G.R. No. 128448 - Spouses Mirasol vs. Court of Appeals

Spouses Alejandro and Lilia Mirasol owned and planted sugarland. In crop year 1973–1974, they produced 70,501.08 piculs of sugar (25,662.36 piculs for export); in 1974–1975, 65,100 piculs (23,696.40 piculs for export).
Philippine National Bank (PNB) financed their crop years 1973–1974 and 1974–1975 under crop‐loan credit agreements, secured by chattel mortgages on standing crops (empowering PNB to negotiate and sell sugar) and real estate mortgages.

In November 1974, P.D. No. 579 authorized Philippine Exchange Co., Inc. (PHILEX) to purchase export sugar at price and quantity fixed by government agencies and the President; PNB could finance PHILEX’s purchases; export profits were to accrue to a special government fund.
For crop years 1975–1976 and 1976–1977, PNB continued crop financing under real estate and chattel mortgages. Petitioners sought PNB accounting for export‐sale proceeds; PNB refused, citing P.D. 579.

Between 1975 and 1982, petitioners incurred additional loans and overdrafts; in August 1977, they conveyed real properties valued at ₱1,410,466 by dacion en pago, leaving a ₱1,513,347.78 overdraft. By August 1982, outstanding obligations reached ₱15,964,252.93. PNB foreclosed mortgaged properties, realized ₱3,413,000, and claimed a ₱12,551,252.93 deficiency.
On August 9, 1979, petitioners filed Civil Case No. 14725 for accounting, specific performance, damages; amended in 1987 to implead PHILEX. They limited issues to (a) constitutionality of P.D.s 338, 579, 1192 and (b) amount due for unliquidated cost of export sugar in crop years 1973–1974 and 1974–1975.

The Regional Trial Court declared P.D. 579 unconstitutional, ordered PNB and PHILEX to pay petitioners the difference between market and ₱180/picul advance price for specified export quantities, plus moral damages (₱50,000) and attorney’s fees (₱50,000), with 12% interest. A 1992 resolution qualified the decision by R.A. 7202 (“Sugar Restitution Law”) benefits.
On appeal (CA-G.R. CV No. 38607), the Court of Appeals reversed: it upheld the validity of the dacion en pago and foreclosure; ordered PNB to render an accounting, recompute indebtedness under R.A. 7202, and apply any excess or deficiency according to that law. A motion for reconsideration was denied.

Petitioners raised five issues:

Trial court’s jurisdiction to declare a statute unconstitutional without notice to the Solicitor General;
Constitutionality of P.D. 579 and its issuances;
Application of piercing the corporate veil doctrine to PNB and PHILEX;
Validity of the foreclosure and dacion en pago;
Failure to award damages based on granted petition.

Whether the Regional Trial Court had jurisdiction to declare P.D. 579 unconstitutional without notifying the Solicitor General.
Whether P.D. 579 and its implementing circulars violate due process or the Takings Clause.
Whether the Court of Appeals erred in refusing to pierce the corporate veil between PNB and PHILEX.
Whether the foreclosure and dacion en pago are void for lack of consideration or duress.
Whether moral damages and attorney’s fees should have been restored based on PNB’s breach of accounting duty.