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LAND BANK OF PHILIPPINES v. LAMBERTO C. PEREZ

FACTS:

The petitioner, Land Bank of the Philippines (LBP), filed a complaint for estafa against the respondents, Lamberto C. Perez, Nestor C. Kun, Ma. Estelita P. Angeles-Panlilio, and Napoleon Garcia, officers and representatives of Asian Construction and Development Corporation (ACDC). The complaint alleged that ACDC violated Article 315, paragraph 1(b) of the Revised Penal Code and Section 13 of Presidential Decree No. (P.D.) 115, the Trust Receipts Law. LBP extended credit accommodation to ACDC through an Omnibus Credit Line Agreement, allowing ACDC to use letters of credit/trust receipts to purchase construction materials. The trust receipts, with a principal amount of P52,344,096.32, matured but ACDC failed to return the proceeds or materials subject to the trust receipts. LBP sent a demand letter for payment, and when ACDC did not comply, LBP filed the complaint. The City Prosecutor's Office initially dismissed the complaint for insufficiency of evidence, but on appeal, the Secretary of Justice reversed the dismissal and directed the filing of an information for estafa against the respondents.

The parties in this case entered into an Agreement before the construction materials were delivered to ACDC. The respondents then filed a petition for review before the Court of Appeals. The Court of Appeals reversed and set aside the Resolutions of the Secretary of Justice, ruling that the case did not involve a trust receipt transaction but a mere loan. It noted that the construction materials were delivered to ACDC even before the trust receipts were executed and that LBP did not offer proof that the goods were received by ACDC. The Court of Appeals also adopted ACDC's argument that since no payment for the construction projects had been received by ACDC, its officers could not have been guilty of misappropriating any payment. LBP filed a petition for review on certiorari, arguing that the Court of Appeals erred in applying the ruling in the case of Colinares v. Court of Appeals, which LBP claimed was not applicable in this case. While the case was pending before the Supreme Court, the respondents filed a motion to dismiss, stating that LBP had assigned its rights to the loans in question and that ACDC had already settled its obligation to LBP. The Supreme Court denied the petition. The disputed transactions were determined not to be trust receipts under Section 4 of P.D. 115, as the parties entered into an agreement knowing that the return of the goods subject of the trust receipt was not possible, making it a mere loan.

ISSUES:

  1. Whether the transactions in question are trust receipts under P.D. 115.

  2. Whether the respondents can be held criminally liable for estafa under Article 315, paragraph 1(b) of the Revised Penal Code, in relation to Section 13 of P.D. 115.

RULING:

  1. Trust Receipts: The Supreme Court ruled that the transactions in question are not trust receipts. The materials were intended for construction projects and thereby became part of the public domain once they were used. As such, the agreements between LBP and ACDC were considered as loans rather than trust receipt transactions.

  2. Criminal Liability for Estafa: The respondents cannot be held criminally liable for estafa under the Trust Receipts Law since the transactions are not trust receipts. Furthermore, there was no evidence of misappropriation or dishonesty by the respondents, as they did not receive proceeds from the construction projects.

PRINCIPLES:

  • Trust Receipt Transaction: Defined under Section 4 of P.D. 115, involving an arrangement where the entruster releases goods to the entrustee with the obligation to return or sell the goods and remit the proceeds back to the entruster.

  • Misappropriation Presumption: Under the Trust Receipts Law, intent to defraud is presumed when an entrustee fails to turn over the proceeds of the sale or fails to return the goods.

  • Judicial Interpretation of Contract Intent: Article 1371 of the Civil Code allows the court to consider the contemporaneous and subsequent acts of the parties to judge their actual intention.

  • Ownership of Construction Materials in Public Projects: Under Article 445 of the Civil Code, materials used in the construction of immovable property become part of that property, and ownership presumably belongs to the owner of the land.

  • Prohibition of Imprisonment for Debt: Recognized under existing laws, imprisonment cannot result merely from the non-payment of a debt in the absence of fraud or deceit.

  • Role of the Office of the Solicitor General (OSG): All criminal proceedings before the Supreme Court and Court of Appeals must involve the OSG, as mandated by Section 35, Chapter 12, Title III, Book IV of the Administrative Code of 1987. Exceptions apply where due process is denied or where the private party contests the civil aspect of a lower court's decision.