Mercantile Law

Mock Bar
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Direction: Read and answer the following questions.

I. Pinoy Co., a Filipino Corporation operating in the Philippine territory, is contemplating of

importing goods from Aussie Co., an Australian Corporation operating in Australia. In order to
facilitate the acquisition of goods, Pinoy Co. applied for a letter of credit with Banco Filipino.
Banco Filipino issued a letter of credit to Pinoy Co. which submitted the same to Aussie Co. The
letter of credit requires Banco Filipino to pay Aussie Co. if the bill of lading from the common
carrier and receiving report from the warehouse custodian will be properly submitted by the
latter. Aussie Co. delivered counterfeited goods to Pinoy Co.'s warehouse but was able to obtain
the bill of lading from the common carrier and the receiving report from the warehouse
custodian. Subsequently, Aussie submitted those two documents to Banco Filipino and asked for
reimbursement from the latter which the bank complied with after examining the documents.
Afterwards, Banco Filipino asked for reimbursement from Pinoy Co., who refused to do so by
contending that the goods delivered by Aussie Co. were counterfeited.
A. Is the contention of Pinoy Co. proper? Explain.
B. Assuming the documents submitted by Aussie Co. to Banco Filipino were fake
documents, may Pinoy Co. refuse to reimburse Banco Filipino? Explain.

II. Pinay Co., a Filipino Corporation borrowed P100,000 from BDO Bank to finance the acquisition
of merchandise inventory. In order to secure the payment of the loan, Pinay Co. executed a trust
receipt to BDO bank. After the importation of the goods, Pinay Co. disposed the goods contrary
to the instructions of BDO Bank and failed to remit the proceeds of the goods to BDO Bank. The
acquirer of the goods from Pinay Co. is a purchase in good faith and for value.
A. What is the legal remedy available to BDO Bank against Pinay Co.? Explain.
B. May BDO Bank recover the goods from the acquirer? Explain.
C. Assuming the goods were lost due to fortuitous event after importation but before
disposal to the acquirer, who shall suffer the risk of loss? Explain.

III.

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