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ALFREDO CHING v. CA

FACTS:

The case involves the petition for review on certiorari filed by Alfredo Ching, challenging the decision of the Court of Appeals dismissing his "Petition for Certiorari and Prohibition with Prayer for Issuance of Temporary Restraining Order/Preliminary Injunction." The controversy stemmed from the criminal charges filed against Ching for violation of Article 315 1(b) of the Revised Penal Code, in relation to the Trust Receipts Law. Ching filed an omnibus motion to strike out the information or, in the alternative, to require a preliminary investigation and to suspend further proceedings. The Regional Trial Court (RTC) granted the motion and suspended the criminal cases.

In the meantime, Ching filed a civil case for the declaration of nullity of documents and damages. Ching then filed a petition for the suspension of the criminal proceedings on the ground of prejudicial question. The RTC denied the petition for suspension, leading Ching to file a petition for certiorari and prohibition with the Court of Appeals. The Court of Appeals ruled that the civil case for the declaration of nullity is not a prejudicial question to the criminal cases, prompting Ching to file a motion for reconsideration, which was later denied. However, the RTC-Manila admitted Ching's amended complaint in the civil case seeking the declaration of nullity of the trust receipts.

The petitioner, Philippine Blooming Mills Co., Inc., filed a civil case for the declaration of nullity of trust receipts and damages against the private respondent, Allied Banking Corporation. The petitioner claimed that the documents were null and void and that the transaction was a simple loan, not involving a trust receipt. The private respondent argued that the transaction was a trust receipt accommodation. The trial court ruled in favor of the private respondent, which was affirmed by the Court of Appeals. The petitioner then filed a petition for review with the Supreme Court, seeking the suspension of the criminal cases pending against its president, Alfredo Ching, until the final determination of the civil case.

The accused in this case was charged with estafa under Article 315, paragraph 1(b) of the Revised Penal Code for allegedly violating a trust receipt agreement. The prosecution argued that the accused, as an officer of a corporation, misappropriated the goods covered by the trust receipt agreement and failed to deliver the proceeds from the sale of said goods. The accused, on the other hand, contended that the trust receipt arrangement was not valid and that a civil case was already pending questioning its validity. The accused argued that the resolution of the civil case should be a prejudicial question that would warrant the suspension of the criminal proceedings for estafa. Citing a previous case (Jimenez vs. Averia), the Court ruled that a civil case contesting the validity of a trust receipt is not a prejudicial question that would suspend the criminal proceedings for estafa. The Court emphasized that a violation of a trust receipt agreement is only one mode of committing estafa and a violation thereof is not the sole basis for liability under Article 315 1(b) of the Revised Penal Code.

ISSUES:

  1. Whether a civil case contesting the validity of a receipt can be considered a prejudicial question that warrants the suspension of criminal proceedings for estafa.

  2. Whether the Supreme Court can resolve the merits of a case based on the records and evidence before it, instead of remanding the case to the trial court for further proceedings.

  3. Whether a trust receipt is merely an additional or side document to a principal contract, such as a pure and simple loan.

  4. Whether the original complaint, which alleged that the trust receipts were executed and intended as collateral or security, retains its character as a judicial admission.

  5. Whether or not the filing of an amended complaint alters the theory of the case.

  6. Whether or not the allegations in the amended complaint are inconsistent with those in the original complaint.

  7. Whether or not the transaction between the parties falls under the category of a trust receipt arrangement.

  8. Whether or not the civil action for declaration of nullity of documents and for damages constitutes a prejudicial question to the criminal cases for estafa.

RULING:

  1. A civil case contesting the validity of a receipt is not a prejudicial question that warrants the suspension of criminal proceedings for estafa. Even if the execution of the receipt was vitiated by fraud, duress, or intimidation, the accused can still be proven guilty of estafa through other evidence showing their receipt of the money and their failure to return it upon demand. (Jimenez vs. Averia)

  2. The Supreme Court may resolve the merits of a case based on the records and evidence before it, especially when the resolution of the issues would best serve the ends of justice and promote the speedy disposition of cases. The remand of the case or issue to the lower court for further reception of evidence is not necessary when the Court is in a position to resolve the dispute based on the records, and when the ends of justice would not be served by the remand. (Board of Commissioners vs. Judge Joselito de la Rosa and Judge Capulong, Escudero vs. Dulay)

  3. No, a trust receipt is not merely an additional or side document to a principal contract, such as a pure and simple loan. A trust receipt is considered 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. It is a security agreement that secures an indebtedness and cannot be easily renege on its obligations. (Samo vs. People)

  4. No, the original complaint, which alleged that the trust receipts were executed and intended as collateral or security, does not retain its character as a judicial admission. The admission contained in the original complaint is deemed abandoned and does not form part of the record when the amended complaint is admitted. The original complaint no longer performs any further function as a pleading. (Rules of Court)

  5. Yes, the filing of an amended complaint alters the theory of the case.

  6. Yes, the allegations in the amended complaint are inconsistent with those in the original complaint.

  7. No, the transaction between the parties does not fall under the category of a trust receipt arrangement.

  8. No, the civil action for declaration of nullity of documents and for damages does not constitute a prejudicial question to the criminal cases for estafa.

PRINCIPLES:

  • A violation of a trust receipt agreement is not the sole basis for incurring liability under Article 315 1(b) of the Revised Penal Code. (Presidential Decree 115, Trust Receipts Law)

  • The Supreme Court strives to settle the entire controversy in a single proceeding to avoid future litigation and promote the expeditious administration of justice. (Board of Commissioners vs. Judge Joselito de la Rosa and Judge Capulong)

  • The Supreme Court can resolve a case on the merits based on the records and evidence before it, even if certain issues were not raised on appeal, if their consideration is necessary in arriving at a just disposition of the case. (Escudero vs. Dulay)

  • A trust receipt is 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. It is a security agreement that secures an indebtedness. (Samo vs. People)

  • Pleadings superseded or amended lose their status as pleadings and cease to be judicial admissions. The admission contained therein will not be considered unless formally offered in evidence. (Rules of Court)

  • Amendments to pleadings are allowed unless they lead to delay, change of cause of action or defense, or inconsistency with the allegations in the original pleading.

  • Amendments that alter the theory of the case or result in inconsistency with the original pleading should be denied.

  • The non-payment of the amount covered by a trust receipt is an act violative of the entrustee's obligation to pay, regardless of whether the goods are intended for sale or for use in manufacturing operations.

  • The penal provision of the law on trust receipts encompasses any act violative of an obligation covered by the trust receipt, and is not limited to transactions in goods which are to be sold, retailed, reshipped, stored, or processed as a component of a product ultimately sold.

  • The civil action for declaration of nullity of documents and for damages does not constitute a prejudicial question to the criminal cases for estafa.