PD 115: TRUSTS RECIPTS LAW (COMMERCIAL)

TRUST RECEIPT shall refer to the written or printed document signed by the entrustee in favor of the entrusted 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 s trust receipt.

A Trust Receipt Transaction is any transaction by and between the entruster and the entrustee whereby the entruster, who owns or holds absolute title or security interests over certain 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 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.

A Trust Receipt need not be in any particular form, but every receipt must substantially contain:

1. 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.

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 it was due to the fault or negligence of the entrustee, shall not extinguish his obligation to the entruster for the value thereof.