DAMIAN ROBLES, PETITIONER, VS. THE COURT OF APPEALS AND THE PEOPLE OF THE PHILIP­PINES, RESPONDENTS.

Robles versus Court of Appeals and People of the Philippines

The Case

This is a petition for review brought by Damian Robles against the Court of Appeals and the People of the Philippines, asking the Supreme Court to overturn his conviction for the crime of estafa. Robles had received office equipment from Paramount Business Machines under delivery trust receipts, agreeing either to sell the goods and remit the proceeds or to return them within two days. When he failed to do either, he was prosecuted and convicted. The case matters because it settles the relationship between the Trust Receipts Law, Presidential Decree Number 115, and the crime of estafa under the Revised Penal Code, and because it clarifies that a trust receipt is a genuine fiduciary arrangement and not a mere sales contract on trial.

Procedural History

Robles was charged before the then Court of First Instance of Manila under an information dated 2 March 1978. In its decision dated 20 February 1979, the trial court convicted him of estafa under Article 315, subdivision 1 (b) of the Revised Penal Code and sentenced him to an indeterminate penalty, with an order to indemnify the complainant. Robles appealed to the Court of Appeals. On 17 September 1981, the appellate court affirmed the conviction but modified the penalty, lowering the minimum of the indeterminate sentence and reducing the amount of indemnity. Robles then came to the Supreme Court through a petition for review, assigning errors of law against the Court of Appeals.

Facts

Roberto Ng was the owner and sales manager of Paramount Business Machines, a firm dealing in office equipment in Manila. Between November 1976 and March 1977, in six separate transactions, Ng entrusted to Damian Robles various office machines, including calculators, adding machines and typewriters, with a total value of 14,895 pesos. Each delivery was covered by a delivery trust receipt signed by Robles. Under these receipts, Robles was to hold the goods in trust for Paramount, to sell them and turn over the proceeds, or to return the goods in good order within two days if unsold. For some of the items, Robles issued postdated checks, one of which he later caused to be dishonored by stopping its payment.

Robles admitted receiving the machines and admitted the agreement to sell them and remit the proceeds. He claimed, however, that one typewriter worth 3,500 pesos had been returned. He also argued that the trust receipts were mere formalities, and that the true agreement was a sale on trial for two days, so that when he failed to return the goods within that period he was deemed to have bought them, leaving only a civil obligation to pay the price.

Paramount demanded the return of the machines or the remittance of the proceeds, but Robles did neither. He was then charged with estafa.

Issues

• Whether or not the delivery trust receipts created a genuine trust or fiduciary obligation on Robles to account for the proceeds or return the goods, rather than a mere sale on trial.
• Whether or not the Court of Appeals erred in finding Robles guilty of estafa under subdivision 1 (b) of Article 315 of the Revised Penal Code.

Applicable Provisions

Section 4 of Presidential Decree Number 115, the Trust Receipts Law, defines a trust receipt transaction:

Section 4. What constitutes a trust receipt transaction. -- A trust receipt transaction, within the meaning of this Decree, is any transaction by and between a person referred to in this Decree as the entruster, and another person referred to in this Decree as the entrustee, whereby the entruster, who owns or holds absolute title or security interests over certain specified goods documents or instruments, releases the same to the possession of the entrustee upon the latter's execution and delivery to the entruster of a signed document called a 'trust receipt' wherein the entrustee binds himself to hold the designated goods, documents or instruments in trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the entruster or as appears in the trust receipt or the goods, documents or instruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the trust receipt.

This provision establishes that the receipts signed by Robles were true trust receipts, with Paramount as entruster retaining ownership and Robles as entrustee bound to account for the goods or their proceeds.

Section 13 of the same decree provides the penalty clause:

Section 13. Penalty clause. -- 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 Three Hundred and Fifteen, paragraph one (b) of Act Number Three Thousand Eight Hundred and Fifteen, as amended, otherwise known as the Revised Penal Code.

This provision supplies the criminal liability for the violation of the trust receipt, tying it directly to estafa under the Revised Penal Code.

Ruling

On the first issue, the Court held that the trust receipts clearly showed that Paramount retained ownership of the equipment, and that possession was conveyed to Robles subject to a fiduciary obligation either to return the goods within a specified period or to account for their price or proceeds. The surrounding circumstances confirmed that these were not ordinary sales on trial: there were six transactions, each involving several items, indicating that Robles was a commission merchant rather than an ordinary buyer, and he himself admitted in his affidavit that he was Paramount's sales agent. The Court rejected his claim that the receipts were mere formalities.

On the second issue, the Court held that the receipts were trust receipts within the meaning of the Trust Receipts Law, which took effect on 29 January 1973, and that the acts complained of occurred between November 1976 and March 1977, well after that date. Under Section 13, Robles's failure to turn over the proceeds or return the goods constituted estafa under Article 315 (1) (b). The Court added that even without Section 13, the failure to comply with his fiduciary obligation constituted estafa, since all the elements of the offense were present: unfaithfulness or abuse of confidence, misappropriation of goods received in trust, and prejudice to another. The failure to account, upon demand, for property held in trust is evidence of misappropriation.

Doctrine

A trust receipt is a genuine fiduciary arrangement. The entruster retains ownership of the goods, and the entrustee holds them in trust with the obligation to sell and remit the proceeds or to return the goods if unsold. The violation of this obligation, whether by failing to turn over the proceeds or to return the goods, constitutes the crime of estafa under Article 315 (1) (b) of the Revised Penal Code, as expressly provided by Section 13 of the Trust Receipts Law. Even absent the Trust Receipts Law, the breach of a fiduciary obligation under a trust receipt is punishable as estafa, because the elements of that offense are present. Failure to account, upon demand, for property held in trust is evidence of misappropriation.

Disposition

The Supreme Court denied the petition for lack of merit and affirmed the decision of the Court of Appeals, with costs against the petitioner.

Remember This

The single line to memorize is that a trust receipt creates a real fiduciary obligation, and its violation is estafa under Article 315 (1) (b), as expressly commanded by Section 13 of the Trust Receipts Law. Examiners use this case to test the distinction between a trust receipt and a sale on trial, and to test whether a violation of the Trust Receipts Law is a criminal offense and not a mere civil debt.