
proceeds of the sale.

The other issue raised in the last part of accused Cuevo’s brief is whether the lower court’s erroneous dis­missal
of the information against him amounts to an acquittal which placed him in
jeopardy and whether the return of the case to the lower court for trial would
place him in double jeopardy.

“No person shall be twice put in jeopardy of punish­ment for
the same offense” (Sec. 22, Art. IV of the Consti­tution).  The maxim is non
bis in idem (not twice for the
same).  The ban against double jeopardy
is similar to the rule on res judicata in civil cases.

Jeopardy attaches when an accused was charged with an offense (a)
upon a valid complaint or information sufficient in form and substance to
sustain a conviction (b) in a court of competent jurisdiction and (c) after the
accused had been arraigned and entered his plea, he was convicted or acquitted,
or the case against him was “dismissed or otherwise termi­nated without
his express consent“.

In such a case, his conviction or acquittal (autrefois
convict or autrefois acquit) is
a “bar to another prosecution for the offense charged, or for any attempt
to commit the same or frustration thereof, or for any offense which neces­sarily
includes or is necessarily included in the offense charged in the former
complaint or information” (Sec. 9, Rule 117, Rules of Court).

The accused invokes the ruling that “where a trial court has
jurisdiction but mistakenly dismisses the complaint or information on the
ground of lack of it, the order of dismissal is, after the prosecution has
presented its evidence, unappealable because an
appeal by the government therefrom would place the
accused in second jeopardy for the same offense” (People vs. Duran, Jr.,
107 Phil. 979).

That ruling has no application to this case because in the Duran
case (as in People vs. Caderao, 69 Phil. 327, also
cited by the accused herein) the dismissal was made after the prosecution had
presented its evidence.  The accused
filed a demurrer to the evidence but the trial court dismissed the case, not on
the ground of insufficiency of evidence, but on the ground of lack of jurisdiction.  In the instant case, the prosecution has not
commenced the presentation of its evidence. 
The dismissal was with the consent of the accused because he filed a
motion to dismiss.

In Esguerra vs. De la Costa, 66 Phil.
134, another case cited by the accused, the erroneous dismissal on the ground
of lack of jurisdiction was made by the lower court motu
proprio. 
Hence, the dismissal without the consent of the accused amounted to an
acquittal which placed him in jeopardy.

Moreover, in the Duran case, it was expressly indicated
that the erroneous dismissal on the ground of lack of jurisdiction does not
place the accused in jeopardy if the dismissal was made with the consent of the
accused, as held in People vs. Salico, 84 Phil.
722.  As already stated, in the instant
case the dismis­sal was with the
consent of accused Cuevo.  That dismissal did not place him in jeopardy.

The Chief Justice and six Justices voted to reverse the order of
dismissal.  Justices Teehankee
and De Castro dis­sented.  As only seven
Justices voted to reverse the order of dismissal, the same has to be affirmed.

WHEREFORE, the order of dismissal is affirmed.  Costs de oficio.

SO ORDERED.

Makasiar, Fernandez, Guerrero, Abad Santos, and Melencio-Herrera, JJ., concur.

Fernando, C.J., concurs on the basis of absence of double jeopardy.

Teehankee and De Castro, JJ., dissent.

Barredo and
Concepcion, Jr., JJ., no part.