METROPOLITAN BANK AND TRUST COMPANY, Petitioner, v. LEY CONSTRUCTION
AND DEVELOPMENT CORPORATION AND SPOUSES MANUEL LEY AND JANET LEY, Respondents.
G.R. No. 185590, December 03, 2014
LEONARDO-DE CASTRO, J.:
Facts: This
is an action for recovery of a sum of money and damages with a prayer for the issuance
of writ of preliminary attachment filed by the plaintiff Philippine Banking
Corporation4 against the defendants, namely: Ley Construction
and Development Corporation (hereafter “LCDC”) and Spouses Manuel and Janet C.
Ley (hereafter “[defendant]-spouses”).
Defendant
LCDC, a general contracting firm, through the oral representations of
defendant-spouses, applied with plaintiff, a commercial bank, for the opening
of a Letter of Credit. Plaintiff issued, on April 26, 1990, Letter of Credit DC
90[-]303-C in favor of the supplier-beneficiary Global Enterprises Limited, in
the amount of Eight Hundred Two Thousand Five Hundred U.S. Dollars (USD
802,500.00). The letter of credit covered the importation by defendant LCDC of
Fifteen Thousand (15,000) metric tons of Iraqi cement from Iraq. Defendant
applied for and filed with plaintiff two (2) Applications for Amendment of
Letter of Credit on May 3, 1990 and May 11, 1990, respectively.
Thereafter,
the supplier-beneficiary Global Enterprises, Inc. negotiated its Letter of
Credit with the negotiating bank Credit Suisse of Zurich, Switzerland. Credit
Suisse then sent a reimbursement claim by telex to American Express Bank Ltd.,
New York on July 25, 1990 for the amount of Seven Hundred Sixty[-]Six Thousand
Seven Hundred Eight U.S. Dollars (USD 766,708.00) with a certification that all
terms and conditions of the credit were complied with. Accordingly, on July 30,
1990, American Express Bank debited plaintiff’s account Seven Hundred Seventy
Thousand Six Hundred Ninety[-]One U.S. Dollars and Thirty Cents (USD
770,691.30) and credited Credit Suisse Zurich Account with American Express
Bank, Ltd., New York for the negotiation of Letter of Credit. On August 6,
1990, plaintiff received from Credit Suisse the necessary shipping documents
pertaining to Letter of Credit DC 90-303-C that were in turn delivered to the
defendant. Upon receipt of the aforesaid documents, defendants executed a trust
receipt. However, the cement that was to be imported through the opening of the
subject Letter of Credit never arrived in the Philippines.
The
prompt payment of the obligation of the defendant LCDC was guaranteed by
[defendant]-spouses under the Continuing Surety Agreement executed by the
latter in favor of the defendant.
The
obligation covered by the subject Letter of Credit in the amount of USD
802,500.00 has long been overdue and unpaid, notwithstanding repeated demands
for payment thereof.
Plaintiff
instituted a complaint for recovery.
RTC:
Trial court found that the Bank’s only witness, Fenelito Cabrera, was
incompetent to testify on the documents presented by the Bank during the
trial.
trial court further ruled that only the following
documents remained admitted in evidence:
Exhibit |
Document |
“A” |
Continuing Surety Agreement dated July 25, 1989 |
“B” |
Application and Agreement for Commercial Letter of
Credit |
“C” and “C-1” |
Letter of Credit No. DC 90-303-C |
“N” and “N-1” to “N-4” |
Statement of Outstanding Obligations |
For
the trial court, these were insufficient to show that LCDC and the spouses Ley
were responsible for the improper negotiation of the letter of
credit. Bank failed to establish its cause of action and to make a
sufficient or preponderant case
Court
of Appeals:
The Bank appealed to the Court of Appeals. It claimed that the trial court erred in
granting the demurrer to evidence of LCDC and the spouses Ley on the ground
that the Bank failed to establish its cause of action. The Bank insisted
that, even without considering the exhibits excluded in evidence by the trial
court, the Bank was able to prove by preponderant evidence that it had a right
and that right was violated by LCDC and the spouses Ley. It explained
that the trial court was wrong in considering only Exhibits “A,” “B,” “C,”
“C-1,” “N” and “N-1” to “N-4” as the following documents were also admitted in
evidence and should have been considered in the resolution of the demurrer to
evidence.9
Exhibit |
Document |
“F” |
Register Copy or Memorandum on the Letter of Credit |
“G” |
Trust Receipt No. TRI432/90 dated August 16, 1990 |
“G-1” |
Bank Draft |
“G-2” |
Bill of Exchange |
The
Court of Appeals found no merit in the Bank’s appeal. It observed that
Cabrera, the Bank’s only witness, prepared and properly identified Exhibits
“F,” “G,” “N” and “N-1” to “N-4” only. The Bank’s counsel even admitted
in open court during Cabrera’s direct examination that Cabrera was incompetent
to testify on the rest of the Exhibits. The trial court was therefore correct
in not giving any evidentiary weight to those Exhibits not properly identified
by Cabrera.
Nevertheless, the Court of Appeals ruled that the
following Exhibits of the Bank were admitted in evidence:
Exhibit |
Document |
“A” |
Continuing Surety Agreement dated July 25, 1989 |
“B” |
Application and Agreement for Commercial Letter of
Credit |
“C” and “C-1” |
Letter of Credit No. DC 90-303-C |
“F” |
Register Copy or Memorandum on the Letter of Credit |
“G” |
Trust Receipt No. TRI432/90 dated August 16, 1990 |
“N” and “N-1” to “N-4” |
Statement of Outstanding Obligations |
The
Bank insists that it has been able to establish its cause of action not only
through preponderance of evidence but even by the admissions of LCDC and the
spouses Ley. It maintains that its cause of action is not predicated on
the improper negotiation of the letter of credit but on the breach of the terms
and conditions of the trust receipt
Issue: The issue of whether
or not the Bank was able to establish its cause of action by preponderant
evidence is essentially a question of fact. Stated in another way, the
issue which the Bank raises in this petition is whether the evidence it
presented during the trial was preponderant enough to hold LCDC and the spouses
Ley liable.
Ruling: No.
First. The
conceptual distinction between a question of law and a question of fact is
well-settled in case law:
There is a “question of law” when the doubt or
difference arises as to what the law is on a certain state of facts, and which
does not call for an examination of the probative value of the evidence
presented by the parties-litigants. On the other hand, there is a “question of
fact” when the doubt or controversy arises as to the truth or falsity of the
alleged facts. x x x.21
x x x x x x
The required burden of proof, or that amount of
evidence necessary and sufficient to establish one’s claim or defense, in civil
cases is preponderance of evidence.22 Preponderance of
evidence is defined as follows:
Preponderance
of evidence is the weight, credit, and value of the aggregate evidence on
either side and is usually considered to be synonymous with the term “greater
weight of evidence” or “greater weight of the credible evidence.” Preponderance
of evidence is a phrase which, in the last analysis, means probability to
truth. It is evidence which is more convincing to the court as
worthier of belief than that which is offered in opposition thereto.23 (Emphasis
supplied, citation omitted.)
As preponderance of evidence refers to the probability
to truth of the matters intended to be proven as facts, it concerns a
determination of the truth or falsity of the alleged facts based on the
evidence presented. Thus, a review of the respective findings of the
trial and the appellate courts as to the preponderance of a party’s evidence
requires that the reviewing court address a question of fact.
Moreover,
a demurrer to evidence is a motion to dismiss on the ground of insufficiency of
evidence. Evidence is the means, sanctioned by the Rules of Court, of ascertaining
in a judicial proceeding the truth respecting a matter of fact.24
As such, the question of sufficiency or insufficiency of evidence, the basic
issue presented by the Bank, pertains to the question of whether the factual
matters alleged by the Bank are true. Plainly, it is a question of fact
and, as such, not proper subject of a petition for review on certiorari under
Rule 45 of the Rules of Court. It was incumbent upon the Bank to demonstrate
that this case fell under any of the exceptions to this rule but it failed to
do so.
Second. Another
significant factor that contradicts the Bank’s assertion that its “primary
actionable document” is the Trust Receipt is the manner it pleaded the Letter
of Credit and the Trust Receipt, respectively.
The relevant rule on actionable documents is Section 7, Rule 8 of the Rules of
Court which provides:
Section 7. Action or defense based on
document. – Whenever an action or defense is based upon a written
instrument or document, the substance of such instrument or document shall be
set forth in the pleading, and the original or a copy thereof shall be attached
to the pleading as an exhibit, which shall be deemed to be a part of the
pleading, or said copy may with like effect be set forth in the pleading.
An “actionable document” is a written instrument or document on which an action
or defense is founded. It may be pleaded in either of two ways:
(1)
by setting forth the substance of such document in the pleading and attaching
the document thereto as an annex, or
(2) by setting forth said document verbatim in the pleading.
A look at the allegations in the Complaint quoted above will show that the Bank
did not set forth the contents of the Trust Receipt verbatim in the
pleading. The Bank did not also set forth the substance of the Trust
Receipt in the Complaint but simply attached a copy thereof as an annex.
Rather than setting forth the substance of the Trust Receipt, paragraph 2.8 of
the Complaint shows that the Bank simply described the Trust Receipt as LCDC’s
manifestation of “its acceptance/conformity that the negotiation of the [Letter
of Credit] is in order.”
Third. a
look at the Letter of Credit, the actionable document on which the Bank relied
in its case against LCDC and the spouses Ley, confirms the identical findings
of the Regional Trial Court and the Court of Appeals.
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