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Philippine Veterans Bank Employees Union-N.U.B.E. and Perfecto V.

Fernandez
vs.
Honorable Benjamin Vega, Presiding Judge of Branch 39 of the Regional Trial Court of
Manila, the Central Bank of the Philippines and the liquidator of the Philippine
Veterans Bank
The liquidation court cannot continue with liquidation proceedings of the Philippine Veterans Bank
(PVB) when Congress had mandated its rehabilitation and reopening.
FACTS:
Sometime in 1985, the Central Bank of the Philippines (Central Bank, for brevity) filed with Branch
39 of the Regional Trial Court of Manila a Petition for Assistance in the Liquidation of the Philippine
Veterans Bank, the same docketed as Case No. SP-32311. Thereafter, the Philippine Veterans Bank
Employees Union-N.U.B.E., herein petitioner, represented by petitioner Perfecto V. Fernandez, filed
claims for accrued and unpaid employee wages and benefits with said court in SP-32311. 1
After lengthy proceedings, partial payment of the sums due to the employees were made. However,
due to the piecemeal hearings on the benefits, many remain unpaid. 2
On January 2, 1992, the Congress enacted Republic Act No. 7169 providing for the rehabilitation of
the Philippine Veterans Bank.4
Thereafter, petitioners filed with the labor tribunals their residual claims for benefits and for
reinstatement upon reopening of the bank.5
Sometime in May 1992, the Central Bank issued a certificate of authority allowing the PVB to
reopen.6
Despite the legislative mandate for rehabilitation and reopening of PVB, respondent judge continued
with the liquidation proceedings of the bank. Moreover, petitioners learned that respondents were
set to order the payment and release of employee benefits upon motion of another lawyer, while
petitioners claims have been frozen to their prejudice.
ISSUE: May a liquidation court continue with liquidation proceedings of the Philippine Veterans
Bank (PVB) when Congress had mandated its rehabilitation and reopening?
RULING:
No.
Republic Act No. 7169 entitled "An Act To Rehabilitate The Philippine Veterans Bank Created Under
Republic Act No. 3518, Providing The Mechanisms Therefor, And For Other Purposes", which was
signed into law by President Corazon C. Aquino on January 2, 1992 and which was published in the
Official Gazette on February 24, 1992, provides in part for the reopening of the Philippine Veterans
Bank together with all its branches within the period of three (3) years from the date of the reopening
of the head office.7 The law likewise provides for the creation of a rehabilitation committee in order
to facilitate the implementation of the provisions of the same.8
Pursuant to said R.A. No. 7169, the Rehabilitation Committee submitted the proposed Rehabilitation
Plan of the PVB to the Monetary Board for its approval. Meanwhile, PVB filed a Motion to Terminate
Liquidation of Philippine Veterans Bank dated March 13, 1992 with the respondent judge praying
that the liquidation proceedings be immediately terminated in view of the passage of R.A. No. 7169.
On April 10, 1992, the Monetary Board issued Monetary Board Resolution No. 348 which approved
the Rehabilitation Plan submitted by the Rehabilitaion Committee.
Thereafter, the Monetary Board issued a Certificate of Authority allowing PVB to reopen.
On June 3, 1992, the liquidator filed A Motion for the Termination of the Liquidation Proceedings of
the Philippine Veterans Bank with the respondent judge.
As stated above, the Court, in a Resolution dated June 8, 1992, issued a temporary restraining order
in the instant case restraining respondent judge from further proceeding with the liquidation of PVB.
On August 3, 1992, the Philippine Veterans Bank opened its doors to the public and started regular
banking operations.
Clearly, the enactment of Republic Act No. 7169, as well as the subsequent developments has
rendered the liquidation court functus officio. Consequently, respondent judge has been stripped of
the authority to issue orders involving acts of liquidation.
Liquidation, in corporation law, connotes a winding up or settling with creditors and debtors. 9 It is
the winding up of a corporation so that assets are distributed to those entitled to receive them. It is
the process of reducing assets to cash, discharging liabilities and dividing surplus or loss.
On the opposite end of the spectrum is rehabilitation which connotes a reopening or reorganization.
Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and
reinstate the corporation to its former position of successful operation and solvency. 10
It is crystal clear that the concept of liquidation is diametrically opposed or contrary to the concept of
rehabilitation, such that both cannot be undertaken at the same time. To allow the liquidation
proceedings to continue would seriously hinder the rehabilitation of the subject bank.
San Jose Timber Corporation and Casilayan Softwood Development Corporation
v.
Securities and Exchange Commission, Tierra Factor Corporation and other creditors
of San Jose Timber Corporation and Casilayan Softwood Development Corporation
G.R. No. 162196; Feburary 27, 2012

FACTS: Petitioner CSDC is a corporation duly organized and existing under and by virtue of the
laws of the Republic of the Philippines and the controlling stockholder and creditor of petitioner
SJTC, being the owner of more than 99% of its outstanding capital stock.

Petitioner SJTC is primarily engaged in the operation of a logging concession with a base
camp in Pabanog, Wright, Western Samar, under and by virtue of a Timber License
Agreement (TLA) No. 118 issued by the Department of Environment and Natural
Resources (DENR). The TLA was to expire in 2007.

On February 8, 1989, the DENR issued a Moratorium Order (MO) suspending all logging
operations in the island of Samar effective February 1989 up to May 30, 1989.

As a consequence, SJTC was constrained to cease operations effective February 8, 1989,


despite the fact that the expiration of the period set forth in the MO was still up to May 30, 1989.

The cessation of its operations caused SJTC to lose all its income. Thus, on August 7, 1990,
SJTC and CSDC filed with the SEC a petition for the appointment of a rehabilitation receiver and for
suspension of payments entitled, In Re: Petition for the Appointment of a Rehabilitation Receiver
for SJTC Timber Corporation and For Suspension of Payments, which was docketed as SEC Case
No. 3843.
After due hearing, the SEC Hearing Panel, in its Order dated March 14, 1991, granted the
appointment of a rehabilitation receiver and suspension of payments with the condition that SJTC
would resuscitate its operations and properly service its liabilities in accordance with the duly
approved schedule to be submitted by the Rehabilitation Receiver [3]within a one (1) year period.

On February 26, 1992, the petitioners submitted their Motion to Approve Revised
Rehabilitation Plan and Urgent Motion to Extend Waiting Period for Commencement of
Rehabilitation dated February 24, 1992 to allow the proper government authorities to deliberate on
and approve the lifting of the existing logging moratorium in Samar. The petitioners prayed that the
waiting period be extended by one (1) year and five (5) months from March 15, 1992.

The SEC Hearing Panel extended the waiting period up to August 15, 1992 but held in
abeyance its approval of the revised rehabilitation plan.

Upon subsequent motions of petitioners, SJTC and CSDC, the SEC Hearing Panel extended
the waiting period several times.
On May 6, 2002, however, the SEC En Banc motu proprio handed down its decision
terminating the rehabilitation proceedings and dismissing the petition for rehabilitation. The SEC
opined that SJTC could no longer be rehabilitated because the logging moratorium/ban, which was
crucial for its rehabilitation, had not been lifted.

The May 6, 2002 Decision of the SEC was affirmed by the CA in its September 22,
2003 Decision.

ISSUE: Whether the SEC erred in terminating the rehabilitation proceedings of SJTC.

RULING: Yes.

Both the SEC and the CA had reasonable basis in deciding to terminate the rehabilitation
proceedings of SJTC because of the lack of certainty that the logging ban would, in fact, be lifted. It is
clear from the records that the proposed rehabilitation plan of the petitioners would depend entirely
on the lifting of the logging ban either by the lifting of the moratorium on logging activities
in Samar issued by the DENR, or by the enactment of a law on selective logging. Such lifting of the
logging ban is indispensable to the rehabilitation of SJTC. If it would not be lifted, the company
would have no source of income or revenues and no investor or creditor would come in to lend a
hand in its resuscitation.

At the time of the promulgation of the CA decision, there was no certainty that the
moratorium on logging activities in Samar would be lifted or a law on selective logging was
forthcoming. There being no assurance, the CA was correct in sustaining the decision of the SEC to
terminate the rehabilitation proceedings to protect the interest of all concerned, particularly the
investors and the creditors. To have resolved otherwise would have been prejudicial to these entities
as they would be made to wait indefinitely for something the likelihood of which was quite remote.

On August 15, 2005, however, an event supervened. With the lifting of the logging
moratorium in Samar, an indispensable element for the possible rehabilitation of SJTC has been
made a reality. Considering the extension granted by the DENR, the TLA of SJTC will expire on
2021, or nine (9) years from now. It appears from the proposedAdjusted Rehabilitation Plan, [26] that
SJTC would only need a period of 24 months from the lifting of the logging moratorium within which
to liquidate all of its liabilities, except those of its affiliates.

The petitioners have claimed that as of December 31, 1988, the concessions virgin forest cover
was 37,800 hectares, with commercial timber estimated at 2.25 million cubic meters. [27] Since the
logging operations of SJTC had been stopped in 1989, the petitioners believe that the quantity of
commercial timber has grown considerably. Thus, there is more than sufficient quantity of
commercial timber to pay the obligations of SJTC to the creditors and to realize a reasonable return
of investment.

The Court is of the considered view that SJTC should be given a second chance to recover and
pay off its creditors. The only practical way of doing it is to resume the rehabilitation of SJTC which
estimated its first year production upon resumption of operations at 29,000 cubic meters.
[28]
Thereafter, production is projected to rise to 60,000 cubic meters per year. [29] If the estimated
selling price per cubic meter as of December 31, 1991 was P3,500.00[30] and between P5,000.00
and P6,000.00 in 2004,[31] there is no doubt that the price has again risen.

The Court is not unaware of the issuance of Executive Order (E.O.) No. 23 on February 1,
2011. E.O. No. 23 declares a Moratorium on the Cutting and Harvesting of Timber in the Natural
and Residual Forests and Creates the Anti-Illegal Logging Task Force that will enforce the
moratorium. It aims mainly at the promotion of intergeneration responsibility to protect the
environment. As pronounced in the DENR website, however, it does not impose a total log ban in
the country. What is being protected by the executive order is simply the natural forests and residual
forests.[32] Section 2 thereof provides for a moratorium on the cutting and harvesting of timber in the
natural and residual forests of the entire country. Timber companies, such as petitioner SJTC, may
still be allowed to cut trees subject to the provisions thereof.

Thus, SJTCs rehabilitation appears highly feasible and the proceedings thereon should be
revived. It should, therefore, be given an opportunity to be heard by the SEC to determine if it could
maintain its corporate existence. For said reason, the case should be remanded to the SEC so that it
could factor in the aforecited figures and claims of SJTC and assess whether or not SJTC could still
recover. It appears from the figures that SJTC can generate sufficient income to pay all its obligations
to all its creditors except, as the petitioners pledged, its corporate affiliates who allegedly represent
more than 66% of the liabilities.

WHEREFORE, the September 22, 2003 Decision of the Court of Appeals and its January 29,
2004 Resolution are REVERSED and SET ASIDE. The case is hereby REMANDED to the SEC for
further evaluation and appropriate action.
Advent Capital and Finance Corporation
v.
Nicasio I. Alcantara and Editha I. Alcantara
G.R. No. 183050; June 25, 2012

This case is about the validity of a rehabilitation courts order that compelled a third party
(Belson), in possession of money allegedly belonging to the debtor (Alcantaras) of a company
(Advent Capital) under rehabilitation, to deliver such money to its court-appointed receiver (Atty.
Concepcion) over the debtors objection.

FACTS: On July 16, 2001 petitioner Advent Capital and Finance Corporation (Advent Capital)
filed a petition for rehabilitation [1] with the Regional Trial Court (RTC) of Makati City.
[2]
Subsequently, the RTC named Atty. Danilo L. Concepcion as rehabilitation receiver. [3] Upon audit
of Advent Capitals books, Atty. Concepcion found that respondents Nicasio and Editha Alcantara
(collectively, the Alcantaras) owed Advent Capital P27,398,026.59, representing trust fees that it
supposedly earned for managing their several trust accounts.[4]
Prompted by this finding, Atty. Concepcion requested Belson Securities, Inc. (Belson) to
deliver to him, as Advent Capitals rehabilitation receiver, the P7,635,597.50 in cash dividends that
Belson held under the Alcantaras Trust Account 95-013. Atty. Concepcion claimed that the
dividends, as trust fees, formed part of Advent Capitals assets. Belson refused, however, citing the
Alcantaras objections as well as the absence of an appropriate order from the rehabilitation court. [5]
Thus, Atty. Concepcion filed a motion before the rehabilitation court to direct Belson to
release the money to him. He said that, as rehabilitation receiver, he had the duty to take custody and
control of Advent Capitals assets, such as the sum of money that Belson held on behalf of Advent
Capitals Trust Department.
ISSUE: Whether or not the cash dividends held by Belson and claimed by both the Alcantaras and
Advent Capital constitute corporate assets of Advent Capital that the rehabilitation court may, upon
motion, require to be conveyed to the rehabilitation receiver for his disposition.
RULING: No.
The rehabilitation court has no jurisdiction to hear and adjudicate the conflicting claims of the
parties over the dividends that Belson held in trust. Advent Capital should have filed a separate
action for collection to recover the trust fees it allegedly earned. Rehabilitation proceedings are
summary and non-adversarial in nature.
The rehabilitation court has not been given the power to resolve ownership disputes between
Advent Capital and third parties. Neither Belson nor the Alcantaras are its debtors or creditors with
interest in the rehabilitation.
Advent Capital must file a separate action for collection to recover the trust fees that it
allegedly earned and, with the trial courts authorization if warranted, put the money in escrow for
payment to whomever it rightly belongs. Having failed to collect the trust fees at the end of each
calendar quarter as stated in the contract, all it had against the Alcantaras was a claim for payment
which is a proper subject for an ordinary action for collection. It cannot enforce its money claim by
simply filing a motion in the rehabilitation case for delivery of money belonging to the Alcantaras but
in the possession of a third party.

Rehabilitation proceedings are summary and non-adversarial in nature, and do not


contemplate adjudication of claims that must be threshed out in ordinary court
proceedings. Adversarial proceedings similar to that in ordinary courts are inconsistent with the
commercial nature of a rehabilitation case. The latter must be resolved quickly and expeditiously for
the sake of the corporate debtor, its creditors and other interested parties. Thus, the Interim Rules
incorporate the concept of prohibited pleadings, affidavit evidence in lieu of oral testimony,
clarificatory hearings instead of the traditional approach of receiving evidence, and the grant of
authority to the court to decide the case, or any incident, on the basis of affidavits and documentary
evidence.[18]

Here, Advent Capitals claim is disputed and requires a full trial on the merits. It must be
resolved in a separate action where the Alcantaras claim and defenses may also be presented and
heard. Advent Capital cannot say that the filing of a separate action would defeat the purpose of
corporate rehabilitation. In the first place, the Interim Rules do not exempt a company under
rehabilitation from availing of proper legal procedure for collecting debt that may be due
it. Secondly, Court records show that Advent Capital had in fact sought to recover one of its assets by
filing a separate action for replevin involving a car that was registered in its name.
Advent Capital and Finance Corporation,
v.
ROLAND YOUNG
G.R. No. 183018; August 3, 2011

FACTS:
The present controversy stemmed from a replevin suit instituted by petitioner Advent Capital and
Finance Corporation (Advent) against respondent Roland Young (Young) to recover the possession
of a 1996 Mercedes Benz E230 with plate number UMN-168, which is registered in Advents name. 5

Prior to the replevin case, or on 16 July 2001, Advent filed for corporate rehabilitation with the
Regional Trial Court of Makati City, Branch 142 (rehabilitation court).6

On 27 August 2001, the rehabilitation court issued an Order (stay order) which states that the
enforcement of all claims whether for money or otherwise, and whether such enforcement is by court
action or otherwise, against the petitioner (Advent), its guarantors and sureties not solidarily liable
with it, is stayed.7

On 5 November 2001, Young filed his Comment to the Petition for Rehabilitation, claiming, among
others, several employee benefits allegedly due him as Advents former president and chief executive
officer.

On 6 November 2002, the rehabilitation court approved the rehabilitation plan submitted by Advent.
Included in the inventory of Advents assets was the subject car which remained in Youngs possession
at the time.

Youngs obstinate refusal to return the subject car, after repeated demands, prompted Advent to file
the replevin case on 8 July 2003. The complaint, docketed as Civil Case No. 03-776, was raffled to
the Regional Trial Court of Makati City, Branch 147 (trial court).

After Advents posting of P3,000,000 replevin bond, which was double the value of the subject car at
the time, through Stronghold Insurance Company, Incorporated (Stronghold), the trial court issued
a Writ of Seizure8 directing the Sheriff to seize the subject car from Young. Upon receipt of the Writ
of Seizure, Young turned over the car to Advent,9 which delivered the same to the rehabilitation
receiver.
ISSUE: Whether returning the subject car to Young would constitute a violation of the stay order
issued by the rehabilitation court.
RULING: No.
We agree with the Court of Appeals in directing the trial court to return the seized car to Young since
this is the necessary consequence of the dismissal of the replevin case for failure to prosecute without
prejudice. Upon the dismissal of the replevin case for failure to prosecute, the writ of seizure, which
is merely ancillary in nature, became functus officio and should have been lifted. There was no
adjudication on the merits, which means that there was no determination of the issue who has the
better right to possess the subject car. Advent cannot therefore retain possession of the subject car
considering that it was not adjudged as the prevailing party entitled to the remedy of replevin.

Contrary to Advents view, Olympia International Inc. v. Court of Appeals 16 applies to this case. The
dismissal of the replevin case for failure to prosecute results in the restoration of the parties status
prior to litigation, as if no complaint was filed at all. To let the writ of seizure stand after the
dismissal of the complaint would be adjudging Advent as the prevailing party, when precisely no
decision on the merits had been rendered. Accordingly, the parties must be reverted to their status
quo ante. Since Young possessed the subject car before the filing of the replevin case, the same must
be returned to him, as if no complaint was filed at all.

Advents contention that returning the subject car to Young would constitute a violation of the stay
order issued by the rehabilitation court is untenable. As the Court of Appeals correctly concluded,
returning the seized vehicle to Young is not an enforcement of a claim against Advent which must be
suspended by virtue of the stay order issued by the rehabilitation court pursuant to Section 6 of the
Interim Rules on Corporate Rehabilitation (Interim Rules).17 The issue in the replevin case is who
has better right to possession of the car, and it was Advent that claimed a better right in filing
the replevin case against Young. In defense, Young claimed a better right to possession of the car
arising from Advents car plan to its executives, which he asserts entitles him to offset the value of the
car against the proceeds of his retirement pay and stock option plan.
Young cannot collect a money claim against Advent within the contemplation of the Interim Rules.
The term claim has been construed to refer to debts or demands of a pecuniary nature, or the
assertion to have money paid by the company under rehabilitation to its creditors. 18 In
the replevin case, Young cannot demand that Advent pay him money because such payment, even if
valid, has been stayed by order of the rehabilitation court. However, in the replevin case, Young can
raise Advents car plan, coupled with his retirement pay and stock option plan, as giving him a better
right to possession of the car. To repeat, Young is entitled to recover the subject car as a necessary
consequence of the dismissal of the replevin case for failure to prosecute without prejudice.
LEONARDO S. UMALE, [deceased] represented by CLARISSA VICTORIA, JOHN LEO,
GEORGE LEONARD, KRISTINE, MARGUERITA ISABEL, AND MICHELLE ANGELIQUE,
ALL SURNAMED UMALE,
v.
ASB REALTY CORPORATION,
G.R. No. 181126; June 15, 2011

Being placed under corporate rehabilitation and having a receiver appointed to carry out the
rehabilitation plan do not ipso facto deprive a corporation and its corporate officers of the power to
recover its unlawfully detained property.
FACTS:
This case involves a parcel of land identified as Lot 7, Block 5, Amethyst Street, Ortigas Center, Pasig City
which was originally owned by Amethyst Pearl Corporation (Amethyst Pearl), a company that is, in turn,
wholly-owned by respondent ASB Realty Corporation (ASB Realty).

In 1996, Amethyst Pearl executed a Deed of Assignment in Liquidation of the subject premises in favor of
ASB Realty in consideration of the full redemption of Amethyst Pearls outstanding capital stock from ASB
Realty.[5] Thus, ASB Realty became the owner of the subject premises and obtained in its name Transfer
Certificate of Title No. PT-105797,[6] which was registered in 1997 with the Registry of Deeds of Pasig City.

Sometime in 2003, ASB Realty commenced an action in the Metropolitan Trial Court (MTC) of Pasig City for
unlawful detainer[7] of the subject premises against petitioner Leonardo S. Umale (Umale). ASB Realty
alleged that it entered into a lease contract[8] with Umale for the period June 1, 1999-May 31, 2000.
Umale challenged ASB Realtys personality to recover the subject premises considering that ASB Realty had
been placed under receivership by the Securities and Exchange Commission (SEC) and a rehabilitation
receiver had been duly appointed.
ISSUE: Can a corporate officer of ASB Realty (duly authorized by the Board of Directors) file suit to recover
an unlawfully detained corporate property despite the fact that the corporation had already been placed
under rehabilitation?
RULING: Yes.
There is no denying that ASB Realty, as the owner of the leased premises, is the real party-in-interest in the
unlawful detainer suit.[51] Real party-in-interest is defined as the party who stands to be benefited or injured
by the judgment in the suit, or the party entitled to the avails of the suit.[52]

What petitioners argue is that the corporate officer of ASB Realty is incapacitated to file this suit to recover a
corporate property because ASB Realty has a duly-appointed rehabilitation receiver. Allegedly, this
rehabilitation receiver is the only one that can file the instant suit.

Corporations, such as ASB Realty, are juridical entities that exist by operation of law.[53] As a creature of law,
the powers and attributes of a corporation are those set out, expressly or impliedly, in the law. Among the
general powers granted by law to a corporation is the power to sue in its own name.[54] This power is granted
to a duly-organized corporation, unless specifically revoked by another law. The question becomes: Do the
laws on corporate rehabilitation particularly PD 902-A, as amended,[55] and its corresponding rules of
procedure forfeit the power to sue from the corporate officers and Board of Directors?

Corporate rehabilitation is defined as the restoration of the debtor to a position of successful operation and
solvency, if it is shown that its continuance of operation is economically feasible and its creditors can recover
by way of the present value of payments projected in the plan more if the corporation continues as a going
concern than if it is immediately liquidated. [56] It was first introduced in the Philippine legal system through
PD 902-A, as amended.[57] The intention of the law is to effect a feasible and viable rehabilitation
by preserving a floundering business as a going concern, because the assets of a business are often more
valuable when so maintained than they would be when liquidated.[58] This concept of preserving the
corporations business as a going concern while it is undergoing rehabilitation is called debtor-in-possession
or debtor-in-place. This means that the debtor corporation (the corporation undergoing rehabilitation),
through its Board of Directors and corporate officers, remains in control of its business and
properties, subject only to the monitoring of the appointed rehabilitation receiver.[59] The concept of debtor-
in-possession, is carried out more particularly in the SEC Rules, the rule that is relevant to the instant case.
[60]
It states therein that the interim rehabilitation receiver of the debtor corporation does not take over the
control and management of the debtor corporation. [61] Likewise, the rehabilitation receiver that will replace
the interim receiver is tasked only to monitor the successful implementation of the rehabilitation plan.
[62]
There is nothing in the concept of corporate rehabilitation that would ipso facto deprive[63] the Board of
Directors and corporate officers of a debtor corporation, such as ASB Realty, of control such that it can no
longer enforce its right to recover its property from an errant lessee.

To be sure, corporate rehabilitation imposes several restrictions on the debtor corporation. The rules
enumerate the prohibited corporate actions and transactions [64] (most of which involve some kind of
disposition or encumbrance of the corporations assets) during the pendency of the rehabilitation proceedings
but none of which touch on the debtor corporations right to sue. The implication therefore is that our
concept of rehabilitation does not restrict this particular power, save for the caveat that all its actions are
monitored closely by the receiver, who can seek an annulment of any prohibited or anomalous transaction or
agreement entered into by the officers of the debtor corporation.

Petitioners insist that the rehabilitation receiver has the power to bring and defend actions in his own name
as this power is provided in Section 6 of Rule 59 of the Rules of Court.

Indeed, PD 902-A, as amended, provides that the receiver shall have the powers enumerated under Rule 59
of the Rules of Court. But Rule 59 is a rule of general application. It applies to different kinds of receivers
rehabilitation receivers, receivers of entities under management, ordinary receivers, receivers in liquidation
and for different kinds of situations. While the SEC has the discretion[65] to authorize the rehabilitation
receiver, as the case may warrant, to exercise the powers in Rule 59, the SECs exercise of such discretion
cannot simply be assumed. There is no allegation whatsoever in this case that the SEC gave ASB Realtys
rehabilitation receiver the exclusive right to sue.
Petitioners cite Villanueva,[66] Yam,[67] and Abacus Real Estate[68] as authorities for their theory that the
corporate officers of a corporation under rehabilitation is incapacitated to act. In Villanueva,[69] the
Court nullified the sale contract entered into by the Philippine Veterans Bank on the ground that the banks
insolvency restricted its capacity to act. Yam,[70] on the other hand, nullified the compromise agreement that
Manphil Investment Corporation entered into while it was under receivership by the Central
Bank. In Abacus Real Estate,[71] it was held that Manila Banks president had no authority to execute an
option to purchase contract while the bank was under liquidation.
These jurisprudence are inapplicable to the case at bar because they involve
banking and financial institutions that are governed by different laws.[72] In the cited cases, the applicable
banking law was Section 29[73] of the Central Bank Act.[74] In stark contrast to rehabilitation where the
corporation retains control and management of its affairs, Section 29 of the Central Bank Act, as amended,
expressly forbids the bank or the quasi-bank from doing business in the Philippines.
Moreover, the nullified transactions in the cited cases involve dispositions of assets and claims, which are
prohibited transactions even for corporate rehabilitation[75] because these may be prejudicial to creditors and
contrary to the rehabilitation plan. The instant case, however, involves the recovery of assets and collection of
receivables, for which there is no prohibition in PD 902-A.
Jose Marcel Panlilio, Erlinda Panlilio, Nicole Morris and Mario T. Cristobal
v.
RTC, Branch 51, City of Manila, represented by Hon. Presiding Judge Antonio M.
Rosales; People of the Philippines; and the Social Security System
GR No. 173846; February 2, 2011

FACTS: On October 15, 2004, Jose Marcel Panlilio, Erlinda Panlilio, Nicole Morris and Marlo
Cristobal (petitioners), as corporate officers of Silahis International Hotel, Inc. (SIHI), filed with the
Regional Trial Court (RTC) of Manila, Branch 24, a petition for Suspension of Payments and
Rehabilitation[4] in SEC Corp. Case No. 04-111180.
On October 18, 2004, the RTC of Manila, Branch 24, issued an Order [5] staying all claims
against SIHI upon finding the petition sufficient in form and substance.
At the time, however, of the filing of the petition for rehabilitation, there were a number of
criminal charges[7] pending against petitioners in Branch 51 of the RTC of Manila. These criminal
charges were initiated by respondent Social Security System (SSS) and involved charges of violations
of Section 28 (h)[8] of Republic Act 8282, or the Social Security Act of 1997 (SSS law), in relation to
Article 315 (1) (b)[9] of the Revised Penal Code, or Estafa. Consequently, petitioners filed with the
RTC of Manila, Branch 51, a Manifestation and Motion to Suspend Proceedings. [10] Petitioners argued
that the stay order issued by Branch 24 should also apply to the criminal charges pending in Branch
51. Petitioners, thus, prayed that Branch 51 suspend its proceedings until the petition for
rehabilitation was finally resolved.

ISSUE: Whether or not the stay order issued by Branch 24, Regional Trial Court of Manila, in Sec
Corp. Case No. 04-111180 covers also violation of SSS law for non-remittance of premiums and
violation of Article 315 (1) (b) of the Revised Penal Code.
RULING: No.
In Rosario v. Co[24] (Rosario), a case of recent vintage, the issue resolved by this Court was
whether or not during the pendency of rehabilitation proceedings, criminal charges for violation
of Batas Pambansa Bilang 22 should be suspended, was disposed of as follows:
x x x the gravamen of the offense punished by B.P. Blg. 22 is the act of making and
issuing a worthless check; that is, a check that is dishonored upon its presentation for
payment. It is designed to prevent damage to trade, commerce, and banking caused by
worthless checks. In Lozano v. Martinez, this Court declared that it is not the
nonpayment of an obligation which the law punishes. The law is not intended or
designed to coerce a debtor to pay his debt. The thrust of the law is to prohibit, under
pain of penal sanctions, the making and circulation of worthless checks. Because of its
deleterious effects on the public interest, the practice is proscribed by the law. The law
punishes the act not as an offense against property, but an offense against public order.
The prime purpose of the criminal action is to punish the offender in order to deter him
and others from committing the same or similar offense, to isolate him from society, to
reform and rehabilitate him or, in general, to maintain social order. Hence, the
criminal prosecution is designed to promote the public welfare by punishing offenders
and deterring others.
Consequently, the filing of the case for violation of B.P. Blg. 22 is not a "claim"
that can be enjoined within the purview of P.D. No. 902-A. True, although conviction of
the accused for the alleged crime could result in the restitution, reparation or
indemnification of the private offended party for the damage or injury he sustained by
reason of the felonious act of the accused, nevertheless, prosecution for violation of
B.P. Blg. 22 is a criminal action.
A criminal action has a dual purpose, namely, the punishment of the offender
and indemnity to the offended party. The dominant and primordial objective of the
criminal action is the punishment of the offender. The civil action is merely incidental
to and consequent to the conviction of the accused. The reason for this is that criminal
actions are primarily intended to vindicate an outrage against the sovereignty of the
state and to impose the appropriate penalty for the vindication of the disturbance to the
social order caused by the offender. On the other hand, the action between the private
complainant and the accused is intended solely to indemnify the former. [25]
Rosario is at fours with the case at bar. Petitioners are charged with violations of Section 28 (h) of
the SSS law, in relation to Article 315 (1) (b) of the Revised Penal Code, or Estafa. The SSS law clearly
criminalizes the non-remittance of SSS contributions by an employer to protect the employees from
unscrupulous employers. Therefore, public interest requires that the said criminal acts be
immediately investigated and prosecuted for the protection of society.
The rehabilitation of SIHI and the settlement of claims against the corporation is not a legal
ground for the extinction of petitioners criminal liabilities. There is no reason why criminal
proceedings should be suspended during corporate rehabilitation, more so, since the prime purpose
of the criminal action is to punish the offender in order to deter him and others from committing the
same or similar offense, to isolate him from society, reform and rehabilitate him or, in general, to
maintain social order.[26] As correctly observed in Rosario,[27] it would be absurd for one who has
engaged in criminal conduct could escape punishment by the mere filing of a petition for
rehabilitation by the corporation of which he is an officer.
The prosecution of the officers of the corporation has no bearing on the pending rehabilitation
of the corporation, especially since they are charged in their individual capacities. Such being the
case, the purpose of the law for the issuance of the stay order is not compromised, since the
appointed rehabilitation receiver can still fully discharge his functions as mandated by law. It bears
to stress that the rehabilitation receiver is not charged to defend the officers of the corporation. If
there is anything that the rehabilitation receiver might be remotely interested in is whether the court
also rules that petitioners are civilly liable. Such a scenario, however, is not a reason to suspend the
criminal proceedings, because as aptly discussed in Rosario, should the court prosecuting the
officers of the corporation find that an award or indemnification is warranted, such award would fall
under the category of claims, the execution of which would be subject to the stay order issued by the
rehabilitation court.[28] The penal sanctions as a consequence of violation of the SSS law, in relation
to the revised penal code can therefore be implemented if petitioners are found guilty after trial.
However, any civil indemnity awarded as a result of their conviction would be subject to the stay
order issued by the rehabilitation court. Only to this extent can the order of suspension be
considered obligatory upon any court, tribunal, branch or body where there are pending actions for
claims against the distressed corporation.[29]
On a final note, this Court would like to point out that Congress has recently enacted Republic
Act No. 10142, or the Financial Rehabilitation and Insolvency Act of 2010. [30] Section 18
thereof explicitly provides that criminal actions against the individual officer of a corporation are not
subject to the Stay or Suspension Order in rehabilitation proceedings, to wit:
The Stay or Suspension Order shall not apply:
xxxx
(g) any criminal action against individual debtor or owner, partner, director or officer
of a debtor shall not be affected by any proceeding commenced under this Act.
Based on the foregoing discussion, this Court rules that there is no legal impediment for Branch 51 to
proceed with the cases filed against petitioners.
Equitable PCI Bank, Inc. vs. DNG Realty and Development Corporation
G.R. No. 168672; August 8, 2010
FACTS:
(Respondent) DNG Realty and Development Corporation (DNG) obtained a loan
of P20M from x x x Equitable PCI Bank (EPCIB) secured by a real estate mortgage over
the 63,380 sq. meter land of the former situated in Cabanatuan City. Due to the Asian
Economic Crisis, DNG experienced liquidity problems disenabling DNG from paying
its loan on time. For this reason, EPCIB sought the extrajudicial foreclosure of the said
mortgage by filing a petition for sale on 30 June 2003 before the Office of the Ex-
Officio Sheriff. On 4 September 2003, the mortgage property was sold at public
auction, which was eventually awarded to EPCIB as the highest bidder. That same day,
the Sheriff executed a Certificate of Sale in favor of EPCIB.

On October 21, 2003, DNG filed a petition for rehabilitation under Rule 4 of the
Interim Rules of Procedure on Corporate Rehabilitation before the Regional Trial
Court, Branch 28, docketed as Special Proceeding No. 125. Pursuant to this, a Stay
Order was issued by RTC Branch 28 on 27 October 2003. The petition for
rehabilitation was then published in a newspaper of general circulation on 19 and 26
November 2003.

On the other hand, EPCIB caused the recording of the Sheriff's Certificate of Sale on 3
December 2003 with the Registry of Deeds of Cabanatuan City. EPCIB executed an
Affidavit of Consolidation of Ownership and had the same annotated on the title of
DNG (TCT No. 57143). Consequently, the Register of Deeds cancelled DNG's title and
issued TCT No. T-109482 in the name of EPCIB on 10 December 2003. This prompted
DNG to file Civil Case No. 4631 with RTC-Br. 28 for annulment of the foreclosure
proceeding before the Office of the Ex-Officio Sheriff. This case was dismissed for
failure to prosecute.

In order to gain possession of the foreclosed property, EPCIB on 17 March 2004 filed
an Ex-Parte Petition for Issuance of Writ of Possession docketed as Cadastral Case No.
2414-AF before RTC Br. 23 in Cabanatuan City. After hearing, RTC-Br. 23 on 6
September 2004 issued an order directing the issuance of a writ of possession. On 4
October 2004, RTC-Br. 23 issued the Writ of Possession. Consequently, the Office of
the Ex-Officio Sheriff issued the Notice to Vacate dated 6 October 2004.[2]

On October 15, 2004, respondent filed with the CA a petition for certiorari, prohibition and
mandamus with prayer for the issuance of temporary restraining order/ preliminary injunction. The
petition for certiorari sought to nullify (1) the affidavit of consolidation of ownership dated
December 2, 2003; (2) the cancellation of DNG's TCT No. T-57143 covering the mortgaged property
and the issuance of TCT No. T-109482 in favor of petitioner EPCIB by the Register of Deeds of
Cabanatuan City; (3) the Order dated September 6, 2004 issued by the RTC, Branch 23, directing the
issuance of the writ of possession and the writ of possession issued pursuant thereto; and (4) the
sheriff's Notice to Vacate dated October 6, 2004, while the petition for prohibition sought to enjoin
petitioner EPCIB, their agents and representatives from enforcing and implementing the above-
mentioned actions. And the petition for mandamus sought to require petitioner EPCIB to cease and
desist from taking further action both in the foreclosure proceedings as well as in Cadastral Case No.
2414-AF, where the writ of possession was issued until the petition for rehabilitation pending before
Branch 28 of the Regional Trial Court (RTC) of Cabanatuan City has been terminated or dismissed.
On October 22, 2004, the CA issued a temporary restraining order (TRO). [3]
After the parties filed their respective pleadings, the CA issued its assailed Decision granting the
petition of respondent.

ISSUE: Whether the CA correctly held that all subsequent actions pertaining to respondent
DNG's Cabanatuan property should have been held in abeyance after the Stay Order was issued by
the rehabilitation court.

RULING:
No. The CA was incorrect.
The suspension of the enforcement of all claims against the corporation is subject to the rule that it
shall commence only from the time the Rehabilitation Receiver is appointed. [28]

The CA annulled the RTC Order dated September 6, 2004 directing the issuance of a writ of
possession, as well as the writ of possession issued pursuant thereto on October 4, 2004, and the
notice to vacate issued by the Sheriff for being premature and untimely and ordered the cancellation
of TCT No. T-109482 in the name of petitioner EPCIB as they were all done after the Stay Order was
issued on October 27, 2003 by the rehabilitation court. In so ruling, the CA relied on BPI v. CA.[29]
In BPI v. CA, BPI filed with the RTC a complaint for foreclosure of real estate mortgage against Ruby
Industrial Corporation (RUBY). After RUBY filed its Answer with Counterclaim, it submitted a
motion for suspension of proceedings, since the SEC had earlier issued an Order placing RUBY
under a rehabilitation plan, pursuant to Section 6 par. (c) of PD 902-A which also declared that with
the creation of the Management Committee, all actions or claims against RUBY pending before any
court, tribunal, branch or body were suspended. Thus, the RTC suspended the proceedings. BPI
moved for the reopening of the proceedings; however, the RTC denied it, citing the case of Alemar's
Sibal and Sons, Inc v. Elbinias where we held that suspension of payments applied to all creditors,
whether secured or unsecured, in order to place them on equal footing. As BPI's motion for
reconsideration was denied, it went to the CA in a petition for certiorari and mandamus alleging
grave abuse of discretion on the RTC in refusing to reopen the case, which was dismissed by the CA.
BPI filed its appeal with Us wherein the issue presented was whether BPI, a secured creditor of
RUBY, may still judicially enforce its claim against RUBY which had already been placed by the SEC
under Rehabilitation. We denied the petition and found that BPIs action for foreclosure of real estate
mortgage had been filed against RUBY and was pending with the RTC when RUBY was placed by the
SEC under rehabilitation through the creation of a management committee. Thus, with the SEC
order, which directed that all actions or claims against RUBY pending before any court, tribunal,
branch or body be deemed suspended, the RTC's jurisdiction over the foreclosure case was also
considered suspended; and that SEC had acquired jurisdiction with the appointment of a
rehabilitation receiver for the distressed corporation and had directed all proceedings or claims
against Ruby suspended. We then ruled that:

x x x whenever a distressed corporation asks [the] SEC for rehabilitation and


suspension of payments, preferred creditors may no longer assert such preference, but
x x x stand on equal footing with other creditors. Foreclosure shall be disallowed so as
not to prejudice other creditors, or cause discrimination among them. If foreclosure is
undertaken despite the fact that a petition for rehabilitation has been filed, the
certificate of sale shall not be delivered pending rehabilitation. If this has already been
done, no transfer certificate of title shall likewise be effected within the period of
rehabilitation. The rationale behind PD 902-A, as amended, is to effect a feasible and
viable rehabilitation. This cannot be achieved if one creditor is preferred over the
others.[30]

BPI case is not in all fours with the instant case. Notably, in BPI, the action for judicial foreclosure of
the real estate mortgage was still pending with the RTC when the stay order was issued; thus, there
was no judgment on the foreclosure for payment and the sale of the mortgaged property at a public
auction. In contrast to this case, herein respondent's mortgaged property had already been
extrajudicially foreclosed and sold to petitioner as the highest bidder and a Certificate of Sale was
issued on September 4, 2003, which was prior to the issuance of the Stay Order on October 27, 2003.

We find merit in petitioner EPCIB's argument on the applicability of RCBC v. IAC,[31] an en banc case
decided in 1999, to the instant case. There, we ruled that RCBC can rightfully move for the
extrajudicial foreclosure of the mortgage on the BF Home properties on October 16, 1984, because a
management committee was not appointed by the SEC until March 18, 1985. Such ruling was a
reversal of our earlier decision in the same case where we found that the prohibition against
foreclosure attaches as soon as a petition for rehabilitation was filed.

In RCBC v. IAC, BF Homes filed a petition for rehabilitation and for suspension of payments with the
SEC on September 28, 1984. On October 26, 1984, RCBC requested the Provincial Sheriff to
extrajudicially foreclose its real estate mortgage on some of BF Homes' properties; thus, notices were
sent to the parties. BF Homes filed a motion with the SEC for the issuance of a TRO to enjoin RCBC
and the sheriff from proceeding with the auction sale, which the SEC granted by issuing a TRO for
twenty days. The sale was rescheduled to January 29, 1985. On January 25, 1985, the SEC ordered
the issuance of a writ of preliminary injunction conditioned upon BF Homes' filing of a bond which
the latter failed to do not until January 29, the day of the auction sale. As the sheriff was not aware of
the filing of the bond, he proceeded with the auction on January 29, wherein RCBC emerged as the
highest bidder.

On February 5, 1985, BF Homes filed with the SEC a consolidated motion to annul the auction sale
and to cite RCBC and the sheriff for contempt. The sheriff then withheld the delivery of a certificate
of sale to the RCBC due to the SEC proceedings. On March 13, 1985, RCBC filed with the RTC of
Rizal, Branch 140, an action for mandamus against the Provincial Sheriff of Rizal and his deputy to
compel them to execute in its favor a certificate of sale of the auctioned properties. The sheriffs filed
their answer saying that they proceeded with the sale since no writ of preliminary injunction was
issued as of the auction sale, but they informed the SEC that they would suspend the issuance of the
certificate of sale.

On March 18, 1985, the SEC appointed a management committee for BF Homes.

On May 8, 1985, the RTC, Branch 140, rendered a judgment on the pleading in the mandamus case
filed by RCBC which ordered the sheriff to execute and deliver to RCBC the certificate of sale of
January 29, 1984. BF Homes filed with the IAC an original complaint for annulment of the RTC
judgment. The IAC set aside the RTC decision by dismissing the mandamus case and ordered the
suspension of the issuance to RCBC of new land titles [32] until the SEC had resolved the petition for
rehabilitation.

RCBC filed an appeal with us. During the pendency of the appeal, RCBC filed a manifestation
informing us that the SEC issued an Order on October 16, 1986 denying the motion to annul the
auction sale and to cite RCBC and the sheriff for contempt. Thus, by virtue of the said SEC Order, the
Register of Deeds of Pasay effected transfer of titles over the auctioned properties to RCBC and the
issuance of new titles in its name. Thereafter, RCBC presented with us a motion for the dismissal of
its petition, since the issuance of new titles in its name rendered the petition moot and academic. In
our original decision dated September 14, 1992, we denied petitioners motion to dismiss, finding
basis for nullifying and setting aside the TCTs in the name of RCBC. We dismissed the RCBC petition
and upheld the IAC decision dismissing the mandamus case filed by RCBC. We ordered the
nullification of the new titles already issued in RCBC's name and reinstated the old titles in the name
of BF Homes. In setting aside RCBCs acquisition of title and nullifying the TCTs issued to it, we held
that prohibition against foreclosure attaches as soon as a petition for rehabilitation was filed.

However, as we have said earlier, upon RCBC's motion for reconsideration, we reversed our previous
decision and granted reconsideration for the cogent reason that suspension of actions for claims
commenced only from the time a management committee or receiver was appointed by the SEC. We
said that RCBC, therefore, could have rightfully, as it did, move for the extrajudicial foreclosure of its
mortgage on October 26, 1984, because a management committee was not appointed by the SEC
until March 18, 1985.

In RCBC, we upheld the extrajudicial foreclosure sale of the mortgage properties of BF Homes
wherein RCBC emerged as the highest bidder as it was done before the appointment of the
management committee. Noteworthy to mention was the fact that the issuance of the certificate of
sale in RCBC's favor, the consolidation of title, and the issuance of the new titles in RCBC's name had
also been upheld notwithstanding that the same were all done after the management committee had
already been appointed and there was already a suspension of claims. Thus, applying RCBC v. IAC in
this case, since the foreclosure of respondent DNG's mortgage and the issuance of the certificate of
sale in petitioner EPCIB's favor were done prior to the appointment of a Rehabilitation Receiver and
the Stay Order, all the actions taken with respect to the foreclosed mortgage property which were
subsequent to the issuance of the Stay Order were not affected by the Stay Order. Thus, after the
redemption period expired without respondent redeeming the foreclosed property, petitioner
becomes the absolute owner of the property and it was within its right to ask for the consolidation of
title and the issuance of new title in its name as a consequence of ownership; thus, it is entitled to the
possession and enjoyment of the property.

WHEREFORE, the petition is GRANTED. The Decision dated June 23, 2005 of the Court
of Appeals in CA-G.R. SP No. 86950 is hereby REVERSED andSET ASIDE.
Ong vs PCIB
Case doctrine: The provisions of a MOA regarding the suspension of payments by a
debtor and the non-filing of collection suits by the creditors pertain only to the
property of the principal debtor. Such agreement by the debtor and creditor does not
benefit sureties.
Facts:
On April 20, 1992, respondent Philippine Commercial International Bank filed a case for
collection of a sum of money against petitioners-spouses. Respondent bank sought to hold
petitioners-spouses liable as sureties on the three (3) promissory notes they issued to secure
loans, totalling five million pesos (P5,000,000.00).
The complaint alleged that in 1991, BMC needed additional capital for its business and applied
for various loans, amounting to a total of five million pesos, with the respondent bank.
Petitioners-spouses acted as sureties for these loans and issued three (3) promissory notes for
the purpose. Respondent bank granted BMCs loan applications.
On November 22, 1991, BMC filed a petition for rehabilitation and suspension of payments
with the Securities and Exchange Commission (SEC) after its properties were attached by
creditors. Respondent bank considered debtor BMC in default of its obligations and sought to
collect payment thereof from petitioners-spouses as sureties.
On October 13, 1992, a Memorandum of Agreement (MOA) was executed by debtor BMC, the
petitioners-spouses as President and Treasurer of BMC, and the consortium of creditor banks
of BMC (of which respondent bank is included). The MOA took effect upon its approval by the
SEC on November 27, 1992.
Petitioners-spouses moved to dismiss the complaint. They argued that as the SEC
declared the principal debtor BMC in a state of suspension of payments and, under the MOA,
the creditor banks, including respondent bank, agreed to temporarily suspend any pending
civil action against the debtor BMC, the benefits of the MOA should be extended to
petitioners-spouses who acted as BMCs sureties in their contracts of loan with respondent
bank. Petitioners-spouses averred that respondent bank is barred from pursuing its collection
case filed against them.
RTC denied the motion to dismiss. Decision was affirmed by CA. Hence, this petition.
Issue: Petitioners-spouses claim that the collection case filed against them by respondent bank
should be dismissed
SC: We find no merit in petitioners contentions.
Reliance of petitioners-spouses on Articles 2063 and 2081 of the Civil Code is
misplaced as these provisions refer to contracts of guaranty. They do not apply
to suretyship contracts. Petitioners-spouses are not guarantors but sureties of BMCs
debts.
Under Article 1216 of the Civil Code, respondent bank as creditor may proceed against
petitioners-spouses as sureties despite the execution of the MOA which provided for the
suspension of payment and filing of collection suits against BMC. Respondent banks right to
collect payment from the surety exists independently of its right to proceed directly against
the principal debtor. In fact, the creditor bank may go against the surety alone without prior
demand for payment on the principal debtor.
The provisions of the MOA regarding the suspension of payments by BMC and
the non-filing of collection suits by the creditor banks pertain only to the
property of the principal debtor BMC. Firstly, in the rehabilitation receivership filed by
BMC, only the properties of BMC were mentioned in the petition with the SEC. [8] Secondly,
there is nothing in the MOA that involves the liabilities of the sureties whose properties are
separate and distinct from that of the debtor BMC. Lastly, it bears to stress that the MOA
executed by BMC and signed by the creditor-banks was approved by the SEC whose
jurisdiction is limited only to corporations and corporate assets.
Metrobank vs SLGT holdings
Case doctrine: Even if respondent is under receivership, its obligations as a real estate developer
under P.D. 957 are not suspended. Section 6 (C) of P.D. No. 902-A, as amended, on suspension of all
actions for claims against corporations refers solely to monetary claims.

Facts:
On October 25, 1995, Dylanco and SLGT each entered into a contract to sell with ASB for the
purchase of a unit (Unit 1106 for Dylanco and Unit 1211 for SLGT) at BSA Towers then being
developed by the latter. As stipulated, ASB will deliver the units thus sold upon completion of
the construction or before December 1999. Relying on this and other undertakings, Dylanco
and SLGT each paid in full the contract price of their respective units.
The promised completion date came and went, but ASB failed to deliver, as the Project
remained unfinished at that time. To make matters worse, they learned that the lots on which
the BSA Towers were to be erected had been mortgaged.
Alarmed by this foregoing turn of events, Dylanco, on August 10, 2004, filed with the HLURB
a complaint for delivery of property and title and for the declaration of nullity of mortgage. A
similar complaint filed by SLGT followed three (3) days later. At this time, it appears that the
ASB Group of Companies, which included ASB, had already filed with the Securities and
Exchange Commission a petition for rehabilitation and a rehabilitation receiver had in fact
been appointed.
In response to the above complaints, ASB alleged that it encountered liquidity problems
sometime in 2000 after its creditors [UCPB and Metrobank] simultaneously demanded
payments of their loans; that on May 4, 2000, the Commission (SEC) granted its petition for
rehabilitation; that it negotiated with UCPB and Metrobank but nothing came out positive
from their negotiation .
On the other hand, Metrobank claims that complainants [Dylanco and SLGT] have no
personality to ask for the nullification of the mortgage because they are not parties to the
mortgage transaction.
In resolving the complaint in favor of Dylanco and SLGT, the Housing Arbiter ruled that the
mortgage constituted over the lots is invalid for lack of mortgage clearance from the HLURB.
The HLURB Board of Commissioners affirmed the above rulings with the modification that
ASB should cause the subdivision of the mother titles into condominium certificates of title of
Dylanco and SLGT free from all liens and encumbrances.
The CA affirmed the decision. Hence this petition.
ISSUE: 1. The declaration of nullity of the entire mortgage constituted on the project land site
and the improvements thereon; and

2. The applicability to this case of the suspension order granted by SEC to ASB.
SC: We deny.
As to the first issue, it is the petitioners posture that the CA, and, before it, the OP, erred when
it declared the subject mortgage contract void in its entirety and then directed both petitioner
banks to release the mortgage on the Project. We are not persuaded.
Both petitioners do not dispute executing the mortgage in question without the HLURBs prior
written approval and notice to both individual respondents. Section 18 of Presidential Decree
No. (PD) 957 The Subdivision and Condominium Buyers Protective Decree provides: SEC.
18. Mortgages. - No mortgage of any unit or lot shall be made by the owner or
developer without prior written approval of the [HLURB].
There can thus be no quibbling that the project lot/s and the improvements introduced
or be introduced thereon were mortgaged in clear violation of the aforequoted
provision of PD 957. And to be sure, Dylanco and SLGT, as Project unit buyers, were
not notified of the mortgage before the release of the loan proceeds by petitioner banks.
This thus brings us to the next issue of whether or not the HLURB, OP and, necessarily, the
CA reversibly erred in continuing with the resolution of this case notwithstanding the
rehabilitation proceedings before, and the appointment by, the SEC of a receiver for ASB
which, under Section 6 (c) of PD 902-A, as amended, necessarily suspended all actions for
claims against distressed corporations.
Petitioners maintain that individual respondents demands initially filed with the HLURB
partake of the nature of claim within the contemplation of the aforesaid suspensive section
of PD 902-A. They cite Sobrejuanite v. ASB Development Corporation to drive home the idea
of the encompassing reach of the word claim which they deem to include any and all claims or
demands of whatever nature and character. The Court is unable to accommodate the
petitioners.
As we articulated in Arranza v. B.F. Homes, Inc., the fact that respondent B.F. Homes is
under receivership does not preclude the continuance before the HLURB of the case for
specific performance of a real estate developers obligation under PD 957. For, Even if
respondent is under receivership, its obligations as a real estate developer under P.D. 957 are
not suspended. Section 6 (C) of P.D. No. 902-A, as amended, on suspension of all actions for
claims against corporations refers solely to monetary claims.
The appointment of a receiver does not dissolve the corporation, nor does it interfere
with the exercise of corporate rights. In this case where there appears to be no
restraints imposed upon respondent as it undergoes rehabilitation receivership,
respondent continues or should continue to perform its contractual and statutory
responsibilities to petitioners as homeowners.
No violation of the SEC order suspending payments to creditors would result as far as
petitioners complaint before the HLURB is concerned. To reiterate, what petitioners
seek to enforce are respondents obligation as subdivision developer [for which the
HLURB, not the SEC, is equipped with the expertise to deal with the matter]. Such
claims are basically not pecuniary in nature.
WHEREFORE, the instant petitions are DENIED and the assailed CA Decision and
Resolution are AFFIRMED.
STEEL CORPORATION OF THE PHILIPPINES
vs.
MAPFRE INSULAR INSURANCE CORPORATION, NEW INDIAASSURANCE
COMPANY LIMITED, PHILIPPINE CHARTER INSURANCE CORPORATION,
MALAYAN INSURANCE CO., INC., and ASIA INSURANCE CO., INC., and ASIA
INSURANCE PHIL. CORP.
G.R. No. 201199 October 16, 2013

FACTS:
SCP is a domestic corporation engaged in the manufacture and distribution of cold-rolled and
galvanized steel sheets and coils. It obtained loans from several creditors and, as security, mortgaged
its assets in their favor. The creditors appointed Bank of the Philippine Islands (BPI) as their trustee.
SCP and BPI entered into a Mortgage Trust Indenture (MTI) requiring SCP to insure all of its assets
until the loans are fully paid. Under the MTI, the insurance policies were to be made payable to BPI.
When SCP suffered financial difficulties, one of the creditors filed a petition to have SCP placed
under corporate rehabilitation and the RTC issued a stay order to defer all claims against SCP,
appointed a rehabilitation receiver and eventually approved the modified rehabilitation plan.
Under Collective Master Policy, SCP insured against material damage and business interruption its
assets located in Batangas. On 8 June 2008, a fire broke out at SCPs plant damaging its
machineries. Invoking its right under the MTI, BPI demanded and received from the insurers
$450,000 insurance proceeds.
SCP filed with the RTC a motion to direct BPI to turn over the $450,000 insurance proceeds in order
for SCP to repair and replace the damaged machineries. RTC issued an Order directing BPI to release
the insurance proceeds directly to the contractors and suppliers who will undertake the repairs and
replacements of the damaged machineries. BPI filed with the CA a petition for certiorari under Rule
65. CA affirmed the RTCs Order. However, in its Amended Decision, CA reversed itself and set aside
the RTCs order. SCP filed with SC, which was later denied.
SCP filed with the RTC a motion to direct respondent insurers to pay insurance proceeds in the
amounts of $28,000,000 property damage and $8,000,000 business interruption. RTC granted the
motion.
On appeal, CA declared the RTC decision null and void for lack of jurisdiction.
ISSUE:
Whether the rehabilitation court has jurisdiction over insurance claims.
HELD:
No.
The RTC, acting as rehabilitation court, has no jurisdiction over the subject matter of the insurance
claim of SCP against respondent insurers. SCP must file a separate action for collection where
respondent insurers can properly thresh out their defenses. SCP cannot simply file with the RTC a
motion to direct respondent insurers to pay insurance proceeds. Section 3 of Republic Act No. 10142
states that rehabilitation proceedings are "summary and non-adversarial" in nature. They do not
include adjudication of claims that require full trial on the merits, like SCPs insurance claim against
respondent insurers.
Rehabilitation proceedings are summary and non-adversarial in nature, and do not
contemplate adjudication of claims that must be threshed out in ordinary court
proceedings. Adversarial proceedings similar to that in ordinary courts are inconsistent with the
commercial nature of a rehabilitation case. The latter must be resolved quickly and expeditiously for
the sake of the corporate debtor, its creditors and other interested parties. Thus, the Interim Rules
"incorporate the concept of prohibited pleadings, affidavit evidence in lieu of oral testimony,
clarificatory hearings instead of the traditional approach of receiving evidence, and the grant of
authority to the court to decide the case, or any incident, on the basis of affidavits and documentary
evidence."
Further, the SC agrees with the CA that the jurisdiction of the rehabilitation courts is over
claims against the debtor that is under rehabilitation, not over claims by the debtor
against its own debtors or against third parties. In its decision, CA held that:
x x x Said insurance claims cannot be considered as "claims" within the
jurisdiction of the trial court functioning as a rehabilitation court. Rehabilitation
courts only have limited jurisdiction over the claims by creditors against the distressed
company, not on the claims of said distressed company against its debtors. The interim
rules define claim as referring to all claims or demands, of whatever nature or
character against a debtor or its property, whether for money or otherwise.
Even under the new Rules of Procedure on Corporate Rehabilitation, claim is defined under Section
1, Rule 2 as "all claims or demands of whatever nature or character against a debtor or its property,
whether for money or otherwise." This is also the definition of a claim under Republic Act No. 10142.
Section 4(c) thereof reads:
"(c) Claim shall refer to all claims or demands of whatever nature or character
against the debtor or its property, whether for money or otherwise, liquidated or
unliquidated, fixed or contingent, matured or unmatured, disputed or
undisputed, including, but not limited to: (1) all claims of the government, whether national
or local, including taxes, tariffs and customs duties; and (2) claims against directors and
officers of the debtor arising from the acts done in the discharge of their functions falling
within the scope of their authority: Provided, That, this inclusion does not prohibit the
creditors or third parties from filing cases against the directors and officers acting in their
personal capacities."
Respondent insurers are not claiming or demanding any money or property from SCP. In other
words, respondent insurers are not creditors of SCP. Respondent insurers are contingent debtors of
SCP because they may possibly be, subject to proof during trial, liable to SCP. Thus, the RTC has no
jurisdiction over the insurance claim of SCP against respondent insurers. SCP must file a separate
action against respondent insurers to recover whatever claim it may have against them.
LEXBER, INC.
vs.
CAESAR M. and CONCHITA B. DALMAN
G.R. No. 183587 April 20, 2015

FACTS:
Lexber is a domestic corporation engaged in the business of housing, construction, and real estate
development. Its housing projects are mostly located in the province of Benguet, Baguio City, and
Cabanatuan City.
Among those who availed of Lexbers housing projects are respondent-spouses Caesar and Conchita
Dalman (Spouses Dalman), who bought a house and lot under a contract to sell in Lexbers Regal
Lexber Homes at Tuba, Benguet.
Because of the 1997 Asian financial crisis and other external factors, Lexbers financial condition
deteriorated. It was forced to discontinue some of its housing projects, including the one where the
Spouses Dalmans purchased property is located.
As Lexber could no longer pay its creditors, it filed a petition for rehabilitation with prayer for the
suspension of payments on its loan obligations. Among its creditors are the Spouses Dalman who are
yet to receive their purchased house and lot, or, in the alternative, a refund of their payments which
amounted to P900,000.
The trial court gave due course to Lexbers rehabilitation petition and appointed Atty. Rafael Chris F.
Teston (Atty. Teston) as rehabilitation receiver.
The Spouses Dalman filed a motion for reconsideration from this order and argued that consistent
with Rule 4, Section 11 of the Interim Rules of Procedure on Corporate Rehabilitation (Interim
Rules), the trial court should have dismissed outright the rehabilitation petition because it failed to
approve the rehabilitation plan within 180 days from the date of the initial hearing.
The Spouses Dalman further submitted that no rehabilitation petition of a real estate company like
Lexber should be given due course without the Housing and Land Use Regulatory Boards (HLURB)
prior request for the appointment of the rehabilitation receiver.
The trial court denied the MR. Spouses filed an appeal before the CA via a certiorari petition.
CA granted the petition.
ISSUE:
Whether the CA erred in finding grave abuse of discretion on the trial courts part when it gave due
course to the rehabilitation petition, despite:
a. the absence of the HLURBs prior request for the appointment of a rehabilitation receiver;
and
b. the lapse of the 180-day period for the approval of a rehabilitation plan.
Supervening event:
Lexber disclosed in its petition that in an order dated May 23, 2008, the trial court eventually
dismissed the rehabilitation petition because of the disapproval of Lexbers proposed rehabilitation
plan. The CA is currently reviewing this subsequent order in a separate proceeding.
HELD:

No.
Change in the Interim Rules [may be asked in recits]
SC denied the present petition due to the pendency of CA G.R. No. 103917, pending with the CA after
the trial court dismissed Lexbers rehabilitation petition in its May 23, 2008 order. The ruling is to
avoid any conflicting ruling with the CAs decision in CA G.R. No. 103917, which is reviewing the
rehabilitation petitions dismissal but for a different and more substantive reason, i.e., the
disapproval of Lexbers rehabilitation plan.
This possibility of rendering conflicting decisions among reviewing courts is one of the reasons why
the Rules of Procedure on Corporate Rehabilitation (2008 Rules) amended the Interim Rules
provision on the available procedural remedies after the filing of the rehabilitation petition. This has
also been further amended in the new Financial Rehabilitation Rules of Procedure (2013 Rules).
Under the Interim Rules, a motion for reconsideration is a prohibited pleading. This is no longer true
under the 2008 Rules and the new 2013 Rules, which implemented the procedural changes outlined
below:
2008 Rules 2013 Rules
Rule 8 Rule 6
Procedural Remedies Procedural Remedies

Section 1. Motion for Reconsideration.- A Section 1. Motion for Reconsideration A


party may file a motion for party may file a motion for
reconsideration of any order issued by the reconsideration of any order issued by the
court prior to the approval of the court prior to the approval of the
rehabilitation plan. No relief can be rehabilitation plan. No relief can be
extended to the party aggrieved by the extended to the party aggrieved by the
court's order on the motion through a courts order on the motion through a
special civil action for certiorari under special civil action for certiorari under
Rule 65 of the Rules of Court. Such order Rule 65 of the Rules of Court.
can only be elevated to the Court of
Appeals as an assigned error in the
petition for review of the decision or An order issued after the approval of the
order approving or disapproving the rehabilitation plan can be reviewed only
rehabilitation plan. An order issued after through a special civil action for certiorari
the approval of the rehabilitation plan can under Rule 65 of the Rules of Court.
be reviewed only through a special civil
action for certiorari under Rule 65 of the Section 2. Review of Decision or Order on
Rules of Court. Rehabilitation Plan.- An order approving
or disapproving a rehabilitation plan can
Section 2. Review of Decision or Order on only be reviewed through a petition for
Rehabilitation Plan. - An order approving certiorari to the Court of Appeals under
or disapproving a rehabilitation plan can Rule 65 of the Rules of Court within
only be reviewed through a petition for fifteen (15) days from notice of the
review to the Court of Appeals under Rule decision or order.
43 of the Rules of Court within fifteen (15)
days from notice of the decision or order.

Hence, under the 2008 Rules, an appeal (through a Rule 43 petition) may be filed only after the trial
court issues an order approving or disapproving the rehabilitation plan. Any issue arising from a
denied motion for reconsideration may only be raised as an assigned error in the Rule 43 petition
and may not be questioned in a separate Rule 65 petition. The exception to this is when the issue
only arose after the issuance of the order denying or approving the rehabilitation plan.
This procedural guideline had been further amended in the 2013 Rules where any relief from the trial
courts denial of a motion for reconsideration is no longer available. Moreover, the CAs mode of
review is now through Rule 65 and not Rule 43. But despite this further change, the 2013 Rules
retained the guideline in the 2008 Rules that review may be sought from the CA only after the
rehabilitation court issues an order approving or disapproving the rehabilitation plan. Thus, if after
the filing of the rehabilitation petition the trial court is satisfied that the jurisdictional requirements
were complied with, the initial hearing shall commence and the petition for rehabilitation shall be
given due course. At this stage, no appeal or certiorari petition may yet be filed as any remedy is only
available after the order approving or disapproving the rehabilitation plan. This is to avoid the
present situation where there are multiple petitions filed with the appellate courts from which
conflicting decisions may be rendered.
But since these procedural rules were not yet in place when the facts of this case occurred, the Courts
remedy is to deny the present petition in order to avoid pre-empting the proceedings in CA G.R. No.
103917.
HLURB prior request
The HLURBs prior request for the appointment of a rehabilitation receiver is not a condition
precedent before the trial court can give due course to a rehabilitation petition.
To support its argument that the HLURBs prior request is a condition precedent that must be
complied with before the trial court can give due course to a rehabilitation petition of a real estate
company like Lexber, the CA invoked Section 6(c) of PD-902-A as basis. The pertinent part of this
provision states:
The SEC may appoint a rehabilitation receiver of corporations, partnerships or other
associations supervised or regulated by other government agencies, such as banks and
insurance companies, upon request of the government agency concerned.
The CA explains that its reasoning is consistent with the rule that if there is a particular agency
regulating a business, e.g., the Bangko Sentral ng Pilipinas (BSP) over banks, and the Insurance
Commission (IC) over insurance companies, no rehabilitation petition can be initiated without their
request for the appointment of a receiver.
The error in this generalization is its failure to identify the distinction between the enumerated
examples in Section 6(c), i.e., banks and insurance companies, and Lexber, a construction and real
estate company.
The respective charters of the BSP and the IC specifically authorize them to appoint a receiver in case
a company under their regulation is undergoing corporate rehabilitation. Notably, this is not the case
with the HLURB. Its enabling law does not grant it this particular power.
Lapse of the 180-day period for approval of rehabilitation plan
The lapse of the 180-day period for the approval of the rehabilitation plan should not automatically
result to the dismissal of the rehabilitation petition.
In ruling for the outright dismissal of Lexbers rehabilitation petition, the CA noted that the trial
court failed to approve Lexbers rehabilitation plan within 180 days from the date of the initial
hearing, thus prompting the application of Rule 4, Section 11 of the Interim Rules, to wit:
Section 11. Period of the Stay Order- The stay order shall be effective from the date of its
issuance until the dismissal of the petition or the termination of the rehabilitation
proceedings. The petition shall be dismissed if no rehabilitation plan is approved by the court
upon the lapse of one hundred eighty (180) days from the date of the initial
hearing. The court may grant an extension beyond this period only if it appears by
convincing and compelling evidence that the debtor may successfully be rehabilitated. In no
instance, however, shall the period for approving or disapproving a rehabilitation plan exceed
eighteen (18) months from the date of filing of the petition.
The CA explained that the word "shall" is a word of command. Thus, the essential effect of the non-
approval of the rehabilitation plan after 180 days from the initial hearing is the dismissal of the
rehabilitation petition.
However, while the general rule in statutory construction is that the words "shall," "must," "ought,"
or "should" are of mandatory character in common parlance, it is also well-recognized in law and
equity that this is not an absolute rule or inflexible criterion.
The records of the present case show that on May 4, 2007, Lexber filed a motion for the extension of
the period for the approval of the rehabilitation plan. However, the trial court never issued a
resolution on this motion. Instead, on June 12, 2007, it issued an order giving due course to the
petition. The records also reveal that after the initial hearing, the trial court had to conduct
additional hearings even after the lapse of the 180-day period.
Under these circumstances, the Court concludes that Lexber could not be faulted for the non-
approval of the rehabilitation plan within the 180-day period. A petitioner-corporation should
not be penalized if the trial court needed more time to evaluate the rehabilitation plan.
Notably, in the present case, Lexber filed a motion for the extension of the 180-day period. However,
the trial court did not issue a resolution on this motion. Instead, it issued an order giving due course
to the petition, which also fell within the 18-month limit prescribed under the law.
Rule 2, Section 2 of the Interim Rules dictates the courts to liberally construe the rehabilitation rules
in order to carry out the objectives of Sections 6(c) of PD 902-A, as amended, and to assist the
parties in obtaining a just, expeditious, and inexpensive determination of rehabilitation cases. The
trial courts decision to approve or disapprove a rehabilitation plan is not a ministerial function and
would require its extensive study and analysis. As it turned out, after careful scrutiny of the
rehabilitation petition, and its annexes, the trial court eventually disapproved Lexbers rehabilitation
plan and dismissed the rehabilitation petition.
BPI FAMILY SAVINGS BANK, INC.
vs.
ST. MICHAEL MEDICAL CENTER, INC.
G.R. No. 205469 March 25, 2015

FACTS:
Spouses Virgilio and Yolanda Rodil (Sps. Rodil) are the owners and sole proprietors of St. Michael
Diagnostic and Skin Care Laboratory Services and Hospital (St. Michael Hospital). With a vision to
upgrade St. Michael Hospital into a modern, well-equipped and full service tertiary 11-storey
hospital, Sps. Rodil purchased two (2) parcels of land adjoining their existing property and, on May
22, 2003, incorporated SMMCI, with which entity they planned to eventually consolidate St. Michael
Hospitals operations.
In May 2004, construction of a new hospital building on the adjoining properties commenced, with
Sps. Rodil contributing personal funds as initial capital for the project. To finance the costs of
construction, SMMCI applied for a loan with petitioner BPI Family Savings Bank, Inc. (BPI Family)
which gave a credit line of up to 35,000,000 secured by a Real Estate Mortgage (mortgage) over
three (3) parcels of land belonging to Sps. Rodil, on a portion of which stands the hospital building
being constructed. SMMCI was able to draw the aggregate amount of 23,700,000, for which Sps.
Rodil, who agreed to be co-borrowers on the loan, executed and signed a Promissory Note.
Although the finishing works were later resumed and some of the hospital operations were
eventually transferred to the completed first two floors of the new building, as of May 2006, SMMCI
was still neither operational nor earning revenues. Hence, it was only able to pay the
interest on its BPI Family loan.
BPI Family demanded immediate payment of the entire loan obligation and, soon after, filed a
petition for extrajudicial foreclosure of the real properties covered by the mortgage.
SMMCI filed a Petition for Corporate Rehabilitation before the RTC.
In the said petition, SMMCI claimed that it had to defer the construction of the projected 11-storey
hospital building due to the problems it had with its first contractor as well as the rise of the cost of
construction materials. Further, it was averred that while St. Michael Hospital whose operations
were to be eventually absorbed by SMMCI was operating profitably, it was saddled with the burden
of paying the loan obligation of SMMCI and Sps. Rodil to BPI Family, which it cannot service
together with its current obligations to other persons and/or entities.
Finding the Rehabilitation Petition to be sufficient in form and substance, the RTC issued a Stay
Order. The same was referred to the court-appointed Rehabilitation Receiver, Dr. Uriel S. Halum
(Dr. Halum), who submitted in due time his Report and Recommendations.
The RTC issued an order requiring the counsels of the creditors/oppositors to file their comments to
the Receivers Report within ten (10) days from notice, but only counsel for South East Star
Enterprises complied.
The RTC approved the Rehabilitation Plan with the modifications recommended by the
Rehabilitation Receiver and thus, ordered: (a) a five-year moratorium on SMMCIs bank loan; (b) a
restructuring and payment of obligations to other creditors such as suppliers and lenders; (c) a
programmed spending of a reasonable part of the hospitals revenues for the finishing of the 5th floor
and the improvement of hospital facilities in the next two or three years; and (d) use of fresh capital
from prospective investors to partly pay SMMCIs bank loan and improve St. Michael Hospitals
competitiveness.
Aggrieved, BPI Family elevated the matter before the CA, mainly arguing that the approval of the
Rehabilitation Plan violated its rights as an unpaid creditor/mortgagee and that the same was
submitted without prior consultation with creditors.
The CA affirmed the RTCs approval of the Rehabilitation Plan.
ISSUE:
Whether CA erroneously affirmed SMMCIs Rehabilitation Plan as approved by the RTC.
HELD:
Yes.
I
Restoration is the central idea behind the remedy of corporate rehabilitation. In common parlance,
to "restore" means "to bring back to or put back into a former or original state." Case law explains
that corporate rehabilitation contemplates a continuance of corporate life and activities in an effort
to restore and reinstate the corporation to its former position of successful operation
and solvency, the purpose being to enable the company to gain a new lease on life and
allow its creditors to be paid their claims out of its earnings. Consistent therewith is the
terms statutory definition under Republic Act No. 10142, otherwise known as the "Financial
Rehabilitation and Insolvency Act of 2010" (FRIA), which provides:
Section 4. Definition of Terms. As used in this Act, the term:
xxx
(gg) Rehabilitation shall refer to the restoration of the debtor to a condition of
successful operation and solvency, if it is shown that its continuance of operation is
economically feasible and its creditors can recover by way of the present value of payments
projected in the plan, more if the debtor continues as a going concern than if it is immediately
liquidated.
In other words, rehabilitation assumes that the corporation has been operational but for
some reasons like economic crisis or mismanagement had become distressed or
insolvent, i.e., that it is generally unable to pay its debts as they fall due in the ordinary course of
business or has liability that are greater than its assets. Thus, the basic issues in rehabilitation
proceedings concern the viability and desirability of continuing the business operations of the
distressed corporation, all with a view of effectively restoring it to a state of solvency or to its former
healthy financial condition through the adoption of a rehabilitation plan.
In this case, it cannot be said that the petitioning corporation, SMMCI, had been in a position of
successful operation and solvency at the time the Rehabilitation Petition was filed on August 11,
2010. While it had indeed "commenced business" through the preparatory act of opening a credit
line with BPI Family to finance the construction of a new hospital building for its future operations,
SMMCI itself admits that it has not formally operated nor earned any income since its incorporation.
This simply means that there exists no viable business concern to be restored. Perforce, the remedy
of corporate rehabilitation is improper, thus rendering the dispositions of the courts a quo infirm.
II
In fact, for the same reasons, the Court observes that SMMCI could not have even complied with the
form and substance of a proper rehabilitation petition, and submit its accompanying documents,
among others, the required financial statements of a going concern. Section 2, Rule 4 of the 2008
Rules of Procedure on Corporate Rehabilitation (Rules), which were in force at the time SMMCIs
rehabilitation petition was filed on August 11, 2010, pertinently provides:
SEC. 2. Contents of Petition.
xxx
(b)The petition shall be accompanied by the following documents:
(1) An audited financial statement of the debtor at the end of its last fiscal year;
(2) Interim financial statements as of the end of the month prior to the filing of the petition;
Note that this defect is not negated by the submission of the financial documents pertaining to St.
Michael Hospital, which is a separate and distinct entity from SMMCI. While the CA gave
considerable weight to St. Michael Hospitals supposed "profitability," as explicated in its own
financial statements, as well as the feasibility study conducted by Mrs. Alibangbang, in affirming the
RTC, it has unwittingly lost sight of the essential fact that SMMCI stands as the sole petitioning
debtor in this case; as such, its rehabilitation should have been primarily examined from the lens of
its own financial history. While SMMCI claims that it would absorb St. Michael Hospitals
operations, there was dearth of evidence to show that a merger was already agreed upon between
them. Accordingly, St. Michael Hospitals financials cannot be utilized as basis to determine the
feasibility of SMMCIs rehabilitation.
III
To compound its error, the CA even disregarded the fact that SMMCIs Rehabilitation Plan, an
indispensable requisite in corporate rehabilitation proceedings, failed to comply with the
fundamental requisites outlined in Section 18, Rule 3 of the Rules, particularly, that of a material
financial commitment to support the rehabilitation and an accompanying liquidation analysis, all of
the petitioning debtor:
SEC. 18. Rehabilitation Plan. - The rehabilitation plan shall include (a) the desired business
targets or goals and the duration and coverage of the rehabilitation; (b) the terms and
conditions of such rehabilitation which shall include the manner of its implementation, giving
due regard to the interests of secured creditors such as, but not limited, to the non-
impairment of their security liens or interests; (c) the material financial commitments
to support the rehabilitation plan; (d) the means for the execution of the rehabilitation
plan, which may include debt to equity conversion, restructuring of the debts, dacion en pago
or sale exchange or any disposition of assets or of the interest of shareholders, partners or
members; (e) a liquidation analysis setting out for each creditor that the present
value of payments it would receive under the plan is more than that which it
would receive if the assets of the debtor were sold by a liquidator within a six-
month period from the estimated date of filing of the petition; and (f) such other
relevant information to enable a reasonable investor to make an informed decision on the
feasibility of the rehabilitation plan.
A. Lack of Material Financial Commitment to Support the Rehabilitation Plan.
A material financial commitment becomes significant in gauging the resolve, determination,
earnestness and good faith of the distressed corporation in financing the proposed rehabilitation
plan. This commitment may include the voluntary undertakings of the stockholders or the
would-be investors of the debtor-corporation indicating their readiness, willingness and ability to
contribute funds or property to guarantee the continued successful operation of the debtor
corporation during the period of rehabilitation.
In this case, aside from the harped on merger of St. Michael Hospital with SMMCI, the only
proposed source of revenue the Rehabilitation Plan suggests is the capital which would come from
SMMCIs potential investors, which negotiations are merely pending. Evidently, both propositions
commonly border on the speculative and, hence, hardly fit the description of a material financial
commitment which would inspire confidence that the rehabilitation would turn out to be successful.
B. Lack of Liquidation Analysis.
SMMCI likewise failed to include any liquidation analysis in its Rehabilitation Plan. With no SMMCI
financial statement on record, it is unclear to the Court what assets it possesses in order to determine
the values to be derived if liquidation has to be had thereby. Accordingly, this prevents the Court
from ascertaining if the petitioning debtors creditors can recover by way of the present
value of payments projected in the plan, more if the debtor continues as a going
concern than if it is immediately liquidated, a crucial factor in a corporate rehabilitation case.
Again, the financial records of St. Michael Hospital, being a separate and distinct entity whose
merger with SMMCI only exists in the realm of probability, cannot be taken as a substitute to fulfill
the requirement. What remains pertinent are the financial statements of SMMCI for it solely stands
as the debtor to be rehabilitated, or liquidated in this case.
C. Effect of Non-Compliance.
The failure of the Rehabilitation Plan to state any material financial commitment to support
rehabilitation, as well as to include a liquidation analysis, translates to the conclusion that the RTCs
stated considerations for approval are actually unsubstantiated, and hence, insufficient to decree
SMMCIs rehabilitation.
It is well to emphasize that the remedy of rehabilitation should be denied to corporations that do not
qualify under the Rules. Neither should it be allowed to corporations whose sole purpose is to delay
the enforcement of any of the rights of the creditors, which is rendered obvious by: (a) the absence of
a sound and workable business plan; (b) baseless and unexplained assumptions, targets, and goals;
and (c) speculative capital infusion or complete lack thereof for the execution of the business plan.
Unfortunately, these negative indicators have all surfaced to the fore, much to SMMCIs chagrin.
TUNA PROCESSING, INC., Petitioner, v. PHILIPPINE KINGFORD, INC., Respondent.
G.R. No. 185582
(February 29, 2012)
Note: Corporation Code vs. Special Rules on ADR (General law vs. Special law)
FACTS: Philippine Kingford, Inc. is a corporation duly organized and existing under the laws of the
Philippines while Tuna Processing, Inc. (TPI) is a foreign corporation not licensed to do business in
the Philippines. Kingford withdrew from agreements with petitioner TPI and correspondingly,
reneged on their obligations. Petitioner submitted the dispute for arbitration before the International
Centre for Dispute Resolution in the State of California, United States and won the case against
respondent. To enforce the award, petitioner TPI filed a Petition for Confirmation, Recognition, and
Enforcement of Foreign Arbitral Award before the RTC of Makati City. The RTC dismissed the
petition on the ground that the petitioner lacked legal capacity to sue in the Philippines.
ISSUE: Can a foreign corporation not licensed to do business in the Philippines, but which collects
royalties from entities in the Philippines, sue here to enforce a foreign arbitral award?
RULING: YES. The Alternative Dispute Resolution Act of 2004 shall apply in this case as the Act,
as its title - An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the
Philippines and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes -
would suggest, is a law especially enacted to actively promote party autonomy in the resolution of
disputes or the freedom of the party to make their own arrangements to resolve their disputes. It
specifically provides exclusive grounds available to the party opposing an application for recognition
and enforcement of the arbitral award. The Corporation Code is the general law providing for the
formation, organization and regulation of private corporations. As between a general and special law,
the latter shall prevail generalia specialibus non derogant.
The Special Rules of Court on Alternative Dispute Resolution provides that any party
to a foreign arbitration may petition the court to recognize and enforce a foreign
arbitral award. Indeed, it is in the best interest of justice that in the enforcement of a foreign
arbitral award, the losing party can not avail of the rule that bars foreign corporations not licensed
to do business in the Philippines from maintaining a suit in our courts. When a party enters into a
contract containing a foreign arbitration clause and, as in this case, in fact submits itself to
arbitration, it becomes bound by the contract, by the arbitration and by the result of arbitration,
conceding thereby the capacity of the other party to enter into the contract, participate in the
arbitration and cause the implementation of the result.
CARGILL PHILIPPINES, INC., Petitioner, vs. SAN FERNANDO REGALA TRADING,
INC., Respondent.
G.R. No. 175404 (January 31, 2011)

Note: (I found only two doctrines)


1. While actions for rescission and damages are ordinarily judicial matters, the dispute
at hand may still be referred to arbitration when the contract sought to be rescinded
included an arbitration agreement.
2. Arbitration agreement in a contract constitutes a separate agreement. An
arbitration agreement therefore shall not be regarded as invalid or nonexistent just
because the MAIN contract is invalid, does not come into existence, or is repudiated.

Facts:
San Fernando Regala Trading filed before the trial court a complaint for rescission of contract with
damages against Cargill Philippines, Inc. In its complaint, San Fernando Regala Trading alleged that
it was engaged in buying and selling molasses and that Cargill was one of its suppliers. San Fernando
Regala Trading alleged that it purchased from Cargill, and the latter had agreed to sell, 12,000 tons
of cane blackstrap molasses originating from Thailand at the price of $192 per metric ton, and that
delivery would be made in April or May 1997. After San Fernando Regala Trading delivered the letter
of credit, it claimed that Cargill failed to comply with its obligations under the contract, which
included an arbitration clause as follows:
"Any dispute which the Buyer and Seller may not be able to settle by mutual agreement shall be
settled by arbitration in the City of New York before the American Arbitration Association. The
Arbitration Award shall be final and binding on both parties."
Cargill moved to dismiss and/or suspend the court proceedings citing the arbitration clause. San
Fernando Regala Trading argued that since it was seeking rescission of the contract, it was in effect
repudiating the contract which included the arbitration clause. Further, it argued that rescission
constitutes a judicial issue, which requires the exercise of judicial function and cannot be the subject
of arbitration.
Issue: May the case be submitted to arbitration?
Ruling: YES. The Supreme Court held that the provision to submit to arbitration any dispute arising
between the parties is part of the contract and is itself a contract. The arbitration agreement is to be
treated as a separate agreement and does not automatically terminate when the contract of which it
is a part comes to an end. To reiterate a contrary ruling would suggest that a party's mere
repudiation of the main contract is sufficient to avoid arbitration. That is exactly the situation that
the separability doctrine seeks to avoid. Thus, we find that even the party who has
repudiated the main contract is not prevented from enforcing its arbitration clause.
DFA v. Falcon

Petitioner: DFA & BSP


Respondent: Judge Falcon & BCA International Corporation
Ponente: Leonardo- De Castro

Doctrine: An injury is considered irreparable if it is of such constant and frequent


recurrence that no fair and reasonable redress can be had therefor in a court of law,
or where there is no standard by which their amount can be measured with
reasonable accuracy, that is, it is not susceptible of mathematical computation. It is
considered irreparable injury when it cannot be adequately compensated in
damages due to the nature of the injury itself or the nature of the right or property
injured or when there exists no certain pecuniary standard for the measurement of
damages.

Short Facts: DFA and BCA entered into an agreement for the implementation of machine readable
passport and visa project. Dispute arose between DFA and BCA/PPC (BCAs assignee) due to alleged
breaches by both parties. DFA terminated its contract with BCA. BCA sent a notice of default against
DFA. BCA filed for arbitration with PDRCI. During the pendency of the Request for Arbitration, DFA
and BSP entered into an agreement for the latter to provide passports compliant with international
standards (E-Passports). BCA thereafter filed for a Petition for Interim Relief with the RTC of Pasig.
TRO and thereafter a writ of preliminary injunction were issued by RTC directed against DFA. DFA
filed the instant case alleging that TC committed GAD.

Facts:
DFA needed to implement the Machine Readable Passport and Visa Project under the BOT
scheme. Thus, the PBAC (Prequalification, Bids and Awards Committee) published an invitation
to prequalify and bid for the supply of the needed machine readable passports and visas, and
conducted the public bidding for the MRP/V Project.
PBAC found BCAs bid to be the sole complying bid; hence, it permitted the DFA to engage in
direct negotiations with BCA.
BCA, in compliance with the Notice of Award (NOA), incorporated a project company, the
Philippine Passport Corporation (PPC) to undertake and implement the MRP/V Project.
A Build-Operate-Transfer Agreement (BOT Agreement) between DFA and PPC was signed. The
BOT Agreement was later amended to include the following changes.1
An Assignment Agreement was executed by BCA and PPC whereby BCA assigned its rights arising
from the Amended BOT Agreement to PPC.

1Section 9.05. The PPC has posted in favor of the DFA the performance security required for Phase 1 of the MRP/V Project and shall be deemed, for
all intents and purposes, to be full compliance by BCA with the provisions of this Article 9.
Section 20.15. It is clearly and expressly understood that BCA may assign, cede and transfer all of its rights and obligations under this Amended BOT
Agreement to PPC, as fully as if PPC is the original signatory to this Amended BOT Agreement, provided however that BCA shall nonetheless be jointly
and severally liable with PPC for the performance of all the obligations and liabilities under this Amended BOT Agreement.
Project Completion dates were likewise changed which set the completion of the implementation phase of the project within 18 to 23 months from
date of effectivity of the Amended BOT agreement.
MRP/V Project was divided into 6 phases, 2 with each phase having a different set of timeline and
due dates.
DFA and BCA impute breach of the Amended BOT Agreement against each other.
o DFA: Delay of project is due to the submission of deficient documents as well as
intervening issues regarding BCAs financial incapacity.
o BCA: DFA failed to perform its reciprocal obligation to issue to BCA a certificate of
acceptance of Phase 1 within 14 days which was required by the Amended BOT.
Furthermore, it alleged that every new appointee to the position of DFA secretary wanted
to review the award to BCA thats why it took 3 years for DFA to issue said Certificate.
DFA sent a Notice of Termination to BCA and PPC due to their alleged failure to submit proof of
financial capability to complete the entire MRP/V Project in accordance with the financial
warranty under Section 5.02(A) of the Amended BOT Agreement. DFA likewise demanded for
liquidated damages.
BCA sent a letter to the DFA demanding that it immediately reconsider and revoke its previous
notice of termination, otherwise, BCA would be compelled to declare the DFA in default pursuant
to the Amended BOT Agreement.
When the DFA failed to respond to said letter, BCA issued its own Notice of Default against the
DFA, stating that if the default is not remedied within 90 days, BCA will be constrained to
terminate the MRP/V Project and hold the DFA liable for damages.
BCA filed its Request for Arbitration with the Philippine Dispute Resolution Center (PDRCI)
pursuant to Section 19.02 of the Amended BOT Agreement. BCAs request for Arbitration sought
for the following reliefs
o Judgment nullifying the Notice of Termination by DFA including the demand to pay
liquidated damages.
o Judgment confirming the Notice of Default issued by BCA and ordering DFA to comply
with its obligations under the Amended BOT.
o A judgment ordering DFA to pay damages to BCA in the amount of 50M
representing lost business opportunities, financing fees, etc.
Thereafter, the DFA and the BSP entered into a Memorandum of Agreement for the latter to
provide the former passports compliant with international standards. The BSP then solicited bids
for the supply, delivery, installation and commissioning of a system for the production of
Electronic Passport Booklets or ePassports
Thus, BCA filed a Petition for Interim Relief under Section 28 of the Alternative Dispute
Resolution Act of 2004 (R.A. No. 9285), with the Regional Trial Court (RTC) of Pasig praying for
the issuance of TRO restraining DFA and BSP from awarding a new contract to implement the
Project or if such contract has been awarded, from implementing such projects.
DFA filed an Opposition (to the Application for Temporary Restraining Order and/or Writ of
Preliminary Injunction alleging that:
o BCA has no cause of action: MRP/V is not the same as the contract with BSP which is for
the supply of electronic passports.
o RTC is prohibited from issuing a TRO pursuant to RA 8975.

2 Phase 1: Project Planning Phase; Phase 2: Implementation of MRP/V Project at the Central Facility; Phase 3: Implementation of MRP/V Project at
the Regional Consular Offices; Phase 4: Full Implementation, including Foreign Service Posts; Phase 5: In Service Phase; Phase 6:
Transition/Turnover
The TC, after summarily hearing the parties oral arguments on BCAs application for TRO, TC
ordered the issuance of the TRO. DFA filed an MR.
After notice and hearing, an order granting BCAs application for preliminary injunction was
issued by TC.
DFA and BSP filed the instant Petition for Certiorari and prohibition with a prayer for issuance of
TRO and/or a writ of preliminary injunction, imputing GAD on the trial court when it granted
interim relief to BCA and issued the WPI.
o Main allegation: RTC is prohibited under RA 8975 Section 3 to issue a TRO and a writ
of preliminary injunction against national government projects such as ePassport project.
TRO prayed for by DFA and BSP was granted.

Issues:
1. Whether an information and communication technology project (such as ePassport Project),
which does not conform to our traditional notion of the term infrastructure, is covered by the
prohibition on the issuance of court injunctions found in Republic Act No. 8975? NO
2. Whether the trial courts issuance of writ of injunction was proper? NO

Ratio:
1. Section 3 of RA 8975 provides that court, aside from the Supreme Court, may enjoin a national
government project unless the matter is one of extreme urgency involving a constitutional
issue such that unless the act complained of is enjoined, grave injustice or irreparable injury
would arise.
National government project has three types under Section 2(a) of RA 8975:
a. Current and future national government infrastructure projects, engineering works and
service contracts, including projects undertaken by governmentowned and controlled
corporations;
b. All projects covered by R.A. No. 6975, as amended by R.A. No. 7718, or the BuildOperate-
andTransfer (BOT) Law; and
c. Other related and necessary activities, such as site acquisition, supply and/or installation
of equipment and materials, implementation, construction, completion, operation,
maintenance, improvement repair and rehabilitation, regardless of the source of funding.

Is the ePassport project covered under (b) projects covered under BOT laws? NO
SC pointed out that DFA represented to TC that ePassport Project is a BOT project but in their
Petition before the SC, DFA merely claims that the project is a national government project under
RA 8974.
o The TC, relying on the representation of DFA and agreeing with the contention of BCA,
ruled as follows: The prohibition against issuance of TRO and/or writ of preliminary
injunction under RA 8975 applies only to national government infrastructure
project covered by the BOT Law. The national government projects covered under the
BOT are enumerated under Sec. 2 of RA 6957, as amended, otherwise known as the BOT
Law. Notably, it includes information technology networks and database infrastructure.
In relation to information technology projects, infrastructure projects refer to the civil
works components thereof.
We cannot uphold the theory of BCA and the trial court that the definition of the term
infrastructure project in Republic Act No. 91843 should be applied to the BOT Law.4
o Section 5 of Republic Act No. 9184 prefaces the definition of the terms therein, including
the term infrastructure project, with the following phrase: For purposes of this Act
o There is no legal or rational basis to apply the definition of the term infrastructure
project in one statute (RA 9184) to another statute enacted years before (BOT law) and
which already defined the types of projects it covers.
There is a legislative intent to treat information technology projects differently under the BOT
Law and the Government Procurement Reform Act.
o Under the BOT Law, wherein the projects are to be privately funded, the entire
information technology project, including the civil works component and the
technological aspect thereof, is considered an infrastructure or development
project and treated similarly as traditional infrastructure projects. All the rules
applicable to traditional infrastructure projects are also applicable to information
technology projects.
o In contrast, under Republic Act No. 9184 or the Government Procurement Reform Act,
which contemplates projects to be funded by public funds, the term infrastructure
project was limited to only the civil works component of information technology
projects.
Civil works are subject to the provisions on infrastructure projects.
Technological are covered by the provisions of procurement of goods.
Petitioners presented no proof that the ePassport Project was a BOT project. On the contrary,
evidence adduced by both sides tended to show that the ePassport Project was a procurement
contract under Republic Act No. 9184
o Being a government procurement contract under Republic Act No. 9184, only the civil
works component of the ePassport Project would be considered an infrastructure
project that may not be the subject of a lower courtissued writ of injunction under
Republic Act No. 8975

Is the ePassport project covered under (a) engineering works or a service contract
or as related and necessary activities? NO
Service contract refers to infrastructure contracts entered into by any department, office or
agency of the national government with private entities and nongovernment organizations for
services related or incidental to the functions and operations of the department, office or agency
concerned.
On the other hand, the phrase other related and necessary activities obviously refers to
activities related to a government infrastructure, engineering works, service contract or project
under the BOT Law
In other words, to be considered a service contract or related activity, petitioners must show that
the ePassport Project is an infrastructure project or necessarily related to an infrastructure
project

3 RA 9184: infrastructure projects include the construction, improvement, rehabilitation, demolition, repair, restoration or maintenance of roads and
bridgescivil works components of information technology projects xxx
4 RA 7718 (amended RA 6957): private sector infrastructure or development projects are those normally financed and operated by the public
sector but which will now be wholly or partly implemented by the private sector, including but not limited toinformation technology networks and
database infrastructure xxx
o DFA failed to do this. There is nothing on record to indicate that the ePassport Project has
a civil works component or is necessarily related to an infrastructure project.
o Within the context of Republic Act No. 9184which is the governing law for the ePassport
Projectthe said Project is not an infrastructure project that is protected from lower court
issued injunctions under Republic Act No. 8975, which, to reiterate, has for its purpose the
expeditious and efficient implementation and completion of government infrastructure
projects.

In short: The prohibition in Republic Act No. 8975 is inoperative in so far as the ePassport is
concerned, since petitioners failed to prove that the ePassport Project is national government project
as defined therein.

2. With respect to petitioners contention that BCA will suffer no grave and irreparable injury so as
to justify the grant of injunctive relief, the Court finds that this particular argument merits
consideration.
Under the BOT Law and the Amended BOT Agreement, in the event of default on the part of the
government (in this case, the DFA) or on the part of the proponent, the non defaulting party is
allowed to terminate the agreement, again subject to proper compensation in the manner set
forth in the agreement. T
o Even if we hypothetically accept BCAs contention that the DFA terminated the Amended
BOT Agreement without any default or wrongdoing on BCAs part, it is not indubitable
that BCA is entitled to injunctive relief.
BOT Law expressly allows the government to terminate a BOT agreement, even without fault on
the part of the project proponent, subject to the payment of the actual expenses incurred by the
proponent plus a reasonable rate of return.
Time and again, this Court has held that to be entitled to injunctive relief the party seeking such
relief must be able to show grave, irreparable injury that is not capable of compensation.
o WPI is resorted to only when there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard compensation
o Two requisites are necessary if a preliminary injunction is to issue, namely:
the existence of a right to be protected and
the facts against which the injunction is to be directed are violative of said right.
o It must be shown that the invasion of the right sought to be protected is material and
substantial, that the right of complainant is clear and unmistakable and that
there is an urgent and paramount necessity for the writ to prevent serious damage.
o An injury is considered irreparable if it is of such constant and frequent recurrence
that no fair and reasonable redress can be had therefor in a court of law, or where there is
no standard by which their amount can be measured with reasonable accuracy, that is, it
is not susceptible of mathematical computation. It is considered irreparable injury
when it cannot be adequately compensated in damages due to the nature of the
injury itself or the nature of the right or property injured or when there exists no certain
pecuniary standard for the measurement of damages.
In this case, whether this is a termination by the DFA alone without fault on the part of BCA or a
termination due to default on the part of either party, the BOT Law and the Amended BOT
Agreement lay down the measure of compensation to be paid under the appropriate
circumstances.
Significantly, in BCAs Request for Arbitration with the PDRCI, it prayed for, among others,a
judgment ordering respondent [DFA] to pay damages to Claimant [BCA], reasonably estimated at
P50M. All the purported damages that BCA claims to have suffered by virtue of the DFAs
termination of the Amended BOT Agreement are plainly determinable in pecuniary terms and
can be reasonably estimated according to BCAs own words.

Other points noted by SC [dahil bibo yung nagsulat ng kaso]:


In seeking to enjoin the government from awarding or implementing a machine readable
passport project or any similar electronic passport or visa project and praying for the
maintenance of the status quo ante pending the resolution on the merits of BCAs Request for
Arbitration, BCA effectively seeks to enjoin the termination of the Amended BOT Agreement for
the MRP/V Project. There is no doubt that the MRP/V Project is a project covered by the BOT
Law and, in turn, considered a national government project under Republic Act No. 8795.
o As national government project, TCs are prohibited from issuing a TRO or WPI against the
government to restrain or prohibit the termination or rescission of any such national
contract/project.5
For if a project proponent is allowed to enjoin the termination of its contract on the
ground that it is contesting the validity of said termination, then the government
will be unable to enter into a new contract with any other party while the
controversy is pending litigation. Obviously, a courts grant of injunctive relief in
such an instance is prejudicial to public interest since government would be
indefinitely hampered in its duty to provide vital public goods and services in order
to preserve the private proprietary rights of the project proponent.
o Although BCA did not specifically pray for the trial court to enjoin the termination of
the Amended BOT Agreement and thus, there is no direct violation of Republic Act
No. 8795, a grant of injunctive relief as prayed for by BCA will indirectly contravene
the same statute.
BCA contends that if no injunctive relief will be issued in its favor, the award of ePassport project
would be tantamount to a violation of property without due process of the law.
o The relationship of DFA to BCA is primarily contractual and their dispute involves the
adjudication of contractual rights. The propriety of the DFAs acts, in relation to the
termination of the Amended BOT Agreement, should be gauged against the provisions of
the contract itself
BCAs petition for interim relief before the trial court is essentially a petition for a
provisional remedy ancillary to its Request for Arbitration in PDRCI. BCA specifically
prayed that the trial court grant it interim relief pending the constitution of the arbitral tribunal
in the said PDRCI case. Unfortunately, during the pendency of this case, PDRCI Case was
dismissed for lack of jurisdiction, in view of the lack of agreement between the parties to arbitrate
before the PDRCI
o The dismissal of the principal action thus results in the denial of the prayer for the
issuance of the writ. x x x. In view of intervening circumstances, BCA can no longer be

5 Relax. Ung discussion na mahaba sa taas refers to ePassport. Itong sinasabi ng SC dito refers to MRP/V Project. Pero sana ito nalang sinabi nila
agad para tapos na kanina pa.
granted injunctive relief and the civil case before the trial court should be accordingly
dismissed