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PRESIDENTIAL DECREE NO. 115
PRESIDENTIAL DECREE NO. 115 -
PROVIDING FOR THE REGULATION OF TRUST RECEIPTS TRANSACTIONS
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WHEREAS, the utilization of trust receipts,
as a convenient business device to assist importers and merchants solve
their financing problems, had gained popular acceptance in
international and domestic business practices, particularly in
commercial banking transactions;chanroblesvirtualawlibrary
WHEREAS, there is no specific law in the Philippines that governs trust
receipt transactions, especially the rights and obligations of the
parties involved therein and the enforcement of the said rights in case
of default or violation of the terms of the trust receipt
agreement; chanroblesvirtualawlibrary
WHEREAS, the recommendations contained in the report on the financial
system which have been accepted, with certain modifications by the
monetary authorities included, among others, the enactment of a law
regulating the trust receipt transactions;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, as
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972, and
General Order No. 1, dated September 22, 1972, as amended, and in order
to effect the desired changes and reforms in the social, economic, and
political structure of our society, do hereby order and decree and make
as part of the law of the land the following:cralaw:red
Section 1. Short Title. — This Decree shall be known
as the Trust Receipts Law.
Section 2. Declaration of Policy. — It is hereby
declared to be the policy of the state (a) to encourage and promote the
use of trust receipts as an additional and convenient to commerce and
trade; (b) to provide for the regulation of trust receipts transactions
in order to assure the protection of the rights and enforcement of
obligations of the parties involved therein; and (c) to declare the
misuse and/or misappropriation of goods or proceeds realized from the
sale of goods, documents or instruments released under trust receipts
as a criminal offense punishable under Article Three hundred and
fifteen of the Revised Penal Code.
Section 3. Definition of terms. — As used in this
Decree, unless the context otherwise requires, the term —chanroblesvirtualawlibrary
(a) "Document" shall mean written or printed evidence
of title to goods.
(b) "Entrustee" shall refer to the person having or
taking possession of goods, documents or instruments under a trust
receipt transaction, and any successor in interest of such person for
the purpose or purposes specified in the trust receipt agreement.
(c) "Entruster" shall refer to the person holding
title over the goods, documents, or instruments subject of a trust
receipt transaction, and any successor in interest of such person.
(d) "Goods" shall include chattels and personal
property other than: money, things in action, or things so affixed to
land as to become a part thereof.
(e) "Instrument" means any negotiable instrument as
defined in the Negotiable Instrument Law; any certificate of stock, or
bond or debenture for the payment of money issued by a public or
private corporation, or any certificate of deposit, participation
certificate or receipt, any credit or investment instrument of a sort
marketed in the ordinary course of business or finance, whereby the
entrustee, after the issuance of the trust receipt, appears by virtue
of possession and the face of the instrument to be the owner.
"Instrument" shall not include a document as defined in this Decree.
( f ) "Purchase" means taking by sale, conditional
sale, lease, mortgage, or pledge, legal or equitable. chanroblesvirtualawlibrary
(g) "Purchaser" means any person taking by purchase.
(h) "Security Interest" means a property interest in
goods, documents or instruments to secure performance of some
obligations of the entrustee or of some third persons to the entruster
and includes title, whether or not expressed to be absolute, whenever
such title is in substance taken or retained for security only.
(i) "Person" means, as the case may be, an
individual, trustee, receiver, or other fiduciary, partnership,
corporation, business trust or other association, and two more persons
having a joint or common interest. chanroblesvirtualawlibrary
( j) "Trust Receipt" shall refer to the written or
printed document signed by the entrustee in favor of the entruster
containing terms and conditions substantially complying with the
provisions of this Decree. No further formality of execution or
authentication shall be necessary to the validity of a trust receipt.
(k) "Value" means any consideration sufficient to
support a simple contract.
Section 4. What constitutes a trust receipt
transaction. — A trust receipt transaction, within the meaning of this
Decree, is any transaction by and between a person referred to in this
Decree as the entruster, and another person referred to in this Decree
as entrustee, whereby the entruster, who owns or holds absolute title
or security interests over certain specified goods, documents or
instruments, releases the same to the possession of the entrustee upon
the latter's 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 in trust for the
entruster and to sell or otherwise dispose of the 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 specified in the trust
receipt, or for other purposes substantially equivalent to any of the
following: chanroblesvirtualawlibrary
1. In the case of goods or documents, (a) to sell the
goods or procure their sale; or (b) to manufacture or process the goods
with the purpose of ultimate sale: Provided, That, in the case of goods
delivered under trust receipt for the purpose of manufacturing or
processing before its ultimate sale, the entruster shall retain its
title over the goods whether in its original or processed form until
the entrustee has complied fully with his obligation under the trust
receipt; or (c) to load, unload, ship or tranship or otherwise deal
with them in a manner preliminary or necessary to their sale; or chanroblesvirtualawlibrary
2. In the case of instruments, (a) to sell or procure
their sale or exchange; or (b) to deliver them to a principal; or (c)
to effect the consummation of some transactions involving delivery to a
depository or register; or (d) to effect their presentation, collection
or renewal.
The sale of goods, documents or instruments by a person in the business
of selling goods, documents or instruments for profit who, at the
outset of the transaction, has, as against the buyer, general property
rights in such goods, documents or instruments, or who sells the same
to the buyer on credit, retaining title or other interest as security
for the payment of the purchase price, does not constitute a trust
receipt transaction and is outside the purview and coverage of this
Decree. chanroblesvirtualawlibrary
Section 5. Form of trust receipts; contents. — A
trust receipt need not be in any particular form, but every such
receipt must substantially contain (a) a description of the goods,
documents or instruments subject of the trust receipt; (2) the total
invoice value of the goods and the amount of the draft to be paid by
the entrustee; (3) an undertaking or a commitment of the entrustee (a)
to hold in trust for the entruster the goods, documents or instruments
therein described; (b) to dispose of them in the manner provided for in
the trust receipt; and (c) to turn over the proceeds of the sale of the
goods, documents or instruments to the entruster to the extent of the
amount owing to the entruster or as appears in the trust receipt or to
return the goods, documents or instruments in the event of their
non-sale within the period specified therein.
The trust receipt may contain other terms and conditions agreed upon by
the parties in addition to those hereinabove enumerated provided that
such terms and conditions shall not be contrary to the provisions of
this Decree, any existing laws, public policy or morals, public order
or good customs.
Section 6. Currency in which a trust receipt may be
denominated. — A trust receipt may be denominated in the Philippine
currency or any foreign currency acceptable and eligible as part of
international reserves of the Philippines, the provisions of existing
law, executive orders, rules and regulations to the contrary
notwithstanding: Provided, however, That in the case of trust receipts
denominated in foreign currency, payment shall be made in its
equivalent in Philippine currency computed at the prevailing exchange
rate on the date the proceeds of sale of the goods, documents or
instruments held in trust by the entrustee are turned over to the
entruster or on such other date as may be stipulated in the trust
receipt or other agreements executed between the entruster and the
entrustee.
Section 7. Rights of the entruster. — The entruster
shall be entitled to the proceeds from the sale of the goods, documents
or instruments released under a trust receipt to the entrustee to the
extent of the amount owing to the entruster or as appears in the trust
receipt, or to the return of the goods, documents or instruments in
case of non-sale, and to the enforcement of all other rights conferred
on him in the trust receipt provided such are not contrary to the
provisions of this Decree.
The entruster may cancel the trust and take possession of the goods,
documents or instruments subject of the trust or of the proceeds
realized therefrom at any time upon default or failure of the entrustee
to comply with any of the terms and conditions of the trust receipt or
any other agreement between the entruster and the entrustee, and the
entruster in possession of the goods, documents or instruments may, on
or after default, give notice to the entrustee of the intention to
sell, and may, not less than five days after serving or sending of such
notice, sell the goods, documents or instruments at public or private
sale, and the entruster may, at a public sale, become a purchaser. The
proceeds of any such sale, whether public or private, shall be applied
(a) to the payment of the expenses thereof; (b) to the payment of the
expenses of re-taking, keeping and storing the goods, documents or
instruments; (c) to the satisfaction of the entrustee's indebtedness to
the entruster. The entrustee shall receive any surplus but shall be
liable to the entruster for any deficiency. Notice of sale shall be
deemed sufficiently given if in writing, and either personally served
on the entrustee or sent by post-paid ordinary mail to the entrustee's
last known business address.
Section 8. Entruster not responsible on sale by
entrustee. — The entruster holding a security interest shall not,
merely by virtue of such interest or having given the entrustee liberty
of sale or other disposition of the goods, documents or instruments
under the terms of the trust receipt transaction be responsible as
principal or as vendor under any sale or contract to sell made by the
entrustee.
Section 9. Obligations of the entrustee. — The
entrustee shall (1) hold the goods, documents or instruments in trust
for the entruster and shall dispose of them strictly in accordance with
the terms and conditions of the trust receipt; (2) receive the proceeds
in trust for the entruster and turn over the same to the entruster to
the extent of the amount owing to the entruster or as appears on the
trust receipt; (3) insure the goods for their total value against loss
from fire, theft, pilferage or other casualties; (4) keep said goods or
proceeds thereof whether in money or whatever form, separate and
capable of identification as property of the entruster; (5) return the
goods, documents or instruments in the event of non-sale or upon demand
of the entruster; and (6) observe all other terms and conditions of the
trust receipt not contrary to the provisions of this Decree.
Section 10. Liability of entrustee for loss. — 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.
Section 11. Rights of purchaser for value and in good
faith. — Any purchaser of goods from an entrustee with right to sell,
or of documents or instruments through their customary form of
transfer, who buys the goods, documents, or instruments for value and
in good faith from the entrustee, acquires said goods, documents or
instruments free from the entruster's security interest.
Section 12. Validity of entruster's security interest
as against creditors. — The entruster's security interest in goods,
documents, or instruments pursuant to the written terms of a trust
receipt shall be valid as against all creditors of the entrustee for
the duration of the trust receipt agreement.
Section 13. Penalty clause. — The failure of an
entrustee to turn over the proceeds of the sale of the goods, documents
or instruments covered by a trust receipt to the extent of the amount
owing to the entruster or as appears in the trust receipt or to return
said goods, documents or instruments if they were not sold or disposed
of in accordance with the terms of the trust receipt shall constitute
the crime of estafa, punishable under the provisions of Article Three
hundred and fifteen, paragraph one (b) of Act Numbered Three thousand
eight hundred and fifteen, as amended, otherwise known as the Revised
Penal Code. If the violation or offense is committed by a corporation,
partnership, association or other juridical entities, the penalty
provided for in this Decree shall be imposed upon the directors,
officers, employees or other officials or persons therein responsible
for the offense, without prejudice to the civil liabilities arising
from the criminal offense. chanroblesvirtualawlibrary
Section 14. Cases not covered by this Decree. — Cases
not provided for in this Decree shall be governed by the applicable
provisions of existing laws.
Section 15. Separability clause. — If any provision
or section of this Decree or the application thereof to any person or
circumstance is held invalid, the other provisions or sections hereof
and the application of such provisions or sections to other persons or
circumstances shall not be affected thereby.
Section 16. Repealing clause. — All Acts inconsistent
with this Decree are hereby repealed.
Section 17. This Decree shall take effect immediately.
Done in the City of Manila,
this 29th day of January, in the year of Our Lord, nineteen hundred and
seventy-three.
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