UNION BANK OF THE PHILIPPINES vs. DEVELOPMENT BANK OF THE PHILIPPINES G.R. No. 191555 January 20, 2014
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Foodmasters, Inc. (FI) had outstandin !oan o"!iations to "oth #nion $an%&s 'redecessorininterest, $ancom e*e!o'ment +or'oration ($ancom), and to e*e!o'ment $an% o the -hi!i''ines ($-). FI and $- entered into a eed o +ession o -ro'erty In -ayment o e"t (dacion en 'ao) here"y the ormer ceded in a*or o the !atter certain 'ro'erties (inc!udin a 'rocessin '!ant) in consideration o the o!!oin/ (a) he u!! and com'!ete satisaction o FI&s !oan o"!iations to $- and (") he direct assum'tion "y $- o FI&s o"!iations to $ancom in the amount o -1,000,000.00 -1,000,000.00 (3ssumed "!iations). "!iations). $-, as the ne oner o the 'rocessin '!ant, !eased "ac% or 20 years the said 'ro'erty to FI (ease 3reement) hich as, in turn, o"!ied to 'ay month!y renta!s to "e shared "y $- and $ancom. $- a!so entered into a se'arate areement ith $ancom (3ssum'tion 3reement) here"y the ormer/ (a) +on6rmed its assum'tion o FI&s o"!iations to $ancom and (") #ndertoo% to remit u' to 708 o any and a!! renta!s due rom FI to $ancom hich ou!d ser*e as 'ayment o the assumed o"!iations, o"!iations, to "e 'aid in month!y insta!!ments.
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n ay 27, 199, FI assined its !easeho!d rihts under the ease 3reement to Foodmasters :or!dide, Inc. (F:) n ay 9, 19;4, $ancom con*eyed a!! its recei*a"!es, inc!udin $-&s assumed o"!iations, to #nion $an%. +!aimin that the su"
(a) $- to 'ay #nion $an% the sum o -4,019,077.59, re'resentin re'resentin the amount o the su"no F:&s? tota! renta! de"t), inc!udin interest unti! u!!y 'aid and (") F:, as third'arty deendant, to indemniy $-, as third 'arty '!ainti@, or its 'ayments o the su"
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R+ ru!ed that hen $- ai!ed to remit the su"
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+3 ru!ed that $- did not deau!t in its o"!iations to remit the su"
Union Bank an! DBP fl! s+a%at +titions $o% %vi, on c%tio%a%i "eore the =u'reme +ourt. •
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=+/ Dni! #ot& +titions in a Reso!ution. =+ u'he!d the +3&s 6ndin that hi!e $- direct!y assumed FI&s o"!iations to #nion $an%, $- as on!y o"!ied to remit to the !atter 708 o the !ease renta!s co!!ected rom F:, rom hich any de6ciency as to "e sett!ed "y $- not !ater than ecem"er 29, 199;. n ay 1B, 2001, Union Bank fl! a -otion $o% c*tion #$o% t& 'T(, 'rayin that $- "e directed to 'ay the amount o -9,72,420.555 hich re'resents the amount o the su"
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DBP fl! a -otion $o% %consi!%ation a*errin that the R+ 'remature!y ordered $- to 'ay the assumed o"!iations to #nion $an% "eore F:&s 'ayment. T& -otion ,as !ni! . hus, $-&s de'osits ere e*entua!!y arnished. DBP t&n fl! a +tition $o% c%tio%a%i #$o% t& (A . +3/ Dis-iss! DBP)s +tition , 6ndin that the R+ did not a"use its discretion hen it issued the cto"er 15, 2001 :rit o CDecution. DBP a++al! t& (A)s %*lin" #$o% t& S(. =+/ n January 17, 2004, S( "%ant! DBP)s a++al , and there"y re*ersed and set aside the +3&s ru!in. =+ ac%no!eded that $-&s o"!iation o"!iation to #nion $an% or remittance o the !ease 'ayments is continent on F:&s 'rior 'ayment to $-, and that any de6ciency $- had to 'ay "y ecem"er 29, 199; as 'er the 3ssum'tion 3reement cannot "e determined unti! ater the satisaction o F:&s on renta! o"!iations to $-. 3ccordin!y, the =+/ (a) nu!!i6ed the cto"er 15, 2001 :rit o CDecution and a!! re!ated issuances thereto and (") ordered #nion $an% to return to $- the amounts it recei*ed 'ursuant to the said rit.
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Union Bank -ov! $o% %consi!%ation hich as !ni! #1 t& S( . DBP -ov! $o% t& c*tion o the said decision "eore the R+. he 'T 'T( ( t&n iss*! a ,%it o$ c*tion (=e'tem"er B, 2005 :rit o CDecution), orderin #nion $an% to return to $- a!! unds it recei*ed 'ursuant to the cto"er 15, 2001 :rit o CDecution. n =e'tem"er 17, 2005, Union Bank fl! a Mani$station an! Motion to A2%- L"al (o-+nsation to t& 'T( , 'rayin that the R+ a''!y !ea! com'ensation "eteen itse! and $- in order to o@set the return o the unds it 're*ious!y recei*ed rom $-. #nion $an% anchored its motion on to rounds, name!y/ (a) on ecem"er 29, 199;, $-&s assumed o"!iations o"!iations "ecame due and demanda"!e and (") considerin that F: "ecame nono'erationa! and noneDistent, $"ecame 'rimari!y !ia"!e to the "a!ance o its assumed o"!iation, hich as o #nion $an%&s com'utation ater its c!aimed seto@, amounted to -1,;49,791.;.
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R+/ Dni! t& a#ov3-ntion! -otion or !ac% o merit. :ith #nion $an%&s motion or reconsideration reconsideration ha*in "een denied, Union Bank fl! a +tition $o% c%tio%a%i ,it& t& (A. -endin reso!ution, #nion $an% issued a anaer&s +hec% amountin to -52,42,250.00 in a*or o $-, in satisaction o the :rit o CDecution dated =e'tem"er B, 2005. +3/ Dis-iss! Union Bank)s +tition , 6ndin no ra*e a"use o discretion discretion on the R+&s 'art. +3 aErmed the denia! o its motion to aErm !ea! com'ensation considerin that/ (a) the R+ on!y im'!emented the =u'reme +ourt&s January 17, 2004 ecision hich "y then had a!ready attained 6na!ity (") $- is not a de"tor o #nion $an% and (c) there is neither a demanda"!e nor !iAuidated de"t rom $- to #nion $an%.
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Union Bank -ov! $o% %consi!%ation hich as !ni! in a Reso!ution dated Fe"ruary Fe"ruary 2B, 2010 hence, the instant 'etition.
Iss*: :N the +3 correct!y u'he!d the denia! o #nion $an%&s motion to aErm !ea! com'ensation.
'*lin": es. es. he 'etition 'etition is "eret "eret o merit. +om'ensation +om'ensation is de6ned as a mode o o eDtinuishin o"!iations here"y to 'ersons in their ca'acity as 'rinci'a!s are mutua! de"tors and creditors o each other ith res'ect to eAua!!y !iAuidated and demanda"!e o"!iations to hich no retention or contro*ersy has "een time!y commenced and communicated "y third 'arties. he reAuisites thereor are 'ro*ided under 3rtic!e 129 o the +i*i! +ode hich reads as o!!os/ 3rt. 129. In order that com'ensation may "e 'ro'er, it is necessary/ (1) hat each one o the o"!iors "e "ound 'rinci'a!!y, and that he "e at the same time a 'rinci'a! creditor creditor o the other (2) hat "oth de"ts consist in a sum o money, or i the thins due are consuma"!e, they "e o the same %ind, and a!so o the same Aua!ity i the !atter has "een stated (7) hat the to de"ts "e due (4) hat they "e !iAuidated and demanda"!e
(5) hat o*er neither o them there "e any retention or contro*ersy, commenced "y third 'ersons and communicated in due time to the de"tor. he ru!e on !ea! com'ensation com'ensation is stated in 3rtic!e 1290 1290 o the +i*i! +ode hich 'ro*ides that Hhen a!! the reAuisites mentioned in 3rtic!e 129 are 'resent, com'ensation ta%es e@ect "y o'eration o !a, and eDtinuishes "oth de"ts to the concurrent amount, e*en thouh the creditors and de"tors are not aare o the com'ensation.H hereore, hereore, com'ensation cou!d not ha*e ha*e ta%en '!ace '!ace "eteen these these de"ts or the a''arent reason that reAuisites 7 and 4 under 3rtic!e 129 o the +i*i! +ode are not 'resent. 'resent. =ince $-&s assumed o"!iations to #nion $an% or remittance o the !ease 'ayments are in the +ourt&s ords Hcontinent Hcontinen t on the 'rior 'ayment thereo "y F: to $-,H it cannot "e said that "oth de"ts are due (reAuisite 7 o 3rtic!e 129 o the +i*i! +ode). 3!so, the +ourt o"ser*ed that any de6ciency that $- had to ma%e u' or the u!! satisaction o the assumed o"!iations Hcannot "e determined unti! ater the satisaction o F:&s o"!iation to $-.H In this reard, it cannot "e conc!uded that the same de"t had a!ready "een !iAuidated, and there"y "ecame demanda"!e (reAuisite 4 o 3rtic!e 129 o the +i*i! +ode). hus, +3 correct!y u'he!d the denia! o #nion $an%&s motion to aErm !ea! com'ensation
