A.C. No. 5281 - Lee vs. Tambago

On 5 July 1985, Pacific Banking Corporation (PaBC) was placed under receivership due to insolvency pursuant to Monetary Board Resolution No. 699 issued by the Central Bank of the Philippines.
Following receivership, PaBC was placed under liquidation with a liquidator designated to oversee the process.

On 7 April 1986, the Central Bank, through the Office of the Solicitor General, initiated a petition for assistance in PaBC’s liquidation before the RTC of Manila, Branch 31.
On 17 May 1991, Vitaliano N. NaAagas, President of the Philippine Deposit Insurance Corporation (PDIC), was appointed by the Central Bank as the liquidator.

On 26 June 1992, private respondents Ang Eng Joo, Ang Keong Lan, and E.J. Ang International Ltd.—collectively known as the Singaporeans—filed a claim before the liquidating court.
The Singaporeans, represented by Attorney-in-Fact Gonzalo C. Sy, invoked Republic Act No. 5186 (Investment Incentives Act) to claim their equity investment amounting to US$2,531,632.18 as preferred creditors, along with interest until the closure of PaBC.

On 11 September 1992, Presiding Judge Regino Veridiano II of the RTC directed that the Singaporeans, being foreign investors, were to be treated liberally as preferred creditors and ordered the payment of their principal investment.
The Order deferred the determination of accrued legal interest (or dividends) pending a study and report by the liquidator.
Subsequent motions by the liquidator, including a motion for reconsideration, were denied, and a notice of appeal was later struck off for noncompliance with the prescribed period.

The liquidator’s petition for certiorari before the Court of Appeals was dismissed because the appeal was not perfected on time.
On 13 April 1998, Judge Wilfredo D. Reyes (pairing judge) ordered the release by the Land Bank of funds amounting to US$2,531,632.18 (or its peso equivalent).
On 12 May 1998, Judge Reyes denied motions to halt fund withdrawals and ordered the payment of legal interest at 12% per annum, computed from 15 October 1981 until full payment.
On 15 May 1998, another order directed the release of additional funds from the Philippine National Bank to cover further monetary obligations.

Aggrieved by the subsequent orders and modifications, the Bureau of Internal Revenue (BIR), PDIC, and the liquidator filed a petition for certiorari, mandamus, and prohibition before the Court of Appeals.
The Court of Appeals, in its decision of 31 January 2002, affirmed parts of the orders (including payment of interest at 12% per annum) but modified others—specifically, reducing the period or rate of the interest awarded.
The liquidator subsequently filed a petition before the Supreme Court, raising multiple issues regarding the computation and basis of the awarded interest and the proper dating of its accrual.

The liquidator argued that the interest computed as accrued dividends (or interest) on an equity investment was legally unfounded because dividends can only be declared from profits by the Board of Directors, not automatically as interest.
He contended that no actual breach of obligation occurred since the closure of PaBC was due to mismanagement (akin to a force majeure), hence actual and compensatory damages should not give rise to interest from the time of investment.
The liquidator also raised issues concerning overpayment by showing that the total funds released to the Singaporeans far exceeded their actual principal and accrued interest, thereby suggesting unjust enrichment.

Whether an equity investment in a terminated corporation, such as PaBC, is entitled to accrue interest as actual and compensatory damages from the time of the investment until the bank’s closure.
Whether the classification of the Singaporeans’ investment as equity precludes it from being treated like a loan or forbearance of money, which would ordinarily warrant interest.

Whether the liquidation court was correct in awarding legal interest at 12% per annum from 15 October 1981 and/or applying a separate 6% rate for the period until PaBC's closure.
Whether the interest should accrue from the date of demand (as per Article 1169 of the Civil Code) rather than from the date of the initial investment.

Whether the petition for certiorari filed by the liquidator, although seeking review of the Court of Appeals’ order—mainly an issue of error in judgment—was the proper remedy.
Whether the conversion of the petition into an appeal under Rule 45 of the Rules of Civil Procedure was justified and procedurally proper given the timing of the filing.

The determination of whether there was indeed an overpayment to the Singaporeans, with claims of unjust enrichment when further funds and additional interest were released.
The necessity to recompute the total payments against the actual principal and guaranteed interest, and whether the computation of overpayment was substantiated.