Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 115)
The short title of Presidential Decree No. 115 is the "Trust Receipts Law."
The primary policy is to encourage and promote the use of trust receipts as an aid to commerce and trade, regulate trust receipt transactions to protect rights and enforce obligations, and to declare misuse or misappropriation of goods or proceeds under trust receipts as a criminal offense.
A trust receipt is a written or printed document signed by the entrustee in favor of the entruster containing terms and conditions substantially complying with the provisions of the Decree, wherein the entrustee agrees to hold goods, documents, or instruments in trust and turn over proceeds or return the goods as specified.
The entruster is the person holding title over the goods, documents, or instruments subject of the trust receipt transaction; the entrustee is the person taking possession of those goods, documents, or instruments under the trust receipt transaction.
The entrustee must hold goods, documents, or instruments in trust, dispose of them per terms, turn over proceeds to the entruster, insure the goods, keep them or proceeds identifiable as property of the entruster, return unsold goods or documents upon demand, and observe all terms of the trust receipt.
The entruster may cancel the trust and take possession of the goods, documents, or instruments. The entruster may notify the entrustee and sell the goods through public or private sale to satisfy the indebtedness, with any surplus going to the entrustee, and any deficiency held against the entrustee.
The risk of loss is borne by the entrustee, and loss does not extinguish the obligation to the entruster regardless of fault or negligence.
Yes, any purchaser who buys goods, documents, or instruments for value and in good faith acquires them free from the entruster's security interest.
Failure constitutes the crime of estafa punishable under Article 315 of the Revised Penal Code. If committed by a juridical entity, responsible officers or persons will be penalized.
Payment is made in the Philippine currency equivalent at the prevailing exchange rate on the date proceeds are turned over or as stipulated in the trust receipt or agreements.