Letters of Credit, Warehouse Receipts Law and Trust Receipts Law Jurisprudence (2014)

Commercial Law Review

Commercial Law Review

Galvez vs CA (GR 187919)

The Philippine Supreme Court limited the extent of the possible criminal liability of the fraud foisted by the accused individuals in the case of Galvez vs. Court of Appeals (G.R. No. 187919, February 20, 2013) from syndicated estafa under Presidential Decree No. 1689  to simple estafa under Article 315 (2)(a) of the Revised Penal Code.

PD 1689 imposes capital punishment for swindling committed by five or more persons where the defraudation results in the misappropriation of moneys contributed by stockholders, or members of rural banks, cooperative, “samahang nayon(s)”, or farmers’ associations, or of funds solicited by corporations/associations from the general public.

In the Galvez case, Asia United Bank (AUB) granted a P250 Million Omnibus Credit Line in favor of Radio Marine Network, Inc. (RMSI). Subsequently, this credit line was increased to P452 Million. RMSI was doing business under the name Smartnet Philippines and/or Smartnet Philippines, Inc. (SPI).

A group of directors and officers of RMSI then created a separate subsidiary and named it “SPI.” This group represented to AUB that their subsidiary was the same as Smartnet Philippines in order to secure a US$29,300 worth of irrevocable letter of credit from AUB when in fact, this company had only P62,500 of paid-up capital.

AUB filed a criminal complaint for syndicated estafa under PD 1869 against the bogus “SPI”   The Supreme Court however ruled that this “SPI” group can only be charged simple estafa under Article 315 (2) (a) of the Revised Penal Code. Under the Penal Code, estafa is committed by any person who shall defraud another by, among others, false pretenses or fraudulent acts executed prior to or simultaneous with the commission of fraud.

The Court noted that PD 1689 speaks of a syndicate of five or more individuals who are members of the association or corporation formed with the intention of carrying out the unlawful scheme for the misappropriation of the money contributed by the members of the same association or corporation or the money collected from the general public.

In the case of the spurious “SPI” group, the individuals were not in any way related either by employment or ownership to AUB. They were outsiders who, by their machinations, were able to defraud a corporation, which is AUB in this case. If they had been members or officers of AUB, then syndicated estafa would have been the proper charge.

The Court summarized how PD 1689 should be interpreted:

  1. PD 1689 also covers commercial banks;
  2. The swindling must be committed through the association or corporation, which operates on funds solicited from the general public;
  3. When the number of the accused are five or more, the crime is syndicated estafa and the penalty is capital punishment;
  4. When the number of accused is less than five, the criminal liability is reclusion temporal (12 years and 1 day to 20 years) to reclusion perpetua (20 years and 1 day to 40 years); and
  5. PD 1689 does not apply regardless of the number of the accused, when, (a) the entity soliciting funds from the general public is the victim and not the means through which the estafa is committed, or (b) the offenders are not owners or employees who used the association to perpetrate the crime, in which case, Article 315 (2)(a) of the Revised Penal Code applies.

In 2005, the Philippine Congress passed a law prohibiting the imposition of the death penalty. Instead, the maximum penalty that can be imposed is forty years without the benefit of parole.

From http://www.fnslaw.com.ph/articleAAC03.html

Bank of America vs CA (GR 105395)

There would at least be three (3) parties: (a) the buyer, who procures the letter of credit and obliges himself to reimburse the issuing bank upon receipts of the documents of title; (b) the bank issuing the letter of credit, which undertakes to pay the seller upon receipt of the draft and proper document of titles and to surrender the documents to the buyer upon reimbursement; and, (c) the seller, who in compliance with the contract of sale ships the goods to the buyer and delivers the documents of title and draft to the issuing bank to recover payment.

Facts : Bank of America received an Irrevocable Letter of Credit issued by Bank of Ayudhya for the Account of General Chemicals Ltd., Inc. for the sale of plastic ropes and agricultural files. Under the letter of credit, Bank of America acted as an advising bank and Inter-Resin Industrial Corp. (IR) acted as the beneficiary. Upon receipt of the letter advice, Inter- Resin told Bank of America to confirm the letter of credit.

Notwithstanding such instruction, Bank of America failed to confirm the letter of credit. Inter-Resin made a partial availment of the Letter of Credit after presentment of the required documents to Bank of America. After confirmation of all the documents Bank of America issued a check in favor of IR. BA advised Bank of Ayudhya of IR’s availment under the letter of credit and asked for the corresponding reimbursement. IR presented documents for the second availment under the same letter of credit. However, BA stopped the processing of such after they received a telex from Bank of Ayudhya delaring that the LC fraudulent. BA sued IR for the recovery of the first LC payment.

The IR contended that Bank of America should have first checked the authenticity of the letter of credit with bank of Ayudhya

Issue: Whether or not Bank of America may recover what it has paid under the letter of credit to Inter-Resin

Held: May Bank of America then recover what it has paid under the letter of credit when the corresponding draft

There would at least be three (3) parties: (a) the buyer, who procures the letter of credit and obliges himself to reimburse the issuing bank upon receipts of the documents of title; (b) the bank issuing the letter of credit, which undertakes to pay the seller upon receipt of the draft and proper document of titles and to surrender the documents to the buyer upon reimbursement; and, (c) the seller, who in compliance with the contract of sale ships the goods to the buyer and delivers the documents of title and draft to the issuing bank to recover payment.

The services of an advising (notifying) bank may be utilized to convey to the seller the existence of the credit; or, of a confirming bank 16 which will lend credence to the letter of credit issued by a lesser known issuing bank; or, of a paying bank, which undertakes to encash the drafts drawn by the exporter. Further, instead of going to the place of the issuing bank to claim payment, the buyer may approach another bank, termed the negotiating bank, 18 to have the draft discounted.

Bank of America has acted independently as a negotiating bank, thus saving Inter-Resin from the hardship of presenting the documents directly to Bank of Ayudhya to recover payment. As a negotiating bank, Bank of America has a right to recourse against the issuer bank and until reimbursement is obtained, Inter-Resin, as the drawer of the draft, continues to assume a contingent liability thereon.

Furthermore, bringing the letter of credit to the attention of the seller is the primordial obligation of an advising bank. The view that Bank of America should have first checked the authenticity of the letter of credit with bank of Ayudhya, by using advanced mode of business communications, before dispatching the same to Inter-Resin finds no real support.

From http://lexmercatoriaphilippines.wordpress.com/2014/03/15/bank-of-america-nt-sa-v-court-of-appeals-and-francisco-et-al-g-r-no-105395-december-10-1993/

MWSS vs. Hon. Daway (GR 160732)

The prohibition under Sec 6 (b) of Rule 4 of the Interim Rules does not apply to the the standby letter of credit issued by the bank as the former prohibition is on the enforcement of claims against guarantors or sureties of the debtors whose obligations are not solidary with the debtor.

The concept of guarantee vis-à-vis the concept of an irrevocable letter of credit are inconsistent with each other. The guarantee theory destroys the independence of the bank’s responsibility from the contract upon which it was opened and the nature of both contracts is mutually in conflict with each other. A Standby Letter of Credit is not a guaranty because under a Standby Letter of Credit, the bank undertakes a primary obligation. On the other hand, a guarantor undertakes a collateral obligation which arises only upon the debtor’s default. A Standby Letter of Credit is a primary obligation and not an accessory contract.

Facts: Maynilad obtained a 20-year concession to manage, repair, refurbish, and upgrade existing Metropolitan Waterworks and Sewerage System (MWSS) water delivery and sewerage services in Metro Manila’s west zone. Maynilad, under the concession agreement undertook to pay concession fees and itsforeign loans. To secure its obligations, Maynilad was required under Section 9 of the concession contract to put up a bond, bank guarantee or other security acceptable to MWSS. Pursuant to this requirement, Maynilad arranged on for a three-year facility with a number of foreign banks led by Citicorp Intl for the issuance of an irrevocable standby letter of credit (SLC) in the amount of $ 120 million in favor of MWSS for the full and prompt payment of Maynilad’s obligations to MWSS. Due to devaluation of the peso and other business reversals of Maynilad, MWSS filed a notice of early termination of the concession contract. Upon certification of the non performance of Maynilad obligation, the MWSS moved to collect from Citicorp on the standby letters of credit issued. Maynilad filed for corporate rehabilitation.   Judge Daway stayed the payment of the letter of credit by Citicorp pursuant to Sec 6 (b) of Rule 4 of the Interim Rules on Corporate Rehabilitation.

Issue: Whether or not the payment of the standby of letter of credit can be stayed by filing of a petition for rehabilitation

Held: No. The prohibition under Sec 6 (b) of Rule 4 of the Interim Rules does not apply to the the standby letter of credit issued by the bank as the former prohibition is on the enforcement of claims against guarantors or sureties of the debtors whose obligations are not solidary with the debtor.

The participating bank’s obligation under the letter of credit are solidary with respondent Maynilad in that it is a primary, direct, definite and an absolute undertaking to pay and is not conditioned on the prior exhaustion of the debtors assets. These are the same characteristics of a surety or solidary obligor. And being solidary, the claims against them can be pursued separately from and independently of the rehabilitation case.

Issuing banks under the letters of credit are not equivalent to guarantors. The concept of guarantee vis-à-vis the concept of an irrevocable letter of credit are inconsistent with each other. The guarantee theory destroys the independence of the bank’s responsibility from the contract upon which it was opened and the nature of both contracts is mutually in conflict with each other. In contracts of guarantee, the guarantor’s obligation is merely collateral and it arises only upon the default of the person primarily liable. On the other hand, in an irrevocable letter of credit, the bank undertakes a primary obligation. We have also defined a letter of credit as an engagement by a bank or other person made at the request of a customer that the issuer shall honor drafts or other demands of payment upon compliance with the conditions specified in the credit.

A Standby Letter of Credit is not a guaranty because under a Standby Letter of Credit, the bank undertakes a primary obligation. On the other hand, a guarantor undertakes a collateral obligation which arises only upon the debtor’s default. A Standby Letter of Credit is a primary obligation and not an accessory contract

From http://lexmercatoriaphilippines.wordpress.com/2014/03/15/metropolitan-waterworks-and-sewerage-system-v-hon-reynaldo-b-daway-g-r-no-160732-june-21-2004/

Another digest at http://ustlawreview.com/pdf/vol.XLIX/Cases/MWSS_v._Daway.pdf

Transfield Philippines vs Luzon Hydro Electric Corp (GR 146717)

The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent from the justification aspect and is a separate obligation from the underlying agreement like for instance a typical standby; or (b) independence may be only as to the justification aspect like in a commercial letter of credit or repayment standby, which is identical with the same obligations under the underlying agreement. In both cases the payment may be enjoined if in the light of the purpose of the credit the payment of the credit would constitute fraudulent abuse of the credit.

Facts: Transfield Philippines (Transfield) entered into a turn-key contract with Luzon Hydro Corp. (LHC).Under the contract, Transfield were to construct a hydro-electric plants in Benguet and Ilocos. Transfield was given the sole responsibility for the design, construction, commissioning, testing and completion of the Project. The contract provides for a period for which the project is to be completed and also allows for the extension of the period provided that the extension is based on justifiable grounds such as fortuitous event. In order to guarantee performance by Transfield, two stand-by letters of credit were required to be opened. During the construction of the plant, Transfield requested for extension of time citing typhoon and various disputes delaying the construction. LHC did not give due course to the extension of the period prayed for but referred the matter to arbitration committee. Because of the delay in the construction of the plant, LHC called on the stand-by letters of credit because of default. However, the demand was objected by Transfield on the ground that there is still pending arbitration on their request for extension of time.

Issue: Whether or not LHC can collect from the letters of credit despite the pending arbitration case

Held: Transfield’s argument that any dispute must first be resolved by the parties, whether through negotiations or arbitration, before the beneficiary is entitled to call on the letter of credit in essence would convert the letter of credit into a mere guarantee.

The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent from the justification aspect and is a separate obligation from the underlying agreement like for instance a typical standby; or (b) independence may be only as to the justification aspect like in a commercial letter of credit or repayment standby, which is identical with the same obligations under the underlying agreement. In both cases the payment may be enjoined if in the light of the purpose of the credit the payment of the credit would constitute fraudulent abuse of the credit.

Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the settlement of a dispute between the parties is not a pre-requisite for the release of funds under a letter of credit. In other words, the argument is incompatible with the very nature of the letter of credit. If a letter of credit is drawable only after settlement of the dispute on the contract entered into by the applicant and the beneficiary, there would be no practical and beneficial use for letters of credit in commercial transactions.

The engagement of the issuing bank is to pay the seller or beneficiary of the credit once the draft and the required documents are presented to it. The so-called “independence principle” assures the seller or the beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing bank from determining whether the main contract is actually accomplished or not. Under this principle, banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for the general and/or particular conditions stipulated in the documents or superimposed thereon, nor do they assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented by any documents, or for the good faith or acts and/or omissions, solvency, performance or standing of the consignor, the carriers, or the insurers of the goods, or any other person whomsoever.

From http://lexmercatoriaphilippines.wordpress.com/2014/03/15/transfield-philippines-vs-luzon-hydro-electric-corp-gr-no-146717-nov-22-2004/

PNB vs. Benedito (GR 119231)

Noah’s Ark Sugar Refinery issued Warehouse Receipts on several dates. The receipts are substantially in the form, and contains the terms, prescribed for negotiable warehouse receipts by Section 2 of the law.

Subsequently, Warehouse Receipts Nos. 18080 and 18081 were negotiated and endorsed to Luis T. Ramos; and Receipts Nos. 18086, 18087 and 18062 were negotiated and endorsed to Cresencia K. Zoleta. Ramos and Zoleta then used the quedans as security for two loan agreements – one for P15.6 million and the other for P23.5 million – obtained by them from the Philippine National Bank. The aforementioned quedans were endorsed by them to the Philippine National Bank.

Luis T. Ramos and Cresencia K. Zoleta failed to pay their loans upon maturity on January 9, 1990. Consequently, on March 16, 1990, the Philippine National Bank wrote to Noah’s Ark Sugar Refinery demanding delivery of the sugar stocks covered by the quedans endorsed to it by Zoleta and Ramos. Noah’s Ark Sugar Refinery refused to comply with the demand alleging ownership thereof, for which reason the Philippine National Bank filed with the Regional Trial Court of Manila a verified complaint for “Specific Performance with Damages and Application for Writ of Attachment” against Noah’s Ark Sugar Refinery, Alberto T. Looyuko, Jimmy T. Go and Wilson T. Go, the last three being identified as the sole proprietor, managing partner, and Executive Vice President of Noah’s Ark, respectively.

 

  1. COMMERCIAL LAW; WAREHOUSE RECEIPTS LAW; THE UNCONDITIONAL PRESENTMENT OF THE RECEIPTS FOR PAYMENT CARRIED WITH IT THE ADMISSIONS OF THE EXISTENCE AND VALIDITY OF THE TERMS, CONDITIONS AND STIPULATIONS WRITTEN ON THE FACE OF THE WAREHOUSE RECEIPTS, INCLUDING THE UNQUALIFIED RECOGNITION OF THE PAYMENT OF WAREHOUSEMAN’S LIEN FOR STORAGE FEES AND PRESERVATION EXPENSES; CASE AT BAR. – Petitioner is in estoppel in disclaiming liability for the payment of storage fees due the private respondents as warehouseman while claiming to be entitled to the sugar stocks covered by the subject Warehouse Receipts on the basis of which it anchors its claim for payment or delivery of the sugar stocks. The unconditional presentment of the receipts by the petitioner for payment against private respondents on the strength of the provisions of the Warehouse Receipts Law (R.A. 2137) carried with it the admission of the existence and validity of the terms, conditions and stipulations written on the face of the Warehouse Receipts, including the unqualified recognition of the payment of warehouseman’s lien for storage fees and preservation expenses. Petitioner may not now retrieve the sugar stocks without paying the lien due private respondents as warehouseman.
  2. ID.; ID.; ID.; WAREHOUSEMAN’S LIEN; POSSESSORY IN NATURE. – While the PNB is entitled to the stocks of sugar as the endorsee of the quedans, delivery to it shall be effected only upon payment of the storage fees. Imperative is the right of the warehouseman to demand payment of his lien at this juncture, because, in accordance with Section 29 of the Warehouse Receipts Law, the warehouseman loses his lien upon goods by surrendering possession thereof. In other words, the lien may be lost where the warehouseman surrenders the possession of the goods without requiring payment of his lien, because a warehouseman’s lien is possessory in nature.

From http://sc.judiciary.gov.ph/jurisprudence/1996/apr1996/119231.htm

Colinares vs CA (GR 90828)

The ownership of the merchandise continues to be vested in the person who had advanced payment until he has been paid in full, or if the merchandise has already been sold, the proceeds of the sale should be turned over to him by the importer or by his representative or successor in interest.

Facts: Melvin Colinares and Lordino Veloso (hereafter Petitioners) were contracted for a consideration of P40,000 by the Carmelite Sisters of Cagayan de Oro City to renovate the latter’s convent at Camaman-an, Cagayan de Oro City. Colinares applied for a commercial letter of credit with the Philippine Banking Corporation, Cagayan de Oro City branch (hereafter PBC) in favor of CM Builders Centre. PBC approved the letter of credit for P22,389.80 to cover the full invoice value of the goods. Petitioners signed a pro-forma trust receipt as security.

PBC debited P6,720 from Petitioners’ marginal deposit as partial payment of the loan. After the initial payment, the spouses defaulted. PBC wrote to Petitioners demanding that the amount be paid within seven days from notice. Instead of complying with PBC’s demand, Veloso confessed that they lost P19,195.83 in the Carmelite Monastery Project and requested for a grace period of until 15 June 1980 to settle the account. Colinares proposed that the terms of payment of the loan be modified P2,000 on or before 3 December 1980, and P1,000 per month . Pending approval of the proposal, Petitioners paid P1,000 to PBC on 4 December 1980, and thereafter P500 on 11 February 1981, 16 March 1981, and 20 April 1981. Concurrently with the separate demand for attorney’s fees by PBC’s legal counsel, PBC continued to demand payment of the balance. On 14 January 1983, Petitioners were charged with the violation of P.D. No. 115 (Trust Receipts Law) in relation to Article 315 of the Revised Penal Code

During trial, petitioner Veloso insisted that the transaction was a “clean loan” as per verbal guarantee of Cayo Garcia Tuiza, PBC’s former manager. He and petitioner Colinares signed the documents without reading the fine print, only learning of the trust receipt implication much later. When he brought this to the attention of PBC, Mr. Tuiza assured him that the trust receipt was a mere formality. The Trust Receipts Law does not seek to enforce payment of the loan, rather it punishes the dishonesty and abuse of confidence in the handling of money or goods to the prejudice of another regardless of whether the latter is the owner. Here, it is crystal clear that on the part of Petitioners there was neither dishonesty nor abuse of confidence in the handling of money to the prejudice of PBC. Petitioners continually endeavored to meet their obligations, as shown by several receipts issued by PBC acknowledging payment of the loan.

Issue: Whether or not the transaction of Colinares falls within the ambit of the Law on Trust Receipt

Held: Colinares received the merchandise from CM Builders Centre on 30 October 1979. On that day, ownership over the merchandise was already transferred to Petitioners who were to use the materials for their construction project. It was only a day later, 31 October 1979, that they went to the bank to apply for a loan to pay for the merchandise. This situation belies what normally obtains in a pure trust receipt transaction where goods are owned by the bank and only released to the importer in trust subsequent to the grant of the loan.

The bank acquires a “security interest” in the goods as holder of a security title for the advances it had made to the entrustee. The ownership of the merchandise continues to be vested in the person who had advanced payment until he has been paid in full, or if the merchandise has already been sold, the proceeds of the sale should be turned over to him by the importer or by his representative or successor in interest. To secure that the bank shall be paid, it takes full title to the goods at the very beginning and continues to hold that title as his indispensable security until the goods are sold and the vendee is called upon to pay for them; hence, the importer has never owned the goods and is not able to deliver possession. In a certain manner, trust receipts partake of the nature of a conditional sale where the importer becomes absolute owner of the imported merchandise as soon as he has paid its price. There are two possible situations in a trust receipt transaction. The first is covered by the provision which refers to money received under the obligation involving the duty to deliver it (entregarla) to the owner of the merchandise sold. The second is covered by the provision which refers to merchandise received under the obligation to “return” it (devolvera) to the owner. Failure of the entrustee to turn over the proceeds of the sale of the goods, covered by the trust receipt to the entruster or to return said goods if they were not disposed of in accordance with the terms of the trust receipt shall be punishable as estafa under Article 315 (1) of the Revised Penal Code, without need of proving intent to defraud.

From http://lexmercatoriaphilippines.wordpress.com/2014/03/15/colinares-v-ca-g-r-no-90828-september-5-2000/

Landl vs Metrobank (GR 159622)

The possession by the bank of the goods under the trust receipts does not bar collection of the loan. Mere possession does not amount to foreclosure for foreclosure denotes the procedure adopted by the mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself. Neither can said repossession amount to dacion en pago. Dation in payment takes place when property is alienated to the creditor in satisfaction of a debt in money and the same is governed by sales. Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation.

Facts: Landl Co opened Commercial Letter of Credit No. 4998 with respondent bank, in the amount of US$19,606.77, which was equivalent to P218,733.92 in Philippine currency at the time the transaction was consummated. The letter of credit was opened to purchase various welding rods and electrodes from Perma Alloys, Inc., New York, U.S.A., As an additional security, and as a condition for the approval of petitioner corporation’s application for the opening of the commercial letter of credit, respondent bank required petitioners Percival G. Llaban and Manuel P. Lucente to execute a Continuing Suretyship Agreement to the extent of P400,000.00.

Upon arrival of the goods in the Philippines, petitioner corporation took possession and custody thereof. On the maturity date of the trust receipt, petitioner corporation defaulted in the payment of its obligation to respondent bank and failed to turn over the goods to the latter. The goods were sold for P30,000.00 to respondent bank as the highest bidder. The proceeds of the auction sale were insufficient to completely satisfy petitioners’ outstanding obligation to respondent bank, notwithstanding the application of the time deposit account of petitioner Lucente. Accordingly, respondent bank demanded that petitioners pay the remaining balance of their obligation. After petitioners failed to do so, respondent bank instituted the instant case to collect the said deficiency.

Issue: Whether or not possession by the bank of the goods under the trust receipts does not bar collection of the loan.

Held: The initial repossession by the bank of the goods subject of the trust receipt did not result in the full satisfaction of the petitioners’ loan obligation. Petitioners are apparently laboring under the mistaken impression that the full turn-over of the goods suffices to divest them of their obligation to repay the principal amount of their loan obligation. The entrustee’s possession of the subject machinery and equipment being precisely as a form of security for the advances given to TCC under the Letter of Credit, said possession by itself cannot be considered payment of the loan secured thereby. Payment would legally result only after PNB had foreclosed on said securities, sold the same and applied the proceeds thereof to TCC’s loan obligation. Mere possession does not amount to foreclosure for foreclosure denotes the procedure adopted by the mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself. Neither can said repossession amount to dacion en pago. Dation in payment takes place when property is alienated to the creditor in satisfaction of a debt in money and the same is governed by sales. Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation.

A trust receipt is inextricably linked with the primary agreement between the parties. Time and again, we have emphasized that a trust receipt agreement is merely a collateral agreement, the purpose of which is to serve as security for a loan. Thus, in Abad v. Court of Appeals, we ruled: A letter of credit-trust receipt arrangement is endowed with its own distinctive features and characteristics. Under that set-up, a bank extends a loan covered by the letter of credit, with the trust receipt as security for the loan. In other words, the transaction involves a loan feature represented by the letter of credit, and a security feature which is in the covering trust receipt. x x x. A trust receipt, therefore, is a security agreement, pursuant to which a bank acquires a “security interest” in the goods. It secures an indebtedness and there can be no such thing as security interest that secures no obligation. The Trust Receipts Law was enacted to safeguard commercial transactions and to offer an additional layer of security to the lending bank. Trust receipts are indispensable contracts in international and domestic business transactions. The prevalent use of trust receipts, the danger of their misuse and/or misappropriation of the goods or proceeds realized from the sale of goods, documents or instruments held in trust for entruster banks, and the need for regulation of trust receipt transactions to safeguard the rights and enforce the obligations of the parties involved are the main thrusts of the Trust Receipts Law.

From http://lexmercatoriaphilippines.wordpress.com/2014/03/16/landl-co-vs-metropolitan-bank-trust-company-g-r-no-159622-july-30-2004/

 

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