MALACAÑANG
M a n i l aPRESIDENTIAL DECREE No. 115 January 29, 1973
PROVIDING FOR THE REGULATION OF TRUST RECEIPTS TRANSACTIONS
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;
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;
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;
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...
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Presidential Decrees
Providing For The Regulation Of Trust Receipts Transactions
Presidential Decree No. 115
Summary of Presidential Decree No. 115 (Trust Receipts Law)
Declaration of Policy (Section 2):
- Encourage and promote the use of trust receipts as an aid to commerce and trade.
- Regulate trust receipts transactions to protect rights and enforce obligations of parties.
- Declare misuse/misappropriation of goods or proceeds under trust receipts as a criminal offense (estafa).
Definition of Terms (Section 3):
- Defines key terms like "document", "entrustee", "entruster", "goods", "instrument", "purchase", "purchaser", "security interest", "person", "trust receipt", and "value".
Trust Receipt Transaction (Section 4):
- Involves an entruster releasing goods, documents, or instruments to an entrustee.
- Entrustee executes a trust receipt agreeing to hold them in trust and sell/dispose them.
- Entrustee obligated to turn over proceeds to entruster or return unsold items.
- Excludes regular sales transactions where seller has general property rights.
Form and Contents of Trust Receipt (Section 5):
- No particular form required, but must contain:
- Description of goods, documents, or instruments.
- Total invoice value and draft amount.
- Entrustee's undertaking to hold in trust, dispose as agreed, and turn over proceeds or return unsold items.
Currency Denomination (Section 6):
- Trust receipts can be denominated in Philippine currency or eligible foreign currencies.
- Foreign currency proceeds converted to Philippine peso at prevailing exchange rate.
Rights of Entruster (Section 7):
- Entitled to proceeds from sale up to amount owed or return of unsold items.
- Can cancel trust, take possession, and sell items upon entrustee's default.
- Sale proceeds applied to expenses, entrustee's debt, with surplus/deficiency to entrustee.
Entruster Not Responsible for Entrustee's Sale (Section 8):
- Entruster not responsible as principal/vendor for entrustee's sales.
Obligations of Entrustee (Section 9):
- Hold goods/proceeds in trust for entruster and dispose as per trust receipt terms.
- Turn over sale proceeds up to amount owed.
- Insure goods against loss.
- Keep goods/proceeds separate and identifiable as entruster's property.
- Return unsold goods/items upon demand.
- Observe all trust receipt terms.
Liability for Loss (Section 10):
- Entrustee bears risk of loss of goods/items, even if not at fault.
- Loss does not extinguish obligation to entruster for the value.
Rights of Purchaser for Value and in Good Faith (Section 11):
- Purchaser who buys goods/documents/instruments for value and in good faith from entrustee acquires them free from entruster's security interest.
Validity of Entruster's Security Interest (Section 12):
- Entruster's security interest valid against entrustee's creditors for duration of trust receipt agreement.
Penalty Clause (Section 13):
- Failure to turn over sale proceeds or return unsold items constitutes estafa under Revised Penal Code Article 315(1)(b).
- Penalty applies to responsible individuals in case of corporations/entities.
Other Provisions:
- Cases not covered governed by existing laws (Section 14).
- Separability clause for invalid provisions (Section 15).
- Repeals inconsistent laws (Section 16).
- Immediate effectivity (Section 17).
Declaration of Policy (Section 2):
- Encourage and promote the use of trust receipts as an aid to commerce and trade.
- Regulate trust receipts transactions to protect rights and enforce obligations of parties.
- Declare misuse/misappropriation of goods or proceeds under trust receipts as a criminal offense (estafa).
Definition of Terms (Section 3):
- Defines key terms like "document", "entrustee", "entruster", "goods", "instrument", "purchase", "purchaser", "security interest", "person", "trust receipt", and "value".
Trust Receipt Transaction (Section 4):
- Involves an entruster releasing goods, documents, or instruments to an entrustee.
- Entrustee executes a trust receipt agreeing to hold them in trust and sell/dispose them.
- Entrustee obligated to turn over proceeds to entruster or return unsold items.
- Excludes regular sales transactions where seller has general property rights.
Form and Contents of Trust Receipt (Section 5):
- No particular form required, but must contain:
- Description of goods, documents, or instruments.
- Total invoice value and draft amount.
- Entrustee's undertaking to hold in trust, dispose as agreed, and turn over proceeds or return unsold items.
Currency Denomination (Section 6):
- Trust receipts can be denominated in Philippine currency or eligible foreign currencies.
- Foreign currency proceeds converted to Philippine peso at prevailing exchange rate.
Rights of Entruster (Section 7):
- Entitled to proceeds from sale up to amount owed or return of unsold items.
- Can cancel trust, take possession, and sell items upon entrustee's default.
- Sale proceeds applied to expenses, entrustee's debt, with surplus/deficiency to entrustee.
Entruster Not Responsible for Entrustee's Sale (Section 8):
- Entruster not responsible as principal/vendor for entrustee's sales.
Obligations of Entrustee (Section 9):
- Hold goods/proceeds in trust for entruster and dispose as per trust receipt terms.
- Turn over sale proceeds up to amount owed.
- Insure goods against loss.
- Keep goods/proceeds separate and identifiable as entruster's property.
- Return unsold goods/items upon demand.
- Observe all trust receipt terms.
Liability for Loss (Section 10):
- Entrustee bears risk of loss of goods/items, even if not at fault.
- Loss does not extinguish obligation to entruster for the value.
Rights of Purchaser for Value and in Good Faith (Section 11):
- Purchaser who buys goods/documents/instruments for value and in good faith from entrustee acquires them free from entruster's security interest.
Validity of Entruster's Security Interest (Section 12):
- Entruster's security interest valid against entrustee's creditors for duration of trust receipt agreement.
Penalty Clause (Section 13):
- Failure to turn over sale proceeds or return unsold items constitutes estafa under Revised Penal Code Article 315(1)(b).
- Penalty applies to responsible individuals in case of corporations/entities.
Other Provisions:
- Cases not covered governed by existing laws (Section 14).
- Separability clause for invalid provisions (Section 15).
- Repeals inconsistent laws (Section 16).
- Immediate effectivity (Section 17).