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METROPOLITAN BANK & TRUST COMPANY,
Petitioner, -versus- ASB HOLDINGS, INC., ASB REALTY CORPORATION, ASB
DEVELOPMENT CORPORATION, ASB LAND, INC., ASB FINANCE, INC., MAKATI HOPE
CHRISTIAN SCHOOL, INC., BEL-AIR HOLDINGS CORPORATION, WINCHESTER TRADING,
INC., VYL DEVELOPMENT CORPORATION, GERICK HOLDINGS CORPORATION, NEIGHBORHOOD
HOLDINGS, INC., and ROSARIO S. BERNALDO, Respondents. CAMERON GRANVILLE 3 ASSET MANAGEMENT,
INC.,
Intervenor. |
G.R. No. 166197 Present: pUNO, C.J., Chairperson, Sandoval-Gutierrez, *AZCUNA, and GARCIA,
JJ. Promulgated: February
27, 2007 |
x-----------------------------------------------------------------------------------------x
SANDOVAL-GUTIERREZ, J.:
For our
resolution is the instant Petition for
Review on Certiorari[1]
assailing the Decision dated
The facts borne by the records are:
The Metropolitan Bank and Trust
Company, petitioner, is a creditor bank
of respondent corporations, collectively known as the ASB Group of Companies, owner
and developer of condominium and real estate projects. Specifically, the loans extended by
petitioner bank to respondents ASB Realty Corporation and ASB Development
Corporation amounted to P523.5 million and P1.073 billion,
respectively. These loans were secured
by real estate mortgages.
On May
2, 2000, the ASB Group of Companies filed with the Securities and Exchange Commission
(SEC) a Petition For Rehabilitation With
Prayer For Suspension Of Actions And Proceedings Against Petitioners,[3]
pursuant to Presidential Decree (P.D.) No. 902-A, as amended, docketed as SEC
Case No. 05-00-6609. The pertinent portions
of the petition allege:
6. The total assets of petitioner ASB
Group of Companies, together with petitioner ASB Allied Companies, amount to
Nineteen Billion Four Hundred Ten Million Pesos (P19,410,000,000.00).
7. The Projects were financed with loans
or borrowings from bank and individual creditors which resulted in petitioner
Group of Companies having a total liability in the amount of Twelve Billion
Seven Hundred Million Pesos (P12,700,000,000.00).
8. On account of the sudden non-renewal
and/or the massive withdrawal by creditors of their loans to petitioner ASB
Holdings, Inc., coupled with the recent developments in the country, like,
among others, (i) the glut in the real
estate market; (ii) the severe drop in the sale of real properties; (iii) the
depreciation of the peso vis-a-vis the dollar;
and (iv) the decreased investor confidence in the
economy, petitioner Group of Companies was unable to complete and sell some of
its projects on schedule and, hence, was unable to service its obligations as
they fell due.
9. Petitioner Group of Companies possesses
sufficient property to cover its obligations.
However, petitioner Group of Companies foresees its inability to pay its
obligations within a period of one (1) year.
10. Because of the inability of the Group of
Companies to pay its obligations as they respectively fall due, its secured and
non-secured creditors pressed for payments of due and maturing obligations and
threatened to initiate separate actions against it, which will adversely affect
its operations and shatter its hope
in rehabilitating itself for the benefit of its investors and creditors and the
general public.
11. There is a clear, present and imminent
danger that the creditors of petitioner Group of Companies will institute
extrajudicial and judicial foreclosure proceedings and file court actions
unless restrained by this Honorable Commission.
12. The institution of extrajudicial and
judicial foreclosure proceedings and the filing of court actions against
petitioner Group of Companies will necessarily result in the paralization of its business operation and its assets being
lost, dissipated or wasted.
13. There is, therefore, a need for the suspension of payment of all claims
against petitioner Group of Companies, in the separate and combined capacities
of its member companies, while it is
working for its rehabilitation.
14. Petitioner Group of Companies has at
least seven hundred twelve (712) creditors, three hundred seventeen (317)
contractors/suppliers and four hundred ninety-two (492) condominium unit
buyers, who will certainly be prejudiced by the disruption of the operations of
petitioner ASB Group of Companies which seeks to protect the interest of the
parties from any precipitate action of any person who may only have his
individual interest in mind.
15. The business of petitioner ASB Group of
Companies is feasible and profitable. Petitioner Group of Companies will eventually
be able to pay all its obligations given some changes in its management,
organization, policies, strategies, operations, or finances.
16. With the support of this Honorable
Commission, petitioner Group of Companies is confident that it will be able to
embark on a sound and viable rehabilitation plan, with a built-in debt
repayment schedule through the optimal use of their present facilities, assets
and resources. Although a proposed rehabilitation plan is
attached to this petition, a detailed and comprehensive rehabilitation proposal
will be presented for the approval of this Honorable Commission, with the
foregoing salient features:
a. Servicing and eventual full repayment of all debts and liabilities, focusing on debt restructure and possible liquidation through dacion en pago, transfer and assignment, or outright sale of assets, in order to lighten the debt burden of petitioner Group of Companies;
b. Forming of
strategic alliances with third party investors, including joint ventures and
similar arrangements;
c.
Contributing specified properties from
petitioner ASB Allied Companies;
d. Streamlining the operations of petitioner ASB
Group of Companies, and the effective management of its revenues and funds
towards the strengthening of its financial and business positions; and
e. Stabilizing the operations of petitioner Group of Companies, and preparing it to take advantage of future opportunities for growth and development.
On May 4, 2000, the Hearing Panel of
the SEC Securities Investigation and Clearing Department, finding the petition
for rehabilitation sufficient in form and substance, issued a sixty-day
Suspension Order (a) suspending all
actions for claims against the ASB Group of Companies pending or still to be
filed with any court, office, board, body, or tribunal; (b) enjoining the ASB
Group of Companies from disposing of their properties in any manner, except in
the ordinary course of business, and from paying their liabilities outstanding
as of the date of the filing of the petition; and (c) appointing Atty. Monico V. Jacob as interim receiver of the ASB Group of
Companies.
On
On
Metropolitan Bank and Trust Co.
Principal
Amount – Principal (amount) plus any interest due
and unpaid as of
Form of Agreement – Dacion en Pago Agreement
Purpose – To retire existing loans.
Tenor – Immediate Dacion en Pago of related properties, subject to the approval of the Securities and Exchange Commission (SEC).
Effective Date –
Dacion En Pago
Arrangement –
ASB will dacion
the bank’s equity in St.
Outstanding
Loan Balance
After Dacion En Pago – None[5]
Petitioner
bank, in its Comment/Opposition to the
Rehabilitation Plan,[6] objected
to the above Plan, specifically the arrangement concerning the mode of payment
by respondents ASB Realty Corporation and ASB Development Corporation of their
loan obligations.
Petitioner
bank claimed that the above arrangement “is not acceptable” because: (1) it does not agree with the valuation
of the properties offered for dacion; (2) the
waiver of interests, penalties and charges after April 30, 2000 is not feasible
considering that the bank continues to incur costs on the funds owed by ASB
Realty Corporation and ASB Development Corporation; and (3) since the proposed dacion is not acceptable to the bank, there is no basis to
release the properties which serve as collateral for the loans. Petitioner thus prayed that the
Rehabilitation Plan be disapproved.
On
PREMISES
CONSIDERED, the objections to the rehabilitation plan
raised by the creditors are hereby considered unreasonable.
Accordingly,
the Rehabilitation Plan submitted by petitioners is hereby APPROVED, except
those pertaining to Mr. Roxas’ advances, and the
SO ORDERED.
On July 10, 2001, petitioner bank filed
with the SEC En Banc a Petition
for Certiorari,[8] docketed
as EB-725, alleging that the SEC Hearing Panel, in approving the Rehabilitation
Plan, committed grave abuse of discretion amounting to lack or excess of
jurisdiction; and praying for the issuance of a temporary restraining order
and/or a writ of preliminary injunction to enjoin its implementation. Subsequently, the ASB Group of Companies filed
their Opposition[9] to
the petition, to which petitioner bank filed its Reply.[10]
In a Resolution[11]
dated
Petitioner bank then filed with the
Court of Appeals a Petition for Review.[12] On
WHEREFORE, finding the instant petition not impressed with merit, the same is DENIED DUE COURSE. No pronouncement as to costs.
SO ORDERED.
Petitioner bank’s Motion for Reconsideration was
likewise denied in a Resolution dated
Hence, this petition for review on certiorari.
In the
meantime, or on
In a Resolution dated
Now to the resolution of the instant petition.
Petitioner bank contends that the
Court of Appeals erred:
1. In not
nullifying the SEC Resolution dated
2. In not finding that the Rehabilitation
Plan compels petitioner bank to waive the interests, penalties and other
charges that accrued after the SEC issued its Stay Order. Again, this is in violation of the constitutional
mandate on non-impairment of contracts and due process.
3. In not finding that only respondent ASB
Holdings, Inc. suffered financial distress as stated in the Rehabilitation Plan
and, as such, the coercive reach of the SEC’s Stay Order under P.D. 902-A can
extend only to the enforcement of claims against this distressed
corporation. It cannot suspend the claims
and actions against its affiliate corporations.
In their Comment, respondent corporations comprising the ASB Group of
Companies prayed for the dismissal of the instant petition for being
unmeritorious.
The first two (2) assigned errors lack merit. We shall discuss them jointly as they are
closely interrelated.
We are
not convinced that the approval of the Rehabilitation Plan impairs petitioner
bank’s lien over the mortgaged properties.
Section 6 [c] of P.D. No. 902-A provides that “upon appointment of a
management committee, rehabilitation receiver, board or body, pursuant to this
Decree, all actions for claims
against corporations, partnerships or associations under management or
receivership pending before any court, tribunal, board or body shall be suspended.”
By that
statutory provision, it is clear that the approval of the Rehabilitation Plan
and the appointment of a rehabilitation receiver merely suspend the actions for
claims against respondent corporations.
Petitioner bank’s preferred status over the unsecured creditors relative
to the mortgage liens is retained, but the enforcement
of such preference is suspended. The loan agreements between the parties have
not been set aside and petitioner bank may still enforce its preference when
the assets of ASB Group of Companies will be liquidated. Considering
that the provisions of the loan agreements are merely suspended, there is no
impairment of contracts, specifically its lien in the mortgaged properties.
As we stressed in Rizal Commercial Banking Corporation v.
Intermediate Appellate Court,[19] such
suspension “shall not prejudice or
render ineffective the status of a secured creditor as compared to a totally
unsecured creditor,” for what P.D. No. 902-A merely provides is that all
actions for claims against the distressed corporation, partnership or association
shall be suspended. This arrangement provided
by law is intended to give the receiver a chance to rehabilitate the
corporation if there should still be a possibility for doing so, without being
unnecessarily disturbed by the creditors’ actions against the distressed
corporation. However, in the event that
rehabilitation is no longer feasible and the claims against the distressed
corporation would eventually have to be settled, the secured creditors, like
petitioner bank, shall enjoy preference over the unsecured creditors.
Likewise, there is no compulsion on
the part of petitioner bank to accept a dacion en pago arrangement of the mortgaged properties based on
ASB Group of Companies’ transfer values and to condone interests and penalties. The
Rehabilitation Plan itself, under item IV-A, explains the dacion en pago proposal, thus:
IV. THE REVISED REHABILITATION PLAN
A. The Total Approach
It is apparent that ASB’s corporate indebtedness needs to be reduced as quickly as possible in order to prevent rapid deterioration in equity. x x x. In order to reduce debt quickly, we must do the following:
1. Complete or sell on-going projects;
2. Invite secured creditors to complete dacion en pago transactions, waiving all penalties; and
3. Invite unsecured creditors to purchase real estate parcels and other assets and set-off the amount of their outstanding claim against the purchase price.
The assets included in the above program include all real estate assets.
In order to
determine the feasibility of the above, representatives of our financial
advisors met with or had discussions with most of the secured creditors. Preliminary discussions indicate support
from the secured creditors towards the concepts of the program associated with
them. The majority of these secured
creditors appear to want to complete dacion en pago transactions based
on MUTUALLY AGREED UPON TERMS. x x x. We
continue to pursue discussions with secured creditors. Based on the program, secured creditors’
claims amounting to PhP5.192 billion will be paid in full including interest up
to
x x x.[20] (Underscoring supplied)
Indeed, based on the above explanation
in the Rehabilitation Plan, the dacion en pago program and the intent of respondent ASB Group of
Companies to ask creditors to waive the interests, penalties and related
charges are not compulsory in nature. They are merely proposals for the
creditors to accept. In fact, as
explained, there was already an initial discussion on these proposals and the majority
of the secured creditors showed their desire to complete dacion en pago transactions, but they must be “based on MUTUALLY AGREED UPON TERMS.” The SEC En
Banc in its Resolution dated
x x x, petitioner asserts that the
Rehabilitation Plan is not legally feasible because respondents cannot dictate
the terms of dacion.
We do not agree. A cursory reading of the Rehabilitation Plan debunks this assertion. The Plan provides that dacion en pago transaction will be effected only if the secured creditors, like petitioner, agree thereto and under terms and conditions mutually agreeable to private respondents and the secured creditor concerned. The dacion en pago program is essential to eventually pay all creditors and rehabilitate private respondents. If the dacion en pago does not materialize in case secured creditors refuse to agree thereto, the Rehabilitation Plan contemplates to settle the obligations to secured creditors with mortgaged properties at selling prices. This is for the general interest of the employees, creditors, unit buyers, government, general public, and the economy.[21] (Underscoring supplied)
With respect to the third assigned error, we note that the
same was not raised by petitioner
bank in its Comment/Opposition to the
Rehabilitation Plan filed with the SEC Hearing Panel. Such belated issue cannot be considered,
especially because it involves a question
of fact, the resolution of which is normally beyond the authority of this
Court as it is not a trier of facts.[22]
At any
rate, the SEC En Banc found that the SEC Hearing Panel “acted within its
legal authority in resolving this case.
Neither it overstepped its lawful authority nor
acted whimsically in approving the Rehabilitation Plan. Hence, it cannot be faulted of grave abuse of
discretion.”[23] We find no reason to disturb such finding,
it being a fundamental rule that factual findings of quasi-judicial agencies,
like the SEC, which have acquired expertise as their jurisdiction is confined
to special matters such as the subject of this case, are generally accorded
great respect and even finality, absent any showing that they arbitrarily
disregarded evidence or misapprehended evidence to such an extent as to compel
a contrary conclusion if such evidence had been properly appreciated.[24]
Petitioner bank also argues that “ASB Group of
Companies” is merely a generic name used to describe collectively various
companies and as such, it is not a legal entity with juridical personality and cannot
be a party to a suit. True, “ASB Group
of Companies” is merely used in this case as a generic name, for brevity, to
collectively describe the various companies/corporations that filed a Petition For
Rehabilitation with the SEC. However, in their petition, all the respondent
corporations are individually named as
petitioners, not “ASB Group
of Companies.”
One last word. The
purpose of rehabilitation proceedings is to enable the company to gain new
lease on life and thereby allows creditors to be paid their claims from its
earnings.[25] Rehabilitation contemplates a continuance of
corporate life and activities in an effort to restore and reinstate the financially
distressed corporation to its former position of successful operation and
solvency.[26] This is
in consonance with the State’s objective to promote a wider and more meaningful
equitable distribution of wealth to protect investments and the public.[27] The approval of the Rehabilitation Plan by
the SEC Hearing Panel, affirmed by both the SEC En Banc and the Court of Appeals, is precisely
in furtherance of the rationale behind P.D. No. 902-A, as amended, which is “to
effect a feasible and viable rehabilitation”[28]
of ailing corporations which affect the public welfare.
WHEREFORE,
we DENY the instant petition for
review on certiorari. The
assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
77260 are AFFIRMED.
Costs against
intervenor Cameron Granville.
SO ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate
Justice
WE
CONCUR:
|
REYNATO S. PUNO Chief Justice
Chairperson |
|
|
RENATO C. CORONA Associate Justice |
(On official leave) ADOLFO S. AZCUNA Associate Justice |
CANCIO C. GARCIA
Associate Justice |
|
REYNATO S. PUNO
* On official leave.
[1] Filed under Rule 45 of the 1997 Rules of Civil Procedure, as amended.
[2] Penned by Associate Justice Mariano C. Del Castillo and concurred in by Associate Justice Edgardo P. Cruz and Associate Justice Magdangal M. De Leon.
[3] In their petition for rehabilitation, the corporations comprising the ASB Group of Companies alleged that their allied companies (ASB Holdings, Inc., ASB Land, Inc., ASB Finance, Inc., Makati Hope Christian School, Inc., Bel-Air Holdings Corporation, Winchester Trading, Inc., VYL Development Corporation, Gerick Holdings Corporation, and Neighborhood Holdings, Inc.) have joined in the said petition “because they executed mortgages and/or pledges over their real and personal properties to secure the obligations of petitioner ASB Group of Companies. Further, (they) agreed to contribute, to the extent allowed by law, some of their specified properties and assets to help rehabilitate petitioner ASB Group of Companies.” Rollo, pp. 119-120.
[4] Rollo, pp. 470-547.
[5]
[6]
[7]
[11]
[12] Under Rule 43 of the 1997 Rules of Civil Procedure, as amended.
[13] Rollo, pp. 60-80.
[15]
[16]
[19] G.R. No. 74851,
[20] Rollo, pp. 491-492.
[21]
[22] Batangas Laguna Tayabas Bus Company, Inc. v. Bitanga, G.R. Nos. 137934 & 137936, August 10, 2001, 362 SCRA 635, citing Palomado v. NLRC, 257 SCRA 680 (1996).
[24] Batangas Laguna Tayabas Bus Company,
Inc. v. Bitanga, supra.
[25] Rubberworld
(Phils.), Inc. v. NLRC,
G.R. No. 126773,
[26] Ruby Industrial
Corporation v. Court of Appeals, G.R. Nos. 124185-87,
[27] P.D. 902-A, as amended, First “Whereas”
clause.
[28] Rizal Commercial Banking Corporation v.
Intermediate Appellate Court, G.R. No. 74851, September 14, 1992, 213 SCRA
830.