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Consolidated Bank vs CA, GR No.

114286, 19 April 2001, 356 SCRA 671


24FEB
FACTS
Continental Cement Corp obtained from Consolidated Bank letter of credit used to purchased 500,000 liters of bunker fuel oil.
Respondent Corporation made a marginal deposit to petitioner. A trust receipt was executed by respondent corporation, with
respondent Gregory Lim as signatory. Claiming that respondents failed to turn over the goods or proceeds, petitioner filed a complaint
for sum of money before the RTC of Manila. In their answer, respondents aver that the transaction was a simple loan and not a trust
receipt one, and tht the amount claimed by petitioner did not take into account payments already made by them. The court dismissed
the complaint, CA affirmed the same.
ISSUE
Whether or not the marginal deposit should not be deducted outright from the amount of the letter of credit.
HELD
No. petitioner argues that the marginal deposit should be considered only after computing the principal plus accrued interest and other
charges. It could be onerous to compute interest and other charges on the face value of the letter of credit which a bank issued, without
first crediting or setting off the marginal deposit which the borrower paid to it-compensation is proper and should take effect by
operation of law because the requisited in Art. 1279 are present and should extinguish both debts to the concurrent amount. Unjust
enrichment.
Colinares v CA G.R. No. 90828. September 5, 2000
MARCH 15, 2014LEAVE A COMMENT
The ownership of the merchandise continues to be vested in the person who had advanced payment until he has been paid in
full, or if the merchandise has already been sold, the proceeds of the sale should be turned over to him by the importer or by
his representative or successor in interest.
Facts: Melvin Colinares and Lordino Veloso (hereafter Petitioners) were contracted for a consideration of P40,000 by the Carmelite
Sisters of Cagayan de Oro City to renovate the latters convent at Camaman-an, Cagayan de Oro City. Colinares applied for a
commercial letter of credit with the Philippine Banking Corporation, Cagayan de Oro City branch (hereafter PBC) in favor of CM
Builders Centre. PBC approved the letter of credit for P22,389.80 to cover the full invoice value of the goods. Petitioners signed a proforma trust receipt as security.
PBC debited P6,720 from Petitioners marginal deposit as partial payment of the loan. After the initial payment, the spouses
defaulted. PBC wrote to Petitioners demanding that the amount be paid within seven days from notice. Instead of complying with
PBCs demand, Veloso confessed that they lost P19,195.83 in the Carmelite Monastery Project and requested for a grace period of
until 15 June 1980 to settle the account. Colinares proposed that the terms of payment of the loan be modified P2,000 on or before 3
December 1980, and P1,000 per month . Pending approval of the proposal, Petitioners paid P1,000 to PBC on 4 December 1980, and
thereafter P500 on 11 February 1981, 16 March 1981, and 20 April 1981. Concurrently with the separate demand for attorneys fees by
PBCs legal counsel, PBC continued to demand payment of the balance. On 14 January 1983, Petitioners were charged with the
violation of P.D. No. 115 (Trust Receipts Law) in relation to Article 315 of the Revised Penal Code
During trial, petitioner Veloso insisted that the transaction was a clean loan as per verbal guarantee of Cayo Garcia Tuiza, PBCs
former manager. He and petitioner Colinares signed the documents without reading the fine print, only learning of the trust receipt
implication much later. When he brought this to the attention of PBC, Mr. Tuiza assured him that the trust receipt was a mere formality.
The Trust Receipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty and abuse of confidence in the
handling of money or goods to the prejudice of another regardless of whether the latter is the owner. Here, it is crystal clear that on the
part of Petitioners there was neither dishonesty nor abuse of confidence in the handling of money to the prejudice of PBC. Petitioners
continually endeavored to meet their obligations, as shown by several receipts issued by PBC acknowledging payment of the loan.
Issue: Whether or not the transaction of Colinares falls within the ambit of the Law on Trust Receipt

Held: Colinares received the merchandise from CM Builders Centre on 30 October 1979. On that day, ownership over the merchandise
was already transferred to Petitioners who were to use the materials for their construction project. It was only a day later, 31 October
1979, that they went to the bank to apply for a loan to pay for the merchandise. This situation belies what normally obtains in a pure
trust receipt transaction where goods are owned by the bank and only released to the importer in trust subsequent to the grant of the
loan.
The bank acquires a security interest in the goods as holder of a security title for the advances it had made to the entrustee. The
ownership of the merchandise continues to be vested in the person who had advanced payment until he has been paid in full, or if the
merchandise has already been sold, the proceeds of the sale should be turned over to him by the importer or by his representative or
successor in interest. To secure that the bank shall be paid, it takes full title to the goods at the very beginning and continues to hold
that title as his indispensable security until the goods are sold and the vendee is called upon to pay for them; hence, the importer has
never owned the goods and is not able to deliver possession. In a certain manner, trust receipts partake of the nature of a conditional
sale where the importer becomes absolute owner of the imported merchandise as soon as he has paid its price. There are two possible
situations in a trust receipt transaction. The first is covered by the provision which refers to money received under the obligation
involving the duty to deliver it (entregarla) to the owner of the merchandise sold. The second is covered by the provision which refers to
merchandise received under the obligation to return it (devolvera) to the owner. Failure of the entrustee to turn over the proceeds of
the sale of the goods, covered by the trust receipt to the entruster or to return said goods if they were not disposed of in accordance
with the terms of the trust receipt shall be punishable as estafa under Article 315 (1) of the Revised Penal Code, without need of
proving intent to defraud.
Tio Khe Chio v. CA
GR No. 76101-02 September 30, 1991
Facts: Petitioner shipped bags of imported fishmeals and insured the same with respondent insurance company Eastern Assurance &
Surety Corp (EASCO). During transit, the bags were found out to be damaged thus rendering the fishmeals useless. Petitioner filed a
claim before the EASCO which denied the same, prompting the former to sue the latter at CFI Cebu who ordered EASCO to pay the
petitioner's claim for insurance with damages. Upon execution, respondent filed a petition for certiorari with the CA who set aside the
lower court's decision arguing that the latter has erred in fixing the legal interest on 12% per annum rather than the mandated 6%.
Issue:

What

should

the

legal

interest

be

for

damages

arising

from

loss

of

property?

Held: The applicable law is Article 2209 of the Civil Code which reads that if the obligation consists in the payment of a sum of money
and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of interest
agreed upon, and in the absence of stipulation, the legal interest which is 6% per annum.
The adjusted rate mentioned in the Circular No. 416, from which the CFI based its decision, refers only to loans or forbearances of
money, goods or credits and court judgments thereon but not to court judgments for damages arising from injury to persons and loss of
property which does not involve a loan.
Tio Khe Chio vs. Court of Appeals
(202 SCRA 119)Circular No. 416 of the Central Bank which took effect on July 29, 1974 pursuant to Presidential Decree No. 116
(Usury Law) raised the legal rate of interest from six (6%) percent to twelve (12%) percent. The adjusted rate mentioned in the circular
refers only to loans or forbearances of money, goods or credits and court judgments thereon but not to court judgments for damages
arising from injury to persons and loss of property which does not involve a loan. In the case of Philippine Rabbit Bus Lines, Inc. vs.
Cruz ,G.R. No. 71017, July 28, 1986, 143 SCRA 158, the Court declared that the legal rate of interest is six (6%) percent per annum
and not twelve (12%) percent, where a judgment award is based on an action for damages for personal injury, not use or forbearance
of money, goods or credit. In the same vein, the Court held in GSIS vs. Court of Appeals G.R. No. 52478, October30, 1986, 145 SCRA
311, that the rates under the Usury Law(amended by P. D. 116) are applicable only to interest by way of compensation for the use or
forbearance of money; interest by way of damages is governed by Article 2209 of the Civil Code.

Colinares v CA G.R. No. 90828. September 5, 2000


MARCH 15, 2014LEAVE A COMMENT
The ownership of the merchandise continues to be vested in the person who had advanced payment until he has been paid in
full, or if the merchandise has already been sold, the proceeds of the sale should be turned over to him by the importer or by
his representative or successor in interest.
Facts: Melvin Colinares and Lordino Veloso (hereafter Petitioners) were contracted for a consideration of P40,000 by the Carmelite
Sisters of Cagayan de Oro City to renovate the latters convent at Camaman-an, Cagayan de Oro City. Colinares applied for a
commercial letter of credit with the Philippine Banking Corporation, Cagayan de Oro City branch (hereafter PBC) in favor of CM
Builders Centre. PBC approved the letter of credit for P22,389.80 to cover the full invoice value of the goods. Petitioners signed a proforma trust receipt as security.
PBC debited P6,720 from Petitioners marginal deposit as partial payment of the loan. After the initial payment, the spouses
defaulted. PBC wrote to Petitioners demanding that the amount be paid within seven days from notice. Instead of complying with
PBCs demand, Veloso confessed that they lost P19,195.83 in the Carmelite Monastery Project and requested for a grace period of
until 15 June 1980 to settle the account. Colinares proposed that the terms of payment of the loan be modified P2,000 on or before 3
December 1980, and P1,000 per month . Pending approval of the proposal, Petitioners paid P1,000 to PBC on 4 December 1980, and
thereafter P500 on 11 February 1981, 16 March 1981, and 20 April 1981. Concurrently with the separate demand for attorneys fees by
PBCs legal counsel, PBC continued to demand payment of the balance. On 14 January 1983, Petitioners were charged with the
violation of P.D. No. 115 (Trust Receipts Law) in relation to Article 315 of the Revised Penal Code
During trial, petitioner Veloso insisted that the transaction was a clean loan as per verbal guarantee of Cayo Garcia Tuiza, PBCs
former manager. He and petitioner Colinares signed the documents without reading the fine print, only learning of the trust receipt
implication much later. When he brought this to the attention of PBC, Mr. Tuiza assured him that the trust receipt was a mere formality.
The Trust Receipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty and abuse of confidence in the
handling of money or goods to the prejudice of another regardless of whether the latter is the owner. Here, it is crystal clear that on the
part of Petitioners there was neither dishonesty nor abuse of confidence in the handling of money to the prejudice of PBC. Petitioners
continually endeavored to meet their obligations, as shown by several receipts issued by PBC acknowledging payment of the loan.
Issue: Whether or not the transaction of Colinares falls within the ambit of the Law on Trust Receipt
Held: Colinares received the merchandise from CM Builders Centre on 30 October 1979. On that day, ownership over the merchandise
was already transferred to Petitioners who were to use the materials for their construction project. It was only a day later, 31 October
1979, that they went to the bank to apply for a loan to pay for the merchandise. This situation belies what normally obtains in a pure
trust receipt transaction where goods are owned by the bank and only released to the importer in trust subsequent to the grant of the
loan.
The bank acquires a security interest in the goods as holder of a security title for the advances it had made to the entrustee. The
ownership of the merchandise continues to be vested in the person who had advanced payment until he has been paid in full, or if the
merchandise has already been sold, the proceeds of the sale should be turned over to him by the importer or by his representative or
successor in interest. To secure that the bank shall be paid, it takes full title to the goods at the very beginning and continues to hold
that title as his indispensable security until the goods are sold and the vendee is called upon to pay for them; hence, the importer has
never owned the goods and is not able to deliver possession. In a certain manner, trust receipts partake of the nature of a conditional
sale where the importer becomes absolute owner of the imported merchandise as soon as he has paid its price. There are two possible
situations in a trust receipt transaction. The first is covered by the provision which refers to money received under the obligation
involving the duty to deliver it (entregarla) to the owner of the merchandise sold. The second is covered by the provision which refers to

merchandise received under the obligation to return it (devolvera) to the owner. Failure of the entrustee to turn over the proceeds of
the sale of the goods, covered by the trust receipt to the entruster or to return said goods if they were not disposed of in accordance
with the terms of the trust receipt shall be punishable as estafa under Article 315 (1) of the Revised Penal Code, without need of
proving intent to defraud.
Eastern Shipping Lines, Inc. v. CA and The First Nationwide Assurance Corp.
G.R. No. 97412 July 12, 1994
Vitug, J.

FACTS:
13 coils of uncoated 7-wire stress relieved wire strand for pre-stressed concrete were shipped on board a vessel owned and operated
by Eastern Shipping Lines at Kobe, Japan, for delivery to Stresstek Post-Tensioning Phils., Inc. in Manila
while en route from Kobe to Manila, the carrying vessel encountered very rough seas and stormy weather; the coils wrapped in burlap
cloth and cardboard paper were stored in the lower hold of the hatch of the vessel which was flooded with water; the water entered the
hatch when the vessel encountered heavy weather en route to Manila; upon request, a survey of bad order cargo was conducted at the
pier in the presence of the representatives of the consignee and E. Razon, Inc. and it was found that 7 coils were rusty on one side
each; upon survey conducted at the consignees warehouse it was found that the wetting of the cargo was caused by fresh water that
entered the hatch when the vessel encountered heavy weather; all 13 coils were extremely rusty and totally unsuitable for the intended
purpose
The First Nationwide Assurance Corp. indemnified the consignee in the amount of P171,923.00 for damage and loss to the insured
cargo
ISSUE: WON Eastern Shipping Lines is liable
HELD: Yes.
under Art. 1733, common carriers are bound to observe extra-ordinary vigilance over goods according to all circumstances of each
case
Art. 1735: In all cases other than those mentioned in Art. 1734, if the goods are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence
Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the part of the carrier applies;
and the carrier must present evidence that it has observed the extraordinary diligence required by Article 1733 of the Civil Code in order
to escape liability for damage or destruction to the goods that it had admittedly carried in this case. But no evidence was presented;
hence, the carrier cannot escape liability.
GSIS vs Court of Appeals and Mr. & Mrs. Racho, GR No. L-40824 February 23, 1989
Posted by Pius Morados on January 12, 2012
(Negotiable Instruments payable to order or to bearer)
Facts: Spouses Racho together with Spouses Lagasca executed a deed of mortgage in favor of GSIS in connection with 2 loans
granted by the latter in the sums of p11,500.00 and p3,000.00, respectively. A parcel of land co-owned by the mortgagor spouses was
govern as security under the aforesaid deeds and executed a promissory note promising to pay the said amounts to GSIS jointly,
severally and solidarily.
The Lagasca spouses executed an instrument obligating themselves in the assumption of the aforesaid obligation and to secure the
release of the mortgage.
Failing to comply with the conditions of the mortgage, GSIS extrajudicially foreclosed the mortgage and caused the property to be sold
at public auction.
More than 2 years after, Spouses Racho filed a complaint against GSIS and Spouses Lagasca praying that the extrajudicial
foreclosure be declared null and void. They allege that they signed the mortgage contracts not as sureties for the Lagasca spouses but
merely as accommodation party
Issue: WON the promissory note and mortgage deeds are negotiable.
Held: No. Section 29 of the NIL provides that an accommodation party is one who has signed an instrument as maker, drawer, acceptor
of indorser without receiving value therefore, but is held liable on the instrument to a holder for value although the latter knew him to be
only an accommodation party.

Both parties appear to be misdirected and their reliance misplaced. The promissory note, as well as the mortgage deeds subject of this
case, are clearly not negotiable instrument because it did not comply with the fourth requisite to be considered as such under Sec. 1 of
the NIL they are neither payable to order nor to bearer. The note is payable to a specified party, the GSIS.
JOSE ALMEDA VS. COURT OF APPEALS, digested
Posted by Pius Morados on November 7, 2011
GR # 121013 July 16 1998
(Remedial Law, Appeal)
FACTS: Petitioner Jose Almeda filed a notice of appeal which was disapproved by the trial court due to it being filed five (5) days late
beyond the reglementary period and subsequently denied of motion for reconsideration. Respondent court dismissed the petition
contending that the requirement regarding perfection of an appeal was not only mandatory but jurisdictional such that the petitioners
failure to comply therewith had the effect of rendering the judgment final. Subsequently, petitioner motions for reconsideration and is
denied. Also, it was found that there was lack of merit in the petitioners reason for the late filing of the notice of appeal.
ISSUE: Whether or not failure to comply with the requirement regarding perfection of an appeal within reglementary period would
render a judgment final and executory.
HELD: Yes, the period to appeal is prescribed not only by the Rules of Court but also by statute, particularly Sec 39 of BP 129, which
provides:
Sec.39. Appeals. The period for appeal from final orders, resolutions, awards, judgments, or decisions of any court in all cases shall be
fifteen (15) days counted from the notice of the final order, resolution, award, judgment, or decision appealed from

The right to appeal is a statutory right and one who seeks to avail of it must strictly comply with the statutes or rules as they are
considered indispensable interdictions against needless delays and for an orderly discharge of judicial business. Due to petitioners
negligence of failing to perfect his appeal, there is no recourse but to deny the petition thus making the judgment of the trial court final
and executory.