JUDICIAL

DEPOSIT
OR SEQUESTRATION
ARTICLE 2005 - 2008 NCC
WHEN JUDICIAL DEPOSIT
TAKES PLACE
• Attachment or seizure of property

• Court order
HOW COURT EXERCISE JUDICIAL DEPOSIT

RECEIVERSHIP REPLEVIN
ATTACHMENT BY SHERIFF
• Rule 57 (preliminary • Rule 59 • Rule 60
attachment)
ATTACHEMENT BY
SHERIFF
• Remedy by the plaintiff or other
party
• Applied at the commencement of
action or any time before judgment
• Property taken into the custody of
court
• Enforced by sheriff of the court or
Chief of Police deputized as sheriff
RECEIVERSHIP

• Court appoints a representative as

depositary of the property during the
pendency of an action
ü Preserve
ü Administer
ü Dispose of
ü Prevent the loss or dissipation
• Can be availed even after the
judgment has become final and
executory
REPLEVIN

• Seeks to regain the possession of

personal chattels being wrongfully
detained from the plaintiff
• Right of the plaintiff to obtain
possession of specific personal
property
ü Being the owner
ü Have special interest
NATURE AND PURPOSE OF JUDICIAL DEPOSIT

NATURE PURPOSE
• Auxiliary to a case pending in court • Maintain status quo during pendency of
the litigation
• Movable or immovable property
• Insure the right of the parties to the
property
OBLIGATION OF DEPOSITARY OF SEQUESTERED
PROPERTY
• Depositary = Person appointed by the court
• Take care the property with the diligence of a good father of a family
• Not relieved of his obligation until:
Ø Litigation ends; or
Ø Court order
DIFFERENCE BETWEEN JUDICIAL AND EXTRAJUDICIAL
DEPOSIT

JUDICIAL DEPOSIT EXTRAJUDICIAL DEPOSIT

• Will of the court • Will of the parties
• As security • Custody and safekeeping of the things
• Movable or immovable • Movable property only
• Onerous • Onerous or gratuitous
• In behalf of the person who has a right • In behalf of the depositor or 3rd person
(by judgment) designated
 GOVERNING LAW IS RULES OF COURT

PRELIMINARY RECEIVERSHIP REPLEVIN ATTACHMENT IN

ATTACHMENT CRIMINAL CASES
• Rule 57 • Rule 59 • Rule 60 • Rule 127
MERCHANTS AND
COMMERCIAL
TRANSACTIONS
CODE OF COMMERCE - TITLE 1
MERCHANT
- Is the middleman between the
consumer and manufacturer

- Must do business in his own

name
PEPSI COLA – not a merchant
Puregold – Merchant
Lazada – Merchant
MERCHANTS

Filipino Merchants
• Natural persons
ü Legal capacity to engage in commerce
ü Free disposition of property
ü Habitually engaging in commerce
MERCHANTS

Filipino Merchants
• Juridical Persons
ü Industrial or commercial company
ü Organize in accordance with existing legislation
MERCHANTS

Foreign Merchants
- Engaged in business in the Philippines
ü Capacity to contract (laws of their country)
ü Creation of their establishments, mercantile operations and jurisdiction of our courts
(Philippine Code of Commerce or Corporation Code)
DISQUALIFICATIONS FROM ENGAGING IN COMMERCE

• Absolute Disqualification • Relative Disqualification

- Through out the Philippines - Territory where officer exercise his
functions
- Acts are null and void
q Those serving the penalty of civil - Subjected to disciplinary action or
interdiction punishment
q Those judicially declared insolvent q Certain government officials
q Those who are absolutely disqualified q Money and commercial brokers
under special laws q Those under relative disqualification
under special laws
COMMERCIAL
TRANSACTIONS

Those acts contained in

the Code of Commerce

All other analogous acts

LETTERS OF CREDIT
ARTICLES 567-572 – CODE OF COMMERCE
LETTERS OF CREDIT

• Financial device developed by

merchants as a convenient and
relatively safe mode of dealing with
sales of goods.
PURPOSE

• To satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his
goods before he is paid, and a buyer, who wants to have control of the goods before
paying.
ESSENTIAL CONDITIONS

1. To be issued in favor of a determined person and not

to order
2. To be limited to a fixed and specified amount, or to
one or more indeterminate amounts, but all within a
maximum sum the limit of which must be exactly
stated.
PARTIES IN LETTER OF CREDIT

01 02 03 04
Applicant / Issuing / Seller / Correspondent
Buyer / Opening bank Exporter / / Advising bank
Importer Beneficiary
LAWS
GOVERNING • Code of Commerce
LETTERS OF • Uniform Custom and Practice for Documentary Credits
CREDIT
COMMERCIAL LETTER OF CREDIT STANDBY LETTER OF CREDIT
• Involve payment of money under a • Payable upon certification of a party’s
contract of sale nonperformance
• Documents shows that he has taken • Documents tends to show that the
affirmative steps to comply applicant has not performed
• Beneficiary must demonstrate that he • Beneficiary must certify that his obligor
has performed his contract has not performed the contract
INDEPENDENCE PRINCIPLE
• Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness,
falsification or legal effect of any document, 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.
Transfield Philippines, Inc v. Luzon Hydro Corp.
G.R. 146717, November 22, 2004
Facts:
• Transfield undertook to construct a hydro-electric power station on or before June 1, 2000.
• Transfield opened 2 letters of credit from ANZ and Security Bank in favor of Luzon to secure
the performance of its obligation.
• Transfield failed to complete the project on the target date allegedly due to force majeure.
• Filed a case to restrain the banks from paying on the securities and prevent Luzon from calling
on the securities.
Transfield Philippines, Inc v. Luzon Hydro Corp.
G.R. 146717, November 22, 2004
Issue:

Whether or not the “Independence Principle” on Letter of Credit may be invoked by a

beneficiary.
Transfield Philippines, Inc v. Luzon Hydro Corp.
G.R. 146717, November 22, 2004
Ruling:
Yes, the beneficiary can invoke the independence principle.
“In a letter of credit transaction where the credit is stipulated as irrevocable, there is a
definite undertaking by the issuing bank to pay the beneficiary provided that the stipulated
documents are presented and the conditions of the credit are complied with, and
particularly, the independence principle liberates the issuing bank from the duty of
ascertaining compliance by the parties of the main contract.”
TRUST RECEIPTS LAW
WHAT IS A TRUST RECEIPT?

• A trust receipt refers to the written or printed document signed by the entrustee in favor
of the entruster containing terms and conditions substantially complying with the
provisions of Presidential Decree No. 115 (P.D. No. 115), otherwise known as the Trust
Receipts Law.
WHO ARE THE PARTIES TO A TRUST RECEIPT
TRANSACTION?
• The entrustee shall refer to the person having or taking possession of goods, documents
or instruments under a trust receipt transaction, and any successor in interest of such
person for the purpose or purposes specified in the trust receipt agreement.

• The entruster shall refer to the person holding title over the goods, documents, or
instruments subject of a trust receipt transaction, and any successor in interest of such
person.
WHAT ARE THE OBLIGATIONS OF THE ENTRUSTEE?

1. Hold the goods, documents or instruments in trust shall dispose of them strictly in
accordance with the terms and conditions of the trust receipt
2. Receive the proceeds in trust and turn over the same to the extent of the amount owed or
as appears on the trust receipt
3. Insure the goods for their total value against loss from fire, theft, pilferage or other
casualties
4. Keep said goods or proceeds, separate and capable of identification
5. Return of the goods, documents, or instrument in the event of non-sale or demand
6. Observe all other terms and condition on trust receipt not contrary to Trust Receipt Law
WHAT IF THE ENTRUSTEE FAILS TO PERFORM HIS
OBLIGATIONS?
• Under Sec. 13 of P.D. No. 115 which provides for the penalty clause, the failure of the
entrustee to perform any of his obligations as mentioned above shall constitute the
crime of Estafa under Art. 315, paragraph 1 (b) of the Revised Penal Code of the
Philippines.
Colinares & Veloso v. CA
G.R. 90828, September 5, 2000
Facts:
• In 1979 Melvin Colinares and Lordino Veloso were contracted by Carmelite Sisters to renovate
the latter’s convent.
• Petitioner obtained materials for the construction from CM Builders Centre
• Petitioner applied for a commercial letter of credit with PBC in favor of CM Builders which
was subsequently approved. Also petitioners signed a pro-forma trust receipt as security
• Petitioner failed to settle the full amount upon the original due date
• PBC filed a case against petitioner for violation of Trust Receipt LAw
Colinares & Veloso v. CA
G.R. 90828, September 5, 2000
Issue:

Whether or not the transaction of Colinares falls within the ambit of Law on Trust Receipt
Colinares & Veloso v. CA
G.R. 90828, September 5, 2000
Ruling:
No, the transaction of Colinares does not fall within the ambit of Law on Trust Receipt
“The 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.”
Colinares & Veloso v. CA
G.R. 90828, September 5, 2000
Ruling:
“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.”
TRUTH IN LENDING ACT
REPUBLIC ACT 3765
WHAT IS THE
TRUTH IN
LENDING ACT
AN ACT REQUIRING THE DISCLOSURE OF
FINANCE CHARGES IN CONNECTION WITH THE
EXTENSION OF CREDIT
WHO ARE
COVERED?
ANY CREDITOR
 (1) the cash price or delivered price of the property or service to be acquired;

(2) the amounts, if any, to be credited as down payment and/or trade-in;

(3) the difference between the amounts set forth under clauses (1) and (2);

(4) the charges, individually itemized, which are paid or to be paid by such person
in connection with the transaction but which are not incident to the extension of
credit;
SECTION 4 (5) the total amount to be financed;

(6) the finance charge expressed in terms of pesos and centavos; and

(7) the percentage that the finance bears to the total amount to be financed
expressed as a simple annual rate on the outstanding unpaid balance of the
obligation.
POLICY BEHIND

• To protect the people from lack of awareness of the true cost of credit by assuring full
disclosure of such cost, with a view of preventing the uninformed use of credit to the
detriment of the national economy.
United Coconut Planters Bank v. Sps Beluso
G.R. 159912, August 17, 2007
Facts:
• On April 1997, spouses Beluso constituted other than promissory notes, a real estate
mortgage over parcels of land.
• 3 of their promissory notes were renewed several times. UCPB also applied different
interest rates on the promissory notes ranging from 18% to 34%
• Subsequently, spouses failed to deliver payment upon UCPB’s demand which results to
foreclosure of their mortgage.
• Spouses filed Petition for Annulment, Accounting and Damages against UCPB.
United Coconut Planters Bank v. Sps Beluso
G.R. 159912, August 17, 2007
Issue:

Whether or not the CA erred when it affirmed the RTC which found petitioner liable for
violation of the Truth in Lending Act
United Coconut Planters Bank v. Sps Beluso
G.R. 159912, August 17, 2007
Ruling:
The CA is correct in affirming the RTC which which found petitioner liable for violation of the
Truth in Lending Act
“The allegation that the promissory notes grant UCPB the power to unilaterally fix the interest
rates certainly also means that the promissory notes do not contain a "clear statement in
writing" of
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance charge bears to the amount to be financed expressed as a
simple annual rate on the outstanding unpaid balance of the obligation."
THE USURY LAW
ACT NO. 2655
 • The Monetary Board of the Central Bank in Resolution
No.224 dated December 3, 1982 approved this
USURY LAW regulation

Rate of interest no longer subject to • Effective January 1, 1983, usury has become “legally
any ceiling inexistent”
• Lender and borrower can legally agree on any interest
United Alloy Philippines Corporation v. UCPB
G.R. 175949, Jauary 30, 2017
Facts:
• Petitioner corporation was granted a credit accommodation by UCPB evidenced by a
Credit Agreement which some part was secured by a Surety Agreement.
• Six (6) Promissory Notes, were later executed by UNIALLOY in UCPB’s favor.
• UCPB filed against UNIALLOY, the spouses Chua, Yang and Van Der Sluis an action for Sum
of Money
United Coconut Planters Bank v. Sps Beluso
G.R. 159912, August 17, 2007
Issue:

Whether or not the interest rates imposed by the UCPB on the promissory notes may be
subjected to change by the court?
United Coconut Planters Bank v. Sps Beluso
G.R. 159912, August 17, 2007
Ruling:
Yes, the courts have the authority to strike down or to modify provisions in promissory notes
that grant the lenders unrestrained power to increase interest rates, penalties and other
charges at the latter's sole discretion and without giving prior notice to and securing the
consent of the borrowers.
Although the Usury Law has been effectively repealed, courts may still reduce iniquitous or
unconscionable rates charged for the use of money.
Furthermore, excessive interests, penalties and other charges not revealed in disclosure
statements issued by banks, even if stipulated in the promissory notes, cannot be given effect
under the Truth in Lending Act.