SECOND DIVISION
FILIPINAS TEXTILE
MILLS, INC.AND BERNARDINO
VILLANUEVA,
Petitioners,
G.R.
No.
119800
November 12, 2003
-versus-
COURT OF APPEALS
AND STATE INVESTMENT
HOUSE, INC.,
Respondents.
chanroblesvirtualawlibrary
D E C I S
I O
N
TINGA,
J.:
Before this Court
is a Petition for Review on Certiorari assailing the Decision[1]
and Resolution[2]
of the Court of Appeals dated June 16, 1994 and April 19, 1995,
respectively,
affirming the Decision[3]
of the Regional Trial Court dated July 23, 1990 which found the
petitioners
Filipinas Textile Mills, Inc. ("Filtex") and Bernardino Villanueva
("Villanueva")
jointly and severally liable to respondent State Investment House, Inc.
("SIHI") for the amount of P7,868,881.11.chanrobles virtuallaw libraryred
The antecedent facts
are as follows:
On December 6, 1985,
SIHI instituted a Complaint[4]
for the collection of the sum of P3,118,949.75, with interest,
penalties,
exemplary damages, attorneys fees and costs of suit against herein
petitioners
Filtex and Villanueva.chanrobles virtuallaw libraryred
In its Complaint, SIHI
alleged that sometime in 1983, Filtex applied for domestic letters of
credit
to finance the purchase of various raw materials for its textile
business.
Finding the application to be in order, SIHI issued on various dates
domestic
letters of credit[5]
authorizing Indo-Philippine Textile Mills, Inc. ("Indo-Phil"), Texfiber
Corporation ("Texfiber"), and Philippine Polyamide Industrial
Corporation
("Polyamide") "to value" on SIHI such drafts as may be drawn by said
corporations
against Filtex for an aggregate amount not exceeding P3,737,988.05.chanrobles virtuallaw libraryred
Filtex used these domestic
letters of credit to cover its purchase of various textile materials
from
Indo-Phil, Texfiber and Polyamide. Upon the sale and delivery of the
merchandise,
Indo-Phil, Texfiber and Polyamide issued several sight drafts[6]
on various dates with an aggregate value of P3,736,276.71 payable to
the
order of SIHI, which were duly accepted by Filtex. Subsequently, the
sight
drafts were negotiated to and acquired in due course by SIHI which paid
the value thereof to Indo-Phil, Texfiber and Polyamide for the account
of Filtex.chanrobles virtuallaw libraryred
Allegedly by way of
inducement upon SIHI to issue the aforesaid domestic letters of credit
and "to value" the sight drafts issued by Indo-Phil, Texfiber and
Polyamide,
Villanueva executed a comprehensive surety agreement[7]
on November 9, 1982, whereby he guaranteed, jointly and severally with
Filtex, the full and punctual payment at maturity to SIHI of all the
indebtedness
of Filtex. The essence of the comprehensive surety agreement was that
it
shall be a continuing surety until such time that the total outstanding
obligation of Filtex to SIHI had been fully settled.chanrobles virtuallaw libraryred
In order to ensure the
payment of the sight drafts aforementioned, Filtex executed and issued
to SIHI several trust receipts[8]
of various dates, which were later extended with the issuance of
replacement
trust receipts all dated June 22, 1984, covering the merchandise sold.
Under the trust receipts, Filtex agreed to hold the merchandise in
trust
for SIHI, with liberty to sell the same for SIHI's account but without
authority to make any other disposition of the said goods. Filtex
likewise
agreed to hand the proceeds, as soon as received, to SIHI "to apply"
against
any indebtedness of the former to the latter. Filtex also agreed to pay
SIHI interest at the rate of 25% per annum from the time of release of
the amount to Indo-Phil, Texfiber and Polyamide until the same is fully
paid, subject to SIHI's option to reduce the interest rate.
Furthermore,
in case of delay in the payment at maturity of the aggregate amount of
the sight drafts negotiated to SIHI, said amount shall be subject to
two
percent (2%) per month penalty charge payable from the date of default
until the amount is fully paid.chanrobles virtuallaw libraryred
Because of Filtex's
failure to pay its outstanding obligation despite demand, SIHI filed a
Complaint on December 6, 1985 praying that the petitioners be ordered
to
pay, jointly and severally, the principal amount of P3,118,949.75, plus
interest and penalties, attorney's fees, exemplary damages, costs of
suit
and other litigation expenses.cralaw:red
In its Answer with Counterclaim,[9]
Filtex interposed special and affirmative defenses, i.e., the
provisions
of the trust receipts, as well as the comprehensive surety agreement,
do
not reflect the true will and intention of the parties, full payment of
the obligation, and lack of cause of action. For his part, Villanueva
interposed
the same special and affirmative defenses and added that the
comprehensive
surety agreement is null and void and damages and attorney's fees are
not
legally demandable.[10]
The petitioners, however, failed to specifically deny under oath the
genuineness
and due execution of the actionable documents upon which the Complaint
was based.chanrobles virtuallaw libraryred
On July 23, 1990, the
Regional Trial Court of Manila rendered judgment[11]
holding Filtex and Villanueva jointly and severally liable to SIHI.
Dissatisfied,
Filtex and Villanueva filed an Appeal,[12]
primarily contending that they have fully paid their indebtedness to
SIHI
and asserting that the letters of credit, sight drafts, trust receipts
and comprehensive surety agreement upon which the Complaint is based
are
inadmissible in evidence supposedly because of non-payment of
documentary
stamp taxes as required by the Internal
Revenue Code.[13]chanrobles virtuallaw libraryred
In its assailed Decision,
the Court of Appeals debunked the petitioners' contention that the
letters
of credit, sight drafts, trust receipts and comprehensive surety
agreement
are inadmissible in evidence ruling that the petitioners had "in
effect,
admitted the genuineness and due execution of said documents because of
their failure to have their answers placed under oath, the complaint
being
based on actionable documents in line with Section 7, Rule 8 of the Rules
of Court."[14]
The appellate court also ruled that there remained an unpaid balance as
of January 31, 1989 of P868,881.11 for which Filtex and Villanueva are
solidarily liable.[15]chanrobles virtuallaw libraryred
The appellate court
denied the petitioners' Motion for Reconsideration[16]
in its Resolution,[17]
ruling that the petitioners failed to raise new and substantial matters
that would warrant the reversal of its decision. However, due to
certain
typographical oversights, the Court of Appeals modified its decision
and
stated that the correct unpaid balance as of January 31, 1989 was
actually
P7,868,881.11, excluding litigation and other miscellaneous expenses
and
filing fees.[18]chanrobles virtuallaw libraryred
In asking this Court
to reverse and set aside the aforementioned decision and resolution of
the Court of Appeals, the petitioners argued that the appellate court
should
not have admitted in evidence the letters of credit, sight drafts,
trust
receipts and comprehensive surety agreement for lack of the requisite
documentary
stamps thereon. They hypothesized that their implied admission of the
genuineness
and due execution of these documents for failure to specifically deny
the
same under oath should not be equated with an admission in evidence of
the documents and an admission of their obligation. They also
maintained
that they have fully paid the obligation and, in fact, have made an
excess
payment in the amount of P415,722.53. In addition, Villanueva asserted
that the comprehensive surety agreement which he executed is null and
void,
inadmissible in evidence and contains material alterations. Thus, he
claimed
that he should not be held solidarily liable with Filtex. chanrobles virtuallaw libraryred
Traversing the allegations
in the instant petition, SIHI stated in its Comment[19]
that in their respective answers to the complaint, the petitioners
expressly
admitted the due execution of the letters of credit, sight drafts and
trust
receipts and their obligation arising from these documents. Having done
so, they could no longer question the admissibility of these documents.
Moreover, their allegation of inadmissibility of these documents is
inconsistent
with their defense of full payment. SIHI also reasoned that the
documentary
stamps, assuming they are required, are for the sole account of Filtex
not only because the letters of credit were issued at its instance and
application but also because it was the issuer and acceptor of the
trust
receipts and sight drafts, respectively. As regards the petitioners'
allegation
of full payment, SIHI stressed that the appellate court had already
resolved
this issue in its favor by ruling that there remained an unpaid balance
of P7,868,881.11 as of January 31, 1989 for which the petitioners were
held solidarily liable. Besides, by quoting substantial portions of
their
appellants' Brief in the instant petition, the petitioners merely
repeated
the issues that have already been passed upon by the appellate court.
Finally,
SIHI asserted the validity and admissibility of the comprehensive
surety
agreement.chanrobles virtuallaw libraryred
The threshold issue
in this case is whether or not the letters of credit, sight drafts,
trust
receipts and comprehensive surety agreement are admissible in evidence
despite the absence of documentary stamps thereon as required by the Internal
Revenue Code.[20]chanrobles virtuallaw libraryred
We rule in the affirmative.
As correctly noted by the respondent, the Answer with Counterclaim[21]
and Answer,[22]
of Filtex and Villanueva, respectively, did not contain any specific
denial
under oath of the letters of credit, sight drafts, trust receipts and
comprehensive
surety agreement upon which SIHI's Complaint[23]
was based, thus giving rise to the implied admission of the genuineness
and due execution of these documents. Under Sec. 8, Rule 8 of the Rules
of Court, when an action or defense is founded upon a written
instrument,
copied in or attached to the corresponding pleading as provided in the
preceding section, the genuineness and due execution of the instrument
shall be deemed admitted unless the adverse party, under oath,
specifically
denies them, and sets forth what he claims to be the facts.chanrobles virtuallaw libraryred
In Benguet Exploration,
Inc. vs. Court of Appeals,[24]
this Court ruled that the admission of the genuineness and due
execution
of a document means that the party whose signature it bears admits that
he voluntarily signed the document or it was signed by another for him
and with his authority; that at the time it was signed it was in words
and figures exactly as set out in the pleading of the party relying
upon
it; that the document was delivered; and that any formalities required
by law, such as a seal, an acknowledgment, or revenue stamp, which it
lacks,
are waived by him.chanrobles virtuallaw libraryred
Moreover, under Section
173 of the Internal
Revenue Code the liability for payment of the stamp taxes is
imposed
on "the person making, signing, issuing, accepting, or transferring"
the
document. As correctly pointed out by SIHI, Filtex was the issuer and
acceptor
of the trust receipts and sight drafts, respectively, while the letters
of credit were issued upon its application. On the other hand,
Villanueva
signed the comprehensive surety agreement. Thus, being among the
parties
obliged to pay the documentary stamp taxes, the petitioners are
estopped
from claiming that the documents are inadmissible in evidence for
non-payment
thereof. chanrobles virtuallaw libraryred
Interestingly, the petitioners
questioned the admissibility of these documents rather belatedly, at
the
appeal stage even. Their respective answers[25]
to SIHI's Complaint were silent on this point. The rule is well-settled
that points of law, theories, issues and arguments not adequately
brought
to the attention of the trial court need not, and ordinarily will not,
be considered by a reviewing court as they cannot be raised for the
first
time on appeal because this would be offensive to the basic rules of
fair
play, justice and due process.[26]chanrobles virtuallaw libraryred
Hence, the petitioners
can no longer dispute the admissibility of the letters of credit, sight
drafts, trust receipts and comprehensive surety agreement. However,
this
does not preclude the petitioners from impugning these documents by
evidence
of fraud, mistake, compromise, payment, statute of limitations,
estoppel
and want of consideration.[27]
This brings us to the
petitioners' contention that they have already fully paid their
obligation
to SIHI and have, in fact, overpaid by P415,722.53. This matter is
purely
a factual issue. In Fortune Motors (Phils.) Corporation vs. Court of
Appeals,[28]
it was held that "the jurisdiction of this Court in cases brought
before
it from the Court of Appeals under Rule 45 of the Rules
of Court is limited to reviewing or revising errors of law. It is
not
the function of this Court to analyze or weigh evidence all over again
unless there is a showing that the findings of the lower court are
totally
devoid of support or are glaringly erroneous as to constitute serious
abuse
of discretion. Factual findings of the Court of Appeals are conclusive
on the parties and carry even more weight when said court affirms the
factual
findings of the trial court."[29]chanrobles virtuallaw libraryred
It should be noted that
the issue of overpayment as well as the proof presented by the
petitioners
on this point merely rehash those submitted before the Court of
Appeals.
The appellate court affirmed the trial court and passed upon this issue
by exhaustively detailing the amounts paid as guaranty deposit, the
payments
made and the balance due for every trust receipt. This Court shall not
depart from the findings of the trial court and the appellate court,
supported
by the preponderance of evidence and unsatisfactorily refuted by the
petitioners,
as they are.chanrobles virtuallaw libraryred
As a final issue, Villanueva
contended that the comprehensive surety agreement is null and void for
lack of consent of Filtex and SIHI. He also alleged that SIHI
materially
altered the terms and conditions of the comprehensive surety agreement
by granting Filtex an extension of the period for payment thereby
releasing
him from his obligation as surety. We find these contentions
specious. chanrobles virtuallaw libraryred
In the first place,
the consent of Filtex to the surety may be assumed from the fact that
Villanueva
was the signatory to the sight drafts and trust receipts on behalf of
Filtex.[30]
Moreover, in its Answer with Counterclaim,[31]
Filtex admitted the execution of the comprehensive surety agreement
with
the only qualification that it was not a means to induce SIHI to issue
the domestic letters of credit. Clearly, had Filtex not consented to
the
comprehensive surety agreement, it could have easily objected to its
validity
and specifically denied the same. SIHI's consent to the surety is also
understood from the fact that it demanded payment from both Filtex and
Villanueva.chanrobles virtuallaw libraryred
As regards the purported
material alteration of the terms and conditions of the comprehensive
surety
agreement, we rule that the extension of time granted to Filtex to pay
its obligation did not release Villanueva from his liability. As this
Court
held in Palmares vs. Court of Appeals.[32]chanrobles virtuallaw libraryred
"The
neglect
of the creditor to sue the principal at the time the debt falls due
does
not discharge the surety, even if such delay continues until the
principal
becomes insolvent x x x.chanrobles virtuallaw libraryred
The raison d'etre for
the
rule is that there is nothing to prevent the creditor from proceeding
against
the principal at any time. At any rate, if the surety is dissatisfied
with
the degree of activity displayed by the creditor in the pursuit of his
principal, he may pay the debt himself and become subrogated to all the
rights and remedies of the creditor.
It may not be amiss
to add that leniency shown to a debtor in default, by delay permitted
by
the creditor without change in the time when the debt might be
demanded,
does not constitute an extension of the time of payment, which would
release
the surety. In order to constitute an extension discharging the surety,
it should appear that the extension was for a definite period, pursuant
to an enforceable agreement between the principal and the creditor, and
that it was made without the consent of the surety or with a
reservation
of rights with respect to him. The contract must be one which precludes
the creditor from, or at least hinders him in, enforcing the principal
contract within the period during which he could otherwise have
enforced
it, and precludes the surety from paying the debt."[33]chanrobles virtuallaw libraryred
Lastly, with regard
to Villanueva's assertion that the 25% annual interest to be paid by
Filtex
in case it failed to pay the amount released to suppliers was inserted
by SIHI without his consent, suffice it to say that the trust receipts
bearing the alleged insertion of the 25% annual fee are countersigned
by
him. His pretension of lack of knowledge and consent thereto is
obviously
contrived.chanrobles virtuallaw libraryred
In view of the foregoing,
we find the instant petition bereft of merit.chanrobles virtuallaw libraryred
WHEREFORE, premises
considered, the petition is DENIED and the assailed Decision and
Resolution
of the Court of Appeals concurring with the decision of the trial court
are hereby AFFIRMED. Costs against the petitioners.chanrobles virtuallaw libraryred
SO ORDERED.chanrobles virtuallaw libraryred
Bellosillo, Quisumbing
Austria-Martinez and Callejo, Sr., JJ.,
concur. chan
robles virtual law library
____________________________
Endnotes:
[1]
Rollo, pp. 34–50. Penned by Associate Justice Bernardo Ll. Salas, with
Associate Justices Alfredo L. Benipayo and Buenaventura J. Guerrero,
concurring.
[2]
Id. at 53–54.chanrobles virtuallaw libraryred
[3]
Id. at 55–57.chanrobles virtuallaw libraryred
[4]
Records, Civil Case No. 85-33881, pp. 1–9.
[5]
Id. at 10–17.chanrobles virtuallaw libraryred
[6]
Id. at 18–25.chanrobles virtuallaw libraryred
[7]
Id. at 27–30.chanrobles virtuallaw libraryred
[8]
Id. at 31–42.chanrobles virtuallaw libraryred
[9]
Id. at 58–63.chanrobles virtuallaw libraryred
[10]
Id. at 93–96chanrobles virtuallaw libraryred
[11]
Supra, note 1 at 55–57.chanrobles virtuallaw libraryred
[12]
Id. at 59–90.chanrobles virtuallaw libraryred
[13]
Sec. 173.chanrobles virtuallaw libraryred
[14]
Supra, note 1 at 48.chanrobles virtuallaw libraryred
[15]
Id. at 50chanrobles virtuallaw libraryred
[16]
Records, C.A. G.R No. 28794, pp. 189–194.
[17]
Supra, note 2.chanrobles virtuallaw libraryred
[18]
Supra, note 1 at 54.chanrobles virtuallaw libraryred
[19]
Id. at 93–134.chanrobles virtuallaw libraryred
[20]
Sec. 173. Stamp taxes upon documents, instruments, and papers. — Upon
documents,
instruments, and papers, and upon acceptances, assignments, sales, and
transfers of the obligation, right, or property incident thereto, there
shall be levied, collected and paid for, and in respect of the
transaction
so had or accomplished, the corresponding documentary stamp taxes
prescribed
in the following sections of this Title, by the person making, signing,
issuing, accepting, or transferring the same, wherever the document is
made, signed, issued, accepted or transferred when the obligation or
right
arises from Philippine sources or the property is situated in the
Philippines
and at the same time such act is done or transaction had; Provided,
That
whenever one party to the taxable document enjoys exemption from the
tax
herein imposed, the other party thereto who is not exempt shall be the
one directly liable for the tax."chanrobles virtuallaw libraryred
x x
x
x x
x
x x x chanrobles virtuallaw libraryred
"Sec.
201. Effect of failure to stamp taxable document. — An instrument,
document,
or paper which is required by law to be stamped and which has been
signed,
issued, accepted, or transferred without being duly stamped, shall not
be recorded, nor shall it or any copy thereof or any record of transfer
of the same be admitted or used in evidence in any court until the
requisite
stamp or stamps shall have been affixed thereto and cancelled."
(National
Internal Revenue Code)chanrobles virtuallaw libraryred
[21]
Supra, note 4 at 58–63.chanrobles virtuallaw libraryred
[22]
Id. at 93–96.chanrobles virtuallaw libraryred
[23]
Supra, note 4.chanrobles virtuallaw libraryred
[24]
G.R. No. 117434, 9 February 2001, 351 SCRA 445, citing Hibberd vs.
Rhode,
32 Phil. 476; Heirs of Amparo del Rosario vs. Aurora Santos, et al.,
194
Phil. 670.
[25]
Supra, notes 9 and 10.chanrobles virtuallaw libraryred
[26]
PAL vs. NLRC, 328 Phil. 814.chanrobles virtuallaw libraryred
[27]
Republic of the Philippines vs. Court of Appeals, 357 Phil. 174.
[28]
335 Phil. 315.chanrobles virtuallaw libraryred
[29]
Id. at 330.chanrobles virtuallaw libraryred
[30]
Supra, note 4 at 18–25, 31–42.chanrobles virtuallaw libraryred
[31]
Supra, note 9 at 59.chanrobles virtuallaw libraryred
[32]
351 Phil. 664.chanrobles virtuallaw libraryred
[33]
Id. at 686–687.chanrobles virtuallaw libraryred |