Sarmiento v Court of Appeals

FACTS: Davao Libra opened Letter of Credit with plaintiff bank in favor of LS Parts for purchase of
assorted scrap irms for 495,000 thousand. Davao Libra then executed Trust receipt. Davao Libra
defaulted in their payment so ABC sued them for violation of Trust Receipts law. Davao Libra argued
that it was not liable under TR because scrap metal sunk with its carrier while in transship. RTC
rendered judgement in favor of Associated Banking Corporation.

ISSUE: Whether or not accused can be held civilly liable on a separate action than criminal.

HELD: The entruster’s complaint in the civil case against the entrustee was based on the failure of the
latter to comply with his obligation as spelled out in the TR agreement. This breach of obligation is
separate and distinct from any criminal liability for misuse and misappropriation of good or proceeds
realized from the sale of goods, documents or instruments released under trust receipts under PD 115.
Being based on obligation ex contractu and not ex delicto, the civil action may proceed independently of
the criminal proceedings instituted against petitioners regardless of the result of the later.