Bank of Commerce V Serrano

3B SPCL Digests
BANK OF COMMERCE v. TERESITA S. SERRANO for the purchase and importation of fabric and textile
Feb 16, 2005 products from Tiger Ear Fabric Co. Ltd. of Taiwan. To
secure the release of the goods covered, respondent,
G.R. No.: 151895 Ponente: Quisumbing
in representation of Via Moda, executed Trust Receipt
dated April 21, 1994 with due date on July 20, 1994.
Related Article: Tickler:
On behalf of Via Moda International, respondent,

obtained an export packing loan from petitioner.
secured by a Deed of Assignment over Irrevocable
Doctrine of the Case
Transferable Letter of Credit. Respondent executed
in favor of BOC a Promissory Note dated May 6, 1994
A letter of credit is a separate document from a trust
with maturity date on July 14, 1994. Via Moda then
receipt. While the trust receipt may have been
opened a deposit account for the proceeds of the said
executed as a security on the letter of credit, still the
loan.
two documents involve different undertakings and
obligations.
Under the terms of the trust receipt, Via Moda agreed
to hold the goods in trust for petitioner as the latter’s
A letter of credit is an engagement by a bank or other
property and to sell the same for the latter’s account.
person made at the request of a customer that the
In case of sale, the proceeds are to be remitted to the
issuer will honor drafts or other demands for payment
bank as soon as it is received, but not later than the
upon compliance with the conditions specified in the
maturity date. Said proceeds are to be applied to the
credit. Through a letter of credit, the bank merely
relative acceptances, with interest and penalty of the
substitutes its own promise to pay for the promise to
total amount due until fully paid in case of non-payment
pay of one of its customers who in return promises to
of the trust receipt and relative acceptance at maturity
pay the bank the amount of funds mentioned in the
date or, in the alternative, to return the goods in case
letter of credit plus credit or commitment fees mutually
of non-sale.
agreed upon. By contrast, a trust receipt transaction is
one where the entruster, who holds an absolute title or
The goods covered by the trust receipt were shipped
security interests over certain goods, documents or
by Via Moda to its consignee in New Jersey, USA, who
instruments, released the same to the entrustee, who
sent an Export Letter of Credit issued by the Bank of
executes a trust receipt binding himself to hold the
New York, in favor of BOC. The Regional Operations
goods, documents or instruments in trust for the
Officer of BOC signed the export declarations to show
entruster and to sell or otherwise dispose of the goods,
consent to the shipment.
documents and instruments with the obligation to turn
over to the entruster the proceeds thereof to the extent
The proceeds of the entrusted goods sold were not
of the amount owing to the entruster, or as appears in
credited to the trust receipt but were applied by the
the trust receipt, or return the goods, documents or
bank to the principal, penalties and interest of the
instruments themselves if they are unsold, or not
export packing loan. The excess was applied to the
otherwise disposed of, in accordance with the terms
trust receipt, leaving a balance of ₱1,444,802.28 as of
and conditions specified in the trust receipt.
November 15, 1994.
On November 16, 1994, petitioner sent a demand letter

Bank of Commerce (formerly Boston Bank of the to Via Moda to pay the said amount plus interest and
Philippines) – Issuing bank penalty charges, or to return the goods covered by the
Teresita S. Serrano – acting on behalf of Via Moda, corresponding trust receipt but the demand was not
importer heeded.
Tiger Ear Fabric Co. Ltd. - exporter On March 8, 1998, respondent was charged with the
crime of estafa under Article 315 (b) of the Revised
Penal Code in relation to Presidential Decree No. 115
Facts
RTC Ruling:
On March 15, 1994, Bank of Commerce (BOC) issued
to Via Moda International, Irrevocable Letter of Credit
Pulido, Alwin U.
3B SPCL Digests
On May 31, 2000, the trial court rendered judgment

finding respondent GUILTY beyond reasonable doubt
CA Ruling:
CA rendered a decision reversing that of the trial

court’s.
The Court of Appeals held that the element of

misappropriation or conversion in violation of P.D. No.
115, in relation to the crime of estafa, was absent in
this case, thereby acquitting the respondent and
deleting her civil liability.
Issue/s
Whether the guarantee clause of the letter of credit

secured by trust receipt will impute joint and solidary
liability on the part of the respondent.
Whether the Respondent can be held civilly liable

under the trust receipt
Ruling
NO. The question of the liability of respondent based

on the Guarantee Clause of the Letter of Credit, was
not raised either at the trial court or before the Court of
Appeals. A question that was never raised in the courts
below cannot be allowed to be raised for the first time
on appeal without offending basic rules of fair play,
justice, and due process.
No. Respondent cannot be held civilly liable under the

trust receipt since she was not made personally liable
nor was she a guarantor therein. The parties stipulated
during the pre-trial that respondent Serrano executed
the trust receipt in representation of Via Moda, Inc.,
which has a separate personality from Serrano, and
petitioner BOC failed to show sufficient reason to justify
the piercing of the veil of corporate fiction. It thus ruled
that this was not Serrano’s personal obligation but that
of Via Moda and there was no basis of finding her
solidarily liable with Via Moda.
Disposition:
Petition was denied for lack of merit
Pulido, Alwin U.

Bank of Commerce V Serrano

Uploaded by

Copyright:

Available Formats

Bank of Commerce V Serrano

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bank of Commerce V Serrano

Uploaded by

Copyright:

Available Formats

3B SPCL Digests

On behalf of Via Moda International, respondent,

On November 16, 1994, petitioner sent a demand letter

On May 31, 2000, the trial court rendered judgment

CA rendered a decision reversing that of the trial

The Court of Appeals held that the element of

Whether the guarantee clause of the letter of credit

Whether the Respondent can be held civilly liable

NO. The question of the liability of respondent based

No. Respondent cannot be held civilly liable under the

Petition was denied for lack of merit

You might also like