GR No. 114286, 19 April 2001, 356 SCRA 671
FACTS:
On July 13, 1982, Continental Cement Corporation (Continental Cement) and its President, Gregory Lim, obtained from Consolidated Bank and Trust Corporation (CBTC) Letter of Credit in the amount of P1,068,150.00 which was used to purchase fuel oil from Petrophil Corporation. On the same date, Continental Cement paid a marginal deposit of P320,445.00 to CBTC. In relation to the same transaction, a trust receipt for the amount of P1,001,520.93 was executed by Continental Cement. CBTC filed a complaint for sum of money claiming that Continental Cement and Lim failed to turn over the goods covered by the trust receipt or the proceeds. In its answer, Continental Cement argued that the transaction was a simple loan and not a trust receipt transaction.
ISSUE:
Whether or not the transaction involved is a simple loan
HELD:
YES. In Colinares v. Court of Appeals, it was found that inasmuch as the debtor received the goods subject of the trust receipt before the trust receipt itself was entered into, the transaction was a simple loan and not a trust receipt agreement. Prior to the date of execution of the trust receipt, ownership over the goods was already transferred to the debtor. This situation is inconsistent with what normally obtains in a pure trust receipt transaction, wherein the goods belong in ownership to the bank and are only released to the importer in trust after the loan is granted. In this case, the delivery to Continental Cement of the goods subject to the trust receipt occurred long before the trust receipt itself was executed.
Furthermore, Continental Cement is not an importer, which acquired the bunker fuel oil for re-sale; it needed the oil for its own operations. More importantly, at no time did title over the oil pass to CBTC, but directly to Continental Cement to which the oil was directly delivered long before the trust receipt was executed. Continental Cement was required to sign the trust receipt simply to facilitate collection by CBTC of the loan it had extended to the former.