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BF GOODRICH v REYES 121 SCRA 363 WHEREFORE, the lower court decision is affirmed declaring that petitioner is not engaged in retail business within the purview of Section 4 of Republic Act No. 1180 in accordance with Presidential Decree No. 714, except as to its sales to its employees and offices. The restraining order issued is likewise made permanent but subject to the above modification. No costs. MARSMAN v FIRST COCONUT CENTRAL 162 SCRA 206
Relying on the equal protection clause, BF Goodrich contends that it does not fall within the ban. It is engaged in the business of manufacturing and selling rubber products to dealers, who in turn sells it to others. Under the statute, it cannot engage in retail business, namely to sell direct to the general public, merchandise, commodities or goods for consumption. It admitted that it sold directly to the government and all its instrumentalities and/or agencies; public utilities; agricultural enterprises; logging, mining, and natural resources exploration firms; automotive assembly plants who buy its products in large bulk; industrial enterprises; and employees and officers of its company. Accordingly, a restraining order was issued by the RTC. Subsequently, the answer was duly filed, the principal defenses being that the petitioner should not be considered exempt as it is not a corporation wholly owned by citizens of the Philippines and that even on the assumption that such was the case, it being alleged in the petition that only 1.46% of its capital stock was owned by aliens, non-Filipinos or non-Americans, the Parity Amendment being still in force and effect at the time of the filing of this petition, still Republic Act 1180 is quite clear as to its not being applicable to petitioner considering the allegations of the petition. The plea was for dismissal. In the stipulation of facts, the allegations set forth above were admitted as to its selling to dealers and distributors primarily but likewise selling directly to certain entities and individuals named. Paragraph XX of the stipulation of facts made mention of the opinion of the then Secretary of Justice, Pedro Tuason, who ruled that a corporation whose capital stock was 99.99% Filipino and 0.01% alien was exempt from the provisions of Republic Act No. 1180, based on the doctrine of "de minimis non curat lex"; hence, the said corporation could retail. ISSUE: Whether the business of BF Goodrich constitutes “retail trade” and thus, restrained from engaging in the business. HELD: A ruling on the question raised as to the precise meaning of retail business is obviated by the issuance of Presidential Decree No. 714 amending Republic Act No. 1180. Under the former, which took effect without presidential approval on June 19, 1954, the term "retail business" covers "any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption, but shall not include: (a) a manufacturer, processor, laborer or worker selling to the general public the products manufactured, processed or produced by him if his capital does not exceed five thousand pesos, or (b) a farmer or agriculturist selling the product of his farm." Under the aforesaid PD, two more paragraphs were included. They are: "(c) a manufacturer or processor selling to the industrial and commercial users or consumers who use the products bought by them to render service to the general public and/or to produce or manufacture goods which are in turn sold to them; (d) a hotel- owner or keeper operating a restaurant irrespective of the amount of capital, provided that the restaurant is necessarily included in, or incidental to, the hotel business." It is clear from the above that proprietary planters and persons engaged in the exploration of natural resources are included within the aforesaid amendment. The lower court decision, however, is in accordance with law insofar as employees and officers of petitioners are concerned. As thus modified, the decision calls for affirmance.
First Coconut Central Co., Inc. purchased on installment one diesel generating unit worth P21,000.00 from Madrid Trading. As down payment, the defendant company paid the amount of P4,000.00 to Madrid. Upon delivery, they agreed that the payment of the balance of P17,000.00 in three (3) equal monthly installments to begin from date of delivery with usual clause on interests and attorney's fees. As security for the satisfaction of the said obligation, a chattel mortgageover the same diesel generating unit was constituted by the defendant First Coconut Central Co., Inc. in favor of Madrid Trading. Madrid Trading assigned all its rights under the chattel mortgage to the herein plaintiff, Marsman & Company, Inc. by virtue of a Deed of Assignment. Then the defendant company paid Marsman & Company, Inc. the sum of P2,000.00, leaving a balance of P15,000.00. For failure to pay the remaining balance despite repeated demands, Marsman & Company, Inc. brought this action to recover the balance of defendant company's account in the sum of Fourteen Thousand Pesos (P14,000.00). CFI rendered a judgement in favor of the plaintiff and against the defendant in the amount of P14,000.00, with interest at the rate of 12% per annum plus attorneys fees and other fees. First Coconut appealed to the CA. The CA stated that the sale in question violated Republic Act No. 1180, setting aside the judgement of the CFI and dismissing the case. Hence, this petition. ISSUE: Whether the sale of industrial machinery covered by the Anti-Dummy Law and the Retail Trade Nationalization Law. HELD:
NO! Marsman cannot be guilty of violating the AntiDummy Law or of using a dummy since it is not prohibited by the Retail Trade Nationalization Law from selling the diesel generating unit to herein respondent. For a sale to be considered as retail, the following elements should concur: (1) The seller should be habitually engaged in selling; (2) The sale must be direct to the general public; and (3) The object of the sale is limited to merchandise, commodities or goods for consumption. In this case, the first two elements are present. It is the presence of the third element that must be determined. The last element refers to the subject of the retailer's activities or what he is selling, i.e., consumption goods or consumer goods. Consumer goods may be defined as "goods which are used or bought for use primarily for personal, family or household purposes. Such goods are not intended for resale or further use in the production of other products." In other words, consumer goods are goods which by their very nature are ready for consumption. In the case at bar, the article in controversy is a piece of industrial machinery—a diesel generating unit. The said unit was purchased by respondent to be used in its coconut central and as such may be classified as "production or producer goods." Since the diesel generating unit is not a consumer item,
SOTELO, M.S. | 1
Their terms are to be interpreted in accordance SOTELO. employee. applied for LC with Allied Bank Makati Branch to finance its purchase of Dolomites and Nozzle Bricks. In the business 15 persons were employed 12 of whom are Filipinos and the other 3 Chinese.S. ISSUE: Whether or not PD 115 (Trust Receipts Law) apply when the goods covered by a Trust Receipt do not form part of the finished products which are ultimately sold but are instead. It is imperative that the law be interpreted in a manner that would stave off any attempt at circumvention of this legislative purpose. It prohibits a person not a Filipino from engaging in retail trade directly or indirectly while it limits the management. a naturalized Filipino citizen. Inc. The Supreme Court ruled that: Trust Receipts Law includes goods used by the business in its operation. ORDONEZ 192 SCRA 246 FACTS: Philippine Blooming Mills. Inc. Three weeks after King had acquired the business as aforesaid. as amended with particular reference to the right of public utility corporations to keep non-American aliens in their employ. "This theory offends all logic and reason which could not have been intended by Congress in enacting R. restraining or governing influence over an affair or business to which they relate. operation. the Philippine Cold Stores. The court stated that to hold that a partially nationalized corporation or association will not be liable under said Section 2-A would be to grant more rights and greater immunities to a partially nationalized corporation or association. MACARIO v HERNAEZ 4 SCRA 792 FACTS: Macario King. HELD: NO! It is a violation of the anti-dummy law. administration or control of said business. one having been employed as purchaser and the other two as salesmen. a criminal complaint was files against PBM for violation of PD 115. Hence. 1963 advised plaintiff-appellant that the Secretary of Justice rendered an opinion to the effect that the employment of non-American aliens in public utility corporations is prohibited by Section 2-A of the Anti-Dummy Law. Macario King and his three Chinese employees filed a petition for declaratory relief. as amended by Republic Act No. or laborer therein". M. including the three petitioners herein as purchaser and salesmen. | 2 . To secure the payment of the LC. there is an obligation to repay the entruster. but it cannot be denied that by reading them in connection with the positions therein enumerated one cannot draw any other conclusion than that they cover the entire range of employment regardless of whether they involve control or non-control activities. administration and control to Filipino citizens." ALLIED BANKING v.A. The CFI entered judgment holding that petitioner King may employ any person. as amended by Republic Act No. right. These words may be technically synonymous in the sense that they all refer to the exercise of a directing. "whether as an officer. PBM executed four (4) Trust Receipts in favor of Allied Banking. When the law says that you cannot employ an alien in any position pertaining to management. may be owned by aliens up to 40%. ANTI DUMMY BOARD 46 SCRA 474 FACTS: Plaintiff-appellant Luzon Stevedoring Corporation filed a complaint for declaratory relief alleging among others that it has nine (9) non-American aliens under its employ since long before the decision on in Macario v Hernaez. 1180. administration and control. The prevailing idea is to secure both ownership and management of the retail business in Filipino hands. a grocery wholesale and retail business. ISSUE: Whether the prohibition against the employment of non-American aliens in public utility corporations refers only to business. No. operation. PBM defaulted in its obligation to deliver the proceeds of the sale of the good which are the subject of the TR or to return the same to Allied Bank despite the repeated demand of the latter. in any position in his retail business not involving participation. ISSUE: LUZON STEVEDORING v. As a result of such adverse ruling.A. previously owned by the Philippine Cold Stores. franchise or privilege which is completely nationalized. ANTI-DUMMY & TRUST RECEIPTS it necessarily does not come within the ambit of retail business as defined by Republic Act No. The LC was issued in favor of Nikko Industries who drew drafts paid by the petitioner bank. utilized/used up in the operation of the equipment and machineries of PBM. The trust receipts. he sought permission from the President of the Philippines to retain the services of the three Chinese employees pursuant to Section 2-A of Commonwealth Act 108. 134 purposely fashioned to implement and strengthen the provision of C. injunction and mandamus against the Secretary of Commerce and Industry and the Executive Secretary before the CFI. NO! It applies to partly nationalized industries. HELD: Whether King may validly hire the three Chinese nationals in his business. 134. it only means one thing: the employment of a person who is not a Filipino citizen even in a minor or clerical or non-control position is prohibited. this petition. Consequently. and prays for a judicial construction of the provisions of Section 16(a) of the Public Service Act in relation to Section 2-A of the AntiDummy Law. by law. 108. coursing his letter thru the Secretary of Commerce and Industry. although not a citizen of the Philippines or of the United States of America. Section 2-A applies to a public utility the capital of which. operation. in conjunction with Section 2-A of Commonwealth Act No. and that defendant-appellee Anti-Dummy Board in a letter dated February 27. No. which ruled that aliens other than Americans may not be employed in whatever capacity in any retail business in the Philippine because of the Retail Trade Law. This official recommended to the President the disapproval of King's request on the ground that aliens may not be appointed to operate or administer a retail business The President approved the recommendation of the Secretary of Commerce and Industry since the positions of purchaser and salesmen occupied by the three Chinese employees are not technical positions within the meaning of Section 2-A of Commonwealth Act 108. or intervention in the management.. 134. for no one can deny that while one may be employed in a non-control position who apparently is harmless he may later turn out to be a mere tool to further the evil designs of the employer. became the owner of the business establishment known as "Import Meat and Produce". other than to a Filipino citizen or a completely nationalized corporation or association. thru Alfredo Ching.RETAIL TRADE. 108. The reason is obvious: to plug any loophole or close any avenue that an unscrupulous alien may resort to flout the law or defeat its purpose. HELD: YES. The three Chinese were old employees of the previous owner.
ANTI-DUMMY & TRUST RECEIPTS with the general rules on contracts. dismissing the Complaint and ordering petitioner to pay respondents the following amounts under their counterclaim: P490. the latter remained a lender and creditor. the VINTOLAS agreed to hold the goods in trust for IBAA as the "latter's property with liberty to sell the same for its account. a bank extends a loan covered by the Letter of Credit. respondents averred that the transaction between them was a simple loan and not a trust receipt transaction. The entrustee binds himself to sell or otherwise dispose of the entrusted goods with the obligation to turn over to the entruster the proceeds if sold.469. as shown by several receipts issued by PBC acknowledging payment of the loan. and that the amount claimed by petitioner did not take into account payments already made by them. Claiming that respondents failed to turn over the goods covered by the trust receipt or the proceeds thereof. The foregoing premises considered. respondent Corporation) and Gregory T. A trust receipt. DOM-23277 in the amount of P1. with the trust receipt as a security for the loan. Lim (hereinafter. which partially modified the Decision by deleting the award of attorney’s fees in favor of respondents and. VINTOLA v INSULAR BANK 150 SCRA578 FACTS: Spouses Vintola (VINTOLAS) applied for and were granted a domestic letter of credit by the Insular Bank of Asia and America (IBAA). wherein the goods belong in ownership to the bank and are only released to the importer in trust after the loan is granted. on Dax Kin International for the purchase of puka and olive seashells. petitioner filed a complaint for sum of money with application for preliminary attachment before the RTC. the prejudice of PBC. M. VINTOLAS received from Stalin Tan the puka and olive shells and executed a Trust Receipt Agreement with IBAA. There. Here. IBAA commenced a civil action to recover the value of the goods. The trial court acquitted the VINTOLAS of the offense charged.90 representing overpayment of respondent Corporation. it follows that the acquittal of the VINTOLAS in the Estafa case is no bar SOTELO. the transaction in question was a simple loan and not a trust receipt agreement. In relation to the same transaction.00 to petitioner. The trust receipt arrangement did not convert the IBAA into an investor. it is found that inasmuch as the debtor received the goods subject of the trust receipt before the trust receipt itself was entered into." IBAA did not become the real owner of the goods. This situation is inconsistent with what normally obtains in a pure trust receipt transaction. The court dismissed the case holding that the complaint was barred by the judgment of acquittal in the criminal case.001. and a security feature which is in the covering trust receipt. A violation of this undertaking constitutes estafa under Sec. one Stalin Tan. In answer to the complaint.445. which should not be the basis for criminal prosecution in the event of violation of its provisions. At no time did title over the construction materials pass to the bank. as found by the lower court and the CA. which the latter delivered directly to respondent Corporation in its Bulacan plant. misapplied and converted for their own personal use and benefit theaforesaid goods. ISSUE: Whether or not extinguish civil liability? HELD: acquittal from criminal offense NO! The petitioner failed to convince SC that its transaction with respondent Corporation is really a trust receipt transaction instead of merely a simple loan. responded by offering to return thegoods. and due to the continued refusal of the VINTOLAS to make good their undertaking.00 as attorney’s fees. 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. It was merely the holder of a security title for the advances it had made to the VINTOLAS The goods the VINTOLAS had purchased through IBAA financing remain their own property and they hold it at their own risk. Having defaulted on their obligation. and costs.RETAIL TRADE.00 On the same date. CONSOLIDATED BANK v. is a security agreement. with respondent Lim as signatory. IBAA charged them with Estafa for havingmisappropriated.228. 1988 until fully paid. therefore.S. | 3 .520. Also noteworthy is the fact that Petitioners are not importers acquiring the goods for re-sale. ISSUE: HELD: Whether the transaction is a trust receipt transaction. Under that set-up.22 as and for attorney’s fees and litigation expenses. PD 115. respondent Lim) obtained from petitioner Consolidated Bank and Trust Corporation Letter of Credit No. "It secures an indebtedness and there can be no such thing as security interest that secures no obligation. IBAA demanded payment from the VINTOLAS. They are contractors who obtained the fungible goods for their construction project. CA applies in this case. RTC rendered its Decision. In other words. or return the goods if unsold or not otherwise disposed of.93 was executed by respondent Corporation. The Letter of Credit authorized the bank to negotiate for their account drafts drawn by their supplier. IBAA refused to accept the merchandise. The VINTOLAS. Under that Agreement. The recent case of Colinares v.068. pursuant to which a bank acquires a "security interest" in the goods. it is crystal clear that on the part of Petitioners there was neither dishonesty nor abuse of confidence in the handling of money to A letter of credit-trust receipt arrangement is endowed with its own distinctive features and characteristics.150. The Trust Receipts Law does not seek to enforce payment of the loan. The letter of credit was used to purchase around five hundred thousand liters of bunker fuel oil from Petrophil Corporation. but directly to the Petitioners from CM Builders Centre. the transaction involves a loan feature represented by the letter of credit. CA 356 SCRA 671 FACTS: Continental Cement Corporation (hereinafter. 13. This impresses upon the trust receipt in question vagueness and ambiguity. ordering respondent Corporation to pay petitioner P37. Respondent Lim also denied any personal liability in the subject transactions. ownership over the goods was already transferred to the debtor. Hence this petition. contrary to the express provision embodied in the trust receipt. instead. P10. Prior to the date of execution of the trust receipt. who were unable to dispose of the shells. with interest thereon at the legal rate from July 26. Both parties appealed to the Court of Appeals.000. Petitioners continually endeavored to meet their obligations. the law being alert in all cases to prevent fraud on the part of either party to the transaction. in accordance with the terms and conditions specified in the trust receipt. a trust receipt for the amount of P1. " and "incase of sale" to turn over the proceeds. respondent Corporation paid a marginal deposit of P320.
But on 18 September 1992 the Labor Arbiter denied the claim of petitioner and directed the Sheriff to proceed with the levy of the properties. TCC filed with petitioner bank an application and agreement for the establishment of an 8 year deferred letter of credit (L/C) for $7M in favor of Toyo Menka Kaisha to cover the importation of a cement plant machinery and equipment. HELD: There was no dacion en pago. the civil suit instituted by IBAA is based ex contractu and as such is distinct and independent from any criminal proceedings and may proceed regardless of the result of the latter. misapply or convert" the merchandise as charged in the criminal case. 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. such interest. PNB contends that the sale of La Vista was made to satisfy not only the amount owed by the spouses on their personal loan but also the amount of expenses owed by said spouses as sureties of TCC.S. It justifies the dismissal of petitioner's third-party claim on the ground that trust receipts are mere security transactions which do not vest upon petitioner any title of ownership. The Arroyos oppose the foreclosure. pursuant to the trust receipt agreement. PRUDENTIAL BANK v. however. Their civil liability does not arise ex delicto. From the legal and jurisprudential standpoint it is clear that the security interest of the entruster is not merely an empty or idle title. said possession by itself cannot be considered payment of the loan secured thereby. It is inaccurate for the VINTOLAS to claim that the judgment in the estafa case had declared that the facts from which the civil action might arise. no dacion en pago was ever accomplished. Thus.RETAIL TRADE. The repossession of the machinery and equipment in question was merely to secure the payment of TCC’s loan obligation and not for the purpose of transferring ownership thereof to PNB in satisfaction of said loan. contending primarily that repossession of the imported machinery and equipment by PNB amounted to dacion en pago that extinguished their obligation as surety to TCC. NLRC denied the petition relying on the pronouncement on trust receipts in Vintola v. the NLRC was confused about the nature of a trust receipt. The transfer of ownership to extinguish a pre-existing obligation is the essence in dation in payment. whether they did or they did not "misappropriate. Insular Bank of Asia and America. TCC. As a result. Toyo Menka Kaisha made the corresponding drawings against the L/C as scheduled. For to refuse to recognize the title of the banker under the trust receipt as security for the advance of the purchase price would be to strike down a bona fide and honest transaction of great commercial benefit and advantage founded upon a well-recognized custom by which banking credit is officially mobilized for manufacturers and importers of small means. Prudential Bank filed an Affidavit of Third-Party Claim asserting ownership over the seized properties on the strength of trust receipts executed by INTERASIA in its favor. To a certain extent. PHILIPPINE NATIONAL BANK v PINEDA 197 SCRA 1 FACTS: The Arroyo Spouses obtained a loan of P580K from PNB to purchase 60% of the subscribed capital stock. 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. ISSUE: WON the repossession of the machinery was tantamount to a dacion en pago that absolved Arroyo spouses as surety? NO. and thereby acquire the controlling interest of Tayabas Cement Company. As security for said loan. Thus. the Arroyo spouses executed a surety agreement. Payment would legally result only after PNB had foreclosed on said securities. the action for the recovery of which would have been deemed instituted with the criminal-action (unless waived or reserved) and where acquittal based on a judicial declaration that the criminal acts charged do not exist would have extinguished the civil action. for. SOTELO. writs of execution were issued. A contrary view would be disastrous. Petitioner then filed separate appeals to the NLRC. Upon approval of the application and opening of an L/C by PNB in favor of Toyo Menka Kaisha for the account of TCC. 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. such interest becomes a "lien" on the goods because the entruster's advances will have to be settled first before the entrustee can consolidate his ownership over the goods. was embroiled in three (3) labor cases which were eventually resolved against it. ISSUE: Whether the trust receipts vested ownership to Prudential HELD: YES! The issue here involves the effect and enforcement of the security aspect of trust receipt whereas the Vintola case deals with the loan aspect of a trust receipt transaction. Subsequently. The imported cement plant machinery and equipment arrived from Japan and were released to TCC under a trust receipt agreement. PNB took possession of the imported cement plant machinery and equipment pursuant to the trust receipt agreement executed by and between PNB and TCC giving the former the unqualified right to the possession and disposal of all property shipped under the Letter of Credit until such time as all the liabilities and obligations under said letter had been discharged. Apparently. The Sheriff levied on execution personal properties located in the factory of INTERASIA. With the finality of the three (3) decisions. the Sheriff suspended the public auction sale. failed to remit and/or pay the corresponding amount covered by the drawings. NLRC 251 SCRA 421 FACTS: Interasia Container Industries. there was no showing that it canceled the trust receipts and took possession of the goods. but a real contract and novates the original debt relationship into a consummated sale. | 4 . (TCC). PNB foreclosed the real estate mortgages executed by the spouses Arroyo in TCC’s favor. ANTI-DUMMY & TRUST RECEIPTS to the institution of a civil action for collection. Inc. specifically the security aspect thereof. Inc. (INTERASIA). M. did not exist. the spouses executed a real estate mortgage over a parcel of land known as the La Vista property. therefore it is not a consensual contract. Rather. sold the same and applied the proceeds thereof to TCC’s loan obligation." The VINTOLAS are liable ex contractu for breach of the Letter of Credit — Trust Receipt. PNB notified TCC of its intention to repossess the imported machinery and equipment for failure of TCC to settle its obligations under the L/C. it will be recalled that the decision of acquittal expressly declared that "the remedy of the Bank is civil and not criminal in nature. PNB’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. and that although the Trust Receipt Agreements described petitioner as owner of the goods.
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