GR 109087; (April, 2001) (Digest)
G.R. No. 109087. May 9, 2001.
RODZSSEN SUPPLY CO. INC., petitioner, vs. FAR EAST BANK & TRUST CO., respondent.
FACTS
Petitioner Rodzssen Supply Co. Inc. opened a 30-day domestic letter of credit (LC) with respondent Far East Bank and Trust Co. to purchase five hydraulic loaders from Ekman and Company, Inc. The LC was subsequently amended, extending its validity until October 16, 1979. Three units were delivered and paid for. The remaining two units, valued at P76,000, were delivered to and accepted by Rodzssen, but the delivery occurred after the LC’s expiry date. Despite the expiration, Ekman presented the shipping documents to Far East Bank, which then paid Ekman the P76,000. The bank demanded reimbursement from Rodzssen, which refused, arguing the bank acted negligently by paying on an expired LC. Rodzssen offered to return the two loaders, but this offer was made three years after receipt.
ISSUE
The primary issue is whether Rodzssen is liable to reimburse Far East Bank for the P76,000 paid to Ekman for the two hydraulic loaders delivered after the letter of credit’s expiration.
RULING
The Supreme Court affirmed Rodzssen’s liability, applying the principles of solutio indebiti and unjust enrichment. The legal logic is grounded in mutual negligence and equity. While the bank was negligent in paying Ekman after the LC had expired, Rodzssen was likewise negligent in accepting and retaining the two units of equipment without immediate objection or offer to return them upon delivery. The Court held that the fault of one party cancels the negligence of the other, preventing Rodzssen from using the bank’s lapse to escape its own obligation. By voluntarily accepting the goods and using them for three years before offering their return, Rodzssen was deemed to have ratified the delivery and incurred an obligation to pay. To allow Rodzssen to keep the equipment without payment would result in unjust enrichment at the bank’s expense, which is prohibited by law. The Court modified the interest rate to 6% per annum from the date of demand, as the obligation did not arise from a loan or forbearance of money, and deleted the award of attorney’s fees due to the mutual negligence of both parties.