Bank of the Philippine Islands As Successor-In-Interest of Far East Bank v. Smp

Summary

SMP Inc. successfully recovered damages from Bank of the Philippine Islands for wrongful attachment of polystyrene products delivered to Clothespak. The Supreme Court distinguished between contracts of sale and contracts to sell, ruling that SMP retained ownership until Clothespak's checks cleared, making it a contract to sell under Article 1478 of the Civil Code. The Court rejected the bank's challenge to the provisional receipt under the best evidence rule, finding the triplicate copy admissible as an original document. The decision clarifies that FOB terms can coexist with ownership retention clauses, and that in contracts to sell, payment is a positive suspensive condition preventing transfer of ownership until fulfilled. This case establishes important precedent on third party claims in attachment proceedings and the distinction between sale contracts.