Title
Bank of Commerce vs. Radio Philippines Network, Inc.
Case
G.R. No. 195615
Decision Date
Apr 21, 2014
TRB sold assets to Bancommerce; RPN sought execution against Bancommerce for TRB’s debts. SC ruled no merger, Bancommerce not liable, execution null.
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Case Digest (G.R. No. 195615)

Facts:

Background of the Transaction

  • In late 2001, Traders Royal Bank (TRB) proposed to sell its banking business, consisting of specified assets and liabilities, to Bank of Commerce (Bancommerce) for P10.4 billion. The sale was contingent upon approval from the Bangko Sentral ng Pilipinas (BSP).
  • On November 8, 2001, the BSP approved the Purchase and Assumption (P & A) Agreement between TRB and Bancommerce, subject to the condition that an escrow fund of P50 million be set up to cover TRB's contingent liabilities that were excluded from the purchase.

Escrow Fund Establishment

  • To comply with the BSP's condition, TRB placed P50 million in escrow with Metropolitan Bank and Trust Co. (Metrobank) on December 6, 2001. This fund was intended to cover any judicially established claims against TRB that were excluded from the P & A Agreement.
  • The BSP finally approved the P & A Agreement on July 3, 2002.

Judicial Decision Against TRB

  • On October 10, 2002, the Supreme Court, in G.R. No. 138510, ordered TRB to pay respondents Radio Philippines Network (RPN), Intercontinental Broadcasting Corporation, and Banahaw Broadcasting Corporation (collectively, RPN, et al.) actual damages of P9,790,716.87 plus 12% legal interest.
  • Based on this decision, RPN, et al. filed a motion for execution against TRB before the Regional Trial Court (RTC) of Quezon City. Instead of pursuing the escrow fund, RPN, et al. filed a Supplemental Motion for Execution, alleging that TRB had merged with Bancommerce.

Bancommerce's Opposition

  • On February 20, 2004, Bancommerce filed a Special Appearance with Opposition, denying any merger with TRB and challenging the RTC's jurisdiction over Bancommerce.
  • On August 15, 2005, the RTC issued an Order granting the writ of execution against TRB's assets, including those acquired by Bancommerce under the P & A Agreement and the escrow fund.

Court of Appeals Decision

  • Bancommerce filed a petition for certiorari with the Court of Appeals (CA), which on December 8, 2009, denied the petition. The CA clarified that Bancommerce was not being held liable for TRB's debts but rather for the assets of TRB under its possession.
  • The CA also deleted the RTC's finding that the P & A Agreement was a "farce" or a "mere tool to effectuate a merger."

Subsequent Proceedings

  • On January 8, 2010, RPN, et al. filed a motion for an alias writ of execution against Bancommerce, which the RTC granted on February 19, 2010.
  • Bancommerce sought reconsideration and filed motions to quash the alias writ, but the RTC denied these motions on August 18, 2010.
  • Bancommerce elevated the matter to the CA, which dismissed the petition on November 26, 2010, for failure to file a motion for reconsideration. The CA denied Bancommerce's motion for reconsideration on February 9, 2011, prompting Bancommerce to appeal to the Supreme Court.

Issue:

  • (Unlock)

Ruling:

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Ratio:

  1. Exceptions to the Rule on Filing a Motion for Reconsideration: The Court recognized that Bancommerce's case fell within the exceptions to the rule requiring a motion for reconsideration before filing a petition for certiorari. These exceptions include urgent necessity, futility of the motion, deprivation of due process, and the raising of purely legal issues.
  2. No Merger Between TRB and Bancommerce: The Court emphasized that the CA had already ruled that there was no merger between TRB and Bancommerce. Therefore, Bancommerce could not be held liable for TRB's debts, and the RTC's Order of execution against Bancommerce was improper.
  3. Protection of Creditors in Asset Transfers: The Court noted that while Bancommerce acquired TRB's assets, it did not assume TRB's liabilities, except for those covered by the escrow fund. The Court reiterated the principle that a purchaser of assets is not liable for the seller's debts unless there is an express or implied assumption of such liabilities.


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