CIVIL PROCEDURE | Metrobank v. Ley Construction & Devt. Corp G.R. No. 185590, DECEMBER 3, 2014

Metrobank v. Ley Construction & Devt. Corp 

G.R. No. 185590, DECEMBER 3, 2014



FACTS: FACTS: Metropolitan Bank and Trust Company (the Bank) filed a complaint against Ley Construction and Development Corporation (LCDC) and the spouses Manuel and Janet Ley (the spouses Ley) for the recovery of a sum of money and damages.The Bank alleged that LCDC, through the oral representations of the spouses Ley, applied for the opening of a Letter of Credit with the Bank for the importation of Iraqi cement. The Bank issued the Letter of Credit in favor of the supplier-beneficiary Global Enterprises Limited. However, the cement never arrived in the Philippines, and LCDC failed to pay its obligation under the Letter of Credit. The Bank claimed that the spouses Ley, as sureties, were also liable for LCDC's obligations. During the trial, the Bank presented Fenelito Cabrera, the Head of the Foreign Department of the Bank's Dasmariñas Branch, as its only witness. The trial court found that Cabrera was incompetent to testify on the documents presented by the Bank because he was not with the Bank's Head Office during the period the transaction took place. The trial court ruled that the Bank's evidence was insufficient to establish its cause of action against LCDC and the spouses Ley. Only certain documents were admitted as evidence, and the trial court concluded that these documents were insufficient to show LCDC and the spouses Ley's responsibility for the improper negotiation of the Letter of Credit. As a result, the trial court granted LCDC and the spouses Ley's demurrer to evidence and dismissed the case. Whether the Bank was able to establish its cause of action against LCDC and the spouses Ley


RULING: —A cause of action — the act or omission by which a party violates the right of another — has three essential elements: (1) the existence of a legal right in favor of the plaintiff; (2) a correlative legal duty of the defendant to respect such right; and (3) an act or omission by such defendant in violation of the right of the plaintiff with a resulting injury or damage to the plaintiff for which the latter may maintain an action for the recovery of relief from the defendant. Although the first two elements may exist, a cause of action arises only upon the occurrence of the last element, giving the plaintiff the right to maintain an action in court for recovery of damages or other appropriate relief. 


Here, however, even the legal rights of the Bank and the correlative legal duty of LCDC have not been sufficiently established by the Bank in view of the failure of the Bank’s evidence to show the provisions and conditions that govern its legal relationship with LCDC, particularly the absence of the provisions and conditions supposedly printed at the back of the Application and Agreement for Commercial Letter of Credit. Even assuming arguendo that there was no impropriety in the negotiation of the Letter of Credit and the Bank’s cause of action was simply for the collection of what it paid under said Letter of Credit, the Bank did not discharge its burden to prove every element of its cause of action against LCDC.






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