GR 109087; (May, 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 No. 52/0428/79-D) with respondent Far East Bank & Trust Co. on January 15, 1979, in the amount of P190,000.00 in favor of Ekman and Company, Inc. (Ekman) to finance the purchase of five hydraulic loaders. The LC’s validity was extended several times, ultimately expiring on October 16, 1979. Three loaders were delivered and paid for within the LC’s validity. The remaining two loaders, valued at P76,000.00, were delivered to and received by petitioner in October 1979, after the LC’s expiry date. Respondent bank paid Ekman P76,000.00 for these two loaders on March 14, 1980, despite the LC having expired and having been cancelled in December 1979, at which time the bank had credited petitioner’s account with the marginal deposit for the unnegotiated portion. Petitioner refused to pay respondent for the amount, and instead offered to return the two loaders, which respondent refused. Respondent filed a complaint to recover the P76,000.00.
ISSUE
1. Whether it was proper for respondent bank to pay under a letter of credit that had expired.
2. Whether petitioner is liable to reimburse respondent bank for the payment made.
RULING
1. No, it was not proper. The letter of credit had become invalid upon the lapse of its fixed expiry date (October 16, 1979). Respondent bank was no longer obligated to pay Ekman under the LC when it did so in March 1980, five months after its expiration and after it had been cancelled.
2. Yes, petitioner is liable. While respondent was negligent in paying after the LC expired, petitioner was also negligent by voluntarily receiving and keeping the two loaders delivered in October 1979 without immediate objection or offer to return them until years later when demanded for payment. Under Article 2142 of the Civil Code on quasi-contract, no one shall be unjustly enriched at the expense of another. To allow petitioner to keep the loaders without paying would result in its unjust enrichment at respondent’s expense. The mutual negligence of both parties cancels each other out, and equity demands reimbursement. The Supreme Court affirmed the Court of Appeals with modifications: petitioner is ordered to reimburse respondent P76,000.00 with interest at 6% per annum from April 7, 1983, and the award of attorney’s fees was deleted.