G.R. No. 189509 , November 23, 2015
Metropolitan Bank & Trust Company, Petitioner, vs. G & P Builders, Incorporated, Spouses Elpidio and Rose Violet Paras, Spouses Jesus and Ma. Consuelo Paras and Victoria Paras, Respondents.

FACTS

Respondent G & P Builders, Inc. (G&P) filed a Petition for Rehabilitation on March 17, 2003. Among its obligations was a loan from petitioner Metropolitan Bank & Trust Company (Metrobank) secured by twelve parcels of land. During the pendency of the rehabilitation proceedings, G&P and Metrobank executed a Memorandum of Agreement (first MOA) on August 11, 2003, approved by the rehabilitation court on September 26, 2003. Under the first MOA, four of the mortgaged properties were to be sold for ₱15,000,000.00, with the proceeds to be deposited with Metrobank “for subsequent disposition and application pursuant to the Court approved Rehabilitation Plan,” to be exclusively applied to G&P’s obligation with Metrobank. Metrobank had the free use of the deposit but was obliged to credit the interest due on the deposit in favor of G&P.
On August 11, 2006, Metrobank entered into a Loan Sale and Purchase Agreement with Elite Union Investments Limited (Elite Union), selling G&P’s loan account for ₱10,419,000.00. Subsequently, on September 15, 2006, Elite Union, G&P, and Spouses Victor and Lani Paras executed a second MOA, where Elite Union sold all its rights and interests over the account to the Spouses Paras. The rehabilitation court approved this and rendered a Partial Judgment on Compromise on November 9, 2006.
On November 27, 2006, G&P filed a Motion for the Release of Unapplied Deposit with Metrobank, seeking the ₱15,000,000.00 deposit. Metrobank opposed, claiming the deposit was not covered by the sale to Elite Union and was to be applied exclusively to G&P’s obligation with Metrobank. The rehabilitation court granted G&P’s motion in an Order dated April 2, 2007, directing Metrobank to return the deposit with 5% annual interest, reasoning that Metrobank’s sale of the loan account novated the obligation and Metrobank’s retention of the deposit would unjustly enrich it. The Court of Appeals reversed this Order in a Decision dated November 24, 2008, holding that G&P had no personality to ask for the release since the loan account had been sold to the Spouses Paras, and that the deposit was not included in the sale to Elite Union, thus Metrobank remained entitled to it.

ISSUE

Whether the Loan Sale and Purchase Agreement between Metrobank and Elite Union, executed during the pendency of corporate rehabilitation proceedings, covered the ₱15,000,000.00 proceeds from the sale of mortgaged properties deposited with Metrobank pursuant to the court-approved first MOA.

RULING

No. The Supreme Court ruled that the ₱15,000,000.00 deposit was not included in the sale from Metrobank to Elite Union and thus remained with Metrobank. The Court held that the first MOA created a contract of simple loan or mutuum between G&P and Metrobank over the deposit, whereby Metrobank, as debtor, had the obligation to return the money to G&P, the creditor, upon demand. The terms of the first MOA were clear: the deposit was for subsequent application to G&P’s obligation pursuant to a court-approved Rehabilitation Plan. Since no Rehabilitation Plan was ever approved, the condition for the deposit’s application did not arise. Consequently, Metrobank’s obligation to return the deposit remained.
The Court further ruled that the Loan Sale and Purchase Agreement between Metrobank and Elite Union was an assignment of credit, which transferred Metrobank’s rights as a creditor to Elite Union. However, the agreement explicitly stated that all “Collections and Recoveries” received by Metrobank before the “Cut-off Date” belonged to Metrobank. The ₱15,000,000.00 deposit was received by Metrobank on September 1, 2003, which was long before the Cut-off Date of August 11, 2006 specified in the agreement. Therefore, the deposit was not part of the loan account sold to Elite Union. Metrobank’s subsequent sale of the loan account did not novate its separate obligation to return the deposit under the first MOA. The Supreme Court reversed the Court of Appeals Decision and reinstated the rehabilitation court’s April 2, 2007 Order, directing Metrobank to return the ₱15,000,000.00 deposit with 5% annual interest to G&P.