United Planters V CA PDF

SUPREME COURT REPORTS ANNOTATED VOLUME 614 02/03/2018, 5*31 PM
Petition denied, judgment and resolution affirmed.
Note.·The auction sale was null and void for non-

compliance with the provisions of the Real Property Tax
Code on mandatory notice. (Vizarra vs. Rodriguez, 509
SCRA 504 [2006])
··o0o··
G.R. No. 126890. March 9, 2010.*
UNITED PLANTERS SUGAR MILLING CO., INC.

(UPSUMCO), petitioner, vs. THE HONORABLE COURT
OF APPEALS, PHILIPPINE NATIONAL BANK (PNB) and
ASSET PRIVATIZATION TRUST (APT), AS TRUSTEE OF
THE REPUBLIC OF THE PHILIPPINES, respondents.
Remedial Law; Appeals; Referral to the Court en banc of cases

assigned to a Division is to be denied on the ground that the Court
en banc is not an Appellate Court to which decisions or resolutions of
a Division may be appealed; A second motion for reconsideration of a
judgment or final resolution shall not be entertained for being a
prohibited pleading under Section 2, Rule 52 in relation to Section 4,
Rule 56 of the Rules of Court except for extraordinary persuasive
reasons and only after an express leave shall have first been
obtained.·Under Section 3 of the CourtÊs Circular No. 2-89,
effective March 1, 1989, the referral to the Court en banc of cases
assigned to a Division is to be denied on the ground that the Court
en banc is not an Appellate Court to which decisions or resolutions
of a Division may be appealed. Moreover, a second motion for
reconsideration of a judgment or final resolution shall not be
entertained for being a prohibited pleading under Section 2, Rule
52, in relation to Section 4, Rule 56 of the Rules of Court, except for
extraordinarily persuasive reasons and only after an express leave
shall have first been obtained. Accordingly, the Court, in the
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exercise of its sound discretion,
_______________
* EN BANC.
452
452 SUPREME COURT REPORTS ANNOTATED
United Planters Sugar Milling Co., Inc. vs. Court of Appeals
determines the issues which are of transcendental importance, as in

the present case, which necessitates it to accept the referral of a
Division case before it and the grant of a second motion for
reconsideration.
Same; Same; The doctrine of stare decisis et no quieta movere or
principle of adherence to precedents does not apply to the present
case.·The doctrine of stare decisis et no quieta movere or principle
of adherence to precedents does not apply to the present case so as
to bar the Court en banc from taking cognizance over the case which
rectified the disposition of the case and reversed and set aside the
Decision rendered by a Division thereof.
MOTION FOR RECONSIDERATION of a decision of the

Supreme Court.
The facts are stated in the resolution of the Court.
Sabig, Vinco & Sabig Law Office for petitioner.
David A. Domingo for United Planters Sugar Milling
Company, Inc.
Reginald I. Bacolor for respondent.
The Chief Legal Counsel for Philippine National Bank.
RESOLUTION
PERALTA, J.:
For consideration is the Motion for Reconsideration of
petitioner United Planters Sugar Milling Company, Inc.
(UPSUMCO) seeking to reverse and set aside the
Resolution of the Court dated April 2, 2009 which granted
both Second Motions for Reconsideration filed by
respondents Privatization and Management Office (PMO),

formerly Asset Privatization Trust (APT), and Philippine
National Bank (PNB), and reinstated the Decision of the
Court of Appeals dated February 29, 1996 which, in turn,
reversed and set aside the Decision of the Regional Trial
Court, Branch 45, Bais, Negros Oriental. The dispositive
portion of the CA Decision reads:
„WHEREFORE, the appealed decision is hereby set aside and

judgment is herein rendered declaring that the subject Deed of
Assignment has not condoned all of UPSUMCOÊs obligations to APT
as assignee of PNB.
To determine how much APT is entitled to recover on its
counterclaim, it is required to render an accounting before the
Regional Trial Court on the total payments made by UPSUMCO on
its obligations including the following amounts:
(1) The sum seized from it by APT whether in cash or in kind
(from UPSUMCOÊs bank deposits as well as sugar and molasses
proceeds):
(2) The total obligations covered by the following documents:
(a) Credit agreement dated November 05, 1974 (Exh. „1,‰
Record p. 528); and
(b)
(c) The Restructuring Agreements dated (i) June 24,
1982, (ii) December 10, 1982, and (3) May 9, 1984 and
(3) The P450,000,000.00 proceeds of the foreclosure
Should there be any deficiency due APT after deducting the
foregoing amounts from UPSUMCOÊs total obligation in the amount
of (P2,137,076,433.15), the latter is hereby ordered to pay the same.
However, if after such deduction there should be any excess
payment, the same should be turned over to UPSUMCO.
The Regional Trial Court is hereby directed to receive APTÊs
accounting and thereafter, to render the proper disposal of this case
in accordance with the foregoing findings and disposition.
Costs against appellees.
SO ORDERED.‰
Petitioner prefaces its arguments that it is the aggrieved

party, not the government as represented by respondent
APT (now the PMO), as its deposits with respondent PNB
were taken without its prior knowledge and that it was
reluctant to give assent to the desire of the government to
forego redemption of its assets by reason of uncontested
foreclosure.
454

United Planters Sugar Milling Co., Inc. vs. Court of
Appeals
Facts showed that in 1974, petitioner, engaged in the

business of milling sugar, obtained „takeoff loans‰ from
respondent PNB to finance the construction of a sugar
milling plant which were covered by a Credit Agreement
dated November 5, 1974. The said loans were thrice
restructured through Restructuring Agreements dated
June 24, 1982, December 10, 1982, and May 9, 1984. The
takeoff loans were secured by a real estate mortgage over
two parcels of land where the milling plant stood and
chattel mortgages over certain machineries and equipment.
Also included in the condition for the takeoff loans,
petitioner agreed to „open and/or maintain a deposit
account with [respondent PNB] and the bank is authorized
at its option to apply to the payment of any unpaid
obligations of the client any/and all monies, securities
which may be in its hands on deposit.‰
From 1984 to 1987, petitioner contracted another set of
loans from respondent PNB, denominated as „operational
loans,‰ for the purpose of financing its operations, which
also contained setoff clauses relative to the application of
payments from petitionerÊs bank accounts. They were
likewise secured by pledge contracts whereby petitioner
assigned to respondent PNB all its sugar produce for the
latter to sell and apply the proceeds to satisfy the
indebtedness arising from the operational loans.
Later, respondent APT and petitioner agreed to an
„uncontested‰ or „friendly foreclosure‰ of the mortgaged
assets, in exchange for petitionerÊs waiver of its right of
redemption. On July 28, 1987, respondent PNB (as
mortgagee) and respondent APT (as assignee and
transferee of PNBÊs rights, titles and interests) filed a
Petition for Extrajudicial Foreclosure Sale with the Ex-
Officio Regional Sheriff of Dumaguete City, seeking to
foreclose on the real estate and chattel mortgages which
were executed to secure the takeoff loans. The foreclosure

sale was conducted on August 27, 1987 whereby
respondent APT purchased the auctioned properties for
P450,000,000.00.
455
VOL. 614, March 9, 2010 455

Appeals
Seven (7) days after the foreclosure sale, or on

September 3, 1987, petitioner executed a Deed of
Assignment assigned to respondent APT its right to redeem
the foreclosed properties, in exchange for or in
consideration of respondent APT „condoning any deficiency
amount it may be entitled to recover from the Petitioner
under the Credit Agreement dated November 5, 1974, and
the Restructuring Agreements[s] dated June 24 and
December 10, 1982, and May 9, 1984, respectively, executed
between [UPSUMCO] and PNB⁄‰ On the same day, the
Board of Directors of petitioner approved the Board
Resolution authorizing Joaquin Montenegro, its President,
to enter into said Deed of Assignment.
Despite the Deed of Assignment, petitioner filed a
complaint on March 10, 1989 for sum of money and
damages against respondents PNB and APT before the
Regional Trial Court (RTC) of Bais City alleging therein
that respondents had illegally appropriated funds
belonging to petitioner, through the following means: (1)
withdrawals made from the bank accounts opened by
petitioner beginning August 27, 1987 until February 12,
1990; (2) the application of the proceeds from the sale of the
sugar of petitioner beginning August 27, 1987 until
December 4, 1987; (3) the payment from the funds of
petitioner with respondent PNB for the operating expenses
of the sugar mill after September 3, 1987, allegedly upon
the instruction of respondent APT and with the consent of
respondent PNB.
The RTC rendered judgment in favor of the petitioner.
On appeal, the CA reversed and set aside the RTC Decision
and ruled that only the „takeoff‰ loans and not the
operational loans were condoned by the Deed of

Assignment. In a Decision dated November 28, 2006 and
Resolution dated July 11, 2007, the Court (Third Division)
reversed and set aside the CA Decision. The case was
thereafter referred to the Court en banc which reversed the
ruling of the Third Division.
In its Motion for Reconsideration, petitioner raises the
following grounds:
456

Appeals
„1. The order of the Honorable Court En Banc reinstating the

decision of the Honorable Court of Appeals would be inconsistent
with the facts of the case and the findings of this Honorable Court.
2. There is no valid ground to conclude that APT has still the
right to the deposit of UPSUMCO after the August 27, 1987 friendly
foreclosure, and the withdrawal of P80,200,806.41 as payment could
be applied either as repayment on the Take-off Loans or for the
Operational Loans.
3. The findings that the condonation took effect only after the
execution of the Deed of Assignment hence upholds the validity of
APTÊs taking of the deposit of P80,200,806.41 in UPSUMCOÊs PNB
account as payment of the deficiency is without basis.
4. The admission of the case by Honorable Court En Banc after
the denial of the Second Division of the Second Motion for
Reconsideration and the referral of the case to the Honorable Court
En Banc appear not to be in accordance with the Rules of
Procedure.
5. The basis for admission of the case to the Honorable Court
En Banc are belated issues which have no other purpose but to give
apparent reasons for the elevation of the case.
6. There is no legal basis for the withdrawals of UPSUMCOÊs
deposit on the ground of conventional compensation.
7. Since the amount of P17,773,185.24 could not be the subject
of conventional compensation, it should be returned to petitioner
immediately by respondents.‰
After a careful review of the arguments in the
petitionerÊs motion for reconsideration, the Court finds the

same to be mere rehash of the main points already set forth
in the CourtÊs En Banc Resolution of April 2, 2009 and,
hence, denies the same for lack of merit. The pertinent
portions of the decision read as follows:
„The rulings of the lower courts, as well as the petition itself, are not
clear as to the amount extended by way of takeoff loans by PNB to
UPSUMCO. However, the Court of Appeals did enumerate the following
transactions consisting of the operational loans, to wit:
(1) Trust Receipts dated August 26, 1987; February 5, 1987; and
July 10, 1987;
457
VOL. 614, March 9, 2010 457

Appeals
(2) Deed of Assignment By Way of Payment dated November 16,

1984 (Exh. 3 [PNB]; Exh. 12 [APT]; Record, p. 545);
(3) Two (2) documents of Pledge both dated February 19, 1987;
(4) Sugar Quedans (Exh. 13 to 16; Record, pp. 548 to 551);
(5) Credit Agreements dated February 19, 1987 (Exhs. „2‰ [PNB] &
„4‰ [APT]; Record, pp. 541-544) and April 29, 1987 (Exh. „11‰
[APT]; Record, pp. 314-317).
(6) Promissory Notes dated February 20, 1987 (Exh. „17‰; Record, p.
573); March 2, 1987 (Exh. „18‰; Record, p. 574); March 3, 1987
(Exh. „19‰; Record, p. 575); March 27, 1987; (Exh. „20‰; Record, p.
576); March 30, 1987 (Exh. „21‰; Record, p. 577); April 7, 1987
(Exh. „22‰; Record, p. 578); May 22, 1987 (Exh. „23‰; Record, p.
579); and July 30, 1987 (Exh. „24‰; Record p. 580).
On 27 February 1987, through a Deed of Transfer, PNB assigned

to the Government its „rights‰ titles and interests over UPSUMCO,
among several other assets. The Deed of Transfer acknowledged
that said assignment was being undertaken „in compliance with
Presidential Proclamation No. 50.‰ The Government subsequently
transferred these „rights‰ titles and interests‰ over UPSUMCO to
respondent Asset and Privatization Trust (APT), [now PMO].
xxxx
This much is clear. The Deed of Assignment condoned only the

take-off loans, and not the operational loans. The Deed of
Assignment in its operative part provides, thus:
That United Planter[s] Sugar Milling Co., Inc. (the
„Corporation‰)·pursuant to a resolution passed by its board
of Directors on September 3, 1987, and confirmed by the
CorporationÊs stockholders in a stockholdersÊ Meeting held on
the same (date), for and in consideration of the Asset
Privatization Trust („APT‰) condoning any deficiency
amount it may be entitled to recover from the
Corporation under the Credit Agreement dated
November 5, 1974 and the Restructuring Agreement[s]
dated June 24, and December 10, 1982, and May 9, 1984,
respectively, executed between the Corporation and
the Philippine National Bank („PNB‰),
458

which financial claims have been assigned to APT, through

the National Government, by PNB, hereby irrevocably
sells, assigns and transfer to APT its right to redeem
the foreclosed real properties covered by Transfer
Certificates of Titles Nos. T-16700 and T-16701.
IN WITNESS WHEREOF, the Corporation has caused this
instrument to be executed on its behalf by Mr. Joaquin S.
Montenegro, thereunto duly authorized, this 3rd day of September,
1997.
xxxx
This notwithstanding, the RTC Decision was based on the
premise that all of UPSUMCOÊs loans were condoned in the Deed of
Assignment. In contrast, the Court of Appeals acknowledged that
only the take-off loans were condoned, and thus ruled that APT was
entitled to have the funds from UPSUMCOSÊs accounts transferred
to its own account „to the extent of UPSUMCOÊs remaining
obligation, less the amount condoned in the Deed of Assignment
and the 450,000,000.00 proceeds of the foreclosure.‰
The challenged acts of respondents all occurred on or
after 27 August 1987, the day of the execution sale.
UPSUMCO argues that after that date, respondents no
longer had the right to collect monies from the PNB bank
accounts which UPSUMCO had opened and maintained as
collateral for its operational take-off loans. UPSUMCO is
wrong. After 27 August 1987, there were at least two causes
for the application of payments from UPSUMCOÊs PNB
accounts. The first was for the repayment of the operational
loans, which were never condoned. The second was for the
repayment of the take-off loans which APT could obtain
until 3 September 1987, the day the condonation took effect.
The error of the CourtÊs earlier rulings, particularly the
Resolution dated 11 July 2007, was in assuming that the non-
condonation of the operational loans was immaterial to the
application of payments made in favor of APT from UPSUMCOSÊs
PNB accounts that occurred after 27 August 1987. For as long as
there remained outstanding obligations due to APT (as PNBÊs
successor-in-interest), APT would be entitled to apply payments
from the bank accounts of PNB. That right had been granted in
favor of PNB, whether on account of the take-off loans or the
operational loans.
459
VOL. 614, March 9, 2010 459

Petitioner filed with the RTC the complaint which alleged that
„among the conditions of the Âfriendly foreclosureÊ are: (A) That all
the accounts of [United Planters] are condoned, including the JSS
notes at the time of the public bidding.‰ It was incumbent on
petitioner, not respondents, to prove that particular allegation in its
complaint. Was petitioner able to establish that among the
conditions of the „friendly foreclosureÊ was that „all its accounts are
condoned‰? It did not, as it is now agreed by all that only the take-
off loans were condoned.
This point is material, since the 2007 Resolution negated the
findings that only the take-off loans were condoned by faulting
respondents for failing to establish that there remained outstanding
operational loans on which APT could apply payments from
UPSUMCOÊs bank accounts. By the very language of the Deed of
Assignment, it was evident that UPSUMCOÊs allegation in its
complaint that all of its accounts were condoned was not proven.
Even if neither PNB nor APT had filed an answer, there would have
been no basis in fact for the trial court to conclude that all of
UPSUMCOÊs loans were condoned (as the RTC in this case did), or
issue reliefs as if all the loans were condoned (as the 2007
Resolution did).
As noted earlier, APT had the right to apply payments from
UPSUMCOÊs bank accounts, by virtue of the terms of the
operational loan agreements. Considering that UPSUMCO was
spectacularly unable to repay the take-off loans it had earlier
transacted, it simply beggars belief to assume that it had fully paid
its operational loans. Moreover, APT had the right to obtain
payment of the operational loans by simply applying payments from
UPSUMCOÊs bank accounts, without need of filing an action for
collection with the courts. The bank accounts were established
precisely to afford PNB (and later APT) extrajudicial and legal
means to obtain repayment of UPSUMCOÊs outstanding loans
without hassle.
B.
There is no question that the Deed of Assignment condoned the
outstanding take-off loans of UPSUMCO due then to APT. The
Deed of Assignment was executed on 3 September 1987 as was the
UPSUMCO Board Resolution authorizing its President to sign the
Deed of Assignment. However, despite the absence of any terms to
that effect in the Deed of Assignment, it is UPSUMCOÊs position
that the condonation actually had retroacted to 27 August 1987.
The previous rulings of the Court unfortunately upheld that
position.
460

It is easy to see why UPSUMCO would pose such an argument.

It appears that between 27 August 1987 and 3 September 1987.
APT applied payments from UPSUMCOÊs bank accounts in the
amount of around 80 Million Pesos. UPSUMCO obviously desires
the return of the said amount. But again, under the terms of the
loan arguments, APT as successor-in-interest of PNB, had the right
to seize any amounts deposited in UPSUMCOÊS bank accounts as
long as UPSUMCO remained indebted under the loan agreements.
Since UPSUMCO was released from its take-off loans only on 3
September 1987, as indicated in the Deed of Assignment, then
APTÊs application of payments is perfectly legal.

The earlier rulings of the Court were predicated on a finding that
there was a „friendly foreclosure‰ agreement between APT and
UPSUMCO, whereby APT agreed to condone all of UPSUMCOÊs
outstanding obligations in exchange for UPSUMCOÊs waiver of its
right to redeem the foreclosed property. However, no such
agreement to the effect was ever committed to writing or presented
in evidence. The written agreement actually set forth was not as
contended by UPSUMCO. For one, not all of the outstanding loans
were condoned by APT since the take-off loans were left extant. For
another, the agreement itself did not indicate any date of effectivity
other than the date of the execution of the agreement, namely 3
September 1987.
It is argued that the use of the word „any‰ in „any deficiency
amount‰ sufficiently establishes the retroactive nature of the
condonation. The argument hardly convinces. The phrase „any
deficiency amount‰ could refer not only to the remaining deficiency
amount after the 27 August foreclosure sale, but also the remaining
deficiency amount as of 3 September 1987, when the Deed of
Assignment was executed and after APT had exercised its right as
creditor to apply payments from petitionerÊs PNB accounts. The
Deed of Assignment was not cast in intractably precise terms, and
both interpretations can certainly be accommodated.
It is in that context that the question of parol evidence comes
into play. The parol evidence rule states that generally, when the
terms of an agreement have been reduced into writing, it is
considered as containing all the terms agreed upon and there can be
no evidence of such terms other than the contents of the written
agreement. Assuming that the Deed of Assignment failed to
accurately reflect an intent of the parties to retroact the effect of
condonation to
461
VOL. 614, March 9, 2010 461

the date of the foreclosure sale, none of the parties, particularly

UPSUMCO, availed of its right to seek the reformation of the
instrument to the end that such true intention may be expressed.
As there is nothing in the text of Deed of Assignment that clearly
gives retroactive effect to the condonation, the parol evidence rule
generally bars any other evidence of such terms other than the
contents of the written agreement, such as evidence that the said
Deed had retroactive effect.
It is argued that under Section 9, Rule 130, a party may present
evidence to modify, explain or add to the terms of the written
agreement if it is put in issue in the pleading, „[t]he failure of the
written agreement to express the true intent and the agreement of
the parties thereto.‰
Petitioner did not exactly state in its Amended Complaint that
the condonation effected in the Deed of Assignment had retroacted
to the date of the foreclosure sale. What petitioner contented in its
amended complaint was that the Deed of Assignment „released and
discharged plaintiff from any and all obligations due the defendant
PNB and defendant APT,‰ that „after the foreclosure by PNB/APT
plaintiff is entitled to all the funds it deposited or being held by
PNB in all its branches,‰ and that „among the conditions of the
Âfriendly foreclosureÊ are that all the accounts of the plaintiff are
condoned.‰ It remains unclear whether petitioner had indeed
alleged in its Amended Complaint that the Deed of Assignment
executed on 3 September1987 had retroacted effect as of the
foreclosure sale, or on 27 August 1987. If petitioner were truly
mindful to invoke the exception to the parol evidence rule and
intent on claiming that the condonation had such retroactive effect,
it should have employed more precise language to the effect in their
original and amended complaints.
xxxx
The right of respondent PNB to set-off payments from
UPSUMCO arose from conventional compensation rather than legal
compensation, even if all the requisites for legal compensation were
present between those two parties. The determinative factor is the
mutual agreement between PNB and UPSUMCO to set-off
payments. Even without an express agreement stipulating
compensation, PNB and UPSUMCO would have been entitled to
set-off of payments, as the legal requisites for compensation under
Article 1279 were present.
462

As soon as PNB assigned its credit to APT, the mutual creditor-
debtor relation between PNB and UPSUMCO ceased to exist.

However, PNB and UPSUMCO had agreed to a conventional
compensation, a relationship which does not require the presence of
all the requisites under Article 1279. And PNB too had assigned all
its rights as creditor to APT, including its rights under conventional
compensation. The absence of the mutual creditor-debtor relation
between the new creditor APT and UPSUMCO cannot negate the
conventional compensation. Accordingly, APT, as the assignee of
credit of PNB, had the right to set-off the outstanding obligations of
UPSUMCO on the basis of conventional compensation before the
condonation took effect on 3 September 1987.
V.
The conclusions are clear. First. Between 27 August to 3
September 1987, APT had the right to apply payments from
UPSUMCOÊs bank accounts maintained with PNB as repayment for
the take-off loans and/or the operational loans. Considering that as
of 30 June 1987, the total indebtedness of UPSUMCO as to the
take-off loans amounted to P2,137,076,433.15, and because the
foreclosed properties were sold during the execution sale for only
450 Million Pesos, it is safe to conclude that the total amount of
P80,200,806.41 debited from UPSUMCOÊs bank accounts from 27
August to 3 September 1987 was very well less than the then
outstanding indebtedness for the take-off loans. It was only on 3
September 1987 that the take-off loans were condoned by APT,
which lost only on that date too the right to apply payments from
UPSUMCOÊS bank accounts to pay the take-off loans.
Second. After 3 September 1987, APT retained the right to apply
payments from the bank accounts of UPSUMCO with PNB to
answer for the outstanding indebtedness under the operational loan
agreements. It appears that the amount of P17,773,185.24 was
debited from UPSUMCOÊs bank accounts after 3 September. At the
same time, it remains unclear what were the amounts of
outstanding indebtedness under the operational loans at the
various points after 3 September 1987 when the bank accounts of
UPSUMCO were debited.
The Court of Appeals ordered the remand of the case to the trial
court, on the premise that it was unclear how much APT was
entitled to recover by way of counterclaim. It is clear that the
463
VOL. 614, March 9, 2010 463
amount claimed by APT by way of counterclaim·over 1.6 Billion

Pesos·is over and beyond what it can possibly be entitled to, since
it is clear that the take-off loans were actually condoned as of 3
September 1987. At the same time, APT was still entitled to
repayment of UPSUMCOÊs operational loans. It is not clear to what
extent, if at all, the amounts debited from UPSUMCOÊs bank
accounts after 3 September 1987 covered UPSUMCOÊs outstanding
indebtedness under the operational loans. Said amounts could be
insufficient, just enough, or over and beyond what UPSUMCO
actually owed, in which case the petitioner should be entitled to
that excess amount debited after 3 September 1987. Because it is
not evident from the voluminous records what was the outstanding
balance of the operational loans at the various times post-
September 3 UPSUMCOÊs bank accounts were debited, the remand
ordered by the Court of Appeal is ultimately the wisest and fairest
recourse.‰1
Petitioner insists that the Court should not have taken

cognizance of the respondentsÊ second motions for
reconsideration with the prayer that the case be referred to
the Court en banc as the same appear not to be in
accordance with the rules.
Generally, under Section 3 of the CourtÊs Circular No. 2-
89, effective March 1, 1989, the referral to the Court en
banc of cases assigned to a Division is to be denied on the
ground that the Court en banc is not an Appellate Court to
which decisions or resolutions of a Division may be
appealed. Moreover, a second motion for reconsideration of
a judgment or final resolution shall not be entertained for
being a prohibited pleading under Section 2, Rule 52, in
relation to Section 4, Rule 56 of the Rules of Court, except
for extraordinarily persuasive reasons and only after an
express leave shall have first been obtained.2 Accordingly,
the Court, in the exercise of its sound discretion,
determines the issues which are of transcendental
importance, as in the present case, which necessi-
_______________
1 Rollo, pp. 1272-1273, 1284, 1286-1291, and 1300-1302.

2 See Ortigas and Company Limited Partnership vs. Velasco, G.R. Nos.
109645 and 112564, March 4, 1996, 254 SCRA 234.
464

Appeals
tates it to accept the referral of a Division case before it

and the grant of a second motion for reconsideration.
In sum, the Resolution of the Court En Banc reinstating
the Decision of the CA categorically ruled that only its
takeoff loans, not the operational loans, were condoned by
the Deed of Assignment dated September 3, 1987. The
Deed of Assignment expressly stipulated the particular
loan agreements which were covered therein. As such,
respondent APT was entitled to have the funds from
petitionerÊs savings accounts with respondent PNB
transferred to its own account, to the extent of petitionerÊs
remaining obligations under the operational loans, less the
amount condoned in the Deed of Assignment and the
P450,000,000.00 proceeds of the foreclosure. As the En
Banc Resolution explained, respondent APT had a right to
go after the bank deposits of petitioner, in its capacity as
the creditor of the latter. Likewise, respondent PNB had
the right to apply the proceeds of the sale of petitionerÊs
sugar and molasses, in satisfaction of petitionerÊs
obligations. Respondent PNB never waived these rights
and the same were transferred to respondent APT (now
PMO) by virtue of the Deed of Transfer executed between
them. Moreover, there was no conventional subrogation
since such requires the consent of the original parties and
of the third persons and there was no evidence that the
consent of petitioner (as debtor) was secured when
respondent PNB assigned its rights to respondent APT, and
that the assignment by respondent PNB to respondent APT
arose by mandate of law and not by the volition of the
parties. Accordingly, the remand of the case to the RTC for
computation of the partiesÊ remaining outstanding balances
was proper.
The doctrine of stare decisis et no quieta movere3 or
principle of adherence to precedents does not apply to the
present case so as to bar the Court en banc from taking

cognizance
_______________
3 Tala Realty Services Corp. v. Banco Filipino Savings and Mortgage

Bank, G.R. No. 132051, June 25, 2001, 359 SCRA 469.
465
VOL. 614, March 9, 2010 465

Appeals
over the case which rectified the disposition of the case and
reversed and set aside the Decision rendered by a Division
thereof.
WHEREFORE, the Motion for Reconsideration filed by
petitioner United Planters Sugar Milling Company, Inc.
(UPSUMCO) is DENIED WITH FINALITY for lack of
merit.
SO ORDERED.
Corona, Velasco, Jr., Leonardo-De Castro, Brion,

Bersamin, Del Castillo, Abad, Villarama, Jr., Perez and
Mendoza, JJ., concur.
Puno (C.J.), I Join the Dissent of J. Carpio.
Carpio, J., See Dissenting Opinion.
Carpio-Morales, J., I maintain my vote in the Original
Decision, hence, I vote to grant the present motion.
Nachura, J., No part. Signed Pleading as Solicitor
General.
DISSENTING OPINION
CARPIO, J.:
I maintain my dissent that the remand of this case for
the accounting of petitioner United Planters Sugar Milling
Company, Inc.Ês (UPSUMCO) supposed outstanding loans
to respondent Asset Privatization Trust (APT)1 is baseless
in fact and in law.
TodayÊs ruling reiterates the conclusions of the
Resolution dated 2 April 20092 that:
_______________
1 Per Resolution dated 2 April 2009.

2 Granting respondent APT and Philippine National BankÊs second
motion for reconsideration of the Decision dated 28 November 2006 and
Resolution dated 11 July 2007.
466

Appeals
(1) UPSUMCO remains indebted to APT (for an

undetermined amount) because APT, as assignee of
respondent Philippine National bank (PNB), condoned only
some but not all of UPSUMCOÊs loans, because (a) by its
terms, the contract of condonation (Deed of Assignment dated
3 September 1987) mentioned only the „take-off‰ loans,
leaving out the „operating loans‰; and (b) the admission of
parole evidence modifying the terms of the Deed of
Assignment to cover UPSUMCOÊs „operating loans‰ owing to
APT is improper and, at any rate, UPSUMCO introduced no
parole evidence; and
(2) PNBÊs post-foreclosure diversion of UPSUMCOÊs bank
deposits to APT without UPSUMCOÊs knowledge or consent
was a valid act of „conventional compensation.‰
Neither the facts of the case nor the law on

compensation bears out these conclusions.
First. UPSUMCOÊs „operating loans‰ (so-called because
the proceeds were used to finance its operations) have
nothing to do with this case. This case concerns
UPSUMCOÊs post-foreclosure deficiency obligation to APT
and the mortgage over the foreclosed properties
secured UPSUMCOÊs „take-off loans‰ only (so-called
because the proceeds were used to build UPSUMCOÊs
milling plant). As summed up in the Resolution of 11 July
2007:
„[P]NB assigned to APT its „take-off loans‰ to UPSUMCO x x x,

including the mortgages on these take-off loans. PNB did not
assign to APT any „operating loans‰ of UPSUMCO. x x x x On
27 August 1987, APT foreclosed the mortgages on the take-off
loans. The foreclosure price was P450,000,000, leaving a deficiency
of P1,687,076,433. On 3 September 1987, in consideration of
UPSUMCOÊs assignment to APT of UPSUMCOÊs right to redeem
the
467
VOL. 614, March 9, 2010 467

foreclosed assets, APT condoned „any deficiency amount‰ of

UPSUMCO after the foreclosure.‰3 (Emphasis supplied)
Indeed, the „operating loans‰ remained with PNB and

contained their own security mechanisms in the
form of pledge agreements obliging UPSUMCO to
assign all its produce to PNB which UPSUMCO
simultaneously authorized to sell and apply the proceeds to
satisfy UPSUMCOÊs unpaid operating loans.4 Thus, the
issue on UPSUMCOÊs supposed unpaid „operating loans
owing to APT‰ is not only factually inaccurate but also
alien to this litigation on UPSUMCOÊs post-foreclosure
deficiency obligation to APT arising from the „take-off‰
loans.
_______________
3 United Planters Sugar Milling Co., Inc. (UPSUMCO) v. Court of

Appeals (Resolution), G.R. No. 126890, 11 July 2007, 527 SCRA 336, 341
[2007]).
4 We held in the Decision of 28 November 2006:
To finance its operations, UPSUMCO also obtained loans from
PNB evidenced by, among others, the Deed of Assignment by Way
of Payment, notarized on 16 November 1984 and the Credit
Agreements dated 19 February 1987 and 29 April 1987 („operating
loans‰). The Credit Agreements, which also carried set-off
clauses, were secured by Pledge contracts dated 19
February 1987 and 30 March 1987. By these contracts,
UPSUMCO undertook to assign to PNB all its sugar
produce for PNB to sell and apply the proceeds to satisfy

UPSUMCOÊs unpaid obligation under the operating loans.
The promissory notes for the funds released under the operating
loans also carried set-off clauses. In the Deed of Assignment by
Way of Payment, UPSUMCO undertook to assign to PNB its
milled sugar and molasses beginning the crop year 1984-1985. To
keep track of UPSUMCOÊs sugar assignments and the payments
to UPSUMCOÊs loans, PNB maintained „sugar accounts payable‰
under UPSUMCOÊs name. (United Planters Sugar Milling Co.,
Inc. (UPSUMCO) v. Court of Appeals (Decision), G.R. No. 126890,
28 November 2006, 508 SCRA 310, 314-315; emphasis supplied,
internal citations omitted).
468

Appeals
The 2 April 2009 Resolution hoists the decision of the

Court of Appeals as doctrinal prop for its finding that (1)
UPSUMCO owes APT unpaid „operating loans‰ and (2) this
is an issue here. Even a cursory glance at the appealed
ruling proves this reliance unfounded. All that the
appellate court did to arrive at its ruling (to remand this
case for accounting of UPSUMCOÊs supposed outstanding
obligations) was look at the Deed of Assignment, subtract
from the mass of UPSUMCO loans the contracts listed in
the Deed of Assignment, and hold UPSUMCO liable (for an
undetermined amount) for the remaining loans (without
specifying whether these were „take-off‰ or „operating‰
loans).5 The maxim expressio unios est exclusio alterios, not
a considered analysis of which loans were secured by the
foreclosed properties, won the day for respondents.
_______________
5 As held in the Resolution of 11 July 2007:

[T]he Court of Appeals never distinguished UPSUMCOÊs
obligation to APT or PNB in terms of UPSUMCOÊs operating or
take-off loans. Instead, the Court of Appeals relied on a rule of
statutory construction [of expressio unios est exclusio alterios]
in examining the Deed of Assignment. Thus, the appellate court held

that since that document only mentioned the Credit Agreement dated 5
November 1974 and the Restructuring Agreements dated 24 June 1982,
10 December 1982, and 9 May 1984, it could not have covered the loans
and other security instruments not mentioned in the contract.
Accordingly, the Court of Appeals did not determine what loans PNB
assigned to APT on 27 February 1987 which is determinative of the
extent of APTÊs interest in the foreclosure proceedings of UPSUMCOÊs
assets and consequently of what APT condoned under the Deed of
Assignment of 3 September 1987. (United Planters Sugar Milling Co.,
Inc. (UPSUMCO) v. Court of Appeals (Resolution), G.R. No. 126890, 11
July 2007, 527 SCRA 336, 346 [2007]; emphasis supplied, internal
citations omitted).
This hypertextual interpretation of the Deed of Assignment, divorcing
it from the foreclosure proceedings and the governmentÊs policy of
expediting asset disposition does violence to the intent of the parties.
469
VOL. 614, March 9, 2010 469

Appeals
Indeed, the Court of Appeals could not have passed upon

respondentsÊ newfangled theory on UPSUMCOÊs
„undetermined liability‰ for unpaid „operating loans owing
to APT,‰ because respondents presented this concoction
only with this Court, in their motion for reconsideration of
our Decision in 2006 granting UPSUMCOÊs petition, 18
years after they filed their Answer to UPSUMCOÊs
complaint in the Regional Trial Court of Bais City.6 This
late-game, last ditch contrivance,
_______________
6 We observed in the Resolution of 11 July 2007:

Until it filed its motion for reconsideration, PNB made no mention of
any outstanding obligation of UPSUMCO under the operational loans. In
the Answer it filed with the trial court, PNB counterclaimed not
for UPSUMCOÊs alleged unpaid obligation under the operational
loans but for moral damages and attorneyÊs fees. Indeed, at no time
during the pendency of this case in the trial court, the Court of Appeals,
or this Court did PNB hint of any proof of such alleged debt. (United
Planters Sugar Milling Co., Inc. (UPSUMCO) v. Court of Appeals
(Resolution), G.R. No. 126890, 11 July 2007, 527 SCRA 336, 348 [2007];
internal citations omitted).
The 2 April 2009 Resolution finesses away the devastating implication
of respondentsÊ failure to immediately raise the defense of compensation
for outstanding operating loans thus:
[I]t was evident UPSUMCOÊs allegation in its complaint that all of its
account were condoned was not proven. Even if neither PNB nor APT
had filed an answer, there would have been no basis in fact for
the trial court to conclude that all of UPSUMCOÊs loans were
condoned x x x. (United Planters Sugar Milling Co., Inc. (UPSUMCO) v.
Court of Appeals (Resolution), G.R. No. 126890, 2 April 2009, 583 SCRA
63, 83-85; emphasis supplied).
Evidently, the 2 April 2009 Resolution confused proof of condonation
with proof of payment because as found by the trial court and the
Decision of 28 November 2006, UPSUMCOÊs evidence sufficed to prove
the cancellation of its deficiency obligation. Tellingly, the 2 April 2009
Resolution kept clear of the
470

Appeals
made part of Philippine jurisprudence courtesy of the 2

April 2009 Resolution, now provides legal cover for PNBÊs
diversion of tens of millions of pesos of UPSUMCO deposits
as alleged payments for UPSUMCOÊs non-existent
„operating loans owing to APT.‰7
Second. Both the text and context of the Deed of
Assignment compel the conclusion that UPSUMCO, as
debtor-mortgagor, and APT, as creditor-mortgagee, in
executing the Deed of Assignment, intended to cancel
UPSUMCOÊs post-foreclosure deficiency obligation in
exchange for UPSUMCOÊs waiver of its redemption right,
allowing APT to dispose of the foreclosed assets without
waiting for the expiry of the one-year redemption period.8
Indeed, the Deed of Assignment
_______________
import of APTÊs inaction to collect on UPSUMCOÊs supposed unpaid

operating loans for more than 20 years.
7 Within a span of seven days from foreclosure (covering the period 27
August 1987 to 3 September 1987), PNB adjusted its books to transfer
P80,200,806.41 to APT without UPSUMCOÊs knowledge much less
consent. After 3 September 1987, PNB continued to funnel UPSUMCOÊs
deposits to APT totaling P17,773,185.24.
8 For the textual basis, we observed in the Resolution of 11 July 2007:
[T]he Deed of Assignment itself speaks of condonation of
„any deficiency amount,‰ an amount that is determined
right after the foreclosure. None of the respondents have
presented good cause to undermine the reasons for our ruling,
namely: (1) the condonation of UPSUMCOÊs deficiency obligation
was, as found by the trial court in the PHILSUCOR case, part of
the bundle of incentives APT offered UPSUMCO for the latter to
agree to the „friendly foreclosure‰ of its mortgaged assets and (2)
the Deed of Assignment itself stated that APT condoned
„any deficiency amount‰ of UPSUMCO from the take-off
loans after the foreclosure on 27 August 1987. (United
Planters Sugar Milling Co., Inc. (UPSUMCO) v. Court of Appeals
(Resolution), G.R. No. 126890, 11 July 2007, 527 SCRA 336, 352
[2007]; emphasis supplied, internal citations omitted).
471
VOL. 614, March 9, 2010 471

Appeals
must not be divorced from the negotiated foreclosure

which the government pursued following its policy of
quickly disposing acquired assets.9
The 2 April 2009 Resolution doubts the reality of this
negotiated foreclosure (as it should, because the only way
to sus-
_______________
For the contextual grounding, UPSUMCO presented in

evidence two Board Resolutions (authorizing its President to sign
the Deed of Assignment and seeking APTÊs assistance to resist a

collection case filed by a co-creditor post-foreclosure) uniformly
stating its understanding that the Deed of Assignment condoned
its post-foreclosure deficiency obligation (see United Planters
Sugar Milling Co., Inc. (UPSUMCO) v. Court of Appeals
(Decision), G.R. No. 126890, 28 November 2006, 508 SCRA 310,
334-339). These pieces of evidence were properly introduced as an
exception to the Parole Evidence Rule (under Rule 130, Section 9,
par. [b]) after UPSUMCO raised as an issue the failure of the Deed
of Assignment to express the true intent of the parties in so far as
it gives the impression that its scope is limited to the loan
agreements mentioned in the contract. The Resolution of 2 April
2009 finds that these pieces of evidence should be excluded
because UPSUMCOÊs statement in its amended complaint before
the trial court that „the Deed of Assignment x x x released and
discharged [UPSUMCO] from any and all obligations due to the
defendant PNB and defendant APT‰ does not suffice to raise as an
issue the scope of the Deed of Assignment, adding that UPSUMCO
„should have employed more precise language to that effect‰
(United Planters Sugar Milling Co., Inc. (UPSUMCO) v. Court of
Appeals (Resolution), G.R. No. 126890, 2 April 2009, p. 23-24).
This conclusion finds no basis in Rule 130, Section 9 which
requires only that a party „puts in issue in his pleading x x x the
failure of the written agreement to express the true intent and
agreement of the parties thereto.‰ That the counsel for UPSUMCO
is less of a craftsman than what the 2 April 2009 Resolution
expects is no reason to deny his client the benefit of the exception
to the Parole Evidence Rule.
9 Indeed, within two months from foreclosure, APT sold the
UPSUMCO foreclosed assets to a third party (Universal Robina Sugar
Milling Corporation) for P500M.
472

Appeals
tain its finding is to treat the Deed of Assignment as an

isolated transaction, devoid of contextual meaning).
However, the statements in the 2 April 2009 Resolution
that·
„The earlier rulings of the Court were predicated on a finding that

there was a „friendly foreclosure‰ agreement between APT and
UPSUMCO, whereby APT agreed to condone all of UPSUMCOÊs
outstanding obligations in exchange for UPSUMCOÊs waiver of its
right to redeem the foreclosed property. However, no such
agreement to that effect was ever committed to writing or
presented in evidence. The written agreement actually set
forth was not as contended by UPSUMCO.‰10 (Emphasis
supplied)
would have carried weight if not for the ruling in United

Planters and Sugar Milling Corporation, Inc. v. Philippine
Sugar Corporation11 that: (1) APT and PNB (representing
_______________

Appeals (Resolution), G.R. No. 126890, 2 April 2009, 583 SCRA 63, 85.
11 The Decision of 28 November 2006 described PHILSUCORÊs
participation in UPSUMCOÊs mortgaged assets:
In the early 1980s, UPSUMCO and other sugar millers, hard hit by a
slump in the international sugar market, started to default on their loan
payments. To bail out these corporations, then President Ferdinand E.
Marcos created the Philippine Sugar Corporation (PHILSUCOR), which
was authorized to issue and sell „sugar bonds‰ to various commercial
banks holding non-performing loans of ailing sugar millers. Accordingly,
PHILSUCOR issued and sold to PNB P3 billion worth of „sugar bonds‰
on 14 February 1984. PNB partly paid the bonds by assigning to
PHILSUCOR 30% of its credit with UPSUMCO, computed as of 14
February 1984. This made PHILSUCOR UPSUMCOÊs creditor to
that extent. To secure PHILSUCORÊs interest in UPSUMCO,
PHILSUCOR agreed that PNB will continue to hold UPSUMCOÊs
collateral for the take-off loans, for itself and PHILSUCOR, to the
extent of their pro-rata interest in the event of a foreclosure.
xxxx
To quickly dispose of UPSUMCOÊs mortgaged assets, APT negotiated
with UPSUMCO for the mortgagesÊ uncontested or
473
VOL. 614, March 9, 2010 473

Appeals
APTÊs co-creditor and co-mortgagee PHILSUCOR)

conducted a „friendly foreclosure‰ of UPSUMCOÊs
mortgaged assets; (2) APT condoned UPSUMCOÊs entire
post-foreclosure deficiency obligation under the Deed of
Assignment in exchange for UPSUMCOÊs relinquishment
of its redemption right; and (3) because of this full
condonation, UPSUMCO is discharged from all claims of its
supposed deficiency obligation, including PHILSUCORÊs
suit.12 ThereÊs no escaping the import of the following
findings (quoted in the Decision of 26 November 2006):
„Defendant [PHILSUCOR] ha[d] notice of the friendly

foreclosure conducted by APT and PNB. x x x x [UPSUMCO],
due to the conduct of the defendant [PHILSUCOR], and the
other parties, PNB and APT[,] was made to believe that
when it assigned its right of redemption, it was in
consideration of the condonation of deficiency claims
against it including that which pertains to the defendant
[PHILSUCOR].
xxxx
The doctrine of estoppel x x x, precludes [a party] from
repudiating an obligation voluntarily assumed after its having
accepted benefits therefrom. x x x x
Under the aforesaid principle of estoppel, defendant
[PHILSUCOR] in the case at bar, after having made [UPSUMCO]
believed
_______________
„friendly‰ foreclosure and for UPSUMCOÊs waiver of its right of redemption.

UPSUMCO accommodated APT. Hence, APT and PNB („respondents‰), the
latter as PHILSUCORÊs representative, scheduled the foreclosure sale on
27 August 1987. In the notices of foreclosure, PNB placed UPSUMCOÊs total
„mortgage indebtedness‰ at P2,137,076,433.15, as of 30 June 1987. At the
foreclosure sale, APT purchased the auctioned properties for P450 million.
(United Planters Sugar Milling Co., Inc. (UPSUMCO) v. Court of Appeals
(Decision), G.R. No. 126890, 28 November 2006, 508 SCRA 310, 315-317;
emphasis supplied, internal citations omitted)
12 In Civil Case No. 63-B, rendered by the Regional Trial Court of Bais City,
Branch 45, the same court which rendered the ruling in this case.
474

[sic] in good faith that the foreclosure proceedings, including[] a

part of it, i.e. condonation of deficiency claims against plaintiff, and
after having benefited from such conduct, [cannot] undertake an
inconsistent claim subsequently and proceed with its concealed
intention to collect deficiency claim against [UPSUMCO].
In fact, according to Atty. Buñag, defendant [PHILSUCOR] did
not make any reservation to claim for deficiency after having
received its share of the auction sale in the amount of P58 million
from APT. x x x However, defendant [PHILSUCOR] left the
matter of deficiency balance to APT. x x x But, what
happened was that APT condoned said deficiency claim
against [UPSUMCO].
x x x x
WHEREFORE, premises considered, this Court renders the
following judgment:
On Civil Case No. 63-B
1. [UPSUMCO] is hereby ordered released and
discharged from any and all claims that the defendant
[PHILSUCOR] may have against the former[.]‰ (Emphasis
supplied).13
The Court of Appeals14 and this Court15 affirmed United

Planters and Sugar Milling Corporation, Inc. v. Philippine
Sugar Corporation on successive appeals.
Third. The only way for PNB to justify its unilateral
diversion of huge sums of depositorÊs money (UPSUMCO)
is to claim compensation (otherwise, it would expose itself
to, at best, suits to recover the illegally applied funds, as
here). Unfortunately for PNB, the law on compensation, as
a short-cut to the tedious collection process, is stacked with
safety features indispensable to a creditorÊs exercise of this
option. Regardless of the type of compensation exercised
(that is,
_______________
Appeals (Decision), G.R. No. 126890, 28 November 2006, 508 SCRA 310,
338-339.
14 In the Decision dated 15 October 1997 in CA-G.R. CV No. 46957.
15 In the Resolution dated 30 March 1993 in G.R. No. 132731
(dismissing outright PHILSUCORÊs petition).
475
VOL. 614, March 9, 2010 475

Appeals
whether legal or conventional), the irreducible minimum

requirement is that the parties must be creditor and
debtor of each other.16 Otherwise, the remedy for the
creditor to satisfy its credit is to initiate collection
proceedings.
The trouble for PNB is that when it diverted
UPSUMCOÊs deposits starting 27 August 1987 as supposed
compensation, PNB was no longer a creditor of
UPSUMCOÊs „take-off loans,‰ having assigned its credit
under these loans to APT six months earlier on 27
February 1987. Hence, at the time of the supposed
application of payments, PNB had already reverted to its
default role as UPSUMCOÊs debtor, in its capacity as
holder of UPSUMCOÊs bank deposits.17
_______________
16 Article 1278 of the Civil Code provides: „Compensation shall take

place when two persons, in their own right, are creditors and debtors
of each other.‰ (Emphasis supplied)
17 Following the characterization of the relations between depositor
and bank as that of creditor and debtor (Moran v. Court of Appeals, G.R.
No. 105836, 7 March 1994, 230 SCRA 799).
The 2 April 2009 Resolution strained to fit within the „conventional
compensation‰ model PNBÊs diversion of UPSUMCO funds to APT. The
implausibility of this occurrence given the absence of mutuality of credits
between PNB and APT, on the one hand, and UPSUMCO, on the other, is
evident from the 2 April 2009 ResolutionÊs convoluted and contradictory
reasoning:
[W]e recognize the concept of conventional compensation,
defined as occurring „when the parties agree to compensate their

mutual obligations[„] x x x [T]he only requisites of conventional
compensation are (1) that each of the parties can dispose of the
credit he seeks to compensate, and (2) that they agree to the
mutual extinguishment of their credits. x x x x
[T]he absence of the mutual creditor-debtor relation
between the new creditor APT and UPSUMCO cannot
negate the conventional compensation. Accordingly, APT,
as the assignee of credit of PNB, had the right to set-off the
outstanding obligations of UPSUMCO on the basis of
conventional compensation before the condonation took effect
on 3 September 1987. (United Planters Sugar Mill-
476

Appeals
Further, PNB did not use UPSUMCO funds to apply

payments for itself but for APT. Thus, what controls is not
the law on compensation but the rules on payment by third
parties.18 As we noted in the Resolution of 11 July 2007:
[P]NB, in setting-off, acted as a third person using its own

funds to pay the debt of UPSUMCO to its creditor APT. PNB can
recover from UPSUMCO to the extent that the payment
benefited UPSUMCO.19 (Emphasis supplied)
However, PNB is precluded from invoking this rule because

by the time it made the alleged payments to APT (starting
27 August 1987), APT had agreed (in the Deed of
Assignment) to wipe-out UPSUMCOÊs post-foreclosure
deficiency obligation (in exchange for UPSUMCOÊs waiver
of its redemption right, allowing APT to immediately sell
the foreclosed assets to Universal Universal Robina Sugar
Milling Corporation even during the one-year redemption
period which UPSUMCO agreed to waive).20 As there were
no more debts to pay, none of the alleged payments PNB
made to APT benefited UPSUMCO. Thus, UPSUMCO has
every right to recover its wrongfully diverted funds.
_______________
ing Co., Inc. (UPSUMCO) v. Court of Appeals (Resolution), G.R.

No. 126890, 2 April 2009, pp. 30-31; emphasis supplied)
18 Article 1236 of the Civil Code provides: „The creditor is not bound
to accept payment or performance by a third person who has no interest
in the fulfillment of the obligation, unless there is a stipulation to the
contrary.
Whoever pays for another may demand from the debtor what
he has paid, except that if he paid without the knowledge or
against the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.‰ (Emphasis supplied)
Appeals (Resolution), G.R. No. 126890, 11 July 2007, 527 SCRA 336, 341
(2007).
20 See note 9.
477
VOL. 614, March 9, 2010 477

Appeals
Lastly, PNBÊs doom is sealed by its retention of

UPSUMCOÊs operating loans, the final factual tug which
pulls PNBÊs theoretical rug from under its feet. Not having
assigned these loans to APT (and were thus excluded from
the foreclosure proceedings), PNBÊs belated submission of
applying UPSUMCO deposits as payments for
UPSUMCOÊs „operating loans owing to APT‰ crumbles
under the weight of its own inconsistency. The 2 April 2009
ResolutionÊs grounding of „conventional compensation‰
would have been plausible if PNB had claimed to have
applied payments under the „operating loans‰ for itself. Of
course, this argumentative avenue is closed to PNB
because every cent of UPSUMCO money that PNB
held PNB transferred to APT.
Fourth. The 2 April 2009 Resolution spun a tale of a
helpless creditor government victimized by a cunning,
bullying debtor sugar miller, exacting terms of foreclosure
settlement „friendly‰ to no one but itself, thus justifying the
CourtÊs timely succor. This script would have been perfect if
it did not mock common sense (government is never

bullied), ignore business practice (the creditor always
dictates terms of settlement) and discard a fact
(UPSUMCO was bankrupt). In truth, APT insisted on the
deal with UPSUMCO and achieved its goal of immediately
selling the foreclosed property.24 APT was satisfied with
what it got and treated the matter closed until it was made
to answer UPSUMCOÊs suit which, in the first place,
UPSUMCOÊs former owners would not have filed had they
not discovered UPSUMCOÊs nearly depleted bank deposits
with PNB.
By subscribing to PNB and APTÊs hastily crafted,
incoherent theory of „conventional compensation without
mutuality of credits‰ of undetermined „operating loans
owing to APT,‰ the 2 April 2009 Resolution sets a
dangerous precedent of babying government (and
incidentally its assignor bank), achieved through
convoluted analysis of facts and untenable
_______________
21 Id.
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SUPREME COURT REPORTS ANNOTATED VOLUME 614 02/03/2018, 5*31 PM

Petition denied, judgment and resolution affirmed.

Note.·The auction sale was null and void for non-

G.R. No. 126890. March 9, 2010.*

UNITED PLANTERS SUGAR MILLING CO., INC.

Remedial Law; Appeals; Referral to the Court en banc of cases

exercise of its sound discretion,

452 SUPREME COURT REPORTS ANNOTATED

United Planters Sugar Milling Co., Inc. vs. Court of Appeals

determines the issues which are of transcendental importance, as in

MOTION FOR RECONSIDERATION of a decision of the

respondents Privatization and Management Office (PMO),

„WHEREFORE, the appealed decision is hereby set aside and

Petitioner prefaces its arguments that it is the aggrieved

454 SUPREME COURT REPORTS ANNOTATED

Facts showed that in 1974, petitioner, engaged in the

were executed to secure the takeoff loans. The foreclosure

VOL. 614, March 9, 2010 455

Seven (7) days after the foreclosure sale, or on

operational loans were condoned by the Deed of

456 SUPREME COURT REPORTS ANNOTATED

„1. The order of the Honorable Court En Banc reinstating the

After a careful review of the arguments in the

petitionerÊs motion for reconsideration, the Court finds the

VOL. 614, March 9, 2010 457

(2) Deed of Assignment By Way of Payment dated November 16,

On 27 February 1987, through a Deed of Transfer, PNB assigned

This much is clear. The Deed of Assignment condoned only the

458 SUPREME COURT REPORTS ANNOTATED

which financial claims have been assigned to APT, through

VOL. 614, March 9, 2010 459

460 SUPREME COURT REPORTS ANNOTATED

It is easy to see why UPSUMCO would pose such an argument.

APTÊs application of payments is perfectly legal.

VOL. 614, March 9, 2010 461

the date of the foreclosure sale, none of the parties, particularly

462 SUPREME COURT REPORTS ANNOTATED

As soon as PNB assigned its credit to APT, the mutual creditor-

debtor relation between PNB and UPSUMCO ceased to exist.

VOL. 614, March 9, 2010 463

United Planters Sugar Milling Co., Inc. vs. Court of Appeals

amount claimed by APT by way of counterclaim·over 1.6 Billion

Petitioner insists that the Court should not have taken

1 Rollo, pp. 1272-1273, 1284, 1286-1291, and 1300-1302.

109645 and 112564, March 4, 1996, 254 SCRA 234.

464 SUPREME COURT REPORTS ANNOTATED

tates it to accept the referral of a Division case before it

present case so as to bar the Court en banc from taking

3 Tala Realty Services Corp. v. Banco Filipino Savings and Mortgage

VOL. 614, March 9, 2010 465

Corona, Velasco, Jr., Leonardo-De Castro, Brion,

Resolution dated 2 April 20092 that:

1 Per Resolution dated 2 April 2009.

466 SUPREME COURT REPORTS ANNOTATED

(1) UPSUMCO remains indebted to APT (for an

Neither the facts of the case nor the law on

„[P]NB assigned to APT its „take-off loans‰ to UPSUMCO x x x,

VOL. 614, March 9, 2010 467

foreclosed assets, APT condoned „any deficiency amount‰ of