FIRST DIVISION
[G.R. No. 130365. July 14, 2000]
STATE
INVESTMENT HOUSE, INCORPORATED, petitioner, vs. COURT OF APPEALS,
PHILIPPINE NATIONAL BANK and SPOUSES FEDERICO L. FRANCO and FELICISIMA R.
FRANCO, respondents.
D E C I S I O N
KAPUNAN, J.:
Private respondent spouses Federico and
Felisisima Franco bought four (4) units of M.A.N. Diesel Long Distance Touring
Coaches from Delta Motor Corporation-M.A.N. Division (DMC). To secure payment
therefor, the spouses executed in favor of DMC four (4) promissory notes,[1] each with a face value of P800,000.00, as
well as four (4) chattel mortgages over said vehicles.
The promissory notes executed by the Franco
spouses subsequently became the subject of conflicting claims by DMC’s
creditors, namely, the State Investment House, Inc. (SIHI), the Philippine
National Bank (PNB), and the Union Bank of the Philippines (UBP). To determine
to whom they should continue paying the amounts stated in the promissory notes,
the spouses filed an action for interpleader in the Regional Trial Court of
Manila.
SIHI’s claim
SIHI alleged that in 1979 it granted a
twenty-five million peso (P25,000,000) credit line to DMC. In
consideration therefor, DMC bound itself to deliver and assign to SIHI all its
contracts to sell, notes, accounts, checks, bills of exchange, and choses of
actions evidencing actual sales of its merchandise to DMC’s clients. The
agreement between SIHI and DMC is embodied in a Continuing Deed of Assignment
of Receivables[2] executed on December 23, 1981.
By March 24, 1992, DMC’s availment of the
credit line had amounted to P24,010,269.32. Of this sum, P12,846,939.36
was due and payable. The loan to DMC was subsequently restructured, resulting
in a Memorandum of Agreement[3] whereby DMC agreed to sell P8,000,000 worth of
its receivables to SIHI, the proceeds of which shall be used to pay the loans
past due.
On September 13, 1983, DMC executed in favor
of SIHI a Deed of Sale[4] of various accounts receivables amounting to P18,909,100, including the subject promissory notes.
SIHI later sent demand letters dated March
29, 1984[5] and June 27, 1984[6] informing the Franco spouses of the assignment and
directing that they make payments to SIHI’s office.
PNB's claim
PNB’s claim over the promissory notes, on
the other hand, is based on a letter of credit[7] granted by PNB to DMC to finance the importation of
325 units of M.A.N. CKD Diesel Bus Chassis. The imported units supposedly
include the four (4) units sold by DMC to the Francos. After DMC took
possession of the units, DMC and PNB entered into a Trust Receipt Agreement[8] whereby DMC agreed:
x x x to hold said
merchandise in storage as property of said Bank, with the liability to sell the
same for cash, for its account and to hand the proceeds thereof to the said
Bank to be applied against its acceptance on account of the undersigned, and/or
under the terms of the Letter of Credit noted below; and further agrees to hold
said merchandise and the proceeds thereof in trust for the payment of said
acceptance and of any other indebtedness of the undersigned to the said Bank.
A Credit Agreement[9] dated February 17, 1981 was also executed providing
that:
xxx (a) The CLIENT
shall open and maintain a Special Deposit Account (SDA) with the Bank; (b) All
collections of the CLIENT on the sales of the units and other goods imported
under the Letter of Credit as well as sales of the units subsequently imported
out of the aforesaid collections shall be deposited to the SDA.
In a Deed of Assignment[10] dated February 27, 1981, PNB and DMC stipulated
that:
Should the sums of
money, credits, receivables or other properties assigned, be in the possession
of, or due or to be due from a third party, then it is hereby agreed that the
same shall be remitted by such third party direct to the ASSIGNEE to be disposed
of in accordance with the terms and conditions thereof. The ASSIGNOR shall
obtain the conformity of such third party to this condition.
PNB claimed that the subject promissory
notes were covered by this Deed of Assignment, the notes representing the
consideration for the sale of the units imported from the proceeds of the
Letter of Credit.
In a Demand Letter[11] dated May 20, 1984, PNB informed the Francos of the
assignment and enjoined payment to PNB.
UBP’s claim
UBP, in turn, obtained a Writ of Garnishment
as a result of a judgment against DMC. UBP asserted rights over the promissory
notes by virtue of said writ.
Ruling on these conflicting claims, the RTC
held that SIHI’s claims over the promissory notes were superior to those of PNB
and UBP. The dispositive portion of the RTC’s decision states:
WHEREFORE,
judgment is hereby rendered as follows:
(1) Granting this
action for interpleader;
(2) Declaring
defendant-claimant State Investment House Inc. as the one with superior right
over the obligation (unpaid as of March 29, 1984) of plaintiffs as covered by
their promissory notes and chattel mortgages executed in favor of Delta Motors
Corporation, M-A-N Division (Exhs. 7, 8, 9 and 10-SIHI);
(3) Lifting and
setting aside the Writ of Preliminary Injunction previously issued;
(4) Dismissing and
denying defendants Philippine National Bank’s and Union Bank of the
Philippines’ claims;
(5) After the
finality of this Decision, defendant SIHI shall be allowed to cause the
withdrawal of the deposit now totaling P634,090.24 to be applied to plaintiffs’
said allegation;
(6) Plaintiffs and
SIHI shall resolve as early as possible the matter concerning the balance of
the oft-stated accounts, and henceforth, plaintiffs shall discharge their
remaining obligations (Exhs. 7, 8, 9 and 10-SIHI) by paying to SIHI.
There shall be
pronouncement as to costs.
SO ORDERED.[12]
It does not appear that UBP questioned the
decision of the RTC. PNB, for its part, appealed to the Court of Appeals.
In a Decision dated September 10, 1996, the
Court of Appeals reversed the decision of the RTC and declared PNB’s claims
superior to those of SIHI. It held that under Section 9 of the Trust Receipts
Law,[13] DMC was merely an entrustee of the products imported
and, thus, obliged to turn over to its entruster, PNB, the proceeds of the sale
of said products. The dispositive portion of said decision is reproduced
hereunder:
WHEREFORE,
foregoing considered, the appealed decision is hereby REVERSED and SET ASIDE. A
new one is hereby rendered.
1. Declaring defendant-appellant
PNB as the one having superior rights over the obligation of
plaintiffs-appellees as covered by their promissory notes and chattel
mortgages.
2. After finality
of decision, defendant-claimant-appellant PNB shall be allowed to withdraw the
proceeds of the sale deposited by the plaintiffs-spouses Federico L. Franco and
Felicisima Franco with the trial court, to be applied to their and DMC-MAN’s
obligations.
3.
Plaintiff-appellee shall discharge their remaining obligation by paying
defendant-claimant-appellant PNB.
4. Dismissing and
denying defendant-appellee SIHI’s and defendant-appellant UBP’s claims.
5. Lifting and
setting aside the Writ of Preliminary injunction previously issued by the trial
court.
No pronouncement
as to cost.[14]
The Court of Appeals denied SIHI’s motion
for reconsideration.
Seeking a review of the adverse decision of
the Court of Appeals, SIHI filed in this Court the present petition for certiorari
under Rule 45 of the Rules of Court.
Petitioner SIHI alleges that the vehicles
sold by DMC to the Francos were not covered by the trust receipts
agreement between PNB and DMC. Assuming that said vehicles were the subject of
said receipts, SIHI contends that its rights are superior to those of PNB since
the former is a purchaser in good faith, having no notice or knowledge of PNB’s
interest over the notes. SIHI likewise imputes gross negligence in PNB’s
handling of DMC’s accounts. The subject vehicles were supposedly released to
DMC as early as 1980 and were sold to the Francos in 1981-1982. It was only in
May 1984, however, when PNB asserted its claim over the promissory notes, long
after DMC had assigned the notes to SIHI.
The petition is meritorious.
Section 7 of the Trust Receipts Law provides
that the entruster shall be entitled to the proceeds from the sale of the goods
released under a trust receipt to the entrustee to the extent of the amount
owing to the entruster or as appears in the trust receipt.[15] The pivotal issue, therefore, is whether the goods
released under the trust receipt include the vehicles purchased by the Franco
spouses from DMC and for which the promissory notes were issued.
PNB contends that this issue is a question
of fact. It submits that both the RTC and the Court of Appeals found that the
vehicles are covered by the trust receipts agreement and such findings are
conclusive upon this Court.[16]
We are not impressed.
It is true that the decision of the RTC
states that PNB "financed Delta’s importation of 325 units of M.A.N. CKD
Diesel Bus Chassis… which includes the four (4) units which were sold to
plaintiffs."[17] This statement, however, appears in the recital of
the allegations of the parties, and not in the rationale of its decision.
The Court of Appeals, for its part, held
that the "[e]vidence clearly showed that the vehicles sold to plaintiffs
were covered by a Trust Receipt Agreement executed between DMC-MAN and
defendant appellant-PNB."[18] The appellate court, however, did not refer to any
evidence that would justify its findings. As such, the present case constitutes
an exception to the rule on the conclusiveness of findings of facts.[19]
In any case, this Court has the authority to
review and reverse the factual findings of the lower courts if, as in this
case, it finds that such findings do not conform to the evidence on record.[20]
The evidence for PNB fails to establish that
the vehicles sold to the Francos were among those covered by the trust
receipts. As petitioner points out, neither the trust receipts covering the
units imported nor the corresponding bills of lading contain the chassis and
engine numbers of the vehicles in question.[21]
PNB asseverates that "the records of
the case… is replete with evidence to show that the subject vehicles are indeed
covered by the trust receipts issued by DMC to PNB."[22] However, it has not pointed out which evidence
specifically supports its claim. It does not even explain why the bills of
lading for the imported units do not contain the chassis numbers and serial
numbers of the subject vehicles.
PNB further asserts that assuming its
evidence does not expressly and definitely identify the subject properties the
properties were nevertheless substantially described in PNB’s documents,
particularly the Deed of Assignment dated February 27, 1981.[23]
We find no such substantial description in
said Deed of Assignment. On the contrary, the Deed of Assignment begs the
question. The Deed states that a lien was thereby constituted
from the sale on
installments of units assembled from CKD’s to be imported from the proceeds
of the letter of credit accommodation granted by the ASSIGNEE to the
ASSIGNOR as well as those imported from subsequent collection from the
proceeds of the sale thereof.[24]
But just what is the specific description of
the units imported by the assignor DMC? Does the Deed of Assignment include the
subject vehicles? The Deed of Assignment does not say.
PNB adds that the Deed of Assignment could
not have expressly and definitely mentioned the promissory notes since said
deed, executed on February 27, 1981, predates the notes, which were dated July
18, 1981, September 23, 1981, February 12, 1982, and March 23, 1982,
respectively.[25] This is beside the point, however, for it is not the
identity of the promissory that is at issue but that of the units so imported.
Verily, PNB has failed to prove its claim by
a preponderance of evidence, the weakness of its evidence betrayed by the
weakness of its arguments. SIHI, for its part, has successfully discharged its
burden. It is undisputed that the subject notes were covered by the Deed of
Sale of receivables executed by DMC in petitioner’s favor. Accordingly, SIHI is
entitled to the promissory notes in question.
WHEREFORE, the petition is hereby given DUE COURSE and the
Decision of the Court of Appeals is REVERSED. The Decision of the Regional
Trial Court is REINSTATED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno,
Pardo, and Ynares-Santiago, JJ., concur.
[1] Exhibits "7" to "10" (SIHI)
[2] Exhibit "4" (SIHI)
[3] Exhibit "5" (SIHI)
[4] Exhibit "6" (SIHI)
[5] Exhibit "11" (SIHI)
[6] Exhibit "12" (SIHI)
[7] Exhibit "1" (PNB)
[8] Exhibits "4 to 11-D" (PNB)
[9] Exhibit "6" (SIHI)
[10] Exhibit "13" (PNB)
[11] Exhibit "E."
[12] Rollo, p. 82.
[13] Presidential Decree No. 115.
[14] Rollo, p. 42.
[15]
Section 7 states in full:
SEC. 7. Rights of the entruster. — The
entruster shall be entitled to the proceeds from the sale of the goods,
documents or instruments released under a trust receipt to the entrustee to the
extent of the amount owing to the entruster or as appears in the trust receipt,
or to the return of the goods, documents or instruments in case of non-sale,
and to the enforcement of all other rights conferred on him in the trust
receipt provided such are not contrary to the provisions of this Decree.
The entruster may cancel the trust and take possession of the goods, documents or instruments subject of the trust or of the proceeds realized therefrom at any time upon default or failure of the entrustee to comply with any of the terms and conditions of the trust receipt or any other agreement between the entruster and the entrustee, and the entruster in possession of the goods, documents or instruments may, on or after default, give notice to the entrustee of the intention to sell, and may, not less than five days after serving or sending of such notice, sell the goods, documents or instruments at public or private sale, and the entruster may, at a public sale, become a purchaser. The proceeds of any such sale, whether public or private, shall be applied (a) to the payment of the expenses thereof; (b) to the payment of the expenses of re-taking, keeping and storing the goods, documents or instruments; (c) to the satisfaction of the entrustee’s indebtedness to the entruster. The entrustee shall receive any surplus but shall be liable to the entruster for any deficiency. Notice of sale shall be deemed sufficiently given if in writing, and either personally served on the entrustee or sent by post-paid ordinary mail to the entrustee's last known business address.
[16] Rollo, pp. 136-137.
[17] Id., at 78. Italics ours.
[18] Id., at 38.
[19] See Cang vs. Court of Appeals, 296 SCRA 128 (1998)
[20] Ibid.
[21] Rollo, pp. 12, 146-154.
[22] Id., at 137.
[23] Rollo, pp. 138-139.
[24] See Note 10.
[25] Rollo, pp. 138-139.