Abad v. Court of Appeals
REITERATIONFacts
The Antecedents: TOMCO, Inc. (TOMCO) applied for and was granted a domestic letter of credit (LC) by Philippine Commercial and Industrial Bank (PCIB) for P80,000.00 in favor of its supplier, Oregon Industries, Inc., to purchase a Skagit Yarder. PCIB paid Oregon Industries against a bill of exchange. TOMCO made a marginal deposit of P28,000.00 and signed a trust receipt acknowledging receipt of the merchandise in trust for PCIB. Petitioner Ramon Abad signed a Deed of Continuing Guaranty, promising to pay the obligation jointly and severally with TOMCO. Procedural History: No payment was made by TOMCO or Abad, except for the marginal deposit. PCIB sued TOMCO and Abad for the total sum of P125,766.13 as of August 26, 1970. The trial court ruled in favor of PCIB, ordering TOMCO and Abad to pay the said amount with interest and charges. Abad appealed to the Court of Appeals, which affirmed the trial court's decision. The Petition: Abad filed a petition for review, raising the issue of whether TOMCO's P28,000.00 marginal deposit should have been deducted from the principal obligation before computing interest and other charges, arguing that failure to do so resulted in unjust enrichment.
Issue(s)
Whether the marginal deposit of TOMCO, Inc. should be deducted from its principal obligation under the letter of credit before computing interest and other charges. Whether the bank was unjustly enriched by not deducting the marginal deposit, considering the nature of the trust receipt arrangement and the purpose of the marginal deposit.
Ruling
The petition is granted. The decision of the Court of Appeals is modified by deducting TOMCO's marginal deposit of P28,000.00 from the principal amount of P80,000.00 covered by its letter of credit. The interests and other charges of the bank should be computed on the outstanding loan balance of P52,000.00 only. The decision is affirmed in other respects.
Ratio Decidendi
On whether the marginal deposit should be deducted from the principal obligation: The Court held that a marginal deposit is a collateral security given by the debtor and is supposed to be returned upon compliance with the secured obligation. Unlike ordinary bank deposits, the bank pays no interest on marginal deposits. It would be unfair and onerous to compute interest and other charges on the face value of the letter of credit without first crediting or setting off the marginal deposit paid by the importer. Compensation is proper by operation of law as the requisites under Article 1279 of the Civil Code are present, extinguishing both debts to the concurrent amount. Petitioner Abad, as surety, may set up compensation as regards what the creditor owes the principal debtor, TOMCO, pursuant to Article 1280 of the Civil Code. On whether the bank was unjustly enriched: The Court found that the bank likely used TOMCO's marginal deposit to partially fund the P80,000.00 letter of credit. Therefore, the interests and other charges should only be levied on the balance of P52,000.00, which was the portion actually funded by the bank from its own funds. Requiring the importer to pay interest on the entire letter of credit without deducting the marginal deposit would constitute unjust enrichment by the bank. The nature of a trust receipt arrangement was clarified, emphasizing that it is a security transaction for financing importers, where the bank acts as a lender and creditor, not the real owner of the goods. The marginal deposit requirement is a Central Bank measure to control liquidity, and it is equitable for this deposit to be set off against the debt.
Main Doctrine
A marginal deposit made by an importer for a letter of credit should be deducted from the principal obligation before computing interest and other charges, as it constitutes collateral security and its retention by the bank without crediting it against the debt would result in unjust enrichment.