Colinares and Veloso V CA

Colinares and Veloso v CA, GR No.
90828, 5 September 2000 (Gomez)

Petitioner: Melvin Colinares; Lordino Veloso
Respondent: CA; People of the PH
Doctrine:
The Trust Receipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty and
abuse of confidence in the handling of money or goods to the prejudice of another regardless of whether the latter is
the owner. Here, it is crystal clear that on the part of Petitioners there was neither dishonesty nor abuse of
confidence in the handling of money to the prejudice of PBC. Petitioners continually endeavored to meet their
obligations, as shown by several receipts issued by PBC acknowledging payment of the loan.
Facts:
Melvin Colinares and Lordino Veloso (Petitioners) were contracted for a consideration of P40,000 by the
Carmelite Sisters of Cagayan de Oro City to renovate the latter’s convent at Camaman-an, Cagayan de Oro City.
Colinares applied for a commercial letter of credit with the Philippine Banking Corporation, Cagayan de
Oro City branch (hereafter PBC) in favor of CM Builders Centre. PBC approved the letter of credit for P22,389.80
to cover the full invoice value of the goods. Petitioners signed a pro-forma trust receipt as security.
PBC debited P6,720 from Petitioners’ marginal deposit as partial payment of the loan. After the initial
payment, the spouses defaulted. PBC wrote to Petitioners demanding that the amount be paid within seven days from
notice. Instead of complying with PBC’s demand, Veloso confessed that they lost P19,195.83 in the Carmelite
Monastery Project and requested for a grace period of until 15 June 1980 to settle the account. Colinares proposed
that the terms of payment of the loan be modified P2,000 on or before 3 December 1980, and P1,000 per month .
Pending approval of the proposal, Petitioners paid P1,000 to PBC on 4 December 1980, and thereafter P500 on 11
February 1981, 16 March 1981, and 20 April 1981. Concurrently with the separate demand for attorney’s fees by
PBC’s legal counsel, PBC continued to demand payment of the balance. On 14 January 1983, Petitioners were
charged with the violation of P.D. No. 115 (Trust Receipts Law) in relation to Article 315 of the Revised Penal Code
During trial, petitioner Veloso insisted that the transaction was a “clean loan” as per verbal guarantee of
Cayo Garcia Tuiza, PBC’s former manager. He and petitioner Colinares signed the documents without reading the
fine print, only learning of the trust receipt implication much later. When he brought this to the attention of PBC, Mr.
Tuiza assured him that the trust receipt was a mere formality.
Lower Court Decisions:

Trial Court
 Convicted the petitioners of estafa for violating the Trust Receipts Law in relation to Art. 315 of the RPC
CA
 Modified the judgement by increasing the penalty
 Denied the petitioners’ Motion for New Trial/Reconsideration
N.B. on 2 February 1990, petitioners had already fully paid PBC for the balance of the loan (P70k)
Issue:
 Whether the transaction of the petitioner and PBC falls within the ambit of the Trust Receipts Law?
(NO)
Held:
SC resolved the case in favor of the petitioners. True intention intended was a simple loan not a trust
receipt transaction
There are two possible situations in a trust receipt transaction. The first is covered by the provision which
refers to money received under the obligation involving the duty to deliver it (entregarla) to the owner of the
merchandise sold. The second is covered by the provision which refers to merchandise received under the obligation
to “return” it (devolvera) to the owner
Failure of the entrustee to turn over the proceeds of the sale of the goods, covered by the trust receipt to the
entruster or to return said goods if they were not disposed of in accordance with the terms of the trust receipt shall be
punishable as estafa under Article 315 (1) of the Revised Penal Code, without need of proving intent to defraud.
A thorough examination of the facts obtaining in the case at bar reveals that the transaction intended by the
parties was a simple loan, not a trust receipt agreement.
Petitioners received the merchandise from CM Builders Centre on 30 October 1979. On that day, ownership
over the merchandise was already transferred to Petitioners who were to use the materials for their construction
project. It was only a day later, 31 October 1979, that they went to the bank to apply for a loan to pay for the
merchandise
It is crystal clear that on the part of Petitioners there was neither dishonesty nor abuse of confidence in the
handling of money to the prejudice of PBC. Petitioners continually endeavored to meet their obligations, as shown by
several receipts issued by PBC acknowledging payment of the loan. Petitioners employed no artifice in dealing
with PBC and never did they evade payment of their obligation nor attempt to abscond. Instead, Petitioners
sought favorable terms precisely to meet their obligation.
Also noteworthy is the fact that Petitioners are not importers acquiring the goods for re-sale, contrary to the
express provision embodied in the trust receipt. They are contractors who obtained the fungible goods for their
construction project. At no time did title over the construction materials pass to the bank, but directly to the Petitioners
from CM Builders Centre. This impresses upon the trust receipt in question vagueness and ambiguity, which should
not be the basis for criminal prosecution in the event of violation of its provisions
The practice of banks of making borrowers sign trust receipts to facilitate collection of loans and place them under
the threats of criminal prosecution should they be unable to pay it may be unjust and inequitable, if not reprehensible.
Such agreements are contracts of adhesion which borrowers have no option but to sign lest their loan be disapproved.
The resort to this scheme leaves poor and hapless borrowers at the mercy of banks, and is prone to misinterpretation,
as had happened in this case. Eventually, PBC showed its true colors and admitted that it was only after collection of
the money, as manifested by its Affidavit of Desistance
Other Issues:
Petitioners have miserably failed to establish the second requisite of the rule on newly discovered evidence. Petitioners
themselves admitted that “they searched again their voluminous records, meticulously and patiently, until they
discovered this new and material evidence” only upon learning of the Court of Appeals’ decision and after they were
“shocked by the penalty imposed.” Clearly, the alleged newly discovered evidence is mere forgotten evidence that
jurisprudence excludes as a ground for new trial.
Dispositive Portion:
WHEREFORE, the challenged Decision of 6 March 1989 and the Resolution of 16 October 1989 of the Court
of Appeals in CA-G.R. No. 05408 are REVERSED and SET ASIDE. Petitioners are hereby ACQUITTED of the
crime charged, i.e., for violation of P.D. No. 115 in relation to Article 315 of the Revised Penal Code.

Colinares and Veloso V CA

Uploaded by

Copyright:

Available Formats

Colinares and Veloso V CA

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Colinares and Veloso V CA

Uploaded by

Copyright:

Available Formats

Colinares and Veloso v CA, GR No.

90828, 5 September 2000 (Gomez)

Lower Court Decisions:

You might also like