G.R. Nos. 216608 & 216625, April 26, 2023
Standard Chartered Bank, Philippine Branch, Petitioner, vs. Philippine Investment Two (SPV-AMC), Inc., Philippine Investment One (SPV-AMC), Inc., and MRM Asset Holdings 2, Inc., Respondents. [Consolidated with G.R. Nos. 216702-03]

FACTS

Standard Chartered Bank (SCB), through its Philippine Branch (SCB Philippines), provided loans to Philippine Investment Two (SPV-AMC), Inc. (PI Two), an affiliate of Lehman Brothers Holdings, Inc. (LBHI), under a group facilities agreement. LBHI executed guarantees for these loans. On September 12, 2008, LBHI executed a pledge agreement in favor of SCB’s New York Branch, pledging debt instruments (HD Supply notes and Idearc loans) as collateral. On September 15, 2008, LBHI filed for bankruptcy in the U.S., triggering a stay order. SCB Philippines then demanded payment from PI Two, which failed to pay. Metrobank initiated rehabilitation proceedings for PI Two. The RTC approved a rehabilitation plan requiring PI Two to pay its loan over six years. During rehabilitation, PI Two alleged SCB Philippines concealed its status as a secured creditor holding the pledged collaterals. The RTC ordered SCB Philippines to disclose the collaterals, which it did, revealing the HD Supply notes and Idearc loans. MRM Asset Holdings 2, Inc. moved to remove SCB Philippines from PI Two’s management committee and suspend payments, arguing SCB was already secured. The RTC removed SCB Philippines from the committee but ordered it to proportionately release collaterals as PI Two made payments. LBHI filed an adversary complaint in U.S. bankruptcy court seeking to nullify the pledge agreement. SCB Philippines settled this complaint via a Stipulation, Agreement and Order approved by the U.S. court. The rehabilitation receiver then filed a motion to direct SCB Philippines to apply the settlement proceeds to PI Two’s loan. The RTC granted this motion, ordering SCB Philippines to credit the settlement amount to PI Two’s obligation. SCB Philippines filed a Petition for Review with the Court of Appeals, which was denied. PI Two also filed a Petition for Indirect Contempt against SCB Philippines, which was likewise denied.

ISSUE

The primary issue is whether the RTC, acting as a rehabilitation court, correctly ordered SCB Philippines to credit the settlement proceeds from the U.S. bankruptcy proceedings against PI Two’s loan obligation under the approved rehabilitation plan.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals’ decision. The RTC, as a rehabilitation court, has the authority to issue orders necessary to achieve the objectives of rehabilitation proceedings, including preventing a creditor from being unjustly enriched by receiving double payment for the same obligation. The settlement proceeds received by SCB Philippines from the LBHI bankruptcy estate were intended to settle claims related to the same group facilities agreement that included PI Two’s loan. Allowing SCB Philippines to retain both the settlement proceeds and full payment from PI Two under the rehabilitation plan would constitute unjust enrichment. The RTC’s order to credit the settlement amount to PI Two’s debt was a valid exercise of its jurisdiction to ensure the fair and equitable implementation of the rehabilitation plan. The Court also found no basis for indirect contempt against SCB Philippines.