Philippine Supreme Court Jurisprudence > Year 2019 > December 2019 Decisions > G.R. No. 238258 - DUTY PAID IMPORT CO. INC., RAMON P. JACINTO, RAJAH BROADCASTING NETWORK, INC., AND RJ MUSIC CITY, PETITIONERS, v. LANDBANK OF THE PHILIPPINES, RESPONDENT.:

This Petition for Review on Certiorari¹� under Rule 45 of the Rules of Court challenges the Court of Appeals' (CA) Decision² dated June 29, 2017, and Resolution³ dated March 20, 2018 which dismissed� petitioners' appeal, and, thus, affirmed the Regional Trial Court's� (RTC) Decision dated June 25, 2015, and Order dated January 20, 2016, finding petitioners solidarily liable to pay respondent its loan obligations.

On� November� 19,� 1997,� respondent� Landbank� of� the� Philippines (LBP)� extended to� petitioner� Duty� Paid� Import� Co.� Inc.,� (DPICI) an Omnibus� Credit� Line� Agreement� for� the� amount� of� Two� Hundred� Fifty Million Pesos (P250,000,000.00). A Comprehensive� Surety Agreement was executed by petitioners Ramon P. Jacinto, Rajah Broadcasting Network, Inc., and� RJ� Music� City, represented� by Jaime� J.� Colayco (Colayco)� and� Ma. Belen B. Quejano (Quejano) (collectively, Jacinto, et al.).⁴ Under the Comprehensive� Surety� Agreement,� Jacinto,� et� al., unconditionally, irrevocably, jointly and severally bound themselves to pay LBP the principal sum of P250,000,000.00 in the event DPICI fails to pay its loans, credits, advances, and other credit facilities and accommodation on maturity.⁵

From July 24, 1997 to August 4, 1998, Colayco and Quejano executed the following promissory notes in favor of LBP:⁶

Promissory Note	Date	Amount
B-2083 (15)	July 24, 1997	P50,000,000.00
B-2083 (17)	July 24, 1997	P40,000,000.00
B-2083 (18)	November 21, 1997	P25,000,000.00
B-2083 (19)	November 26, 1997	P15,000,000.00
B-2083 (20)	December 4, 1997	P10,000,000.00
B-2083 (21)	May 22, 1998	P50,000,000.00
B-2083 (22)	June 26, 1998	P25,000,000.00
B-2083 (23)	August 4, 1998	P35,000,000.00

As security for DPICI's loan in the amount of Ten Million Pesos (P10,000,000,00), Colayco, in his capacity as Vice President of RJ Holdings, Inc., executed a real estate mortgage over a condominium� unit covered by CCT No. 33328.

When DPICI failed to� pay its obligations, LBP extrajudicially foreclosed the real estate mortgage over the condominium unit on December 17, 1998. LBP� emerged� as the highest� bidder� at the auction� sale� held on February� 5, 1999,� for the amount� of Two Million� Nine Hundred Seventy Thousand Pesos (P2,970,000.00).

Despite applying the proceeds of the foreclosure sale to the outstanding� loan obligations,� there remained a deficiency in the amount of Three Hundred Four Million Five Hundred Twenty-four Thousand Four Hundred Thirty-eight� Pesos and 98/100 cents (P304,524,438.98). LBP then sent� demand� letters� dated� September� 22,� 1998� and� October� 7,� 1998� to DPICI, to no avail.⁷

This� led� LBP to file the� complaint� a quo for� collection� of sum� of money against herein petitioners.

By way of answer, petitioners contended that the complaint was prematurely filed as LBP allegedly agreed to a restructuring of the loan agreement.

They also argued that the actual amount of the obligations� was less� than� that� prayed� for� in LBP's� complaint.� Petitioners� also� raised� the defense that their� failure� to pay was� due to the Asian� economic� crisis� in 1997, which was a force majeure.

On� June� 25,� 2015,� the� RTC� promulgated its� Decision with� the following conclusion:

WHEREFORE,� premises considered,� judgment is� hereby RENDERED� in favor of [LBP] and against [petitioners]� ordering the latter to jointly and severally pay the former the following:

(a) The principal� obligation� in the amount of [P]166,853,078.57 plus interest thereon� at the rate of 6% per annum from 7 October� 1998 until the same are fully paid;

(b) The amount� of [P]100,000.00 as and by way of attorney's� fees;

and

(c) Cost of suit.

The compulsory� counterclaims� of [petitioners]� are DENIED� for lack of merit.

Furnish copies of� this� Decision to� the� parties and� their� respective [counsel].

SO ORDERED.⁸

Petitioners'� motion� for� reconsideration� was� likewise� denied� by� the RTC, prompting them to bring their appeal to the CA.

In denying petitioners'� appeal, the CA took note of the RTC's finding that the alleged restructuring of the loan obligations was not substantiated by evidence. The CA observed that petitioners' lone witness, Colayco, merely confirmed the existence of the Omnibus Credit Line Agreement and nothing more.⁹� Contrariwise,� that the proposed� restructuring� of the loan agreement never came to pass was proven by a letter sent by petitioners' Vice President for Finance to LBP which acknowledged� that such proposal was denied by LBP.¹⁰ Because of these, the CA disregarded petitioners' defense that LBP's complaint was prematurely filed.

The CA also agreed with the RTC when the latter rejected petitioners' contention that their failure to pay was due to the economic crisis in 1997, which should be treated as force majeure.¹¹ The CA was in further agreement with the RTC that petitioners were liable as sureties, and, as such, solidarily liable with DPICI as principal obligor.¹²

Finally, the� CA refused� petitioners'� invocation� of Republic Act No. 3765 or the Truth in Lending Act for having been raised for the first time on appeal.¹³

The CA disposed thus:

WHEREFORE, premises considered, the� present appeal is DISMISSED for lack of merit.

The Decision dated June 25, 2015 and Order dated January 20, 2016 issued by the Regional Trial Court, Branch 139, Makati City in Civil Case No.
99-1929 are AFFIRMED in toto.

SO ORDERED.¹⁴

Dissatisfied with the denial of their appeal and subsequent motion for reconsideration, petitioners filed the instant petition raising the following:

Issues

A.� RESPONDENT HAS NO CAUSE OF ACTION OR RIGHT OF ACTION AGAINST THE PETITIONERS.

B. THE PRESENT ACTION WAS PREMATURELY FILED.

C. THE OBLIGATION OF DPICI WAS MUCH LESS THAN THE AMOUNTS CLAIMED BY THE RESPONDENT.

D.� PETITIONERS� COULD� NOT� BE� HELD� LIABLE� TO RESPONDENT FOR THE AMOUNTS CLAIMED WERE EXCESSIVE AND EXORBITANT ON ACCOUNT OF THE UNCONSCIONABLY HIGH� INTEREST�� RATES�� AND PENALTIES IMPOSED BY THE RESPONDENT.

E. PETITIONERS RAMON P. JACINTO, RAJAH BROADCASTING CORP. AND RJ MUSIC SHOULD NOT BE HELD SOLIDARILY LIABLE WITH [DPICI].

F.� PETITIONERS RAMON P. JACINTO, RAJAH BROADCASTING CORP. AND RJ MUSIC SHOULD NOT BE MADE TO PAY THE LIABILITIES OF [DPICI] CONSIDERING THAT IT[S] FAILURE TO PAY ITS DEBT WAS BASED ON JUSTIFIABLE REASONS.¹⁵

In its Comment,¹⁶� LBP seeks the outright� denial� of the petition� for having� raised� issues� not� constituting� questions� of� law. At� any� rate,� LBP contends� that� petitioners failed� to� prove� that� the� loan� agreement was restructured� and� that� petitioners� knowingly� executed� the� loan documents. LBP stresses that petitioners are liable not as guarantors but as sureties of DPICI's� debts,� and, consequently,� are� directly� and� absolutely bound� with DPICI as principal� debtor.¹⁷ LBP also finds no error committed� by the CA when it refused to treat the Asian economic crisis in 1997 as force majeure.¹⁸

In Reply,¹⁹ petitioners assert that there was an agreement to restructure the loan albeit� LBP abruptly� declared� that their� loan� already� became due without consulting� the account officer handling petitioners' loan.²⁰� Because of the agreement� to restructure, petitioners� contend� that DPICI's loan was not yet due; thus, Jacinto et al.'s liability as sureties has yet to arise.²¹ Again, petitioners allege that they do not seek to evade liability, they only seek that the restructuring� of the loan agreement� be implemented� as their failure to pay was brought about by the economic crisis over which petitioners had no control.²²


For lack of merit, we deny the petition.

Only questions� of law should� be raised in Rule� 45 petitions� as this Court is not a trier of facts and will not entertain questions of fact as factual findings of the CA and trial courts are final, binding, or conclusive on the parties, and on this Court when supported by substantial evidence.²³

The issues raised by petitioners in this petition are a virtual rehash, if not a verbatim reproduction,� of the issues raised before the CA.²⁴� Whether the parties� agreed� on� the� restructuring� of� the� loan,� whether� the� amounts sought to� be� collected by� LBP� are� much higher than DPICI's loan obligations, and whether petitioners bound themselves� as sureties under the Comprehensive Surety Agreement, are questions of fact which have all been settled by the courts below.

As in all general rules, the rule that only questions of law may be entertained in a petition for review also permits� exceptions. As enumerated in Pascual v. Burgos:²⁵

However, these rules do admit exceptions. Over time, the exceptions to� these rules have expanded. At� present, there are 10� recognized exceptions that were first listed in Medina v. Mayor Asistio, Jr.:

(1)� When� the conclusion� is a finding� grounded� entirely on speculation, surmises or� conjectures;� (2)� When� the� inference� made� is manifestly mistaken,� absurd� or� impossible;� (3)� Where� there� is� a� grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions� of both appellant and appellee; (7) The� findings� of the� Court� of Appeals� are� contrary� to those� of the� trial court;� (8) When� the findings� of fact are conclusions� without� citation� of specific evidence on which they are based; (9) When the facts set forth in the� petition as well� as in the� petitioner's� main� and� reply� briefs are not disputed� by the respondents;� and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of� evidence and is contradicted� by the evidence on record.²⁶ (Internal citations omitted)

None of the above exceptions exists in the instant case; thus, we find no reason to depart from the similar findings of the appellate and trial courts.

Even when the Court considers the facts as alleged by petitioners, it will still arrive at the conclusion that they failed to establish by preponderance� of evidence� that the loan agreement� was restructured� as to give merit to the argument that LBP's complaint was prematurely filed.

Basic is the evidentiary rule that he who allege a fact bears the burden of proof.²⁷� Petitioners� merely allege that LBP had agreed to restructure the DPICI's loan obligations in the same manner that the obligations of DPICI's affiliate� company, First� Women's� Credit� Corporation,� was� allegedly restructured,� and, that pending such restructuring,� LBP had agreed to give DPICI a grace period within which to pay its obligations.²⁸� As unanimously found by the CA and the RTC, these allegations were never substantiated by evidence.²⁹� Petitioner's lone witness,� Colayco, merely� confirmed the existence of the Omnibus Credit Line Agreement in favor of DPICI. There was no evidence, documentary� or testimonial,� to prove the existence of the alleged agreement by the parties to restructure. Allegations are not evidence and without� evidence,� bare� allegations� do not� prove� facts.³⁰ At most, the letter³¹� presented by LBP proves that there was a proposal on the part of the petitioners to restructure� the loan, but that said proposal� was nevertheless denied by LBP.� Hence, what this settles is that LBP did not give its consent to the proposed restructuring; as such, there was no restructuring to speak of.

Petitioners'� argument that LBP was at fault for not having consulted its� account� officer� before� collecting� the� loan� is,� at� best,� specious.� The account officer merely keeps track of records pertinent to the account. By no measure is the account officer a party to the loan agreement which is strictly between LBP and petitioners.

Anent petitioners' argument that the amount sought to be collected by LBP was much higher than its total obligations, suffice to say that the lower courts uniformly determined that even after the application of the proceeds of the foreclosure sale, there remained a balance on the loan obligation in the amount of P166,853,078.57.³²� Quite glaringly, petitioners did not bother to disprove this finding by offering contrary proof.

In the same manner, we sustain� the finding that Jacinto,� et al., are liable as sureties. In� fact, petitioners� do not deny� their liability as sureties under� the Comprehensive� Surety� Agreement,� but� nevertheless� argue� that their liability arises only when the collaterals used to secure the obligation proved to be insufficient.³³� The� terms of� the Comprehensive Surety Agreement itself, which petitioners knowingly and intelligently entered into, belie
such contention:

WHEREAS, the BANK has granted to DUTY-PAID� IMPORT CO., INC.� (Save-a-Lot)� (hereinafter� referred� to� as� the� BORROWER) certain loans, credits, advances, and other credit facilities or accommodations� up to a principal amount of PESOS:� TWO� HUNDRED� FIFTY MILLION PESOS, (P250,000,000.00), Philippine Currency, (the OBLIGATIONS) with a condition, among others, that a joint and several liability undertaking be executed� by the� SURETY� for the� due� and punctual� payment� of all loans, credits, advances, and other credit facilities or
accommodations of the BORROWER due and payable to the BANK and for the faithful and prompt performance of any or all the terms and conditions thereof.

WHEREAS,� the SURETY has, for a valuable consideration� received from the BORROWER agreed to irrevocably, unconditionally� and jointly and severally undertake/guarantee the OBLIGATIONS.

�x x x x

14. Upon any default, the BANK may proceed directly against the SURETY without first proceeding against and without exhausting the
property of the BORROWER;³⁴� (Emphasis and underscoring in the original)

Thus,� under� the� terms� of� the� Comprehensive Surety� Agreement, Jacinto, et al., become immediately liable upon DPICI's� default without the need for LBP to first proceed against, and, exhaust the collaterals offered by DPICI.

Finally, petitioners'� plea to be absolved of liability on account of the Asian financial crisis in 1997, deserves scant consideration. Upon the petitioners rest the burden of proving that its financial distress which it claim to have suffered was the proximate cause of its inability to comply with its obligations.³⁵� The loan agreement was entered into on November 19, 1997, or well after the start of the Asian economic crisis. Petitioners� ought to be aware of the economic environment at that time, yet it chose to contract said obligations from LBP. It was a business judgment that entailed certain risks. In any case, the 1997 financial crisis that ensued in Asia did not constitute a valid justification to renege on one's obligations³⁶� and it is not among the fortuitous events contemplated under Article 1174 of the New Civil Code.³⁷

In all, we find no error on the part of the appellate court necessitating the Court's exercise of its discretionary review power under Rule 45.

WHEREFORE, the petition is DENIED.� The Decision dated June 29, 2017 and Resolution� dated March 20, 2018 of the Court of Appeals are AFFIRMED in toto.

SO ORDERED.

Peralta, C.J., (chairperson), Caguioa, (working chairperson), Reyes, J. Jr., Lazaro-Javier, and Lopez., JJ. concur.

Endnotes:

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¹Rollo, pp. 9-29.

² Penned� by Associate� Justice� Ma.� Luisa C.� Quijano-Padilla and� concurred� in by� Associate� Justices Sesinando E. Villon and Rodil V. Zalameda (now a Member of the Court); id. at 31-39.

³ Id. at 41-42.

⁴ Id. at 11.

⁵ Id.

⁶ Id. at 32.

⁷ Id.

⁸ Id. at 33.

⁹ Id. at 35.

¹⁰ Id. at 36.

¹¹Id. at 34.

¹² Id. at 38.

¹³ Id. at 36.

¹⁴ Id. at 39.

¹⁵ Id. at 20.

¹⁶ Id. at 73-91.

¹⁷ Id. at 84.

¹⁸ Id. at 85.

¹⁹ Id. at 98-103.

²⁰ Id. at 98-99.

²¹ Id.at100.

²² Id. at 101.

²³Commissioner� of Internal Revenue v. Embroidery and Garments Industries (Phil.), Inc., 364 Phil. 541, 546 (1999).

²⁴Rollo, p. 79.

²⁵ 776 Phil. 167, 182-183 (2016).

²⁶ Id. at 182.

²⁷Lim v. Equitable� PCI Bank, 724 Phil. 453, 454 (2014).

²⁸ Rollo, p. 13.

²⁹ Id. at 82.

³⁰Sabellina v. Buray, 768 Phil. 224, 238 (2015).

³¹ Supra note 10.

³²Rollo, p. 35.

³³� Id. at 25.

³⁴ Id. at 37.

³⁵ See Asian Construction and Development Corp. v. PCI Bank, 522 Phil. 168, 180 (2006).�

³⁶ Id.��

³⁷Mondragon� Leisure and Resorts Corp.� v. Court v. Appeals, 499 Phil. 268, 279 (2005).