Case Summary (G.R. No. 148163)
Facts of the Case
In 1989, Rosario Textile Mills Corporation (RTMC) applied for an Omnibus Credit Line from Home Bankers Savings and Trust Company, seeking P10 million but was granted only P8 million. The bank notified RTMC of this approval through a letter on March 2, 1989, to which Edilberto Yujuico, on behalf of RTMC, consented. A Surety Agreement was subsequently executed by Yujuico, binding him jointly with RTMC for the payment of debts arising from the credit line. RTMC made multiple withdrawals, each secured by separate promissory notes and trust receipts. However, RTMC defaulted on its obligations despite the bank's demand for payment. The bank ultimately filed a complaint for a sum of money against RTMC and Yujuico in January 1993.
Court Proceedings and Trial Court Decision
RTMC and Yujuico argued in their response that the bank had assured them that the Surety Agreement was merely a formality and that they would not be held personally liable. They claimed a right to return defective raw materials to the bank, which were later destroyed in a fire that engulfed RTMC's premises. The trial court ruled in favor of the bank, ordering both RTMC and Yujuico to pay the debts specified in the promissory notes, along with interest and penalties. The counterclaims by the defendants were dismissed.
Court of Appeals Ruling
On appeal, RTMC and Yujuico contended that their obligations should not be enforced since the bank retained ownership of the raw materials, thus arguing that the destruction of those materials should absolve them from liability. The Court of Appeals affirmed the trial court's ruling, reasoning that the goods purchased through the credit line belonged to RTMC and that the bank merely held them as collateral.
Issues Raised in the Petition
The petition for review on certiorari challenged the Court of Appeals on multiple grounds, including claims that the acts of the petitioners constituted a valid tender of goods to the bank, an erroneous application of the doctrine of "res perit domino," a misinterpretation of the Surety Agreement's intentions, and a violation of the principles laid out in the Trust Receipts Law.
Analysis of the Court's Decision
The Supreme Court dismissed the petition, affirming that the nature of the transaction between RTMC and the bank constituted a loan agreement rather than a mere trust arrangement. The Court emphasized that the trust receipts served merely as security for th
...continue readingCase Syllabus (G.R. No. 148163)
Case Overview
- Case Citation: G.R. No. 137232, June 29, 2005
- Court: Third Division
- Petitioners: Rosario Textile Mills Corporation (RTMC) and Edilberto Yujuico
- Respondent: Home Bankers Savings and Trust Company
- Deciding Justice: Sandoval-Gutierrez, J.
Procedural History
- Petitioners filed a petition for review on certiorari against the Decision of the Court of Appeals dated March 31, 1998, and its subsequent Resolution dated January 12, 1999.
- The case originated from a complaint filed by the respondent bank against petitioners for sum of money due to failure to pay the loan obligations.
Facts of the Case
- In 1989, RTMC applied for an Omnibus Credit Line of P10 million from Home Bankers, which was approved for P8 million.
- The approval was communicated to RTMC via a letter dated March 2, 1989, and Edilberto Yujuico signed a Surety Agreement on March 3, 1989, binding himself jointly and severally with RTMC for all debts incurred within the credit line.
- RTMC executed a total of eleven promissory notes to avail of the credit line but failed to settle these after their respective due dates, prompting the bank to file a complaint on January 22, 1993.
- In their defense, petitioners claimed that the Surety Agreement was merely a formality and contended that the bank should bear the loss from the destruction of imported raw materials caused by a fire, as they had offered to return the defective materials.