LEE vs CA and PBCOM - G.R. No. 114913

CHARLES LEE, ET AL. vs. CA and PHILIPPINE BANK OF COMMUNICATIONS

G.R. No. 117913          February 1, 2002

Charles Lee, as President of MICO requested private respondent Philippine Bank of Communications (PBCom) for a grant of a discounting loan/credit line for the purpose of carrying out MICOs line of business and for the purpose of opening letters of credit and trust receipts. As security for the loans, MICO through its Vice-President and General Manager, Mariano Sio, executed a Deed of Real Estate Mortgage over its properties situated in Pasig, Metro Manila. 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 properties in a public auction sale. Private respondent PBCom which emerged as the highest bidder in the auction sale, applied the proceeds of the purchase price at public auction to the expenses of the foreclosure, interest and charges and part of the principal of the loans. Aside from the unpaid balance, MICO had another standing obligation representing its trust receipts liabilities to private respondent. PBCom then demanded the settlement of the aforesaid obligations from herein petitioners-sureties who, however, refused to acknowledge their obligations to PBCom under the surety agreements. Hence, PBCom filed a complaint with prayer for writ of preliminary attachment. The trial court gave credence to the testimonies of herein petitioners and dismissed the complaint filed by PBCom. The trial court said that PBCom failed to adequately prove that the proceeds of the loans were ever delivered to MICO.

ISSUE:

WON it is presumed that said negotiable instruments were issued for valuable consideration while the subject promissory notes and letters of credit issued by the PBCom made no mention of delivery of cash.

HELD:

Yes. Under Section 3, Rule 131 of the Rules of Court, the following presumptions, are satisfactory if uncontradicted: a) That there was a sufficient consideration for a contract and b) That a negotiable instrument was given or indorsed for sufficient consideration. Negotiable instruments include promissory notes, bills of exchange and checks. Letters of credit and trust receipts are, however, not negotiable instruments. But drafts issued in connection with letters of credit are negotiable instruments. Hence, petitioners should have presented credible evidence to rebut that presumption, as well as the evidence presented by private respondent PBCom. 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.