Allied Banking Corporation (now Philippine National Bank) vs. Eduardo De Guzman, Sr.

A surety who sends a letter of revocation by registered mail, properly addressed with postage prepaid, is entitled to the disputable presumption that the letter was received by the addressee in the regular course of mail. The addressee bears the burden to overcome this presumption with clear and convincing evidence; a bare, self-serving denial is insufficient. Furthermore, when issues not raised in the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings, pursuant to Section 5, Rule 10 of the Rules of Court.

Petitioner Allied Banking Corporation (now Philippine National Bank) granted credit accommodations to Yeson International Philippines, Inc. Respondent Eduardo De Guzman, Sr., along with other incorporators of the company, executed a Continuing Guaranty/Comprehensive Surety on February 14, 1990, binding themselves jointly and severally to pay the company's obligations to the bank. The agreement provided that it was a continuing guaranty that would remain in full force until written notice of revocation was received by PNB. De Guzman was a Filipino businessman who accommodated his Korean friends who needed a Filipino to establish their business.

On February 14, 1990, respondent Eduardo De Guzman, Sr., along with Dong Hee Kim, Chul Ho Shin, and Bong Il Kim, all incorporators of Yeson International Philippines, Inc., executed a Continuing Guaranty/Comprehensive Surety binding themselves jointly and severally to pay any and all obligations obtained by the company from petitioner Allied Banking Corporation (now Philippine National Bank). The agreement provided that "this is a continuing guaranty and shall remain in full force and effect until written notice shall have been received by you (PNB) that it has been revoked by the undersigned." In 1992, the company executed six trust receipts to facilitate the acquisition of merchandise from its suppliers. On April 30, 1993, after the company's obligation became past due, it was repackaged and consolidated, and the company executed a Promissory Note. PNB then required the company's directors to execute another contract of suretyship, and the incorporators, together with Antonio Katigbak, executed a new Continuing Guaranty/Comprehensive Surety dated June 23, 1993, without De Guzman's participation.

De Guzman admitted to signing the first surety agreement when he was still a stockholder and director of the company, as an accommodation to his Korean friends. Later that same year, Bong Il Kim acceded to his request to be replaced, and De Guzman was informed he was no longer a board member or shareholder. Immediately thereafter, De Guzman sent a letter dated September 4, 1991 to PNB revoking his obligation as surety. He presented an original copy of the letter, which he sent by registered mail, but could not obtain a certification from the Muntinlupa Post Office as to its delivery because records for 1991 had been disposed of. Elizabeth Sy, the company's former Import/Export Manager, testified that when the company failed to pay its obligation, the first surety agreement was superseded and PNB required the execution of the second surety agreement without De Guzman's participation.

On April 29, 1997, PNB filed a Complaint for Sum of Money against De Guzman and the other sureties, contending that the company failed to pay its outstanding loan of P7,335,809.99 and to return P5,349,149.71 arising from the six trust receipts. In their Answer, the defendants admitted the company's indebtedness but pointed out that in 1996, the company filed a Petition for Suspension of Payments before the SEC, which suspended all claims against it. De Guzman later alleged that he had no knowledge of the complaint, that summons was never personally served on him, and that he never engaged the services of the counsel who filed responsive pleadings on his behalf. He claimed he only learned of the case in July 2000 when a messenger asked him to sign a special power of attorney appointing Atty. Polines as his representative, and he was forced to sign because he was told he would be declared in default if he refused.

• Status as Stockholder: PNB faulted the CA for concluding that since De Guzman was no longer a stockholder of the corporation, he could no longer be held liable under the surety agreement, arguing that De Guzman voluntarily executed the same in his personal capacity, regardless of his status as stockholder or director.
• Supersession of Surety Agreement: PNB claimed that the RTC and CA should not have considered Elizabeth Sy's testimony, arguing that the execution of the second surety agreement does not mean the first had been superseded, and that a party is only allowed to add to the terms of an agreement if he has put in issue in his pleading the additional matters presented.
• Proof of Revocation: PNB insisted that De Guzman failed to prove, by preponderance of evidence, that he sent the notice of revocation and that the same was actually received by PNB, arguing that the findings of the RTC and CA are not binding as they are not based on the evidence on record.
• Procedural Bar: PNB asserted that the courts below should not have allowed De Guzman to present evidence to show revocation when said defense was never raised in his pleadings.

N/A — The decision does not separately recount De Guzman's arguments on appeal beyond the factual narrative of his defenses before the trial court.

• Factual Findings on Appeal: Whether the Court should review the factual findings of the RTC and CA regarding the sufficiency of evidence of De Guzman's revocation of the surety agreement.
• Presumption of Receipt of Mailed Letter: Whether De Guzman sufficiently established the requisites to give rise to the disputable presumption that his letter of revocation was received by PNB in the regular course of mail.
• Presentation of Evidence on Unpleaded Defense: Whether the RTC and CA should have allowed De Guzman to present evidence of revocation when said defense was never raised in his pleadings.

• Factual Findings on Appeal: No. The petition was denied because only questions of law may be raised in a petition for review on certiorari under Rule 45, and the findings of fact of the trial court, especially when affirmed by the CA, are final and conclusive. The Court found no merit in PNB's invocation of the exception that the lower courts' findings were not supported by the evidence on record.
• Presumption of Receipt of Mailed Letter: Yes. De Guzman sufficiently established the requisites for the presumption under Section 3(v), Rule 131 of the Rules of Court: (a) the letter was properly addressed with postage prepaid, and (b) it was mailed, as proven by the original letter, its registry receipt, and a certification from the Postmaster. PNB failed to overcome the presumption with its bare, self-serving denial.
• Presentation of Evidence on Unpleaded Defense: No. PNB failed to timely object to the presentation of evidence on revocation at trial and proceeded to lengthily and exhaustively cross-examine De Guzman on the matter, thereby giving implied consent under Section 5, Rule 10 of the Rules of Court, which treats the issue as if it had been raised in the pleadings.

• Factual Findings on Appeal: The Court reiterated the settled rule that in petitions for review on certiorari under Rule 45, only questions of law may be raised, as the Court is not a trier of facts. Findings of fact of the trial court, especially when affirmed by the CA, are final and conclusive and cannot be reviewed on appeal. While PNB invoked the exception that the lower courts' findings were not supported by the evidence on record, a cursory review revealed that the findings of the RTC and CA were duly supported by the evidence presented by the parties.

• Presumption of Receipt of Mailed Letter: The Court applied Section 3(v), Rule 131 of the 1997 Rules of Court, which provides the disputable presumption that a letter duly directed and mailed was received in the regular course of the mail. The facts to be proved to raise this presumption are: (a) that the letter was properly addressed with postage prepaid; and (b) that it was mailed. Citing Commissioner of Internal Revenue vs. Metro Star Superama, Inc. and Barcelon, Roxas Securities, Inc. vs. Commissioner of Internal Revenue, the Court stressed that to prove the fact of mailing, a party must present sufficient evidence such as the registry receipt issued by the Bureau of Posts or the registry return card. In this case, De Guzman presented an original copy of the September 4, 1991 letter of revocation, its corresponding registry receipt, and a Certification from the Postmaster of Muntinlupa City that the letter was posted for mailing. The presumption therefore arose that PNB received the letter in the regular course of mail. PNB failed to overcome this presumption, as its bare, self-serving denial could not prevail over the documentary evidence presented by De Guzman, which enjoyed the presumption of due receipt absent clear and convincing evidence to the contrary.

• Presentation of Evidence on Unpleaded Defense: The Court rejected PNB's procedural argument that the courts below should not have considered De Guzman's evidence of revocation because the defense was never raised in his pleadings. Citing Section 5, Rule 10 of the Rules of Court, the Court held that when issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. PNB failed to timely object to the presentation of the evidence at trial; after De Guzman testified that he sent a letter of revocation, PNB proceeded to lengthily and exhaustively cross-examine him, thereby giving implied consent to the trial of that issue.

• Disputable Presumption of Receipt of Mailed Letter — Under Section 3(v), Rule 131 of the Rules of Court, when a mail matter was sent by registered mail, there arises a disputable presumption that it was received in the regular course of mail. The facts to be proved to raise this presumption are: (a) that the letter was properly addressed with postage prepaid; and (b) that it was mailed. Once these facts are proved, the presumption is that the letter was received by the addressee as soon as it could have been transmitted in the ordinary course of the mail. The addressee bears the burden to overcome the presumption with clear and convincing evidence; a bare, self-serving denial is insufficient. The Court applied this doctrine to find that De Guzman's presentation of the original letter of revocation, its registry receipt, and the Postmaster's certification sufficiently established the fact of mailing, and PNB's mere denial failed to overcome the presumption.

• Amendment to Conform to or Authorize Presentation of Evidence — Under Section 5, Rule 10 of the Rules of Court, when issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. The Court applied this doctrine to hold that PNB's failure to timely object to the presentation of evidence on revocation, and its lengthy and exhaustive cross-examination of De Guzman on the matter, constituted implied consent, thereby allowing the trial court to consider the defense of revocation.

• Limited Jurisdiction in Rule 45 Petitions — In petitions for review on certiorari under Rule 45, only questions of law may be raised, as the Court is not a trier of facts. Findings of fact of the trial court, especially when affirmed by the CA, are final and conclusive and cannot be reviewed on appeal. The exception applies only when the lower courts' findings were not supported by the evidence on record, or were based on a misapprehension of facts, or certain relevant and undisputed facts were manifestly overlooked.

• "The facts to be proved to raise this presumption are (a) that the letter was properly addressed with postage prepaid, and (b) that it was mailed. Once these facts are proved, the presumption is that the letter was received by the addressee as soon as it could have been transmitted to him in the ordinary course of the mail. But if one of the said facts fails to appear, the presumption does not lie." — This passage, quoted from Barcelon, Roxas Securities, Inc. v. Commissioner of Internal Revenue, states the canonical formulation of the requisites for the disputable presumption of receipt of mailed letters, which the Court applied to De Guzman's favor.

• "What is essential to prove the fact of mailing is the registry receipt issued by the Bureau of Posts or the Registry return card which would have been signed by the Petitioner or its authorized representative." — This excerpt, quoted from Barcelon, identifies the specific evidence required to prove the fact of mailing, which De Guzman satisfied by presenting the original registry receipt and the Postmaster's certification.

• "Here, PNB's bare, self-serving denial, and nothing more, does little to persuade. To the Court, PNB's mere denial cannot prevail over the records presented by De Guzman such as the letter of revocation, registry receipt, and certification, which constitute documentary evidence enjoying the presumption that, absent clear and convincing evidence to the contrary, these were duly received in the regular course of mail." — This passage articulates the Court's application of the presumption doctrine and explains why PNB failed to overcome it, forming the core of the ratio decidendi.

• Commissioner of Internal Revenue vs. Metro Star Superama, Inc., 652 Phil. 172 (2010) — Cited as controlling authority for the proposition that to prove the fact of mailing, a party must present sufficient evidence such as the registry receipt issued by the Bureau of Posts or the registry return card, and that a certification from the postmaster may be required if the original documents cannot be located.
• Barcelon, Roxas Securities, Inc. (now known as UBP Securities, Inc.) vs. Commissioner of Internal Revenue, 529 Phil. 785 (2006) — Cited as the source of the canonical formulation of the requisites for the disputable presumption of receipt of mailed letters and the evidentiary requirements to prove the fact of mailing.
• Mangahas vs. Court of Appeals, 588 Phil. 61 (2008) — Cited for the rule that in petitions for review on certiorari under Rule 45, only questions of law may be raised, and for the importance of presenting the original registry receipt as the best evidence of mailing.
• Palecpec, Jr. vs. Hon. Davis, 555 Phil. 675 (2007) — Cited for the rule that when a document is shown to have been properly addressed and actually mailed, there arises a presumption that the same was duly received by the addressee, and it becomes the burden of the latter to prove otherwise.
• Lapulapu Foundation, Inc. vs. Court of Appeals, 466 Phil. 53 (2004) — Cited alongside Palecpec for the same rule regarding the presumption of receipt and the burden on the addressee to overcome it.

• Section 3(v), Rule 131, 1997 Rules of Court — Provides the disputable presumption that a letter duly directed and mailed was received in the regular course of the mail. The Court applied this provision to presume that PNB received De Guzman's September 4, 1991 letter of revocation, and held that PNB failed to overcome this presumption.
• Section 5, Rule 10, Rules of Court — Provides that when issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. The Court applied this provision to allow the trial court's consideration of De Guzman's defense of revocation despite it not being raised in his pleadings, because PNB impliedly consented to the trial of that issue.
• Rule 45, Rules of Court — Governs petitions for review on certiorari, which may raise only questions of law. The Court applied this rule to decline review of the factual findings of the RTC and CA.

Carpio (Chairperson), Perlas-Bernabe, Caguioa, and Reyes, Jr., JJ., concurred.

N/A — No dissenting opinions are noted in the provided case text.