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[G.R. No. 141421.November 26, 2001]

COGASCO PHILS., INC. et al. vs. CONSOLIDATED ORIENT FINANCE LEASING CORP.

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated NOV 26 2001.

G.R. No. 141421(Cogasco Phils., Inc., et al. vs. Consolidated Orient Finance Leasing Corp.)

Assailed in the instant petition for review is the decision of the Court of Appeals reversing the decision of the Regional Trial Court of Makati, Branch 60 in Civil Case No. 2759.

As quoted from the decision of the Court of Appeals. the antecedent facts are as follows:

On separate occasions, plaintiff-appellant CONSOLIDATED ORIENT LEASING AND FINANCE CORPORATION (COLF), a domestic corporation engaged in lease-financing of commercial and industrial equipment, entered into three sale and lease-back agreements with the defendant-appellee COGASCO PHILIPPINES, INC. (COGASCO) over several properties. The first was an NEC NEAX 12S 65 EPABX unit, covered by Lease Agreement No. 361 dated 08 January 1980 (Record, vol. II, p. 256) and signed by Eduardo R. Alvarez, executive vice-president of COLF, and defendant-appellee NATIVIDAD G. ONG, vice-president of COGASCO. The lease was for a term of forty-eight months commencing from, as with the other lease agreements, the issuance date of the acceptance receipt, which in this case fell on 08 January 1980 (Record, p. 289), with a monthly rental of P8,63 5.00. In the same agreement, ONG bound herself in her personal capacity as surety for the due and proper performance of COGASCO's obligations under the contract. As additional security, defendant-appellee MANUEL L. ONG (husband of Natividad) executed a "continuing guaranty" (Record, vol. II, p. 260) whereby he bound himself jointly and severally liable together with COGASCO.

The second was a one set SANYI RATTAN-MAKING MACHINE, consisting of a Sanyi Rattan Auto Round Rod Machine and a Sanyi Rattan Horizontal Splitting Machine. This transaction was covered by Lease Agreement No. 386 dated 05 March 1981 (Record, vol. II, p. 258) and signed by Alvarez and Natividad Ong. This lease was for a term of 24 months from 05 March 1980 with a monthly rental of P7,709.00. Once more, Ong bound herself as surety, while her husband again executed a continuing guaranty in COLF's favor (Record, vol. II, p. 263) the same equipment became the subject of a sublease (Record, Vol. II, p. 264) whereby COGASCO sublet the machine to defendant-appellee STAR TRADERS INDUSTRIES.

The third was an EPABX Model N. EAX 12 S, covered by Lease Agreement No. 406 dated 28 April 1980 (Record, vol. II, p. 273). This lease was for a term of forty-eight months from 28 April 1980 with a monthly rental of P8,718.00. The same arrangements for security were executed, with Natividad Ong binding herself as surety and her husband acting as a "continuing" guarantor (Exhibit R, Record, vol. II., p. 278). A second "continuing" guaranty was executed in COLF's favor by defendant-appellee ANDRES GAERLAN (Exhibit Q, Record, vol. II, p. 276).

COGASCO failed to comply with its obligations under the three lease agreements despite demand by plaintiff-appellant. A similar demand made upon the surety, guarantors and the sub-lessee were not met, compelling COLF to initiate Civil Case No. 2759, an action for replevin and damages, before the then Court of First Instance of Rizal. On 18 March 1982, an Order for a writ of seizure (Record, p. 79) was issued by the trial court, and the corresponding writ was issued on 24 March 1982 (Record, p. 82). In compliance with the writ, the Deputy Sheriff filed a partial return on 16 April 1982 reporting that only parts of the units described in the unit were seized. (Record, p. 83).

Parenthetically, the lease agreements were apparently terminated by COLF's counsel per a letter dated 25 January 1982 sent to MANUEL ONG (Record, p. 291).

On 22 October 1982, COLF filed a second Amended Complaint against defendants-appellees SPOUSES MANUEL and NATIVIDAD ONG, ANDRES GAERLAN and STAR TRADERS INDUSTRIES. In a Manifestation dated 26 November 1982 (Record, p. 175), COGASCO, the ONG SPOUSES and GAERLAN stated that they were adopting the Amended Answer they had earlier filed (Record, pp. 94-100). On its part, STAR TRADERS filed an Answer with Counterclaim (Record, pp. 176-180), to which COLF filed a Reply (Record, pp. 183-184). However, in an Order dated 24 April 1984 (Record, p. 205), the trial court declared STAR TRADERS "[as] in default" and terminated the pre-trial.

xxx

During the trial, only Ricardo Ramirez, Credit and Collection Manager of COLF, testified for the plaintiff. On the other hand, only NATIVIDAD testified for the defendants. 1 Rollo, pp. 29-30.

On March 10, 1993, the RTC rendered judgment dismissing the complaint as well as the counterclaim filed by STAR. It ruled that there was no competent proof of COLF's claims as Ramirez' testimony was merely based on the accounting records and had no personal knowledge of petitioners' past due accounts.

COLF appealed to the Court of Appeals. On December 21, 1999, the respondent court promulgated the assailed decision, as it disposed, to wit:

WHEREFORE, the decision appealed from is hereby REVERSED. A new judgment is hereby entered declaring defendants-appellees COGASCO PHILIPPINES, INC., MANUEL ONG, NATIVIDAD ONG, ANDRES GAERLAN jointly and severally liable to pay plaintiff-appellant the amount of P3,824,490.85. STAR TRADERS INDUSTRIES is hereby declared subsidiarily liable to COLF in the amount of P185,016.00 plus legal interest. 2 Id., at 36.

Hence, this petition.

The petition is devoid of merit.

We find no reversible error with the findings of the Court of Appeals that petitioners are indeed liable for non-payment of lease rentals of the subject properties.

Contrary to the ruling of the trial court, the respondent court correctly appreciated witness Ricardo Ramirez as competent enough to testify on petitioners' overdue accounts. As the Credit and Collection Manager of the private respondent, he certainly had personal knowledge that petitioners defaulted in their payments. His testimony plus the demand letters sent to the petitioners clearly establish that petitioners failed to pay the rents as they fell due according to the lease agreements executed by the parties.

Petitioners' obligations according to the lease agreements are undeniable. This is a finding of the respondent court supported by substantial evidence on record which we find no cogent reason to disturb.

IN VIEW OF THE FOREGOING, the Court Resolved to DENY the petition for lack of merit.

Very truly yours,

(Sgd.) VIRGINIA ANCHETA-SORIANO

Clerk of Court


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