G.R. No. 202227. Aug 15, 2018

THIRD DIVISION  [G.R. No. 202227, August 15, 2018]  EVERCREST GOLF CLUB RESORT, INC. V. BANGKO SENTRAL NG PILIPINAS AND REGISTER OF DEEDS OF NASUGBU, BATANGAS.

This is an appeal by certiorari under Rule 45 of the Rules of Court assailing the Decision[1] dated December 20, 2011 and Resolution[2] dated June 14, 2012 of the Court of Appeals (CA) in dismissing CA-G.R. SP No. 109927 for being moot and academic.

Antecedents

The present controversy emanated from various legal actions taken by respondent Bangko Sentral ng Pilipinas (BSP) to recover the billion-peso debt of Orient Commercial Banking Corporation (OCBC) and businessman Jose C. Go (Go). Evercrest Golf Club Resort, Inc. (Evercrest) is among those corporations whose properties were attached in a collection suit filed by BSP.

The factual background of this case is set forth in Bangko Sentral ng Pilipinas v. Orient Commercial Banking Corporation, et al.,[3] which is herein partly quoted:
On February 13, 1998, herein respondent Orient Commercial Banking Corporation (OCBC) declared a bank holiday on account of its inability to pay all its obligations to depositors, creditors and petitioner Bangko Sentral ng Pilipinas (BSP).

On March 17, 1998, OCBC filed a petition for rehabilitation with the Monetary Board. The bank was placed under receivership and the Philippine Deposit Insurance Corporation (PDIC) was designated as Receiver. Pursuant to the Monetary Board's Resolution No. 1427, PDIC took over all the assets, properties, obligations and operations of OCBC. Respondent Jose C. Go, the principal and biggest stockholder of OCBC, with his affiliate companies (respondent corporations), challenged the said action of the PDIC before the RTC of Manila, Branch 44 (Civil Case No. 98-91265). Said case was dismissed and the dismissal was appealed to the CA.

During the pendency of Civil Case No. 98-91265, the Monetary Board adopted Resolution No. 602 dated May 7, 1999 directing the Receiver to proceed with the liquidation of OCBC. In June, 1999, the PDIC instituted Special Proceeding No. 99-94328 before the RTC of Manila, Branch 51 entitled "In Re: Petition for Assistance in the Liquidation of Orient Commercial Banking Corporation, Philippine Deposit Insurance Corporation, Petitioner".On December 17, 1999, petitioner filed in the RTC of Manila (Branch 12) a complaint for sum of money with preliminary attachment (Civil Case No. 99-95993) against the respondents seeking to recover deficiency obligation owed by OCBC which then stood at P1,273,959,042.97 with interest at 8.894 % per annum, overdraft obligation of P1,028,000,000.00, attorney's fees and costs of suit.

On January 14, 2000, the RTC of Manila, Branch 12 issued an Order in Civil Case No. 99-95993 granting petitioner's motion for preliminary attachment. On January 19, 2000, following the posting by petitioner of P50 million attachment bond issued by the Government Service Insurance System (GSIS), the corresponding writ was issued ordering the Deputy Sheriffs to attach the real and personal properties of respondents to the value of petitioner's demand in the amount of P2,301,951,042.97, exclusive of interests and costs, as security for the said claim.[4]
The RTC order granting the preliminary attachment against the properties of defendants OCBC, Go, et al. were questioned by the latter before the CA, docketed as CA-G.R. SP No. 60509. The consolidated motion to dismiss filed by defendants in Civil Case No. 99-95993 was denied by the RTC.

On June 11, 2001, the CA rendered its decision[5] in CA-G.R. SP No. 60509 dissolving the writ of attachment and ordered the RTC to desist from proceeding with Civil Case No. 99-95993 except as against Jose C. Go, Vicente C. Go and George C. Go. This decision was later recalled and BSP was required to comment. The ponente likewise inhibited himself from the case.[6]

Meanwhile, on July 3, 2001, BSP filed a petition before this Court, docketed as G.R. No. 148483, to annul the June 11, 2001 decision of the CA in CA-G.R. SP No. 60509 and enjoin the implementation, in any manner, of the said decision until the Court has decided the case.

On December 16, 2003, a compromise agreement was executed between the parties[7] in Civil Case No. 99-95993 which was approved by the RTC of Manila, Branch 12 in its Order[8] dated December 29, 2003.

Under the compromise agreement, the parties agreed to cause the dismissal of nineteen (19) pending civil cases in various courts, including G.R. No. 148483, CA-G.R. SP No. 60509 and Civil Case No. 99-95993, in consideration for the faithful compliance by OCBC and Go, et al. of the agreed terms and conditions of payment of the total deficiency obligation of OCBC to BSP amounting to Two Billion Nine Hundred Seventy-Four Million Nine Hundred Three Thousand Pesos (P2,974,903,000.00).

OCBC and Go, et al. agreed to settle its outstanding obligations to BSP through dacion en pago and scheduled amortization payments of the balance. The compromise agreement further identified the real properties and existing funds and rental earnings which shall continue to be the subject of writ of attachment and guarantee the stipulated amortizations under the amortization schedule, with express warranties made on such undertakings, viz:

C. Additional Properties for Execution

c i)
To ensure payment of the monthly amortizations due under this Compromise Agreement, defendants Ever Crest Golf Club Resort, Inc., and Mega Heights, Inc., have agreed to have its real properties with improvements covered by TCT Nos. T-68963, T-6890, T-68966 and TD ARPN-AA-1702 00582 and AA-17023-005 shall be subject of existing writ of attachment to secure the faithful payment of the outstanding obligation herein mentioned, until such obligation shall have been fully paid by defendants to plaintiff.
c ii)
That all the corporate approvals for the execution of this Compromise agreement by Ever Crest Golf Club Resort, Inc., and Mega Heights, Inc., consisting of stockholders resolution and Board of Directors approval have already been obtained at the time of the execution of this Agreement.
c iii)
Failure on the part of the defendants to fully settle their outstanding obligations and to comply with any of the terms of this Compromise Agreement shall entitle the plaintiff to immediately ask for a Writ of Execution against all assets of the Ever Crest Golf Club Resort, Inc., and Mega Heights, Inc., now or hereafter arising upon the signing of this Compromise Agreement.

xxxx

IV. REPRESENTATION AND WARRANTIES
The signatories to this Compromise Agreement represent and pursuant to Bangko Sentral as follows:
  1. xxx
  2. It has obtained the respective Board of Directors approval and other corporate authorizations for its execution, signing and delivery of this Compromise Agreement and its attachments.
  3. The execution and delivery of this Compromise Agreement and all other documents and deeds related thereto and the performance and observance by the parties of the respective terms and conditions thereof, shall not contravene or violate any provision of term of any contract or agreement entered into by the parties with any third party, nor contravene any provision or term of its Articles of Incorporation and By-Laws.
  4. It shall defend the title and peaceful possession by Bangko Sentral of the Properties against all claims of third persons,and shall indemnify and hold Bangko Sentral free and harmless from any and all losses, claims, damages, liabilities and expenses which it might suffer or incur as a result of this Compromise Agreement or any document or agreement entered into in connection therewith.
  5. It shall not execute or enter into any agreement or contract with any third party involving the properties which in any way, diminish, impair, prejudice or affect the rights, title and interest of Bangko Sentral over the properties acquired by or vested in Bangko Sentral pursuant to Compromise Agreement and all other documents executed between the parties in connection therewith.[9] (emphases supplied)
Upon manifestation of BSP and pursuant to the aforesaid judicial compromise, this Court issued a resolution in G.R. No. 148483 denying the petition, thus:
WHEREFORE, the petition is DENIED for being moot and academic: The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 12 for continuation of proceedings to implement the Compromise Agreement in Civil Case No. 99-95993 dated December 22, 2003 approved by said court on December 29, 2003.

No costs.

SO ORDERED.[10]
However, OCBC and Go, et al. did not comply with the provisions of the compromise agreement. This prompted the BSP to move for the execution of the compromise agreement against the properties of Mega Heights, Inc. and Evercrest, which were levied upon by the sheriff. OCBC and Go, et al. opposed the motion for execution.

The RTC Ruling

Finding the motion for execution premature, the RTC initially denied the same, but on BSP's motion for reconsideration, it eventually granted the motion in the Order[11] dated June 4, 2009.

The RTC admitted that it erroneously interpreted the provision of the compromise agreement by making the ten-year payment of the principal obligation as the period for the defendants, OBCB and Go, et al., to execute the amortization schedule. It noted that the compromise agreement had long become final and there is no proof that defendants fully complied with the balance of their obligation, particularly the remaining properties to be included in the dacion enpago arrangement in favor of BSP.

Pursuant to the rule that if a party fails or refuses to abide by a compromise agreement, the other party may either enforce the compromise or regard it as rescinded and insist upon the original demand, the RTC held that the execution of its decision based on the compromise agreement dated December 29, 2003 was in order. The writ of execution was issued on July 6, 2009.

On August 10, 2009, Go and his corporations, including Evercrest, filed a petition for certiorari in the CA, docketed as CA-G.R. SP No. 109927, alleging grave abuse of discretion in the issuance of the writ of execution against Evercrest who was not a party to the compromise agreement. They argued that the RTC's ruling that OCBC and Go, et al. violated the terms of the compromise agreement lacks legal and factual bases. They claimed that they could not have agreed to the dacion en pago arrangement of certain properties considering that ownership of these properties were no longer with them even prior to the execution of the compromise agreement. The validity of the notice of levy upon realty and the notice of sale on execution of real property (scheduled on August 12, 2009) was likewise questioned.

The CA Ruling

The CA issued a 60-day temporary restraining order (TRO) but did not subsequently issue a writ of preliminary injunction. Eventually, the public auction, pushed through, and the properties of Evercrest were sold to BSP as the highest bidder. On December 17, 2017, a writ of possession was issued placing BSP in possession of the subject properties. Thereafter, the transfer certificates of title (TCTs) in the name of Evercrest were cancelled, and new TCTs were then issued to BSP as the new registered owner.

On January 6, 2011, a supplemental petition was filed by Go and his corporations (petitioners in CA-G.R. SP No. 109927) insisting that Evercrest was not bound by the RTC decision based on the compromise agreement considering that it was not a party in Civil Case No. 99-95993.

In its December 20, 2011 decision,[12] the CA dismissed the petition. At the outset, it declared that the action was mainly for injunction. Citing the transfer of possession and titles of Evercrest to BSP, the appellate court held that the enforcement of the writ of execution and auction sale of the subject properties sought to be enjoined in the petition, have become fait accompli. Thus, the CA said it can no longer take cognizance of the case asserting petitioner's right of ownership over the subject properties as basis for enjoining their execution and sale. The issue had become moot and academic.

Further, the CA declared that to continue with the proceedings would sanction a collateral attack on the registered titles of the BSP, which is proscribed under existing laws and jurisprudence. As the new registered owner and possessor of the subject properties, BSP was now entitled to hold and enjoy all the rights of ownership. The dispositive portion of the CA decision reads:
WHEREFORE, premises considered, the instant petition is DISMISSED for being moot and academic.

No pronouncement as to costs.

SO ORDERED.[13]
The CA likewise denied the motion for reconsideration filed by OCBC, Go, et al. in CA-G.R. SP No. 109927 in a resolution dated June 14, 2012. On the matter of admission of the supplemental petition, the appellate court found it as a collateral attack on BSP's title to the subject properties. It pointed out that the supplemental petition was, in fact, a new petition which raised different causes of action and prayed for reliefs totally different from those in the original petition. The CA stressed that the RTC decision based on the compromise agreement had long become final and executory, citing this Court's decision in G.R. No. 148483, which upheld with finality the validity of the compromise agreement sought to be enforced by BSP and which bound all the properties of both Evercrest and Mega Heights, Inc.[14]

Hence, this petition filed solely by Evercrest.
Issues

I

THE CA ERRED IN RULING THAT THEIR ACTION IS MAINLY ONE FOR INJUNCTION;

II

THE CA ERRED IN NOT NULLIFYING AND SETTING ASIDE THE LEVY AND SALE OF THE PROPERTIES OF EVERCREST WHICH IS UNDENIABLY NOT A PARTY TO THE CASE FILED BY BSP (CIVIL CASE NO. 99-95993) AND TO THE COMPROMISE AGREEMENT;

III

THE CA ERRED IN DECLARING THAT THEIR ACTION IS AN INDIRECT ATTACK ON THE TITLES OF BSP DESPITE A SHOWING TO THE CONTRARY; AND

IV

THE CA ERRED IN CONSIDERING THEIR SUPPLEMENTAL PETITION AS A MERE SCRAP OF PAPER.[15]
Evercrest contends that it did not just ask from the CA a preliminary injunctive writ to prevent the enforcement of the assailed RTC orders and writ of execution but mainly to cause their nullification for having been issued with grave abuse of discretion. Citing the dissenting opinion of Associate Justice (now Presiding Justice of the CA) Romeo F. Barza, it emphasizes that the main issue of whether it is bound by the compromise agreement submitted in Civil Case No. 99-95993 even though it was not party to the said case, remains. With such as core issue, the case has not ceased to be a justiciable controversy, and certainly not moot and academic. Otherwise, the courts would be sanctioning the outright deprivation of one's property through a mere procedural technicality.

To clarify, Evercrest emphasizes anew that it is not a party-defendant in Civil Case No. 99-95993, and that it is a distinct and separate entity from Evercrest Cebu Golf Club, Inc. which is based in Cebu; while it is based in Nasugbu, Batangas. Evercrest further points out that it is not among those who took part in the execution of the compromise agreement.[16] It was also established at the hearing conducted by the CA on the application for a writ of preliminary injunction, that Evercrest has not issued a board resolution authorizing anyone to enter into a compromise agreement covering the company's properties, a fact which is admitted by BSP.

As to the supplemental petition which the CA regarded as a mere scrap of paper, Evercrest submits that it was based on matters arising subsequent to the filing of the original petition which are very much related and founded on the same causes of action. Thus, the sale on execution of the subject real properties, the issuance of title in BSP's name and the granting of the writ of possession in favor of BSP, are all offshoots of the assailed orders granting BSP's motion for execution.

In its Comment,[17] BSP claimed that Evercrest and its co-petitioners in CA-G.R. SP No. 109927 committed deliberate forum shopping when they filed two cases before this Court challenging the validity of the same ruling of the CA in its decision dated December 20, 2011. BSP refers to G.R. No. 202262 entitled "Jose C. Go, Gotesco Properties, Inc., Go Tong Electrical Supply, Inc., Ever Emporium, Inc., Ever Gotesco Resources and Holdings, Inc., Gotesco Tyan Ming Development, Inc., Evercrest Cebu Golf Club, Nasugbu Resorts, Inc., GMCC United Development Corporation, and Gulod Resort, Inc., petitioners, v. Bangko Sentral ng Pilipinas, and Register of Deeds of Nasugbu, Batangas, respondents. "Such fact is sufficient ground for the outright dismissal of the present petition.

On the CA's finding that the action is one mainly for injunction and the acts sought to be restrained had become fait accompli, BSP argues that Evercrest raises factual issues, which are proscribed in a Rule 45 petition. It points out that Evercrest is guilty of inaction in many instances when it could have properly raised the alleged irregular execution and levy of its properties. For one, Evercrest opted not to exercise the right of redemption which is allowed in a sheriffs execution sale. The disclosure in the financial statements of Evercrest, prepared by the audit firm SGV, from 2003 until 2008, also revealed that its Board of Directors had prior knowledge of the court-approved compromise agreement and that BSP was entitled to ask for a writ of execution against its real properties even if it was not a party to the civil case between BSP, and OCBC, Go, et al. Yet, said Board allowed the auction sale of Evercrest's real properties and did nothing to protect the interest of its stockholders.

Significantly, the BSP notes that petitioners in CA-G.R. SP No. 109927, including herein Evercrest, knew of the lapse of the 60-day TRO in November 2009, but waited until after the sheriffs sale was conducted, its titles transferred to BSP and writ of possession issued to the latter, or a period of almost two years. Thus, BSP filed its motion to dismiss petition for being moot and academic on November 22, 2010, while Evercrest filed its motion for leave to admit supplemental petition only on January 6, 2011. BSP contends that such belated filing was actually a ploy for the parent company of Evercrest, the Gotesco Group of Companies, and Jose Go as majority owner, to frustrate the recovery of its assets.

BSP argues that Evercrest is guilty of laches by estoppel and is not entitled to seek modification of the judgment which it did not appeal. Evercrest cannot indirectly resurrect its lost appeal, considering that the judgment based on compromise agreement had long attained finality, as entry of judgment was issued by this Court on June 29, 2011. Said compromise agreement became res judicata between the parties, and its violation by OCBC and Go, et al. entitles BSP to enforce its terms through a writ of execution. Indeed, there is nothing else the RTC and CA can do except to implement the final judgment based on the compromise agreement.

As to the dissenting opinion in CA-G.R. SP No. 109927, BSP argues that the findings of fact of the CA's Special Division of Five Members, are more credible and deserve greater weight than the dissenting opinion of one member based on a draft ruling (attached to the rollo of CA-G.R. SP No. 109927) of the previous ponente, who was compelled to inhibit from the case due to his lawyer-daughter's association with Go, et al. and their counsel.

The Court's Ruling

The petition must fail.

Evercrest essentially faults the CA for not nullifying the order of execution and levy on its properties despite the fact that it is neither a party in Civil Case No. 99-95993 nor a signatory to the compromise agreement.

The Court has resolved the issue in a similar petition, G.R. No. 202262, which likewise questioned the validity of the December 20, 2011 decision of the CA in CA-G.R. SP No. 109927.

Thus, in Go, et al. v. BSP, et al.[18] decided in July 8, 2015, the Court rejected the posture of petitioners Go, et al. that the issuance of the order of execution was issued with grave abuse of discretion because it was directed against the properties of Evercrest, herein petitioner, who was neither a party defendant in Civil Case No. 99-95993 nor a signatory to the compromise agreement between BSP, and OCBC and Go, et al. The Court held:
First of all, the petitioners and Ever Crest themselves firmly committed in the compromise agreement, supra, to have their properties with their improvements be made subject to the writ of attachment in order "to secure the faithful payment of the outstanding obligation herein mentioned, until such obligation shall have been fully paid by defendants to plaintiff'' and expressly assured Bangko Sentral in the same compromise agreement that "all the corporate approvals for the execution of this Compromise agreement by Ever Crest Golf Club Resort, Inc., and Mega Heights, Inc., consisting of stockholders resolution and Board of Directors approval have already been obtained at the time of the execution of this Agreement. " They warranted in the compromise agreement that: "Failure on the part of the defendants to fully settle their outstanding obligations and to comply with any of the terms of this Compromise Agreement shall entitle the plaintiff to immediately ask for a Writ of Execution against all assets of the Ever Crest Golf Club Resort, Inc., and Mega Heights, Inc., now or hereafter arising upon the signing of this Compromise Agreement. " By such express commitments, the petitioners and Ever Crest were estopped from claiming that the properties of Ever Crest and Mega Heights could not be the subject of levy pursuant to the writ of execution issued by the RTC. In other words, they could not anymore assail the RTC for authorizing the enforcement of the judgment on the compromise agreement against the assets of Ever Crest.

xxx Under estoppel by deed, a party to a deed and his privies are precluded from denying any material fact stated in the deed as against the other party and his privies. Under estoppel by laches, an equitable estoppel, a person who has failed or neglected to assert a right for an unreasonable and unexplained length of time is presumed to have abandoned or otherwise declined to assert such right and cannot later on seek to enforce the same, to the prejudice of the other party, who has no notice or knowledge that the former would assert such rights and whose condition has so changed that the latter cannot, without injury or prejudice, be restored to his former state.

Here, the petitioners are estopped by deed by virtue of the execution of the compromise agreement. They were the ones who had offered the properties of Ever Crest to Bangko Sentral, and who had also assured that all the legalities and formalities for that purpose had been obtained. They should not now be allowed to escape or to evade their responsibilities under the compromise agreement just to prevent the levy on execution of Ever Crest's properties.

And, secondly, the petitioners as well as Ever Crest and Mega Heights were contractually prohibited from challenging the levy on the assets of Ever Crest. Through the compromise agreement, the petitioners warranted that they would defend Bangko Sentral's title and peaceful possession of such levied properties against all claims of third persons. Their warranty was expressly made applicable to the properties subject of the dacion as well as to the properties of Ever Crest and Mega Heights subject of the preliminary attachment. Considering that the petitioners asserted that Ever Crest was a third party or stranger to the compromise agreement, they were contractually mandated to resist the adverse claim of Ever Crest and to defend the validity and efficacy of the levy on execution. As such, they could not validly raise any issue that would defeat the rights of Bangko Sentral in such properties.[19] (emphases supplied)
Res judicata refers to "a matter adjudged." This doctrine bars the re-litigation of the same claim between the parties, also known as claim preclusion or bar by former judgment. It likewise bars the re-litigation of the same issue on a different claim between the same parties, also known as issue preclusion or conclusiveness of judgment. It "exists as an obvious rule of reason, justice, fairness, expediency, practical necessity, and public tranquility."[20]

The antecedents of this case clearly show the existence of the following elements of res judicata: (a) identity of parties or at least such as representing the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and, (c) the identity in the two (2) particulars is such that any judgment which may be rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.[21] Undoubtedly, the principle of res judicata applies in this case.

Therefore, Evercrest is not permitted to relitigate the issue of whether BSP may validly enforce the terms of the court-approved compromise agreement against it because it was not a party defendant in Civil Case No. 99-95993. By the express terms of the compromise agreement, Evercrest, along with Go and the corporations connected to him, are contractually prohibited from challenging the validity of the levy of its assets.

The Court finds it unnecessary to delve into the matter raised in the supplemental comment filed by BSP regarding the supposed absence of a valid authorization from Evercrest board of directors to file the present petition.

WHEREFORE, the petition is DENIED. The December 20, 2011 Decision and the June 14, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 109927 are AFFIRMED in toto.

SO ORDERED.

[1] Rollo, pp. 63-76; penned by Associate Justice Antonio L. Villamor and concurred in by Associate Justices Jose C. Reyes, Jr. and Fernanda Lampas Peralta; Associate Justices Romeo F. Barza (now Presiding Justice) and Sesinando E. Villon, dissented.

[2] Id. at 97-107.

[3] 668 Phil. 164(2011).

[4] Id. at 166-167. "

[5] Rollo, pp. 449-489.

[6] Id. at 496-500.

[7] Civil Case No. 99-95993, entitled Bangko Sentral ng Pilipinas v. Orient Commercial Banking Corporation, Jose C. Go, George C. Go, Vicente C. Go, Gotesco Properties, Inc., Go Tong Electrical Supply Inc., Ever Emporium Inc., Ever Gotesco Resources and Holdings Inc., Gotesco Tyan Ming Development Inc., Evercrest Cebu Golf Club and Resort Inc., Nasugbu Resorts Inc., GMCC United Development Corp., Gulod Resort, Inc., Ok Star, Ever Plaza, Inc., and Ever Electrical Mfg. Inc.

[8] Rollo, pp. 152-153.

[9] Id. at 145 and 148.

[10] Bangko Sentral ng Pilipinas v. Orient Commercial Banking Corporation, et al., supra note 3 at 172.

[11] Rollo, pp. 214-217.

[12] Id. at 63-76.

[13] Id. at 75.

[14] Id. at 97-107.

[15] Id. at 22.

[16] Id. at 150.

[17] Id. at 540-563.

[18] 763 Phil. 480 (2015).

[19] Id. at 488-490.

[20] People v. Escobar, G.R. No. 214300, July 26, 2017; citing Degayo v. Magbanua-Dinglasan, et al., 757 Phil. 376, 382 (2015).

[21] Cruz v. Court of Appeals, et al, 388 Phil. 550, 553 (2000).

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