G.R. No. 205915 - Asset Pool A , Inc. vs. Clark Development Corp.

Case Summary (G.R. No. 205915)

Factual Background and Compromise Agreement

After CDC’s issuance of the 2015 TOR and the issuance of the TRO, APA and CDC filed, on November 6, 2015, an Urgent Joint Motion to Render Judgment Based on a Compromise Agreement and to lift the TRO. They attached a written compromise agreement and its annexes. The compromise agreement was framed as a contractual settlement designed to end the pending disputes, and it expressly contemplated approval by the Supreme Court in G.R. No. 205915, the same proceeding in which the appeal was being pursued.

Under the compromise agreement, CDC undertook, upon approval by the Supreme Court, to pay APA PhP 277.413 Million via manager’s or cashier’s check representing the secured creditors’ 12.5% share in the gross gaming revenues of the Regency Casino for the period up to 30 June 2015 pursuant to Section 6 of the 20 February 2004 MOA. The agreement further required that, upon signing, APA and CDC would jointly file the urgent joint motion in the Supreme Court and lift the TRO dated October 21, 2015.

The compromise agreement also set the mechanism for the withdrawal or dismissal of cases. APA and CDC agreed that, within seven (7) working days from Supreme Court approval, they would file appropriate pleadings for the withdrawal and/or dismissal with prejudice of all cases identified in Appendix I. If cases between APA and CDC were omitted or not included in Appendix I due to lack of knowledge or any other reason, the parties agreed those cases would nonetheless be deemed included and be withdrawn and/or dismissed accordingly.

Relatedly, MLRC was to file pleadings for the withdrawal and/or dismissal with prejudice of cases listed in Appendix II, with APA tasked to submit the pleadings to CDC within seven (7) working days from Supreme Court approval.

The compromise agreement conditioned payment obligations. It stated that failure of APA to file or submit the necessary pleadings under the withdrawal/dismissal provisions would entitle CDC not to release the amount provided under Section 7.1 until the necessary pleadings were properly filed or submitted for cases in Appendices I and II.

On the substantive entitlement to casino revenues, the agreement provided that the agreed revenue share from the Regency Casino operations would continue to accrue until successful privatization of the MLE. CDC would pay APA its share annually until the date of signing of the lease agreement with the winning bidder, and APA’s entitlement would cease in the event of closure of the Regency Casino.

In the event of successful privatization, the compromise agreement addressed a larger payment. It provided that the total amount of PhP 765 Million to be sourced from the privatization proceeds of the MLE would be released by CDC to APA upon signing of the lease agreement with the winning bidder and payment of the consideration to CDC under Section 8 of the 20 February 2004 MOA. It further specified that this provision applied also in case of successful privatization in the future.

Conversely, if privatization failed, the agreement stated that CDC had no obligation to release the PhP 765 Million, and it emphasized that CDC’s payment would be sourced from the proceeds of privatization paid to CDC by the winning bidder.

The compromise agreement contained broad relinquishment provisions. CDC and APA agreed that all derivative rights, privileges, interests, and obligations of APA over the MLE or pertaining to the secured creditors were waived, consolidated, and assigned in favor of CDC. They also agreed to forever waive all other claims and counterclaims against each other, including claims for money, damages, attorney’s fees, and costs of suit, and they undertook not to file any case of any kind arising from the same facts, incident, claim, cause, or causes of action. The agreement characterized itself as the full and final settlement of claims arising out of or connected with the cases stated in Appendix I. It also declared that it should not be construed as an admission of fault, negligence, or liability. Both parties assumed their own litigation expenses and attorney’s fees and other incidental expenses incurred in connection with the cases.

Finally, the agreement acknowledged that obligations arising from the 20 February 2004 MOA were deemed fully performed upon execution and compliance with the parties’ respective undertakings under the compromise agreement, and it specified that it would take effect upon approval by the Supreme Court in G.R. No. 205915.

Procedural Posture in the Supreme Court

The Supreme Court appeal proceeded from the CA’s adverse rulings. The CA had dismissed APA’s petition for certiorari that challenged the RTC June 24, 2008 order in Civil Case No. 13926, as well as the CA’s February 7, 2013 denial of APA’s motion for reconsideration.

While the appeal remained pending, the factual landscape shifted in the privatization timetable when CDC announced a reopening of bidding and issued the 2015 TOR, prompting APA to seek injunctive relief. The Court granted a TRO on October 21, 2015 to preserve the status quo against implementation of the 2015 TOR and further disposal of the MLE.

The compromise agreement and the urgent joint motion were then presented during the pendency of the Supreme Court appeal, with the explicit objective of terminating disputes and lifting the TRO.

Legal Principles Invoked by the Court

In evaluating the compromise, the Court anchored its discussion on established civil law principles governing compromise and the legal effect of such agreements once judicially approved. It characterized a compromise agreement as a contract in which parties, through reciprocal concessions, avoid litigation or end one already commenced.

The Court also invoked the statutory duty of the court to persuade parties to agree on a fair compromise in civil cases, referring to Article 2029 of the Civil Code. It further recognized that parties may establish stipulations and terms they deem convenient, as long as those stipulations are not contrary to law, morals, good customs, public order, or public policy.

Further, the Court recognized that once the parties entered into a compromise, the agreement carried the effect and authority of res judicat

Case Syllabus (G.R. No. 205915)

Asset Pool A (SPV-AMC), Inc. appealed an adverse decision of the Court of Appeals that dismissed its petition for certiorari challenging an earlier RTC order and a subsequent CA resolution.
Clark Development Corporation was the adverse party in the appeal and the respondent in the certiorari proceedings below.
The appeal reached the Supreme Court after the parties submitted a joint motion to terminate their disputes through a compromise agreement, with a request to lift the existing temporary restraining order.

Parties and Procedural Posture

Asset Pool A (SPV-AMC), Inc. acted as the transferee and successor-in-interest of United Coconut Planters Bank (UCPB) and Metropolitan Bank and Trust Company (Metrobank), which were secured creditors of Mondragon Leisure and Resorts Corporation (MLRC).
The Supreme Court case was an appeal from a CA decision promulgated on September 4, 2012 in CA-G.R. SP No. 104129, and from a CA resolution promulgated on February 7, 2013 that denied a motion for reconsideration.
The CA had dismissed the petition for certiorari assailing an RTC, Branch 62 order dated June 24, 2008 in Civil Case No. 13926, which had been issued in an action for specific performance and damages.
The Supreme Court proceedings included the issuance of a temporary restraining order (TRO) during the pendency of the appeal, which later became the subject of a request to be lifted.
On November 6, 2015, Asset Pool A (SPV-AMC), Inc. and Clark Development Corporation filed an Urgent Joint Motion for the Supreme Court to render judgment based on their compromise agreement and to lift the TRO.
The Supreme Court approved the compromise agreement, rendered judgment in accordance with its terms, lifted and set aside the TRO, and dismissed the appeal without pronouncement on costs.

Key Factual Allegations

The dispute arose from the development and operation of the Tourism Estate Phase I, which later became known as the Mimosa Leisure Estate (MLE).
The secured creditors of MLRC had provided working capital requirements for the MLE project, and Asset Pool A (SPV-AMC), Inc. claimed rights as their transferee and successor-in-interest.
The RTC proceeding involved specific performance and damages aimed at compelling Clark Development Corporation to include the claims of the secured creditors in the documents attendant to the bidding for the privatization of the MLE.
The CA dismissed the certiorari petition that attacked the RTC order and later denied reconsideration, prompting the appeal to the Supreme Court.
While the appeal was pending, Clark Development Corporation announced that the privatization of the MLE would be re-opened for public bidding.
The respondent issued the 2015 Terms of Reference (2015 TOR) and scheduled the submission, opening, and evaluation of bids, with the schedule later moved from October 13, 2015 to October 27, 2015.
In response to the re-bidding, the Supreme Court issued a TRO on October 21, 2015 to enjoin Clark Development Corporation, its agents, and representatives from implementing the 2015 TOR or proceeding with the disposal of the MLE.
The parties then entered into a compromise arrangement designed to resolve disputes related to the secured creditors’ interests and the privatization process.

Compromise Agreement Terms

The parties’ compromise agreement defined Clark Development Corporation as CDC and Asset Pool A (SPV-AMC), Inc. as APA.
The compromise agreement provided for conditional monetary payments tied to the secured creditors’ share in gross gaming revenues and to the successful privatization of the MLE.
The agreement stated that, upon approval of the compromise by the Supreme Court, CDC would pay APA PhP277.413 Million representing the secured creditor’s 12.5% share in the gross gaming revenues of the Regency Casino for the period up to 30 June 2015, pursuant to Section 6 of the 20 February 2004 MOA.
The agreement required that, upon signing, APA and CDC would jointly file an Urgent Joint Motion to render judgment based on the compromise agreement and to lift the TRO dated October 21, 2015.
The agreement required that, within seven (7) working days from Supreme Court approval, APA and CDC would file the appropriate pleadings for the withdrawal and/or dismissal with prejudice of all cases stated in Appendix I.
The agreement also contemplated cases that might be omitted from Appendix I by lack of knowledge or other reasons, stating that such cases were to be treated as included and withdrawn and/or dismissed accordingly.
The agreement required MLRC, via APA, to file the appropriate ple