Professional Documents
Culture Documents
117913
February 1, 2002
DECISION
DE LEON, JR., J:
Before us is the joint and consolidated petition for review of the
Decision1 dated June 15, 1994 of the Court of Appeals in CA-G.R. CV
No. 27480 entitled, "Philippine Bank of Communications vs. Mico
Metals Corporation, Charles Lee, Chua Siok Suy, Mariano Sio,
Alfonso Yap, Richard Velasco and Alfonso Co," which reversed the
decision of the Regional Trial Court (RTC) of Manila, Branch 55
dismissing the complaint for a sum of money filed by private
respondent Philippine Bank of Communications against herein
petitioners, Mico Metals Corporation (MICO, for brevity), Charles
Lee, Chua Siok Suy,2 Mariano Sio, Alfonso Yap, Richard Velasco and
Alfonso Co.3 The dispositive portion of the said Decision of the
Court of Appeals, reads:
WHEREFORE, the decision of the Regional Trial Court is hereby
reversed and in lieu thereof, a new one is entered:
a) Ordering the defendants-appellees jointly and severally to
pay plaintiff PBCom the sum of Five million four hundred fiftyone thousand six hundred sixty-three pesos and ninety
On March 26, 1979 Charles Lee, Chua Siok Suy, Mariano Sio,
Alfonso Yap and Richard Velasco, in their personal capacities
executed a Surety Agreement 8 in favor of PBCom whereby the
petitioners jointly and severally, guaranteed the prompt payment
on due dates or at maturity of overdrafts, promissory notes,
discounts, drafts, letters of credit, bills of exchange, trust receipts,
and other obligations of every kind and nature, for which MICO may
be held accountable by PBCom. It was provided, however, that the
liability of the sureties shall not at any one time exceed the
principal amount of Three Million Pesos (P3,000,000.00) plus
interest, costs, losses, charges and expenses including attorneys
fees incurred by PBCom in connection therewith.
On July 14, 1980, petitioner Charles Lee, in his capacity as
president of MICO, wrote PBCom and applied for an additional loan
in the sum of Four Million Pesos (P4,000,000.00). The loan was
intended for the expansion and modernization of the companys
machineries. Upon approval of the said application for loan, MICO
availed of the additional loan of Four Million Pesos (P4,000,000.00)
as evidenced by Promissory Note TA No. 094.9
As per agreement, the proceeds of all the loan availments were
credited to MICOs current checking account with PBCom. To induce
the PBCom to increase the credit line of MICO, Charles Lee, Chua
Siok Suy, Mariano Sio, Alfonso Yap, Richard Velasco and Alfonso Co
(hereinafter referred to as petitioners-sureties), executed another
surety agreement10 in favor of PBCom on July 28, 1980, whereby
they jointly and severally guaranteed the prompt payment on due
dates or at maturity of overdrafts, promissory notes, discounts,
drafts, letters of credit, bills of exchange, trust receipts and all
other obligations of any kind and nature for which MICO may be
held accountable by PBCom. It was provided, however, that their
liability shall not at any one time exceed the sum of Seven Million
Five Hundred Thousand Pesos (P7,500,000.00) including interest,
costs, charges, expenses and attorneys fees incurred by MICO in
connection therewith.
On July 29, 1980, MICO furnished PBCom with a notarized
certification issued by its corporate secretary, Atty. P.B. Barrera,
that Chua Siok Suy was duly authorized by the Board of Directors to
for the price of the merchandise, the goods were delivered to MICO
which executed a corresponding trust receipt18 in favor of PBCom.
On November 10, 1981, MICO applied for authority to open a
foreign letter of credit in favor of Ta Jih Enterprises Co., Ltd., 19 and
thus, the corresponding letter of credit 20 was then issued by PBCom
with a cable sent to the beneficiary, Ta Jih Enterprises Co., Ltd.
advising that said beneficiary may draw funds from the account of
PBCom in its correspondent banks New York Office. 21 PBCom also
informed its corresponding bank in Taiwan, the Irving Trust
Company, of the approved letter of credit. The correspondent bank
acknowledged PBComs advice through a confirmation letter 22 and
by debiting from PBComs account with the said correspondent
bank the sum of Eleven Thousand Nine Hundred Sixty US Dollars
($11 ,960.00).23 As in past transactions, MICO executed in favor of
PBCom a corresponding trust receipt.24
On January 4, 1982, MICO applied, for authority to open a foreign
letter of credit in the sum of One Thousand Nine Hundred US
Dollars ($1,900.00), with PBCom.25 Upon approval, the
corresponding letter of credit denominated as LC No. 62293 26 was
issued whereupon PBCom advised its correspondent bank and
MICO27 of the same. Negotiation and proper acceptance of the
letter of credit were then made by MICO. Again, a corresponding
trust receipt28 was executed by MICO in favor of PBCom.
In all the transactions involving foreign letters of credit, PBCom
turned over to MICO the necessary documents such as the bills of
lading and commercial invoices to enable the latter to withdraw the
goods from the port of Manila.
On May 21, 1982 MICO obtained from PBCom another loan in the
sum of Three Hundred Seventy-Seven Thousand Pesos
(P377,000.00) covered by Promissory Note BA No. 7458.29
Upon maturity of all credit availments obtained by MICO from
PBCom, the latter made a demand for payment. 30 For failure of
petitioner MICO to pay the obligations incurred despite repeated
demands, private respondent PBCom extrajudicially foreclosed
MICOs real estate mortgage and sold the said mortgaged
trust receipts and letters of credit, the presumption that the drafts
drawn in connection with the letters of credit have sufficient
consideration. Under Section 3(r), Rule 131 of the Rules of Court
there is also a presumption that sufficient consideration was given
in a contract. Hence, petitioners should have presented credible
evidence to rebut that presumption as well as the evidence
presented by private respondent PBCom. The letters of credit show
that the pertinent materials/merchandise have been received by
MICO. The drafts signed by the beneficiary/suppliers in connection
with the corresponding letters of credit proved that said suppliers
were paid by PBCom for the account of MICO. On the other hand,
aside from their bare denials petitioners did not present sufficient
and competent evidence to rebut the evidence of private
respondent PBCom. Petitioner MICO did not proffer a single piece of
evidence, apart from its bare denials, to support its allegation that
the loan transactions, real estate mortgage, letters of credit and
trust receipts were issued allegedly without any consideration.
Petitioners-sureties, for their part, presented the By-Laws34 of Mico
Metals Corporation (MICO) to prove that only the president of MICO
is authorized to borrow money, arrange letters of credit, execute
trust receipts, and promissory notes and consequently, that the
loan transactions, letters of credit, promissory notes and trust
receipts, most of which were executed by Chua Siok Suy in
representation of MICO were not allegedly authorized and hence,
are not binding upon MICO. A perusal of the By-Laws of MICO,
however, shows that the power to borrow money for the company
and issue mortgages, bonds, deeds of trust and negotiable
instruments or securities, secured by mortgages or pledges of
property belonging to the company is not confined solely to the
president of the corporation. The Board of Directors of MICO can
also borrow money, arrange letters of credit, execute trust receipts
and promissory notes on behalf of the corporation. 35 Significantly,
this power of the Board of Directors according to the by-laws of
MICO, may be delegated to any of its standing committee, officer or
agent.36 Hence, PBCom had every right to rely on the Certification
issued by MICO's corporate secretary, P.B. Barrera, that Chua Siok
Suy was duly authorized by its Board of Directors to borrow money
and obtain credit facilities in behalf of MICO from PBCom.
COURT:
Q: Now, all of these promissory note Exhibits "I" and "J" which as
you have said previously (sic) availed originally by defendant Mico
Metals Corp. sometime in 1979, my question now is, do you know
what happened to the proceeds of the original availment?
A: Well, it was credited to the current account of Mico Metals Corp.
Q: Why did it was credited to the proceeds to the account of Mico
Metals Corp? (sic)
A: Well, that is our understanding.
ATTY. DURAN:
Your honor, may we be given a chance to object, the best evidence
is the so-called current account...
ATTY. ACEJAS:
Your Honor, these are a confidential record, and they might not be
disclosed without the consent of the person concerned. (sic)
ATTY. SANTOS:
Well, you are the one who is asking that.
ATTY. DURAN:
Your Honor, Im precisely want to show for the ... (sic)
COURT:
But the amount covered by the current account of defendant Mico
Metals Corp. is the subject matter of this case.
xxx
xxx
xxx
ATTY. ACEJAS:
We object to that, your Honor, because the disclose is the secrecy
of the bank deposit. (sic)
xxx
xxx
xxx
Q: Before the recess Mr. Gardiola, you stated that the proceeds of
the three (3) promissory notes were credited to the accounts of
Mico Metals Corporation, now do you know what kind of current
account was that which you are referring to?
ATTY. ACEJAS:
Objection your Honor, that is the disclose of the deposit of
defendant Mico Metals Corporation and it cannot disclosed without
the authority of the depositor. (sic)37
That proceeds of the loans which were originally availed of in 1979
were delivered to MICO is bolstered by the fact that more than a
year later, specifically on July 14, 1980, MICO through its president,
petitioner-surety Charles Lee, requested for an additional loan of
Four Million Pesos (P4,000,000.00) from PBCom. The fact that MICO
was requesting for an additional loan implied that it has already
availed of earlier loans from PBCom.
Petitioners allege that PBCom presented no evidence that it
remitted payments to cover the domestic and foreign letters of
credit. Petitioners placed much reliance on the erroneous decision
of the trial court which stated that private respondent PBCom
allegedly failed to prove that it actually made payments under the
letters of credit since the bank drafts presented as evidence show
that they were made in favor of the Bank of Taiwan and First
Commercial Bank.
Petitioners allegations are untenable.
Modern letters of credit are usually not made between natural
persons. They involve bank to bank transactions. Historically, the
letter of credit was developed to facilitate the sale of goods
questioned the authority of Chua Siok Suy pointing out that he (Co)
is not empowered to sign the document inasmuch as only the
latter, as president, was authorized to do so. However, Chua Siok
Suy allegedly just said that he had already talked with the
Chairman of the Board of PBCom; and that Chua Siok Suy
reportedly said that he needed the money to finance a project that
he had with the Taipei government. Co also testified that he knew
of the application for domestic letter of credit in the sum of Three
Hundred Forty-Eight Thousand Pesos (P348,000.00); and that a
certain Moises Rosete was authorized to claim the check covering
the Three Hundred Forty-Eight Thousand Pesos (P348,000.00) from
PBCom; and that after claiming the check Rosete brought it to Perez
Battery Center for indorsement after which the same was deposited
to the personal account of Chua Siok Suy.45
MICO and herein petitioners-sureties insist that Chua Siok Suy was
not duly authorized to negotiate for loans in behalf of MICO from
PBCom. Petitioners allegation, however, is belied by the July 28,
1980 Certification issued by the corporate secretary of PBCom, Atty.
P.B. Barrera, that MICO's Board of Directors gave Chua Siok Suy full
authority to negotiate for loans in behalf of MICO with PBCom. In
fact, the Certification even provided that Chua Siok Suys authority
continues until and unless PBCom is notified in writing of the
withdrawal thereof by the said Board. Notably, petitioners failed to
contest the genuineness of the said Certification which is notarized
and to show any written proof of any alleged withdrawal of the said
until the plaintiffs evidence has been presented and duly offered.
The defendant has then no burden except to produce evidence
sufficient to create a state of equipoise between his proof and that
of the plaintiff to defeat the latter, whereas the plaintiff has the
burden, as in the beginning, of establishing his case by a
preponderance of evidence.47 But where the defendant has failed to
present and marshall evidence sufficient to create a state of
equipoise between his proof and that of plaintiff, the prima facie
case presented by the plaintiff will prevail.
In the case at bar, respondent PBCom, as plaintiff in the trial court,
has in fact presented sufficient documentary and testimonial
evidence that proved by preponderance of evidence its subject
collection case against the defendants who are the petitioners
herein. In view of all the foregoing, the Court of Appeals committed
no reversible error in its appealed Decision.
WHEREFORE, the assailed Decision of the Court of Appeals in CAG.R. CV No. 27480 entitled, "Philippine Bank of Communications vs.
Mico Metals Corporation, Charles Lee, Chua Siok Suy, Mariano Sio,
Alfonso Yap, Richard Velasco and Alfonso Co," is AFFIRMED in toto.
Costs against the petitioners.
SO ORDERED.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari under Rule 45 of the Rules
of Court assailing the October 9, 2003 Decision 1 of the Court of
Appeals2 in CA-G.R. CV No. 57436, and its January 20, 2004
Resolution3 denying petitioners motion for reconsideration.
The factual antecedents are as follows:
On June 25, 1981, petitioner, Land Bank of the Philippines (Land
Bank), and Monets Export and Manufacturing Corporation (Monet)
executed an Export Packing Credit Line Agreement 4 under which
Monet was given a credit line in the amount of P250,000.00,
secured by the proceeds of its export letters of credit, 5 the
continuing guaranty of the spouses Vicente V. Tagle, Sr. and Ma.
Consuelo G. Tagle,6 and the third party mortgage executed by
Pepita C. Mendigoria.7
The credit line agreement was renewed and amended several
times8 until it was increased to P5,000,000.00. 9 Owing to the
continued failure and refusal of Monet, notwithstanding repeated
demands, to pay its indebtedness to Land Bank, which have
ballooned to P11,464,246.1910 by August 31, 1992, a complaint11
for collection of sum of money with prayer for preliminary
attachment was filed by Land Bank with the Regional Trial Court of
Manila, docketed as Civil Case No. 93-64350.12
In their joint Answer with Compulsory Counterclaim, 13 Monet and
the Tagle spouses alleged that Land Bank failed and refused to
collect the receivables on their export letter of credit against
Wishbone Trading Company of Hong Kong in the sum of
US$33,434.00, while it made unauthorized payments on their
import letter of credit to Beautilike (H.K.) Ltd. in the amount of
US$38,768.40, which seriously damaged the business interests of
Monet.
On July 15, 1997, the trial court rendered decision, 14 the dispositive
portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
as follows:
1. Recognizing the obligation of the defendants as stated in the
"Schedule of Amortization from the Loans and Discount Department
From the foregoing decision, Land Bank filed an appeal 16 with the
Court of Appeals.
As regards the Beautilike account, the trial court and the Court of
Appeals erred in holding that Land Bank failed to protect Monets
interest when it paid the suppliers despite discrepancies in the
shipment vis--vis the order specifications of Monet.
v.
Luzon
Hydro
losses having affirmed the findings of the trial court and the Court
of Appeals that Land Bank, as the attorney-in-fact of Monet in its
transaction with Wishbone Trading Company, committed acts of
mismanagement. On account of the foregoing reasons, we reduce
the amount of opportunity losses granted to Monet to
US$15,000.00 payable in Philippine pesos at the official exchange
rate when payment is to be made.
Anent the second issue, we find that the trial court erred in limiting
the obligation of the respondents to Land Bank to what was stated
in the "Schedule of Amortization from the Loans and Discounts
Department of LANDBANK", or Exhibit "39",26 for the respondents.
Prefatorily, we restate the time honored principle that in a petition
for review under Rule 45, only questions of law may be raised. It is
not our function to analyze or weigh all over again evidence already
considered in the proceedings below, our jurisdiction is limited to
reviewing only errors of law that may have been committed by the
lower court.27 The resolution of factual issues is the function of
lower courts, whose findings on these matters are received with
respect. A question of law which we may pass upon must not
involve an examination of the probative value of the evidence
presented by the litigants.28
The above rule, however, admits of certain exceptions. The findings
of fact of the Court of Appeals are generally conclusive but may be
reviewed when: (1) the factual findings of the Court of Appeals and
the trial court are contradictory; (2) the findings are grounded
entirely on speculation, surmises or conjectures; (3) the inference
made by the Court of Appeals from its findings of fact is manifestly
mistaken, absurd or impossible; (4) there is grave abuse of
discretion in the appreciation of facts; (5) the appellate court, in
making its findings, goes beyond the issues of the case and such
findings are contrary to the admissions of both appellant and
appellee; (6) the judgment of the Court of Appeals is premised on a
misapprehension of facts; (7) the Court of Appeals fails to notice
certain relevant facts which, if properly considered, will justify a
different conclusion; and (8) the findings of fact of the Court of
Appeals are contrary to those of the trial court or are mere
conclusions without citation of specific evidence, or where the facts
set forth by the petitioner are not disputed by respondent, or where
the findings of fact of the Court of Appeals are premised on the
absence of evidence but are contradicted by the evidence on
record.29
Our review of the records of this case reveal that the reversible
error committed by the lower court, and that of the Court of
Appeals, partook of the form of over reliance and sole reliance on
the figures contained in Exhibit "39", to the exclusion of other
pieces of documentary evidence annexed by Land Bank to its
complaint.
There is no doubt that the respondents indeed owed Land Bank a
sum of money. This much was clearly established by the series of
letters30 written by the officers of Monet to Land Bank
acknowledging the corporations indebtedness, albeit without
specifying any amount, and asking for understanding and more
time within which they can settle their obligations. We note,
however, that the respondents have been consistent and persistent
in their stand that they do not harbor any intention of evading the
payment of the amount they actually owed to the petitioner,
provided that there be a reconciliation of the payments made by
the respondents on their loan obligations.31
Indeed, Exhibit "39" or the Summary of Availment and Schedule of
Amortization, which was made by the trial court as the basis in
determining the amount of indebtedness of the respondents to the
petitioner, is a document issued by the Loans and Discounts
Department of Land Bank itself. Nevertheless, we note that the
amount covered by the said summary pertains only to the
indebtedness of Monet to Land Bank amounting to P2,500,000.00,
as covered by Promissory Note No. P-981. The amount reflected in
Exhibit "39" is so small when compared to the P11,464,246.19
which Land Bank sought to collect from the respondents in its
complaint before the trial court. The records of this case show that
respondents, in the course of their credit transactions with Land
Bank, executed not only one, but several promissory notes in
varying amounts in favor of the bank.
On the other hand, Land Bank submitted a Consolidated Statement
of Account dated August 31, 1992 32 in support of its claim as to the
amount owed to it. The said document illustrated how, based on
the computations made by Land Bank, the indebtedness of Monet
ballooned to P11,464,246.19. Land Bank also submitted a Summary
of Availments and Payments from 1981 to 1989 33 which detailed
the series of availments and payments made by Monet.
Notwithstanding the above facts, and considering that Monets
Exhibit "39" was prepared before its due date of April 29, 1991,
while Land Banks Consolidated Statement of Account was
prepared much later on August 31, 1992, the trial court chose to
overlook them and conveniently held that the correct basis of
Monets indebtedness to Land Bank are the figures contained in
Exhibit "39". Nonetheless, no explanation was proferred why it used
Exhibit "39" as basis in determining the actual indebtedness of
Monet. We note that instead of dealing squarely with the issue of
resolving the total amount of indebtedness due to Land Bank, the
trial court and the Court of Appeals chose to expound on Land
Banks alleged acts of mismanagement.
In "discussing" this issue, all the trial court said was:
LANDBANK claims that as of August 31, 1992, the defendants owe
them the sum of P11,464,246.19 payable with interest at the rate
of 10% per annum. But this is disputed by the defendants as shown
in their Summary of Availment and Schedule of Amortization (Exh.
"39").34
While both the petitioner and the respondents submitted their
respective pieces of documentary evidence in support of their
contentions as to the amount of indebtedness due to petitioner, the
trial court failed to calibrate and harmonize them.
Unfortunately, despite the pieces of evidence submitted by the
parties, our review of the same is inconclusive in determining the
total amount due to the petitioner. The petitioner had failed to
establish the effect of Monets Exhibit "39" to its own Consolidated
Statement of Account as of August 31, 1992, nor did the
respondents categorically refute the said statement of account vis-vis its Exhibit "39". The interest of justice will best be served if
this case be remanded to the court of origin for the purpose of
determining the amount due to petitioner. The dearth in the records
of sufficient evidence with which we can utilize in making a
categorical ruling on the amount of indebtedness due to the
petitioner constrains us to remand this case to the trial court with
instructions to receive additional evidence as needed in order to
fully thresh out the issue and establish the rights and obligations of
the parties. From the amount ultimately determined by the trial
court as the outstanding obligation of the respondents to the
petitioner, will be deducted the award of opportunity losses granted
to the respondents in the amount of US$ 15,000.00 payable in
Philippine pesos at the official exchange rate when payment is to
be made.
Held: NO. The execution of the MOA constitutes a novation which "places
petitioner Bank in estoppel to insist on the original trust relation and
constitutes a bar to the filing of any criminal information for violation of the
trust receipts law."
It has the effect of a compromise agreement, novated BMCs existing
obligations under the trust receipt agreement. The novation converted the
parties relationship into one of an ordinary creditor and debtor. Moreover,
the execution of the MOA precludes any criminal liability on their part which
may arise in case they violate any provision thereof.
The lower court also ventured the opinion that the other phrase in
paragraph (b), por otro titulo que produzca obligacion de entregarla
o devolverla" ("under any other obligation involving the duty to
make delivery of or to return the same") is not applicable because
that phrase allegedly refers to the very "money, goods, or any
other personal property received by the offender" as a deposit, and
not to the proceeds of the sale of the goods covered by the trust
receipt.
We hold that even if the accused did not receive the merchandise
for deposit, he is, nevertheless, covered by article 315(l) (b)
because after receiving the price of the sale, he did not deliver the
money to the bank or, if he did not sell the merchandise, he did not
return it to the bank.
The lower court observed further that the framers of the Spanish
Penal Code could not have contemplated the inclusion of the trust
receipt in article 315(l) (b) because that transaction did not exist in
the nineteenth century. The usual form of a trust receipt is as
follows: 1wph1.t
I/We hereby agree to hold said goods in trust for the said
corporation (meaning the bank as trustor), and as its
property with liberty to sell the same for its account, but
without authority to make any other disposition whatever of
the said goods or any part thereof (or of proceeds thereof)
either by way of conditional sale, pledge or otherwise.
Those two situations are within the purview of article 315(l) (b). The
first situation is covered by the provision which refers to money
received under the obligation involving the duty to deliver it
(entregarla) to the owner of the merchandise sold.
The other contingency is covered by the provision which refers to
merchandise received under the obligation to "return" it
(devolvelra) to the owner.
The fact that in the first case the money was received from the
purchaser of the merchandise and not from the bank does not
remove it from the operation of article 315(l) (b).
As noted by Justice Street in People vs. Yu Chai Ho, supra, the
conversion by the trustee in a trust receipt of the proceeds of the
sale falls "most literally and directly under" the provisions of article
315(l) (b).
Thus, it was held that where, notwithstanding repeated oral and
written demands by the bank, the petitioner had failed either to
turn over to the said bank the proceeds of the sale of the goods, or
to return said goods if they were not sold, the petitioner is guilty of
estafa under article 315(l) (b) (Samo vs. People, 115 Phil. 346).
In this connection, it is relevant to state that Presidential Decree
No. 115, the Trust Receipts Law, regulating trust receipts
transactions, was issued on January 29, 1973.
The accused invokes the ruling that "where a trial court has
jurisdiction but mistakenly dismisses the complaint or information
on the ground of lack of it, the order of dismissal is, after the
prosecution has presented its evidence, unappealable because an
appeal by the government therefrom would place the accused in
second jeopardy for the same offense" (People vs. Duran, Jr., 107
Phil. 979).