G.R. No. 185590; December 3, 2014
METROPOLITAN BANK AND TRUST COMPANY, Petitioner, vs. LEY CONSTRUCTION AND DEVELOPMENT CORPORATION and SPOUSES MANUEL LEY and JANET LEY, Respondents.

FACTS

Petitioner Metropolitan Bank and Trust Company (the Bank) filed a complaint for sum of money and damages against respondents Ley Construction and Development Corporation (LCDC) and spouses Manuel and Janet Ley. The Bank alleged that LCDC, through the spouses, applied for and was issued a Letter of Credit (LC) for USD 802,500.00 to cover the importation of cement. The LC was negotiated, and the Bank paid the negotiating bank. The shipping documents were delivered to respondents, who executed a trust receipt. The cement never arrived. The obligation was guaranteed by the spouses under a Continuing Surety Agreement. Despite demands, the obligation remained unpaid. During trial, the Bank presented only one witness, Fenelito Cabrera. The trial court found Cabrera incompetent to testify on and authenticate most of the Bank’s documentary exhibits, as he was assigned to a branch office, not the head office, during the relevant transaction period. The trial court admitted only Exhibits “A” (Continuing Surety Agreement), “B” (Application for LC), “C” & “C-1” (LC), and “N” & “N-1” to “N-4” (Statement of Obligations). Respondents filed a demurrer to evidence, which the trial court granted, dismissing the case for failure to establish a cause of action by preponderant evidence. The Court of Appeals affirmed the dismissal, ruling that the Bank’s evidence was insufficient.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s grant of the demurrer to evidence and dismissal of the complaint on the ground that the Bank failed to establish its cause of action by preponderance of evidence.

RULING

No, the Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The Court held that the grant of a demurrer to evidence was proper as the Bank failed to discharge its burden of proof. The Bank’s lone witness, Cabrera, was incompetent to authenticate crucial documents, as he had no personal knowledge of the transactions handled by the head office. The documents properly admitted in evidence (Exhibits A, B, C, C-1, N, N-1 to N-4) were insufficient to prove the Bank’s cause of action. These documents merely showed the existence of a surety agreement, an application for an LC, the LC itself, and a statement of account. They did not establish the vital links in the cause of action: that the LC was duly negotiated and paid by the Bank, that the shipping documents were delivered to and received by respondents, and that respondents executed a trust receipt for the goods. The trust receipt (Exhibit G) and other documents critical to proving these steps were excluded for lack of proper authentication. The Bank’s claim that respondents judicially admitted these documents in their pre-trial brief by stating they “shall adopt” them was rejected; such a statement is a mere reservation to use the documents and does not constitute an admission of their authenticity. Consequently, the Bank failed to present preponderant evidence to prove the facts essential to its claim for recovery.