G.R. No. 126890. UNITED
PLANTERS SUGAR MILLING CO., INC., Petitioner, v. COURT OF
APPEALS, ET AL., Respondents.
Promulgated :
July 11, 2007
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DISSENTING OPINION
Tinga,
J.:
I respectfully dissent from the denial
of the instant Motion for Reconsideration of the Decision dated
The following brief summary of
pertinent facts is drawn from the record. Petitioner United Planters Sugar
Milling Co. (United Planters) obtained two sets of loans from respondent
Philippine National Bank (PNB). The first set of loans, known as “take-off
loans”, were intended to finance the construction of United Planters’ sugar
milling plant. The take-off loans were secured by a real estate mortgage over
two parcels of land where the milling plant stood and chattel mortgages over
the machineries and equipment. Under the “take-off loan” agreements, United
Planters was also obligated to open bank accounts with PNB, the funds of which
PNB could apply to pay any due obligations under these loans. These take-off
loans consisted in particular of the loan agreement dated
The second set of loans, known as
“operational loans,” were contracted between 1984 and 1987, and were intended
to finance the operations of United Planters. These operational loans also
contained setoff clauses relative to the application of payments from United
Planters’ bank accounts, and were also secured by pledge contracts whereby
United Planters assigned to PNB all its sugar produce for PNB to sell and apply
the proceeds to satisfy the indebtedness arising from the operational loans. The
operational loans consisted of a Deed of Assignment by Way of Payment notarized
on
In addition, on
Then in 1986, President Aquino created
the respondent Asset and Privatization Trust (APT), which was formed so that
non-relevant and non-performing assets of government corporations such as the
PNB could be disposed off. On
Even as PNB had already assigned its
interests over United Planters to the Government as of
In the meantime, it appears that APT
and United Planters undertook negotiations concerning the disposal of United
Planters’ mortgaged assets. The Decision stated that the parties then agreed to
an “uncontested or ‘friendly foreclosure’ of these mortgaged assets, in
exchange for United Planters’ waiver of its right of redemption.”[9] The
Decision also stated that “APT and PNB…,the latter as PHILSUCOR’s
representative, scheduled the foreclosure sale on
Then, 7 days after the foreclosure
sale, United Planters executed a Deed of Assignment[12]
wherein it assigned to APT its right to redeem the foreclosed properties, in
exchange for or in consideration of 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 Agreements[s] dated June 24 and
December 10, 1982, and May 9, 1984, respectively, executed between [United
Planters] and PNB…” This Deed of Assignment was executed on
Notwithstanding this Deed of
Assignment, United Planters later filed a complaint[14]
dated
This complaint would be amended one
month after it was filed.[15]
In the original complaint, it was alleged that “after
Interestingly, it appears that the original defense posed by APT and PNB before the RTC tended to disclaim the effect of condonation pursuant to the Deed of Assignment. Both APT and PNB claimed in their respective comments that the extrajudicial foreclosure sale was unconditional and mandatory under Presidential Decree No. 385.[19] They also specifically denied the allegation regarding the execution of
the
Still, during the course of trial, APT
(though not PNB) would eventually admit the existence
of the
Assignment.[22]
However, APT argued that such Deed could not retroact to
The action was eventually decided by the RTC in favor of United Planters. The RTC decision[25] was rooted on the following assumptions:
(1) The obligation of United Planters with PNB under the initial creditor-debtor relation was “novated by the subrogation of creditors, i.e., [APT].”[26]
(2)
The bank accounts maintained by United Planters with PNB created a
creditor-debtor relation, in addition to the same relation (albeit in reversed
identities) between the same parties by reason of the loan agreements. However,
whatever right PNB had to set-off the outstanding indebtedness from United
Planters’ bank accounts ceased the moment PNB assigned its rights to APT on
(3)
Assuming there remained any deficiency claim in favor of PNB or APT, the same
was condoned by the Deed of Assignment dated
In all, PNB and APT were made jointly and severally liable to United Planters for approximately Php88 Million, representing supposed unauthorized transfers from the bank accounts of United Planters, as well as the proceeds from the sale of sugar which PNB assigned to APT. PNB was made singly liable for approximately PhP40 Million for the amount it transferred to PHILSUCOR from the sale of sugar; and APT singly liable for around PhP5 Million for the operational expenses of the sugar mill after 3 September 1987.
The
Court of Appeals set aside the trial court’s ruling, finding in essence that
only the “take-off” loans and not the operational loans were condoned by the
Deed of Assignment. The appellate court
explained that such fact was made plain by the Deed of Assignment itself, which
expressly stipulated the particular loan agreements which were covered therein.[29]
As such, the Court of Appeals concluded that APT was “entitled to have the
funds from UPSUMCO’s savings accounts with [PNB] transferred to its own
account, to the extent of UPSUMCO’s 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.”[30] At
the same time, the Court of Appeals ordered a remand of the case to the RTC for
computation of the parties’ remaining outstanding balances.
The
Court of Appeals was in turn reversed by the Court in its Decision, holding in
main that (1) both “operational loans” and “take-off loans” were condoned by
the Deed of Assignment; and (2) the Deed of Assignment dated
With due respect, I submit that both main conclusions are erroneous. Admittedly, the majority acknowledges error in the first conclusion, but it refuses to accord any meaningful implication to the same.
The
proper scope of the condonation accorded in the Deed of Assignment dated
On Condonation of Take-Off Loans
The
majority now agrees that the Deed of Assignment condoned only the take-off
loans, but not the operational loans. I wish to expound on this point further.
It
bears repeating that the “take-off loans” were established through four loan
agreements: (1) the Credit Agreement dated
In holding that the Deed of Assignment
covered even the “take-off loans”, the Decision cited the provisions of the
Deed itself, as well as the Board Resolution dated
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 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.[33]
Whereas,
United Planters’ Board Resolution of 3 September 1987, authorizing its
President Joaquin 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.[34]
I note that the evidence is indubitable that
at the time of the execution of the Deed of Assignment the parties did not
contemplate to include the operational loans within its coverage at all. The
Deed of Assignment itself clearly limits the consideration of such assignment
to “any deficiency amount [APT] may be entitled to recover from [United
Planters] 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 between the Corporation and the Philippine National
Bank.”[35] The
real properties foreclosed on
Even assuming that the Deed of Assignment was intended to cover even the condonation of the operational loans, the President of United Planters who signed such Deed would not have had the authority to do so, as the Board Resolution authorizing him to sign such Deed specified those “mortgages [executed] in favor of PNB by [United Planters] 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.”[36]
The plain and unambiguous stipulations
in the Deed of Assignment, as confirmed by the equally plain and unambiguous
manifestations in the Board Resolution cannot be superseded by mere theorizing sans supporting evidence.
Article 1370 of the Civil Code mandates that “[i]f the terms of a contract are
clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulations shall control.” Under Section 9, Rule 130
of the Rules of Court, once the terms of an agreement have been reduced to
writing, it is deemed to contain all the terms agreed upon by the parties and
no evidence of such terms other than the contents of the written agreement
shall be admissible.[37]
The language of the Deed of Assignment is clear, explicit and unequivocal that
only the take-off loans were condoned therein, and there is left no room for
contrary interpretation.[38]
Even United Planters, in its present Opposition to the Motion for Reconsideration, admits that its previous “admission under oath of the exclusion of its other obligations to PNB in the Deed of Assignment is not an issue in the instant case because those alleged other obligations were not past due accounts”. This present observation of United Planters highlights as fact that such operational loans were not intended to be included in the Deed of Assignment.
However, both the RTC decision and the Decision failed to consider any distinction between the take-off loans and the operational loans. Both did not point to any evidence on record that established that the operational loans were included in the coverage of the Deed of Assignment. Neither was there any admission on the part of the parties to the Deed that the document contemplated the condonation of both the operational loans and the take-off loans, an admission which if present, could have formed the basis of the tacit conclusion in the RTC and the express assertion in the Decision.
The evidence on record to support the proposition that all of United Planters’ outstanding obligations were condoned by the Deed of Assignment is quite weak. For example, there was a Resolution[39] passed by the Board of Directors of United Planters allegedly in November 1988 (but certified only in December of 1989), whereby the Board resolved to express that “indebtedness and obligations of [United Planters] having been totally condoned including the JSS notes, [United Planters] exclusively retained full and complete ownership of all assets, including all sugar, molasses, chattels, real estate properties, and bank deposits maintained with PNB, Dumaguete City and all its branches nationwide…” Such declaration by the Board of United Planters, self-serving as it is, could not conceivably affirm the total condonation of the corporation’s debts. Moreover, it should be noted that assuming that the Resolution was indeed adopted in November 1988, such came only three (3) months before the filing of the initial complaint by United Planters before the RTC, thus highlighting the self-serving nature of the declaration.
The Decision did advert to a Board Resolution purportedly passed by the Board of Directors of United Planters on 26 March 1988[40], to support the statement that “[United Planters] 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 [United Planters] and [the latter] carried out its affairs as a debt-free corporation.”[41] However, the said resolution did express that APT “had executed a condonation agreement with [United Planters] on any deficiency that may arise out of the uncontested foreclosure. x x x” Again, it should be remembered that the properties which were foreclosed were constituted as security only for the take-off loans, and not the operational loans. Assuming that the self-serving nature of the Resolution can be disregarded, the averments therein do not contradict the fact that only the take-off loans were condoned.
The Decision referred to “disclosures” made during the trial that APT had offered incentives to United Planters for the latter to agree to the friendly foreclosure, such as a 5% markup on United Planters’ bid price or a cash payment equivalent to 5% of the winning bid; the waiver of the solidary obligation of United Planter’s directors; and the condonation of any deficiency from the foreclosure sale.[42] It should be noted that the source of these “disclosures” were the testimonies of the Corporate Secretary[43] and President of United Planters[44], hardly unbiased witnesses. Still, such disclosures do not definitively establish that the condonation extended to the operational loans themselves. What follows is the passage of the testimony of the Corporate Secretary which was relied upon by the Decision:
Q: What do
you mean by friendly foreclosure?
A: Well,
at that time Your Honor, the friendly foreclosure as impressed to us especially
to me and [United Planters President] Mr. [Joaquin] Montenegro because I went to the 10th floor of
IBAA Building, Makati, where the APT was there, was that we will not controvert
or oppose the foreclosure. In return, for
the foreclosure of the physical assets Your Honor, that will be advertised,
[United Planters] will receive minus 5% of the highest bid by APT if we lose in
the bidding. If we win the bid, we will not be awarded the 5% preference on the
basis of the highest bidder. The JSS notes, or joint and solidary obligation of
the planters-directors of [United Planters] will be totally extinguished and
finally that whatever amount remaining
as deficiency balance owing to PNB and [Philsucor] will be waived by APT
who took over all the accountabilities from these two entities, that was the
friendly foreclosure. In return Your Honor, we will waive our right to redeem
the property foreclosed for one (1) year. That one (1) year period was waived.[45]
This excerpt makes it clear that the condonation related to the deficiency balance arising after the foreclosure of the mortgaged properties. The qualification would have been relevant with respect to the operational loans had it been that the mortgaged properties were constituted as security for those loans, and not the take-off loans. Yet since the foreclosed properties secured only the take-off loans, the resulting condonation of the deficiency balance would affect only the take-off loans, and not the operational loans.
As it is evident that the operational loans were not condoned by the Deed of Assignment, it follows that United Planters remained obligated to repay such loans. It is on this point that I disagree with the majority, which continues to insist that there can be no conclusion that “UPSUMCO must still pay PNB under the operational loans”.[46] The majority reasons that PNB failed to prove that United Planters still owed PNB under the operational loans.
We should remember that though it was the position of United Planters from the beginning that by reason of the Deed of Assignment, it was wholly acquitted from any further obligations to PNB and United Planters.[47] As such, the burden was on United Planters to establish such fact, and an ultimate finding that the operational loans were actually not condoned indicates that United Planters had failed to discharge such burden. Only the Deed of Assignment, which was limited in coverage to take-off loans, was presented by United Planters as basis for the extinguishment of its obligations to PNB and APT.
What the majority is now saying is that the evidentiary burden that is determinative of the case actually fell on the defendants, PNB and APT, in that they had the burden of establishing that the operational loans still subsisted. The point fails to redeem the fact that United Planters, as plaintiff, failed to discharge its own evidentiary burden, contrary to the allegations of its complaint, it was not established that all of its outstanding accounts with PNB and APT were condoned. The prayers of United Planters, as well as the reliefs granted by the RTC, were predicated on the conclusion which the majority finds erroneous that all the loans were condoned under the Deed of Assignment.
Had the RTC correctly appreciated the limited extent under which the Deed of Assignment condoned the obligations of United Planters, it would not have rendered the decision which the majority now reaffirms even as it recognized that the RTC’s legal conclusion was indeed wrong. Courts simply do not award money claims without legal grounds, and the premises on which the RTC made the awards to United Planters were, as the majority admits, wrong. In the case at bar, while it appears that the Deed of Assignment had made the condonation operative, there is ultimate uncertainty as to the amount condoned owing to the subsistence of the operational loans.
There
is thus much prudential wisdom in the remand order of the Court of Appeals for
the determination of the amount of outstanding balances due from the
operational loans, which were not condoned in the Deed of Assignment in the
first place. With such result, there
will be assurance that United Planters will be financially restituted to the
extent that it was wrongfully deprived, to the exclusion of those amounts which
were rightfully retained and applied by PNB and APT. A remand will not necessitate the
introduction of new evidence, as the documentary proof, as contained in the
voluminous record, was already submitted during trial. Unfortunately, the RTC then did not bother to
evaluate the evidence following the correct legal premises, relying extensively
instead on the representations of United Planters. A remand will give the RTC the opportunity to properly exercise its duties as
trier of fact.
On Retroactivity of Deed of Assignment
Certainly, the fact that the operational loans were not condoned under the Deed of Assignment is sufficient basis to sustain the assailed decision of the Court of Appeals as its tenability is hinged on the same foundation. However, there is another assertion in the Decision that warrants explicit rectification; otherwise, it would ultimately serve as the premise for an erroneous legal result.
I
refer to the assertion in the Decision that the Deed of Assignment, which was
executed on
The
Decision held that the condonation through the Deed of Assignment executed on
Any conclusion that the condonation was, along with the foreclosure sale, part and parcel of the so-called “friendly foreclosure agreement” would have been bolstered by certain incontrovertible factual circumstances, such as if the Deed of Assignment were executed simultaneously with the foreclosure sale. But that was not the case. Still assuming that there was in place an agreement for “friendly foreclosure,” the mere existence thereof would not necessarily translate into a conclusive finding that the condonation had taken effect even before, that is as of the date of the foreclosure sale. Indeed, no terms of retroactivity appear in the Deed of Assignment.
The
majority further contends that the
amount condoned is “any deficiency amount” which is “determined by simple
arithmetical computation immediately after the foreclosure.” Yet the Deed of
Assignment does not state any reference as to when such deficiency amount is to
be ascertained. There is always the possibility that the debtor may opt to make
further payments even after the foreclosure sale, with the remaining amount
after such further payments characterized still as the “deficiency amount.”
The
ascertainability of the deficiency amount cannot be equated, as the majority would
have it, with the alleged retroactivity of the condonation subject of the deed
of assignment. The claim begs the question. What was condoned is whatever was
the deficiency amount as of the date of the deed of assignment.
Indeed, there is utterly no basis to presume ipso facto that the term “any deficiency amount” had the effect of retroacting the Deed of Assignment to a week prior to its execution. A finding that the condonation effected in the Deed of Assignment retroacted to the date of the foreclosure sale would go against established rules of evidence. 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.[49] Assuming that the Deed of Assignment failed to accurately reflect an intent of the parties to retroact the effect of condonation to the date of the foreclosure sale, none of the parties, particularly United Planters, availed of its right to seek the reformation of the instrument to the end that such true intention may be expressed.[50]
In
fact, the original complaint filed by United Planters had alleged that it was
only “after
Notably,
among the documentary evidence presented by United Planters, only one document
was offered for the purpose of establishing that the “condonation retroacts to
the date of auction [s]ale (sic)
There
also appears on record certain seeming admissions on the part of a lawyer of
APT that are injurious to respondents’ cause. In its Motion for Partial
Execution of Judgment Pending Appeal filed before the Court of Appeals,[54]
United Planters referred to a letter dated 7 December 1994 by the Solicitor
General to APT. Therein, the Solicitor General noted that one of that
institutions’ lawyers, a Jose M. Suratos, Jr., had admitted that “PNB had no
right to transfer [United Planters’]s funds deposited with the bank after
February 27, 1987.”[55] Such “admission” was cited to favor a proposed
settlement of the case. However, such “admission” cannot be accorded
evidentiary weight by this Court. For one, its admissibility as evidence is
highly questionable considering that the letter is a privileged communication
between attorney and client. How United Planters even acquired possession of a
copy of the letter is in fact suspicious. Moreover, this letter was submitted not
to the RTC, but to the Court of Appeals, and not during the trial of the case
at that. The rule in appellate procedure is that a factual question may not be
raised for the first time on appeal, and documents forming no part of the
proofs before the appellate court will not be considered in disposing of the
issues of an action.[56]
Indeed,
there is no preponderance of evidence to establish United Planters’ bare
allegation that the Deed of Assignment dated
What the RTC instead concluded was that as of the date of the foreclosure sale, and prior to the Deed of Assignment, APT as creditor was not entitled to “simply appropriate the things of the plaintiff” following Article 2088[57] of the Civil Code, and assuming that such deficiency claim did exist, “the foreclosing creditor should have initiated proper actions to recover the same.”[58]
The majority also dwells on this right of set-off, insisting in the end that PNB had no right to set-off from the accounts of United Planters. Such conclusion, even if correct, is ultimately misplaced in the appreciation of this case.
To evaluate the question of set-off, a closer analysis of the take-off loans and the securities constituted with them is in order. The RTC correctly observed that with the take-off loans and the corresponding creation of the bank accounts, there existed a mutual creditor-debtor relationship between PNB and United Planters. Such would allow the set-off or compensation of the latter’s outstanding obligations to the former from the latter’s bank accounts, congruently with Article 1278[59] of the Civil Code, and as expressly stipulated in the take-off loan agreements.
PNB then assigned all its rights, titles and interests over United Planters to APT by way of the Deed of Assignment. As between United Planters and APT or PNB and APT, there no longer existed the mutual creditor-debtor relationship. The RTC appreciated this fact leading to the conclusion that since PNB was no longer a debtor of United Planters, the bank no longer had the right to set-off payments from the bank deposits, and that whatever disbursements made by PNB in favor of APT and Philsucor “should not be considered money or funds taken from or belonging to [United Planters].”[60] This is the conclusion which the majority dwells upon.
At the same time, it cannot be denied that APT had a right to go after the bank deposits of United Planters, in its capacity as the creditor of the latter. The RTC had claimed that by virtue of PNB’s Deed of Assignment, there took place conventional subrogation under the Civil Code,[61] whereby APT as the subrogee was vested with all the rights of the PNB covered by the deed thereto, either against the debtor or against third persons.[62] I am not as certain whether conventional subrogation could be deemed as having taken place, since such requires “the consent of the original parties and of the third person.”[63] There is no evidence on record that the consent of the debtor United Planters was secured, and the fact is that the assignment by PNB to APT arose by mandate of law and not the volition of the parties.
However, even if conventional subrogation did not take place, there was still a perfected assignment of credit as between PNB and APT, under Article 1624[64] of the Civil Code. The assignment of a credit includes all the accessory rights, such as a guaranty, mortgage, pledge or preference.[65] By virtue of the assignment of credit, APT was entitled to pursue the rights and remedies granted to the previous creditor, PNB. Could such rights extend to PNB the right to set-off payments?
It might seem that APT has no right to set-off payments with United Planters for under Article 1279 (1), it is necessary for compensation that the obligors “be bound principally, and that he be at the same time a principal creditor of the other.”[66] There is, concededly, no mutual creditor-debtor relation between APT and United Planters. However, our jurisdiction recognizes the concept of conventional compensation, defined as occurring “when the parties agree to compensate their mutual obligations even if some requisite is lacking, such as that provided in Article 1282.”[67] It is intended to eliminate or overcome obstacles which prevent ipso jure extinguishment of their obligations.[68] Legal compensation takes place by operation of law when all the requisites are present, as opposed to conventional compensation which takes place when the parties agree to compensate their mutual obligations even in the absence of some requisites.[69] The 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.[70]
I submit that the right of PNB to set-off payments from United Planters arose out of conventional compensation rather than legal compensation, even though all of the requisites for legal compensation were present as between those two parties. The determinative factor is the mutual agreement between PNB and United Planters to set-off payments. Even without an express agreement stipulating compensation, PNB and United Planters would have been entitled to set-off of payments, as the legal requisites for compensation under Article 1279 were present.
Once PNB assigned its credit to APT, the mutual creditor-debtor relation between PNB and United Planters ceased to exist. However, PNB and United Planters 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. Thus, the absence of the mutual creditor-debtor relation between the new creditor APT and United Planters cannot negate the conventional compensation.
Accordingly,
APT, as the assignee of credit of PNB, had the right to set-off the outstanding
obligations of United Planters on the basis of conventional compensation before
the condonation took effect on
It cannot be denied that the Filipino
people and the Republic of the P500,000 Million, which is less than one-fourth the
amount of the total indebtedness of United Planters.
Even if there is no issue before us
concerning the validity of the condonation agreement between APT and United
Planters, an agreement which the parties concede did happen, the palpable
damage produced by the arrangement to the State should serve caution against
the reflexive affirmation of the resulting favors received by United Planters.
Our jurisprudence, reflecting Article 1378 of the Civil Code, has pronounced
that “in case of doubt in the circumstances surrounding the execution of a
contract, as in this case, the least transmission of rights and interests shall
prevail if the contract is gratuitous and, if onerous, the doubt shall be
settled in favor of the greatest reciprocity of interests.”[71] The Deed of Assignment is free from doubt that
the condonation covered only the take-off loans, and that the condonation took
effect only on
I VOTE to GRANT the Motions for
Reconsideration and to reinstate the decision of the Court of Appeals dated
DANTE
O. TINGA
Associate Justice
[24]Otherwise known as the parol evidence rule. The provision reads in part: “Evidence of written agreements—when the terms of an agreement have been reduced to writing, it is to be considered as containing all such terms, and, therefore, there can be, between the parties and their successors-in-interest, no evidence of the terms of the agreement other than the contents of the writing”
[35]See note 33.
[37]See
Revised Rules of Court, Rule 130,
Sec. 9. See also Gaw v. IAC, G.R. No.
70451.
[43]Romeo S. Geocadin. See rollo, p. 838. Geocadin is also counsel for United Planters in the present petition, see id. at 150, and the person who verified the petition, see id. at 151.
[47]See p. 4, Amended Complaint (RTC records, p. 46.), where United Planters alleged that “among the conditions of the ‘friendly foreclosure’ are: (A) That all the accounts of [United Planters] are condoned, including the JSS notes at the time of the public bidding.”
[53]See
Plaintiff’s Offer of Exhibits dated
[56]Matugas v. COMELEC, 465 Phil. 299, 312
(2004), citing Telephone Engineering
& Service Co.,
[57]“The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void.”
[59]“Compensation shall take place when two persons, in their own right, are creditors and debtors of each other.”
[64]“An assignment of credits and other incorporeal rights shall be perfected in accordance with the provisions of Article 1475.
[67]See A. Tolentino, IV The Civil Code, p. 366; citing 2 Castan 562. Art. 1282 allows that “the parties may agree upon the compensation of debts which are not yet due,” a deviation from the requisite of compensation that “the two debts be due”.
[70]See CKH Industrial v. CA, 338 Phil. 837, 853 (1997); citing IV Tolentino, Civil Code of the Philippines, 1985 ed., p. 368.
[71]Cruz v. Court of Appeals, 459 Phil. 264,
279 (2003). “Thus, in the early case of Olino v. Medina, 1909, Olino filed a
complaint against Medina to recover a parcel of riceland which he alleged to
have mortgaged for P175.00 and which Medina refused to return on the
ground that the latter allegedly bought the property. In deciding the conflict
of allegations between the parties, this Court, through Justice Florentino Torres,
considered the transaction over the property as a loan, reasoning that ‘such
contract involves a smaller transmission of rights and interests, and the
debtor does not surrender all rights to his property but simply confers upon
the creditor the right to collect what is owing from the value of the thing
given as security, there existing between the parties a greater reciprocity of
rights and obligations.’” Labasan v.
Lacuesta, No. L-25931,