Development Bank v. Traders Royal Bank
REITERATIONFacts
The Antecedents: In 1980, Phil-Asia Food Industries Corporation (Phil-Asia) obtained a loan accommodation from Traders Royal Bank (TRB) for P92,290,845.58, utilized for importing machineries and equipment for a soya beans processing plant. Development Bank of the Philippines (DBP) issued a guaranty to TRB for $8,015,447.13 to cover the importation costs. After partial payments, a balance of P8,432,381.78 remained. TRB filed a collection complaint against Phil-Asia and DBP. The Asset Privatization Trust (APT), now the Privatization and Management Office (PMO), was later impleaded, having allegedly acquired DBP's distressed accounts. Procedural History: The Regional Trial Court ordered Phil-Asia and DBP to jointly and severally pay TRB the outstanding balance, plus interest and attorney's fees, while dismissing the complaint against APT. Both TRB and DBP appealed. The Court of Appeals affirmed the trial court's decision with modifications, increasing the interest rate to 12% per annum and ordering Phil-Asia to indemnify DBP for any payment made. The Court of Appeals denied the subsequent motions for reconsideration filed by both parties. The Petition: This petition for review under Rule 45 of the Rules of Civil Procedure assails the decision and resolution of the Court of Appeals. The petitioner, DBP, raises three issues: (1) whether the importation of machineries was covered by the DBP guaranty, (2) whether the letters of credit had been paid, and (3) whether the PMO should be held liable. The Supreme Court found that these issues involve questions of fact, which are not reviewable under Rule 45, and that the Court of Appeals' factual findings were supported by the evidence and did not fall under any exceptions to the rule.
Issue(s)
Whether the importation of machineries covered by the subject letters of credit are covered by the DBP guaranty. Whether the letters of credit subject to respondent Traders Royal Bank’s claim have been paid. Assuming DBP can be held liable, whether the Privatization and Management Office should be made to pay for the same.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the issues raised were questions of fact, which are not reviewable under Rule 45 of the Rules of Court. The Court found no reversible error in the CA's findings that DBP's actions constituted implied approval of the change in supplier, that the letters of credit had not been fully paid, and that APT/PMO had not assumed the liabilities.
Ratio Decidendi
On the issue of whether the importations were covered by the DBP guaranty: The Court held that DBP's actions, including its payment of letters of credit covering importations from Emi Disc Corporation despite the initial guaranty specifying Archer Daniels Midland Corporation, constituted implied approval and ratification of the change in supplier. This finding is based on the factual determination by the lower courts that DBP was informed of the change and did not object, and subsequently made payments. Therefore, the importation from Emi Disc Corporation was deemed covered by the DBP guaranty, as per the findings of the Court of Appeals. The Court reiterated that it is not a trier of facts and will not re-evaluate evidence already passed upon by the lower courts. On the issue of whether the letters of credit have been paid: The Court affirmed the findings of the Court of Appeals that the payments made by DBP and Phil-Asia totaled P83,858,463.80, which, when deducted from Phil-Asia's availment of P92,290,845.58, left an outstanding balance of P8,432,381.78. The Court emphasized the rule that he who pleads payment has the burden of proving it, and DBP failed to discharge this burden. The Court noted that TRB had adequately explained discrepancies in statements of account and that DBP had not made further complaints, supporting the conclusion that payment had not been fully established. The Court's role under Rule 45 is limited to questions of law, and re-examining payment claims requires a review of evidence. On the issue of whether the Privatization and Management Office (PMO) should be held liable: The Court upheld the lower courts' findings that no sufficient evidence was presented to show that APT (now PMO) assumed the obligations of DBP and Phil-Asia under the letters of credit. The deed of transfer between DBP and the national government did not substantiate the claim of assumption of liability. The Court reiterated that the party alleging an affirmative defense, such as the assumption of liability by APT/PMO, bears the burden of proof, which DBP failed to meet. This determination also falls under questions of fact, which are beyond the scope of a Rule 45 petition.
Main Doctrine
The Supreme Court affirmed the Court of Appeals' ruling that the Development Bank of the Philippines (DBP) is liable under its guaranty for importations made by Phil-Asia Food Industries Corporation (Phil-Asia) even with a change in supplier, as DBP's actions constituted implied approval and ratification. The Court also held that questions of fact, such as whether a loan has been paid or if a liability was assumed, are generally not reviewable under a petition for review on certiorari under Rule 45, as the Court is not a trier of facts.