VOL.

339, SEPTEMBER 5, 2000

609

Colinares vs. Court of Appeals

G.R. No. 90828. September 5, 2000.

MELVTN COLINARES and LORDINO VELOSO, petitioners, vs.

HONORABLE COURT OF APPEALS, and THE PEOPLE OF
THE PHILIPPINES, respondents.
Actions; New Trial; The grant or denial of a motion for new trial rests
upon the discretion of the judge.The grant or denial of a motion for new
trial rests upon the discretion of the judge. New trial may be granted if: (1)
errors of law or irregularities have been committed during the trial
prejudicial to the substantial rights of the accused; or (2) new and material
evidence has been discovered which the accused could not with reasonable
diligence have discovered and produced at the trial, and which, if introduced
and admitted, would probably change the judgment.
Same; Same; Newly Discovered Evidence; It is essential that the
offering party exercise reasonable diligence in seeking to locate the
evidence before or during trial but nonetheless failed to secure it.For
newly discovered evidence to be a ground for new trial, such evidence must
be (1) discovered after trial; (2) could not have been discovered and
produced at the trial even with the exercise of reasonable diligence; and (3)
material, not merely cumulative, corroborative, or impeaching, and of such
weight that, if admitted, would probably change the judgment. It is essential
that the offering party exercised reasonable diligence in seeking to locate the
evidence before or during trial but nonetheless failed to secure it.
Same; Same; Same; Alleged newly discovered evidence which is mere
forgotten evidence is excluded as a ground for new trial.Petitioners could
not have been unaware that the two-page document exists. The Disclosure
Statement itself states, NOTICE TO BORROWER: YOU ARE
ENTITLED TO A COPY OF THIS PAPER WHICH YOU SHALL SIGN.
Assuming Petitioners copy was then unavailable, they could have
compelled its production in court, which they never did. 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.

________________
*

FIRST DIVISION.

610

610

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals

Criminal Law; Trust Receipts Law (P.D. 115); Words and Phrases;
Trust Receipt Transaction, Dened.Section 4, P.D. No. 115, the Trust
Receipts Law, denes a trust receipt transaction as any transaction by and
between a person referred to as the entruster, and another person referred to
as the entrustee, whereby the entruster who owns or holds absolute title or
security interest over certain specied goods, documents or instruments,
releases the same to the possession of the entrustee upon the latters
execution and delivery to the entruster of a signed document called a trust
receipt wherein the entrustee binds himself to hold the designated goods,
documents or instruments with the obligation to turn over to the entruster
the proceeds thereof to the extent of the amount owing to the entruster or as
appears in the trust receipt or the goods, documents or instruments
themselves if they are unsold or not otherwise disposed of, in accordance
with the terms and conditions specied in the trust receipt.
Same; Same; Estafa; 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 is punishable as estafa.There are two possible
situations in a trust receipt transaction. The rst 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.
Same; Same; Same; In a pure trust receipt transaction, the goods are
owned by the bank and only released to the importer in trust subsequent to
the grant of the loanthe bank acquires a security interest in the goods
as holder of a security title for the advances it had made to the entrustee; In

a certain manner, trust receipts partake of the nature of a conditional sale

where the importer becomes absolute owner of the imported merchandise as
soon as he has paid its price.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. This situation belies what normally obtains in a pure trust
611

VOL. 339, SEPTEMBER 5, 2000

611

Colinares vs. Court of Appeals

receipt transaction where goods are owned by the bank and only released to
the importer in trust subsequent to the grant of the loan. The bank acquires a
security interest in the goods as holder of a security title for the advances
it had made to the entrustee. The ownership of the merchandise continues to
be vested in the person who had advanced payment until he has been paid in
full, or if the merchandise has already been sold, the proceeds of the sale
should be turned over to him by the importer or by his representative or
successor in interest. To secure that the bank shall be paid, it takes full title
to the goods at the very beginning and continues to hold that title as his
indispensable security until the goods are sold and the vendee is called upon
to pay for them; hence, the importer has never owned the goods and is not
able to deliver possession. In a certain manner, trust receipts partake of the
nature of a conditional sale where the importer becomes absolute owner of
the imported merchandise as soon as he has paid its price.
Same; Same; The Trust Receipts Law does not seek to enforce the
payment of the loan, rather it punishes the dishonesty and abuse of
condence in the handling of money or goods to the prejudice of another.
The Trust Receipts Law does not seek to enforce payment of the loan,
rather it punishes the dishonesty and abuse of condence 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 condence 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.
Same; Same; The mala prohibita nature of the alleged offense
notwithstanding, intent as a state of mind was not proved to be present in
the situation of the accusedthey employed no artice in dealing with the
bank and never did they evade payment of their obligation nor attempt to
abscond.The Information charges Petitioners with intent to defraud and

misappropriating the money for their personal use. The mala prohibita
nature of the alleged offense notwithstanding, intent as a state of mind was
not proved to be present in Petitioners situation. Petitioners employed no
artice 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.
Same; Same; The fact that the accused are not importers acquiring the
goods for re-sale, contrary to the express provision embodied in the trust
receipt and at no time did the title pass to the bank impresses upon the
612

612

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals

trust receipt in question vagueness and ambiguity which should not be the
basis for criminal prosecution in the event of violation of its provisions.
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.
Same; Same; Banks and Banking; Contracts; Contracts of Adhesion;
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.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 Afdavit of Desistance.

PETITION for review on certiorari of a decision of the Court of

Appeals.
The facts are stated in the opinion of the Court.

Romualdo, Amado, Romualda and Associates Law Ofce for

petitioners.
The Solicitor General for the People.
DAVIDE, JR., C.J.:
In 1979 Melvin Colinares and Lordino Veloso (hereafter Petitioners)
were contracted for a consideration of P40,000 by the Carmelite
Sisters of Cagayan de Oro City to renovate the latters convent at
Camaman-an, Cagayan de Oro City.
On 30 October 1979, Petitioners obtained 5,376 SF Solatone
acoustical board 2x4x1/2, 300 SF tanguile Wood tiles 12x 12,
613

VOL. 339, SEPTEMBER 5, 2000

613

Colinares vs. Court of Appeals

260 SF Marcelo economy tiles and 2 gallons UMYLIN cement

1
adhesive from CM Builders Centre for the construction project. The
following day, 31 October 1979, Petitioners applied for a
2
commercial letter of credit with the Philippine Banking
Corporation, Cagayan de Oro City branch (hereafter PBC) in favor
3
of CM Builders Centre. PBC approved the letter of credit for
P22,389.80 to cover the full invoice value of the goods. Petitioners
4
signed a pro-forma trust receipt as security. The loan was due on 29
January 1980.
On 31 October 1979, PBC debited P6,720
from Petitioners
5
marginal deposit as partial payment
of the loan.
6
On 7 May 1980, PBC wrote to Petitioners demanding that the
amount be paid within seven days from notice. Instead of complying
with PBCs demand, Veloso confessed that they lost P19,195.83 in
the Carmelite Monastery Project and requested
for a grace period of
7
until 15 June 1980 to settle the account.
8
PBC sent a new demand letter to Petitioners on 16 October 1980
and informed them that their outstanding balance as of 179November
1979 was P20,824.40 exclusive of attorney s fees10of 25%.
On 2 December 1980, Petitioners proposed that the terms of
payment of the loan be modied as follows: P2,000 on or before 3
December 1980, and P1,000 per month starting 31 January 1980
until the account is fully paid. Pending approval of the proposal,
11
Petitioners paid P1,000 to PBC on12 4 December 1980,
and
13
thereafter P500 on 11 February 1981, 16 March 1981, and 20
April
_______________
1

Exhibit D, Original Record (OR), 115.

Exhibit A, Id., 112.

Exhibit B, OR, 113.

Exhibit C, Id., 114.

Exhibit 8-C, Id., 181.

Exhibit 4, Id., 160.

Exhibits 3, I, Id., 153.

Exhibit E, Id., 116.

Exhibit 5, Id., 161.

10

Exhibit F, Id., 117.

11

Exhibit 7, Id., 167.

12

Exhibit 7-A, Id., 168.

13

Exhibit 7-B, Id., 169.

614

614

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals
14

1981. Concurrently with the separate demand for attorneys fees by

PBCs legal counsel, PBC continued to demand payment of the
15
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 in an Information which was led with Branch
18, Regional Trial Court of Cagayan de Oro City. The accusatory
portion of the Information reads:
That on or about October 31, 1979, in the City of Cagayan de Oro,
Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused entered into a trust receipt agreement with the Philippine
Banking Corporation at Cagayan de Oro City wherein the accused, as
entrustee, received from the entruster the following goods to wit:
Solatone Acoustical board
Tanguile Wood Tiles
Marcelo Cement Tiles
Umylin Cement Adhesive
with a total value of P22,389.80, with the obligation on the part of the
accused-entrustee to hold the aforesaid items in trust for the entruster and/or
to sell on cash basis or otherwise dispose of the said items and to turn over
to the entruster the proceeds of the sale of said goods or if there be no sale to
return said items to the entruster on or before January 29, 1980 but that the
said accused after receipt of the goods, with intent to defraud and cause
damage to the entruster, conspiring, confederating together and mutually
helping one another, did then and there wilfully, unlawfully and feloniously
fail and refuse to remit the proceeds of the sale of the goods to the entruster
despite repeated demands but instead converted, misappropriated and
misapplied the proceeds to their own personal use, benet and gain, to the

damage and prejudice of the Philippine Banking Corporation, in the

aforesaid sum of P22,389.80, Philippine Currency.
Contrary to PD 115 in relation to Article 315 of the Revised Penal
16
Code.
________________
14

Exhibit 7-C, Id., 170.

15

Exhibit G, Id., 118.

16

OR, 33.
615

VOL. 339, SEPTEMBER 5, 2000

615

Colinares vs. Court of Appeals

The case was docketed as Criminal Case No. 1390.

During trial, petitioner Veloso insisted that the transaction was a
clean loan as per verbal guarantee of Cayo Garcia Tuiza, PBCs
former manager. He and petitioner Colinares signed the documents
without reading the ne 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
17
formality.
18
On 7 July 1986, the trial court promulgated its decision
convicting Petitioners of estafa for violating P.D. No. 115 in relation
to Article 315 of the Revised Penal Code and sentencing each of
them to suffer imprisonment of two years and one day of prision
correccional as minimum to six years and one day of prision mayor
as maximum, and to solidarity indemnify PBC the amount of
P20,824.44, with legal interest from 29 January 1980, 12% penalty
charge per annum, 25% of the sums due as attorneys fees, and costs.
The trial court considered the transaction between PBC and
Petitioners as a trust receipt transaction under Section 4, P.D. No.
115. It considered Petitioners use of the goods in their Carmelite
monastery project an act of disposing as contemplated
under
19
Section 13, P.D. No. 115, and treated the charge invoice for goods
issued by CM Builders Centre as a document within the meaning
of Section 3 thereof. It concluded that the failure of Petitioners to
turn over the amount they owed to PBC constituted estafa.
Petitioners appealed from the judgment to the Court of Appeals
which was docketed as CA-G.R. CR No. 05408. Petitioners asserted
therein that the trial court erred in ruling that they violated the Trust
Receipt Law, and in holding them criminally liable therefor. In the
alternative, they contend that at most they can only be made civilly
liable for payment of the loan.
________________

17

TSN, 21 May 1986, 21-22, 30.

18

Per Judge Senen C. Pearanda. Rollo 12-17.

19

Exhibit D, supra note 1.

616

616

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals
20

In its decision 6 March 1989, the Court of Appeals modied the

judgment of the trial court by increasing the penalty to six years and
one day of prision mayor as minimum to fourteen years eight
months and one day of reclusion temporal as maximum. It held that
the documentary evidence of the prosecution prevails over Velosos
testimony, discredited Petitioners claim that the documents they
signed were in blank, and disbelieved that they were coerced into
signing them.
On 25 March 1989,
Petitioners led a Motion for New
21
Trial/Reconsideration alleging
that the Disclosure Statement on
22
Loan/Credit Transaction (hereafter Disclosure Statement) signed
by them and Tuiza was suppressed by PBC during the trial. That
document would have proved that the transaction was indeed a loan
as it bears a 14% interest as opposed to the trust receipt which does
not at all bear any interest. Petitioners further maintained that when
PBC allowed them to pay in installment, the agreement was novated
and a creditor-debtor23relationship was created.
In its resolution of 16 October 1989 the Court of Appeals
denied the Motion for New Trial/Reconsideration because the
alleged newly discovered evidence was actually forgotten evidence
already in existence during the trial, and would not alter the result of
the case.
Hence, Petitioners led with us the petition in this case on 16
November 1989. They raised the following issues:
1. WHETHER OR NOT THE DENIAL OF THE MOTION
FOR NEW TRIAL ON THE GROUND OF NEWLY
DISCOVERED EVIDENCE, NAMELY, DISCLOSURE
ON LOAN/CREDIT TRANSACTION, WHICH IF
INTRODUCED AND ADMITTED, WOULD CHANGE
THE JUDGMENT, DOES NOT CONSTITUTE A
DENIAL OF DUE PROCESS.
2. ASSUMING THERE WAS A VALID TRUST RECEIPT,
WHETHER OR NOT THE ACCUSED WERE
PROPERLY CHARGED,
________________

20

Annex A Petition, Rollo, 3-10. Per Imperial, J., J., with the concurrence of

Puno, R. and Francisco, C, JJ.

21

Rollo, 27-39.

22

Id., 177-178.

23

Id., 45.
617

VOL. 339, SEPTEMBER 5, 2000

617

Colinares vs. Court of Appeals

TRIED AND CONVICTED FOR VIOLATION OF SEC.

13, PD NO. 115 IN RELATION TO ARTICLE 315
PARAGRAPH (I) (B) NOTWITHSTANDING THE
NOVATION OF THE SO-CALLED TRUST RECEIPT
CONVERTING
THE
TRUSTOR-TRUSTEE
RELATIONSHIP TO CREDITORDEBTOR SITUATION.
In its Comment of 22 January 1990, the Ofce of the Solicitor
General urged us to deny the petition for lack of merit.
On 28 February 1990 Petitioners led a Motion to Dismiss the
case on the ground that they had already fully paid PBC on 2
February 1990 the amount of P70,000 for the balance of the loan,
including interest and other
charges, as evidenced by the different
24
receipts issued
by PBC, and that the PBC executed an Afdavit of
25
desistance.
We required the Solicitor General to comment on the Motion to
Dismiss.
In its Comment of 30 July 1990, the Solicitor General opined that
payment of the loan was akin to a voluntary surrender or plea of
guilty which merely serves to mitigate Petitioners culpability, but
does not in any way extinguish their criminal liability.
In the Resolution of 13 August 1990, we gave due course to the
Petition and required the parties to le their respective memoranda.
The parties subsequently led their respective memoranda.
It was only on 18 May 1999 when this case was assigned to the
ponente. Thereafter, we required the parties to move in the premises
and for Petitioners to manifest if they are still interested in the
further prosecution of this case and inform us of their present
whereabouts and whether their bail bonds are still valid.
Petitioners submitted their Compliance.
The core issues raised in the petition are the denial by the Court
of Appeals of Petitioners Motion for New Trial and the true nature
of the contract between Petitioners and the PBC. As to the latter,
________________
24

Rollo, 127.

25

Id., 128.
618

618

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals

Petitioners assert that it was an ordinary loan, not a trust receipt

agreement under the Trust Receipts Law.
The grant or denial of a motion for new trial rests upon the
discretion of the judge. New trial may be granted if: (1) errors of law
or irregularities have been committed during the trial prejudicial to
the substantial rights of the accused; or (2) new and material
evidence has been discovered which the accused could not with
reasonable diligence have discovered and produced at the trial, and
which, if 26introduced and admitted, would probably change the
judgment.
For newly discovered evidence to be a ground for new trial, such
evidence must be (1) discovered after trial; (2) could not have been
discovered and produced at the trial even with the exercise of
reasonable diligence; and (3) material, not merely cumulative,
corroborative, or impeaching, and of such
weight that, if admitted,
27
would probably change the judgment. It is essential that the
offering party exercised reasonable diligence in seeking to locate28the
evidence before or during trial but nonetheless failed to secure it.
We nd no indication in the pleadings that the Disclosure
Statement is a newly discovered evidence.
Petitioners could not have been unaware that the two-page
document exists. The Disclosure Statement itself states, NOTICE
TO BORROWER: YOU ARE ENTITLED29 TO A COPY OF THIS
PAPER WHICH YOU SHALL SIGN. Assuming Petitioners
copy was30 then unavailable, they could have compelled its production
in court, which they never did. Petitioners have miserably failed to
establish the second requisite of the rule on newly discovered
evidence.
________________
26

Section 2, Rule 121, Revised Rules of Criminal Procedure.

27

See People v. Excija, 258 SCRA 424, 443 [1996]; People v. Tirona, 300 SCRA

431, 440 [1998]; Villanueva v. People, G.R. No. 135098, 12 April 2000, 7, 330 SCRA
695.
28

Tumang v. Court of Appeals, et al., 172 SCRA 328, 334 [1989]. See Garrido v.

CA, et al., 236 SCRA 450, 456 [1994].

29

Rollo, 178.

30

People v. Ducay, et al., 225 SCRA 1 [1993].

619

VOL. 339, SEPTEMBER 5, 2000

619

Colinares vs. Court of Appeals

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
31
penalty imposed. Clearly, the alleged newly discovered evidence
is mere forgotten
evidence that jurisprudence excludes as a ground
32
for new trial.
However, the second issue should be resolved in favor of
Petitioners.
Section 4, P.D. No. 115, the Trust Receipts Law, denes a trust
receipt transaction as any transaction by and between a person
referred to as the entruster, and another person referred to as the
entrustee, whereby the entruster who owns or holds absolute title or
security interest over certain specied goods, documents or
instruments, releases the same to the possession of the entrustee
upon the latters execution and delivery to the entruster of a signed
document called a trust receipt wherein the entrustee binds
himself to hold the designated goods, documents or instruments with
the obligation to turn over to the entruster the proceeds thereof to the
extent of the amount owing to the entruster or as appears in the trust
receipt or the goods, documents or instruments themselves if they
are unsold or not otherwise disposed of, in accordance with the
terms and conditions specied in the trust receipt.
There are two possible situations in a trust receipt transaction.
The rst 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
33
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 Arti________________
31

Motion for New Trial/Reconsideration; Rollo, 28.

32

People v. Hernando, et al., 108 SCRA 121 [1981]; People v. Ducay, supra note

30; People v. Penones, 200 SCRA 624 [1994].

33

People v. Cuevo, 104 SCRA 312, 318 [1981].

620

620

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals

34

cle 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.
This situation belies what normally obtains in a pure trust receipt
transaction where goods are owned by the bank and only released to
the importer in trust subsequent to the grant of the loan. The bank
acquires a security interest in the goods as holder
of a security title
35
for the advances it had made to the entrustee. The ownership of the
merchandise continues to be vested in the person who had advanced
payment until he has been paid in full, or if the merchandise has
already been sold, the proceeds of the sale should be turned over to
him by the importer or by his representative or successor in
36
interest. To secure that the bank shall be paid, it takes full title to
the goods at the very beginning and continues to hold that title as his
indispensable security until the goods are sold and the vendee is
called upon to pay for them; hence, the importer
has never owned
37
the goods and is not able to deliver possession. In a certain manner,
trust receipts partake of the nature of a conditional sale where the
importer becomes absolute owner of the imported merchandise as
38
soon as he has paid its price.
_______________
34

Section 13, P.D. No. 115.

35

Vintola v. IBAA, 150 SCRA 578, 583 [1987].

36

Prudential Bank v. NLRC, 251 SCRA 421 [1995], quoting National Bank v.

Vda. de Hijos de Angel Jose, 63 Phil. 814, 821 [1936].

37

People v. Yu Chai Ho, 53 Phil. 874 [1928], quoting In re: Dunlap Carpet Co.,

207 Fed. 726.

38

Prudential Bank v. NLRC, supra note 36.

621

VOL. 339, SEPTEMBER 5, 2000

621

Colinares vs. Court of Appeals

Trust receipt transactions are intended to aid in nancing importers

and retail dealers who do not have sufcient funds or resources to
nance the importation or purchase of merchandise, and who may

not be able to acquire credit except through utilization, as collateral,

39
of the merchandise imported or purchased.
The antecedent acts in a trust receipt transaction consist of the
application and approval of the letter of credit, the making of the
marginal deposit and the
effective importation of goods through the
40
efforts of the importer.
PBC attempted to cover up the true delivery date of the
merchandise, yet the trial court took notice even though it failed to
attach any signicance to such fact in the judgment. Despite the
Court of Appeals contrary view that the goods were delivered to
Petitioners previous to the execution of the letter of credit and trust
receipt, we nd that the records of the case speak volubly and this
fact remains uncontroverted. It is not uncommon for us to peruse
through the transcript of the stenographic notes of the proceedings to
be satised that the records of the case do support the conclusions of
41
the trial court. After such perusal Grego Mutia, PBCs credit
investigator, admitted thus:
ATTY. CABANLET: (continuing)
Q Do you know if the goods subject matter of this letter of credit
and trust receipt agreement were received by the accused?
A Yes, sir.
Q Do you have evidence to show that these goods subject matter of
this letter of credit and trust receipt were delivered to the
accused?
A Yes, sir.
Q I am showing to you this charge invoice, are you referring to this
document?
A Yes, sir.
_______________
39

Ceferina Samo v. People, 115 Phil. 346, 349-350; 5 SCRA 354, 356357, [1962],

citing 53 Am Jur. 961. See also Prudential Bank v. NLRC, supra note 36.
40

Sia v. People, 121 SCRA 655 [1983].

41

People v. Vergara, et al., 270 SCRA 624 [1997].

622

622

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals

xxx
Q What is the date of the charge invoice?
A October 31, 1979.

COURT:

Make it of record as appearing in Exhibit D, the zero in 30 has

42
been superimposed with numeral 1.

During the cross and re-direct examinations he also impliedly

admitted that the transaction was indeed a loan. Thus:
Q In short the amount stated in your Exhibit C, the trust receipt was
a loan to the accused you admit that?
A Because in the bank the loan is considered part of the loan.

xxx

RE-DIRECT BY ATTY. CABANLET.

ATTY. CABANLET (to the witness)
Q What do you understand by loan when you were asked?
A Loan is a promise of a borrower from the value received. The
borrower will pay the bank on a certain specied date with
43
interest

Such statement is akin to an admission against interest binding upon

PBC
Petitioner Velosos claim that they were made to believe that the
transaction was a loan was also not denied by PBC. He declared:
Q Testimony was given here that that was covered by trust receipt.
In short it was a special kind of loan. What can you say as to
that?
A I dont think that would be a trust receipt because we were made
to understand by the manager who encouraged us to avail of their
44
facilities that they will be granting us a loan

PBC could have presented its former bank manager, Cayo Garcia
Tuiza, who contracted with Petitioners, to refute Velosos testimony,
yet it only presented credit investigator Grego Mutia. No_______________
42

TSN, 18 December 1986, 10-11.

43

Id., 21-22.

44

TSN, 21 May 1986, 3-4.

623

VOL. 339, SEPTEMBER 5, 2000

Colinares vs. Court of Appeals

623

where from Mutias testimony can it be gleaned that PBC

represented to Petitioners that the transaction they were entering into
was not a pure loan but had trust receipt implications.
The Trust Receipts Law does not seek to enforce payment of the
loan, rather it punishes the dishonesty and abuse of condence in the
handling of money or goods to the45 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
condence 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.
The Information charges Petitioners with intent to defraud and
misappropriating the money for their personal use. The mala
prohibita nature of the alleged offense notwithstanding, intent as a
state of mind was not proved to be present in Petitioners situation.
Petitioners employed no artice 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
46
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
_______________
45

People v. Nitafan, et al., 207 SCRA 726 [1992].

46

Sia v. People, supra note 40.

624

624

SUPREME COURT REPORTS ANNOTATED

Colinares vs. Court of Appeals

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 Afdavit of Desistance.
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.
No costs.
SO ORDERED.
Kapunan and Pardo, JJ., concur.
Puno, J., No part.
Ynares-Santiago, J., On leave.
Judgment reversed and set aside. Petitioners acquitted.
Notes.At the pith of the requirements for newly discovered
evidence as ground for new trial is that what is essential is that the
offering party had exercised reasonable diligence in producing or
locating such evidence before or during trial but had nonetheless
failed to secure it. (Garrido vs. Court of Appeals, 236 SCRA 450
[1994])
An afdavit of desistance can not be said to be newly discovered
evidence. (People vs. Delabajan, 280 SCRA 696 [1997])
o0o
625

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