By Rey Panaligan
The Supreme Court (SC) has affirmed a Court of Appeals’ (CA) ruling that ordered a copra exporting firm and its affiliated companies to pay Banco de Oro Unibank, Inc. (BDO) P833.5 million in unpaid loans accumulated since 1960.
Supreme Court (SC) (MANILA BULLETIN)
In a resolution issued by its third division and made public last week, the SC also increased the attorney’s fees payable to BDO from P25 million to P41.6 million.
“Acting on the petition for review on certiorari assailing the decision and resolution, dated Nov. 22, 2018 and July 3, 2019, respectively, of the Court of Appeals, the Court resolves to deny the petition for failure to show any reversible error in the challenged decision and resolution as to warrant the exercise by this Court of its discretionary appellate jurisdiction,” the SC’s resolution stated.
Ordered to pay BDO were the International Copra Export Corp. (ICEC), Interco Manufacturing Corp. (Interco), Luys Securities Co., Inc., Mandarin Securities Corp., and Triton Securities Corp. jointly with several officers of the companies.
The SC resolution affirmed with modification the ruling issued by the CA on Nov. 22, 2018 which upheld the Jan. 25, 2017 decision of the Makati City regional trial court (RTC).
It dismissed the petition filed by ICEC and its affiliated companies.
Case records showed that BDO’s predecessor-in-interest, Philippine Commercial International Bank (PCI Bank) which later on became Equitable PCI Bank (EPCI), had been extending loan and credit facilities to ICEC and Interco without collaterals.
However, between starting in 1995, a surety agreement and deed of suretyship were executed between the bank and the officers of the companies, and in 2006 the parties negotiated for the collaterization of the loans.
The then EPCI proposed that part of the loan obligations be secured by a real estate mortgage over the LKG Tower, a building in Makati City owned by ICEC Land. The proposal was rejected.
EPCI then offered the companies two options -- renew the P900 million loan on a clean basis but subject to a P25 million quarterly amortization beginning November 2006, and the outstanding obligation of P255 million should be amortized for five years beginning January 2007 through five annual payments of P51 million.
The options were subjected to a condition that all the creditors should remain on “pari passu” such that the creditors would be treated on equal footing with respect to the uniform absence of collaterals and mortgage of assets.
With the “pari passu” agreement, BDO extended the maturity of the loans and even extended credit facilities in 2008 and 2009 that were covered by promissory notes.
Later, BDO discovered that ICEC and Interco had mortgaged and disposed their properties to secure their indebtedness to other creditors.
BDO also found that the maturity dates of the promissory notes have lapsed without the obligation being settled by ICEC and its affiliated companies.
Thus, BDO filed a complaint for sum of money with plea for preliminary attachment.
In affirming the ruling of the RTC, the CA junked ICEC and its affiliated companies’ claim that there was no “pari passu” agreement between them and BDO.
The CA said: “The absence of any written conformity of defendants-appellants (ICEC and affiliated companies) to the ‘pari passu’ agreement is not fatal to plaintiff-appellee's (BDO) case. The latter only needed to show by a preponderance of evidence that there was indeed an oral representation on the part of the former, which the bank did.”
“Conspicuously, the evidence submitted by plaintiff-appellee weigh more than defendants-appellants' bare denials.
Other than denial, no other evidence was submitted by defendants-appellants to prove its defense. As aptly pronounced by the RTC, their plain denial that there was no ‘pari passu’ representation deserves no weight and cannot overcome the straightforward, unequivocal and categorical declaration of plaintiff- appellee's witnesses,” it added.
The CA’s decision was affirmed by the SC with modification on the interest rate on the settlement of the loans and on the amount of attorney’s fees.