DUTY PAID IMPORT CO. INC., RAMON JACINTO, et al vs.
LAND BANK OF THE PHILIPPINES
FACTS: On November 19, 1997, the respondent Landbank of the Philippines extended to petitioner Duty
Paid Import Co. Inc., (DPICI) an Omnibus Credit Line Agreement for the amount of P250 million pesos. A
Comprehensive Surety Agreement was executed by petitioners Ramon Jacinto, et al. Under the
agreement, Jacinto, et al., unconditionally, irrevocably, jointly and severally bound them to pay the LBP
the principal amount of P250 million in the event DPICI fails to pay its obligations on maturity.
As security for DPICI’s loan in the amount of P10 million, petitioner Colayco, executed a real
estate mortgage over a condominium unit. When DPICI failed to pay its obligations, the Landbank
extrajudicially foreclosed the real estate mortgage over the condominium unit. The LBP emerged to be
the highest bidder at the auction for the amount of 2.97 Million. Despite applying the proceeds of the
foreclosure sale to the outstanding loan obligations there remained a deficiency in the amount of P304
Million. Thus, the LBP sent demand letters to petitioner DPICI, to no avail.
Consequently, the LBP filed a complaint for collection of sum of money before the RTC
against the herein petitioners. In their answer, the petitioners contended that the complaint was
prematurely filed as LBP allegedly agreed to a restructuring of the loan agreement and that there is an
on-going economic crisis during that time.
The RTC ruled in favor of Landbank, ordering the herein petitioners to jointly and
severally pay the bank the principal obligation of DPICI plus interest thereon at the rate of 6% per
annum until the same is fully paid. The Court of Appeals affirmed the decision of the trial court in toto.
The CA also held that Jacinto, et al., were liable as sureties, and as such, solidarily liable with DPICI as
principal obligor. DPICI elevated the case before the Supreme Court still contending that
the action for collection of money instituted by the Landbank was premature because of the restructing
of the loan agreement. On the otherhand, petitioners Jacinto, et al., contends that they should not be
held solidarily liable with DPICI. They averred that as sureties, their liability arises only when the
collaterals used to secure the obligation prove to be insufficient.
ISSUE: (1) Whether or not there is a valid restructure of the DPICI’s loan agreement with the Landbank.
(2) Whether or not petitioner Jacinto, et al., is jointly and severally liable with the DPICI.
RULING: (1) No. The Supreme Court held that it is basic evidentiary rule that he who alleges a fact bears
the burden of proof. DPICI merely allege that the Landbank had agreed to restructure the former’s loan,
and, that pending such restructuring , the Landbank had agreed to give DPICI a grace period within
which to pay its obligations. At most, the Landbank presented a letter proving that there was a proposal
on the part of the DPICI to restructure the loan, but the said proposal was nevertheless denied by the
bank. Hence, this settles that LBP did not give its consent to the proposed restructuring.
(2) Yes. The Supreme Court held that petitioners Jacinto, et al., are liable as sureties. In fact,
petitioners do not deny their liability as sureties under the Comprehensive Surety Agreement. A perusal
of the said Surety Agreement revealed that the Landbank has granted to DPICI certain loans and credit
accommodations up to a principal amount of P250 Million with a condition that a joint and several
liability undertaking be executed by Jacinto, et al., for the due and punctual payment of the loans of
DPICI. There is also a clause therein which provides that ‘upon default, the bank may proceed directly
against Jacinto, et al., without first proceeding against and without exhausting the property of DPICI’.
