Gonzalez vs. Hongkong & Shanghai Banking Corporation

A violation of the Trust Receipts Law (P.D. 115) is malum prohibitum, such that mere failure to deliver the proceeds of the sale or the goods themselves constitutes estafa under Article 315(1)(b) of the Revised Penal Code without need of proving intent to defraud.

Jose Antonio U. Gonzalez, as Chairman and Chief Executive Officer of Mondragon Leisure and Resorts Corporation (MLRC), owner and operator of Mimosa Leisure Estate, signed two Trust Receipt Agreements on 1 August 1997 in favor of Hongkong & Shanghai Banking Corporation (HSBC). Trust Receipt No. 001-016310-205 covered various golfing equipments valued at HK$85,540.00, due on 1 September 1997, while Trust Receipt No. 001-016310-206 covered assorted Walt Disney items valued at HK$143,993.90, due on 28 January 1998. Both receipts explicitly stated that the goods and proceeds were held in trust for HSBC and were governed by P.D. 115. When the due dates lapsed without payment or return of the goods, HSBC sent a demand letter on 28 March 2000 requiring the turnover of the proceeds or the merchandise. MLRC failed to comply with the demand.

• The Trust Receipt Transactions: On 1 August 1997, Gonzalez, representing MLRC, executed Trust Receipt No. 001-016310-205 for golfing equipments (HK$85,540.00, due 1 September 1997) and Trust Receipt No. 001-016310-206 for assorted Walt Disney items (HK$143,993.90, due 28 January 1998) in favor of HSBC. The receipts bound MLRC to hold the goods and proceeds in trust for HSBC and to turn over the proceeds immediately upon sale or return the goods if unsold.
• Default and Demand: The trust receipts matured without MLRC turning over the proceeds or returning the goods. On 28 March 2000, HSBC, through its Credit Control Department Vice-President, formally demanded the turnover of the sale proceeds or the return of the goods.
• Criminal Complaint: Following MLRC's failure to heed the demand, HSBC filed a complaint-affidavit charging Gonzalez with estafa under P.D. 115 in relation to Art. 315(1)(b) of the RPC, alleging he failed to remit a single centavo of the proceeds or return any of the goods.
• Petitioner's Defense: In his counter-affidavit, Gonzalez maintained he merely performed valid corporate acts and should not be held personally liable absent fault or negligence. He claimed the transactions were actually loan agreements rather than trust receipt transactions, and that Best Price PX, Inc. was the real debtor. He attributed MLRC's inability to pay to the Asian economic crisis and the unlawful closure of the Mimosa Regency Casino by CDC and PAGCOR, asserting that MLRC was not in default due to these fortuitous events. He argued that mere failure to pay does not constitute estafa without proof of misappropriation or conversion to personal use.

• Elements of Estafa: Petitioner argued that P.D. 115 must be read in conjunction with Article 315(1)(b) of the Revised Penal Code, which requires proof that the person charged misappropriated, misused, or converted the proceeds or goods to his own personal use to the damage of the entruster. Mere failure to pay the amounts covered by the trust receipts does not conclusively constitute estafa.
• Absence of Probable Cause: Petitioner maintained that no probable cause existed because the real transaction was a loan agreement, not a trust receipt transaction, and Best Price PX, Inc. was the actual debtor. Holding a high position in MLRC was insufficient reason to charge him absent a clear showing of personal fault or negligence.

• Signing as Basis for Liability: Respondent countered that petitioner is criminally liable since he signed the trust receipts.
• Nature of the Offense: Respondent argued that fraud is unnecessary for conviction under the Trust Receipts Law because the violation is malum prohibitum.
• Inexcusability of Failure: Respondent asserted that the Asian currency crisis and the casino closure do not excuse non-compliance, emphasizing that the goods covered (Disney items and golf equipment) are typically paid in cash upon receipt by buyers, and if unsold, the merchandise should still be with MLRC, leaving no reason for the failure to turn over proceeds or return the goods.

• Probable Cause: Whether there is probable cause to hold petitioner liable to stand trial for violation of P.D. 115 in relation to Art. 315(1)(b) of the RPC.
• Nature of Trust Receipt Violation: Whether intent to defraud or personal misappropriation must be proved to establish a violation of P.D. 115.
• Corporate Officer Liability: Whether a corporate officer who signed a trust receipt on behalf of a corporation can be held criminally liable under P.D. 115.

• Probable Cause: Probable cause was properly found by the City Prosecutor and affirmed by the DOJ and the Court of Appeals. The executive determination of probable cause was not tainted by grave abuse of discretion, being supported by the trust receipts bearing petitioner's signature, official transaction documents, the demand letter, and petitioner's admission in his counter-affidavit of entering into the trust receipt transaction. Defenses regarding the true nature of the transaction or the identity of the real debtor are evidentiary matters best left to the trial court.
• Nature of Trust Receipt Violation: The offense punished under P.D. 115 is malum prohibitum. A mere failure to deliver the proceeds of the sale or the goods if unsold constitutes a criminal offense, causing prejudice not only to another but to the public interest, without need of proving intent to defraud.
• Corporate Officer Liability: A corporate officer who signed the trust receipts cannot avoid criminal responsibility under P.D. 115. Section 13 of the law explicitly imposes the penalty upon the directors, officers, employees, or other officials responsible for the offense when committed by a corporation, as they are vested with the authority to ensure compliance. Furthermore, a corporation cannot be imprisoned, necessitating the imposition of the penalty on the responsible natural persons.

• Probable Cause — The existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. It merely binds over the suspect to stand trial and is not a pronouncement of guilt.
• Non-Interference in Prosecutorial Discretion — Courts consistently adhere to the policy of non-interference in the conduct of preliminary investigations, leaving to the investigating prosecutor sufficient latitude of discretion in determining what constitutes sufficient evidence for probable cause. The determination may only be reviewed via certiorari if the prosecutor exercised power in an arbitrary and despotic manner by reason of passion or personal hostility, amounting to an evasion of the duty enjoined or a unilateral refusal to perform it.
• Malum Prohibitum in Trust Receipts Law — A violation of P.D. 115 is malum prohibitum. The mere failure of an entrustee to turn over the proceeds of the sale or to return the goods if unsold, upon demand, constitutes estafa under Art. 315(1)(b) of the RPC without need of proving intent to defraud or personal misappropriation.

• "The offense punished under Presidential Decree No. 115 is in the nature of malum prohibitum. A mere failure to deliver the proceeds of the sale or the goods if not sold, constitutes a criminal offense that causes prejudice not only to another, but more to the public interest."
• "The failure of an entrustee to turn over the proceeds of the sale of the goods, documents or instruments covered by a trust receipt to the extent of the amount owing to the entruster or as appears in the trust receipt or to return said goods, documents or instruments if they were not sold or disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa, punishable under the provisions of Article Three Hundred Fifteen, paragraph one (b) of Act Numbered Three Thousand Eight Hundred Fifteen, as amended, otherwise known as the Revised Penal Code."

• People v. Nitafan, G.R. Nos. 81559-60, 6 April 1992 — Followed. Established that violation of P.D. 115 is malum prohibitum, where mere failure to deliver proceeds or goods constitutes a criminal offense causing prejudice to the public interest.
• Colinares v. Court of Appeals, 394 Phil. 106 (2000) — Followed. Held that failure of the entrustee to turn over the proceeds or return the goods is punishable as estafa without need of proving intent to defraud.
• Ching v. Secretary of Justice, G.R. No. 164317, 6 February 2006 — Followed. Cited for the rationale that corporate officers are held criminally accountable because they are vested with the authority and responsibility to devise means necessary to ensure compliance with the law.
• Ong v. Court of Appeals, 449 Phil. 691 (2003) — Followed. Cited for the principle that a corporation cannot be arrested and imprisoned; hence, the penalty for violation of P.D. 115 must be imposed upon the responsible natural persons.

• Section 4, Presidential Decree No. 115 (Trust Receipts Law) — Defines a trust receipt transaction as one where the entruster releases goods, documents, or instruments to the entrustee upon execution of a trust receipt, binding the entrustee to hold the same in trust for the entruster and to turn over the proceeds of the sale or return the goods if unsold. Applied to characterize the transaction between MLRC and HSBC.
• Section 13, Presidential Decree No. 115 (Trust Receipts Law) — Provides the penalty clause, stating that the failure of an entrustee to turn over the proceeds or return the goods constitutes estafa under Art. 315(1)(b) of the RPC. Further provides that if the violation is committed by a corporation, the penalty shall be imposed upon the directors, officers, employees, or other officials responsible for the offense. Applied to hold petitioner liable despite his acting as a corporate officer.
• Article 315(1)(b), Revised Penal Code — Punishes estafa committed with unfaithfulness or abuse of confidence, specifically by misappropriating or converting money, goods, or personal property received in trust or under obligation to make delivery of or to return the same. Applied in conjunction with P.D. 115 to characterize the criminal offense.

Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, Antonio Eduardo B. Nachura, Ruben T. Reyes