DISSENTING OPINION

CARPIO, J.:

I maintain my dissent that the remand of this case for the accounting of petitioner United Planters Sugar Milling Company, Inc.s (UPSUMCO) supposed outstanding loans to respondent Asset Privatization Trust (APT)¹c�fa is baseless in fact and in law.chanroblesvirtua|awlibary

Todaysruling reiterates the conclusions of the Resolution dated 2 April 2009²c�fa that:

cralaw(1) UPSUMCO remains indebted to APT (for an undetermined amount) because APT, as assignee of respondent Philippine National bank (PNB), condoned only somebut not all of UPSUMCOs loans, because (a) by its terms, the contract of condonation (Deed of Assignment dated 3 September 1987) mentioned only the "take-off" loans, leaving out the "operating loans"; and (b) the admission of parole evidence modifying the terms of the Deed of Assignment to cover UPSUMCOs "operating loans" owing to APT is improper and, at any rate, UPSUMCO introduced no parole evidence; and

(2) PNBs post-foreclosure diversion of UPSUMCOs bank deposits to APT without UPSUMCOs knowledge or consent was a valid act of "conventional compensation.cra|aw"

Neither the facts of the case nor the law on compensation bears out these conclusions.chanroblesvirtua|awlibary

First. UPSUMCOs "operating loans" (so-called because the proceeds were used to finance its operations) have nothing to do with this case. This case concerns UPSUMCOs post-foreclosure deficiency obligation to APT and the mortgage over the foreclosed properties secured UPSUMCOs "take-off loans" only (so-called because the proceeds were used to build UPSUMCOs milling plant). As summed up in the Resolution of 11 July 2007:

P]NB assigned to APT its "take-off loans" to UPSUMCO x x x, including the mortgages on these take-off loans. PNB did not assign to APT any "operating loans" of UPSUMCO. x x x x On 27 August 1987, APT foreclosed the mortgages on the take-off loans. The foreclosure price was P450,000,000, leaving a deficiency of P1,687,076,433. On 3 September 1987, in consideration of UPSUMCOs assignment to APT of UPSUMCOs right to redeem the foreclosed assets, APT condoned "any deficiency amount" of UPSUMCO after the foreclosure.³c�fa (Emphasis supplied)

Indeed, the "operating loans" remained with PNB and contained their own security mechanisms in the form of pledge agreements obliging UPSUMCO to assign all its produce to PNB which UPSUMCO simultaneously authorized to sell and apply the proceeds to satisfy UPSUMCOs unpaid operating loans.⁴c�fa Thus, the issue on UPSUMCOs supposed unpaid "operating loans owing to APT" is not only factually inaccurate but also alien to this litigation on UPSUMCOs post-foreclosure deficiency obligation to APT arising from the "take-off" loans.chanroblesvirtua|awlibary

The 2 April 2009 Resolution hoists the decision of the Court of Appeals as doctrinal prop for its finding that (1) UPSUMCO owes APT unpaid "operating loans" and (2) this is an issue here. Even a cursory glance at the appealed ruling proves this reliance unfounded. All that the appellate court did to arrive at its ruling (to remand this case for accounting of UPSUMCOs supposed outstanding obligations) was look at the Deed of Assignment, subtract from the mass of UPSUMCO loans the contracts listed in the Deed of Assignment, and hold UPSUMCO liable (for an undetermined amount) for the remaining loans (without specifying whether these were "take-off" or "operating" loans).⁵c�fa The maxim expressio unios est exclusio alterios, not a considered analysis of which loans were secured by the foreclosed properties, won the day for respondents.chanroblesvirtua|awlibary

Indeed, the Court of Appeals could not have passed upon respondents newfangled theory on UPSUMCOs "undetermined liability" for unpaid "operating loans owing to APT," because respondents presented this concoction only with this Court, in their motion for reconsideration of our Decision in 2006 granting UPSUMCOs petition, 18 years after they filed their Answer to UPSUMCOs complaint in the Regional Trial Court of Bais City.⁶c�fa This late-game, last ditch contrivance, made part of Philippine jurisprudence courtesy of the 2 April 2009 Resolution, now provides legal cover for PNBs diversion of tens of millions of pesos of UPSUMCO deposits as alleged payments for UPSUMCOs non-existent "operating loans owing to APT."⁷c�fa

Second. Both the text and context of the Deed of Assignment compel the conclusion that UPSUMCO, as debtor-mortgagor, and APT, as creditor-mortgagee, in executing the Deed of Assignment, intended to cancel UPSUMCOs post-foreclosure deficiency obligation in exchange for UPSUMCOs waiver of its redemption right, allowing APT to dispose of the foreclosed assets without waiting for the expiry of the one-year redemption period.⁸c�fa Indeed, the Deed of Assignment must not be divorced from the negotiated foreclosure which the government pursued following its policy of quickly disposing acquired assets.⁹c�fa

The 2 April 2009 Resolution doubts the reality of this negotiated foreclosure (as it should, because the only way to sustain its finding is to treat the Deed of Assignment as an isolated transaction, devoid of contextual meaning). However, the statements in the 2 April 2009 Resolution that

The earlier rulings of the Court were predicated on a finding that there was a "friendly foreclosure" agreement between APT and UPSUMCO, whereby APT agreed to condone all of UPSUMCOs outstanding obligations in exchange for UPSUMCOs waiver of its right to redeem the foreclosed property. However, no such agreement to that effect was ever committed to writing or presented in evidence. The written agreement actually set forth was not as contended by UPSUMCO.¹⁰c�fa (Emphasis supplied)

would have carried weight if not for the ruling in United Planters and Sugar Milling Corporation, Inc. v. Philippine Sugar Corporation¹¹c�fa that: (1) APT and PNB (representing APTs co-creditor and co-mortgagee PHILSUCOR) conducted a "friendly foreclosure" of UPSUMCOs mortgaged assets; (2) APT condoned UPSUMCOs entire post-foreclosure deficiency obligation under the Deed of Assignment in exchange for UPSUMCOs relinquishment of its redemption right; and (3) because of this full condonation, UPSUMCO is discharged from all claims of its supposed deficiency obligation, including PHILSUCORs suit.¹²c�fa Theres no escaping the import of the following findings (quoted in the Decision of 26 November 2006):

Defendant [PHILSUCOR] ha[d] notice of the friendly foreclosure conducted by APT and PNB. x x x x [UPSUMCO], due to the conduct of the defendant [PHILSUCOR], and the other parties, PNB and APT,] was made to believe that when it assigned its right of redemption, it was in consideration of the condonation of deficiency claims against it including that which pertains to the defendant [PHILSUCOR].chanroblesvirtua|awlibary

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].chanroblesvirtua|awlibary

In fact, according to Atty. Buñag, defendant [PHILSUCOR] did not make any reservation to claim for deficiency after having received its share of the auction sale in the amount of P58 million from APT. x x x However, defendant [PHILSUCOR] left the matter of deficiency balance to APT. x x x But, what happened was that APT condoned said deficiency claim against [UPSUMCO]. x x x x

WHEREFORE, premises considered, this Court renders the following judgment:

On Civil Case No. 63-B

1. [UPSUMCO] is hereby ordered released and discharged from any and all claims that the defendant [PHILSUCOR] may have against the former[.] (Emphasis supplied).¹³c�fa

The Court of Appeals¹⁴c�fa and this Court¹⁵c�fa affirmed United Planters and Sugar Milling Corporation, Inc. v. Philippine Sugar Corporation on successive appeals.chanroblesvirtua|awlibary

Third. The only way for PNB to justify its unilateral diversion of huge sums of depositors money (UPSUMCO) is to claim compensation (otherwise, it would expose itself to, at best, suits to recover the illegally applied funds, as here). Unfortunately for PNB, the law on compensation, as a short-cut to the tedious collection process, is stacked with safety features indispensable to a creditors exercise of this option. Regardless of the type of compensation exercised (that is, whether legal or conventional), the irreducible minimum requirement is that the parties must be creditor and debtor of each other.¹⁶c�fa Otherwise, the remedy for the creditor to satisfy its credit is to initiate collection proceedings.chanroblesvirtua|awlibary

The trouble for PNB is that when it diverted UPSUMCOs deposits starting 27 August 1987 as supposed compensation, PNB was no longer a creditor of UPSUMCOs "take-off loans," having assigned its credit under these loans to APT six months earlier on 27 February 1987. Hence, at the time of the supposed application of payments, PNB had already reverted to its default role as UPSUMCOs debtor, in its capacity as holder of UPSUMCOs bank deposits.¹⁷c�fa

Further, PNB did not use UPSUMCO funds to apply payments for itself but for APT. Thus, what controls is not the law on compensation but the rules on payment by third parties.¹⁸c�fa As we noted in the Resolution of 11 July 2007:

P]NB, in setting-off, acted as a third person using its own funds to pay the debt of UPSUMCO to its creditor APT. PNB can recover from UPSUMCO to the extent that the payment benefited UPSUMCO.¹⁹c�fa (Emphasis supplied)

However, PNB is precluded from invoking this rule because by the time it made the alleged payments to APT (starting 27 August 1987), APT had agreed (in the Deed of Assignment) to wipe-out UPSUMCOs post-foreclosure deficiency obligation (in exchange for UPSUMCOs waiver of its redemption right, allowing APT to immediately sell the foreclosed assets to Universal Universal Robina Sugar Milling Corporation even during the one-year redemption period which UPSUMCO agreed to waive).²⁰c�fa As there were no more debts to pay, none of the alleged payments PNB made to APT benefited UPSUMCO. Thus, UPSUMCO has every right to recover its wrongfully diverted funds.chanroblesvirtua|awlibary

Lastly, PNBs doom is sealed by its retention of UPSUMCOs operating loans, the final factual tug which pulls PNBs theoretical rug from under its feet. Not having assigned these loans to APT (and were thus excluded from the foreclosure proceedings), PNBs belated submission of applying UPSUMCO deposits as payments for UPSUMCOs "operating loans owing to APT" crumbles under the weight of its own inconsistency. The 2 April 2009 Resolutions grounding of "conventional compensation" would have been plausible if PNB had claimed to have applied payments under the "operating loans" for itself. Of course, this argumentative avenue is closed to PNB because every cent of UPSUMCO money that PNB held PNB transferred to APT.chanroblesvirtua|awlibary

Fourth. The 2 April 2009 Resolution spun a tale of a helpless creditor government victimized by a cunning, bullying debtor sugar miller, exacting terms of foreclosure settlement "friendly" to no one but itself, thus justifying the Courts timely succor. This script would have been perfect if it did not mock common sense (government is never bullied), ignore business practice (the creditor always dictates terms of settlement) anddiscard a fact (UPSUMCO was bankrupt). In truth, APT insisted on the deal with UPSUMCO and achieved its goal of immediately selling the foreclosed property.²¹c�fa APT was satisfied with what it got and treated the matter closed until it was made to answer UPSUMCOs suit which, in the first place, UPSUMCOs former owners would not have filed had they not discovered UPSUMCOs nearly depleted bank deposits with PNB.chanroblesvirtua|awlibary

By subscribing to PNB and APTs hastily crafted, incoherent theory of "conventional compensation without mutuality of credits" of undetermined "operating loans owing to APT," the 2 April 2009 Resolution sets a dangerous precedent of babying government (and incidentally its assignor bank), achieved through convoluted analysis of facts and untenable application of the law at the expense of a duly substantiated suit, filed decades ago, to recover wrongfully diverted property. That the 2 April 2009 Resolution did so after the Court had rendered judgment for UPSUMCO and denied APT and PNBs plea for reconsideration makes its disposition all the more unprecedented.chanroblesvirtua|awlibary

Accordingly, I vote to GRANT the motion for reconsideration of petitioner United Planters Sugar Milling Company, Inc., SET ASIDE the Resolution dated 2 April 2009, and REINSTATE the Decision dated 28 November 2006 as modified by the Resolution dated 11 July 2007.

ANTONIO T. CARPIO
Associate Justice

cralaw Endnotes: