Published — February 2, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Read also: RIGHTS OF THE ENTRUSTER UNDER THE TRUST RECEIPTS LAW
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A trust receipt transaction is one where the entrustee has the obligation to deliver to the entruster the price of the sale, or if the merchandise is not sold, to return the merchandise to the entruster.
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The risk of loss shall be borne by the entrustee.
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Loss of goods, documents or instruments which are the subject of a trust receipt, pending their disposition, irrespective of whether or not it was due to the fault or negligence of the entrustee, shall not extinguish his obligation to the entruster for the value thereof.
A trust receipt transaction is one where the entrustee has the obligation to deliver to the entruster the price of the sale, or if the merchandise is not sold, to return the merchandise to the entruster.
In the case of Hur Tin Yang vs. People of the Philippines (G.R. No. 195117, August 14, 2013), the Court said that there are two obligations in a trust receipt transaction: the first refers to money received under the obligation involving the duty to turn it over (entregarla) to the owner of the merchandise sold, while the second refers to the merchandise received under the obligation to “return” it (devolvera) to the owner.
What then happens if the goods, documents or instruments which are subject of a trust receipt have been lost?
Presidential Decree No. 115 or Trust Receipts Law states that:
The risk of loss shall be borne by the entrustee. Loss of goods, documents or instruments which are the subject of a trust receipt, pending their disposition, irrespective of whether or not it was due to the fault or negligence of the entrustee, shall not extinguish his obligation to the entruster for the value thereof.
Under the Trust Receipts Law, the loss of the goods subject of the trust receipt regardless of the cause and period of time it occurred, does not extinguish the civil obligation of the entrustee. Hence, the fact that the entrustee attempted to make a tender of goods to the entruster and as a consequence of the latter’s refusal, the goods were stored in the entrustee’s warehouse and thereafter gutted by fire, the liability of the entrustee still subsists.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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