Case Summary (G.R. No. 207004)
Petitioner, Respondent, and Procedural History
Petitioners sought implementation of Republic Act No. 7202 (Sugar Restitution Law) against PNB, claiming entitlement to credit and restitution of proceeds from two agricultural lots sold under the Comprehensive Agrarian Reform Program (CARP). The Regional Trial Court (RTC) ruled in their favor in 2004, awarding restitution, reconveyance of a residential lot, moral and exemplary damages, attorney’s fees, and costs. The Court of Appeals (CA) reversed in 2012, dismissing the complaint, and denied reconsideration in 2013. The Supreme Court granted the petition and affirmed the CA.
Key Dates
– Loan foreclosure: 1985
– RA 7202 enacted: February 29, 1992
– Requests and correspondence: 1995–2000
– RTC decision: December 10, 2004
– CA decision: March 23, 2012; resolution denying reconsideration: April 1, 2013
– Supreme Court decision: June 6, 2018
Applicable Law
– 1987 Constitution of the Philippines
– Republic Act No. 7202, “Sugar Restitution Law” and its Implementing Rules and Regulations (IRR)
– Civil Code Articles 19 (good faith) and 21 (moral damages)
Factual Background and Claims
The late spouses Aguilar obtained sugar-crop loans from PNB, secured by four registered lots. Upon their default, PNB foreclosed in 1985 and consolidated title under its name. Under RA 7202, the spouses sought recomputation and restructuring of their obligations and restitution of any excess payment. Two agricultural lots were conveyed to the Department of Agrarian Reform (DAR) and sold through Land Bank of the Philippines, generating proceeds of ₱3,212,012.48. Petitioners alleged PNB agreed to apply those proceeds against their account and return any excess, including reconveying a residential lot.
RTC Decision
The RTC held that under RA 7202 petitioners were entitled to: (1) credit the DAR sale proceeds as payment; (2) restructure the remaining balance over 13 years; and (3) reconvey the residential lot upon full satisfaction. The court found PNB acted in bad faith for refusing to apply those proceeds and awarded moral damages of ₱100,000, exemplary damages of ₱50,000, attorney’s fees of ₱50,000, and litigation expenses of ₱10,000.
Court of Appeals Ruling
The CA recognized that the Aguilars’ crop loans fell within RA 7202’s coverage but held that PNB’s recomputation—certified by the Commission on Audit—showed no excess payment after condonation of interest above 12% per annum, penalties, and surcharges. Under Sections 6, 7, and 9 of the IRR, only sugar producers with net excess payment after recomputation are entitled to restitution. The CA concluded foreclosing the mortgaged collateral fully satisfied the loan and dismissed the complaint.
Issue on Appeal
Whether the CA erred in excluding from the Aguilars’ loan account the proceeds of the DAR sale of their agricultural lots. Petitioners argued those sums should reduce their outstanding balance, producing a surplus of ₱975,674.57, which PNB should return, and that PNB’s inconsistent treatment of similarly situated borrowers (the Pfleiders) demonstrated bad faith.
Supreme Court’s Analysis on Restitution
The Supreme Court held that RA 7202 and its IRR neither mandate crediting CARP proceeds as direct “loan payments” in recomputation nor require reconveyance of foreclosed property. Under Section 6 of the IRR, only excess interest, penalties, and surcharges are offset against loan obligations. Since PNB’s audited recomputation revealed no excess payment, petitioners had no statutory right to
...continue readingCase Syllabus (G.R. No. 207004)
Procedural Posture
- Petition for review under Rule 45 of the Rules of Court assails:
• CA Decision dated March 23, 2012 in CA-G.R. CV No. 00708 reversing the RTC Decision dated December 10, 2004 in Civil Case No. RTC-725;
• CA Resolution dated April 1, 2013 denying motion for reconsideration. - Petitioners seek implementation of RA 7202 (Sugar Restitution Law) benefits plus damages and costs.
- PNB counterclaimed for moral and exemplary damages, attorney’s fees and litigation expenses.
Facts and Antecedent Proceedings
- Late spouses Romulus and Evelyn Aguilar obtained sugar crop loans (late 1970s–early 1980s) from PNB–Victoria Branch, secured by real estate mortgages on four registered parcels in Negros Occidental (one residential lot, three agricultural lots).
- Foreclosure of mortgage in 1985, consolidation of all four parcels under PNB’s name.
- RA 7202 enacted February 29, 1992 to restitute sugar producers’ losses.
- Romulus wrote PNB on July 5, 1995 requesting reconsideration under Sugar Restitution Law; he died January 10, 1996.
- Evelyn received PNB letter (September 17, 1997) requiring:
• Restructuring arrangements within 60 days;
• Conformity to computation;
• Submission of ten‐year crop production data. - Petitioners claim compliance; PNB furnished COA-audited statements of account (Dec 15, 1996 to Nov 30, 1999) showing P2,236,337.91 total due.
Movements Regarding CARP Proceeds
- PNB conveyed agricultural lots to DAR; advised petitioners to follow up with LBP so PNB could apply sale proceeds to loan.
- LBP Memoranda of Valuation:
• Lot 3749 valued at P 1,254,328.17 (Dec 21, 1998);
• Lot 3587 valued at P 1,957,684.31 (Nov 23, 1999). - Glenn Aguilar wrote PNB (Feb 8, Mar 15, Apr 24, 2000) seeking RA 7202 benefits, citing similar Pfleider case.
- PNB reply (Sept 22, 2000): as owner of foreclosed properties, it may convey to DAR and receive proceeds without liability for any excess to petitioners.
RTC Decision
- Dismissed PNB’s counterclaim.
- Ordered:
• Grant RA 7202 benefits;
• Credit VOS proceeds of agricultural lots (Lots 3587, 3588, 3749) to petitioners’ account;
• Shortfall payable over 13 years at RA 7202 interest; excess proceeds delivered to petitioners;
• Upon full payment, reconvey residential Lot No. 3 to petitioners. - Awarded P100,000 moral damages; P50,000 exemplary damages; P50,000 att