case digests mercantile law

8/3/2019 Case Digests Mercantile Law

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Trust Receipts Law

PILIPINAS BANK, petitioner

vs.

ALFREDO T. ONG and LEONCIA LIM, respondents

[G.R. No. 133176. August 8, 2002]

Facts:

On April 1991, Baliwag Mahogany Corporation (BMC), through its president, respondent Alfredo T.Ong, applied for a domestic commercial letter of credit with petitioner Pilipinas Bank (hereinafter

referred to as the bank) to finance the purchase of about 100,000 board feet of "Air Dried, Dark RedLauan" sawn lumber. The bank approved the application and issued Letter of Credit No. 91/725-HO in

the amount of P3,500,000.00. To secure payment of the amount, BMC, through respondent Ong, executed

two (2) trust receipts[3] providing inter alia that it shall turn over the proceeds of the goods to the bank, ifsold, or return the goods, if unsold, upon maturity on July 28, 1991 and August 4, 1991. On due dates,BMC failed to comply with the trust receipt agreement. On November 22, 1991, it filed with the

Securities and Exchange Commission (SEC) a Petition for Rehabilitation and for a Declaration in a Stateof Suspension of Payments under Section 6 (c) of P.D. No. 902-A, [4] as amended, docketed as SEC Case

No. 4109. On November 27, 1992, the SEC rendered a Decision [7] approving the Rehabilitation Plan ofBMC as contained in the MOA and declaring it in a state of suspension of payments. However, BMC and

respondent Ong defaulted in the payment of their obligations under the rescheduled payment schemeprovided in the MOA.

Issue:

Whether or not respondents Ong and Leoncia Lim (as president and treasurer of BMC, respectively)violated the Trust Receipts Law (PD No. 115).

Held:

NO. The execution of the MOA constitutes a novation, which places petitioner Bank in estoppel to insiston the original trust relation and constitutes a bar to the filing of any criminal information for violation of

the trust receipts law.

It has the effect of a compromise agreement, novated BMCs existing obligations under the trust receipt

agreement. The novation converted the parties relationship into one of an ordinary creditor and debtor.Moreover, the execution of the MOA precludes any criminal liability on their part which may arise incase they violate any provision thereof.

The execution of the MOA extinguished respondents obligation under the trust receipts. Respondents

liability, if any, would only be civil in nature since the trust receipts were transformed into mere loandocuments after the execution of the MOA. This is reinforced by the fact that the mortgage contracts

executed by the BMC survive despite its non-compliance with the conditions set forth in the MOA.


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Secrecy of Bank Deposits

PHILIPPINE COMMERCIAL & INDUSTRIAL BANK, et al.

vs.

COURT OF APPEALS, et al.[GR no. 84526, January 28, 1991]

Facts:

A group of laborers obtained a favorable judgment against the Marinduque Mining and IndustrialCorporation for the payment of backwages amounting to P205,853 before the National Labor Relations

Commission. A writ of execution was issued and the Deputy Sheriff served the writ, but it was

unsatisfied. The sheriff prepared on his own a Notice of Garnishment addressed to six banks in BacolodCity, including petitioner PCIB, directing the bank concerned to issue a check in satisfaction of the

judgment. While the in house lawyer of the Corporation warned the PCIB to withhold any release of its

deposit with the bank, the bank issued a managers check in the amount of P37,466, which was the exact balance of the private respondents account as of that day. The said check was also encashed by the

sheriff the next day. Marinduque Mining thus filed a complaint before the RTC of Manila against PCIB

and the deputy sheriff, alleging that its current deposit with the petitioner bank was levied upon,garnished, and with undue haste unlawfully allowed to be withdrawn, and notwithstanding the allegedunauthorized disclosure of the said current deposit and unlawful release thereof, the latter have failed and

refused to restore the amount of P37,466 to the formers account despite repeated demands.

Trial court rendered judgment in favor of Marinduque Mining Corporation. On appeal, the Court ofAppeals initially reversed the trial courts order but later affirmed it. Thus, this petition to the SC.

Issue:

Whether or not the petitioners violated RA 1405, otherwise known as the Secrecy of Bank Deposits Act,when they allowed the sheriff to garnish the deposit of Marinduque Mining Corporation?

Held:

NO. The SC first ruled that the release of the deposit by the bank was not done in undue and indecent

haste. We find the immediate release of the funds by the petitioner bank on the strength of the notice of

garnishment and writ of execution, whose issuance, absent any patent defect, enjoys the presumption ofregularity.The SC likewise did not find any violation whatsoever by the petitioners of RA 1405, otherwise known as

the Secrecy of Bank Deposits Act. The Court, in China Banking Corporation v. Ortega, had the occasion

to dispose of this issue when it stated, to wit:It is clear from the discussion of the conference committee report on Senate Bill No. 351 and House Bill

No. 3977, which later became Republic Act No. 1405, that the prohibition against examination of orinquiry into a bank deposit under Republic Act No. 1405 does not preclude its being garnished to insure

satisfaction of a judgment. Indeed, there is no real inquiry in such a case, and if existence of the deposit isdisclosed, the disclosure is purely incidental to the execution process. It is hard to conceive that it was

ever within the intention of Congress to enable debtors to evade payment of their just debts, even ifordered by the Court, through the expedient of converting their assets into cash and depositing the same in

a bank.Since there is no evidence that the petitioners themselves divulged the information that the private

respondent had an account with the petitioner bank and it is undisputed that the said account was properlythe object of the notice of garnishment and writ of execution carried out by the deputy sheriff, a duly

authorized officer of the court, we cannot therefore hold the petitioners liable under RA 1405.


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Code of Commerce (Maritime Commerce)

Chua Yek Hong vs IAC

[GR L-74811, 30 September 1988]

Facts:Chua Yek Hong is a duly licensed copra dealer based at Puerta Galera, Oriental Mindoro, whileMariano Guno and Dominador Olit are the owners of the vessel, M/V Luzviminda I, a

common carrier engaged in coastwise trade from the different ports of Oriental Mindoro to thePort of Manila. In October1977, Chua Yek Hong loaded 1,000 sacks of copra, valued at

P101,227.40, on board the vessel M/V Luzviminda I for shipment from Puerto Galera,Oriental Mindoro to Manila. Said cargo, however, did not reach Manila because somewhere

between Cape Santiago and Calatagan, Batangas, the vessel capsized and sank with all its cargo.Petitioner filed an action for damages.

Issue:

Whether respondents can avail of the limited liability.

Held:

YES. Under Article 587 of the Code of Commerce, direct liability is moderated and limited by

the shipagents or shipowners right of abandonment of the vessel and earned freight. Thisexpresses the universal principle of limited liability under maritime law. The most fundamental

effect of abandonment is the cessationof the responsibility of the shipagent/owner. It has thus

been held that by necessary implication, theshipagents or shipowners liability is confined tothat which he is entitled as of right to abandonthe vessel with all her equipment and the

freight it may have earned during the voyage, and to the insurancethereof if any. In otherwords, the shipowners or agents liability is merely co-extensive with his interest inthe vessel

such that a total loss thereof results in its extinction. No vessel, no liability expresses in anutshell the limited liability rule. The total destruction of the vessel extinguishes maritime liens

as there is no longer any res to which it can attach.The primary law is the Civil Code and in default thereof, the Code of Commerce and other

special laws are applied. Since the Civil Code contains no provisions regulating liability ofshipowners or agents in the event of total loss or destruction of the vessel, it is the provisions of

the Code of Commerce that govern in this case.

case digests mercantile law

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