Case Digest (G.R. No. 126890)
Facts:
- The case involves United Planters Sugar Milling Company, Inc. (UPSUMCO) as the petitioner and Philippine National Bank (PNB) and Asset Privatization Trust (APT) as respondents.
- UPSUMCO, a sugar miller in Negros Oriental, secured loans from PNB for constructing its milling plant, backed by real estate and chattel mortgages.
- Loan agreements mandated UPSUMCO to maintain accounts with PNB for settling obligations.
- In the early 1980s, UPSUMCO defaulted on loans due to a decline in the sugar market, leading to the creation of the Philippine Sugar Corporation (PHILSUCOR) to assist distressed millers.
- PNB sold P3 billion in sugar bonds to PHILSUCOR and assigned 30% of its credit with UPSUMCO to PHILSUCOR.
- Proclamation No. 50 established APT on December 8, 1986, to manage non-performing assets of government corporations, including PNB.
- PNB assigned its rights over UPSUMCO to the government, which were then transferred to APT.
- APT conducted a "friendly" foreclosure of UPSUMCO's assets on August 27, 1987, purchasing them for P450 million.
- On September 3, 1987, UPSUMCO executed a Deed of Assignment, transferring its right to redeem the foreclosed properties to APT in exchange for the cancellation of any deficiency owed to PNB.
- UPSUMCO later filed a suit against PNB and APT, alleging illegal appropriation of its funds, including account deposits and sugar sale proceeds.
- The trial court ruled in favor of UPSUMCO, ordering PNB and APT to pay various amounts owed, leading to an appeal and remand by the Court of Appeals.
Issue:
- (Unlock)
Ruling:
- The petition should not be denied outright despite raising factual questions due to conflicting findings from lower courts.
- UPSUMCO has no outstanding obligations to PNB and APT.
- UPSUMCO is entitled to the monetary a...(Unlock)
Ratio:
- The Supreme Court found merit in UPSUMCO's petition, reinstating the trial court's ruling with modifications.
- The Court clarified that UPSUMCO's obligations to PNB and APT arose from two types of loans: take-off loans and operational loans.
- The Deed of Assignment executed on September 3, 1987, effectively condoned UPSUMCO's deficiency obligations, including amounts owed after the foreclosure sale. ...continue reading
Case Digest (G.R. No. 126890)
Facts:
The case involves the petitioner, United Planters Sugar Milling Company, Inc. (UPSUMCO), and the respondents, the Philippine National Bank (PNB) and the Asset Privatization Trust (APT). The events leading to the case began when UPSUMCO, a domestic sugar miller based in Manjuyod, Negros Oriental, obtained loans from PNB to finance the construction of its milling plant. These loans were secured by a real estate mortgage and chattel mortgages over the properties and equipment of UPSUMCO. The loan agreements required UPSUMCO to maintain bank accounts with PNB, which PNB could use to pay any due obligations. By 1987, UPSUMCO had multiple accounts with PNB and other banks.
In the early 1980s, UPSUMCO, along with other sugar millers, defaulted on its loans due to a slump in the sugar market. To address this, the Philippine Sugar Corporation (PHILSUCOR) was created, which issued sugar bonds to help distressed sugar millers. PNB sold P3 billion worth of sugar bonds to PHILSUCOR and assigned 30% of its credit with UPSUMCO to PHILSUCOR.
On December 8, 1986, Proclamation No. 50 was issued, creating APT to manage and liquidate non-performing assets of government corporations, including PNB. Subsequently, PNB assigned its rights over UPSUMCO to the government, which transferred these rights to APT. APT then negotiated a "friendly" foreclosure of UPSUMCO's mortgaged assets, which took place on August 27, 1987, with APT purchasing the properties for P450 million.
On September 3, 1987, UPSUMCO executed a Deed of Assignment, transferring its right to redeem the foreclosed properties to APT in exchange for t...