G.R. No. 192947 - De Ocampo vs. Radio Philippines Network, Inc.

Case Digest (G.R. No. 192947)
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Facts:

Background and Contracts

Between 2003 and 2007, Standard Chartered Bank (SCB), through its New York branch, and Lehman Brothers Holdings, Inc. (LBHI) entered into a Group Facilities Agreement.
Under the agreement, LBHI and its foreign affiliate, Philippine Investment Two (PI Two), obtained loans totaling P819,000,000.00 from SCB Philippines.
As security, LBHI executed a Pledge Agreement on September 12, 2008, pledging:

Debt instruments (Notes issued by HD Supply, Inc.) with a face value of US $81,455,477.00;
LBHI’s interest in loans granted to Idearc, Inc. amounting to US $87,189,447.00.

Bankruptcy and Rehabilitation Proceedings

On September 15, 2008, LBHI filed a bankruptcy petition in New York, USA; SCB intervened as a creditor.
In the Philippines, on September 18, 2008, Metrobank, as one of PI Two’s creditors, filed a petition for corporate rehabilitation before the RTC of Makati City (SP Proc. Case No. M-6683).
The Rehabilitation Court approved a Rehabilitation Plan on December 14, 2009 which:

Identified Metrobank and SCB as claimants;
Created a Management Committee (ManCom) composed of representatives from PI Two, Metrobank, and SCB.

Entry of MRM and Subsequent Motions

MRM Asset Holdings 2, Inc. (MRM) acquired an indirect equity interest in PI Two during the rehabilitation, allegedly without the knowledge of the other parties.
Metrobank, through a Manifestation and Motion, sought to bar MRM from interfering in PI Two’s management, resulting in a September 13, 2010, Order that prohibited MRM from acting in the board or management of PI Two until Metrobank’s and SCB’s money claims were fully paid.

Dispute Over SCB's Role and Collateral Handling

A disagreement emerged over SCB’s handling of the pledged collaterals:

PI Two alleged that SCB concealed its possession as well as the status of its claim in the US bankruptcy.
SCB was suspected of seeking double recovery.

PI Two moved for:

Disclosure of relevant information on the collaterals;
Submission of SCB’s pleadings from the US Bankruptcy Court;
Suspension of all payments due to SCB.

The Rehabilitation Court, in its May 4, 2011, Resolution, partially granted the motion by ordering SCB to submit a detailed list of collaterals received from LBHI.

Motions Regarding SCB's Membership in the ManCom

On January 18, 2011, PI Two filed an Urgent Motion to withdraw SCB’s Appointment to the ManCom on grounds that its representative was not a Filipino citizen (alleged violation of the Anti-Dummy Law), which was denied on May 6, 2011, for lack of merit.
MRM, feeling aggrieved by SCB’s continued presence in the ManCom and its alleged concealment of material information, filed an Omnibus Motion for:

The removal of SCB from the ManCom for lack of trustworthiness;
The suspension of payments to SCB.

The Rehabilitation Court, by its September 26, 2011, Resolution, ordered:

SCB to be removed from the ManCom (with a 30-day period provided to nominate a substitute via the Receiver);
SCB to surrender, release, and transfer a portion of the pledge collaterals to PI Two equivalent to the amount paid under the rehabilitation plan;
The denial of MRM’s other prayer in the motion for lack of merit.

Appeal and Subsequent Developments

SCB appealed the September 26, 2011, Resolution. On July 17, 2012, the Court of Appeals (CA) granted SCB’s appeal, nullifying:

The order directing the surrender of the collaterals;
The removal of SCB’s representative from the ManCom, thereby reinstating SCB on the ManCom.

Contemporaneously, the Rehabilitation Court dissolved the ManCom on July 11, 2012, stating that the reason for its creation no longer existed.
In a separate venue in New York, LBHI and LCPI initiated legal action against SCB to nullify the Pledge Agreement and recover the collaterals.
A Stipulation, Agreement and Order approved by the US Bankruptcy Court resulted in:

The allowance of SCB’s Guarantee Claim in the bankruptcy proceedings;
Partial payments to SCB and the subsequent release/transfer of the pledged collaterals to LCPI.

Further Motions in the Rehabilitation Proceedings and Final Developments

The Rehabilitation Receiver submitted a Comment on February 25, 2013, stating that SCB had lost its standing in the rehabilitation due to its opting to collect via the US bankruptcy process, recommending the dismissal of SCB’s claim.
PI Two filed an Urgent Motion on March 6, 2013, seeking:

The removal of SCB from PI Two’s list of creditors;
The return of all payments received from PI Two under the Rehabilitation Plan.

The Rehabilitation Court, on August 30, 2013, issued a Joint Resolution granting these motions and amending the Rehabilitation Plan to exclude SCB as a creditor.
On May 26, 2014, a consolidated CA Decision upheld the Joint Resolution, and a subsequent CA Resolution in January 2015 denied SCB’s partial reconsideration.
Finally, on November 26, 2015, the Rehabilitation Court terminated the rehabilitation proceedings on PI Two’s motion, certifying its successful rehabilitation.

Mootness of the Issues Raised

Both MRM and SCB acknowledged that:

The dissolution of the ManCom;
The exclusion of SCB as a creditor in the Rehabilitation Plan;
The CA’s affirmations and the eventual termination of the rehabilitation proceedings;

rendered the issues on SCB’s membership in the ManCom moot.

MRM, however, continued to insist on the surrender of the pledged collaterals to PI Two despite the collateral being already transferred pursuant to the US Bankruptcy Court’s order.

Issues:

Whether the Court of Appeals erred in nullifying the Rehabilitation Court’s order that directed SCB to surrender, release, and transfer the pledge collaterals to PI Two.
Whether the Court of Appeals erred in ordering the reinstatement of SCB’s membership in the Management Committee (ManCom) of PI Two.
Whether the issues raised, specifically SCB’s membership in the ManCom and the surrender of collaterals, are now moot and academic due to subsequent developments in the rehabilitation and related bankruptcy proceedings.
Whether any remaining claims by MRM over the pledged collaterals should be pursued separately through the appropriate forum, given that the disputes in the rehabilitation proceedings have been resolved through other mechanisms.

Ruling:

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Ratio:

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Doctrine:

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Case Digest (G.R. No. 192947)
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Case Digest (G.R. No. 192947)
Standard Advanced