GR 42735; (January, 1990) (Digest)
G.R. No. 42735 ; January 22, 1990
RAMON L. ABAD, petitioner, vs. HON. COURT OF APPEALS & THE PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, respondents.
FACTS
On October 31, 1963, TOMCO, Inc. obtained a domestic letter of credit for P80,000 from the Philippine Commercial and Industrial Bank (PCIB) to pay for machinery. TOMCO made a required marginal deposit of P28,000 with PCIB. Subsequently, TOMCO executed a trust receipt over the merchandise, and petitioner Ramon L. Abad signed a “Deed of Continuing Guaranty” as surety for the obligation. Except for the marginal deposit, no payment was made on the letter of credit.
PCIB sued TOMCO and Abad for the unpaid obligation. The bank presented a statement showing TOMCO’s indebtedness, including interest and charges, had ballooned to P125,766.13 as of August 26, 1970. TOMCO and Abad did not deny liability but contended that the P28,000 marginal deposit should first be deducted from the principal obligation of P80,000 before computing interest and other charges. Both the trial court and the Court of Appeals ruled in favor of PCIB, ordering TOMCO and Abad to pay the full amount without deducting the marginal deposit.
ISSUE
Whether the debtor’s (or its surety’s) cash marginal deposit should be deducted from the principal obligation under a letter of credit before computing interest and other charges.
RULING
Yes. The Supreme Court granted the petition and modified the appellate court’s decision. The Court clarified the nature of a letter of credit-trust receipt arrangement. The bank is not the true owner of the goods but a lender holding a security interest; the transaction is essentially a loan secured by the trust receipt. A marginal deposit is a collateral security, not an ordinary interest-earning deposit, required by the bank and returnable upon fulfillment of the obligation.
The legal logic is grounded on the principles of compensation and unjust enrichment. The requisites for legal compensation under Article 1279 of the Civil Code are present: both parties are principal debtors and creditors of each other in their own right for a sum of money. The bank’s claim for the loan and the debtor’s claim for the return of the marginal deposit are liquidated and demandable. Therefore, compensation takes effect by operation of law under Article 1290, extinguishing both debts to a concurrent amount. As a surety, Abad can invoke compensation regarding what the creditor owes the principal debtor under Article 1280.
It would be inequitable to compute interest on the full P80,000 when the bank held the P28,000 deposit, which it could use for its own purposes without paying interest. The bank effectively funded only P52,000 of the loan from its own resources. Charging interest on the entire face value without crediting the deposit constitutes unjust enrichment. Consequently, the marginal deposit must be deducted from the principal, and interest should be computed only on the resulting balance of P52,000.