SECOND DIVISION
[G.R. NO. 170738 : September 12, 2008]
RIZAL COMMERCIAL BANKING CORPORATION, Petitioner, v. MARCOPPER MINING CORPORATION, Respondent.
D E C I S I O N
QUISUMBING, J.:
x x x xRepresentatives from both parties met on July 3, 1997, 10 to discuss Marcopper's proposal.
Based on the foregoing, we foresee two (2) possible options for you, namely:The Company may request the involvement of our major shareholders who could ensure a definite repayment plan for the principal exposure of $13.7 Million. Said repayment plan will consist of the following components:
1)Initiate a foreclosure on the mortgaged assets, thereby realizing maximum cash proceeds of about $11.6 Million. The balance will have to be relegated to the rank of unsecured obligations whose repayment will solely depend on the timing and extent of cash proceeds to be generated from the disposal of the company's assets, or
2) Accept our proposal which calls for the involvement of our major shareholders.x x x x
a)Implementation of the assignment of the Forbes Park property for the previously agreed amount of P235 Million;
b) Payment of the amount of P71 Million, being the peso equivalent of the difference between $11.6 Million and $8.9 Million (dollar equivalent of P235 Million) over a period of one (1) year on a quarterly basis, plus interest; and c) Payment of the balance of P55.4 Million (being the peso equivalent of the difference between the entire principal obligation of $13.7 Million and $11.6 Million which is the sum of Items a) and b) above, over a period of two (2) years payable quarterly.
We believe that Option 2 above guarantees your full recovery of our principal obligation to you. Since our major shareholders have already indicated their willingness to support this repayment scheme, may we request you to accept this option for immediate implementation. 9
x x x x
July 8, 1997RCBC Director/Senior Vice-President Susanne Y. Santos and Senior Vice-President Filadelfo S. Rojas, Jr. signed their conformity to the above letter.
RIZAL COMMERCIAL BANKING CORP.
Sen. Gil Puyat Avenue
Makati City
Attention: MR. FILADELFO ROJAS, Jr.Senior Vice-President
Gentlemen:
Subject: Marcopper FCDU Loan
This is to summarize our discussion and the points agreed upon during our meeting last July 3, regarding our payment proposal made in our letter to you of July 1.
In the meeting, Mr. Joost Pekelharing and I have reiterated Marcopper's proposal that with the involvement of the company's major shareholders, a definite repayment plan on the principal amount of your exposure to us be ensured.
While you raised your concern about the accrued interest, we had to explain that it may be unfair to overburden the company's major shareholders who are already overexposing themselves, if only to ensure that you will be repaid to the extent of your principal exposure to us. For this reason, we requested that said accrued interest be waived.
We then agreed on the repayment of your principal exposure to us as follows:
1) The principal amount was to be revised, from the original principal of $13.7 million to $14.327 million, which includes interest that has been capitalized; 2) Implementation of the assignment of the Forbes Park property for the agreed amount of P235 million, equivalent to about $8,901,515; 3) Payment of the amount of $2,698,485 over a period of one (1) year payable quarterly plus interest; and 4) Payment of the balance of $2,727,000 over a period of two (2) years, payable quarterly, without interest.
It was emphasized that the restructured loans will be guaranteed by the company's major shareholders.
We believe the foregoing captures the essence of what transpired in our meeting. May we therefore, request you to indicate your conforme in the space provided for below.
Thank you.
Very truly yours,(Sgd.)NICANOR L. ESCALANTE
Treasurer
Conforme: Director/SVP SUSANNE Y. SANTOS SVP FILADELFO S. ROJAS, JR. (Sgd.)____________________________ (Sgd.)
___________________Rizal Banking Corporation
(Authorized Signatories) 11
31 July 1997RCBC did not sign the Deed of Release from Mortgage of the six Rig Haul Trucks and one Demag Hydraulic Excavator Shovel. Instead, it returned the unsigned deed to Marcopper. However, it signed the Deed of Assignment of the Forbes Park property.
Rizal Commercial Banking Corporation
Sen. Gil J. Puyat Avenue, Makati City
Attention : Ms. Ma. Felisa BanzonVice-President
Gentlemen:Re: Deed of Release from Mortgage
In connection with the transfer of our Forbes Park Property in your favor, we are transmitting to you herewith the following documents:Kindly note that the release of the above-mentioned property by MR Holdings Limited from their mortgage was made on the condition that a substitution thereof with other unencumbered and free assets and properties of the mortgagor under a second Addendum to Mortgage be effected. Inasmuch as our only free and unencumbered assets will be those that will be released by you under the Deed of Release from Mortgage mentioned under Item No. 4 above, may we therefore request that your authorized signatories sign as soon as possible the said Deed of Release from Mortgage.
- Deed of Assignment [of the Forbes Park property] dated August 1, 1997, for BIR purposes;
- Deed of Partial Release from Mortgage signed by the Attorney-in-Fact of MR Holdings Limited releasing from their mortgage the above-mentioned property; and
- Copy of Secretary's Certificate of a resolution passed by the Board of Directors of MR Holdings Limited appointing as Attorney-in-Fact, Atty. Alma D. Fernandez-Mallonga. The original of said Secretary's Certificate is with Atty. Mallonga and will be presented to the Register of Deeds when required.
- Deed of Release from Mortgage to be signed by RCBC involving the release from your mortgage six (6) Units Rig Trucks and one (1) unit Demag Shovel.
Thank you for your kind assistance and cooperationVery truly yours,
(Sgd.)
NICANOR L. ESCALANTE
Treasurer 12
September 12, 1997On November 24, 1997, Marcopper stressed to RCBC the need for RCBC to release the mortgaged properties. Marcopper stated that RCBC was well aware that MR Holdings, Ltd. agreed to release its lien on the Forbes Park property upon Marcopper's assurance that RCBC will release from mortgage the six Rig Haul Trucks and one Demag Hydraulic Excavator Shovel. In said letter, Marcopper for the first time also stated that pledges over the club shares were to be released as well. The properties to be released from mortgage and pledge were to be used as substitute security in favor of MR Holdings, Ltd. The letter reads:
MARCOPPERMINING CORP.
6th Floor, V. Madrigal Bldg.
6793 Ayala Avenue,
Makati CityAttention: MR. NICANOR L. ESCALANTE
Treasurer
Gentlemen:
As you are aware, we have effected the transfer of ownership of the Forbes property which you used to partially settle your past due obligations with the bank. You have previously requested the release of six (6) Unit Rig trucks and one (1) Demag Shovel. However, as I have previously informed you, we first need to work on some details in relation to the dacion. We still need to get approval for your request thus no commitment can be made at this time.Very truly yours,
(Sgd.)
MA. FELISA R. BANZON
Vice-President 14
November 24, 1997In a letter 16 dated December 15, 1997, RCBC informed Marcopper that its Executive Committee had approved the release of five Rig Haul Trucks subject to the condition that Marcopper pays the first amortization which fell due on November 24, 1997. On December 17, 1997, RCBC sent a second letter 17 to Marcopper informing the latter that it has approved the release from mortgage of the six Rig Haul Trucks and one Demag Hydraulic Excavator Shovel as well as the release from pledge of the club shares, also subject to the same condition. Marcopper failed to settle the obligations which fell due on November 24, 1997, February 23, 1998 and May 25, 1998. RCBC sent to Marcopper and its surety Mr. Teodoro G. Bernardino a letter dated July 1, 1998, declaring the whole obligation under the non-negotiable promissory notes due and payable and demanding that they pay the same. Marcopper and its surety refused to pay.
MR. CESAR VIRATA
Chairman of the Board
RIZAL COMMERCIAL BANKING CORPORATION
Sen. Gil J. Puyat Avenue
Makati City
Dear Mr. Virata,
We are writing you in connection with the recently completed documentation on the assignment of our Forbes Park property in your favor, representing partial settlement of our loan obligations to you.
As you may be aware, the Forbes Park property had, up to the time of assignment to you, been part of a pool of assets mortgaged with MR HOLDINGS, LTD. (MR Holdings), successor-in-interest of the Asian Development Bank. MR Holdings agreed to release this asset from their mortgage only upon our assurance that RCBC will release as well from their mortgage, and we would, without delay, turn over to MR Holdings, six (6) units Rig Trucks and one (1) unit Demag Shovel.
We, likewise, committed to MR Holdings that we will additionally mortgage to them some club shares, which we earlier pledged to you, and which we expected to be released by you, after the restructuring of our loan obligations with you. As you very well know, the restructured balance of our obligations with you are covered by a surety issued by Mr. Teodoro G. Bernardino, in addition to the equipment to be retained by you as collateral.
Up to now, however, the abovementioned equipment have not yet been released from your mortgage, nor have the pledged club shares been turned over to us. We have been advised by RCBC that the non-release of the abovementioned assets is caused by a pending issue between RCBC and its assigned Central Bank examiner, involving the restructuring agreement entered into between RCBC and Marcopper.
Considering the pressure being exerted on us by MR Holdings on the immediate compliance of our commitment to deliver the abovementioned assets to them, may we, therefore, seek your kind assistance in the release of said assets from RCBC.
Thank you.
Very truly yours,
MARCOPPER MINING CORP.(Sgd.)JOOST PEKELHARING
Chairman of the Board 15
WHEREFORE, premises considered, judgment is hereby [rendered], as follows:The Court of Appeals affirmed with modification the trial court's ruling. Thus:The compulsory counterclaims of defendant are dismissed for lack of merit.
- Ordering defendant Rizal Commercial Banking Corporation to execute a Deed of Partial Release from Mortgage, in favor of the plaintiff, the following properties:
a) six (6) units Rig [Haul] trucks b) one (1) Demag Excavator shovel and for said defendant to release from pledge, in favor of the plaintiff, the following: a) one (1) share of Baguio Country Club under Certificate No. 3753; b) one (1) share of Canlubang Golf and Country Club under Certificate No. 1759; c) one (1) share of Philippine Columbian Club Association under Certificate No. 1461; d) one (1) share of Philippine Columbian Club Association under Certificate No. 1486; and e) one (1) share of Puerto Azul Beach and Country Club under Certificate No. 534.- Ordering defendant to cease and desist from enforcing and collecting on the non-negotiable Promissory Note Nos. 21-3699 and 21-37997 including the comprehensive surety agreements of Mr. Teodoro Bernardino, the same not being due and enforceable against the plaintiff and Teodoro Bernardino.
- Ordering defendant to pay Marcopper the amount equivalent to 30% of the value as of 1997 of the six (6) units Rig trucks, Demag Excavator shovel and the club shares mentioned in [the] preceding par. 1 hereof, as compensatory damages; and [P500,000.00] as exemplary damages.
No costs.
SO ORDERED. 19
WHEREFORE, premises considered, the decision of Branch 57, Regional Trial Court of Makati in Civil Case No. 98-1661 is hereby AFFIRMED with Modifications in items 2 and 3 of the same:RCBC's motion for reconsideration was denied. Hence, the instant appeal by RCBC. RCBC alleges that:2. Enforcement of Promissory Notes 21-3697 and 21-3797 is hereby SUSPENDED until the RELEASE of properties specified in the trial court's decision dated July 2, 2002.The dismissal of defendant's compulsory counterclaims is AFFIRMED.
3. RCBC is held liable for actual and compensatory damages equivalent to thirty percent (30%) of the value of the equipment not released to answer for the depreciation these equipment underwent due to the passage of time and the profit [Marcopper] could have realized if aforementioned release was effected on time. RCBC is likewise held liable for exemplary damages in the reduced amount of One Hundred Thousand (P100,000.00) Pesos.
SO ORDERED. 20
Simply, the issue is: Did the parties agree that RCBC will execute a Deed of Release from Mortgage and Pledge of the six Rig Haul Trucks, one Demag Hydraulic Excavator Shovel and shares of stock in exchange for the assignment by Marcopper to RCBC of the Forbes Park property?I.
THE COURT OF APPEALS ERRED IN FINDING THAT RCBC WAS LEGALLY OBLIGATED TO RELEASE THE SUBJECT MORTGAGE AND PLEDGE BASED ON HEARSAY, IRRELEVANT, AND THUS INADMISSIBLE EVIDENCE, AND IN DISREGARDING THE UNDISPUTED AND MATERIAL FACTS, WHICH IF PROPERLY CONSIDERED, WOULD JUSTIFY A CONTRARY CONCLUSION.
x x x xII.
THE COURT OF APPEALS DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS IN GIVING MORE WEIGHT AND CREDENCE TO THE HEARSAY, DOUBTFUL, TENUOUS, AND IRRELEVANT, TESTIMONIES OF MARCOPPER'S WITNESSES, AND IN DISREGARDING THE CATEGORICAL TESTIMONIES OF MARIA FELI[S]A R. BANZON AND MERLYN E. DUEÑAS, BOTH OF WHOM WERE PRESENT AT THE PARTIES' MEETING ON 3 JULY 1997, PROVING THAT THERE WAS NO COMMITMENT, MUCH LESS AGREEMENT, TO RELEASE THE SUBJECT MORTGAGE AND THE PLEDGE.III.
THE COURT OF APPEALS ERRED IN AWARDING DAMAGES TO MARCOPPER BASED ON MANIFESTLY MISTAKEN, ABSURD, OR IMPOSSIBLE INFERENCES AND MERE SPECULATION.IV.
THE COURT OF APPEALS ERRED IN DISMISSING RCBC'S COUNTERCLAIMS. 21
x x x x
The foregoing discussion, however, must be situated within the general rules on evidence, in light of the burden of proof in civil cases, i.e., preponderance of evidence, and the shifting of the burden of evidence in such cases. Simply put, he who alleges the affirmative of the issue has the burden of proof, and upon the plaintiff in a civil case, the burden of proof never parts. However, in the course of trial in a civil case, once plaintiff makes out a prima facie case in his favor, the duty or the burden of evidence shifts to defendant to controvert plaintiff's prima facie case, otherwise, a verdict must be returned in favor of plaintiff. Moreover, in civil cases, the party having the burden of proof must produce a preponderance of evidence thereon, with plaintiff having to rely on the strength of his own evidence and not upon the weakness of the defendant's. The concept of "preponderance of evidence" refers to evidence which is of greater weight, or more convincing, that which is offered in opposition to it; at bottom, it means probability of truth.In a civil case, the burden of proof is on the plaintiff to establish his case through a preponderance of evidence. If he claims a right granted or created by law, he must prove his claim by competent evidence. 34
SO ORDERED.
Carpio Morales, Tinga, Velasco, Jr., and Brion, JJ., concur.
Endnotes:
1Rollo, pp. 53-71. Penned by Associate Justice Arcangelita M. Romilla-Lontok, with Associate Justices Rodrigo V. Cosico and Danilo B. Pine concurring.
2 Id. at 73-74.
3 Id. at 75-98. Penned by Judge Reinato G. Quilala.
4 Records, pp. 178-181.
5 Id. at 184-185.
6 Id. at 182-183.
7 Id. at 72-75.
8Rollo, p. 75.
9 Records, pp. 73-74.
10 Id. at 76.
11 Id. at 76-77.
12 Id. at 14.
13 Id. at 79.
14 Id. at 83.
15 Id. at 197-198.
16 Id. at 199.
17 Id. at 200.
18 Id. at 1-9.
19Rollo, pp. 97-98.
20 Id. at 69-70.
21 Id. at 22-24.
22 Id. at 25.
23 Id. at 178-179.
24Vibram Manufacturing Corporation v. Manila Electric Company, G.R. No. 149052, August 9, 2005, 466 SCRA 178, 183.
25Domingo v. Domingo, G.R. No. 150897, April 11, 2005, 455 SCRA 230, 238.
26 Records, pp.197-198.
27 Civil Code of the Philippines, Article 1315.
28 Id., Article 1159.
29Swedish Match, AB v. CA, G.R. No. 128120, October 20, 2004, 441 SCRA 1, 18.
30 Records, p. 86.
31 Id. at 87.
32 1997 Rules of Court, Rule 2, Section 2.
33 G.R. No. 124853, February 24, 1998, 286 SCRA 495, 532.
34Social Security System v. Chaves, G.R. No. 151259, October 13, 2004, 440 SCRA 269, 277.