TodayisTuesday,September27,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION
G.R.No.179901April14,2008
BANCODEOROEPCI,INC.,*petitioner,
vs.
JAPRLDEVELOPMENTCORPORATION,RAPIDFORMINGCORPORATIONandJOSEU.AROLLADO,
respondents.
DECISION
CORONA,J.:
Thispetitionforreviewoncertiorari1seekstosetasidethedecision2oftheCourtofAppeals(CA)inCAG.R.SP
No.95659anditsresolution3denyingreconsideration.
AfterevaluatingthefinancialstatementsofrespondentJAPRLDevelopmentCorporation(JAPRL)forfiscalyears
1998, 1999 and 2000,4 petitioner Banco de OroEPCI, Inc. extended credit facilities to it amounting to
P230,000,0005onMarch28,2003.RespondentsRapidFormingCorporation(RFC)andJoseU.Arolladoacted
asJAPRL'ssureties.
Despite its seemingly strong financial position, JAPRL defaulted in the payment of four trust receipts soon after
theapprovalofitsloan.6PetitionerlaterlearnedfromMRMManagement,JAPRL'sfinancialadviser,thatJAPRL
hadalteredandfalsifieditsfinancialstatements.Itallegedlybloateditssalesrevenuestopostabigincomefrom
operations for the concerned fiscal years to project itself as a viable investment.7 The information alarmed
petitioner. Citing relevant provisions of the Trust Receipt Agreement,8 it demanded immediate payment of
JAPRL'soutstandingobligationsamountingtoP194,493,388.98.9
SPProc.No.Q03064
OnAugust30,2003,JAPRL(anditssubsidiary,RFC)filedapetitionforrehabilitationintheRegionalTrialCourt
(RTC) of Quezon City, Branch 90 (Quezon City RTC).10 It disclosed that it had been experiencing a decline in
salesforthethreeprecedingyearsandastaggeringlossin2002.11
Becausethepetitionwassufficientinformandsubstance,astayorder12wasissuedonSeptember28,2003.13
However,theproposedrehabilitationplanforJAPRLandRFCwaseventuallyrejectedbytheQuezonCityRTCin
anorderdatedMay9,2005.14
CivilCaseNo.03991
BecauseJAPRLignoreditsdemandforpayment,petitionerfiledacomplaintforsumofmoneywithanapplication
for the issuance of a writ of preliminary attachment against respondents in the RTC of Makati City, Branch 145
(Makati RTC) on August 21, 2003.15 Petitioner essentially asserted that JAPRL was guilty of fraud because it
(JAPRL)alteredandfalsifieditsfinancialstatements.16
TheMakatiRTCsubsequentlydeniedtheapplication(fortheissuanceofawritofpreliminaryattachment)forlack
ofmeritaspetitionerwasunabletosubstantiateitsallegations.Nevertheless,itorderedtheserviceofsummons
onrespondents.17 Pursuant to the said order, summonses were issued against respondents and were served
uponthem.
Respondents moved to dismiss the complaint due to an allegedly invalid service of summons.18 Because the
officer's return stated that an "administrative assistant" had received the summons,19 JAPRL and RFC argued

thatSection11,Rule14oftheRulesofCourt20containedanexclusivelistofpersonsonwhomsummonsagainst
acorporationmustbeserved.21An"administrativeassistant"wasnotoneofthem.Arollado,ontheotherhand,
citedSection6,Rule14thereof22whichmandatedpersonalserviceofsummonsonanindividualdefendant.23
The Makati RTC, in its October 10, 2005 order,24 noted that because corporate officers are often busy,
summonses to corporations are usually received only by administrative assistants or secretaries of corporate
officersintheregularcourseofbusiness.Hence,itdeniedthemotionforlackofmerit.
Respondentsmovedforreconsideration25butwithdrewitbeforetheMakatiRTCcouldresolvethematter.26
RTCSECCaseNo.682008C
OnFebruary20,2006,JAPRL(anditssubsidiary,RFC)filedapetitionforrehabilitationintheRTCofCalamba,
Laguna, Branch 34 (Calamba RTC). Finding JAPRL's petition sufficient in form and in substance, the Calamba
RTCissuedastayorder27onMarch13,2006.
In view of the said order, respondents hastily moved to suspend the proceedings in Civil Case No. 03991
pendingintheMakatiRTC.28
OnJuly7,2006,theMakatiRTCgrantedthemotionwithregardtoJAPRLandRFCbutorderedArolladotofile
ananswer.Itruledthat,becausehewasjointlyandsolidarilyliablewithJAPRLandRFC,theproceedingsagainst
himshouldcontinue.29Respondentsmovedforreconsideration30butitwasdenied.31
OnAugust11,2006,respondentsfiledapetitionforcertiorari32intheCAallegingthattheMakatiRTCcommitted
graveabuseofdiscretioninissuingtheOctober10,2005andJuly7,2006orders.33Theyassertedthatthecourt
didnotacquirejurisdictionovertheirpersonsduetodefectiveserviceofsummons.Thus,theMakatiRTCcould
nothearthecomplaintforsumofmoney.34
In its June 7, 2007 decision, the CA held that because the summonses were served on a mere administrative
assistant,theMakatiRTCneveracquiredjurisdictionoverrespondents.Thus,itgrantedthepetition.35
Petitionermovedforreconsiderationbutitwasdenied.36Hence,thispetition.
PetitionerassertsthatrespondentsmaliciouslyevadedtheserviceofsummonsestopreventtheMakatiRTCfrom
acquiringjurisdictionovertheirpersons.Furthermore,theyemployedbadfaithtodelayproceedingsbycunningly
exploitingproceduraltechnicalitiestoavoidthepaymentoftheirobligations.37
Wegrantthepetition.
Respondents, in their petition for certiorari in the CA, questioned the jurisdiction of the Makati RTC over their
persons(i.e.,whetherornottheserviceofsummonswasvalidlymade).Therefore,itwasonlytheOctober10,
2005orderofthesaidtrialcourtwhichtheyineffectassailed.38However,becausetheywithdrewtheirmotionfor
reconsiderationofthesaidorder,itbecamefinal.Moreover,thepetitionwasfiled10monthsand1dayafterthe
assailedorderwasissuedbytheMakatiRTC,39waypastthe60daysallowedbytheRulesofCourt.Forthese
reasons,thesaidpetitionshouldhavebeendismissedoutrightbytheCA.
More importantly, when respondents moved for the suspension of proceedings in Civil Case No. 03991 before
the Makati RTC (on the basis of the March 13, 2006 order of the Calamba RTC), they waived whatever defect
there was in the service of summons and were deemed to have submitted themselves voluntarily to the
jurisdictionoftheMakatiRTC.40
WewithholdjudgmentforthemomentontheJuly7,2006orderoftheMakatiRTCsuspendingtheproceedings
in Civil Case No. 03991 insofar as JAPRL and RFC are concerned. Under the Interim Rules of Procedure on
CorporateRehabilitation,astayorderdefersallactionsorclaimsagainstthecorporationseekingrehabilitation41
fromthedateofitsissuanceuntilthedismissalofthepetitionorterminationoftherehabilitationproceedings.42
TheMakatiRTCmayproceedtohearCivilCaseNo.03991onlyagainstArolladoifthereisnogroundtogoafter
JAPRLandRFC(aswilllaterbediscussed).Acreditorcandemandpaymentfromthesuretysolidarilyliablewith
thecorporationseekingrehabilitation.43
Respondents abused procedural technicalities (albeit unsuccessfully) for the sole purpose of preventing, or at
least delaying, the collection of their legitimate obligations. Their reprehensible scheme impeded the speedy
dispensation of justice. More importantly, however, considering the amount involved, respondents utterly
disregardedthesignificanceofastableandefficientbankingsystemtothenationaleconomy.44

Banksareentitiesengagedinthelendingoffundsobtainedthroughdeposits45 from the public.46 They borrow

the public's excess money (i.e., deposits) and lend out the same.47 Banks therefore redistribute wealth in the
economybychannelingidlesavingstoprofitableinvestments.
Banks operate (and earn income) by extending credit facilities financed primarily by deposits from the public.48
They plough back the bulk of said deposits into the economy in the form of loans.49 Since banks deal with the
public'smoney,theirviabilitydependslargelyontheirabilitytoreturnthosedepositsondemand.Forthisreason,
banking is undeniably imbued with public interest. Consequently, much importance is given to sound lending
practicesandgoodcorporategovernance.50
Protectingtheintegrityofthebankingsystemhasbecome,bylarge,theresponsibilityofbanks.Theroleofthe
public, particularly individual borrowers, has not been emphasized. Nevertheless, we are not unaware of the
rampantandunscrupulouspracticeofobtainingloanswithoutintendingtopaythesame.
In this case, petitioner alleged that JAPRL fraudulently altered and falsified its financial statements in order to
obtain its credit facilities. Considering the amount of petitioner's exposure in JAPRL, justice and fairness dictate
that the Makati RTC hear whether or not respondents indeed committed fraud in securing the credit
accomodation.
Afindingoffraudwillchangethewholepicture.Inthisevent,petitionercanusethefindingoffraudtomovefor
thedismissaloftherehabilitationcaseintheCalambaRTC.
Theprotectiveremedyofrehabilitationwasneverintendedtobearefugeofadebtorguiltyoffraud.
Meanwhile,theMakatiRTCshouldproceedtohearCivilCaseNo.03991againstthethreerespondentsguided
bySection40oftheGeneralBankingLawwhichstates:
Section 40. Requirement for Grant of Loans or Other Credit Accommodations. Before granting a loan or
othercreditaccommodation,abankmustascertainthatthedebtoriscapableoffulfillinghiscommitments
tothebank.
Towardsthisend,abankmaydemandfromitscreditapplicantsastatementoftheirassetsandliabilities
andoftheirincomeandexpendituresandsuchinformationasmaybeprescribedbylaworbyrulesand
regulations of the Monetary Board to enable the bank to properly evaluate the credit application which
includes the corresponding financial statements submitted for taxation purposes to the Bureau of Internal
Revenue.Shouldsuchstatementsprovetobefalseorincorrectinanymaterialdetail,thebankmay
terminate any loan or credit accommodation granted on the basis of said statements and shall
havetherighttodemandimmediaterepaymentorliquidationoftheobligation.
InformulatingtherulesandregulationsunderthisSection,theMonetaryBoardshallrecognizethepeculiar
characteristicsofmicrofinancing,suchascashflowbasedlendingtothebasicsectorsthatarenotcovered
bytraditionalcollateral.(emphasissupplied)
Underthisprovision,bankshavetherighttoannulanycreditaccommodationorloan,anddemandtheimmediate
paymentthereof,fromborrowersproventobeguiltyoffraud.Petitionerwouldthenbeentitledtotheimmediate
paymentofP194,493,388.98andotherappropriatedamages.51
Finally, considering that respondents failed to pay the four trust receipts, the Makati City Prosecutor should
investigate whether or not there is probable cause to indict respondents for violation of Section 13 of the Trust
ReceiptsLaw.52
ACCORDINGLY,thepetitionisherebyGRANTED.TheJune7,2007decisionandAugust31,2007resolutionof
theCourtofAppealsinCAG.R.SPNo.95659areREVERSEDandSETASIDE.
TheRegionalTrialCourtofMakatiCity,Branch145isorderedtoproceedexpeditiouslywiththetrialofCivilCase
No.03991withregardtorespondentJoseU.Arollado,andtheotherrespondentsifwarranted.
SOORDERED.
RENATOC.CORONA
AssociateJustice

WECONCUR:
REYNATOS.PUNO

REYNATOS.PUNO
ChiefJustice
Chairperson
**ADOLFOS.AZCUNA

ANTONIOT.CARPIO
AssociateJustice

AssociateJustice

TERESITAJ.LEONARDODECASTRO
AssociateJustice

CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitution,IcertifythattheconclusionsintheaboveDecisionhad
beenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourt'sDivision.
REYNATOS.PUNO
ChiefJustice

Footnotes
*FormerlyEquitablePCIBank,Inc.
**OnOfficialLeave.
1UnderRule45oftheRulesofCourt.
2PennedbyAssociateJusticeJoseL.Sabio,Jr.andconcurredinbyAssociateJusticesJoseC.Reyes,Jr.

andMyrnaDimarananVidaloftheTenthDivisionoftheCourtofAppeals.DatedJune7,2007.Rollo,pp.
4959.
3DatedAugust31,2007.Id.,p.60.
4Id.,pp.6263.
5Id.,p.63.
6JAPRLfailedtopaythevalueoftrustreceiptnos.114505,1000006285,1000006305and1000006325.

Id.
7Id.,pp.6266.
8Paragraph16oftheTrustReceiptAgreementprovided:

16.IfanyofthefollowingEventsofDefaultshallhaveoccurred:
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b.TheEntrusteeshalldefaultinthedueperformanceorobservanceofanyothercovenant
containedhereinoninanyagreementunderwhichtheEntrusterissuedtheletterofcreditunderthe
termsofwhichtheTrustPropertywaspurchased,andsuchdefaultshallremainunremediedfora
periodoffive(5)calendardaysaftertheEntrusteeshallhavereceivedwrittennoticethereoffromthe
Entrusteror,
c.Anystatement,representationorwarrantymadebytheEntrustee,hereunder,initsapplication
withtheEntrusterorinotherdocumentdeliveredormadepursuanttheretoshallprovetobe
incorrectoruntrueintheanymaterialrespector,
d.TheEntrustee/anyofitssubsidiaryoraffiliatefailstopayordefaultinthepaymentofany
installmentoftheprincipalorinterestsrelativeto,orfailstocomplywithortoperform,anyother
obligationorcommitsabreachorviolationofanyoftheterms,conditionsorstipulations,ofany
agreement,contractordocumentwithEntrusteroranythirdpersonorpersonstowhichthe
Entrusteroranyofitssubsidiaryoraffiliateisapartyorprivy,whetherexecutedpriortoorafterthe
datehereofunderwhichcredithasormayhavebeenextendedtosuchEntrustee/subsidisiaryor

affiliatebytheEntrusterorsuchthirdpersonorpersonsorunderwhichtheEntrusteehasagreedto
actasguarantor,suretyoraccommodationparty,which,underthetermsofsuchagreement,
contract,document,guarantyorsuretyship,includinganyagreementsimilaroranalogousthereto,
shallconstituteadefaultorisdefinedasaneventofdefaultthereunderor,
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j.Anyadversecircumstanceoccurs,whichinthereasonableopinionoftheEntruster,materiallyor
adverselyaffectstheabilityoftheEntrusteetoperformitsobligationhereunderor
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Id.,pp.6566.
9JAPRL'soutstandingliabilitieswerebrokendownasfollows:

LETTEROF
CREDIT
9185863
9186617
9186263
9188618
9187128
14913
14927
14952
14969
14982
15144
15168
15181
15186
15207
15236
15244
15251
15273
15320
15340
15374
15387

15413

TRUSTRECEIPTOUTSTANDING
BALANCE
114505
P4,818,784.50
115613
10,002,405.35
115099
24,421,786.32
115612
17,742,002.53
116067
7,718,059.80
1000006285
1,734.837.50
1000006305
3,235,780.00
1000006325
2,809,031.24
1000006330
3,739,312.50
1000006339
4,142,952.24
1000006532
7,080,696.00
1000006558
4,889,034.00
1000006571
5,104,317.50
1000006574
10,129,035.00
1000006599
7,183,010.00
1000006646
6,730,310.00
1000006648
3,481,760.00
1000006652
6,353,342.50
1000006670
10,781,095.00
1000006723
9,043,803.00
1000006749
8,974,180.00
1000006781
5,344,652.00
1000006801
10,545,120.00
1000006808
6,454,320.00
1000006809
5,837,680.00
1000006824
6,196,080.00
TOTAL
P194,493,388.98

Id.,p.64.
10Id.,pp.8384.
11Id.,p.63.

AccordingtotheaffidavitofgeneralfinancialconditionexecutedbyPeterPaulLimson,concurrent
chairmanandchiefexecutiveofficerofJAPRLandRFC,bothcorporationshavebeensufferingstaggering
lossessincetheyear2000:
2002
SALES
JAPRL
RFC

2001

P210,570,962 P233,064,377
284,828,246 294,940,656

2000
P303,661,262
248,013,118

RFC

284,828,246

294,940,656

248,013,118

PROFIT/LOSSES
JAPRL
(P14,536,976)
RFC
215,747

P269,958
327,462

P516,359
503,112

12SeeInterimRulesofProcedureonCorporateRehabilitation(A.M.No.00810SC),Sec.6which

provides:
Section6.StayOrder.Ifthecourtfindsthepetitiontobesufficientinformandsubstance,it
shall,notlaterthanfive(5)daysfromthefilingofthepetition,issueanOrder:(a)applyinga
RehabilitationReceiverandfixinghisbond(b)stayingenforcementofallclaims,whetherfor
moneyorotherwiseandwhethersuchenforcementisbycourtactionorotherwise,against
thedebtor,itsguarantorsandsuretiesnotsolidarilyliablewiththedebtor(c)prohibitingthe
debtorfromselling,encumbering,transferring,ordisposinginanymanneranyofitsproperties
exceptintheordinarycourseofbusiness(d)prohibitingthedebtorfrommakinganypaymentof
itsliabilitiesoutstandingasatthedateoffilingofthepetition(e)prohibitingthedebtor's
suppliersofgoodsorservicesfromwithholdingsupplyofgoodsandservicesintheordinarycourse
ofbusinessforaslongasthedebtormakespaymentsfortheservicesandgoodssuppliedafterthe
issuanceofthestayorder(f)directingthepaymentinfullofalladministrativeexpensesincurred
aftertheissuanceofthestayorder(g)fixingtheinitialhearingonthepetitionnotearlierthanforty
five(45)daysbutnotlaterthansixty(60)daysfromthefilingthereof(h)directingthepetitionerto
publishtheOrderinanewspaperofgeneralcirculationinthePhilippinesonceaweekfortwo(2)
consecutiveweeks(i)directingallcreditorsandallinterestedparties(includingtheSecurities
andExchangeCommission)tofileandserveonthedebtoraverifiedcommentonor
oppositiontothepetition,withsupportingaffidavitsanddocuments,notlaterthanten(10)
daysbeforethedateoftheinitialhearingandputtingthemonnoticethattheirfailuretodo
sowillbarthemfromparticipatingintheproceedingsand(j)directingthecreditorsand
interestedpartiestosecurefromthecourtcopiesofthepetitionanditsannexeswithinsuchtimeas
toenablethemselvestofiletheircommentonoroppositiontothepetitionandtoprepareforthe
initialhearingofthepetition.(emphasissupplied)
13IssuedbyPresidingJudgeReynaldoB.Daway.Rollo,pp.8384.
14Id.,p.127.
15Annex"F,"id.,pp.6171.
16Id.,p.67.
17IssuedbyPresidingJudgeCesarD.Santamaria.DatedSeptember23,2003.Annex"G,"id.,pp.7374.
18Annex"K,"id.,pp.9294.
19Annex"J,"id.,p.91.Itstated:

IHEREBYCERTIFYthatonJuly9,2004acopyofsummonsdatedMay5,2004issuedbythe
HonorableCourtinconnectionwith[CivilCaseNo.03991],theundersignedservedupon[JAPRL],
2/FVasquezMadrigalPlaza,51AnnapolisSt.,Greenhills,SanJuan,MetroManila,[RFCand
Arollado]thruMs.GRACECANO,administrativeassistantwhoacknowledgedreceiptas
evidencedbyhersignatureattheoriginalcopyofsummons.
DULYSERVED.
CityofMakati,12July2004.(emphasissupplied)
20RulesofCourt,Rule14,Sec.11provides:

Section11.Serviceupondomesticprivatejuridicalentity.Whenthedefendantisacorporation,
partnershiporassociationorganizedunderthelawsofthePhilippineswithajuridicalpersonality,
servicemaybemadeonthepresident,managingpartner,generalmanager,corporate
secretary,treasurer,orinhousecounsel.(emphasissupplied)
21Annex"K,"rollo,pp.9294.SeeMasonv.CourtofAppeals,459Phil.689,698699(2003).
22RulesofCourt,Sec.6,Rule14provides:

Section6.Serviceinpersonondefendant.Wheneverpracticable,thesummonsshallbeserved
byhandingacopythereoftothedefendantinperson,orifherefusestoreceiveandsignforit,
bytenderingittohim.(emphasissupplied)
23Rollo,p.93.
24Annex"M,"id.,pp.102103.
25Annex"N,"id.,pp.104112.
26Annex,"O,"id.,pp.113115.
27IssuedbyJudgeJesusA.Santiago.DatedSeptember11,2006.Id.,pp.126129.
28Annex"Q,"id.,pp.124125.
29Annex"R,"id.,p.130.
30Annex"S,"id.,pp.131134.
31Annex"T,"id.,p.135.
32UnderRule65oftheRulesofCourt.
33Respondents'motionforreconsiderationwaspendingintheMakatiRTCwhentheyfiledthepetitionfor

certiorariintheCA.It(petition)shouldhavebeendismissedforbeingfiledprematurely.
34Annex"U,"rollo,pp.136149.
35Supranote2.
36Supranote3.
37Id.,pp.1035.
38TheJuly7,2006andSeptember11,2006ordersoftheMakatiRTCresolvedwhetherornotthe

proceedingsinCivilCaseNo.03991shouldbesuspendedinviewoftheMarch13,2006orderofthe
CalambaRTCinRTCSECCaseNo.682008C.
39SeeRulesofCourt,Sec.4,Rule65whichprovides:

Section4.Whenandwherepetitionfiled.Thepetitionshallbefilednotlaterthansixty(60)daysfrom
noticeofjudgment,orderorresolution.Incaseamotionforreconsiderationisfiledontime,whether
suchmotionisrequiredornot,thesixty(60)dayperiodshallbecountedforthenoticeofsaid
motion.
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40SeeOrosav.CourtofAppeals,330Phil.67(1996).
41PhilippineAirlinesv.Kurangking,438Phil.375,381(2002).
42Id.

SeeA.M.No.00810SC,Sec.11provides:
Section11.PeriodofStayOrder.Thestayordershallbeeffectivefromthedateofitsissuance
untilthedismissalofthepetitionorterminationoftherehabilitationproceedings.
Thepetitionshallbedismissedifnorehabilitationisapprovedbythecourtuponthelapseofone
hundredeighty(180)daysfromthedateoftheinitialhearing.Thecourtmaygrantanextension
beyondthisperiodonlyifitappearsbyconvincingandcompellingevidencethatthedebtormay
successfullyberehabilitated.Innoinstance,however,shalltheperiodforapprovingordisapproving
arehabilitationplanexceedeighteen(18)monthsfromthedateoffilingofthepetition.(emphasis
supplied)

43PhilippineBloomingMillsv.CourtofAppeals,459Phil.875,892(2003)citingTradersRoyalBankv.

CourtofAppeals,G.R.No.78412,26September1989,177SCRA788,792.
44Gen.BankingLaw,Sec.2provides:

Section2.DeclarationofPolicy.TheStaterecognizesthevitalroleofbanksprovidingan
environmentconducivetothesustaineddevelopmentofthenationaleconomyandthe
fiduciarynatureofbankingthatrequireshighstandardsofintegrityandperformance.Infurtherance
thereof,theStateshallpromoteastableandefficientbankingandfinancialsystemthatis
globallycompetitive,dynamicandresponsivetothedemandsofadevelopingeconomy.
(emphasissupplied)
45Gen.BankingLaw,Sec.3.1.
46Gen.BankingLaw,Sec.8.2.
47FredericMishkin,TheEconomicsofMoney,BankingandFinancialMatters,5thed.,pp.231238.

SeealsoVicenteValdepeas,Jr.,TheBangkoSentralandThePhilippineEconomy,pp.123124.
48Valdepeas,id.,p.125.
49TheBangkoSentralngPilipinas(BSP)controlsbanklendingbyimposingreserverequirementswhich

maybeincreasedorreduced,subjecttothefinancingneedsoftheeconomy.
50Valdepeas,supranote47at125126.
51Paragraph28oftheTrustReceiptAgreementprovides:

28.InallcaseswheretheEntrusteriscompelledtoresorttothecancellationofthisTrustReceiptor
anytakelegalactiontoprotectitsinterests,theEntrusteeshallpayattorneyfeesfixedat15%ofthe
totalobligationoftheEntrustee,whichshallincasebelessthanP20,000exclusiveofcostsandfees
allowedbylawandtheotherexpensesofcollectionincurredbytheEntruster,andliquidated
damagesequaltofifteenpercent(15%)ofthetotalamountduebutinnocaselessthanP20,000.
Anydeficiencyresultingwithin24hoursfromsuchsale,failingwhichtheEntrustermaytakesuch
legalaction,withoutfurthernoticetotheEntrustee,asitmaydeemnecessarytocollectsuch
deficiencyfromtheEntrustee.
Id.,pp.6667.
52TrustReceiptsLaw,Sec.13provides:

Section13.PenaltyClause.Thefailureofanentrusteetoturnovertheproceedsofthesaleofthe
goods,documentsorinstrumentscoveredbyatrustreceipttotheextentoftheamountowingtothe
entrusterorasappearsinthetrustreceiptortoreturnsaidgoods,documentsorinstrumentsifthey
werenotsoldordisposedofinaccordancewithtermsofthetrustreceiptshallconstitutethecrime
ofestafa,punishableundertheprovisionsofArticleThreehundredandfifteen,paragraphone(b)of
ActNumberedThreethousandeighthundredandfifteen,asamended,otherwiseknownasthe
RevisedPenalCode.Iftheviolationoroffenseiscommittedbyacorporation,partnership,
associationorotherjuridicalentities,thepenaltyprovidedforinthisDecreeshallbeimposedupon
thedirectors,officers,employeesorotherofficialsorpersonsthereinresponsiblefortheoffense,
withoutprejudicetocivilliabilitiesarisingfromthecriminaloffense.(emphasissupplied)
TheLawphilProjectArellanoLawFoundation