NAMUAG, NINA YSABEL A.

PCBEA-22-502P
REFLECTION PAPER FM-106 CREDIT COLLECTIONS

ACTIVITY 4

LAND BANK OF THE PHILIPPINES vs. MONET’S EXPORT AND MANUFACTURING

CORPORATION, SPOUSES VICENTE V. TAGLE, SR. and MA. CONSUELO G. TAGLE

The Land Bank of the Philippines was appointed as an assignor by the Monet's Export
and Manufacturing Corporation to demand, collect, and receive the earnings of their clients'
export letters of credit. Land Bank of the Philippines and Monet's Export and
Manufacturing Corporation signed an Export Packing Credit Line Agreement in which
Monet was granted a credit line of P250,000.00 secured by the proceeds of its export
letters of credit and the continuing guarantee of Vicente V. Tagle, Sr. and Ma. Tagle,
Consuelo G and the third party mortgage executed by Pepita C. Mendigoria. Before reaching
P5,000,000.00, the credit line agreement was renewed and changed several times. Land
Bank filed a complaint for collection of sum of money with prayer for preliminary
attachment with the Regional Trial Court of Manila, docketed as Civil Case No. 93-64350, in
response to Monet's continued failure and refusal, despite repeated demands, to pay its
indebtedness to Land Bank, which had ballooned to P11,464,246.19 by August 31, 1992.

One of Monet's companies, Wishbone Trading Company of Hong Kong, did draw
$38,768.40 on the letter of credit. The Land Bank is clearly at fault because Monet's Export
and Manufacturing assigned them to demand, collect, and receive earnings on their clients'
export letters of credit, which they clearly did not do because they failed to collect from
Wishbone Trading Company of Hong Kong. Monet's Export and Manufacturing stated that
they are not liable for the letter of credit due to Land Bank's shortcomings. Furthermore,
Monet's Export and Manufacturing lacked the financial resources to purchase the materials
needed to fulfill its clients' standing orders. Regardless of whether the Land Bank is at fault
or not, this does not exempt Monet's Export and Manufacturing of liability.

The Supreme Court ordered that Monet's liabilities would be lowered to $15,000.00
payable in Philippine pesos. They arrived at this decision because, even if the Land Bank is
at fault, Monet still needs to pay its letter of credit, though the Supreme Court reduced the
total amount that they must pay. The Land Bank should have used due diligence in
collecting the sum owed to it in transactions involving their export letters of credit, which
they did not do in the case of Hong Kong's Wishbone Trading Company. Both Land Bank
and Monet are committed mistakes have shortcomings and so they are both responsible to
fulfill it and for my opinion the Supreme Court’s decision is equal and just.