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SO ORDERED.
Puno (C.J.), Ynares-Santiago, Carpio, Corona, Carpio-
Morales, Chico-Nazario, Velasco, Jr., Nachura, Leonardo-De
Castro, Brion, Peralta, Bersamin and Abad, JJ., concur.
Quisumbing, J., On Official Leave.
Petition denied, judgment and resolution affirmed.
Note.It is a basic principle of the law on public officers that a
public official or employee is under a three-fold responsibility for violation
of a duty or for a wrongful act or omissionhe may be held civilly,
criminally and administratively liable for a wrongful doing; The dismissal of
a criminal complaint does not necessarily foreclose the continuation of an
administrative action or carry with it relief from administrative liability.
(Apolinario vs. Flores, 512 SCRA 113 [2007])
o0o

G.R. No. 171681.September 11, 2009.
*
KEI MARIE and BIANCA ANGELICA, all surnamed ABRERA,
minors and represented by their parent EVELYN C. ABRERA;
ASTRID NOELLE S. ALMEDA, minor, represented by his parent MA.
ROMINA FRANCHESCA S. ALMEDA; JOHN KENNETH P.
ANDALIS, minor, represented by his parent ELSA P. ANDALIS;
RONALD B. ANG, minor, represented by his parent MA. JUDY B.
ANG; MARIEL ANGELES, minor, represented by her parent
ENRIQUE E. ANGELES; JEREMIAH M. ANTONIO, minor,
represented by his parent ELSA M. ANTONIO; LESTER C. ARAO,
minor, represented by his parent ROSALINA C.
_______________
* THIRD DIVISION.
535
VOL. 599, SEPTEMBER 11, 2009 535
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Abrera vs. Barza
ARAO; MA. LIRIO A. AROMIN, minor, represented by his parent
FREDERICK A. AROMIN; ELDY S. AZURIN, minor, represented by
her parent ELSA S. AZURIN; MARION JANINE J. AZURIN, minor,
represented by her parent MA. THERESA J. AZURIN; PIOLO
MIGUEL G. BARLETA, minor, represented by his parent HENRY
LUIS E. BARLETA; VIANCA SOPHIA, VINCE PATRICK and
VOLTAIRE BYRONE, all surnamed BASAS, minors, and respresented
by their parents NERIO and MARIBEL D. BASAS; LAWRENCE
CARLOS and LUIS PAULO, all surnamed BATAC, minors, and
represented by their parent RAQUEL C. BATAC; DARREL L.
BAUTISTA, minor, represented by his parent NILDA L. BAUTISTA;
JUAN CARLOS and MARIA ANGELA, all surnamed BAUZA,
minors, and represented by their parent NESTOR A. BAUZA; MARK
GERALD and LUIGI, all surnamed BENTULAN, minors, and
represented by their parent FLORENCIO M. BENTULAN; PIERRE
ANGELI M. BLASCO, minor, represented by her parent NARDA A.
BLASCO; SARAH CATHERINE A. CABACES, minor, represented
by her parent LUZ A. CABACES; KIRK ANTHONY and JOHN
MICHAEL, all surnamed CAMUS, minors, represented by their parent
MABEL B. CAMUS; PRECIOUS JOY V. CAPISTRANO, minor,
represented by her parent JOSEPH F. CAPISTRANO; SHELLAH
MAE P. CARINO, minor, represented by her parent RUPERTO L.
CARINO; JOHN LAWRENCE A. CATAN, minor, represented by his
parent BERNARDINO O. CATAN, JR.; CZARINA ROSE S. CHAN,
minor, represented by her parent LUCILA S. CHAN; ANTHONY S.
CHAN, minor, represented by his parent WILLY L. CHAN; ADRIAN
CHRISTIAN S. CHUA, minor, represented by his parent VINSON G.
CHUA; CHRISTOFFER RYAN and CARL BENEDICT, all surnamed
CHUA, minors, represented by their parent EDGARDO A. CHUA;
SHIELA CERNIAS, minor, represented by her parent YOLANDA
CERNIAS; GENE LOUISE B. COMENDADOR, minor, represented
by his parent HERMOGENES A. COMENDADOR; JOHN
KENNETH and MICHAEL ANGELO, all surnamed
536
536 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
CRUZ, minors, and represented by their parent AIDA L. CRUZ;
WENDELL JAKE D. CRUZ, minor, represented by his parent EDWIN
I. CRUZ; SYMON GABRIEL M. DAVID, minor, represented by his
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parent ARSENIO P. DAVID; JENNILYN M. DE JESUS, minor,
represented by her parent MARCIAL S. DE JESUS; DYLEEN MAY
M. DELA ROSA, minor, represented by her parent ANALEN M.
DELA ROSA; MA. ANGELIKA B. DELA ROSA, minor, represented
by her parent ROMULO R. DELA ROSA; MARK KEVIN H. DELA
TORRE, minor, represented by his parent LEONORA H. DELA
TORRE; ALVIN MERCK C. DE LEON, minor, represented by his
parent MERCEDITA C. DE LEON; RICHARD ANTHONY B.
DELIZO, minor, represented by his parent RICHMOND JOHN
DELIZO; REYNOLD JOHN A. DEMIN, minor, represented by his
parents MERLIN and HERNANDO A. DEMIN; MIRCO M.
DESPABELADERA, minor, represented by his parent ELINITA M.
DESPABELADERA; CARLO D. DIALA, minor, represented by his
parent LEONOR D. DIALA; PATRICK JEROME and FRANCIS, all
surnamed DIAZ, minors, represented by their parents ESMERALDO
and CARMENCITA DIAZ; HILTELYN C. DOMINGUIANO, minor,
represented by her parent HILTON D. DOMINGUIANO;
ROGIELYN G. EBETO, minor, represented by his parent ROGER R.
EBETO; ERIN and EINRE, all surnamed ERMINO, minors, and
represented by their parent EVA H. ERMINO; ARRON LEVIN G.
ESGUERRA, minor, represented by his parent RICHARD MARTIN G.
ESGUERRA; MA. ANGELICA GRACIA C. ESTRADA, minor,
represented by her parent CHARITA C. ESTRADA; FEDERICO C.
FAUSTINO, JR., minor, represented by his parent SALVACION C.
FAUSTINO; MIA RUTH M. FERNANDEZ, minor, represented by her
parent MILAGROS M. FERNANDEZ; FAITH and CHARITY, all
surnamed GABRIEL, minors, and represented by their parent FE G.
GABRIEL; C JAY and ELAINE JOY, all surnamed GAHUMAN,
minors, and repre-sented by their parents JOSEPHINE and CASTOR
V. GAHUMAN, JR.; MARY KAYCY N. GALLARDO, minor, repre-
537
VOL. 599, SEPTEMBER 11, 2009 537
Abrera vs. Barza
sented by her parent GRIZELA N. GALLARDO; DALRU MARPIN
C. GAVIOLA, minor, represented by his parent DALIA C. GAVIOLA;
MARIEL CARLA and JONALYN, all surnamed GEPULLANO,
minors, and represented by their parent MANUELA A. GEPULLANO;
JOEL ROY D. GONZALES, minor, represented by his parent ENELIA
D. GONZALES; KIM ARRIZA P. HENSON, minor, represented by
her parent MERCEDITA G. PASTRANA; EFFIE FIELLE and
GIUSEPPE LORENZO, all surnamed IGNACIO, minors, and
represented by their parent GEMMA M. IGNACIO; HANS
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CHRISTIAN C. GOLONG, minor, represented by his parent
BENSON C. GOLONG; JOSEPHINE V. JORGE, minor, represented
by her parent ELEUTERIO C. JORGE; MARY JUDE C. LOMARDA,
minor, represented by her parent BENJAMIN A. LOMARDA; JERLIN
and JERUSALEM, all surnamed LOPEZ, minors, and represented by
their parents MERLINDA and JERUSALEM P. LOPEZ, SR.; DHAN
COLINS, MA. LIANA, MARIA VIRGINIA and RIZALDY, all
surnamed MABBORANG, minors, represented by their parents
MERCELITA and DANIEL T. MABBORANG, JR.; OSCAR R.
MACHICA, minor, represented by his parent ROSE R. MACHICA;
NERSON and NERIEL, all surnamed MADRIAGA, minors, and
represented by their parent NOEL B. MADRIAGA; MOISES M.
MADRID, minor, represented by his parent, FEDERICO S. MADRID
II; CHRISTINE ALYSSA A. MARQUEZ, minor, represented by her
parent BERNARDO T. MARQUEZ, JR.; CATHLEEN R.
MARQUEZ, minor represented by her parent CARMELITA P.
MARQUEZ; KRISTEL CANE A. MARQUEZ, minor, represented by
her parent FILOMENA A. MARQUEZ; CHRYL BHEFER M.
MARTINEZ, minor, represented by ESPERANZA M. MARTINEZ;
JESSICA J. MARTINEZ, minor, represented by her parent DAISY J.
MARTINEZ; IVAN GERARD G. MASILUNGAN, minor, represented
by his parent LILIAN G. MASILUNGAN; MONA JAMYLA and
KARLA VENICE, all surnamed MENDOZA, minors, and represented
by their parents LILIBETH and OSCAR U. MENDOZA; MARY
JOYCE O. MONTE-
538
538 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
VERDE, minor, represented by her parent MANUELITO C.
MONTEVERDE; CHRISTIAN PAULO O. MORALES, minor,
represented by his parent ELY O. MORALES; JOHN ADRIAN M.
DADOR and KRIZIA ARRA G. MUNCAL, minors, and represented
by their parent LOLITA C. MUNCAL; KENNETH R. MUYA, minor,
represented by his parent EMILY R. MUYA; JACOB YSRAEL C.
NUCUM, minor, represented by his parent MARIA VICI C. NUCUM;
JERIEL JAMES S. NG, minor, represented by his parent JAIME
RAMON J. NG; JOHN MARVIN and JOHN MICHAEL, all
surnamed NORADA, minors, and represented by their parents NORMA
and RODEL P. NORADA; KERVIN M. OCAMPO, minor,
represented by his parent JESUS V. OCAMPO; MARIA ANA and
ANGELO LEO, all surnamed OLANDAY, minors, and represented by
their parent ROLANDO P. OLANDAY; PHOEBE GAYLE Y. ONG,
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minor, rerepsented by her parent PEPITO C. ONG; MARTIN JOHN
and MARC JASON, all surnamed ORIBIANA, minors, and represented
by their parents MYRNA and JOSE JERRY G. ORIBIANA; MARY
ANN M. ORTEGA, minor, represented by her parent VIRGILIO L.
ORTEGA; PHILLIP JULIUS, PHILLIP JOBILL, all surnamed
PARANE and HAYLEY G. SABANGAN, minors, and represented by
their parent and guardian ANNABELLE G. PARANE; RAY
BERNARD and REYNEDEN, all surnamed PAYUYO, minors,
represented by their parent EDEN A. PAYUYO; JUSTIN GODFRED
B. PERALTA, minor, represented by his parent MA. TERESA B.
PERALTA; PATRICK JOHN C. PEREZ, minor, represented by his
parent ROSILYN C. PEREZ; RAMON MIGUEL C. PINEDA, minor,
represented by his parent MELINA C. PINEDA; ERIKA R. PRADO,
minor, represented by her parent VIRGILIO C. PRADO; LAARNI
YVETTE M. QUIJANO, minor, represented by her parent
ARNELSON R. QUIJANO; JOSEPH DAVID Q. SERRANO, minor,
represented by his parents MA. AIDA F. QUINIT; SHAYNE ANNE
and SHEENA APRIL, all surnamed RABIT, minors, and represented by
their parent MILA S. RABIT; JELYNNE and JEN-
539
VOL. 599, SEPTEMBER 11, 2009 539
Abrera vs. Barza
NIFER, all surnamed REYES, minors, and represented by their parents
FE and JUANITO G. REYES; PAULA KATE ROCABERTE, minor,
represented by her parent MA. KATHRYN A. ROCABERTE;
EDRIANE JAMES E. ROMERO, minor, represented by his parent
RIZALITA E. ROMERO; CHRISTOPHER NEIL B. SACLOLO,
minor, represented by his parent ROBERTO C. SACLOLO; FRANZ
HENDRIX FELIX G. SALCEDO, minor, represented by his parent
ROXANIETTE G. SALCEDO; JOHN EDWARD F. SANTOS, minor,
represented by his parent ANITA F. SANTOS; DAVID T. SANTOS,
minor, represented by his parent ESTRELLA T. SANTOS; MARK
ANTHONY E. SINOHIN, minor, represented by his parents
DOLORES and MAMERTO M. SINOHIN; FRANCIS ADRIAN and
FRANCIS DAVID, all surnamed SUMULONG, minors, represented by
their parent FRANCISCO M. SUMULONG; SEAN LAWRENCE A.
SY, minor, represented by his parent ERLANI S. SY; JOSEPH MAR
G. TALAG, minor, represented by his parent JOSE MARCIAL P.
TALAG; KIM ANDREW D. TAMPO, minor, represented by her
parent FRANCISCO S. TAMPO, JR.; LANCE MICHAEL S. TIU,
minor, represented by his parent GIRLIELYN S. TIU; JULIAN
BERNARDO FERICO TORRALBA, minor, represented by his parent
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FEDERICO C. TORRALBA; JENAVEE A. VALENZUELA, minor,
represented by her parent EDNA A. VALENZUELA; MYSTICA R.
VARGAS, minor, represented by her parent ROSA R. VARGAS;
DIANE V. VERGARA, minor, represented by her parent VILMA
VERGARA; KRISTOFER LORENZ J. VICEDO, minor, represented
by his parent CESAR M. VICEDO; MERRY GRACE and MIZZAH-
MYRRH, all surnamed VILLALON, minors, and represented by their
parent MYRNA M. VILLALON; BILLY JOE P. VILLAREAL, minor,
represented by his parent ANITA P. VILLAREAL; REGINE A. VINA;
minor, represented by her parent MA. ERMINDA A. VINA,
ROWAME LAR, DING BERNALD and KAMILLE SHANE, all
surnamed WAJE, minors, and represented by their parent ZOILA M.
WAJE; KRISTINE RAY O. ZAPANTA, represented
540
540 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
by her parent CRISTINA O. ZAPANTA; JEANAFE ABELARDE,
represented by her guardian FE LILIA M. ABELARDE; JOHN
JASPER C. ABRERA, represented by his parent EVELYN C.
ABRERA; AILEEN and ALLAN, all surnamed ACIELO, represented
by their parent ALBERTO P. ACIELO; MARJORIE, MARK DAVE,
OLIVE MARIE, all surnamed ADANZA and LUIS EDISON RANA,
represented by their guardian/parents MYRNA and ORESTE P.
ADANZA; JOSEL AMOR E. AGUILAR, represented by his parent
JOSE L. AGUILAR; JOSUELLE A. ALCANTARA, represented by
her parent ALICIA A. ALCANTARA; ELINOR JOY J. ANTONIO,
represented by her parent TERESITA J. ANTONIO; DESIREE
CLARRISSE K. ARANZASO, represented by her parent
GERMELYN GRACE K. ARANZASO; MARK JEREMIAH J.
AZURIN, represented by his parent MA. THERESA J. AZURIN;
ADAMSON S. BAETA, represented by his parent ADAM Q. BAETA;
LEO A. BALACUIT; SYDNEY ADRIANE C. BALOD, represented
by her parent ANDRES P. BALOD, SR.; ANTONIO A. BALTAZAR;
JAY-R B. BANOGON, represented by his parent EDUARDO E.
BANOGON; SHARYLEN C. BARLIN, represented by her parent
MAXIMA C. BARLIN; JAYZON S. BAUTISTA, represented by his
parent ESTER S. BAUTISTA; ROSALITA B. BENIG, repesented by
her parent LILLOSA B. BENIG; ROSIELYN and REMILYN, all
surnamed BERMUDEZ, represented by their parent MARINA C.
BERMUDEZ; JUDITH L. BERNAL; JOELIE LELAINE D. BOCAR,
represented by her parent JOSEPH G. BOCAR; JEAN CARLO
BUENO, represented by her guardian JEMMA G. TERRADO;
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JANINA S. BUSTOS, represented by her parent CRISTINA S.
BUSTOS; DOMINADOR D. CAMACHO; EVA CAMERO,
represented by her parent MERLINDA C. CAMERO; DENNIS
ANGELO C. CANLAS, represented by his parent ARMANDO L.
CANLAS; EZRA P. CANLAS, represented by her parent ROMULO
T. CANLAS; MARIA VICTORIA B. CARLOS; VISAMINDA Z.
CARLOS, represented by her parent MA. JOSEFINA Z. CARLOS;
RHENY FRANCES F. CATIM-
541
VOL. 599, SEPTEMBER 11, 2009 541
Abrera vs. Barza
BANG, represented by her parent HENRY T. CATIMBANG;
ADDISON S. CHAN, represented by his parent WILLY CHAN; ACE
PAREJA CHUMACERA, represented by his parent YOLANDA
PAREJA CHUMACERA; ELLAN MARIE P. CIPRIANO,
represented by her parent MARIZA P. CIPRIANO; JASON CARLO
U. CONCEPCION, represented by his parent FEDERICO A.
CONCEPCION; MARK SHERWIN A. CREUS, represented by his
parent MEDENCIA A. CREUS; IMELDA V. CRUZ; ARVILYNNE
L. DALANGIN, represented by her parent EVA L. DALANGIN;
DENNIS and KATHRYN, all surnamed DE JESUS, represented by
their parent MARCIAL S. DE JESUS; RHODA PIA B. DELIZO;
RANIER SAN JOSE DEL ROSARIO, represented by his parent
CEFERINO S. DEL ROSARIO; FRANCIS J. DIAZ, represented by
his parent ESMERALDO G. DIAZ; MEDYLEN P. DIMDIMAN,
represented by her parent DANILO D. DIMDIMAN; ARMAND
ARNEL MILLAN T. DIVINAGRACIA, represented by his parent
MARIETTA T. DIVINAGRACIA; ROBERTO NEIL DIZON,
represented by his parent ROBERTO V. DIZON; CATHERINE
DONES, represented by her parent TERESITA L. DONES; SHERYL
BUDIONGAN ESQUILLA, represented by her parent EUSEBIA B.
ESQUILLA; RUEL A. FERNANDO, represented by his parent
REMEDIOS C. FERNANDO; RAYES, RYAN and RICHARD, all
surnamed FRIAS, represented by their parent ESTELLA P. FRIAS;
KATRINA GRACE R. GALANG, represented by her parent MA.
VICTORIA R. GALANG; JIMMY and JOANNE MARIE, all
surnamed GO, represented by their parent MIRIAM MARGARETTE
M. GO; JUNALIN B. AQUINO, represented by her guardian
SUSANA B. GOLOCINO; HANS CHRISTIAN C. GOLONG,
represented by his parent BENSON C. GOLONG; KRISTINE
GONZALES, represented by her parent EDNA L. GONZALES;
AGNES L. GUIANG; LOURDES JOY and ERIK MARKUS, all
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surnamed HERNAL, represented by their parent NORMAN HERNAL;
MARK TIMOTHY A. HERNANDEZ, represented by his parent
MARIO G. HERNANDEZ; RACHEL JOY M. IBANEZ, represented
by
542
542 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
her parent BRENDA M. IBANEZ; CARLO MIGUEL A. IBARRA,
represented by his parent MARY CLAIR A. IBARRA; SHALIMAR S.
ICABANDI, represented by his parent LADISLAO I. ICABANDI;
DANILO IDOS; EDISON O. INGALLA, represented by his parent
EDUARDO I. INGALLA; JOMARI M. JAVILINAR, represented by
his parent MILAGROS M. JAVILINAR; JOSEPHINE S. JOVES;
VICTORIA P. JUMANOG; ANNA CAMILLE R. LALATA,
represented by her parent CORAZON R. LALATA; LAWRENCE
CHRISTIAN LAM, represented by his parent MILA DE LEON LAM;
KATHERINE and JULIE ANN, all surnamed CABALLA, represented
by their guardian CECILIA C. LUBBERTS; DANICA MAE M.
MABBORANG, represented by her parent DANIEL T.
MABBORANG, JR.; GRACE, ROBERTO JOSHUE and JOSEPH, all
surnamed MALAZARTE, represented by their parent LUCAS L.
MALAZARTE, JR.; ADAM LESTER E. MANALANG, represented
by his parent MARISSA E. MANALANG; CHIARA A.
MARASIGAN, represented by her parent EUFROSINA A.
MARASIGAN; ROSE E. MARQUEZ, represented by her parent
FEDERICO T. MARQUEZ; RICHARD J. MARTINEZ, represented
by his parent DAISY J. MARTINEZ; IVAN ISRA and EXEQUIEL, all
surnamed MASILUNGAN, represented by their parent LILIAN G.
MASILUNGAN; KENO A. MENDEZ, represented by his parent MA.
CLARA A. MENDEZ; LIGAYA J. MENESES; RIA and RUBY, all
surnamed MIRASOL, represented by their parent MARILOU S.
MIRASOL; EMMANUEL L. MISA, represented by his parent
LETICIA L. MISA; MA. KATRINA M. MAYO; NATHANIEL and
MARVIN NOEL, all surnamed MURILLO, represented by their parent
NERISSA T. MURILLO; ERIC and MICHAEL, all surnamed MUYA,
represented by their parent EMILY R. MUYA; IDA AYESAW.
NECIA, represented by her parent ROBERTO P. NECIA; JETHRO
FRANCIS S. NG, represented by his parent PRISCILLA S. NG;
MARY ANN G. MERCADO, represented by her guardian CYNTHIA
M. NOVENCIDO; MA. KATRINA M. OCAMPO, represented by
her
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543
VOL. 599, SEPTEMBER 11, 2009 543
Abrera vs. Barza
parent JESUS V. OCAMPO; KATHLEEN KAY and RUFFA, all
surnamed OLIMAN, represented by their parent ANGELES L.
OLIMAN; RAYMOND JOSEPH R. OLIVERA; RONA M.
OPULENCIA, represented by her parent GLORIA M. OPULENCIA;
JESSICA MAE G. ORIBIANA, represented by her parent JOSE
JERRY G. ORIBIANA; JOSE CONRADO T. OROPILLA,
represented by his parent REBECCA T. OROPILLA; ANN FRANCIS
M. ORTIZ, represented by her parent ANTONIO S. ORTIZ; JOHN
PETER PALENCIA, represented by his parent TSG. PETER K.
PALENCIA; DOM DANIEL M. PATERNO, represented by his parent
MYRNA M. PATERNO; AUSTIN RAINER M. PEREZ, represented
by his parent FE M. PEREZ; FRANCISCO and ANGELICA, all
surnamed POBOCAN, represented by their parent MEDALLA T.
POBOCAN; DIANA and CARMELA, all surnamed PRADO,
represented by their parents ARCELI and VIRGILIO C. PRADO;
FELIX and SAHARA, all surnamed RABIT, represented by their parent
MILA S. RABIT; MA. CRISTINA PAULA A. RAMIREZ,
represented by her parent ISMAEL M. RAMIREZ; GLENN JOSEPH
R. ARBOLEDA, represented by his guardian NANETTE S. RAMIREZ;
RICARDO R. ONG, represented by his guardian CARMEN R.
RAMOS; GIAN FRANCIS B. RAMOS, represented by his parent
ELIZABETH B. RAMOS; CHRISTIAN REY G. RAMOS,
represented by his parent IRINEO B. RAMOS, JR.; PRINCESS RUTH
L. RAYNERA, represented by her parent PURISIMA L. RAYNERA;
MARISSA TESSA Y. REDOR, represented by her parent
FLORDELIZA Y. REDOR; PAULO and DENNIS, all surnamed
ROMERO, represented by their parents LERMA and EDUARDO C.
ROMERO; JILLIAN ROSE L. ROSARIO, represented by her parent
LYDIA L. ROSARIO; VALERIE C. RUBIALES, represented by her
parent DELFIN A. RUBIALES; ANITA S. SAAVEDRA; GIAN
CARLO L. SALAZAR, represented by his parent VIRGILIO B.
SALAZAR; TROT ZARDOZ and GAIA KASSIOPEIA, all surnamed
SALCEDO, represented by their parent ROXANIETTE G. SALCEDO;
RICHARD D. SANTOS, represented
544
544 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
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by his parent ELENA D. SANTOS; TWINKLE I. SAQUITAN,
represented by her parent DOLORES I. SAQUITAN; ROCKY and
JENNIFER, all surnamed SARDUAL, represented by their parent
JEFFERSON SARDUAL; MARIA LOURDES SARMIENTO,
represented by her parent MA. EVELYN L. SARMIENTO; OINECA
LOVE Q. MANUEL, represented by her guardian GRACE Q.
SHARIEM; JOHN RUSSELL I. SUAREZ, represented by his parent
SONIA I. SUAREZ; KRESTA J. SUICO, represented by her parent
MARISSA J. SUICO; ANNA MICHELLE and MAY JOANNA, all
surnamed SUMULONG, represented by their parent FRANCISCO M.
SUMULONG; MA. ELAINE TALOSIG, represented by her parent
AURORA A. TALOSIG; CHARLENE AIKA TAN, represented by
her parent ENG KUI C. TAN; KENO B. TIMPUG, represented by his
parent JAIME A. TIMPUG; MA. KATRINA M. TOLENTINO,
represented by her parent ASTERIA M. TOLENTINO; ROMMEL
JOHN PAUL and ROLANDO, all surnamed TORRES, represented by
their parent DOMINGA TORRES; KIM CHARLES R. TRINIDAD,
represented by his parent MELCHOR S. TRINIDAD; LIBERY ANNE
A. TICZON, represented by LIBRADO D. TICZON; CINDY ANNE
T. UMAGUING, represented by her parent ZENAIDA T.
UMAGUING; APRIL ABIGAIL A. VALENZUELA, represented by
her parent EDNA A. VALENZUELA; ORLANDO and EVELINA, all
surnamed VERGARA, represented by their parent EVELINA R.
VERGARA; JOHANN and DERIKKO, all surnamed VICENTE,
represented by their parent CECILIA M. VICENTE; DIANA RUBY
and CLAIRE ANN, all surnamed VILLANUEVA, represented by their
parent LYDIA VILLANUEVA; MARIE FRANCE and ANTHONY,
all surnamed VILLAREAL, represented by their parent ANITA P.
VILLAREAL; TASEI YOSHIDA and NEMUEL O. VILLAROJAS,
JR., represented by their guardian NELIA G. VILLAROXAS; NILO P.
VILLARUEL; FREDERICK A. VINAS, represented by his parent
BONIFACIO B. VINAS, JR.; DIANE CHRISTINE and DARLENE,
all surnamed VISPO, represented by their parent
545
VOL. 599, SEPTEMBER 11, 2009 545
Abrera vs. Barza
ADELAIDA P. VISPO; RAY KRISTOFFER O. ZAPANTA,
represented by his parent CRISTINA O. ZAPANTA, in their individual
capacities as defrauded purchasers of policies of CAP shares and for and
in behalf of 780,603 others similarly situated, petitioners, vs. HON.
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ROMEO F. BARZA,
**
in his capacity as the Presiding Judge of the
Regional Trial Court of Makati City, Branch 61, and COLLEGE
ASSURANCE PLAN PHILIPPINES, INC., respondents.
Corporation Law; Securities Regulation Code (Republic Act No. 8799);
Corporate Rehabilitation; Pre-Need Plans; Words and Phrases; Pre-Need
Plans, Defined.CAP is a domestic corporation engaged in the business of
selling pre-need educational plans. Republic Act (R.A.) No. 8799, otherwise
known as The Securities Regulation Code, defines pre-need plans as
contracts which provide for the performance of future services or the
payment of future monetary considerations at the time of actual need, for
which planholders pay in cash or installment at stated prices, with or without
interest or insurance coverage, and includes life, pension, education,
interment, and other plans which the Commission may from time to time
approve.
Same; Same; Same; The law governing corporate rehabilitation and
suspension of actions for claims against corporations is Presidential Decree
(P.D.) No. 902-A, as amended; Republic Act No. 8799, which took effect on
August 8, 2000, transferred SECs jurisdiction over all cases enumerated
under Section 5 of Presidential Decree No. 902-A, as amended, to the courts
of general jurisdiction or the appropriate Regional Trial Court.The law
governing corporate rehabilitation and suspension of actions for claims
against corporations is Presidential Decree (P.D.) No. 902-A, as amended.
Section 5 of P.D. No. 902-A, as amended by P.D. No. 1758, enumerates the
cases over which SEC has jurisdiction to hear and decide, which includes
[p]etitions of corporations, partnerships or associations to be declared in the
state of suspension of payments in cases where the corporation, partnership
or association possesses sufficient property to cover all its debts, but foresees
the impossibility of meeting them when they respectively fall due or in cases
where the corporation, partnership or association has no sufficient assets to
cover its liabili-
_______________
** Now an Associate Justice of the Court of Appeals.
546
546 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
ties, but is under the management of a Rehabilitation Receiver or Management
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Committee. R.A. No. 8799, which took effect on August 8, 2000,
transferred SECs jurisdiction over all cases enumerated under Section 5 of
P.D. No. 902-A, as amended, to the courts of general jurisdiction or the
appropriate Regional Trial Court.
Same; Same; Same; Interim Rules of Procedure on Corporate
Rehabilitation of 2000 (Interim Rules); The Interim Rules, which took effect
on December 15, 2000, apply to petitions for rehabilitation filed by
corporations, partnerships, and associations pursuant to P.D. No. 902-A, as
amended.On November 21, 2000, this Court approved the Interim Rules of
Procedure on Corporate Rehabilitation of 2000 (Interim Rules), which took
effect on December 15, 2000. The Interim Rules apply to petitions for
rehabilitation filed by corporations, partnerships, and associations pursuant to
P.D. No. 902-A, as amended. The Interim Rules governed the proceedings in
Sp. Proc. No. M-6144. CAP filed the petition for corporate rehabilitation,
because it is unable to service its debts as they fall due and its assets are
insufficient to cover its liabilities. CAP filed the petition under Section 1, Rule
4 of the Interim Rules, which provides: SECTION 1. Who May Petition.
Any debtor who foresees the impossibility of meeting its debts when they
respectively fall due, or any creditor or creditors holding at least twenty-five
percent (25%) of the debtors total liabilities, may petition the proper Regional
Trial Court to have the debtor placed under rehabilitation. Under the Interim
Rules, debtor shall mean any corporation, partnership, or association,
whether supervised or regulated by the Securities and Exchange
Commission or other government agencies, on whose behalf a petition for
rehabilitation has been filed under these Rules.
Same; Same; Same; Same; Pre-Need Plans; Words and Phrases; The
Interim Rules does not distinguish whether a pre-need corporation cannot file
a petition for rehabilitation before the RTC; The claim of petitioners for
payment of tuition fees from a pre-need corporation is included in the
definition of claims under the Interim Rules.The Interim Rules does not
distinguish whether a pre-need corporation like CAP cannot file a petition for
rehabilitation before the RTC. Courts are not authorized to distinguish where
the Interim Rules makes no distinction. Moreover, under the Interim Rules,
claim shall include all claims or demands of whatever na-
547
VOL. 599, SEPTEMBER 11, 2009 547
Abrera vs. Barza
ture or character against a debtor or its property, whether for money or
otherwise. Creditor shall mean any holder of a claim. Hence, the claim
of petitioners for payment of tuition fees from CAP is included in the
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definition of claims under the Interim Rules.
Same; Same; Same; Same; Rules of Procedure on Corporate
Rehabilitation of 2009; The Interim Rules of Procedure on Corporate
Rehabilitation of 2000 has been amended by the Rules of Procedure on
Corporate Rehabilitation of 2009, which took effect on January 16, 2009.
The Interim Rules of Procedure on Corporate Rehabilitation of 2000 has been
amended by the Rules of Procedure on Corporate Rehabilitation of 2009,
which took effect on January 16, 2009. Under the 2009 Rules of Procedure,
the power of the RTC to issue a Stay Order when it finds the petition for
rehabilitation to be sufficient in form and substance is contained in Section 7,
Rule 3, which likewise does not exempt claims arising from pre-need
contracts from the Stay Order.
Same; Same; Same; Same; Stay Orders; Even if the relationship is one
of trust, there is no provision in the Interim Rules that a claim arising from a
trust relationship is excluded from the Stay Orderthe stay order is effective
on all creditors of the corporation without distinction, whether secured or
unsecured.Petitioners contend that the relationship between a planholder
and a pre-need corporation is one of trust and not a debtor-creditor
relationship. However, such a relationship has not been properly established
by petitioners. This Court is not a trier of facts and cannot rule in this petition
on whether the relationship between CAP and the planholders is one of trust,
absent a factual finding by the trial court. Nevertheless, even if the
relationship is one of trust, there is no provision in the Interim Rules that a
claim arising from a trust relationship is excluded from the Stay Order.
Negros Navigation Co., Inc. v. Court of Appeals (573 SCRA 434 [2008])
explained the reason for suspending all pending claims against a corporation
under receivership, thus: x x x x The stay order is effective on all creditors of
the corporation without distinction, whether secured or unsecured. All assets
of a corporation under rehabilitation receivership are held in trust for the equal
benefit of all creditors to preclude one from obtaining an advantage or
preference over another by the expedience of attachment, execution or
otherwise. As between the creditors, the key phrase is equality in equity.
Once the corporation threatened by
548
548 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
bankruptcy is taken over by a receiver, all the creditors ought to stand on
equal footing. Not one of them should be paid ahead of the others.
Same; Same; Same; A case for specific performance and/or annulment
of contract and a petition for rehabilitation are two different cases and the
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Judge has the discretion to decide each case according to its merits.
Petitioners also contend that the Rehabilitation Court may not appoint a
rehabilitation receiver when a previous intra-corporate dispute (SEC Case No.
05-365) with prayer for the immediate appointment of a receiver has been
filed ahead of the petition for rehabilitation. The contention is without merit.
The case for specific performance and/or annulment of contract (SEC Case
No. 05-365) and CAPs petition for rehabilitation (Sp. Proc. No. M 6144) are
two different cases; hence, respondent Judge has the discretion to decide
each case according to its merits. The case for specific performance and/or
annulment of contract was filed pursuant to the Interim Rules of Procedure
for Intra-Corporate Controversies, while CAPs petition for rehabilitation was
filed under the Interim Rules of Procedure on Corporate Rehabilitation. Under
Section 6, Rule 4 of the latter Interim Rules, respondent Judge has the
authority to appoint a rehabilitation receiver after finding the petition for
rehabilitation to be sufficient in form and substance.
SPECIAL CIVIL ACTION in the Supreme Court. Certiorari and
Prohibition.
The facts are stated in the opinion of the Court.
Syquia, Pascual-Lopez and Santos Law Offices for petitioners.
Poblador, Bautista and Reyes and Sobrevias, Hayudini,
Bodegon, Navarro and San Juan for respondent College Assurance
Plan Philippines, Inc.
PERALTA,J.:
This is a petition for certiorari and prohibition alleging that
respondent Judge Romeo F. Barza of the Regional Trial Court (RTC) of
Makati City, Branch 61, committed grave abuse of
549
VOL. 599, SEPTEMBER 11, 2009 549
Abrera vs. Barza
discretion amounting to lack or excess of jurisdiction in issuing the Orders
dated September 13, 2005 and December 16, 2005 in Special
Proceedings (Sp. Proc.) No. M-6144. The Order dated September 13,
2005 found the petition for corporate rehabilitation of the College
Assurance Plan Philippines, Inc. (CAP) to be sufficient in form and
substance and stayed the enforcement of all claims against CAP. While
the Order dated December 16, 2005 gave due course to CAPs petition
for corporate rehabilitation.
The facts are as follows:
CAP was incorporated on February 14, 1980 for the purpose of
engaging in the sale of pre-need educational plans. Initially, it sold open-
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ended educational plans which guaranteed the payment of tuition and
other standard school fees to the planholder irrespective of the cost at the
time of availment. Later, it engaged in the sale of fixed value plans which
guaranteed the payment of a predetermined amount to the planholder. In
1982, CAP was among the countrys top 2000 corporations. It started
sending its scholars to college in 1984 and saw its first batch of graduates
in 1988. However, it subsequently suffered financial difficulties.
1
On April 28, 2005, six petitioners herein,
2
together with other CAP
planholders, filed an action with the RTC of Makati City for Specific
Performance and/or Annulment of Contract due to Fraud, Return and
Disgorgement of Illegal Profits, Damages with Application for Receiver
and/or Management Committee against CAP, its Directors and Officers,
and the Fil-Estate Group of Companies. The case, docketed as
Securities and Exchange Commission (SEC) Case. No. 05-365,
3
was
assigned to respondent Judge Romeo Barza of the RTC of Makati City,
Branch 61.
_______________
1 Comment, Rollo, pp. 852-913.
2 Edna Valenzuela, Elsa S. Azurin, Theresa J. Azurin, Mabel B. Camus, Eden A.
Payuyo and Remedios C. Fernando.
3 Valenzuela, et al. v. Sobrepea, Jr., et al.
550
550 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
Petitioners alleged that proceedings commenced in SEC Case No.
05-365, but the prayer for the appointment of a receiver and creation of
a management committee was not acted upon by the RTC.
On September 8, 2005, CAP filed a Petition for Corporate
Rehabilitation, docketed as Sp. Proc. No. M-6144, which was raffled to
the RTC of Makati City, Branch 61, presided by respondent Judge
Romeo F. Barza.
On September 13, 2005, Judge Barza issued an Order
4
in Sp. Proc.
No. M-6144 staying the enforcement of all claims against CAP, thus:
Before this court is a Petition for Rehabilitation filed by COLLEGE
ASSURANCE [PLAN] PHILIPPINES, INC. (CAP), a corporation with
principal office address at CAP Building, Amorsolo Street, Legaspi Village,
Makati City.
Finding the petition to be sufficient in form and substance, the
enforcement of all claims, whether for money or otherwise, and whether
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such enforcement is by court action or otherwise, against COLLEGE
ASSURANCE [PLAN] PHILIPPINES, INC., its guarantors and sureties not
solidarily liable with it, is stayed.
As a consequence of the stay order, the COLLEGE ASSURANCE [PLAN]
PHILIPPINES, INC. is prohibited from selling, encumbering, transferring, or
disposing in any manner any of its properties except in the ordinary course of
business. It is further prohibited from making any payment of its liabilities
outstanding as of the date of the filing of this petition on September 8, 2005.
Its suppliers of goods and services are likewise prohibited from withholding
supply of goods and services in the ordinary course of business for as long as
it makes payments for the services and goods supplied after the issuance of
the stay order.
x x x x
All creditors and interested parties, including the Securities and Exchange
Commission, are directed to file and serve on petitioner COLLEGE
ASSURANCE [PLAN] PHILIPPINES, INC., a verified comment on or
opposition to the petition with supporting
_______________
4 Rollo, pp. 336-337.
551
VOL. 599, SEPTEMBER 11, 2009 551
Abrera vs. Barza
affidavits and documents, not later than ten (10) days before the date of the
initial hearing. Failure to do so will bar them from participating in the
proceedings. Copies of the petition and its annexes may be secured from the
court within such time as to enable them to file their comment on or
opposition to the petition to prepare for its initial hearing.
x x x x
Mr. Mamerto A. Marcelo, Jr., CPA, with address at 1407 Cityland
Condominium 10 Tower 2, Ayala Avenue, cor. H.V. Dela Costa St., Salcedo
Village, Makati City is appointed Interim Rehabilitation Receiver of COLLEGE
ASSURANCE [PLAN] PHILIPPINES, INC. He may discharge his duties and
functions as such after taking his oath to perform his powers, duties and
functions faithfully and posting a bond in the amount of P100,000.00 to
guarantee the faithful discharge of his duties and obedience to the orders of
the court.
Petitioner COLLEGE ASSURANCE [PLAN] PHILIPPINES, INC. is
directed to immediately serve a copy of this Order to Mr. Mamerto A.
Marcelo, Jr., who is directed to manifest his acceptance or non-acceptance
of his appointment not later than ten (10) days from receipt of this Order.
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SO ORDERED.
On October 17, 2005, ten planholders, who are also petitioners in
this case,
5
filed an Opposition to the Rehabilitation and Motion to
Exclude Planholders from Stay Order and Terminate Proceeding on the
ground that planholders are not creditors as they have a trust relationship
with the pre-need company.
On December 16, 2005, Judge Barza issued an Order
6
in Sp. Proc.
No. M-6144 giving due course to the petition for rehabilitation, thus:
_______________
5 Rosalina C. Arao, Florencion Bentulan, Yolanda Cernias, Juancito Dacanay,
Richard Martin Esguerra, Manuela Gepullano, Nancy Hilario, Marilyn Lajo, Carmen
Ramos, and Lydia Rosario.
6 Rollo, pp. 341-342.
552
552 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
For determination is the issue of whether or not the petition for corporate
rehabilitation of College Assurance [Plan] Philippines, Inc. (CAP) should be
given due course.
The petition alleges that CAP is a domestic corporation engaged in the
business of selling pre-need educational plans. It was incorporated in 1980
with an initial authorized capital of P10,000,000.00. Within two years of
starting business, it was among the countrys top 2000 corporations, and by
2004, it had climbed in ranking to 146th place with a 21% share of the pre-
need market. CAP has had 110,000 scholars enrolled; 84,490 scholars
graduated; 780,000 planholders; 174,720 planholders being served; and has
paid over P11.3 billion in tuition fees. However, it was brought to financial
difficulties by reason of the policy of deregulation adopted by the Department
of Education which resulted in the unbridled increase in tuition fees over the
years; the effect of the Asian financial crisis on CAPs trust fund
investments; the onerous application by the Securities and Exchange
Commission (SEC) of the Pre-Need Uniform Chart Accounts (PNUCA)
beginning in 2002; and the refusal of the SEC to renew CAPs dealership
license after its expiration in September 2004 and the cancellation of its permit
to sell in August 2004. It is unable to service its debts as they fall due and its
assets are insufficient to cover its liabilities, owing in great part to a bloated
yet theoretical trust fund deficit and capital deficiency reflected in its financial
statements under the SECs Pre-Need Rules, which it has asked the SEC to
re-audit in light of the essential nature of pre-need plans as investment
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contracts rather than insurance contracts.
In support of its petition, CAP has submitted an eight-year Business
Development Plan under which it proposes to build up its equity and liquidity
to meet projected cash requirements and eliminate any equity impairment, and
to build up the asset base and liquidity of its trust fund to cover its trust
variance and meet its maturing obligations.
Pursuant to this courts Stay Order of September 13, 2005, several
pleadings were filed with the Court by interested parties, including the
Securities and Exchange Commission (SEC), by way of comment on the
verified Petition dated August 23, 2005.
During the summary hearing on November 23, 2005, representatives from
the SEC admitted that actuarial reserve liabilities are not actual and present
liabilities of the petitioner.
553
VOL. 599, SEPTEMBER 11, 2009 553
Abrera vs. Barza
The Court has carefully evaluated the Petition and the comments filed by
the various parties relative thereto, and hereby resolves to give due course to
the petition. Even as the Court notes the substantial questions posed by the
SEC and some creditors on the solvency of the corporation, it finds the
interests of the planholder/investing public as an overriding consideration
which cannot be summarily or injudiciously dismissed without a thorough
evaluation by the Rehabilitation Receiver of the corporations chances of
being restored to a successful operation and solvency if given the opportunity
and considering particularly the adverse results to the planholders of a
liquidation scenario as against its proposed rehabilitation under which they
may possibly recover 100% of their contributions.
On the basis of the allegations of the petition and the Business
Development Plan, and in order that it may be well-guided in its final
disposition of the petition, the Court finds merit in the Petition sufficient to
warrant its referral to the Rehabilitation Receiver for study and evaluation.
WHEREFORE, the Court resolves to GIVE DUE COURSE to the petition
and to REFER the same, together with its Annexes and the comments on the
Petition, to the court-appointed Rehabilitation Receiver who is directed to
evaluate the rehabilitation plan and submit his recommendation within thirty
(30) days from receipt hereof.
Petitioners alleged that the Stay Order dated September 13, 2005
and the Order dated December 16, 2005 had been cited for the non-
resolution of pending matters in SEC Case. No. 05-365 for Specific
Performance and/or Annulment of Contract due to Fraud, Return and
Disgorgement of Illegal Profits and Damages.
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Petitioners averred that the proceedings in Sp. Proc. Case No. M-
6144 were summary and non-adversarial in nature, and the filing of a
petition for relief or a motion to dismiss or for reconsideration was
prohibited. Having no speedy and adequate remedy in the ordinary
course of law, they filed this petition.
The pertinent issues raised are as follows:
554
554 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
1.WHETHER THE STAY ORDER AND THE ORDER GRANTING THE
PETITION FOR REHABILITATION WAS ISSUED WITHOUT OR IN
EXCESS OF JURISDICTION, CONSIDERING THAT THE TUITION FEE
PAYMENTS DUE PLANHOLDERS BENEFICIARIES ARE FROM TRUST
FUND ASSETS NOT INCLUDED IN REHABILITATION PROCEEDINGS,
IT BEING PROPERTY NOT BELONGING TO THE DEBTOR.
2.WHETHER THE STAY ORDER AND ORDER GRANTING THE PETITION
FOR REHABILITATION WAS ISSUED WITHOUT OR IN EXCESS OF
JURISDICTION CONSIDERING THAT ALL THE REMAINING ASSETS
OF THE CORPORATION IS TRACEABLE FROM FUNDS COLLECTED
FROM PLANHOLDERS; HENCE, SUBJECT TO TRUST FOR THE
BENEFIT OF THE PLANHOLDERS BENEFICIARIES.
3.WHETHER THE ORDER APPOINTING A REHABILITATION RECEIVER
WAS ISSUED IN EXCESS OF JURISDICTION CONSIDERING THAT A
PREVIOUS INTRACORPORATE DISPUTE WITH PRAYER FOR [THE]
IMMEDIATE APPOINTMENT FOR RECEIVER WAS FILED AHEAD OF
THE REHABILITATION PROCEEDINGS.
4.WHETHER THE PUBLIC RESPONDENTS ORDER DATED DECEMBER
16, 2005 WAS ISSUED IN EXCESS OF JURISDICTION BY NOT
ACCORDING DUE RESPECT TO THE FINDINGS OF A SPECIALIZED
ADMINISTRATIVE AGENCY.
7
At the outset, it must be pointed out that the special civil action for
certiorari under Rule 65 of the Rules of Court
8
is a
_______________
7 Memorandum, Rollo, pp. 1057-1058.
8 Rule 65, Sec. 1. Petition for certiorari.When any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in excess of its
or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in
the ordinary course of law, a person aggrieved thereby may file a verified
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Abrera vs. Barza
remedy designed only for the correction of errors of jurisdiction or grave
abuse of discretion amounting to lack or excess of jurisdiction.
9
In this
case, it is undisputed that the RTC has jurisdiction over the petition for
rehabilitation under Section 2, Rule 3 of the Interim Rules of Procedure
on Corporate Rehabilitation (2000).
10
The main issue is whether or not respondent Judge committed grave
abuse of discretion amounting to lack or excess of jurisdiction in issuing
the Order dated September 13, 2005 staying enforcement of all claims
against CAP and the Order dated December 16, 2005 giving due course
to CAPs petition for rehabilitation.
Petitioners allege that the relationship between a planholder and a pre-
need corporation was one of trust and not a debtor-creditor relationship.
They avered that in 2002, the Securities and Exchange Commission
(SEC) implemented the New Pre-Need Rules, which mandated a pre-
need company to set up a trust fund for the benefit of the beneficiary and
in compliance with the agreement; hence, they contend that an express
trust relationship exists between the policyholder as trustor, the pre-need
firm as trustee, and the beneficiary as cestui que trust. Petitioners add
that Section 1.9 of the Pre-Need Rules defines trust fund as a fund set
up from the planholders payments, separate and distinct from the paid-
up capital of a registered Pre-Need Company, established with a trustee
under a trust agreement approved by the
_______________
petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal,
board or officer, and granting such incidental reliefs as law and justice may require.
9 Land Bank of the Philippines v. Court of Appeals, 456 Phil. 755; 409 SCRA
455 (2003).
10 Rule 3, Sec. 2.Venue.Petitions for rehabilitation pursuant to these Rules
shall be filed in the Regional Trial Court having jurisdiction over the territory where
the debtors principal office is located.
556
556 SUPREME COURT REPORTS ANNOTATED
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Commission, to pay for the benefits as provided in the Pre-Need
Plan.
Petitioners assert that since a trust relationship exists between a
planholder and a pre-need company, CAP may not avail itself of
rehabilitation proceedings to stop payments from its trust assets to the
beneficiaries.
Petitioners contend that respondent Judge acted completely without
jurisdiction in giving due course to the petition for rehabilitation, including
planholders in the Stay Order and including trust assets in the
rehabilitation proceedings notwithstanding the fact that there was a prior
case filed by planholders for receivership and management committee and
that the assets of debtors do not include the funds collected from
planholders.
Petitioners arguments do not persuade.
CAP is a domestic corporation engaged in the business of selling pre-
need educational plans. Republic Act (R.A.) No. 8799, otherwise known
as The Securities Regulation Code, defines pre-need plans as
contracts which provide for the performance of future services or the
payment of future monetary considerations at the time of actual need, for
which planholders pay in cash or installment at stated prices, with or
without interest or insurance coverage, and includes life, pension,
education, interment, and other plans which the Commission may from
time to time approve.
Section 16, Chapter IV of R.A. No. 8799 provides for the regulation
of pre-need plans by SEC, thus:
SEC.16.Pre-Need Plans.No person shall sell or offer for sale to the
public any pre-need plan except in accordance with rules and regulations
which the Commission (SEC) shall prescribe. Such rules shall regulate the
sale of pre-need plans by, among other things, requiring the registration of
pre-need plans, licensing persons involved in the sale of pre-need plans,
requiring disclosures to prospective planholders, prescribing advertising
guidelines, providing for uniform accounting system, reports and
recordkeeping with respect to such plans, imposing capital, bonding and other
financial
557
VOL. 599, SEPTEMBER 11, 2009 557
Abrera vs. Barza
responsibility, and establishing trust funds for the payment of benefits under
such plans.
The law governing corporate rehabilitation and suspension of actions
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for claims against corporations is Presidential Decree (P.D.) No. 902-
A,
11
as amended. Section 5 of P.D. No. 902-A, as amended by P.D.
No. 1758, enumerates the cases over which SEC has jurisdiction to hear
and decide, which includes [p]etitions of corporations, partnerships or
associations to be declared in the state of suspension of payments in
cases where the corporation, partnership or association possesses
sufficient property to cover all its debts, but foresees the impossibility of
meeting them when they respectively fall due or in cases where the
corporation, partnership or association has no sufficient assets to cover its
liabilities, but is under the management of a Rehabilitation Receiver or
Management Committee. R.A. No. 8799, which took effect on August
8, 2000, transferred SECs jurisdiction over all cases enumerated under
Section 5 of P.D. No. 902-A, as amended, to the courts of general
jurisdiction or the appropriate Regional Trial Court.
On November 21, 2000, this Court approved the Interim Rules of
Procedure on Corporate Rehabilitation of 2000 (Interim Rules), which
took effect on December 15, 2000. The Interim Rules apply to petitions
for rehabilitation filed by corporations, partnerships, and associations
pursuant to P.D. No. 902-A, as amended.
The Interim Rules governed the proceedings in Sp. Proc. No. M-
6144. CAP filed the petition for corporate rehabilitation, because it is
unable to service its debts as they fall due and its assets are insufficient to
cover its liabilities.
12
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11 P.D. No. 902-A is entitled REORGANIZATION OF THE SECURITIES AND EXCHANGE
COMMISSION WITH ADDITIONAL POWERS AND PLACING THE SAID AGENCY UNDER THE
ADMINISTRATIVE SUPERVISION OF THE OFFICE OF THE PRESIDENT.
12 RTC Order dated December 16, 2005, Rollo, pp. 341-342.
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558 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
CAP filed the petition under Section 1, Rule 4 of the Interim Rules,
which provides:
SECTION1.Who May Petition.Any debtor who foresees the
impossibility of meeting its debts when they respectively fall due, or any
creditor or creditors holding at least twenty-five percent (25%) of the
debtors total liabilities, may petition the proper Regional Trial Court to have
the debtor placed under rehabilitation.
13
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Under the Interim Rules, debtor shall mean any corporation,
partnership, or association, whether supervised or regulated by the
Securities and Exchange Commission or other government
agencies, on whose behalf a petition for rehabilitation has been filed
under these Rules.
14
The Interim Rules does not distinguish whether a pre-need
corporation like CAP cannot file a petition for rehabilitation before the
RTC. Courts are not authorized to distinguish where the Interim Rules
makes no distinction.
15
Moreover, under the Interim Rules, claim shall include all claims
or demands of whatever nature or character against a debtor or its
property, whether for money or otherwise. Creditor shall mean any
holder of a claim.
Hence, the claim of petitioners for payment of tuition fees from CAP
is included in the definition of claims under the Interim Rules.
What is to be determined at this point is whether or not claims arising
from the pre-need contracts between petitioners and CAP can be stayed
under Section 6, Rule 4 of the Interim Rules or Section 6(c) of P.D. No.
902-A.
Section 6, Rule 4 of the Interim Rules provides:
SEC.6.Stay Order.If the court finds the petition to be sufficient
in form and substance, it shall, not later than five
_______________
13 (Emphasis supplied.)
14 (Emphasis supplied.)
15 Agpalo, Statutory Construction, Fifth Edition (2003), p. 198.
559
VOL. 599, SEPTEMBER 11, 2009 559
Abrera vs. Barza
(5) days from the filing of the petition, issue an Order: (a) appointing a
Rehabilitation Receiver and fixing his bond; (b) staying enforcement of all
claims, whether for money or otherwise, and whether such enforcement
is by court action or otherwise, against the debtor, its guarantors and
sureties not solidarily liable with the debtor; (c) prohibiting the debtor
from selling, encumbering, transferring, or disposing in any manner any of its
properties except in the ordinary course of business; (d) prohibiting the
debtor from making any payment of its liabilities outstanding as of the date of
filing of the petition; (e) prohibiting the debtor's suppliers of goods or services
from withholding supply of goods and services in the ordinary course of
business for as long as the debtor makes payments for the services and goods
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supplied after the issuance of the stay order; (f) directing the payment, in full,
of all administrative expenses incurred after the issuance of the stay order; (g)
fixing the initial hearing on the petition not earlier than forty-five (45) days but
not later than sixty (60) days from the filing thereof; (h) directing the
petitioner to publish the Order in a newspaper of general circulation in the
Philippines once a week for two (2) consecutive weeks; (i) directing all
creditors and all interested parties (including the Securities and Exchange
Commission) to file and serve on the debtor a verified comment on or
opposition to the petition, with supporting affidavits and documents, not later
than ten (10) days before the date of the initial hearing and putting them on
notice that their failure to do so will bar them from participating in the
proceedings; and (j) directing the creditors and interested parties to secure
from the court copies of the petition and its annexes within such time as to
enable themselves to file their comment on or opposition to the petition and to
prepare for the initial hearing of the petition.
The above provision does not provide that a claim arising from a pre-
need contract is an exception to the power of the trial court to stay
enforcement of all claims upon the finding that the petition for
rehabilitation is sufficient in form and substance.
The foregoing provision echoes the provision in Section 6(c) of the
governing law, P.D. No. 602-A, as amended by P.D. No. 1758, which
mandates that upon appointment of a management committee,
rehabilitation receiver, board or body, x x x
560
560 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
all actions for claims against corporations, partnerships or
associations under management or receivership pending before any
court, tribunal, board or body shall be suspended accordingly.
In Negros Navigation Co., Inc. v. Court of Appeals,
16
the Court
held that P.D. No. 902-A does not make any distinction as to what
claims are covered by the suspension of actions for claims against
corporations under rehabilitation x x x Thus, since the law does not make
any exemptions or distinctions, neither should we.
The Interim Rules of Procedure on Corporate Rehabilitation of 2000
has been amended by the Rules of Procedure on Corporate
Rehabilitation of 2009, which took effect on January 16, 2009. Under the
2009 Rules of Procedure, the power of the RTC to issue a Stay Order
when it finds the petition for rehabilitation to be sufficient in form and
substance is contained in Section 7, Rule 3,
17
which likewise does not
exempt claims arising from pre-need contracts from the Stay Order.
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16G.R. Nos. 163156 & 166845, December 10, 2008, 573 SCRA 434.
17 SEC.7.Stay Order.If the court finds the petition to be sufficient in form
and substance, it shall, not later than five (5) working days from the filing of the
petition, issue an Order: (a) appointing a Rehabilitation Receiver and fixing his
bond; (b) staying enforcement of all claims, whether for money or otherwise and
whether such enforcement is by court action or otherwise, against the debtor, its
guarantors and persons not solidarily liable with the debtor; provided, that the
stay order shall not cover claims against letters of credit and similar security
arrangements issued by a third party to secure the payment of the debtor's
obligations; provided, further, that the stay order shall not cover foreclosure by a
creditor of property not belonging to a debtor under corporate rehabilitation;
provided, however, that where the owner of such property sought to be foreclosed
is also a guarantor or one who is not solidarily liable, said owner shall be entitled to
the benefit of excussion as such guarantor; (c) prohibiting the debtor from selling,
encumbering, transferring, or disposing in any manner any of its properties except
in the ordinary course of business; (d) prohibiting the debtor from making
561
VOL. 599, SEPTEMBER 11, 2009 561
Abrera vs. Barza
Petitioners contend that the relationship between a planholder and a
pre-need corporation is one of trust and not a debtor-creditor
relationship. However, such a relationship has
_______________
any payment of its liabilities except as provided in items (e), (f) and (g) of this
Section or when ordered by the court pursuant to Section 10 of Rule 3; (e)
prohibiting the debtor's suppliers of goods or services from withholding supply of
goods and services in the ordinary course of business for as long as the debtor
makes payments for the services and goods supplied after the issuance of the stay
order; (f) directing the payment in full of all administrative expenses incurred after
the issuance of the stay order; (g) directing the payment of new loans or other
forms of credit accommodations obtained for the rehabilitation of the debtor with
prior court approval; (h) fixing the dates of the initial hearing on the petition not
earlier than forty-five (45) days but not later than sixty (60) days from the filing
thereof; (i) directing the petitioner to publish the Order in a newspaper of general
circulation in the Philippines once a week for two (2) consecutive weeks; (j)
directing the petitioner to furnish a copy of the petition and its annexes, as well as
the stay order, to the creditors named in the petition and the appropriate regulatory
agencies such as, but not limited to, the Securities and Exchange Commission, the
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Bangko Sentral ng Pilipinas, the Insurance Commission, the National
Telecommunications Commission, the Housing and Land Use Regulatory Board
and the Energy Regulatory Commission; (k) directing the petitioner that foreign
creditors with no known addresses in the Philippines be individually given a copy
of the stay order at their foreign addresses; (l) directing all creditors and all
interested parties (including the regulatory agencies concerned) to file and serve
on the debtor a verified comment on or opposition to the petition, with supporting
affidavits and documents, not later than fifteen (15) days before the date of the first
initial hearing and putting them on notice that their failure to do so will bar them
from participating in the proceedings; and (m) directing the creditors and interested
parties to secure from the court copies of the petition and its annexes within such
time as to enable themselves to file their comment on or opposition to the petition
and to prepare for the initial hearing of the petition.
The issuance of a stay order does not affect the right to commence actions or
proceedings insofar as it is necessary to preserve a claim against the debtor.
562
562 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
not been properly established by petitioners. This Court is not a trier of
facts and cannot rule in this petition on whether the relationship between
CAP and the planholders is one of trust, absent a factual finding by the
trial court. Nevertheless, even if the relationship is one of trust, there is no
provision in the Interim Rules that a claim arising from a trust relationship
is excluded from the Stay Order.
Negros Navigation Co., Inc. v. Court of Appeals
18
explained the
reason for suspending all pending claims against a corporation under
receivership, thus:
x x x x The stay order is effective on all creditors of the corporation
without distinction, whether secured or unsecured. All assets of a corporation
under rehabilitation receivership are held in trust for the equal benefit of all
creditors to preclude one from obtaining an advantage or preference over
another by the expedience of attachment, execution or otherwise. As between
the creditors, the key phrase is equality in equity. Once the corporation
threatened by bankruptcy is taken over by a receiver, all the creditors ought
to stand on equal footing. Not one of them should be paid ahead of the
others.
Petitioners also contend that the Rehabilitation Court may not appoint
a rehabilitation receiver when a previous intra-corporate dispute (SEC
Case No. 05-365) with prayer for the immediate appointment of a
receiver has been filed ahead of the petition for rehabilitation.
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The contention is without merit.
The case for specific performance and/or annulment of contract (SEC
Case No. 05-365) and CAPs petition for rehabilitation (Sp. Proc. No.
M 6144) are two different cases; hence, respondent Judge has the
discretion to decide each case according to its merits. The case for
specific performance and/or annulment of contract was filed pursuant to
the Interim Rules of Procedure for Intra-Corporate Controversies, while
_______________
18 Supra note 16.
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VOL. 599, SEPTEMBER 11, 2009 563
Abrera vs. Barza
CAPs petition for rehabilitation was filed under the Interim Rules of
Procedure on Corporate Rehabilitation. Under Section 6, Rule 4 of the
latter Interim Rules,
19
respondent Judge has the authority to appoint a
rehabilitation receiver after finding the petition for rehabilitation to be
sufficient in form and substance.
Absent any provision in the Interim Rules, as amended, or P.D. No.
902-A exempting claims arising from pre-need contracts from a court
order staying enforcement of all claims against the debtor/pre-need
company, the Court holds that respondent Judge did not commit grave
abuse of discretion in enforcing the Stay Order against petitioners.
In addition, respondent Judge did not gravely abuse its discretion in
giving due course to the petition for rehabilitation. In the Order dated
December 16, 2005, the RTC considered the comments of the SEC and
CAPs creditors before resolving the petition. It explained its decision,
thus:
The Court has carefully evaluated the Petition and the comments filed by
the various parties relative thereto, and hereby resolves to give due course to
the petition. Even as the Court notes the substantial questions posed by the
SEC and some creditors on the solvency of the corporation, it finds the
interests of the planholder/investing public as an overriding
consideration which cannot be summarily or injudiciously dismissed
without a thorough evaluation by the Rehabilitation Receiver of the
corporations chances of being restored to a successful operation and
solvency if given the opportunity and considering particularly the
adverse results to the planholders of a
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19 SEC.6.Stay Order.If the court finds the petition to be sufficient in form
and substance, it shall, not later than five (5) working days from the filing of the petition,
issue an Order: (a) appointing a Rehabilitation Receiver and fixing his bond; (b)
staying enforcement of all claims, whether for money or otherwise and whether such
enforcement is by court action or otherwise, against the debtor, its guarantors and sureties
not solidarily liable with the debtor; x x x.
564
564 SUPREME COURT REPORTS ANNOTATED
Abrera vs. Barza
liquidation scenario as against its proposed rehabilitation under which
they may possibly recover 100% of their contributions.
On the basis of the allegations of the petition and the Business Development
Plan, and in order that it may be well-guided in its final disposition of the
petition, the Court finds merit in the Petition sufficient to warrant its referral
to the Rehabilitation Receiver for study and evaluation.
20
Grave abuse of discretion implies capricious and whimsical exercise of
judgment amounting to lack of jurisdiction, or arbitrary and despotic
exercise of power because of passion or personal hostility.
21
It must be
as patent and gross as to amount to an evasion or refusal to perform a
duty enjoined by law.
22
It is absent in this case.
Despite the Courts finding that respondent judge did not gravely
abuse his discretion in issuing the Orders staying the enforcement of all
claims against CAP and in giving due course to CAPs petition for
rehabilitation, petitioners are not precluded from seeking other remedies
available to them with the lower court.
The other issues raised pertain to matters that were not discussed in
the subject RTC Orders or are not pertinent to the main issue of whether
or not respondent Judge gravely abused its discretion in including the
claims of petitioners in the Stay Order; hence, they do not fall within the
scope of this petition for certiorari.
WHEREFORE, the petition for certiorari is DISMISSED. No costs.
SO ORDERED.
Ynares-Santiago (Chairperson), Chico-Nazario, Velasco, Jr. and
Nachura, JJ., concur.
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20 Rollo, p. 342. (Emphasis supplied.)
21 Batul v. Bayron, 468 Phil. 131, 148; 424 SCRA 26, 41 (2004).
22 Id.
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