4 GR 119858

G.R. No.
119858 April 29, 2003
EDWARD C. ONG, petitioner,

vs.
THE COURT OF APPEALS AND THE PEOPLE OF THE PHILIPPINES, respondents.
FACTS:
Petitioner, representing
ARMAGRI, applied for a letter of
credit for P2,532,500.00 with
SOLIDBANK
Corporation to finance the
purchase of differential assemblies
from Metropole Industrial Sales.
On 6 July
1990, petitioner, representing
ARMAGRI, executed a trust
receipt acknowledging receipt
from the Bank of
the goods valued at P2,532,500.00
Petitioner, representing
ARMAGRI, applied for a letter of
credit for P2,532,500.00 with
SOLIDBANK
Corporation to finance the
purchase of differential assemblies
from Metropole Industrial Sales.
On 6 July
1990, petitioner, representing
ARMAGRI, executed a trust
receipt acknowledging receipt
from the Bank of
the goods valued at P2,532,500.00
Petitioner, representing ARMAGRI, applied for a letter of credit with SOLIDBANK to finance the
purchase of differential assemblies from Metropole Industrial Sales. On 6 July 1990, petitioner,
representing ARMAGRI, executed a trust receipt acknowledging receipt from the Bank of the
goods valued at PhP2.5 Million.
Petitioner and Benito Ong, representing ARMAGRI, applied for another letter of credit to finance
the purchase of merchandise from Fertiphil Corporation. The Bank approved the application,
opened the letter of credit and paid to Fertiphil Corporation the amount of PhP 2 Million.
Petitioner, signing for ARMAGRI, executed another trust receipt in favor of the Bank
acknowledging receipt of the merchandise.
Both trust receipts contained the same stipulations. Under the trust receipts, ARMAGRI
undertook to account for the goods held in trust for the Bank, or of the goods are sold, to turn
over the proceeds to the Bank. ARMAGRI also undertook to keep the proceeds in the form of
money, bills or receivables as the separate property of the Bank or to return the goods upon
demand by the Bank, if not sold.
When the trust receipts became due and demandable, ARMAGRI failed to pay or deliver the
goods to the Bank despite several demand letters. Petitioner was charged with 2 counts of
estafa.
ISSUE:
Whether or not Ong may be held liable for estafa as he was only acting as agent
RULING:
YES. The Trust Receipts Law is violated whenever the entrustee fails to: (1) turn over
the proceeds of the sale of the goods, or (2) return the goods covered by the trust receipts if
the goods are not sold. The mere failure to account or return gives rise to the crime which is
malum prohibitum. There is no requirement to prove intent to defraud.
The Trust Receipts Law recognizes the impossibility of imposing the penalty of
imprisonment on a corporation. Hence, if the entrustee is a corporation, the law
makes the officers or employees or other persons responsible for the offense liable
to suffer the penalty of imprisonment. The reason is obvious: corporations, partnerships,
associations and other juridical entities cannot be put to jail. Hence, the criminal liability falls on
the human agent responsible for the violation of the Trust Receipts Law.
In the instant case, the Bank was the entruster while ARMAGRI was the entrustee. Being the
entrustee, ARMAGRI was the one responsible to account for the goods or its proceeds in case
of sale. However, the criminal liability for violation of the Trust Receipts Law falls on the human
agent responsible for the violation. Petitioner, who admits being the agent of ARMAGRI, is the
person responsible for the offense for two reasons. First, petitioner is the signatory to the trust
receipts, the loan applications and the letters of credit. Second, despite being the signatory to
the trust receipts and the other documents, petitioner did not explain or show why he is not
responsible for the failure to turn over the proceeds of the sale or account for the goods
covered by the trust receipts.
The Bank released the goods to ARMAGRI upon execution of the trust receipts and as part of
the loan transactions of ARMAGRI. The Bank had a right to demand from ARMAGRI payment or
at least a return of the goods. ARMAGRI failed to pay or return the goods despite repeated
demands by the Bank.
It is a well-settled doctrine long before the enactment of the Trust Receipts Law, that the
failure to account, upon demand, for funds or property held in trust is evidence of
conversion or misappropriation. Under the law, mere failure by the entrustee to
account for the goods received in trust constitutes estafa. The Trust Receipts Law
punishes dishonesty and abuse of confidence in the handling of money or goods to the
prejudice of public order. The mere failure to deliver the proceeds of the sale or the goods if
not sold constitutes a criminal offense that causes prejudice not only to the creditor, but also to
the public interest. Evidently, the Bank suffered prejudice for neither money nor the goods were
turned over to the Bank.
The Trust Receipts Law expressly makes the corporation's officers or employees or
other persons therein responsible for the offense liable to suffer the penalty of
imprisonment. In the instant case, petitioner signed the two trust receipts on behalf of
ARMAGRI as the latter could only act through its agents. When petitioner signed the trust
receipts, he acknowledged receipt of the goods covered by the trust receipts. In addition,
petitioner was fully aware of the terms and conditions stated in the trust receipts, including the
obligation to turn over the proceeds of the sale or return the goods to the Bank.
True, petitioner acted on behalf of ARMAGRI. However, it is a well-settled rule that the
law of agency governing civil cases has no application in criminal cases. When a
person participates in the commission of a crime, he cannot escape punishment on the ground
that he simply acted as an agent of another party. In the instant case, the Bank accepted the
trust receipts signed by petitioner based on petitioner's representations. It is the fact of
being the signatory to the two trust receipts, and thus a direct participant to the
crime, which makes petitioner a person responsible for the offense.

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G.R. No.

119858 April 29, 2003

EDWARD C. ONG, petitioner,

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