Security Bank & Trust Company v. Court of Appeals

Summary

Security Bank sued Transworld Enterprises for unpaid obligations under a trust receipt involving a P250,000 Caterpillar payloader. The central issue was whether interest and charges should be computed on the gross amount (P250,000) or net of the P75,000 marginal deposit (P175,000). The bank relied on BAP Rule No. 6 but failed to present it in evidence. The bank's own witness testified that they had previously used the net-of-margin computation for the same defendants' other letters of credit. All three courts ruled against the bank, finding it estopped from changing computation methods and applying Civil Code Article 1377 that ambiguous contract terms must be construed against the party who prepared them. The Supreme Court affirmed, emphasizing that banks cannot unilaterally change established practices with clients and that contracts of adhesion must be interpreted strictly against their drafters.