This is a petition for review^[1] of the Decision^[2] dated 29 February 1996 and the Resolution dated 29 October 1996 of the Court of Appeals remanding to the Regional Trial Court of Bais City, Negros Oriental a suit for collection of sum of money and damages for further proceedings.


Petitioner United Planters Sugar Milling Company, Inc. ("UPSUMCO") is a domestic sugar miller based in Manjuyod, Negros Oriental. To finance the construction of its milling plant, UPSUMCO obtained loans from respondent Philippine National Bank ("PNB"), evidenced by, among others, a Credit Agreement dated 5 November 1974, subsequently restructured on 24 June 1982, 10 December 1982, and 9 May 1984 ("take-off loans"). These loans were secured by a real estate mortgage over two parcels of land^[3] where UPSUMCO's milling plant stands and by chattel mortgages over machineries and equipment on the parcels of land. The loan agreements also required UPSUMCO to open bank accounts with PNB the funds of which PNB could apply to pay any due obligations of UPSUMCO. As of 1987, UPSUMCO maintained five savings accounts^[4] and one current account^[5] with PNB's Dumaguete City Branch ("PNB Dumaguete") and an account^[6] at PNB's Escolta, Manila Branch ("PNB Escolta"). UPSUMCO also maintained bank accounts with the Bank of the Philippine Islands, Republic Planters Bank, and the Rural Banks of Bais City and Manjuyod, Negros Oriental, the latter two being PNB affiliates at that time.

To monitor UPSUMCO's finances, PNB subsequently assigned a comptroller to UPSUMCO, Dante Santos ("Santos"), who was made signatory to all checks UPSUMCO drew against its current account with PNB Dumaguete. PNB also placed five representatives in UPSUMCO's Board of Directors. Lastly, PNB required UPSUMCO's Directors to bind themselves solidarily liable with UPSUMCO on the loans.

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 ("operational loans"). The Credit Agreements, which also carried set-off clauses,^[7] 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 UPSUMCO's unpaid obligation under the operational loans. The promissory notes^[8] for the funds released under the operational 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 UPSUMCO's sugar assignments and the payments to UPSUMCO's loans, PNB maintained "sugar accounts payable" under UPSUMCO's name.^[9]

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^[10] 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.^[11] This made PHILSUCOR UPSUMCO's creditor to that extent. To secure PHILSUCOR's interest in UPSUMCO, PHILSUCOR agreed that PNB will continue to hold UPSUMCO's collateral for the take-off loans, for itself and PHILSUCOR, to the extent of their pro-rata interest in the event of a foreclosure.

On 8 December 1986, then President Corazon C. Aquino issued Proclamation No. 50^[12] creating respondent Asset Privatization Trust ("APT"),^[13] to among others, "[circumscribe] the areas of economic activities within which government corporations may operate x x x [by disposing and liquidating the] non-relevant and non-performing assets of retained corporations" like PNB. On 27 February 1987, PNB assigned to the Government its "rights, titles, and interests in" several corporations and entities, including UPSUMCO.^[14] The Government then transferred these financial assets to APT under a Trust Agreement.

To quickly dispose of UPSUMCO's mortgaged assets, APT negotiated with UPSUMCO for the mortgages' uncontested or "friendly" foreclosure and for UPSUMCO's waiver of its right of redemption. UPSUMCO accommodated APT. Hence, APT and PNB ("respondents"), the latter as PHILSUCOR's representative, scheduled the foreclosure sale on 27 August 1987. In the notices of foreclosure, PNB placed UPSUMCO's 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.

On 3 September 1987, UPSUMCO "transferred" to APT its right to redeem the foreclosed properties under a Deed of Assignment^[15] which reads in full:

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 Corporation's stockholders in a stockholders' 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"), 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 Title 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 3^rd day of September, 1987.^[16]

On 29 September 1987, APT, in a public auction, sold the foreclosed properties to Universal Robina Sugar Milling Corporation ("URSUMCO") for P500 million. APT and URSUMCO signed the Deed of Sale on 29 December 1987.

On 13 March 1989, UPSUMCO sued respondents in the Regional Trial Court of Bais City, Branch 45 ("trial court"), for sum of money and damages. UPSUMCO alleged that respondents illegally appropriated funds belonging to it, namely: (1) funds on deposit in UPSUMCO's bank accounts with PNB, a portion of which APT allegedly used to pay for the salaries of the mill workers; (2) the proceeds of the sale of UPSUMCO sugar PNB sold in September 1987; and (3) a sum of money respondent APT withdrew from UPSUMCO's account in the Rural Bank of Bais City and placed in an escrow account at PNB Dumaguete. UPSUMCO claimed that it is entitled to recover these amounts as APT had condoned its deficiency obligation. UPSUMCO subsequently amended its complaint to pray for the remittance of the proceeds of all UPSUMCO sugar PNB sold after 27 August 1987 and that respondents' liability be made solidary.

Respondents denied UPSUMCO's claims. PNB contended that as foreclosing creditor, it had the prerogative to place UPSUMCO's accounts in PNB Dumaguete in the name of APT. PNB added that this procedure is based on the set-off clauses provided in the "covering instruments" of UPSUMCO's loans. PNB counterclaimed for damages.

For its part, APT contended that UPSUMCO's claims have been "paid, waived, abandoned or otherwise extinguished." As counterclaim, APT sought payment of the deficiency from the foreclosure sale.

Pending trial, the trial court allowed UPSUMCO to examine the records of PNB relating to UPSUMCO's accounts in PNB Dumaguete and PNB Escolta. In the course of such examination, UPSUMCO found out that, as of latest updating, the credit balance in its five savings accounts in PNB Dumaguete was P1,489,656.80.^[17] For its bank account in PNB Escolta, UPSUMCO learned that as of 26 November 1986, it had a credit balance of P352,869.28 which, however, PNB refused to release. UPSUMCO also discovered the following: (1) on 27 August 1987, PNB transferred to APT's bank account UPSUMCO's deposits from its five savings accounts in PNB Dumaguete amounting to P14,316,593.29; (2) Santos, as APT's comptroller, withdrew the funds in UPSUMCO's bank accounts in the Rural Banks of Bais City and Manjuyod and deposited them to APT's bank account in PNB Dumaguete; (3) from 27 August 1987 to 8 December 1987, PNB credited to APT's bank account, through credit memoranda, the proceeds from the sale of UPSUMCO's sugar amounting to P74,563,823.80; and (4) on 2 September 1987 and 2 October 1987, PNB paid PHILSUCOR P41,407,444.95. UPSUMCO adopted as part of its evidence the documents showing these transfers and payments.


In its Decision^[18] of 27 April 1992, the trial court rendered judgment for UPSUMCO and ordered respondents, singly and solidarily, to pay UPSUMCO, with interest, the following: (1) the credit balance, as of 13 February 1990, in UPSUMCO's five savings accounts in PNB Dumaguete and the deposits from these accounts PNB credited to APT on 27 February 1987; (2) the deposits in UPSUMCO's bank accounts in the Rural Banks of Bais City and Manjuyod Santos transferred to APT; (3) the proceeds of the sale of UPSUMCO sugar PNB transferred to APT from 27 August 1987 to 8 December 1987; (4) the payments PNB made to PHILSUCOR; (5) the credit balance, as of 26 November 1986, in UPSUMCO's bank account in PNB Escolta; (6) the milling plant's maintenance and operating expenses from 3 September 1987 to January 1988 which UPSUMCO paid; and (7) attorney's fees. The trial court also ordered respondents to solidarily pay exemplary damages.^[19] The trial court held:

Crystal[l]izing in simpler terms the facts, it appears that the [UPSUMCO] was both a debtor and depositor[], and that defendant PNB was both a creditor and a depository bank. When Proclamation No. 50 was issued by President Aquino on [December 8, 1986] and defendant PNB executed in favor of defendant APT a deed of assignment of its rights and interest on certain corporations, UPSUMCO's debt was included which indebtedness total[]ed as of June 30, 1987 in the amount of P2,137,076,433.15. Defendants PNB and APT jointly executed foreclosure proceedings against the properties of [UPSUMCO] covered by mortgages and pledges. Prior, on and after the foreclosure proceedings, defendant PNB paid Philippine Sugar Corporation out of [UPSUMCO's] funds and deposits. At the foreclosure sale, on August 27, 1987, defendant APT was the winning bid [sic] in the amount of P450,000,000.00. Thus, deducting the amount of the winning bid, there remained a deficiency balance of P1,687,076,433.15. On September 3, 1987, [UPSUMCO] and defendant APT entered into a Deed of Assignment (Exh. "K") and [the] term[s] substantially stated that in consideration of [UPSUMCO's] [sic] waiving its right of redemption, defendant APT condoned any deficiency amount it may be entitled from the [UPSUMCO].

In finest terms, before the assignment by defendant PNB of its rights, interests, [and] collectibles in favor of defendant APT on February 27, 1987 x x x the role of PNB, was both a creditor and a depository bank. [UPSUMCO] was a debtor and a depositor. After the execution of said Deed of Assignment of February 27, 1987, defendant PNB became an assignor and maintained its status as a depository bank. [UPSUMCO] maintained itself as a debtor and a depositor. However, a third party came in, APT, who was subrogated to the rights of defendant PNB as a creditor.

As its legal effect, the obligation of [UPSUMCO] with defendant PNB was novated by the subrogation of creditors, i.e. defendant APT stepping into the shoes on the creditor's right of defendant PNB. x x x x

[D]efendant PNB's participation in the foreclosure proceedings did not cause retention of the former as a creditor, the same being unnecessary. Legally, as the assignee, and subrogated to the rights of defendant PNB, defendant APT is considered the only foreclosing creditor. Thus, defendant PNB being not a foreclosing creditor, cannot claim to any deficiency claim.

Furthermore, if at all any deficiency claim do exists [sic], regardless as to whether it is in favor of defendant PNB, or defendant APT, the same has been absolutely abandoned or condoned upon the execution of [the] Deed of Assignment between [UPSUMCO] and APT in its initial pleadings may have attempted to becloued [sic] the existence and validity of said Deed of Assignment, [however] in its Memorandum dated February 18, 1992 (p. 716, Records), [APT] clearly admitted its validity and existence with the qualification that the same should not be given retroactive effects [sic] prior to August 27, 1987. But, even admitting in arguendo that either defendant PNB or defendant APT is entitled to deficiency claim, was the procedure in perfecting [sic] such claim followed[?] As of the date of the foreclosure on August 27, 1987, [UPSUMCO] was a creditor as to its deposits and proceeds of sugar sale with the defendant PNB. NEITHER defendant PNB nor defendant APT can[] simply appropriate the things of [UPSUMCO]. (Article 2088, Civil Code of the Philippines). If at all, such deficiency claim did exist and subsist [sic], [the] foreclosing creditor should have initiated proper actions to recover the same, particularly the creditor's interest of [UPSUMCO] in the form of deposits and proceeds of sale with defendant PNB. x x x Defendant PNB did not have any right, as a debtor, to debit the interest of its creditor, [UPSUMCO], by the simple expediency of furnishing [UPSUMCO] of credit memos that the latter's bank deposits have been debited, and credited in favor of defendant APT.^[20] (Capitalization in the original)

Respondents separately appealed to, but raised similar claims in, the Court of Appeals. Respondents took issue with the trial court's finding that UPSUMCO no longer has any unpaid obligations. Respondents claimed that the Deed of Assignment only covered the loans dated 5 November 1974, 24 June 1982, 10 December 1982, and 9 May 1984. Thus, UPSUMCO remains liable for the other loans not mentioned in the Deed of Assignment.


In its Decision of 29 February 1996, the Court of Appeals set aside the trial court's ruling and remanded the case for further proceedings. The Court of Appeals found merit in respondents' claim that the Deed of Assignment condoned only some and not all of UPSUMCO's unpaid obligations. At the same time, the Court of Appeals found that APT failed to show how much UPSUMCO owes it and to account "for all the money which had been transferred to its account," thus the order to remand the case. The Court of Appeals held:

A perusal of the Deed of Assignment plainly shows that what it expressly condoned was any deficiency which APT, as assignee of PNB's rights, may be entitled to recover under the following documents: (1) Credit Agreement dated November 5, 1974 x x x; and (2) the Restructuring Agreements dated: (a) June 24, 1982, (b) December 10, 1982, and (c) May 9, 1984,

There is no ambiguity in the terms of the Deed of Assignment. What APT condoned were the obligations covered by the documents expressly mentioned therein[.] Therefore, UPSUMCO's assertion that said Deed covered all its other obligations with PNB and APT is unfounded. The Deed of Assignment did not in any way include nor mention UPSUMCO's other obligations with PNB subsequently transferred to APT covered by the following instruments or agreements, to wit:

1) Trust Receipts dated August 26, 1987; February 5, 1987; and July 10, 1987;

2) Deed of Assignment By Way of Payment dated November 16, 1984 x x x;

(3) Two (2) documents of Pledge both dated February 19, 1987;

(4) Sugar Quedans x x x;

(5) Credit Agreements dated February 19, 1987 x x x and April 29, 1987 x x x [;]

[6] Promissory Notes dated February 20, 1987 x x x; March 2, 1987 x x x; March 3, 1987 x x x; March 27, 1987 x x x; March 30,1987 x x x; April 7, 1987 x x x; May 22, 1987 x x x; and July 30, 1987 x x x.

x x x x

The provisions [in these instruments] are clear and leave no room for interpretation the Bank has all the right to apply the proceeds of UPSUMCO's deposits with it and its affiliated banks, as well as the proceeds of the sale of UPSUMCO's sugar and molasses, in satisfaction of UPSUMCO's obligations. This right was never waived by PNB and was subsequently transferred to APT by virtue of the Deed of Transfer executed between them (Exh. MM). Neither did APT ever waive such right. Thus, the same should be considered as valid and binding between it and UPSUMCO.

The lower court, in granting [UPSUMCO's] motion for release of the aforementioned deposits, treated the savings deposits of UPSUMCO with PNB and the Rural Banks of Bais and Manjuyod as "ordinary or regular savings accounts." These accounts however are not ordinary. They were opened because UPSUMCO was required to do so in compliance with the mandate of the Credit Agreements x x x. The deposits form part of the additional securities required of UPSUMCO under the Credit Agreements for the release of its additional loan. Consequently, since APT as assignee of PNB enjoyed the privilege to apply the proceeds therefrom in satisfaction of UPSUMCO's obligations and had accordingly applied the same thereto, UPSUMCO cannot validly claim that it still owns the funds deposited in these accounts.

Significantly, if UPSUMCO truly owned these funds, why did it need APT's approval to use or disburse the same while it was acting as caretaker of the mill after the foreclosure? x x x

In view of the foregoing, APT is therefore entitled to have the funds from UPSUMCO's savings accounts with PNB Dumaguete and its affiliated banks transferred to its own account, to the extent of UPSUMCO's remaining obligation, less the amount condoned in the Deed of Assignment and the P450,000,000.00 proceeds of the foreclosure. As transferee of these deposits, APT has the right to use and enjoy these funds as it deems fit, in furtherance of its role under Proclamation No. 50. We find nothing irregular either in the transfer of the proceeds of the sugar sold to APT x x x. As previously mentioned, the obligations secured by these objects were not included in the Deed of Assignment and have not been condoned.

x x x x

On APT's counterclaim that it is still entitled to recover deficiency balance from UPSUMCO, it is not clear from the record how much deficiency balance there is, if any. It is not disputed that as of June 30, 1987, the total obligation of UPSUMCO amounted to P2,137,076,433.15. x x x Thereafter, it applied UPSUMCO's deposits as well as the sugar and molasses sales to UPSUMCO's remaining obligation. However, APT failed to present an accounting of UPSUMCO's entire obligation and the total amount of payments already made. We could not make an award based on conjectures. APT has the duty to prove its claims against UPSUMCO, and the latter is entitled to know how much it already paid and to which obligations these payments were applied.

Finally, although the foreclosure yielded only P450,000,000.00, APT is still duty-bound to render an accounting for all the money which had been transferred to its account as well as the proceeds of the sugar and molasses sale. Only after such accounting has been completed could this Court decide how much it is still entitled to recover from UPSUMCO.

Correlatively, before we could decide on whether any balance remains in favor of UPSUMCO and whether it is entitled to recover the funds expended for the operation of the mill and the wages of the mill workers, the aforementioned accounting should first be completed.^[21] (Emphasis in the original)

UPSUMCO sought reconsideration but the Court of Appeals denied its motion in the Resolution of 29 October 1996.

Hence, this petition. UPSUMCO contends that:

(A) THE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDINGS AND CONCLUSION THAT EXCEPT FOR THE P2,137,076,433.15 PAST DUE OR DELINQUENT ACCOUNTS OF UPSUMCO, COMPUTED AND DETERMINED AS OF JUNE 30, 1987 WITH THE CONFORMITY OF UPSUMCO, WHOSE COLLATERALS WERE EXTRAJUDICIALLY FORECLOSED BY PNB AND APT, UPSUMCO HAS OTHER UNPAID OBLIGATIONS TO PNB WHICH IT SUBSEQUENTLY TRANSFERRED TO APT.

(A-1) AS A SIGNATORY IN THE STATEMENT OF ACCOUNT-SUMMARY COVERING THE PAST DUE ACCOUNTS OF UPSUMCO AS OF JUNE 30, 1987 TO PNB AND PHILSUCOR FOR PURPOSES OF EXTRAJUDICIAL FORECLOSURE [PNB] KNEW IT WAS FULLY PAID OF ITS OPERATIONAL LOANS GRANTED ON PER CROP YEAR BASIS TO UPSUMCO.

(A-2) PNB IS ONLY A NOMINAL PARTY IN THE EXTRAJUDICIAL FORECLOSURE, AS ATTORNEY-IN-FACT OF THE PHILIPPINE SUGAR CORPORATION (PHILSUCOR).

(A-3) KNOWLEDGE OF FOREGOING FACTS PRECLUDED PNB AND APT FROM ALLEGING IN THEIR RESPECTIVE PLEADINGS CLAIMS OR COUNTERCLAIMS CONSTITUTING OTHER UNPAID OBLIGATIONS OF UPSUMCO TO PNB OR APT --- THERE BEING NONE.

(A-4) THE PRE-TRIAL BRIEFS OF PNB AND APT DO NOT RAISE ANY ISSUE CONCERNING OTHER UNPAID OBLIGATIONS OF UPSUMCO TO PNB/APT.

(A-5) NO EVIDENCE OF DEMAND WAS MADE BY PNB AND APT TO ENFORCE COLLECTION OF OTHER UNPAID OBLIGATIONS ON UPSUMCO, IF TRUE.

(A-6) PNB AND APT ALLOWED UPSUMCO UNIMPEDED ENJOYMENT OF ITS DEPOSITS AS AN EXERCISE AND ATTRIBUTE OF OWNERSHIP IN OTHER BANK BRANCHES OF PNB AFTER THE EXTRAJUDICIAL FORECLOSURE, AND IN OTHER BANKS WHERE UPSUMCO HAS BANK DEPOSITS. ACTS WHICH AMOUNTED TO RELEASE AND DISCHARGE OF UPSUMCO'S OBLIGATIONS TO PNB, THENCE TO APT.

(A-7) UPSUMCO PAID ITS CREDITORS FROM BANK DEPOSITS AND SUGAR PROCEEDS MAINTAINED IN PNB, DUMAGUETE CITY BRANCH WITHOUT PNB AND/OR APT OBJECTING. ANOTHER EVIDENCE OF RELEASE OF UPSUMCO FROM ITS REMAINING OBLIGATIONS TO PNB/APT, IF ANY.

(A-8) OF THE ELIMINATION OF PNB'S REPRESENTATION, THENCE APT, IN THE BOARD OF UPSUMCO DURING THE REGULAR ELECTION AT A STOCKHOLDERS' MEETING ON NOVEMBER 11, 1987 WAS ANOTHER INDELIBLE EVIDENCE THAT THE FINDINGS AND CONCLUSION OF THE COURT OF APPEALS WERE PREMISED ON THE ABSENCE OF EVIDENCE AND IS CONTRADICTED BY THE EVIDENCE ON RECORD CONCERNING ITS ERRONEOUS FINDINGS ON "OTHER UNPAID OBLIGATIONS OF UPSUMCO.["]

(A-9) PNB COULD NOT HAVE ASSIGNED OR TRANSFERRED TO APT OTHER LOAN ACCOUNTS OF UPSUMCO OBTAINED THRU QUEDAN FINANCING, BEING CURRENT IN STATUS.

(A-10) CREDIT AGREEMENTS DATED FEBRUARY 19, 1987 AND APRIL 29, 1987 AND ALL OTHER INSTRUMENTS OF INDEBTEDNESS OF UPSUMCO IN 1984 AND 1987 WERE NOT INCLUDED IN THE FORECLOSED AMOUNT OF P2,137,076,433.15 AND WERE NEITHER VALIDLY TRANSFERRED OR ASSIGNED BY PNB TO APT ANYTIME THEREAFTER BECAUSE OF THE STATUTE OF FRAUD[.]

(A-11) CREDIT AGREEMENTS, PROMISSORY NOTES, AND TRUST RECEIPTS WERE FORMALLY OFFERED IN EVIDENCE NOT TO ESTABLISH THE LIABILITY OF UPSUMCO UNDER SAID INSTRUMENTS, BUT FOR DIFFERENT PURPOSES.

(B) THE DECISION OF THE COURT OF APPEALS IS CONTRARY TO THE LAWS ON NOVATION AND COMPENSATION AND THE SETTLED AND APPLICABLE DOCTRINES THEREON WHERE THE TRIAL COURT HAS APTLY AND CORRECTLY APPLIED IN ITS DECISION DATED APRIL 27, 199[2.]

(B-1) THERE IS NO DEFICIENCY BALANCE REMAINING THAT UPSUMCO COULD BE HELD LIABLE TO PAY AS A RESULT OF THE EXECUTION OF THE DEED OF ASSIGNMENT ON SEPTEMBER 3, 1987. AND SHOULD THERE BE ANY, PNB'S RIGHTS UNDER SAID CREDIT AGREEMENTS AND OTHER INSTRUMENTS OF INDEBTEDNESS HAS BECOME FUNCTUS OFFICIO, THAT COMPENSATION WAS NO LONGER PROPER.

(B-2) APT IS NOT ENTITLED TO COMPENSATION OTHERWISE THERE WOULD BE DOUBLE PAYMENT.

(B-3) PNB, AFTER FEBRUARY 27, 1987 COULD NO LONGER INVOKE COMPENSATION[.]

(C) IN FAILING TO AFFIRM THE LIABILITY OF PNB TO UPSUMCO WHEN PNB PAID PHILIPPINE SUGAR CORPORATION (PHILSUCOR) THE TOTAL AMOUNT OF P41,407,444.75 WITHOUT THE KNOWLEDGE AND AUTHORITY FROM THE BOARD OF DIRECTORS OF UPSUMCO.

(D) IN ORDERING THE REMAND OF THE CASE TO THE LOWER COURT WHEN IT COUL[D] HAVE DECIDED THE CASE BASED ON THE EVIDENCE ON RECORD.^[22]

In their respective Comments, respondents claim that the Court should deny the petition outright for raising questions of fact instead of questions of law. Alternatively, respondents maintain that the Court of Appeals did not commit any reversible error.


The petition raises the following issues:

(1) Procedurally, whether the petition should be denied outright for raising factual questions; and

(2) On the merits

(a) Whether UPSUMCO has any outstanding obligations to respondents, and, in the negative,

(b) Whether UPSUMCO is entitled to all the monetary awards the trial court ordered respondents to pay.

The petition has merit. With some modifications, we reinstate the trial court's ruling.


Respondents correctly observe that the petition raises questions of fact instead of questions of law because the issues call for a determination of the truth or falsity of alleged facts and not of what the law is on a certain state of facts.^[23] However, respondents err in concluding that, for this reason, the petition deserves outright denial. Although under Section 1, Rule 45 of the 1997 Rules of Civil Procedure, this Court will resolve only questions of law in a petition for review,^[24] this rule is subject to several exceptions and one of these is when, as here, the lower courts arrived at conflicting findings of fact.^[25] For this reason, we opt to review this case.


UPSUMCO's obligations to PNB, and later, to APT, sprang from two sources (1) the take-off loans to finance the construction of UPSUMCO's milling plant (e.g. the Credit Agreement dated 5 November 1974 as re-structured on 24 June 1982, 10 December 1982, and 9 May 1984) and (2) the operational loans (e.g. Credit Agreements dated 19 February 1987 and 29 April 1987 and the loan under the Deed of Payment by Way of Assignment). As will be shown shortly, we find that UPSUMCO no longer owes respondents under either types of loan.

As of 30 June 1987, PNB placed UPSUMCO's total "mortgage indebtedness" at P2,137,076,433.15.^[26] By APT's own admission^[27] in its counterclaim, this amount in fact represents UPSUMCO's total indebtedness to PNB and APT as of 30 June 1987, thus:

COUNTERCLAIM

19. The total indebtedness of [UPSUMCO] to PNB and APT as of June 30, 1987 was TWO BILLION ONE HUNDRED THIRTY SEVEN MILLION SEVENTY SIX THOUSAND FOUR HUNDRED THIRTY THREE AND 15/100 (P2,137,076,433.15) PESOS, while the assets of [UPSUMCO] were foreclosed and sold for FOUR HUNDRED FIFTY MILLION (P450,000.000.00) PESOS[] only thereby leaving a deficiency balance of ONE BILLION SIX HUNDRED EIGHTY SEVEN MILLION SEVENTY SIX THOUSAND FOUR HUNDRED THIRTY THREE AND 15/100 (P1,687,076,433.15) payable by the plaintiff [UPSUMCO] to the NATIONAL GOVERNMENT[.] (Capitalization in the original; boldfacing supplied) ^[28]

The parties agree that this total obligation was partially paid by the proceeds of the foreclosure sale of P450 million, leaving a deficiency balance of P1,687,076,433.15. It is respondents' claim, which the Court of Appeals sustained, that a portion of this amount remains unpaid because the Deed of Assignment only condoned "any deficiency amount [APT] may be entitled to recover from [UPSUMCO] under the Credit Agreement dated November 5, 1974 and the Restructuring Agreements dated June 24 and December 10, 1988, and May 9, 1984." Thus, the appellate court concluded that the Deed of Assignment could not have condoned UPSUMCO's other obligations under the Credit Agreements dated 19 February 1987 and 29 April 1987 and their ancillary documents (i.e. the Pledges, assignment contracts and promissory notes).

This is error.

Contrary to the Court of Appeals' ruling, we find that the Deed of Assignment fully condoned UPSUMCO's deficiency obligation of P1,687,076,433.15. For clarity in discussion, we reproduce below the Deed of Assignment, 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 Corporation's stockholders in a stockholders' 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"), 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 Title 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, 1987.^[29] (Emphasis supplied)

UPSUMCO's Board Resolution of 3 September 1987, authorizing its President Joaquin Montenegro ("Montenegro") to sign the Deed of Assignment, reads in full:

RESOLVED, That in consideration of the Asset Privatization Trust ("APT") condoning any deficiency amount it may be entitled to recover from the Corporation after having foreclosed the real estate and chattel mortgages assigned to APT, through the National Government, by the Philippine National Bank ("PNB"), which mortgages were executed in favor of PNB by the Corporation to secure its obligations under the Credit Agreement dated November 5, 1974 and the Restructuring Agreements dated June 24 and December 10, 1982, and May 9, 1984, respectively, executed by the Corporation and PNB, the Corporation is hereby authorized to irrevocably sell, assign, and transfer to APT the Corporation's right to redeem the foreclosed real properties covered by Transfer Certificates of Title Nos. T-16700 and T-16701;

RESOLVED, Further that Mr. Joaquin S. Montenegro, the President-Director of the Corporation, be and is hereby authorized for and in behalf of the Corporation to make, sign, execute and/or deliver any and all such agreements, undertakings, or other documents, as well as to perform any and all such acts as may be necessary to implement the foregoing resolution;

RESOLVED, FINALLY That all actions taken by Mr. Joaquin S. Montenegro pursuant to the foregoing resolution be, and the same are hereby confirmed and ratified to be binding on this Corporation.^[30] (Emphasis supplied)

Taken together, these two documents support UPSUMCO's claim that, as stated in its Resolution of 3 September 1987, APT condoned "any deficiency amount it may be entitled to recover x x x after [foreclosing the mortgages securing] the obligations under the Credit Agreement dated November 5, 1974 and the Restructuring Agreements dated June 24 and December 10, 1982, and May 9, 1984." Indeed, the Deed of Assignment should not be treated in isolation but considered in the larger context of the APT initiated "friendly foreclosure" of UPSUMCO's mortgaged assets.

During the trial, it was disclosed that APT offered UPSUMCO the following incentives for the latter to agree to the expedited foreclosure (to enable APT to quickly dispose of the mortgaged properties, as it did sell them to URSUMCO less than a month after the Deed of Assignment's signing): (1) a 5% "preference" or mark-up on UPSUMCO's bid price in the auction sale of the foreclosed properties, or, should UPSUMCO lose in the bidding, a cash payment equivalent to 5% of the winning bid; (2) the waiver of the solidary obligation of UPSUMCO's Directors; and (3) the condonation of any deficiency from the foreclosure sale.^[31] APT made good on its word by releasing UPSUMCO's Directors from their solidary liability, executing the Deed of Assignment, and paying UPSUMCO P25 million in April 1988 (representing 5% of URSUMCO's P500 million winning bid).^[32] Thus, we find unconvincing APT's claim here that the Deed of Assignment condoned only a portion of UPSUMCO's deficiency obligation. Significantly, UPSUMCO and APT's actuations after the signing of the Deed of Assignment are consistent with a full condonation of the former's deficiency liability APT never demanded payment from UPSUMCO and UPSUMCO carried out its affairs as a debt-free corporation.^[33]

Further, the question of whether APT fully condoned UPSUMCO's deficiency obligation had been judicially settled. In United Planters and Sugar Milling Corporation, Inc. v. Philippine Sugar Corporation ("PHILSUCOR Case"), UPSUMCO sued PHILSUCOR also in the Regional Trial Court of Bais City, Branch 45, for "Release and Discharge of Obligation with Damages" to recover, as in this case, a sum of money PNB paid to PHILSUCOR after the foreclosure on 27 August 1987. In its Decision dated 7 March 1994 in Civil Case No. 63-B, the trial court ruled for UPSUMCO, holding that since PHILSUCOR appointed PNB as its foreclosing agent for its proportionate lien in UPSUMCO's mortgaged assets, PHILSUCOR is bound by PNB's assignment of credit to the Government/APT and by APT's subsequent condonation of UPSUMCO's deficiency liability. The trial court held:

Defendant [PHILSUCOR] ha[d] notice of the friendly foreclosure conducted by APT and PNB. x x x x [UPSUMCO] was made to believe that the proceedings were with the participation of APT, PNB and the defendant [PHILSUCOR]. [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].

x x x x

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 [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;
   

x x x x^[34]

(Underlining in the original; boldfacing supplied)

PHILSUCOR appealed to the Court of Appeals but that court affirmed the trial court's ruling in its Decision^[35] dated 15 October 1997 in CA G.R. CV No. 46957, the dispositive portion of which provides:

WHEREFORE, the decision appealed from is AFFIRMED with the MODIFICATION that the defendant-appellant, the PHILIPPINE SUGAR CORPORATION[,] is held liable to plaintiff-appellant, the UNITED PLANTERS SUGAR MILLING [COMPANY], INC., for attorney's fees in the amount equivalent to ten percent (10%) of the award for compensatory damages allowed by the court below.^[36]

PHILSUCOR further appealed to this Court but we dismissed its petition outright in the Resolution of 30 March 1998 in G.R. No. 132731. This ruling became final on 6 August 1998. The doctrine of stare decisis provides that a conclusion reached in one case should, for the sake of certainty, be applied to those which follow, if the facts are substantially the same, even though the parties may be different.^[37] Accordingly, we apply the conclusion in the PHILSUCOR Case here.

Indeed, for us to rule that UPSUMCO still owes respondents, nothing less than concrete and uncontested proof of UPSUMCO's unpaid obligations suffices. Absent such proof, and respondents presented none, we see no reason to remand this case to the trial court to compute UPSUMCO's supposed unpaid obligations, the existence of which is left to inference.


Aside from wiping-out all of UPSUMCO's deficiency obligation, the Deed of Assignment also ended any right PNB and/or APT had to set-off UPSUMCO funds.^[38] Although UPSUMCO and APT signed the Deed of Assignment on 3 September 1987, we hold that its effectivity should properly retroact to the date of the foreclosure on 27 August 1987 considering that the Deed of Assignment was part of the APT-sponsored "friendly foreclosure" of UPSUMCO's assets, entailing UPSUMCO's waiver of its redemption right. Hence, the cut-off date for PNB and/or APT to set-off UPSUMCO funds was 26 August 1987. From 27 August 1987 onwards, all UPSUMCO funds under the control or possession of respondents belonged wholly to UPSUMCO. What PNB did here was (1) pay PHILSUCOR's deficiency claim against UPSUMCO; (2) transfer to APT's account, upon the latter's request, UPSUMCO's bank deposits in PNB Dumaguete; (3) transfer to APT, through credit memos, the proceeds of the sale of UPSUMCO sugar; and (4) appropriate the bank deposit in UPSUMCO's account in PNB Escolta on or after 27 August 1987. Similarly, Santos, as APT comptroller, withdrew funds from UPSUMCO's bank accounts in the Rural Banks of Bais City and Manjuyod and deposited them to APT's bank account in PNB Dumaguete on and after 27 August 1987, respectively.


Accordingly, we affirm the trial court's ruling ordering PNB and/or APT to pay UPSUMCO (1) the credit balance in UPSUMCO's savings accounts in PNB Dumaguete, PNB Escolta, and the Rural Banks of Bais City and Manjuyod, Negros Oriental; (2) the deposits from UPSUMCO's savings accounts in PNB Dumaguete PNB transferred to APT; (3) the proceeds from the sale of UPSUMCO sugar from 27 August 1987 onwards which PNB credited to APT; and (4) the amounts paid to PHILSUCOR. UPSUMCO did not include in its Complaint the last item because it could not have done so, having discovered the documentary evidence on this matter only during the course of the trial after the trial court allowed the examination of PNB's books. However, we agree with the trial court that such falls under UPSUMCO's prayer in its Amended Complaint for the payment of the proceeds of "sugar [PNB] sold and/or liquidated" after the foreclosure on 27 August 1987 as PNB paid PHILSUCOR using funds taken from such sale.^[39]

For the other items awarded to UPSUMCO, the following modifications are in order:

(1) On the trial court's order for APT to pay the cost for the milling plant's maintenance and operating expenses, ordinarily, the mortgagor retains ownership of the foreclosed property during the redemption period,^[40] and thus remains liable for the maintenance expenses. However, in the present case, UPSUMCO waived its redemption right. This had the effect of consolidating ownership over the foreclosed properties to APT effective 27 August 1987, the date of foreclosure. APT's ownership continued until it sold the milling plant to URSUMCO on 29 December 1987. Thus, APT is liable for the milling plant's maintenance and operating expenses only from 27 August 1987 to 29 December 1987.

During the trial, UPSUMCO showed that it paid for the maintenance and operating expenses from 3 September 1987 to "January 1988." UPSUMCO thus waived presenting evidence on the expenses from 27 August 1987 to 3 September 1987. On the other hand, the expenses incurred after 29 December 1987 cannot be charged to APT. Hence, in the execution of this judgment, the trial court is ordered to recompute the amount chargeable to APT covering the period 3 September 1987 to 29 December 1987 only. This does not entail reception of new evidence but only a mathematical computation to proportionately reduce the amount payable taking into account the shortened period;^[41]

(2) On the award of exemplary damages, we also find this appropriate to set an example to creditor banks and their assignees not to trifle with the funds of their depositors or debtors, as the case may be.^[42] However, since exemplary damages cannot be awarded by itself but must be given in addition to moral, temperate, or actual damages, none of which

the trial court awarded,^[43] we further order respondents to jointly and severally pay UPSUMCO nominal damages in the amount of P100,000. This is but proper as respondents clearly violated UPSUMCO's right to enjoy and have control over its deposited funds and the proceeds of the sale of its sugar produce;^[44]

(3) The award of attorney's fees is also in order because UPSUMCO had to incur expenses to protect its interest and of the award of exemplary damages.^[45] However, we reduce the award to P500,000 for which respondents are solidarily liable. If the trial court's order requiring respondents to pay 20% attorney's fees on each of the obligations respondents are held liable singly and solidarily (apparently the rate agreed between UPSUMCO and its counsel), UPSUMCO stands to receive P26,217,744.698, excluding interest and the adjusted amount for the maintenance expenses. This, by any measure, is exorbitant. Under the circumstances, we find the amount of P500,000 as attorney's fees to be more appropriate;^[46]

(4) On the payment of interest, the 12% rate the trial court imposed applies only when the obligation breached consists in the payment of a sum of money i.e. forbearance of money, in the absence of a stipulation. Otherwise the applicable rate is 6% per annum.^[47] Thus, except for UPSUMCO's bank deposits in (1) PNB Dumaguete and Escolta and (2) the Rural Banks of Bais City and Manjuyod, which being forbearance in money, are subject to interest rates of 10%^[48] and 12%^[49] per annum, respectively, the interest rate on all the other monetary awards to UPSUMCO should be reduced to 6% per annum. Upon the finality of this ruling, the rate of interest shall be 12% per annum for the entire judgment, until its satisfaction.^[50]

WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 29 February 1996 and the Resolution dated 29 October 1996 of the Court of Appeals. We REINSTATE the Decision dated 27 April 1992 of the Regional Trial Court of Bais City, Branch 45, with the following MODIFICATIONS:

(1) APT, now the Privatization Management Office ("PMO"), is ORDERED to pay UPSUMCO the maintenance and operating expenses of the milling plant incurred from 3 September 1987 to 29 December 1987 only;

(2) PNB and APT, now the PMO, are ORDERED to jointly and severally pay UPSUMCO nominal damages in the amount of P100,000;

(3) PNB and APT, now the PMO, are ORDERED to jointly and severally pay UPSUMCO attorney's fees in the amount of P500,000; and

(4) The interest rates for the monetary awards relating to UPSUMCO's bank accounts in (a) PNB Dumaguete and Escolta Branches and (b) the Rural Banks of Bais City and Manjuyod are 10% and 12% per annum, respectively, computed from 13 March 1987. All the other monetary awards due to UPSUMCO shall earn interest at 6% per annum also computed from 13 March 1987. Upon the finality of this ruling, the rate of interest for the entire judgment shall be 12% per annum until its payment.

SO ORDERED.

Quisumbing, (Chairperson), Carpio Morales, Tinga, and Velasco, Jr., JJ., concur.

---

^[1] Under Rule 45 of the Rules of Court.

^[2] Penned by Associate Justice Alfredo L. Benipayo with Associate Justices Corona Ibay-Somera and Celia Lipana-Reyes, concurring.

^[3] Covered by Transfer Certificates of Title Nos. T-16701 and T-16700 and measuring 87,154 square meters and 125,804 square meters, respectively.

^[4] Savings Account Nos. 5176994, 5188305, 5192639, 5197762, and 5208578.

^[5] Current Account No. 8300963.

^[6] No. 0120-011088-702.

^[7] The contracts provide:

"The CLIENTS shall open and/or maintain a deposit account with the BANK, and the BANK shall have the right to apply any amount on deposit with it or with any of its subsidiaries or affiliates to the payment of any amount past due hereunder or under any other credit accommodation granted to the CLIENTS by the BANK, including amounts due for advances made by the BANK for insurance premiums, taxes, fees, and other charges."

^[8] Dated 20 February 1987, 2 March 1987, 3 March 1987, 27 March 1987, 30 March 1987, 7 April 1987, 22 May 1987, and 30 July 1987 (Records, pp. 586-593).

^[9] UPSUMCO also executed trust receipts for sugar sold for PNB. Three such trust receipts, dated 5 February 1987, 10 July1987 and 26 August 1987, are found in the records.

^[10] Under Presidential Decree No. 1890, dated 14 November 1983.

^[11] PHILSUCOR bailed out 13 other sugar millers with delinquent PNB accounts. The Court of Appeals in United Planters and Sugar Milling Corporation, Inc. v. Philippine Sugar Corporation (CA-G.R. CV No. 46957) had occasion to discuss in detail the set-up between PNB and PHILSUCOR, thus: "For a clearer appreciation of the x x x agreement [between PHILSUCOR and PNB], it is to be noted that [PHILSUCOR] circulated government-backed indentures through the issuance of high-yielding sugar bonds which are sold in primary markets or in commercial banks to finance the "cash throw-off" in favor of the indebted sugar mills. Under the [agreement], [PHILSUCOR] became a new creditor of UPSUMCO for the principal amount of P262,420 Million Pesos (representing 30% of UPSUMCO's loan outstanding to PNB as of 14 February 1984); the "cash throw-off" refunding of the distressed loans lowered the principal loan outstanding of the sugar mills in PNB but added a variation in the obligation. Under the re-structured loan arrangement, UPSUMCO must continue to service the debt and repay its remaining obligation with the PNB under the original terms and conditions of the credit arrangement to prevent an acceleration of the term-loan maturity and avoid a liquidation of the collectibles of PNB through a recourse against the collateral, while UPSUMCO simultaneously and separately repays its new loan with x x x [PHILSUCOR]. In other words, UPSUMCO must pay two loans: (1) repayment of the amount financed by [PHILSUCOR] for a 30% cash throw-off; and, (2) repayment of the remaining balance on its secured loan in PNB." (Rollo [G.R. No. 132731], pp. 58-59).

^[12] "Proclaiming and Launching a Program for the Expeditious Disposition and Privatization of Certain Government Corporations and/or Assets thereof, and Creating the Committee on Privatization and the Asset Privatization Trust."

^[13] APT's term ended on 31 December 2000 as provided under Republic Act No. 8758. It has since been replaced by the Privatization Management Office ("PMO") created under Executive Order No. 323, dated 6 December 2000.

^[14] Exh. "MM."

^[15] Signed by Johnny Araneta, Associate Executive Trustee of APT, and Joaquin S. Montenegro, UPSUMCO President.

^[16] Records, p. 254.

^[17] UPSUMCO moved for the release of this amount, with interest. Over respondents' objections, the trial court, in its Order of 4 January 1990, granted UPSUMCO's motion and directed PNB to release the deposits in question. On 14 February 1990, PNB paid UPSUMCO P1,950,000.

^[18] Penned by Judge Ismael O. Baldado.

^[19] The dispositive portion of the trial court's ruling provides (Rollo, pp. 214-217):

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of the plaintiff UNITED PLANTERS SUGAR MILLING [COMPANY] (UPSUMCO) and against the defendant[s] PHILIPPINE NATIONAL BANK (PNB) and ASSET PRIVATIZATION TRUST (APT) and the aforesaid defendants are hereby ordered to pay to the plaintiff in the following manner:

1. Both defendant[s] Philippine National Bank and Asset Privatization Trust are ordered jointly and severally to pay to plaintiff the following:
   

(a) the sum of FORTY SIX MILLION NINE HUNDRED EIGHTY SEVEN THOUSAND FOUR HUNDRED FIFTY NINE & 49/100 (P46,987,459.49) PESOS, representing [the] amount transferred by defendant PNB to APT in credit memo dated August 27, 1987 (Exh. "QQ[]"), plus twelve percent (12%) interest per annum computed from date of filing of the complaint;

(b) the sum of FOURTEEN MILLION THREE HUNDRED SIXTEEN THOUSAND FIVE HUNDRED NINETY THREE & 29/100 ([P]14,316,593.29) PESOS, representing the total sum of money withdrawn from Savings Account Nos. 5176994[,] 5188305, 5192639, 5197762, and 520857^[8] of plaintiff and transferred by defendant PNB to defendant APT as shown in debit memo dated August 27, 1987 (Exh. "WW[]-1"), plus twelve percent (12%) interest per annum computed from date of filing of the complaint;

(c) the sum of EIGHTEEN MILLION EIGHT HUNDRED NINETY SIX THOUSAND SEVEN HUNDRED FIFTY THREE & 63/100 (P18,896,753.63) PESOS, representing the proceeds of the sale of plaintiff's sugar credited by defendant PNB in favor of defendant APT as shown in a credit memo dated August 28, 1987 (Exh. "XX"), plus twelve percent (12%) interest computed from date of filing of the complaint;

(d) the sum of THREE MILLION THREE HUNDRED TWENTY THREE THOUSAND SIX HUNDRED FORTY SEVEN & 48/100 (P3,323,647.48) PESOS, representing proceeds of sale of plaintiff's sugar which was credited by defendant PNB to the account of defendant APT as shown by a credit memo dated September 4, 1987 (Exh. "YY"), plus twelve percent interest (12%) per annum computed from date of filing of the complaint;

(e) the sum of FOUR MILLION NINE THOUSAND FOUR HUNDRED THREE & 37/100 (P4,009,403.37) PESOS representing the proceeds of sale of plaintiff's sugar credited by defendant PNB in favor of defendant APT as shown by a credit memo dated September 15, 1987 (Exh. "ZZ"), plus twelve percent (12%) interest per annum computed from date of filing of the complaint;

(f) the sum of THREE HUNDRED FORTY SIX THOUSAND FIVE HUNDRED FIFTY NINE & 83/100 (P346,559.83) PESOS, representing final differential of the sale of plaintiff's sugar for the year 1985-86 which was credited by defendant PNB in favor of defendant APT as shown in a credit memo dated December 4, 1987 (Exh. "AAA[]") plus twelve percent (12%) interest per annum computed from date of filing of the complaint;

(g) the sum of ONE MILLION (P1,000,000.00) PESOS, representing partial payments to the 6,399.89 piculs of export "A" sugar credited by defendant PNB in favor of defendant APT as shown by a credit memo dated December 8, 1987, plus interest at twelve (12%) percentum per annum computed from date of filing of the complaint; (Exh. "BBB")

2. Defendant Philippine National Bank is ordered to pay singly to plaintiff the following:
   

(a) the sum of ELEVEN MILLION EIGHT HUNDRED THIRTY FOUR THOUSAND FOUR HUNDRED NINETY EIGHT & 45/100 (P11,834,498.45) PESOS, corresponding to the payment made by defendant PNB to the Philippine Sugar Corporation as shown in Official Receipt No. 0160 dated September 2, 1987 (Exh. "LLL[L]") plus interest at twelve percent (12%) per annum computed from date of filing of the complaint;

(b) the sum of TWENTY NINE MILLION FIVE HUNDRED SEVENTY TWO THOUSAND NINE HUNDRED FORTY SIX & 50/100 (P29,572,946.50) PESOS, corresponding to payment made by defendant PNB to Philippine Sugar Corporation as shown in Official Receipt No. 0109 dated October 20, 1987 (Exh. "LLL[L]-1"), plus interest at twelve percent (12%) computed from date of filing of the complaint;

(c) the sum of THREE HUNDRED FIFTY TWO THOU[]SAND EIGHT HUNDRED SIXTY NINE & 28/100 (P352,869.28) PESOS, corresponding to the credit balance as of November 26, 1986 of plaintiff's Account No. 0120-011088-702 with defendant PNB (Escolta Branch), plus twelve (12%) percent interest per annum computed from date of the filing of the complaint;

(d) the sum of THIRTY FOUR THOUSAND TWENTY EIGHT & 29/100 (P34,028.29) PESOS, representing [the] balance of deposits of Savings Account Nos. 5176994, 5188305, 5192639, 5197762, 5208578 of plaintiff with defendant PNB as of February 13, 1990 plus twelve percent (12%) interest per annum computed from date of filing of the complaint;

3. Defendant Asset Privatization Trust is hereby ordered to pay singly to plaintiff the following:
   

(a) the sum of THREE HUNDRED NINETY SEVEN THOU[]SAND NINE HUNDRED SEVENTY SIX & 11/100 PESOS (P397,976.11), representing the total balance of plaintiff's Savings Account No. 1196 with the Rural Bank of Bais, Inc., and transferred to account of defendant APT plus twelve (12%) percent x x x per annum computed from date of filing of the complaint;

(b) the sum of FIFTEEN THOUSAND NINE HUNDRED EIGHTY SEVEN & 77/100 (P15,987.77) PESOS representing the total balance of plaintiff's Savings Account No. 3642 with the Rural Bank of Manjuyod, Inc., which was transferred to defendant APT, plus interest at twelve percentum (12%) per annum computed from date of filing of the complaint;

(c) the total sum of FIVE MILLION THREE HUNDRED FIVE THOUSAND SEVEN HUNDRED FIFTY SIX and 22/100 (P5,305,756.22) PESOS representing the expenses incurred by plaintiff for the maintenance and operations of the sugar central after September 3, 1987, plus interest at twelve (12%) percent x x x per annum computed from date of filing of the complaint;

4. Defendant[s] Philippine National Bank and Asset Privatization Trust are hereby ordered to pay jointly and severally x x x attorney's fees x x x equivalent to twenty (20%) percent of the total sum they are ordered to pay jointly and severally;
   
   
5. Defendant Philippine National Bank is hereby ordered to pay singly to plaintiff[] attorney's fees equivalent to twenty (20%) percent x x x of the total sum it is ordered to pay x x x;
   
   
6. Defendant Asset Privatization Trust is hereby ordered to pay singly to plaintiff attorney's fees equivalent to twenty (20%) percent x x x [of] the total sum[] it is ordered to pay x x x;
   
   
7. Both defendants Asset Privatization Trust and Philippine National Bank are ordered to pay jointly and severally to the plaintiff exemplary damages in the amount of FIVE HUNDRED THOUSAND (P500,000.00) PESOS;
   
   
8. Both defendants are hereby ordered jointly and severally to pay costs.
   
9. 
   
10. Counterclaim[s] interposed by both defendants are hereby ordered dismissed.
    

^[20] Rollo, pp. 204, 206-207.

^[21] Id. at 170, 175-176.

^[22] Id. at 52-55.

^[23] McDonald's Corporation v. L.C. Big Mak Burger, Inc., G.R. No. 143993, 18 August 2004, 437 SCRA 10.

^[24] This provision states: "Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth." Section 2, paragraph 2, Rule 45 of the Rules of Court similarly requires that "[o]nly questions of law may be raised in the petition and must be distinctly set forth." (Boldfacing supplied)

^[25] Twin Towers Condominium Corp. v. Court of Appeals, 446 Phil. 280 (2003).

^[26] This was the same amount PNB and APT indicated in the published notices of foreclosure.

^[27] Having been made in the course of the proceedings, this is a judicial admission conclusive on APT (See Solivio v. Court of Appeals, G.R. No. 83484, 12 February 1990, 182 SCRA 119).

^[28] Records, p. 106.

^[29] Id. at 254.

^[30] Exh. "GG."

^[31] TSN, 15 May 1991, pp. 12-13 (Romeo S. Geocadin).

^[32] TSN, 26 July 1991, pp. 8-10 (Joaquin Montenegro).

^[33] On 26 March 1988, UPSUMCO passed Resolution No. 6 seeking, among others, APT's intervention in a case for voluntary insolvency PHILSUCOR filed against UPSUMCO. PHILSUCOR filed the suit to recover its alleged deficiency claim against UPSUMCO. Resolution No. 6 pertinently provides (Exh. "DDDD"):

WHEREAS, the Asset Privatization Trust or APT and the Philippine National Bank or PNB and the United Planters Sugar Milling Company, Inc., or UPSUMCO after a series of negotiations have agreed on the "uncontested" or "friendly" foreclosure of the physical assets of UPSUMCO as mentioned in the petition for extrajudicial foreclosure;

WHEREAS, in these negotiations and uncontested foreclosure, the account of the Philippine Sugar Corporation or [PHILSUCOR] was included in the foreclosure;

WHEREAS, before said foreclosure where APT won as the highest bidder, [PHILSUCOR] was properly informed and did not interpose any objection. In fact, the legal counsel/consultant of [PHILSUCOR], Atty. Jose Sicangco, Jr., has rendered a legal opinion which has influenced the Board of UPSUMCO to go ahead with the foreclosure by APT/PNB;

WHEREAS, after the public bidding where Universal Robina won as the highest bidder, PSC made [a] series of demands to UPSUMCO x x x in the amount of P199 million which demands shocked the Board of Directors;

WHEREAS, APT exercising its powers and authority under Proclamation No. 50 had executed a condonation agreement with UPSUMCO on any deficiency that may arise out of the uncontested foreclosure, and this was confirmed by the letter of the late MR. DAVID SYCIP, Chief Executive Trustee of APT in a letter to Mr. John Gokongwei, copy furnished UPSUMCO, after the award to Universal Robina was confirmed by the COP;

WHEREAS, on February 12, 1988 [PHILSUCOR] filed a case for involuntary insolvency against UPSUMCO before the Regional Trial Court of Makati, Metro Manila docketed as S.P. Case No. M-1709 allegedly because of the non-payment of the deficiency amount;

WHEREAS, UPSUMCO had considered the matter of uncontested foreclosure closed, except the payment of the 5% preference;

WHEREAS, in October, 1987 [PHILSUCOR] allegedly indorsed to APT all its non-performing assets including the properties subject of the uncontested foreclosure of UPSUMCO;

WHEREAS, the early acceptance of the aforesaid indorsement may pave the avenue for the dismissal of the petition for involuntary insolvency, which although frivolous[,] could trigger legal complications;

x x x x

WHEREFORE, the UNITED PLANTERS SUGAR MILLING COMPANY, INC., through its Board of Directors hereunto resolved, as it hereby resolves to appeal to the APT, the following;

1. That the reported non-performing assets of the Philippine Sugar Corporation which were allegedly indorsed to APT be accepted or any internal arrangement between APT/COP and the PSC be agreed at the earliest convenience for the early dismissal of the involuntary insolvency case; x x x x (Capitalization in the original; boldfacing supplied)
   

^[34] Rollo (G.R. No. 132731), pp. 41-43, 46.

^[35] Penned by Associate Justice Ricardo P. Galvez with then Presiding Justice Fidel P. Purisima and Associate Justice B.A. Adefuin-De la Cruz, concurring.

^[36] Rollo (G.R. No. 132731), p. 63.

^[37] Negros Navigation Co., Inc. v. Court of Appeals, 346 Phil. 551 (1997).

^[38] Under Article 1279 of the Civil Code, compensation is proper, if among others, the parties are creditor and debtor of each other. We note that on 27 February 1987, PNB assigned its interests in UPSUMCO to the Government/APT thus ceasing to be UPSUMCO's creditor.

^[39] TSN, 26 July 1991, pp. 45-48 (Joaquin Montenegro).

^[40] See Medida v. Court of Appeals, G.R. No. 98334, 8 May 1992, 208 SCRA 887 (1992).

^[41] We note that although in its Amended Complaint, UPSUMCO only prayed for the reimbursement of expenses for the salaries of the mill workers, UPSUMCO, during the trial, presented evidence for other items of expense (e.g. for material and supplies, taxes, and utilities). As respondents failed to object to the admission of such evidence for not having been alleged in the Amended Complaint, the issue on the payment of these other expenses are deemed to have been raised in the pleadings as provided under Section 5, Rule 10 of the 1997 Rules of Civil Procedure.

^[42] Article 2229 of the Civil Code provides: "Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages."

^[43] The sums of money awarded to UPSUMCO as payment for the funds in its bank accounts and the proceeds of the sale of its sugar are not actual damages as they are neither compensation for what UPSUMCO suffered or lost (daño emergente) nor benefits to which UPSUMCO is entitled (lucro cesante). Further, as a juridical entity, UPSUMCO is not entitled to moral damages (ABS-CBN Broadcasting Corporation v. Court of Appeals, 361 Phil. 499 [1999]).

^[44] Article 2221 of the Civil Code provides: "Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him."

^[45] Article 2208 (1) & (2), Civil Code.

^[46] As an item of damages, attorney's fees under Article 2208 of the Civil Code is awarded to the litigant and not to his counsel (Quirante v. Intermediate Appellate Court, G.R. No. 73886, 31 January 1989, 169 SCRA 769) thus any agreement between the client and his counsel is not controlling (See Corpus v. Cuaderno, Sr., 121 Phil. 568 [1965]).

^[47] Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78.

^[48] As stipulated in the deposit contracts.

^[49] UPSUMCO failed to present evidence on the stipulated rate of interest for these bank accounts.

^[50] Eastern Shipping Lines, Inc. v. Court of Appeals, supra.