Bar Q and A #53

GCash Donate

Gcash Donate

Collapsable Answer Just click the plus sign in the right side.

1.) Is lack of intent to defraud a bar to the prosecution of these acts or omissions?

NO. Lack of intent to defraud is immaterial to the prosecution for estafa under Trust Receipts Law. The mere failure to account or to return gives rise the crime which is a malum prohibitum.

Textbox

2.) Mars Trading, Inc. (MT) imported various construction materials from Japan, under a letter of credit-trust receipt (LC/TR) line provided by Filipinas Bank. When the goods arrived in Manila, the same were released to MTI upon the latter’s execution of a trust receipt whereby MTI undertook to hold the goods in trust for the bank. The trust receipt further provided that upon sale of the goods, the entrustee (MTI) will turn over the proceeds of the sale to the entrusting bank to the extent of the amount of U.S. $100,000 owed by MTI to the bank on account of its importation, which amount shall be paid in Philippine currency based on the rate of exchange prevailing at the time of payment. MTI sold the goods 6 months later, during which the time the peso-dollar rate of exchange deteriorated substantially. MTI refused to pay Filipinas Bank contending that: a. The trust receipt stipulation to pay the peso equivalent of $100,000 violated the Uniform Currency Act, rendering the trust receipt void, and b. Assuming arguendo that such stipulations were enforceable, MIT should pay only on the basis of the rate of exchange prevailing on the date when the goods were released. Decide with reasons.

a. MIT is liable since only the stipulation requiring payment on foreign currency is violative of the Uniform Currency Act. The obligation itself under the law subsists, which can be discharged by a payment in Philippine currency.

b. The basis of payment would be the rate of exchange prevailing at the time of payment since the obligation was incurred in foreign currency. Had the obligation been incurred in Philippine currency then the rate of exchange at the time the obligation was incurred would have been the basis of payment.

Textbox

3.) CCC Car, Inc. obtained a loan from BBB Bank, which fund was used to import ten (10) units of Mercedes Benz S class vehicles. Upon arrival of the vehicles and before release of said vehicles to CCC Car, Inc., X and Y, the President and Treasurer, respectively, of CCC Car, Inc. signed the Trust Receipt to cover the value of the ten (10) units of Mercedes Benz S class vehicles after which, the vehicles were all delivered to the Car display room of CCC Car, Inc. Sale of the vehicles were slow, and it took a month to dispose of the ten (10) units. CCC Car, Inc. wanted to be in business and to save on various documentations required by the bank, decided that instead of turning over the proceeds of the sales, CCC Car, Inc. used the proceeds to buy another ten (10) units of BMW 3 series. Is the action of CCC Car, Inc. legally justified? Explain your answer.

NO. It is the obligation of the entrustee, CCC Car, Inc. to receive the proceeds of the sale of the goods covered by the trust receipts in trust for the entruster and to turn over the same to him to the extent of the obligation. (Sec. 4, Trust Receipts Law)

Textbox

4.) Will the corporate officers of CCC Car, Inc. be held liable under the circumstances? Explain your answer.

YES. Failure of the entrustee to turn over the proceeds of the sale of the goods shall constitute the crime of estafa. If the violation is committed by a juridical entity, the penalty shall be imposed upon the directors, officers, employees or other officials or persons therein responsible for the offense, without prejudice to the civil liabilities arising from the criminal offense. Hence, the corporate officers are criminally liable for the violation of the law being the human agent responsible for the same. (Sec. 13, Trust Receipts Law)

Textbox

5.) Tom Cruz obtained a loan of P1M from XYZ Bank to finance his purchase of 5,000 bags of fertilizer. He executed a trust receipt in favor of XYZ Bank over the 5,000 bags of fertilizer. Tom Cruz withdrew the 5,000 bags from the warehouse to be transported to Lucena City where his store is located. On the way, armed robbers took from Tom Cruz the 5,000 bags of fertilizer. Tom Cruz now claims that his obligation to pay the loan to XYZ Bank is extinguished because the loss was not due to his fault. Is Tom Cruz correct? Explain.

Tom Cruz is not correct in contending that his obligation to pay the loan to XYZ Bank is extinguished. Sec. 10 of P.D. 115, Trust Receipts Law, provides that the loss of goods, documents or instruments which are the subject of a trust receipt, pending their disposition, irrespective of whether or not it was due to the fault or negligence of the entrustee, shall not extinguish his obligation to the entruster for the value thereof. Therefore, the entrustee cannot be relieved of their obligation to pay the loan in favor the bank.

Textbox

6.) Mr. Noble, as the President of ABC Trading, Inc., executed a trust receipt in favor of BPI Bank to secure the importation by his company of certain goods. After release and sale of the imported goods, the proceeds from the sale were not turned over to BPI. Would BPI be justified in filing a case for estafa against Noble?

BPI would be justified in filing a case for estafa under PD 115 against Noble. The fact that the trust receipt issued in favor of a bank, instead of a seller, to secure the importation of the goods did not preclude the application of the Trust Receipts Law (PD 115). Under the law, any officer or employee of a corporation responsible for the violation of a trust receipt is subject to the personal liability thereunder.

Textbox

7.) Alex deposited goods for which Billy, warehouseman, issued a negotiable warehouse receipt wherein the goods were deliverable to Alex or order. Alex negotiated the receipt to Caloy. Thereafter, Dario, a creditor secured judgment against Alex and served notice of levy over the goods on the warehouseman. a. To whom should the warehouseman deliver goods upon demand? b. Would your answer be the same if the warehouseman issued a non-negotiable warehouse receipt?

a. Billy should deliver the goods to Caloy. Under the Warehouse Receipts Act, the goods covered by the negotiable receipt cannot be attached or levied upon directly by the creditor. The creditor must resort to attaching or levying the receipt itself, not the goods, while in the possession of the debtor, Alex. Since Alex has already negotiated it to Caloy, Dario cannot anymore attach or levy the goods under the warehouse receipt.

b. A non-negotiable warehouse receipt is transferred thru simple assignment. Since Alex negotiated it instead of having it assigned, the conveyance of the warehouse receipt to Caloy is not valid; hence, Alex is still the owner of the said goods. Dario could now attach or levy the goods.

Textbox

8.) Jojo deposited several cartons of goods with SN Warehouse Corporation. The corresponding warehouse receipt was issued to the order of Jojo. He endorsed the warehouse receipt to EJ who paid the value of goods deposited. Before EJ could withdraw the goods, Melchor informed SN Warehouse Corporation that the goods belonged to him and were taken by Jojo without his consent. Melchor wants to get the goods, but EJ also wants to withdraw the same. a. Who has a better right to the goods? Why? b. If SN Warehouse Corporation is uncertain as to who is entitled to the property, what is the proper recourse of the corporation? Explain.

a. EJ has better right to the goods. The goods are covered by a negotiable warehouse receipt which was indorsed to EJ for value. The negotiation to EJ was not impaired by the fact that Jojo took the goods without the consent of Melchor, as EJ had no notice of such fact. Moreover, EJ is in possession of the warehouse receipt and only he can surrender it to the warehouseman. (Sec. 8, Warehouse Receipts Law)

b. Under the Sec. 17 of Act 2137, Warehouse Receipt Law, SN Warehouse Corporation may file an action for interpleader and implead EJ and Melchor to determine who is entitled to the said goods.

Textbox

9.) S stored hardware materials in the bonded warehouse of W, a licensed warehouseman under the General Bonded Warehouse Law (Act 3893 as amended). W issued the corresponding warehouse receipt in the form he ordinarily uses for such purpose in the course of his business. All the essential terms required under Section 2 of the Warehouse Receipts Law (Act 2137 as amended) are embodied in the form. In addition, the receipt issued to S contains a stipulation that W would not be responsible for the loss of all or any portion of the hardware materials covered by the receipt even if such loss is caused by the negligence of W or his representatives or employees. S endorsed and negotiated the warehouse receipt to B, who demanded delivery of the goods. W could not deliver because the goods were nowhere to be found in his warehouse. He claims he is not liable because of the free-from-liability clause stipulated in the receipt. Do you agree with W’s contention? Explain.

NO. I do not agree with the contention of W. the stipulation that W would not be responsible for the loss of all or any portion of the hardware materials covered by the receipt even if such loss is caused by the negligence of W or his representative or employees is void. The law requires that a warehouseman should exercise due diligence in the care and custody of the things deposited in his warehouse.

Textbox

10.) A Warehouse Company received for safekeeping 1000 bags of rice from a merchant. To evidence the transaction, the Warehouse Company issued a receipt expressly providing that the goods be delivered to the order of said merchant. A month after, a creditor obtained judgment against the said merchant for a sum of money. The sheriff proceeded to levy on the rice and directed the Warehouse Company to deliver to him the deposited rice. a. What advice will you give the Warehouse Company? Explain your answer. b. Assuming that a week prior to the levy, the receipt was sold to a rice mill on the basis of which it filed a claim with the sheriff. Would the rice mill have better rights to the rice than the creditor? Explain your answer.

a. The 1000 bags of rice were delivered to the Warehouse Company by a merchant, and a negotiable receipt was issued therefore. The rice cannot thereafter, while in possession of the Warehouse Company, be attached by garnishment or otherwise, or be levied upon under an execution unless the receipt be first surrendered to the warehouseman, or its negotiation enjoined. The Warehouse Company cannot be compelled to deliver the actual possession of the rice until the receipt is surrendered to it or impounded by the court.

b. YES. The rice mill, as a holder for value of the receipt, has a better right to the rice than the creditor. It is rice mill that can surrender the receipt which is in its possession and can comply with the other requirements which will oblige the warehouseman to deliver the rice, namely, to sign a receipt for the delivery of the rice, and to pay the warehouseman’s lien and fees and other charges.

Textbox