Bank of Commerce v. Serrano
REITERATIONFacts
The Antecedents: Via Moda International, Inc. (Via Moda), represented by its General Manager and Treasurer Teresita S. Serrano, obtained an export packing loan from Bank of Commerce (BOC) for US$50,000, secured by a Deed of Assignment over a Letter of Credit. Serrano executed a Promissory Note for US$50,000. Separately, BOC issued a Letter of Credit to Via Moda for US$56,735 for the importation of textile products. To secure the release of these goods, Serrano executed a Trust Receipt No. 94-22221 for US$55,944.73, binding Via Moda to hold the goods in trust, sell them for BOC's account, remit the proceeds, or return the goods if unsold. Procedural History: The goods were shipped, and the proceeds were received by BOC. However, BOC applied these proceeds to Via Moda's export packing loan, leaving a balance on the trust receipt. BOC sent a demand letter to Via Moda for payment or return of goods, which was not heeded. Serrano was charged with estafa under Article 315 (b) of the Revised Penal Code in relation to Presidential Decree No. 115. The Regional Trial Court (RTC) found Serrano guilty and ordered her to pay civil liability. The Court of Appeals (CA) reversed the RTC decision, acquitting Serrano and deleting her civil liability, holding that the element of misappropriation or conversion was absent and that Serrano did not bind herself personally to the obligation. The Petition: The Bank of Commerce filed a petition for review on certiorari, questioning the CA's decision to acquit Serrano and delete her civil liability, particularly raising issues regarding Serrano's alleged joint and several liability under a Guarantee Clause of the Letter of Credit and the CA's alleged reversible error in deleting her civil liability.
Issue(s)
Whether respondent Serrano is jointly and severally liable with Via Moda under the Guarantee Clause of the Letter of Credit secured by the Trust Receipt. Whether the Court of Appeals committed a reversible error in deleting the civil liability of respondent Serrano under the trust receipt, considering her role and the application of proceeds by the bank.
Ruling
The petition is DENIED for lack of merit. The Decision dated September 28, 2001, and the Resolution dated January 17, 2002, of the Court of Appeals in CA-G.R. CR No. 24570, are AFFIRMED.
Ratio Decidendi
On the issue of joint and several liability under the Guarantee Clause: The Supreme Court held that the issue of liability based on the Guarantee Clause of the Letter of Credit was not raised either at the trial court or before the Court of Appeals. Basic rules of fair play, justice, and due process dictate that a question not raised in the lower courts cannot be allowed to be raised for the first time on appeal. Therefore, this issue, not having been brought to the fore in the lower tribunals, does not deserve consideration by the Supreme Court. The Court reiterated that a letter of credit and a trust receipt involve different undertakings and obligations, with the former being a bank's engagement to honor drafts and the latter involving the entrustee holding goods in trust for the entruster. On the issue of deleting civil liability: The Supreme Court affirmed the Court of Appeals' finding that respondent Serrano could not be held civilly liable under the trust receipt because she was not made personally liable nor was she a guarantor. The parties stipulated that Serrano executed the trust receipt in representation of Via Moda, Inc., a separate entity, and the bank failed to justify piercing the corporate veil. The Court also upheld the appellate court's finding that there was no misappropriation or conversion by Serrano, as the proceeds were applied by the bank to Via Moda's other obligations without Serrano's participation or knowledge. Such application of payment by the bank, on its own, should not create criminal liability for Serrano. The Court emphasized that it does not delve into factual findings anew when there is disagreement between the trial court and the appellate court, especially when the findings of the appellate court are supported by the records. The findings of fact of the Court of Appeals are considered final and conclusive.
Main Doctrine
A bank's application of proceeds from goods covered by a trust receipt to the debtor's other obligations, without the entrustee's consent or knowledge, does not automatically constitute misappropriation or conversion, negating the element of estafa. Furthermore, issues not raised before the trial court or the Court of Appeals cannot be raised for the first time on appeal.