LCK Industries vs Planters Development Bank.docx

7/24/2019 LCK Industries vs Planters Development Bank.docx

http://slidepdf.com/reader/full/lck-industries-vs-planters-development-bankdocx 1/16

THIRD DIVISION

[G.R. NO. 170606 : November 23, 2007]

LCK INDSTRI!S INC., CHIKO LI" #$% !LI&'(!TH T.LI", Petitioners, v. )L'NT!RS D!V!LO)"!NT

('NK, Respondent .

D ! C I S I O N

CHICO*N'&'RIO, J.:

Before this Court is the Petition for Review on Certiorari under Rule45 of the Revised Rules of Court filed by petitioners LCK IndustriesInc. (LCK, Chi!o Li" #nd $li%#beth Li", see!in& the revers#l #ndthe settin& #side of the 'ecision d#ted )pril *++5 #nd theResolution* d#ted * -ove"ber *++5 of the Court of )ppe#ls in C)/.R. C0 -o. 1244. 3he #ppell#te court, in its #ss#iled 'ecision #ndResolution, reversed the 'ecision2 of the Re&ion#l 3ri#l Court (R3Cof ue%on City, Br#nch , d#ted 2 6epte"ber *++, in Civil C#se-o. 2225, which found respondent Pl#nters 'evelop"entB#n! (respondent b#n! li#ble for the #"ount of P,57,47.71,representin& overp#y"ent.

Petitioner LCK is # do"estic corpor#tion duly or&#ni%ed #nd e8istin&#s such under Philippine l#ws.4

Respondent b#n! is # b#n!in& institution duly #uthori%ed to en&#&ein b#n!in& business under Philippine l#ws.5

9n 6epte"ber 5,petitioner LCK obt#ined # lo#n fro" therespondent b#n! in the #"ount of P2,+++,+++.++ #s evidenced bytwo pro"issory notes.7

)s # security for the lo#n obli&#tion, petitionersspouses Chi!o #nd$li%#beth Li" e8ecuted # Re#l $st#te :ort&#&e over # p#rcel of l#ndcovered by 3r#nsfer Certific#te of 3itle (3C3 -o. 327*2,re&istered under their n#"es #nd loc#ted #t ue%on City, with #n#re# of 7 s;u#re "eters (ue%on City property.1 L#ter on, to

http://www.chanrobles.com/scdecisions/jurisprudence2007/nov2007/gr_170606_2007.php#fnt1
















secure the s#"e obli&#tion, #nother Re#l $st#te :ort&#&e w#se8ecuted over #nother p#rcel of l#nd covered by 3C3 -o. 37*112,#lso re&istered under the n#"es of the petitionerspouses, with #n#re# of 1 s;u#re "eters loc#ted #t B#&uio City (B#&uio City

property.

6ubse;uently, petitioner LCK incurred def#ult in its p#y"ent< thus,"#!in& the obli&#tion due #nd de"#nd#ble. 6ever#l de"#nds werethere#fter "#de by the respondent b#n! to no #v#il. 9n 2 9ctober1, # fin#l letterde"#nd w#s sent by respondent b#n! topetitioner LCK #s!in& for the p#y"ent of its obli&#tion in the#"ount of P*,7*,5++.++. 6uch fin#l de"#nd notwithst#ndin&,petitioner LCK f#iled or refused to p#y its obli&#tion.

Conse;uently, respondent b#n! c#used the e8tr#=udici#l foreclosureof the B#&uio City property which w#s sold #t the public #uctionfor P*,7*5,+++.++ #s shown in the Certific#te of 6#le+ d#ted *>#nu#ry . 6ince the proceeds of the foreclosed B#&uio Cityproperty were not enou&h to s#tisfy the entire lo#n obli&#tion which#"ounted toP*,7*,5++.++, respondent b#n! further c#used thee8tr#=udici#l foreclosure of the ue%on City property. )s evidencedby the Certific#te of 6#le d#ted :#rch , si&ned by -ot#ryPublic )tty. )llene )ni&#n ()tty. )ni&#n, the foreclosed ue%on City

property w#s sold #t # public #uction for P*,*2,47.71. 3herespondent b#n! w#s the hi&hest bidder on both occ#sions.

Prior to the #uction s#le of the ue%on City property on :#rch, petitioners, on * :#rch , filed with the R3C of ue%onCity, Br#nch , #n #ction for )nnul"ent of the ?oreclosure of:ort&#&e #nd )uction 6#le of the ue%on City property withRestr#inin& 9rder@Preli"in#ry In=unction #nd with '#"#&es #&#instrespondent b#n! #nd )tty. )ni&#n.* 3he c#se w#s doc!eted #s CivilC#se -o. 2225.

In their Co"pl#int,2 petitioners #lle&ed th#t respondent b#n! f#iledto co"ply with the postin& #nd public#tion re;uire"ents #s well #swith the filin& of the Petition for the $8tr#=udici#l ?oreclosure of theRe#l $st#te :ort&#&e with the Cler! of Court #s re;uired by )ct -o.225.4 Petitioners pr#yed for the issu#nce of te"por#ry restr#inin&order (3R9 in order to en=oin the respondent b#n! fro" conductin&

















the #uction s#le, #nd in the #ltern#tive, to en=oin the Re&istry of'eeds of ue%on City fro" tr#nsferrin& the ownership of the ue%onCity property to the purch#ser #t the #uction s#le.

In its )nswer with the 9pposition to the Pr#yer for the Issu#nce of3e"por#ry Restr#inin& 9rder (3R9, respondent b#n! #verred th#t ith#d fully observed the postin& #nd public#tion re;uire"ents of )ct-o. 225. It insisted th#t the filin& of the Petition for $8tr#=udici#l?oreclosure of the :ort&#&e Property with the -ot#ry Public w#ss#nctioned by the s#"e st#tute. Respondent b#n! thus pr#yed forthe dis"iss#l of petitionersA co"pl#int for l#c! of "erit.5

?or f#ilure of the counsels for both petitioners #nd respondent b#n!to #ppe#r in the scheduled he#rin& for the issu#nce of te"por#ry

restr#inin& order, the R3C, in #n 9rder d#ted 5 :#y , dee"edthe pr#yer for 3R9 #b#ndoned.7

3here#fter, the R3C conducted # pretri#l conference. In the Pre3ri#l9rder1 d#ted 6epte"ber *+++, the p#rties "#de the followin&#d"issions #nd stipul#tions

( the re#l est#te "ort&#&e e8ecuted by the pl#intiffs in f#vor ofthe defend#nt b#n! covers the lo#n obli&#tion in the tot#l #"ountofP2,+++,+++.++<

(* there were two pro"issory notes e8ecuted by the pl#intiffs oneforP*,1++,+++.++ #nd #nother for P2++,+++.++<

(2 # de"#nd letter d#ted 2 9ctober 1 w#s sent to petitionerLCK by respondent b#n! st#tin& th#t the re"#inin& b#l#nce ofpetitioner LCKAs lo#n obli&#tion w#s P*,7*,5++.++ #s of 2 9ctober1<

(4 # -otice of )uction 6#le by -ot#ry Public w#s "#de by therespondent b#n! in foreclosin& the B#&uio City property, #nd in theCertific#te of 6#le issued by the -ot#ry Public, the respondent b#n!bid P*,7*5,+++.++ for the property<









(5 the respondent b#n! #lso foreclosed the re#l est#te "ort&#&eover the petitionersA ue%on City property on :#rch #nds#id defend#nt b#n! bid P*,*2,47.71 for the property<

(7 the foreclosure of petitionersA ue%on City property w#s "#deby # not#ry public<

(1 the petition for foreclosure w#s not included in the r#ffle of =udici#l notice<

( the petitioners f#iled to fully p#y their lo#n obli&#tion #s of 29ctober 1 in the #"ount of P7*,5++.++< #nd cr#l#wlibr#ry

( despite the de"#nds, petitioners f#iled to p#y their due

obli&#tions.

3he court further defined the issues #s follows

( whether or not the petition w#s filed with the 9ffice of the Cler!of Court<

(* whether or not the e8tr#=udici#l foreclosure of re#l est#te"ort&#&e by defend#nt b#n! w#s "#de in #ccord#nce with theprovisions of )ct 225, #s #"ended< #nd cr#l#wlibr#ry

(2 whether or not the p#rties #re entitled to their respective cl#i"sfor #ttorneyAs fees #nd d#"#&es.

3he p#rties were &iven 5 d#ys fro" receipt of the Pre3ri#l 9rder to"#!e #"end"ents or corrections thereon.

9n )pril *++, the p#rties #&reed to sub"it the c#se for thedecision of the R3C b#sed on the stipul#tions #nd #d"issions "#de#t the pretri#l conference. 3he p#rties further "#nifested th#t they

were w#ivin& their respective cl#i"s for #ttorneyAs fees. 9n thes#"e d#y, the R3C re;uired the p#rties to sub"it their respective"e"or#nd#.

In their :e"or#ndu",*+ petitioners, #side fro" reiter#tin& issuespreviously r#ised in their Co"pl#int, further cl#i"ed th#t there w#s#n overp#y"ent of the lo#n obli&#tion byP,57,47.71. )s shown









in the letterde"#nd d#ted 2 9ctober 1 received by petitionerLCK, its outst#ndin& lo#n obli&#tion #"ounted to P*,7*,5++.++.3he B#&uio City property w#s purch#sed by respondent b#n! #t thepublic #uction for P*,7*5,+++.++, while the ue%on City property

w#s purch#sed for P*,*2,47.71.

?or its p#rt, respondent b#n! "#int#ined in its :e"or#ndu"* th#tthe co"pl#int filed by petitioners is devoid of "erit. It further#ssever#ted th#t petitionersA cl#i" for overp#y"ent w#s not #"on&the issues sub"itted for the resolution of the R3C. It is cle#r fro"the Pre3ri#l 9rder th#t the issues to be resolved #re li"ited towhether the petition for the foreclosure of the re#l est#te "ort&#&ew#s filed before the Cler! of Court #nd whether or not thee8tr#=udici#l foreclosure of re#l est#te "ort&#&e w#s "#de by the

respondent b#n! in #ccord#nce with the provisions of )ct -o. 225.?or f#ilure of petitioners to pro"ptly r#ise the #lle&ed overp#y"ent,the R3C is now b#rred fro" #d=udic#tin& this issue.

9n 2 6epte"ber *++, the R3C rendered its 'ecision** decl#rin& theforeclosure #nd the #uction s#le of the ue%on City property le&#l#nd v#lid, but ordered respondent b#n! to return the overp#y"ent"#de by petitioners in the #"ount of P,57,47.71. 3hedispositive portion of the R3C 'ecision re#ds

D$R$?9R$, pre"ises considered, =ud&"ent is hereby rendered #sfollows

. 'ecl#rin& the e8tr#=udici#l foreclosure #nd #uction s#le of theue%on City property of pl#intiffs LCK Industries, Inc., Chi!o Li"#nd $li%#beth Li" sub=ect of this c#se le&#l #nd v#lid<

*. 9rderin& defend#nt Pl#nters 'evelop"ent B#n! to p#y topl#intiffs the #"ount of P,57,47.71 representin& overp#y"ent<

2. 'is"issin& pl#intiffsA cl#i" for #ttorneyAs fees #nd other liti&#tione8penses<

4. 'is"issin& the c#se #&#inst defend#nt )tty. )llene :. )ni&#n<#ndcr#l#wlibr#ry







5. 'is"issin& the countercl#i"s of defend#nts Pl#nters 'evelop"entB#n! #nd )tty. )rlene :. )ni&#n.*2

?or l#c! of "erit, the :otion for Reconsider#tion filed by therespondent b#n! w#s denied by the R3C in its 9rder d#ted 2'ece"ber *++.*4

)&&rieved, respondent b#n! elev#ted the "#tter to the Court of)ppe#ls by #ss#ilin& the portion of the R3C 'ecision orderin& it top#y petitioners the #"ount of P,57,47.71 representin& the#lle&ed overp#y"ent. 3he respondent b#n!As #ppe#l w#s doc!eted#s C)/.R. C0 -o. 1244.*5

9n )pril *++5, the Court of )ppe#ls &r#nted the #ppe#l of the

respondent b#n! #nd p#rti#lly reversed the R3C 'ecision insof#r #sit ordered respondent b#n! to p#y the overp#id #"ountof P,57,47.71 to petitioners. In deletin& the #w#rd ofoverp#y"ent, the #ppell#te court e"ph#si%ed th#t the pri"#rypurpose of pretri#l is to "#!e cert#in th#t #ll issues necess#ry forthe disposition of the c#se #re properly r#ised in order to preventthe ele"ent of surprise. 6ince the #lle&ed overp#y"ent w#s onlyr#ised by the petitioners lon& #fter the pretri#l conference, thecourt a quo c#nnot dispose of such issue without deprivin& therespondent b#n! of its ri&ht to due process.*7

3he :otion for Reconsider#tion filed by petitioners w#s denied bythe Court of )ppe#ls in its Resolution*1 d#ted * -ove"ber *++5.

Petitioners #re now before this Court via # Petition for Reviewon Certiorari,* under Rule 45 of the Revised Rules of Court,#ss#ilin& the Court of )ppe#ls 'ecision #nd r#isin& the followin&issues #s &rounds

I.

D$3D$R 9R -93 3D$ $EC$66 ):9F-3 9? P,2,7.71 DICD3D$ R$6P9-'$-3 B)-K )CFIR$' ?R9: 3D$ )FC3I9- 6)L$ 9?3D$ P$3I3I9-$R6A PR9P$R3I$6 6D)LL B$ R$3FR-$' 39 3D$:.

II.















D$3D$R 9R -93 3D$ I66F$ 9? 90$RP)G:$-3 )6 R)I6$' BG3D$ P)R3I$6 )-' I-CLF'$' I- 3D$ PR$3RI)L 9R'$R.*

3he petition centers on the cl#i" propounded by petitioners th#tthere w#s #n overp#y"ent of the lo#n obli&#tion in the #"ountof P,57,47.71. Petitioners insist they #re entitled to therei"burse"ent of the overp#id #"ount invo!in& the ele"ent#ryprinciple of in rem verso2+ in hu"#n rel#tions #nd the rule on thedisposition of the proceeds of the s#le providin& th#t the b#l#nce orthe residue #fter deductin& the cost of the s#le #nd the p#y"ent ofthe "ort&#&e debt due, sh#ll be p#id to the =unior encu"br#ncers,#nd in the #bsence of =unior encu"br#ncers, to the "ort&#&or or hisduly #uthori%ed represent#tive.2

9n the other h#nd, respondent b#n! counters th#t the ;uestion ofoverp#y"ent, not bein& included in the issues stipul#ted in Pre3ri#l9rder d#ted 6epte"ber *+++, #nd tot#lly unrel#ted therein,c#nnot be considered by the R3C. 3he bel#ted ventil#tion of the#lle&ed overp#y"ent precluded the R3C fro" rulin& on the "#tter inconson#nce with the pri"ordi#l purpose of the pretri#l conferencewhich is to deline#te the issues necess#ry for the disposition of thec#se.2*

3he conduct of pretri#l in civil #ctions h#s been "#nd#tory #s e#rly#s >#nu#ry 74 upon the effectivity of the Revised Rules ofCourt.22 Pretri#l is # procedur#l device intended to cl#rify #nd li"itthe b#sic issues between the p#rties24 #nd to t#!e the tri#l of c#sesout of the re#l" of surprise #nd "#neuverin&.25

Pretri#l is #n #nswer to the cl#rion c#ll for the speedy disposition of c#ses. D#iled #s the "ost i"port#nt procedur#l innov#tion in )n&lo6#8on =ustice in the nineteenth century,27 pretri#l is # deviceintended to cl#rify #nd li"it the b#sic issues between the

p#rties.21 It thus p#ves the w#y for # less cluttered tri#l #ndresolution of the c#se.2Pretri#l see!s to #chieve the followin&

(# 3he possibility of #n #"ic#ble settle"ent or of # sub"ission to#ltern#tive "odes of dispute resolution<

(b 3he si"plific#tion of the issues<























(c 3he necessity or desir#bility of #"end"ents to the ple#din&s<

(d 3he possibility of obt#inin& stipul#tions or #d"issions of f#cts#nd of docu"ents to #void unnecess#ry proof<

(e 3he li"it#tion of the nu"ber of witnesses<

(f 3he #dvis#bility of # preli"in#ry reference of issues to #co""issioner<

(& 3he propriety of renderin& =ud&"ent on the ple#din&s, orsu""#ry =ud&"ent, or of dis"issin& the #ction should # v#lid&round therefor be found to e8ist<

(h 3he #dvis#bility or necessity of suspendin& the proceedin&s<#ndcr#l#wlibr#ry

(i 6uch other "#tters #s "#y #id in the pro"pt disposition of the#ction.2

3he purpose of enterin& into # stipul#tion of f#cts is to e8pedite tri#l#nd to relieve the p#rties #nd the court #s well of the costs ofprovin& f#cts which will not be disputed on tri#l #nd the truth ofwhich c#n be #scert#ined by re#son#ble in;uiry. Its "#in ob=ective

is to si"plify, #bbrevi#te #nd e8pedite the tri#l, or tot#lly dispensewith it.4+

3he p#rties the"selves or their represent#tive with written #uthorityfro" the" #re re;uired to #ttend in order to #rrive #t # possible#"ic#ble settle"ent, to sub"it to #ltern#tive "odes of disputeresolution, #nd to enter into stipul#tions or #d"issions of f#cts #nddocu"ents. )ll of the "#tters t#!en up durin& the pretri#l,includin& the stipul#tion of f#cts #nd the #d"issions "#de by thep#rties, #re re;uired to be recorded in # pretri#l order.4

3hus, 6ection 1, Rule of the Revised Rules of Court provides

6$C. 1. Record of pretri#l. 3he proceedin&s in the pretri#l sh#llbe recorded. Fpon the ter"in#tion thereof, the court sh#ll issue #norder which sh#ll recite in det#il the "#tters t#!en up in the









conference, the #ction t#!en thereon, the #"end"ents #llowed tothe ple#din&s, #nd the #&ree"ents or #d"issions "#de by thep#rties #s to #ny of the "#tters considered. 6hould the #ctionproceed to tri#l, the order sh#ll e8plicitly define #nd li"it the issues

to be tried. 3he contents of the order sh#ll control the subse;uentcourse of the #ction, unless "odified before tri#l to prevent "#nifestin=ustice.

In the Pre3ri#l 9rder d#ted 6epte"ber *+++, the R3C defined theissues #s follows ( whether or not the petition w#s filed with the9ffice of the Cler! of Court< (* whether or not the e8tr#=udici#lforeclosure of re#l est#te "ort&#&e by defend#nt b#n! w#s "#de in#ccord#nce with the provisions of )ct -o. 225< #nd (2 whether ornot the p#rties #re entitled to their respective cl#i"s for #ttorneyAs

fees #nd d#"#&es.

B#sed on the #d"issions #nd stipul#tions durin& the pretri#lconference #nd the issues defined by the court a quo #s e"bodiedin the Pre3ri#l 9rder, the p#rties #&reed to sub"it the c#se for theresolution of the R3C. Both petitioners #nd respondent #lso"#nifested th#t they would fore&o their respective cl#i"s for#ttorneyAs fees, le#vin& solely the issue of the v#lidity of theforeclosure of "ort&#&e #nd #uction s#le for the R3CAs

disposition. Dowever, in petitionersA :e"or#ndu" filed #fter thec#se w#s sub"itted for resolution , petitioners r#ised the ;uestion ofoverp#y"ent, # new issue th#t w#s included neither in theirCo"pl#int nor in the issues defined in the Pre3ri#l 9rder issued bythe R3C.

/ener#lly, pretri#l is pri"#rily intended to "#!e cert#in th#t #llissues necess#ry to the disposition of # c#se #re properly r#ised.3hus, to obvi#te the ele"ent of surprise, p#rties #re e8pected todisclose #t the pretri#l conference #ll issues of l#w #nd f#ct they

intend to r#ise #t the tri#l.4* Dowever, in c#ses in which the issue"#y involve privile&ed or i"pe#chin& "#tters,42 or if the issues #rei"pliedly included therein or "#y be infer#ble therefro" bynecess#ry i"plic#tion to be inte&r#l p#rts of the pretri#l order #s"uch #s those th#t #re e8pressly stipul#ted, the &ener#l rule will







not #pply.44 3hus, in Velasco v. Apostol,45 this Court hi&hli&hted the#fores#id e8ception #nd ruled in this wise

) pretri#l order is not "e#nt to be # det#iled c#t#lo&ue of e#ch #ndevery issue th#t is to be or "#y be t#!en up durin& the tri#l. Issuesth#t #re i"pliedly included therein or "#y be infer#ble therefro" bynecess#ry i"plic#tion #re #s "uch inte&r#l p#rts of the pretri#lorder #s those th#t #re e8pressly stipul#ted.

In f#ct, it would be #bsurd #nd ine8plic#ble for the respondentco"p#ny to !nowin&ly disre&#rd or deliber#tely #b#ndon the issueof nonp#y"ent of the pre"iu" on the policy considerin& th#t it isthe very core of its defense. Correspondin&ly, e c#nnot butperceive here #n undesir#ble resort to technic#lities to ev#de #n

issue deter"in#tive of # defense duly #verred. (Emphasis supplied .

3he c#se #t b#r f#lls under this p#rticul#r e8ception. Fponscrupulous e8#"in#tion of the Pre3ri#l 9rder d#ted 6epte"ber*+++, it c#n be deduced th#t the p#rties stipul#ted th#t there"#inin& su" of petitioner LCKAs obli&#tion #s of 2 9ctober 1w#sP*,7*,5++.++. In the s#"e Pre3ri#l 9rder, the p#rties li!ewisestipul#ted th#t the B#&uio City property w#s sold #t the public#uction for P*,7*5,+++.++ #nd the ue%on City propertyfor P*,*2,47.71. 9n both occ#sions, respondent b#n! e"er&ed #sthe hi&hest bidder. By #pplyin& si"ple "#the"#tic#l oper#tion, the"ort&#&ed properties were purch#sed by the respondent #t thepublic #uctions for P4,57,47.71< thus, #fter deductin& therefro"the b#l#nce of petitioner LCKAs obli&#tion in the #"ountofP*,7*,5++.++, #n e8cess in the su" of P,2,7.71 re"#ins.

-eedless to s#y, the f#ct of overp#y"ent, thou&h not e8presslyincluded in the issues r#ised in the Pre3ri#l 9rder d#ted 6epte"ber *+++, c#n be evidently inferred fro" the stipul#tions #nd

#d"issions "#de by the p#rties therein. $ven only upon pl#inre#din& of the s#id Pre3ri#l 9rder, it c#n be re#dily discerned th#tthere w#s #n overp#y"ent.

3he pertinent provisions of the Revised Rules of Court one8tr#=udici#l foreclosure s#le provide







Rule 2. 6$C. *. >ud&"ent obli&ee #s purch#ser. hen thepurch#ser is the =ud&"ent obli&ee, #nd no thirdp#rty cl#i" h#sbeen filed, he need not p#y the #"ount of the bid if it does note8ceed the #"ount of the =ud&"ent. If it does, he sh#ll p#y only the

e8cess.

Rule 7. 6$C. 4. 'isposition of proceeds of s#le. 3he #"ountre#li%ed fro" the foreclosure s#le of the "ort&#&ed property sh#ll,#fter deductin& the costs of the s#le, be p#id to the personforeclosin& the "ort&#&e, #nd when there sh#ll be #ny b#l#nce orresidue, #fter p#yin& off the "ort&#&e debt due, the s#"e sh#ll bep#id to =unior encu"br#ncers in the order of their priority, to be#scert#ined by the court, or if there be no such encu"br#ncers orthere be # b#l#nce or residue #fter p#y"ent to the", then to the

"ort&#&or or his duly #uthori%ed #&ent, or to the person entitled toit. (Emphasis supplied .

3he renowned =urist ?loren% Re&#l#do, in 6ulit v. Court of)ppe#ls,47 underscored the obli&#tion of the "ort&#&ee with respectto the surplus "oney resultin& fro" # foreclosure s#le of the"ort&#&ed property

3he #pplic#tion of the proceeds fro" the s#le of the "ort&#&edproperty to the "ort&#&orAs obli&#tion is #n #ct of p#y"ent, notp#y"ent by d#tion< hence, it is the "ort&#&eeAs duty to return #nysurplus in the sellin& price to the "ort&#&or. Perforce, # "ort&#&eewho e8ercises the power of s#le cont#ined in # "ort&#&e isconsidered # custodi#n of the fund, #nd, bein& bound to #pply itproperly, is li#ble to the persons entitled thereto if he f#ils to doso. )nd even thou&h the "ort&#&ee is not strictly considered #trustee in # purely e;uit#ble sense, but #s f#r #s concerns theunconsu"ed b#l#nce, the "ort&#&ee is dee"ed # trustee for the"ort&#&or or owner of the e;uity of rede"ption. HJrblMN OrQJl lJSlbrJrT

Co""entin& on the theory th#t # "ort&#&ee, when he sells under #power, c#nnot be considered otherwise th#n #s # trustee, the vicech#ncellor in Robertson v. -orris ( /iff. 4* observed U3h#te8pression is to be understood in this sense th#t with the powerbein& &iven to en#ble hi" to recover the "ort&#&e "oney, the courtre;uires th#t he sh#ll e8ercise the power of s#le in # provident w#y,





with # due re&#rd to the ri&hts #nd interests of the "ort&#&or in thesurplus "oney to be produced by the s#le. (Emphasis supplied .

Petitioner LCKAs obli&#tion with the respondent b#n! w#s #lre#dyfully s#tisfied #fter the "ort&#&ed properties were sold #t the public#uction for "ore th#n the #"ount of petitioner LCKAs re"#inin& debtwith the respondent b#n!. )s the custodi#n of the proceeds fro"the foreclosure s#le, respondent b#n! h#s no le&#l ri&ht wh#tsoeverto ret#in the e8cess of the bid price in the su" of P,2,7.71,#nd is under cle#r obli&#tion to return the s#"e to petitioners.

In #ny c#se, this Court would not #llow respondent b#n! to hidebehind the clo#! of procedur#l technic#lities in order to ev#de itsobli&#tion to return the e8cess of the bid price, for such #n #ct

constitutes # viol#tion of the ele"ent#ry principle of un=ustenrich"ent in hu"#n rel#tions.

Fnder the principle of un=ust enrich"ent ne"o cu" #lteriusdetri"ento locuplet#ri potest no person sh#ll be #llowed to enrichhi"self un=ustly #t the e8pense of others.41 3his principle of e;uityh#s been enshrined in our Civil Code, )rticle ** of which provides

)rt. **. $very person who throu&h #n #ct of perfor"#nce by#nother, or #ny other "e#ns, #c;uires or co"es into possession ofso"ethin& #t the e8pense of the l#tter without =ust or le&#l &round,sh#ll return the s#"e to hi".

e h#ve held th#t there is un=ust enrich"ent when # personun=ustly ret#ins # benefit to the loss of #nother, or when # personret#ins the "oney or property of #nother #&#inst the fund#"ent#lprinciples of =ustice, e;uity #nd &ood conscience.4

$;uity, #s the co"ple"ent of le&#l =urisdiction, see!s to re#ch #nd

co"plete =ustice where courts of l#w, throu&h the infle8ibility oftheir rules #nd w#nt of power to #d#pt their =ud&"ents to thespeci#l circu"st#nces of c#ses, #re inco"petent to do so. $;uityre&#rds the spirit #nd not the letter, the intent #nd not the for", thesubst#nce r#ther th#n the circu"st#nce, #s it is v#riously e8pressedby different courts.4









It is the policy of the Court to #fford p#rtyliti&#nts the #"plestopportunity to en#ble the" to h#ve their c#ses =ustly deter"ined,free fro" constr#ints of technic#lities. 6ince the rules of procedures#re "ere tools desi&ned to f#cilit#te the #tt#in"ent of =ustice, it is

well reco&ni%ed th#t this Court is e"powered to suspend itsoper#tion, or e8cept # p#rticul#r c#se fro" its oper#tion, when theri&id #pplic#tion thereof tends to frustr#te r#ther pro"ote the endsof =ustice.5+

Court liti&#tions #re pri"#rily for se#rch of truth, #nd # liber#linterpret#tion of the rules by which both p#rties #re &iven the fullestopportunity to #dduce proofs is the best w#y to ferret such truth.3he dispens#tion of =ustice #nd vindic#tion of le&iti"#te &riev#ncesshould not be b#rred by technic#lities.5

/iven the fore&oin& discussion, this Court finds the respondent b#n!li#ble not only for ret#inin& the e8cess of the bid price or the surplus"oney in the su" of P,2,7.71, but #lso for p#yin& the interestthereon #t the r#te of 7V per #nnu" fro" the ti"e of the filin& ofthe co"pl#int until fin#lity of =ud&"ent. 9nce the =ud&"entbeco"es fin#l #nd e8ecutory, the interest of *V per #nnu",should be i"posed, to be co"puted fro" the ti"e the =ud&"entbeco"es fin#l #nd e8ecutory until fully s#tisfied.5*

+H!R!OR!, pre"ises considered, the inst#nt Petitionis GR'NT!D. 3he Court of )ppe#ls 'ecision d#ted )pril *++5 #ndits Resolution d#ted * -ove"ber *++5 in C)/.R. C0 -o. 1244#re hereby R!V!RS!D. Respondent Pl#nters 'evelop"ent B#n! is9R'$R$' to return to the petitioners LCK Industries Inc., Chi!o Li"#nd $li%#beth Li", the su" of P,2,7.71 with interestco"puted #t 7V per annum fro" the ti"e of the filin& of theco"pl#int until its full p#y"ent before fin#lity of =ud&"ent.3here#fter, if the #"ount #d=ud&ed re"#ins unp#id, the interest r#te

sh#ll be *V per #nnu" co"puted fro" the ti"e the =ud&"entbec#"e fin#l #nd e8ecutory until fully s#tisfied. Costs #&#instrespondent Pl#nters 'evelop"ent B#n!.

SO ORD!R!D.

Endnotes:









Penned by )ssoci#te >ustice Celi# Libre#Le#&o&o with )ssoci#te >ustices )ndres B. Reyes, >r. #nd Luc#s P. Bers#"in,concurrin&. Rollo, pp. 4*74.

* Id. #t 7577.

2 Id. #t 254+.

4 Id. #t 1.

5 Id.

7 Id. #t 2.

1 Id.

Id.

Id.

+ Id. #t 24.

Id. #t 57.

* Id. #t 1*2.

2 Id. #t 1*2.

4 )n )ct to Re&ul#te the 6#le of Property under 6peci#l Powers Inserted in or )nne8ed to Re#l $st#te :ort&#&es.

5 Id. #t 2721.

7 Id. #t 21.

1 Id.

Id. #t 2.

Id.

*+ Id. #t *4*1.

* Id. #t *24.

** Id. #t 254+.

*2 Id. #t 4+.

*4 Id. #t 4.

*5 Id. #t 4*.

*7 Id. #t 4*74.

*1 Id. #t 75.

http://www.chanrobles.com/scdecisions/jurisprudence2007/nov2007/gr_170606_2007.php#rnt1
























































* Id. #t 2.

* Id. #t .

2+ CI0IL C9'$, )rticle **. $very person who throu&h #n #ct of perfor"#nce by #nother, or #ny other "e#ns, #c;uires orco"es into possession of so"ethin& #t the e8pense of the l#tter without =ust or le&#l &round, sh#ll return the s#"e to hi".

2 Revised Rules of Court, Rule 7, 6ection 4.

2* Rollo, pp. 141.

22 Development Bank of the Philippines v. Court of Appeals, /.R. -o. 44+, *7 >#nu#ry , 7 6CR) 4+, 4*42.

24 Interlinin Corporation v. Philippine !rust Compan" , 4* Phil. 54, 5 (*++*.

25 Permanent Concrete Products, Inc. v. !eodoro, 25 Phil. 274, 271 (7.

27 !iu v. #iddleton, 27 Phil. *, 25 (.

21 Interlinin Corporation v. Philippine !rust Compan", supr# note 24.

2 Id.

2 Revised Rules of Court, Rule , 6ection *.

4+ Interlinin Corporation v. Philippine !rust Compan" , supr# note 24.

4 Alarcon v. Court of Appeals, 2+ Phil. 71, 717 (*+++.

4* Calte$ %Philippines&, Inc. v. Court of Appeals, /.R. -o. 1152, + )u&ust *, ** 6CR) 44, 47*.

42 Co v. Court of )ppe#ls, 252 Phil. 2+5, 2* (.

44

Velasco v. Apostol , /.R. -o. 445, :#y , 12 6CR) **, *2**22.

45 Id.

47 225 Phil. 4, *7*1.

41 -#tion#l 'evelop"ent Co"p#ny v. :#dri&#l #n D#i Lines Corpor#tion, 45 Phil. +2, +54+55 (*++2.

4 C#r Cool Philippines, Inc. v. Fshio Re#lty #nd 'evelop"ent Corpor#tion, /.R. -o. 2+, *2 >#nu#ry *++7, 41 6CR)4+4, 4*.

4 3#"io v. 3icson, /.R. -o. 545, -ove"ber *++4, 442 6CR) 44, 55.

5+ :etro R#il 3r#nsit Corpor#tion v. Court of 3#8 )ppe#ls, /.R. -o. 77*12, * 6epte"ber *++5, 41+ 6CR) 57*, 577.

5 /o v. 3#n, 45 Phil. 1*1, 127121 (*++2.

5* II. ith re&#rd p#rticul#rly to #n #w#rd of interest in the concept of #ctu#l #nd co"pens#tory d#"#&es, the r#te ofinterest, #s well #s the #ccru#l thereof, is i"posed, #s follows

. hen the obli&#tion is bre#ched, #nd it consists in the p#y"ent of # su" of "oney, i.e., # lo#n or forbe#r#nce of "oney,the interest due should be th#t which "#y h#ve been stipul#ted in writin&. ?urther"ore, the interest due sh#ll itself e#rnle&#l interest fro" the ti"e it is =udici#lly de"#nded. In the #bsence of stipul#tion, the r#te of interest sh#ll be *V per





















































#nnu" to be co"puted fro" def#ult, i.e., fro" =udici#l or e8tr#=udici#l de"#nd under #nd sub=ect to the provisions of)rticle 7 of the Civil Code.

*. hen #n obli&#tion, not constitutin& # lo#n or forbe#r#nce of "oney, is bre#ched, #n interest on the #"ount of d#"#&es#w#rded "#y be i"posed #t the discretion of the court #t the r#te of 7V per #nnu". -o interest, however, sh#ll be#d=ud&ed on unli;uid#ted cl#i"s or d#"#&es e8cept when or until the de"#nd c#n be est#blished with re#son#blecert#inty. )ccordin&ly, where the de"#nd is est#blished with re#son#ble cert#inty, the interest sh#ll be&in to run fro" theti"e the cl#i" is "#de =udici#lly or e8tr#=udici#lly ()rt. 7, Civil Code but when such cert#inty c#nnot be so re#son#bly

est#blished #t the ti"e the de"#nd is "#de, the interest sh#ll be&in to run only fro" the d#te the =ud&"ent of the court is"#de (#t which ti"e the ;u#ntific#tion of d#"#&es "#y be dee"ed to h#ve been re#son#bly #scert#ined. 3he #ctu#l b#sefor the co"put#tion of le&#l interest sh#ll, in #ny c#se, be on the #"ount fin#lly #d=ud&ed.

2. hen the =ud&"ent of the court #w#rdin& # su" of "oney beco"es fin#l #nd e8ecutory, the r#te of le&#l interest,whether the c#se f#lls under p#r#&r#ph or p#r#&r#ph *, #bove, sh#ll be *V per #nnu" fro" such fin#lity until itss#tisf#ction, this interi" period bein& dee"ed to be by then #n e;uiv#lent to # forbe#r#nce of credit. ($#stern 6hippin&Lines, Inc. v. Court of )ppe#ls, /.R. -o. 14*, * >uly 4, *24 6CR) 1, 51.

Documents

LCK Industries vs Planters Development Bank.docx