Mico Metals vs CA

Mico Metals v. Court of Appeals

G.R. No. 117914. 1 February 2002. FACTS:  Mico Metals Corporation (MCC) applied or t!o do"estic letters o credit (#$C) !it% t%e &%ilippine 'an o Co""unications (&'C)  !%ic% applications !ere e*entually +ranted. ,%ereater- t%e do"estic #$Cs !ere ne+otiated and accepted by MCC as e*idenced by t%e correspondin+ ban drat issued or t%e purpose. ter MCC/s supplier !as paid- a trust receipt (,$R)- upon MCC/s o!n initiati*e- !as eecuted in a*or o  &'C.

 e! "ont%s later- MCC applied or aut%ority to open orei+n #$Cs !it% &'C  !%ic% applications !ere e*entu e*entuall ally y appro*ed appro*ed.. Ne+oti Ne+otiati ation on and proper acceptance acceptance o t%e #$C !ere !ere t%en t%en "ade "ade by MCC. MCC. +ain +ain-- a correspondin+ ,$R !as eecuted by MCC in a*or o &'C. n all t%e transactions in*ol*in+ orei+n #$C- &'C turned o*er to MCC t%e necessary docu"ents suc% as t%e  bills o ladin+ and co""ercial in*oices to enable t%e latter to !it%dra! t%e +oods ro" t%e port o Manila. Manila. bout i*e "ont%s later- MCC obtained ro" &'C a loan co*ered by a pro"issory note (&$N). pon "aturity o  all credit a*ail"ents obtained by MCC ro" &'C- t%e latter "ade a de"and or pay"ent  !%ic% de"and !as let un%eeded ISSUE: 3%et%er or not &'C ailed to pro*e t%at it actually "ade pay"ents under t%e #$C since t%e ban drats  presented as e*idence s%o! t%at t%ey !ere "ade in a*or o t!o correspondin+ bans- and as a s suc% it (&'C) is not entitled to rei"burse"ent

No. Mo Mode dern rn #$Cs #$Cs are are usua usuall lly y not "ade "ade bet!e bet!een en natu natura rall perso persons ns.. ,% ,%ey ey in*o in*ol* l*ee ban ban to ban  ban  HELD: No. transactions. 5istorically- #$Cs !as de*eloped to acilitate t%e sale o +oods bet!een- distant and una"iliar   buyers and sellers. t !as an arran+e"ent under !%ic% a ban- !%ose credit !as acceptable acceptab le to t%e seller- !ould at t%e instance o t%e buyer a+ree to pay drats dra!n on it by t%e seller- pro*ided t%at certain docu"ents are  presented suc% as bills o ladin+ acco"panyin+ t%e correspondin+ drats. Conse6uently- t%ere is not%in+ unusual in t%e act t%at t%e drats presented in e*idence by &'C !ere not "ade payable to it (&'C).  24 o t%e Ne+otiable nstru"ents #a! (N#) pro*ides t%at e*ery ne+otiable instru"ent is dee"ed pri"a acie to %a*e been issued or *aluable consideration and e*ery person !%ose si+nature appears t%ereon to %a*e  beco"e a party or *alue. Ne*ert%eless- !%ile t%at presu"ption ound under t%e N# "ay not necessarily be applicable to ,$R and #$C- t%e presu"ption t%at t%e drats dra!n in connection !it% t%e #$C %a*e suicient consid considera erati tion on pre*ai pre*ails. ls. More i"port i"portant antly ly-- und under er  8(r)8(r)- Rule Rule 181 o t%e Rules o Court Court t%ere t%ere is also also a  presu"ption t%at suicient suicient consideration !as +i*en in a contract. 5ence- MCC s%ould %a*e presented credible e*idence to rebut t%at presu"ption as !ell as t%e e*idence  presented by &'C. ,%e #$C s%o! t%at t%e pertinent "aterials$"erc%andise %as been recei*ed by MCC. ,%e drats si+ned by t%e beneiciary$suppliers in connection !it% t%e correspondin+ #$C pro*ed t%at said suppliers !ere paid by &'C or t%e account o MCC. n t%e ot%er %and- aside ro" its bare denials MCC did not present suicient and co"petent e*idence to rebut t%e e*idence o &'C. MCC did not proer a sin+le piece o  e*idence- apart ro" its bare denial- to support its alle+ation t%at t%e loan transactions- #$Cs and ,$Rs !ere issued alle+edly !it%out any consideration.

:G.R. N. 117918. February 1- 2002; C5R#, ->=4 in the sum o) PA,444.444.44 e/ecuted &$ M2CO in  )avor o) P+Com. 5 2rrevoca&le letter o) credit 1o. L-44 dated Jul$ ,->=- issued in )avor o) Pere' +atter$ Center )or  account o) Mico Metals Corp. B5 Dra)t dated Jul$ , ->=- in the sum o) P?A=,444.44 issued &$ Pere' +atter$ Center, &ene)iciar$ o)  irrevoca&le Letter o) Credit 1o. 1o. L-44 and accepted &$ M2CO Metals corporation. =5 Letter dated Jul$ , ->=- )rom Pere' +atter$ Center addressed to private respondent P+Com sho(in"  that proceeds o) the irrevoca&le letter o) credit 1o. L -44 (as received &$ Mr. Moises Rosete, representative o) Pere' +atter$ Center. >5 0rust receipt dated Jul$ , ->=- e/ecuted &$ M2CO in )avor o) P+Com coverin" the merchandise  purchased under Letter o) Credit 1o. -44. -45 2rrevoca&le letter o) credit 1o. L-??A dated Septem&er , ->=- issued in )avor o) Pere' +atter$ Center )or account o) M2CO Metals Corp. --5 Dra)t dated Septem&er , ->=- in the sum o) P>4,444.44 issued &$ Pere' +atter$ Center and accepted  &$ M2CO. -5 Letter dated Septem&er -B, ->=- )rom Pere' +atter$ addressed to P+Com sho(in" that the proceeds o)  credit no. L-?AA (as received &$ Mr. Moises Rosete, a representative o) Pere' +atter$ Center.

-?5 0rust Receipt dated Septem&er , ->=- e/ecuted &$ M2CO in )avor o) P+Com coverin" the merchandise under Letter o) Credit 1o. L-??A. -A5 2rrevoca&le Letter o) Credit no. -=B? dated 1ovem&er -4, ->=- )or ;S--,>4.44 issued &$ P+Com in  )avor o) 0# J27 Enterprises Co. Ltd., throu"h its correspondent &an*, 2rvin" 0rust Compan$ o) 0aipei, 0ai(an. -@5 0rust Receipt dated Decem&er -@, >-=- e/ecuted &$ M2CO in )avor o) P+Com sho(in" that possession o) the merchandise covered &$ 2rrevoca&le Letter o) Credit no. -=B? (as released &$ P+Com to M2CO. -5 Letters dated March , ->B> )rom M2CO si"ned &$ its president, Charles Lee, sho(in" that M2CO  sou"ht credit line )rom P+Com in the )orm o) loans, letters o) credit and trust receipt in the sum o)   PB,@44,444.44. -B5 Letter dated Jul$ -A, ->=4 )rom M2CO si"ned &$ its president, Charles Lee, sho(in" that M2CO reuested )or additional )inancial assistance in the sum o) PA,444,444.44. -=5 +oard resolution dated March , ->B> o) M2CO authori'in" Charles Lee and Mariano Sio sin"l$ or   %ointl$ to act and si"n )or and in &ehal) o) M2CO relative to the o&tention o) credit )acilities )rom P+Com. ->5 Dul$ notari'ed Deed o) Mort"a"e dated Ma$ -, ->B> e/ecuted &$ M2CO in )avor o) P+Com over   M2CO s real properties covered &$ 0C0 1os. --A= and --@4 located in Pasi". 45 Dul$ notari'ed Suret$ #"reement dated March , ->B> e/ecuted &$ herein petitioners Charles Lee,  Mariano Sio, #l)onso 8ap, Richard Velasco and Chua Sio* Su$ in )avor o) P+Com. -5 Dul$ notari'ed Suret$ #"reement dated Jul$ =, ->=4 e/ecuted &$ herein petitioners Charles Lee,  Mariano Sio, #l)onso 8ap, Richard Velasco and Chua Sio* Su$ in )avor o) P+Com. 5 Dul$ notari'ed certi)ication dated Jul$ =, ->=4 issued &$ M2CO s corporate secretar$, Mr. P.+.  +arrera, attestin" to the adoption o) a &oard resolution authori'in" Chua Sio* Su$ to si"n, )or and in &ehal) o)   M2CO, all the necessar$ documents includin" contracts, loan instruments and mort"a"es relative to the o&tention o) various credit )acilities )rom P+Com.

,%e abo*eEcited docu"ents presented %a*e not "erely created a prima )acie case but %a*e actually pro*ed t%e solidary obli+ation o MC and t%e petitioners- as sureties o MC- in a*or o responde nt &'Co". 3%ile t%e  presu"ption ound under t%e Ne+otiable nstru"ents #a! "ay not necessarily be applicable to trust receipts and letters o credit- t%e presu"ption t%at t%e drats dra!n in connection !it% t%e letters o credit %a*e suicient consideration. nder =ection 8(r)- Rule 181 o t%e Rules o Court t%ere is also a presu"ption t%at suicient consideration !as +i*en in a contract. 5ence- petitioners s%ould %a*e presented credible e*idence to rebut t%at  presu"ption as !ell as t%e e*idence presented by pri*ate respondent &'Co". ,%e letters o credit s%o! t%at t%e  pertinent "aterials$"erc%andise %a*e been recei*ed by MC. ,%e drats si+ned by t%e beneiciary$suppliers in connection !it% t%e correspondin+ letters o credit pro*ed t%at said suppliers !ere paid by &'Co" or t%e account o MC. n t%e ot%er %and- aside ro" t%eir bare denials petitioners did not present suicient and co"petent e*idence to rebut t%e e*idence o pri*ate respondent &'Co". &etitioner MC did not proer a sin+le piece o e*idence- apart ro" its bare denials- to support its alle+ation t%at t%e loan transactions- real estate "ort+a+e- letters o credit and trust receipts !ere issued alle+edly !it%out any consideration. &etitionersEsureties- or t%eir part- presented t%e 'yE#a!s :84; o Mico Metals Corporation (MC) to pro*e t%at only t%e president o MC is aut%oriIed to borro! "oney- arran+e letters o credit- eecute trust receiptsand pro"issory notes and conse6uently- t%at t%e loan transactions- letters o credit- pro"issory notes and trust receipts- "ost o !%ic% !ere eecuted by C%ua =io =uy in representation o MC !ere not alle+edly aut%oriIed and %ence- are not bindin+ upon MC.  perusal o t%e 'yE#a!s o MC- %o!e*er- s%o!s t%at t%e i*

 po!er to borro! "oney or t%e co"pany and issue "ort+a+es- bonds- deeds o trust and ne+otiable instru"ents or securities- secured by "ort+a+es or pled+es o property belon+in+ to t%e co"pany is not conined solely to t%e president o t%e corporation. ,%e 'oard o @irectors o MC can also borro! "oney- arran+e letters o  credit- eecute trust receipts and pro"issory notes on be%al o t%e corporation. :8D; =i+niicantly- t%is po!er o  t%e 'oard o @irectors accordin+ to t%e byEla!s o MC- "ay be dele+ated to any o its standin+ co""itteeoicer or a+ent. :8H; 5ence- &'Co" %ad e*ery ri+%t to rely on t%e Certiication issued by MCs corporate secretary- &.'. 'arrera- t%at C%ua =io =uy !as duly aut%oriIed by its 'oard o @irectors to borro! "oney and obtain credit acilities in be%al o MC ro" &'Co". *

*i

&etitionersEsureties also presented a letter o t%eir counsel dated ctober 9- 192- addressed to pri*ate respondent &'Co" purportedly to s%o! t%at &'Co" ne! t%at C%ua =io =uy alle+edly used t%e credit and +ood na"es o t%e petitionerEsureties or %is beneit- and t%at petitionerEsureties !ere "ade to si+n blan  docu"ents and !ere urnis%ed copies o t%e sa"e. ,%e letter- %o!e*er- is in act "erely a reply o petitionersE sureties counsel to &'Co"s de"and or pay"ent o MCs obli+ations- and appears to be an inconse6uential  piece o selEser*in+ e*idence. n addition to t%e ore+oin+- MC and petitionersEsureties cited t%e decision o t%e trial court !%ic% stated t%at t%ere !as no proo t%at t%e proceeds o t%e loans !ere e*er deli*ered to MC. lt%ou+% t%e pri*ate respondents !itness- Mr. Gardiola- testiied t%at t%e proceeds o t%e loans !ere deposited in MCs current account !it% &'Co"- %is testi"ony !as alle+edly not supported by any ban record- note or "e"orandu".  careul scrutiny o t%e record includin+ t%e transcript o steno+rap%ic notes re*eals- %o!e*er- t%at alt%ou+%  pri*ate respondent &'Co" !as !illin+ to produce t%e correspondin+ account led+er s%o!in+ t%at t%e proceeds o t%e loans !ere credited to MCs current account !it% &'Co"- MC in act *i+orously obected to t%e  presentation o said docu"ent. ,%at point is s%o!n in t%e testi"ony o &'Co"s !itness- Gardiola- t%us  No!- all o t%ese pro"issory note