THIRD DIVISION[G.R. NO. 126890 : November 28, 2006]UNITED PLANTERS SUGAR MILLING COMPANY, INC. (UPSUMCO),Petitioner,v.THE HONORABLE COURT OF APPEALS, PHILIPPINE NATIONAL BANK (PNB), and ASSET PRIVATIZATION TRUST (APT), as TRUSTEE OF THE REPUBLIC OF THE PHILIPPINES,Respondents.D E C I S I O NCARPIO,J.:The CaseThis is a Petition for Review1of the Decision2dated 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.The FactsPetitioner 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 land3where 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 accounts4and one current account5with PNB's Dumaguete City Branch ("PNB Dumaguete") and an account6at 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,7were 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 notes8for 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.9In 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 created10the 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 PNBP3 billion worth of "sugar bonds" on 14 February 1984. PNB partly paid the bonds by assigning to PHILSUCOR30% of its credit with UPSUMCO, computed as of 14 February 1984.11This 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. 5012creating respondent Asset Privatization Trust ("APT"),13to 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.14The 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" atP2,137,076,433.15, as of 30 June 1987. At the foreclosure sale, APT purchased the auctioned properties forP450 million.On 3 September 1987, UPSUMCO "transferred" to APT its right to redeem the foreclosed properties under a Deed of Assignment15which 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 3rd day of September, 1987.16On 29 September 1987, APT, in a public auction, sold the foreclosed properties to Universal Robina Sugar Milling Corporation ("URSUMCO") forP500 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 wasP1,489,656.80.17For its bank account in PNB Escolta, UPSUMCO learned that as of 26 November 1986, it had a credit balance ofP352,869.28 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 toP14,316,593.29; (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 toP74,563,823.80; and (4) on 2 September 1987 and 2 October 1987, PNB paid PHILSUCORP41,407,444.95. UPSUMCO adopted as part of its evidence the documents showing these transfers and payments.The Ruling of the Trial CourtIn its Decision18of 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.19The 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 ofP2,137,076,433.15. 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 ofP450,000,000.00. Thus, deducting the amount of the winning bid, there remained a deficiency balance ofP1,687,076,433.15. 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.The Ruling of the Court of AppealsIn 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 itexpressly condonedwas 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, 1974x x x; and (2)the Restructuring Agreementsdated: (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 documentsexpresslymentioned 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 xThe 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 Transferexecuted 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 xIn 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 theP450,000,000.00 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 xOn 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 toP2,137,076,433.15. 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 onlyP450,000,000.00, 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 THEP2,137,076,433.15 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 OFP2,137,076,433.15 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 OFP41,407,444.75 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.22In 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 IssuesThe 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 Ruling of the CourtThe petition has merit. With some modifications, we reinstate the trial court's ruling.On Whether the Petition Deserves Outright DenialRespondents 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.23However, 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,24this rule is subject to several exceptions and one of these is when, as here, the lower courts arrived at conflicting findings of fact.25For this reason, we opt to review this case.UPSUMCO Has NoUnpaid Obligations to RespondentsUPSUMCO'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" atP2,137,076,433.15.26By APT's own admission27in its counterclaim, this amount in fact represents UPSUMCO's total indebtedness to PNB and APT as of 30 June 1987, thus:COUNTERCLAIM19. Thetotal indebtednessof [UPSUMCO] to PNB and APTas of June 30, 1987was 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)28The parties agree that this total obligation was partially paid by the proceeds of the foreclosure sale ofP450 million, leaving a deficiency balance ofP1,687,076,433.15. 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 ofP1,687,076,433.15. 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)cralawlibraryUPSUMCO'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 amountit may be entitled to recover from the Corporationafter 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 obligationsunder 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)cralawlibraryTaken 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.31APT made good on its word by releasing UPSUMCO's Directors from their solidary liability, executing the Deed of Assignment, and paying UPSUMCOP25 million in April 1988 (representing 5% of URSUMCO'sP500 million winning bid).32Thus, 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.33Further, the question of whether APT fully condoned UPSUMCO's deficiency obligation had been judicially settled. InUnited 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 xThe doctrine of estoppel x x x, precludes [a party] from repudiating an obligation voluntarily assumed after its having accepted benefits therefrom. x x x xUnder 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. Buag, defendant [PHILSUCOR] did not make any reservation to claim for deficiency after having received its share of the auction sale in the amount ofP58 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 xWHEREFORE, premises considered, this Court renders the following judgment:On Civil Case No. 63-B1. [UPSUMCO] is hereby ordered released and discharged from any and all claims that the defendant [PHILSUCOR] may have against the former;x x x x34(Underlining in the original; boldfacing supplied)PHILSUCOR appealed to the Court of Appeals but that court affirmed the trial court's ruling in its Decision35dated 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.36PHILSUCOR further appealed to this Court but we dismissed its petition outright in the Resolution of 30 March 1998 in G.R. No. 132731.rbl r l l lbrrThis ruling became final on 6 August 1998. The doctrine ofstare decisisprovides 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.37Accordingly, 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.PNB and/or APT's Right to Set-OffUPSUMCO Funds Ended on 26 August 1987Aside 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.38Although 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.On the Monetary Awards UPSUMCO is EntitledAccordingly, 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.39For 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,40and 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.rbl r l l lbrrDuring 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.42However, 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,43we further order respondents to jointly and severally pay UPSUMCO nominal damages in the amount ofP100,000. 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.45However, we reduce the award toP500,000 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 receiveP26,217,744.698, excluding interest and the adjusted amount for the maintenance expenses. This, by any measure, is exorbitant. Under the circumstances, we find the amount ofP500,000 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 moneyi.e.forbearance of money, in the absence of a stipulation. Otherwise the applicable rate is 6%per annum.47Thus, 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%48and 12%49perannum, 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 annumfor the entire judgment, until its satisfaction.50WHEREFORE, weGRANTthe petition. WeSET ASIDEthe Decisiondated 29 February 1996 and the Resolution dated 29 October 1996 of the Court of Appeals. WeREINSTATEthe Decision dated 27 April 1992 of the Regional Trial Court of Bais City, Branch 45, with the followingMODIFICATIONS:(1) APT, now the Privatization Management Office ("PMO"), isORDEREDto 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 ORDEREDto jointly and severally pay UPSUMCO nominal damages in the amount ofP100,000;(3) PNB and APT, now the PMO, areORDEREDto jointly and severally pay UPSUMCO attorney's fees in the amount ofP500,000; andcralawlibrary(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 annumalso 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