ANTHONY L. NG vs.

PEOPLE OF THE PHILIPPINES

Velasco, Jr., J. April 23, 2010 G.R. Nos. 173905
Par.1: The true nature of a trust receipt transaction can be found in the "whereas" clause of PD 115 which states
that a trust receipt is to be utilized "as a convenient business device to assist importers and merchants solve
their financing problems."
Doctrine
Par.2: There are two obligations in a trust receipt transaction: the first refers to money received under the
obligation involving the duty to turn it over (entregarla) to the owner of the merchandise sold, while the second
refers to the merchandise received under the obligation to "return" it (devolvera) to the owner. A violation of
any of these undertakings constitutes estafa.
Ng was granted a credit line of P3M by Asiatrust, for him to utilize in fabricating communication towers ordered
by his clients. Along with the Credit Line Agreement, he signed a Trust Receipt Agreement, which had no maturity
dates as they were left blank. Due to difficulties in collecting from his clients, he defaulted to pay his loan with
Asiatrust. An information for estafa was filed against Ng. The Court ruled that agreement was a simple loan, as it
Summary
was clear that goods were never intended for sale but for use in fabrication of steel communication towers. Also,
assuming arguendo that they it is a TR, as per Agreement, he was only obligated to turn over proceeds as soon as he
received payment. And since, there was no maturity date, obligation will only mature upon Asiatrust's demand,
which it never did, thus there was no misappropriation.

 Credit Line Agreement of P3M: between Ng, then engaged in business of building and fabricating
communication towers under trade name "Capitol Balcksmith and Builders," and Asiatrust.
 Trust Receipt Agreement: was signed by Ng as required, along with Promissory Notes (PN). The PNs
matured on September 18, 1997; however, maturity dates for Trust Receipts (TR) were left unfilled or blank by
the bank.
 Utilization of goods (of chemicals and metal plates from suppliers): used by Ng to fabricate communication
towers ordered from him by his clients (Islacom, Smart, Infocom) and installed in Leyte, Davao and Tongonan.
 Default of payment: As Ng realized difficulty in collecting from his client, Islacom, he failed to pay his loan.
 Surprise ocular inspection: by Asiatrust's representative appraiser, Linga, who found that 97% of subject goods
of TR were "sold-out and that only 3% of goods pertaining to PN remained." Loan was restructured but Ng still
failed to pay.
 Information for Estafa: was filed against Ng, under Art. 315(b), RPC in relation to Sec. 3, PD 115 (TR Law),
alleging that, Ng entered into TR agreement with Ma. Girlie Bernardez1 whereby Ng as entrustee received in trust
various chemicals in total sum of P4.5M with obligation to hold said chemicals in trust as property of entruster
with right to sell the samme for cash and to remit proceeds to the entruster; however, he misappropriated,
Facts
misapplied and converted said amount to his own personal use and benefit; and despite repeated demands,
failed and still refused to pay, to the prejudice of complainant in amount of P2,971,650.
 Compromise Agreement: where Ng was to issue 6 post-dated checks. Ng, in good faith, tried to comply by
issuing 2-3 PDCs, in total sum of P1.8M. The remaining checks were not deposited as CA did not push through.

Petitioner's defense:
 Loan was granted as his working cpaital and that TR Agreements signed were merely preconditions for
grant and approval of his loan. Also, both Letter of Credit and TRA were contracts of adhesion. Lastly, he
already paid P1.8M out of P2.971M he owed as per Statement of Account dated January 26, 2000.

Court Ruling:
 RTC: guilty of Estafa; Even if TRA is a contract of adhesion, Ng is presumed to have read and understood its
terms, thus, bound by its provisions.
 CA: RTC affirmed; WON Ng acted without malice or fraud, offense punished is malum prohibitum; mere failure
to deliver proceeds of sale or goods if not sold constitutes the criminal offense. | MR: denied. | Hence, this petition.

I. Main issue: WON petitioner is liable for estafa. (NO)

Elements of estafa are not present. [SEE ISSUES BELOW]
(1) that money, goods or other personal property is received by the offender in trust or on commission, or for
Ratio/Issues administration, or under any obligation involving the duty to make delivery of or to return it;
(2) that there be misappropriation or conversion of such money or property by the offender, or denial on his part of
such receipt;
(3) that such misappropriation or conversion or denial is to the prejudice of another; and

1later on Amended Information to change complainant as Bernaldez is just an employee of Asiatrust. (I assume, change to Asiatrust, as the offended
party, since it was not expressly mentioned in case).
 (4) there is demand by the offended party to the offender.

II. WON P.D. 115 applies in the case at bar. (NO)

 SEE DOCTRINE par.1. TR mainly involved sales.
 Petitioner was transparent to Asiatrust from the very beginning that the subject goods were not being held for
sale but were to be used for the fabrication of steel communication towers in accordance with his contracts
with Islacom, Smart, and Infocom. In these contracts, he was commissioned to build, out of the materials
received, steel communication towers, not to sell them.
 Linga showed that he had no real personal knowledge or proof of the fact that the goods were indeed sold. He
did not notify petitioner about the inspection nor did he talk to or inquire with petitioner regarding the
whereabouts of the subject goods. Neither did he confirm with petitioner if the subject goods were in fact sold.
Therefore, the Memorandum of Linga, which was based only on his presumption and not any actual personal
knowledge. What it only proves is that goods were not in the warehouse.
 To emphasize: Trust Receipts Law was created to "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."
 Since Asiatrust knew that petitioner was neither an importer nor retail dealer, it should have
known that the said agreement could not possibly apply to petitioner.

III. [FIRST ELEMENT] WON goods were received in trust. (NO)

SEE DOCTRINE par. 2.
As discussed, goods were not intended for sale, thus not held in trust. Neither did Ng have duty to return them.

IV. [SECOND ELEMENT] WON petitioner misappropriated goods. (NO)

 Assuming arguendo that PD 115 applies, TR entered into states:
In case of sale I/we agree to hand the proceeds as soon as received to the BANK to apply against the
relative acceptance (as described above) and for the payment of any other indebtedness of mine/ours to
ASIATRUST DEVELOPMENT BANK
 Clearly, petitioner was only obligated to turn over the proceeds as soon as he received payment.
However, the evidence reveals that petitioner experienced difficulties in collecting payments
from his clients for the communication towers. Despite this, Ng still tried to paid his obligation.
 Moreso, no maturity date was stipulated in TR. Hence, only way for obligation to mature was for
Asiatrust to demand from petitioner to pay obligation, which it never did.
 Reason: Based on investigations conducted by bank before approval of credit line, Asiatrust knew
that the capacity of petitioner to pay for his loan also hinges upon the latter's receivables from his
clients where he had ongoing and future projects for fabrication and installation of steel
communication towers and not from the sale of said goods.

V. WON obligation is already extinguished. (YES)

 Petitioner has already fully paid obligation, as evidenced by Asiatrust's Affidavit of Desistance, executed in
March 26, 2009, acknowledging full payment of loan. Thus, there is no need to further rule on other issues.

Held CA Decision SET ASIDE. Anthony Ng is ACQUITTED.

Prepared by: KM Liberato [Credit | RVazquez]