THIRD DIVISION
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MAJORITY STOCKHOLDERS OF RUBY
INDUSTRIAL CORPORATION, Petitioners, - versus - MIGUEL LIM, in
his personal capacity as Stockholder of Ruby Industrial Corporation
and representing the MINORITY STOCKHOLDERS OF RUBY INDUSTRIAL CORPORATION and
the MANAGEMENT COMMITTEE OF RUBY INDUSTRIAL CORPORATION, Respondents. |
G.R.
No. 165887 |
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CHINA BANKING
CORPORATION, Petitioner, - versus - MIGUEL LIM, in his personal capacity
as a stockholder of Ruby Industrial Corporation and representing the MINORITY
STOCKHOLDERS OF RUBY INDUSTRIAL CORPORATION,
Respondents. |
G.R.
No. 165929 Present: CARPIO
MORALES, J., Chairperson, BRION, BERSAMIN, ABAD,* and VILLARAMA,
JR., JJ. Promulgated: June
6, 2011 |
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DECISION
VILLARAMA, JR., J.:
This
case is brought to us on appeal for the fourth
time, involving the same parties and interests litigating on issues arising
from rehabilitation proceedings initiated by Ruby Industrial Corporation wayback
in 1983.
Following
is the factual backdrop of the present controversy, as culled from the records
and facts set forth in the ponencia of
Chief Justice Reynato S. Puno in Ruby
Industrial Corporation v. Court of Appeals.[1]
The Antecedents
Ruby
Industrial Corporation (RUBY) is a domestic corporation engaged in glass
manufacturing. Reeling from severe
liquidity problems beginning in 1980, RUBY filed on
On
Subsequently, two (2) rehabilitation
plans were submitted to the SEC: the BENHAR/RUBY Rehabilitation Plan of the
majority stockholders led by Yu Kim Giang, and the Alternative Plan of the
minority stockholders represented by Miguel Lim (Lim).
Under
the BENHAR/RUBY Plan, Benhar International, Inc. (BENHAR) -- a domestic
corporation engaged in the importation and sale of vehicle spare parts which is
wholly owned by the Yu family and headed by Henry Yu, who is also a director
and majority stockholder of RUBY -- shall lend its P60 million credit
line in China Bank to RUBY, payable within ten (10) years. Moreover, BENHAR shall purchase the credits
of RUBYs creditors and mortgage RUBYs properties to obtain credit facilities
for RUBY. Upon approval of the
rehabilitation plan, BENHAR shall control and manage RUBYs operations. For its service, BENHAR shall receive a
management fee equivalent to 7.5% of RUBYs net sales.
The BENHAR/RUBY Plan was opposed by
40% of the stockholders, including Lim, a minority shareholder of RUBY. ALFC,
the biggest unsecured creditor of RUBY and chairman of the management
committee, also objected to the plan as it would transfer RUBYs assets beyond
the reach and to the prejudice of its unsecured creditors.
On
the other hand, the Alternative Plan of RUBYs minority stockholders proposed
to: (1) pay all RUBYs creditors without securing any bank loan; (2) run and
operate RUBY without charging management fees; (3) buy-out the majority shares
or sell their shares to the majority stockholders; (4) rehabilitate RUBYs two
plants; and (5) secure a loan at 25% interest, as against the 28% interest
charged in the loan under the BENHAR/RUBY Plan.
Both plans were endorsed by the SEC
to the MANCOM for evaluation.
On
Meanwhile, BENHAR paid off Far East
Bank & Trust Company (FEBTC), one of RUBYs secured creditors. By
ALFC and Miguel Lim moved to nullify
the deeds of assignment executed in favor of BENHAR and cite the parties
thereto in contempt for willful violation of the
Earlier, on P34.068 million of the P60.437
Million credit facility to be extended to RUBY, as reimbursement for BENHARs
payment to some of RUBYs creditors. The
SEC En Banc directed RUBY to submit
its revised rehabilitation plan to its creditors for comment and approval while
the petition for the creation of a new management committee was remanded for
further proceedings to the SEC Hearing Panel.
The Alternative Plan of RUBYs minority stockholders was also forwarded
to the hearing panel for evaluation.
On
Notwithstanding the objections of 90%
of RUBYs creditors and three members of the MANCOM, the SEC Hearing Panel
approved on
The
original management committee (MANCOM), Lim and ALFC appealed to the SEC En Banc which affirmed the approval of
the Revised BENHAR/RUBY Plan and the creation of a new management committee on
Lim,
ALFC and MANCOM moved for reconsideration while RUBY and BENHAR asked the SEC
to reconsider the portion of its Order prohibiting BENHAR from utilizing RUBYs
assets as collateral. On P34.068 Million of the P60.437
Million credit facility to be extended to RUBY, as settlement for its advance
payment to RUBYs seven (7) secured creditors, such payments made by BENHAR
under the void Deeds of Assignment, in effect were recognized as payable to
BENHAR under the revised plan. The
motion for reconsideration filed by BENHAR and RUBY was likewise denied by the
CA.[6]
Undaunted,
RUBY and BENHAR filed a petition for review in this Court (G.R. Nos. 124185-87 entitled Ruby
Industrial Corporation v. Court of Appeals) alleging that the CA gravely
abused its discretion in substituting its judgment for that of the SEC, and in
allowing Lim, ALFC and MANCOM to file separate petitions prepared by lawyers
representing themselves as belonging to different firms. By Decision[7]
dated January 20, 1998, we sustained the CAs ruling that the Revised
BENHAR/RUBY Plan contained provisions which circumvented its final decision in
CA-G.R. SP No. 18310, nullifying the deeds of assignment of credits and mortgages
executed by RUBYs creditors in favor of BENHAR, as well as this Courts
Resolution in G.R. No. 96675, affirming the said CAs decision. We thus held:
Specifically, the Revised BENHAR/RUBY Plan considered
as valid the advance payments made by BENHAR in favor of some of RUBYs
creditors. The nullity of BENHARs
unauthorized dealings with RUBYs creditors is settled. The deeds of assignment between BENHAR and
RUBYs creditors had been categorically declared void by the SEC Hearing Panel
in two (2) orders issued on
x x x x
These
orders were upheld by the SEC en banc
and the Court of Appeals. In CA-G.R. SP
No. 18310, the Court of Appeals ruled as follows:
x x x x x
x x x x
1) x x x when the Deed of Assignment was executed on
May 30, 1988 by and between Ruby Industrial Corp., Benhar International, Inc.,
and FEBTC, the Rehabilitation Plan
proposed by petitioner Ruby Industrial Corp. for Benhar International, Inc. to
assume all petitioners obligation has not been approved by the SEC. The Rehabilitation Plan was not approved
until
2) The magnitude and coverage of the transactions
involved were such that Yu Kim Giang and the other signatories cannot feign
ignorance or pretend lack of knowledge thereto in view of the fact that they
were all signatories to the transaction and privy to all the negotiations
leading to the questioned transactions. In executing the Deeds of Assignment, the
petitioners totally disregarded the mandate contained in the SEC order not to
dispose the properties of Ruby Industrial Corp. in any manner whatsoever
pending the approval of the Rehabilitation Plan and rendered illusory the SEC
efforts to rehabilitate the petitioner corporation to the best interests of all
the creditors.
3) The
assignments were made without prior approval of the Management Committee created
by the SEC in an Order dated
4) x x x. The
acts for which petitioners were held in indirect contempt by the SEC arose from
the failure or willful refusal by petitioners to obey the lawful order of the
SEC not to dispose of any of its properties in any manner whatsoever without
authority or approval of the SEC. The execution of the Deeds of Assignment tend
to defeat or obstruct the administration of justice. Such acts are offenses against the SEC because
they are calculated to embarrass, hinder
and obstruct the tribunal in the administration of justice or lessen its
authority.
x x x
Even the SEC en
banc, in its July 30, 1993 Order affirming the approval of the Revised
BENHAR/RUBY Plan, has acknowledged the invalidity of the subject deeds of
assignment. However, to justify its
approval of the plan and the appointment of BENHAR to the new management
committee, it gave the lame excuse that BENHAR became RUBYs creditor for
having paid RUBYs debts. x x x
x x x x
For its part, the Court of Appeals noted that the
approved Revised BENHAR/RUBY Plan gave undue preference to BENHAR. The records, indeed, show that BENHARs offer
to lend its credit facility in favor of RUBY is conditioned upon the payment of
the amount it advanced to RUBYs creditors, x x x
x x x x
In fact, BENHAR shall receive P34.068 Million out of
the P60.437 Million credit facility to be extended to RUBY for the latters
rehabilitation.
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. When a distressed company is placed under
rehabilitation, the appointment of a management committee follows to avoid
collusion between the previous management and creditors it might favor, to the
prejudice of the other creditors. All assets of a corporation under
rehabilitation receivership are held in trust for the equal benefit of all
creditors to preclude one from obtaining an advantage or preference over
another by the expediency of attachment, execution or otherwise. As between the creditors, the key phrase is
equality in equity. Once the corporation threatened by bankruptcy is taken over
by a receiver, all the creditors ought to stand on equal footing. Not
any one of them should be paid ahead of the others. This is precisely the reason for suspending
all pending claims against the corporation under receivership.[8] (Additional emphasis supplied.)
Aside
from the undue preference that would have been given to BENHAR under the
Revised BENHAR/RUBY Plan, we also found
RUBYs dealing with BENHAR highly irregular and its proposed financing
scheme more costly and ultimately prejudicial to RUBY. Thus:
Parenthetically, BENHAR is a domestic corporation
engaged in importing and selling vehicle spare parts with an authorized capital
stock of thirty million pesos. Yet, it offered to lend its credit facility in
the amount of sixty to eighty million pesos to RUBY. It is to be noted that BENHAR is not a
lending or financing corporation and lending its credit facilities, worth more
than double its authorized capitalization, is not one of the powers granted to
it under its Articles of Incorporation.
Significantly, Henry Yu, a director and a majority stockholder of RUBY
is, at the same time, a stockholder of BENHAR, a corporation owned and
controlled by his family. These circumstances render the deals between BENHAR
and RUBY highly irregular.
x x x x
Moreover, when RUBY initiated its petition for
suspension of payments with the SEC, BENHAR was not listed as one of RUBYs
creditors. BENHAR is a total stranger to
RUBY. If at all, BENHAR only served as a
conduit of RUBY. As aptly stated in the
challenged Court of Appeals decision:
Benhars role in the Revised Benhar/Ruby Plan, as
envisioned by the majority stockholders, is to contract the loan for Ruby and,
serving the role of a financier, relend the same to Ruby. Benhar is merely extending its credit line
facility with China Bank, under which the bank agrees to advance funds to the
company should the need arise. This is
unlikely a loan in which the entire amount is made available to the borrower so
that it can be used and programmed for the benefit of the companys financial and
operational needs. Thus, it is actually China Bank which will be the source of the funds
to be relent to Ruby. Benhar will not
shell out a single centavo of its own funds.
It is the assets of Ruby which will be mortgaged in favor of Benhar. Benhars
participation will only make the rehabilitation plan more costly and, because
of the mortgage of its (Rubys) assets to a new creditor, will create a
situation which is worse than the present. x x x
We
need not say more.[9] (Additional
emphasis supplied.)
After the finality of the above
decision, the SEC set the case for further proceedings.[10] On March 14, 2000, Bank of the Philippine
Islands (BPI), one of RUBYs secured creditors, filed a Motion to Vacate Suspension
Order[11]
on grounds that there is no existing management committee and that no decision
has been rendered in the case for more than 16 years already, which is beyond
the period mandated by Sec. 3-8 of the Rules of Procedure on Corporate
Recovery. RUBY filed its opposition,[12]
asserting that the MANCOM never relinquished its status as the duly appointed
management committee as it resisted the orders of the second and third
management committees subsequently created, which have been nullified by the CA
and later this Court. As to the
applicability of the cited rule under the Rules on Corporate Recovery, RUBY
pointed out that this case was filed long before the effectivity of said
rules. It also pointed out that the
undue delay in the approval of the rehabilitation plan being due to the
numerous appeals taken by the minority stockholders and MANCOM to the CA and
this Court, from the SEC approval of the BENHAR/RUBY Plan. Since there have already been steps taken to
finally settle RUBYs obligations with its creditors, it was contended that the
application of the mandatory period under the cited provision would cause
prejudice and injustice to RUBY.
It
appears that even earlier during the pendency of the appeals in the CA, BENHAR
and RUBY have performed other acts in pursuance of the BENHAR/RUBY Plan
approved by the SEC.
On
The
aforesaid stockholders meeting was the subject of the Motion to Cite For
Contempt[14]
and Supplement to Motion to Cite For Contempt[15] filed by Lim
before the CA where their petitions for review (CA-G.R. Nos. 32404, 32469 and
32483) were then pending. Lim argued
that the majority stockholders claimed to have increased their shares to 74.75%
by subscribing to the unissued shares of the authorized capital stock (ACS). Lim pointed out that such move of the
majority was in implementation of the BENHAR/RUBY Plan which calls for capital
infusion of P11.814 Million representing the unissued and unsubscribed portion
of the present ACS of P23.7 Million, and the Revised BENHAR/RUBY Plan
which proposed an additional subscription of P30 Million. Since the implementation of both majority
plans have been enjoined by the SEC and CA, the calling of the special
stockholders meeting by the majority stockholders clearly violated the said
injunction orders. This circumstance certainly affects the determination of
quorum, the voting requirements for corporate term extension, as well as the
election of Directors pursuant to the July 30, 1993 Order and October 15, 1993
Resolution of the SEC enjoining not only the implementation of the revised plan
but also the doing of any act that may render the appeal from the approval of
the said plan moot and academic.
The
aforementioned capital infusion was taken up by RUBYs board of directors in a
special meeting[16]
held on
The corporation be authorized to issue out of the
unissued portion of the authorized capital stocks of the corporation in the
form of common stocks 11.8134.00 [Million] after comparing this with the
audited financial statement prepared by SGV as of December 31, 1982, to be
subscribed and paid in full by the present stockholders in proportion to their
present stockholding in the corporation on staggered basis starting
October 28, December 27 then February 28
and April 28 as the last installment date at 25% for each period. It was also
moved and seconded that should any of the stockholders fail to exercise their
rights to buy the number of shares they are qualified to buy by making the
first installment payment of 25% on or before October 13, 1991, then the other
stockholders may buy the same and that only when none of the present
stockholders are interested in the shares may there be a resort to selling them
by public auction.[18]
As
reflected in the Minutes of the special board meeting, a representative of the
absent directors (Tan Chai, Tomas Lim, Miguel Lim and Yok Lim) came to submit
their letter addressed to the Chairman suggesting that said meeting be deferred
until the September 18, 1991 SEC Order becomes final and executory. The directors present nevertheless proceeded
with the meeting upon their belief that neither appeal nor motion for
reconsideration can stay the SEC order.[19]
The
resolution to extend RUBYs corporate term, which was to expire on January 2,
1997, was approved during the September 3, 1996 stockholders meeting, as
recommended by the board of directors composed of Henry Yu (Chairman), James
Yu, David Yukimteng, Harry L. Yu, Yu Kim Giang, Mary L. Yu and Vivian L.
Yu. The board certified that said
resolution was approved by stockholders representing two-thirds (2/3) of RUBYs
outstanding capital stock.[20] Per Certification[21] dated
On
March 17, 2000, Lim filed a Motion[23] informing the SEC
of acts being performed by BENHAR and RUBY through directors who were illegally
elected, despite the pendency of the appeal before this Court questioning the
SEC approval of the BENHAR/RUBY Plan and creation of a new management committee,
and after this Court had denied their motion for reconsideration of the
The
MANCOM concurred with Lim and made a similar manifestation/comment[24] regarding the
irregular and invalid capital infusion and extension of RUBYs corporate term
approved by stockholders representing only 60% of RUBYs outstanding capital
stock. It further stated that the
foregoing acts were perpetrated by the majority stockholders without even
consulting the MANCOM, which technically stepped into the shoes of RUBYs board
of directors. Since RUBY was still under
a state of suspension of payment at the time the special stockholders meeting
was called, all corporate acts should have been made in consultation and close
coordination with the MANCOM.
Lim
likewise filed an Opposition[25] to BPIs Motion
to Vacate Suspension Order, asserting that the management committee originally
created by the SEC continues to control the corporate affairs and properties of
RUBY. He also contended that the SEC Rules
of Procedure on Corporate Recovery cannot apply in this case which was
filed long before the effectivity of said rules.
On
the other hand, RUBY filed its Opposition[26] to the Motion
filed by Lim denying the allegation of Lim that RUBYs corporate existence had
ceased. RUBY claimed that due notice
were given to all stockholders of the
The MANCOM also filed its Opposition[27] to BPIs Motion
to Vacate Suspension Order, stating that it has continuously performed its
primary function of preserving the assets of RUBY and undertaken the management
of RUBYs day-to-day affairs. It
expressed belief that between chaotic foreclosure proceedings and collection
suits that would be triggered by the vacation of the suspension order and an
orderly settlement of creditors claims before the SEC, the latter path is the
more prudent and logical course of action.
On
On August 23, 2000, China Bank filed
a Manifestation[29] echoing the
contentions of BPI that as there is no existing management committee and no
rehabilitation plan approved even after the 240-day period, warrants the
application of Sec. 4-9 of the SEC Rules of Procedure on Corporate Recovery
such that the petition is deemed ipso
facto denied and dismissed. China
Bank lamented that the length of time that has lapsed, as well as the parties
actuations, completely betrays a genuine attempt to rehabilitate RUBYs
moribund operations all to the dismay, damage and prejudice of RUBYs
creditors. It stressed that the
proceedings cannot be prolonged nor used as a ploy to defer indefinitely the
payment of long overdue obligations of RUBY to its creditors. With the case having been ipso facto dismissed, there is no need
of further action from the parties or an order from the SEC. Consequently, RUBYs creditors may now take
whatever legal action they may deem appropriate to protect their rights
including, but not limited to extrajudicial foreclosure.
On
On January 25, 2001, the MANCOM filed
with the SEC its Resolution unanimously adopted on January 19, 2001 affirming
that: (1) MANCOM was never informed nor advised of the supposed capital
infusion by the majority stockholders in October 1991 and it never actually
received any such additional subscription nor signed any document attesting to
or authorizing the said increase of RUBYs capital stock or the extension of
its corporate life; (2) MANCOM
continuously recognizes the 60%-40% ratio of shareholding profile between the
majority and minority stockholders, with the majority having 59.828% while the
minority holds 40.172% shareholding; (3) as there was no valid increase in the
shareholding of the majority and consequently no valid extension of corporate
term, the liquidation of RUBY is thus in order; (4) to date, the majority
stockholders or Yu Kim Giang have not complied with the December 22, 1989 SEC
order for them to turn over the cash including bank deposits, all other financial
records and documents of RUBY including transfer certificates of title over its
real properties, and render an accounting of all the money received by RUBY;
and (5) pursuant to this Courts ruling in G.R. No. 96675 dated August 26,
1991, the previous deeds of assignment made in favor of BENHAR by Florence
Damon, Philippine Bank of Communications, Philippine Commercial International
Bank, Philippine Trust Company, PCI Leasing and Finance, Inc. and FEBTC, having
been earlier declared void by the SEC Hearing Panel, and the CA decision in
CA-G.R. SP No. 18310 affirmed by this Court
have no legal effect and are deemed void.[36]
On the other hand, Lim filed a
Supplement (to Manifestation and Motion dated January 18, 2001)[37] reiterating his
pending motion filed on March 15, 2000 for the SEC to implement this Courts
January 20, 1998 Decision in G.R. Nos. 124185-87 which states in part that [t]he
SEC therefore has the power and authority, directly to declare all assignment
of assets of the petitioner Corporation declared under suspension of payments,
null and void, and to conserve the same in order to effect a fair, equitable
and meaningful rehabilitation of the insolvent corporation. Lim contended that the SEC retains
jurisdiction over pending suspension of payment/rehabilitation cases filed as
of
The MANCOM manifested that it is
adopting in toto the Manifestation
and Motion dated
On
On
The SECs Ruling
On
WHEREFORE, in view of the foregoing, the Commission
hereby resolves to terminate the proceedings and DENY the instant petition.
Accordingly, pursuant to Sec. 5-5 of the SECs Rules
of Procedure on Corporate Recovery, which provides:
Discharge of the Management Committee -- The Management Committee shall be discharged
and dissolved under the following circumstances:
a. Whenever the
Commission, on motion or motu prop[r]io,
has determined that the necessity for the Management Committee no longer
exists;
b. Upon the
appointment of a liquidator under these Rules;
c. By agreement
of the parties;
d. Upon
termination of the proceedings.
Upon its discharge and dissolution, the Management
Committee shall submit its final report and render an accounting of its
management within such reasonable time as the Commission may allow.
the Management Committee is hereby DISSOLVED. It is likewise ordered to:
(1) Make an
inventory of the assets, funds and properties of the petitioner;
(2) Turn-over
the aforementioned assets, funds and properties to the proper party(ies);
(3) Render an
accounting of its management; and
(4) Submit its
Final Report to the Commission.
The MANCOM is ordered to comply with the foregoing
within a non-extendible period of thirty (30) days from receipt of this
Order. Relative to any compensation
owing to the MANCOM, it is left to the determination of the parties concerned.
No pronouncement as to costs.
SO ORDERED.[43]
The
SEC declared that since its order declaring RUBY under a state of suspension of
payments was issued on
Lim,
in his personal capacity and in representation of the minority stockholders of
RUBY, filed a petition for review with prayer for a temporary restraining order
and/or writ of preliminary injunction before the CA (CA-G.R. SP No. 73195)
assailing the SEC order dismissing the petition and dissolving the MANCOM.
Ruling of the CA
On
WHEREFORE, the Questioned Order dated 18 September 2002
issued by the Securities and Exchange Commission in SEC Case No. 2556 entitled
In the Matter of the Petition for
Suspension of Payments, Ruby Industrial Corporation, Petitioner, is hereby
SET ASIDE, and consequently:
(1) the infusion of additional capital made by the
majority stockholders be declared null and void and restoring the capital
structure of Ruby to its original structure prior to the time the injunction
was issued, that is, majority stockholders 59.828% and the minority stockholders
40.172% of the authorized capital stock of Ruby Industrial Corporation.
(2) the
resolution of the majority stockholders, who represents only 59.828% of the
outstanding capital stock of Ruby, extending the corporate life of Ruby for
another twenty-five (25) years which was made during the supposed stockholders
meeting held on 03 September 1996 be declared null and void;
(3)
implementing the invalidation of any and all illegal assignments of
credit/purchase of credits and the cancellation of mortgages connected
therewith made by the creditors of Ruby Industrial Corporation during the
effectivity of the suspension of payments order including that of China Bank
and BPI and to deliver to MANCOM or the Liquidator all the original of the
Deeds of Assignments and the registered titles thereto and any other documents
related thereto; and order their unwinding and requiring the majority
stockholders to account for all illegal assignments (amounts, dates, interests,
etc. and present the original documents supporting the same); and
(4) ordering
the Securities and Exchange Commission to supervise the liquidation of Ruby
Industrial Corporation after the foregoing steps shall have been undertaken.
SO ORDERED.[46]
According
to the CA, the SEC erred in not finding that the
The
CA further noted that the October 2, 1991 board meeting was conducted on the
basis of the September 18, 1991 order of the SEC Hearing Panel approving the
Revised BENHAR/RUBY Plan, which plan was set aside under this Courts January
20, 1998 Decision in G.R. Nos. 124185-87.
The CA pointed out that records confirmed the proposed infusion of
additional capital for RUBYs rehabilitation, approved during said meeting, as implementing the Revised BENHAR/RUBY
Plan. Necessarily then, such capital
infusion is covered by the final injunction against the implementation of the
revised plan. It must be recalled that
this Court affirmed the CAs ruling that the revised plan not only recognized
the void deeds of assignments entered into with some of RUBYs creditors in
violation of the CAs decision in CA-G.R. SP No. 18310, but also maintained a
financing scheme which will just make the rehabilitation plan more costly and
create a worse situation for RUBY.
On
the supposed delay of the minority stockholders in raising the issue of the
validity of the infusion of additional capital effected by the board of
directors, the CA held that laches is inapplicable in this case. It noted that Lim sought relief while the
case is still pending before the SEC. If
ever there was delay, the same is not fatal to the cause of the minority
stockholders.
The
CA likewise faulted the SEC in relying on the presumption of regularity on the
matter of the extension of RUBYs corporate term through the filing of amended
articles of incorporation. In doing so,
the CA totally disregarded the evidence which rebutted said presumption, as
demonstrated by Lim: (1) it was the board of directors and not the stockholders
which conducted the meeting without the approval of the MANCOM; (2) there was
no written waivers of the minority stockholders pre-emptive rights and thus it
was irregular to merely notify them of the board of directors meeting and ask
them to exercise their option; (3) there was an existing permanent injunction
against any additional capital infusion on the BENHAR/RUBY Plan, while the CA
and this Court both rejected the Revised BENHAR/RUBY Plan; (4) there was no General Information Sheet
reports made to the SEC on the alleged capital infusion, as per certification
by the SEC; (5) the Certification stating the present percentage of majority
shareholding, dated December 21, 1993 and signed by Yu Kim Giang -- which was
not sworn to before a Notary Public -- was supposedly filed in 1996 with the
SEC but it does not bear a stamped date of receipt, and was only attached in a
2000 motion long after the October 1991 board meeting; (6) said Certification
was contradicted by the SEC list of all stockholders of RUBY, in which the
majority remained at 59.828% and the minority shareholding at 40.172% as of
October 27, 1991; (7) certain receipts
for the amount of P1.7 million
was presented by the majority stockholders only in the year 2000, long after
Lim questioned the inclusion of
extension of corporate term in the
Notice of Meeting when Lim filed before the CA a motion to cite for contempt
(CA-G.R. Nos. 32404, 32469 and 32483); and (8) this Courts decisions in the
cases elevated to it had recognized the 40% stockholding of the minority. Upon the foregoing grounds, the CA said that
the SEC should have invalidated the resolution extending the corporate term of
RUBY for another twenty-five (25) years.
With
the expiration of the RUBYs corporate term, the CA ruled that it was error for
the SEC in not commencing liquidation proceedings. As to the dismissal of
RUBYs petition for suspension of payments, the CA held that the SEC erred when
it retroactively applied Sec. 4-9 of the Rules of Procedure on Corporate
Recovery. Such retroactive application of procedural rules admits of
exceptions, as when it would impair vested rights or cause injustice. In this case, the CA emphasized that the two
decisions of this Court still have to be implemented by the SEC, but to date the
SEC has failed to unwound the illegal assignments and order the assignees to
surrender the Deeds of Assignment to the MANCOM.
On
the issue of violation of the rule against forum shopping, the CA held that
this is not applicable because the parties in CA-G.R. SP No. 73169 (filed by
MANCOM) and CA-G.R. SP No. 73195 (filed by Lim) are not the same and they do
not have the same interest. This issue
was in fact already resolved in G.R. Nos. 124185-87 wherein this Court, citing Ramos, Sr. v. Court of Appeals[47] declared that
private respondents Lim, the unsecured creditors (ALFC) and MANCOM cannot be
considered to have engaged in forum shopping in filing separate petitions with
the CA as each have distinct rights to protect.
The
CA also found that the belated submission of the special power of attorney
executed by the other minority stockholders representing 40.172% of RUBYs ownership
has no bearing to the continuation of the petition filed with the appellate
court. Moreover, since the petition is
in the nature of a derivative suit, Lim clearly can file the same not only in
representation of the minority stockholders but also in behalf of the
corporation itself which is the real party in interest. Thus, notwithstanding that Lims ownership in
RUBY comprises only 1.4% of the outstanding capital stock, as claimed by the
majority stockholders, his petition may not be dismissed on this ground.
The Consolidated Petitions
From
the Decision of the CA, China Bank and the Majority Stockholder joined by RUBY,
filed separate petitions before this Court.
In
G.R. No. 165887, petitioners Majority Stockholders and RUBY raised the
following grounds for the reversal of the assailed decision and the
reinstatement of the SECs September 18, 2002 Order:
First Reason
THE COURT OF APPEALS ERRED AND WHEN IT DID, IT ACTED
CONTRARY TO LAW AND PRECEDENTS WHEN IT GAVE DUE COURSE TO, AND, THEREAFTER,
SUSTAINED, A FORMALLY AND SUBSTANTIALLY DEFECTIVE PETITION FOR REVIEW.
Second Reason
THE COURT OF APPEALS ERRED AND WHEN IT DID, IT ACTED
IN A MANNER AT WAR WITH ORDERLY PROCEDURE AND APPLICABLE JURISPRUDENCE WHEN
IT REVERSED THE ORDER OF DISMISSAL OF THE SECURITIES AND EXCHANGE COMMISSION
AND SUBSTITUTED ITS JUDGMENT FOR THAT OF THE LATTER IN THE DETERMINATION OF
ISSUES WELL WITHIN THE EXPERTISE OF THE COMMISSION.
Third Reason
THE COURT OF APPEALS ERRED AND WHEN IT DID, IT ACTED
IN GRAVE ABUSE OF ITS DISCRETION AND, IN FACT, IN EXCESS OR LACK OF
JURISDICTION -- WHEN IT SUSTAINED
COLLATERAL ATTACKS OF FINAL ADJUDICATIONS OF THE SECURITIES AND EXCHANGE
COMMISSION.[48]
On
the other hand, petitioner China Bank in G.R. No. 165929 puts forth the
argument that the principle of stare
decisis cannot be given effect in this case considering the prevailing
factual circumstances, as to do so would result in manifest injustice. It contends that the reason for the
declaration of nullity of the Deed of Assignment pronounced more than a decade
ago, has become legally inefficacious by its obsolescence. The creditors of RUBY have the right to
recover their credit. But when the CA
ordered the nullification of China Banks Deed of Assignment in favor of
Greener Investment Corporation, it practically dashed its last hope for ever
recovering its credit.
China
Bank is of the view that the CA overstretched the import of this Courts
Deploring
the principal parties penchant for prolonged litigation resulting considerably
in irreversible losses to RUBY, China Bank maintains that from the report
submitted by the MANCOM to the SEC, it can be clearly seen that no attempt at
rehabilitation whatsoever had been pursued.
Given the current situation, China Bank prays that the CA Decision be
reversed and its Deed of Assignment in favor of Greener Investment Corporation
be recognized and given full legal effect.
In
fine, main issues to be resolved are: (1) whether private respondents MANCOM
and Lim engaged in forum shopping when they filed separate petitions before the
CA assailing the September 18, 2002 SEC Order; (2) whether the defects in the
certification of non-forum shopping submitted by Lim warrant the dismissal of
his petition before the CA; (3) whether the CA was correct in reversing the
SECs order dismissing the petition for suspension of payment.
Our Ruling
The
petitions have no merit.
On
the charge of forum shopping, we have already ruled on the matter in G.R. Nos.
124185-87. Thus:
We hold that private respondents are not guilty of
forum-shopping. In Ramos, Sr. v. Court of Appeals, we ruled:
The private respondents can be considered to have
engaged in forum shopping if all of them, acting as one group, filed identical
special civil actions in the Court of Appeals and in this Court. There must be identity of parties or
interests represented, rights asserted and relief sought in different
tribunals. In the case at bar, two groups of private respondents appear to
have acted independently of each other when they sought relief from the
appellate court. Both groups sought
relief from the same tribunal.
It would not matter even if there are several
divisions in the Court of Appeals. The
adverse party can always ask for the consolidation of the two cases. x x x
In the case at bar, private respondents represent different
groups with different interests the minority stockholders group, represented
by private respondent Lim; the unsecured creditors group, Allied Leasing &
Finance Corporation; and the old management group. Each group has distinct rights to
protect. In line with our ruling in Ramos, the cases filed by private
respondents should be consolidated. In
fact, BENHAR and RUBY did just that in their urgent motions filed on
In
the present case, no consolidation of CA-G.R. SP Nos. 73169 (filed by MANCOM)
which was earlier assigned to the Thirteenth Division and CA-G.R. SP No. 73195
(filed by Lim) decided by the Second Division, took place. In their Comment filed before CA-G.R. SP No.
73169, the Majority Stockholders and RUBY (private respondents therein) prayed
for the dismissal of said case arguing that MANCOM, of which Lim is a member,
circumvented the proscription against forum shopping. The CAs Thirteenth Division, however,
disagreed with private respondents and granted the motion to withdraw petition
filed by MANCOM which manifested that the Second Division in CA-G.R. SP No.
73195 by Decision dated May 26, 2004 had granted the reliefs similar to those
prayed for in their petition, said decision being binding on MANCOM which was
also impleaded in said case (CA-G.R. SP No. 73195). The Thirteenth Division
also cited our pronouncement in G.R. Nos. 124185-87 to the effect that there
was no violation on the rule on forum shopping because MANCOM and Lim or the
minority shareholders of RUBY represent different interests.[50]
As
to the alleged defects in the certificate of non-forum shopping submitted by
Lim, we find no error committed by the CA in holding that the belated
submission of a special power of attorney executed in Lims favor by the
minority stockholders has no bearing to the continuation of the case as
supported by ample jurisprudence. To
appreciate the liberal stance adopted by the CA, one must take into account the
previous history of the petitions for review before the CA involving the SEC
A derivative action
is a suit by a shareholder to enforce a corporate cause of action.[51] It is a remedy designed by equity and has
been the principal defense of the minority shareholders against abuses by the
majority.[52] For this purpose, it is enough that a member or a
minority of stockholders file a derivative suit for and in behalf of a
corporation.[53] An individual
stockholder is permitted to institute a derivative suit on behalf of the
corporation wherein he holds stock in order to protect or vindicate corporate
rights, whenever officials of the corporation refuse to sue or are the ones to
be sued or hold the control of the corporation.
In such actions, the suing stockholder is regarded as the nominal party,
with the corporation as the party in interest.[54]
Now, on the third
and substantive issue concerning the SECs dismissal of RUBYs petition for
suspension of payment.
The SEC based its action on Sec. 4-9
of the Rules of Procedure on Corporate Recovery,[55] which provides:
SEC. 4-9. Period of Suspension Order. The suspension
order shall be effective for a period of sixty (60) days from the date of its
issuance. The order shall be
automatically vacated upon the lapse of the sixty-day period unless extended by
the Commission. Upon motion, the
Commission may grant an extension thereof for a period of not more than sixty
(60) days in each application if the Commission is satisfied that the debtor
and its officers have been acting in good faith and with due diligence, and
that the debtor would likely be able to make a viable rehabilitation plan. After the lapse of one hundred and eighty
(180) days from the issuance of the suspension order, no extension of the said
order shall be granted by the Commission if opposed in writing by a majority of
any class of creditors. The Commission
may grant an extension beyond one hundred eighty (180) days only if it appears
by convincing evidence that there is a good chance for the successful
rehabilitation of the debtor and the opposition thereto by the creditor appears
manifestly unreasonable.
In any
event, the petition is deemed ipso facto denied and dismissed if no
Rehabilitation Plan was approved by the Commission upon the lapse of the order
or the last extension thereof. In such
case, the debtor shall come under the dissolution and liquidation proceedings
of Rule V of these Rules. (Emphasis
supplied.)
According to the SEC, even if the 180
days maximum period of suspension order is counted from the finality of this
Courts decision in G.R. Nos. 124185-87 in December 1998, still this case had
gone beyond the period mandated in the Rules for a corporation under suspension
of payment to have a rehabilitation plan approved by the Commission.
While it is true that the Rules of
Procedure on Corporate Recovery authorizes the dismissal of a petition for
suspension of payment where there is no rehabilitation plan approved within the
maximum period of the suspension order, it must be recalled that there was in
fact not one, but two rehabilitation
plans (BENHAR/RUBY Plan and Revised BENHAR/RUBY Plan) submitted by the
majority stockholders which were approved by the SEC. The implementation of the
first plan was enjoined when it was seriously challenged in the courts by the
minority stockholders through Lim. The
second revised plan superseded the first plan, but eventually nullified by the
CA and the CA decision declaring it void was affirmed by this Court in G.R. Nos.
124185-87. Given this factual milieu,
the automatic application of the lifting of the suspension order as interpreted
by the SEC in its
Moreover,
records reveal that the delay in the proceedings after the case was set for
hearing following this Courts final judgment in G.R. Nos. 124185-87, was not
due to any fault or neglect on the part of MANCOM or the minority stockholders.
The idea propounded by the petitioners majority stockholders that this case is
about a minority in a corporation holding hostage the majority indefinitely by
simple assertion that the formers rights have been transgressed by the latter
is, downright misleading.
First,
the SEC did not even mention in its September 18, 2002 Order that when this
Court remanded to it the case for further proceedings, there remained only the
Alternative Plan of RUBYs minority stockholders which had earlier been
forwarded to the SEC Hearing Panel. With the CA Decision setting aside the SEC
approval of the Revised BENHAR/RUBY Plan, as affirmed by this Court, it
behooves on the SEC to recognize the fact that the Alternative Plan was
endorsed by 90% of the RUBYs creditors who had objected to the Revised
BENHAR/RUBY Plan. Yet, not a single step
was taken by the SEC to address those findings and conclusions made by the CA
and this Court on the highly disadvantageous and onerous provisions of the
Revised BENHAR/RUBY Plan.
Moreover, the SEC failed to act on
motions filed by Lim and MANCOM to implement this Courts January 20, 1998
Decision in G.R. Nos. 124185-87, by declaring all deeds of assignment with
BENHAR and/or the conduits of Henry Yu of no force and legal effect, which of
course necessitates the surrender by the concerned creditors of those void
deeds of assignment. Petitioner China
Bank dismisses it as unnecessary and immaterial to the continued inability of
RUBY to settle its long overdue debts.
However, the CA said that the foregoing acts should have been done by
the SEC for proper documentation and orderly settlement after proper accounting
of the assignment transactions. The
appellate court then concluded that dismissal of the petition under Sec. 4-9 of
the Rules of Procedure on Corporate Recovery would impair the vested
rights of the minority stockholders under this Courts decision invalidating
the aforesaid deeds of assignment, thus:
We agree
with the observations of the petition that if the illegal assignments not
having been unwound and the mortgages not canceled, the majority, their alter
ego, and/or cohorts will claim to be secured creditors and freely collect
extra-judicially the obligations covered by the illegal assignments. Ruby has very little money compared to the
P200 Million probable liability to the illegal assignees as unilaterally stated
by Ruby without audit (previously merely totaled to P34 Million in 1998 as
stated in the revised rehabilitation plan).
Foreclosure of the mortgages by the illegal assignees will follow; Ruby
will lose all its prime properties; there will be no assets left for unsecured
creditors; and there will be no residual P600 Million assets to divide.[56]
Evidently, the minority stockholders
and MANCOM had already foreseen the impossibility of implementing a viable
rehabilitation plan if the illegal assignments made by its creditors with BENHAR
and the majority stockholders, and subsequently, with conduits of RUBY or Henry
Yu, are not properly unwound and those directors responsible for the void
transactions not required to make a full accounting. Contrary to petitioner China Banks
insinuation that the minority stockholders merely want to prolong the
litigation to the great prejudice and damage to RUBYs creditors, MANCOM and
Lim had determined and moved for SEC-supervised liquidation proceedings as the
more prudent course of action for an orderly and equitable settlement of RUBYs
liabilities.
Records likewise revealed that the SEC
chose to keep silent and failed to assist the MANCOM and minority stockholders
in their efforts to demand compliance from the majority stockholders or Yu Kim
Giang (who headed the first MANCOM) with the December 22, 1989 Order directing
them to turn over the cash, financial records and documents of RUBY, including certificates of title over RUBYs real properties,
and render an accounting of all moneys received and payments made by
RUBY. On January 18, 2002, the MANCOM
even filed a Motion[57]
to require Yu Kim Giang to render report/accounting of RUBY from 1983 to the 1st
quarter of 1990, stating that despite a commitment from Mr. Giang, he has
seemingly delayed his compliance, hence frustrating the desire of MANCOM to
submit a comprehensive and complete report for the whole period of 1983 up to
the present. To underscore the importance
of making the said records available for scrutiny of the SEC and MANCOM, Lim
manifested before the SEC that--
Indeed, the
majority is actually unwilling (and not merely unable) to submit such records
because these will show, among others:
(1) The majority to minority ratio in the
corporate ownership is 59.828% :40.172%;
(2) The actual amounts of the bank loans paid off
by Benhar International[,] Inc. and/or Henry Yu would be very low;
(3) The illegal payment of the bank loans and
illegal assignments of the mortgages to Benhar/Henry Yu are contrary to the
Honorable Commissions Order of
(4) The earnings of the corporation from 1983 to
1989 amounted to millions and cannot be accounted for by the majority and the
first Mancom;
(5) The money may have been spent to pay off some
of the loans to the bank but Benhar and Henry Yu fraudulently claim credit
therefor.[58]
It
must be noted that MANCOM had rejected the two rehabilitation plans proposed by
BENHAR and the majority stockholders. In shifting the blame to the MANCOM and
minority stockholders for the delay in the approval of a viable rehabilitation
plan, the SEC apparently overlooked that from the time the SEC approved the Revised
BENHAR/RUBY Plan and dissolved the MANCOM, the majority stockholders has denied
MANCOM access to corporate papers, documents evidencing the amounts actually
paid to creditor banks/assignors, financial statements and titles over RUBYs
real properties.
Although the SEC granted MANCOM and
Lims request for a hearing and direct a representative from BPI to bring all
documents relative to the assignment of RUBYs credit, said hearing did not
materialize after the majority stockholders proposed a compromise agreement
with the minority stockholders. But as
it turned out, this development only caused further delay because the majority
stockholders were unwilling to turn over documents, funds and properties in
their possession, and would neither make a full accounting or disclosure of RUBYs
transactions, especially the actual amounts paid and rates of interest on the
loan assignments. In this state of things, the MANCOM and minority stockholders
resolved that the more reasonable and practical option is to move for a
SEC-supervised liquidation proceedings.
The other ground invoked by Lim and
MANCOM for the propriety of liquidation is the expiration of RUBYs corporate
term. The SEC, however, held that the
filing of the amendment of articles of incorporation by RUBY in 1996 complied
with all the legal requisites and hence the presumption of regularity stands. Records show that the validity of the infusion
of additional capital which resulted in the alleged increase in the
shareholdings of petitioners majority stockholders in October 1991 was
questioned by MANCOM and Lim even before the majority stockholders filed their
motion to dismiss in the year 2000.
A stock corporation is expressly
granted the power to issue or sell stocks.[59]
The power to issue shares of stock in a
corporation is lodged in the board of directors and no stockholders meeting is
required to consider it because additional issuances of shares of stock does
not need approval of the stockholders.[60] What is only required is the board resolution
approving the additional issuance of shares.
The corporation shall also file the necessary application with the SEC
to exempt these from the registration requirements under the Revised
Securities Act (now the Securities Regulation Code).
The new management committee created
pursuant to SEC Order dated
Contrary to the assertion of
petitioners majority stockholders, our decision in G.R. Nos. 124185-87
nullified the deeds of assignment not solely
on the ground of violation of the injunction orders issued by the SEC and
CA. As earlier mentioned, we affirmed
the CAs finding that the re-lending scheme under the Revised BENHAR/RUBY Plan
will not only make rehabilitation more costly for RUBY, but also worsen its
financial condition because of the mortgage of its assets to a new
creditor. To better illumine this point,
we quote from the CA decision in CA-G.R. SP Nos. 32404, 32469 and 32483
comparing the provisions of the rehabilitation proposals submitted by the
majority stockholders (Revised BENHAR/RUBY Plan) and the minority stockholders
(Alternative Plan):
there is no
need for Benhar to act as financier, as Ruby itself can very well secure such
credit accommodation using its assets as collateral. Verily, Benhars pretext at magnanimity is
deception of the highest order considering that: (1) as embodied in the heading
Sources and Uses of Funds in the Revised Benhar/Ruby Plan, the P80-Million
loan/credit facility to be extended by Benhar will be used to pay P60.437-Million
loans of Ruby. Of the P60.437-Million,
P34.068-Million will be paid to Benhar as payment for the amounts it
paid in consideration of the nullified assignments; (2) The Deed of Assignment
of Credit Facility will be executed by Benhar in favor of Ruby only upon
payment of Ruby of such amount already advanced by Benhar, i.e. the P34.068-Million
credit assigned to Benhar by the seven (7) secured creditors.
The Revised
Benhar/Ruby Plan, in fact, gives Benhar undue preference on the matter of
repayment. Under the said plan, the
creditors of Ruby will be paid in accordance with the following schedules:
|
Secured Creditors China Banking Corp. BPI Philippine Orient |
|
To be paid in cash with 12%
interest p.a. |
|
Unsecured
Creditors Allied Leasing Filcor Finance |
|
To be paid
in cash interest-f[r]ee |
|
Benhar For having paid Ruby obligations to 7 creditors |
|
To be paid in cash with interest charge |
|
Trade/Other Creditors |
(p.a. for 3 years) |
Totalling |
(Rollo, CA-G.R.
SP No. 32404, p. 727)
Needless to
state, the foregoing payment schedules
as embodied in the said plan which gives Benhar undue advantage over the other
creditors goes against the very essence of rehabilitation, which requires that
no creditor should be preferred over the other. Indeed, a comparison of the salient features
of the Revised Benhar/Ruby Plan and the Alternative Plan will readily show just
how stacked in favor of Benhar are the provisions of the former plan:
|
Benhar/Ruby Plan |
Alternative Plan |
|
1. Benhar plays a major role. It will be paid |
1. The original creditors are the ones
recognized. The amount payable is lower because interests are not
capitalized. |
|
2. Benhar will not assign the credit facility
of |
2. Direct credit of P80M loan and
will be borrowed from the
bank(s) like Allied, UCPB, Metrobank or Equitable Bank or even China Bank. |
|
3. The main assets
are to be mortgaged to the
creditor- assignor of Benhar and if
the illegal assignments are recognized, then Benhar shall have to be
recognized as mortgagee even when it is a disqualified creditor and/or mortgagee. |
3. Mortgaged to bank(s)
directly. |
|
4. Start up cost |
4. Plant B = Year IV estimated Plant A = 22.40 Year V estimated |
|
5. Rehabilitation only of Plant B. |
5. Rehabilitation of both plants. |
|
6. Recognition of Benhar re-lender/financier. |
6. None |
|
7. Because of the SEC Order he got an MC seat
and and the Pilipinas Shell representative of trade creditors was retained. |
7. Pilipinas Shell representative be retained. |
|
8. Credit facility is being assigned or
re-lent by Benhar. |
8. Credit facility directly to Ruby. |
|
9. Authorized
Benhar to mortgage assets of Ruby itself. Only remaining unencumbered asset
is one (1) real property. Two (2) prime
properties already encumbered to Assignor of Benhar. |
9. None going to
the minority but to actual lenders. |
|
10. Capacity of only
one (1) plant stated at 72% (overrated) |
10. Capacity of two
(2) plants progressive to 75% or 80% with purchase of new machines. |
|
11. Projection
figures based on May, 1990 forex exchange rate. Cost of importation and other local
supplier currently cannot be met. |
11. Minority RP can
be updated at current foreign exchange rate. |
|
12. Market and
economic slow down not taken into consideration. |
12. Taken into
consideration so will upgrade to meet competition. |
|
13. Discriminatory
to creditors Benhar-capitalized with undisclosed rates of interest. |
13. Not
discriminatory. |
|
14. Original Figures
of illegally assigned loans from FEBTC, PCIB, PTC which totaled to |
14. Original figures
will be used original figures plans
12% interest only. |
|
15. Interest is 28%
with Benhar as conduit. |
15. Interest is 25%
payable to the bank. This is still subject to current market rates to be
negotiated by the minority. |
|
16. Call on unissued
shares for |
15. Additional subscription
of |
x
x x x[61]
Prior to the
September 18, 1991 Order approving the Revised BENHAR/RUBY Plan and dissolving
the MANCOM, majority of RUBYs creditors (90%) have already withdrawn their
support to the revised plan and manifested that they were only lately informed
about another plan submitted by the minority stockholders. Hence, these
creditors wrote individual letters to the SEC Hearing Panel expressing their
agreement with and endorsement of the Alternative Plan of the minority
stockholders.[62]
The
Revised BENHAR/RUBY Plan had proposed the calling for subscription of unissued
shares through a Board Resolution from the P11.814 million of the P23.7
million ACS in order to allow the long overdue program of the REHAB Program. RUBY
will offer for subscription 118,140 shares of stocks at par value of P100
each to all stockholders on record, payable within 15 days, or within a
reasonable period from SEC approval of the revised plan.[63] This was implemented by the
The
SEC remained indifferent to the reliefs sought by the minority stockholders,
saying that the issue of the validity of the additional capital infusion was
belatedly raised. Even assuming the
October 2, 1991 board meeting indeed took place, the SEC did nothing to
ascertain whether indeed, as the minority claimed: (1) the minority
stockholders were not given notice as required and reasonable time to exercise
their pre-emptive rights; and (2) the capital infusion was not for the purpose
of rehabilitation but a mere ploy to divest the minority stockholders of their
40.172% shareholding and reduce it to a mere 25.25%.
The
foregoing matters, along with the persistent refusal of the majority
stockholders, led by Yu Kim Giang, to give a full accounting of their
transactions involving RUBYs credits and properties, were extensively argued
by the minority stockholders in their opposition to the motions to
dismiss/vacate suspension order filed by the majority stockholders and BPI, as
follows:
Their
receipts only show supposed payment by the majority of a total of P1,759,150.00
out of the correct amount of P7,068,079.92.00 (sic) (59.828% of P11.814 million required capital infusion under
the MRP and RRP) which should have been the amount paid by them under the RRP which requires full payment. Thus, they
sought to attain a 74.75% equity from a 59.828% original equity by playing more
tricks and stating that, under the general rule, they are supposedly allowed to
pay-up only 25% of their subscription. Unfortunately
for them, in a rehabilitation supervised by the SEC and with an existing
Mancom, the general rule does not apply.
What is stated in the rehabilitation plan must be strictly followed provided
the rehabilitation plan has been finally approved.
It must be
remembered that in
x x x x
Assuming arguendo that the Board of Directors
could act independently and this did not violate any injunction, if the capital
infusion was actually made, the Board of Directors had the duty to report this
to the Mancom because they would then fall under existing assets and would be
part of the evaluation of the proposed RRP, necessary for management and in the
overall plan of rehabilitation. Nothing
of this kind happened and the belated proof cannot correct this situation.
x x x x
It is not
true that there is benevolence on the part of the majority when they maneuvered
the illegal assignments and paid the banks. The
loan obligations remain as accounts payable of Ruby and have even been bloated
to gigantic proportions and yet the SEC does not even ask them to account how
much these obligations are now and the majority should have reported these to
the Mancom, but the majority has not.
These anomalous situations have been made to continue long enough and,
we pray, should be addressed by the Honorable Commission.
x x x x
The SEC
must understand that, being head of the first Mancom, YU KIM GIANG had the same
obligation to render a report to the SEC as the present Mancom now. To single out the present Mancom to do this
when a complete report cannot be made without these starting records is
discriminatory, unfair and violates the rules of accountancy. For example, where is the report on the illegal
assignments and mortgages complete with details? Where did the rentals for the period from
1983 to 1989 go? This amounted to
millions. There are no reports on
these. By not requiring the first Mancom to Report, the SEC is preventing the
complete picture on the liabilities and finances of Ruby from being seen and is
sheltering Ruby and the majority.[64] (Additional emphasis supplied.)
Pre-emptive
right under Sec. 39 of the Corporation Code refers to the right of a
stockholder of a stock corporation to subscribe to all issues or disposition of
shares of any class, in proportion to their respective shareholdings. The right may be restricted or denied under
the articles of incorporation, and subject to certain exceptions and
limitations. The stockholder must be
given a reasonable time within which to exercise their preemptive rights. Upon the expiration of said period, any
stockholder who has not exercised such right will be deemed to have waived it.[65]
The
validity of issuance of additional shares may be questioned if done in breach
of trust by the controlling stockholders.
Thus, even if the pre-emptive right does not exist, either because the
issue comes within the exceptions in Section 39 or because it is denied or
limited in the articles of incorporation, an issue of shares may still be
objectionable if the directors acted in breach of trust and their primary
purpose is to perpetuate or shift control of the corporation, or to freeze
out the minority interest.[66] In this case, the following relevant observations
should have signaled greater circumspection on the part of the SEC -- upon the
third and last remand to it pursuant to our January 20, 1998 decision -- to demand
transparency and accountability from the majority stockholders, in view of the
illegal assignments and objectionable features of the Revised BENHAR/RUBY Plan,
as found by the CA and as affirmed by this Court:
There can be
no gainsaying the well-established rule in corporate practice and procedure
that the will of the majority shall govern in all matters within the limits of
the act of incorporation and lawfully enacted by-laws not proscribed by
law. It is, however, equally true that
other stockholders are afforded the right to intervene especially during
critical periods in the life of a corporation like reorganization, or in this
case, suspension of payments, more so, when
the majority seek to impose their will and through fraudulent means, attempt to
siphon off Rubys valuable assets to the great prejudice of Ruby itself, as
well as the minority stockholders and the unsecured creditors.
Certainly,
the minority stockholders and the unsecured creditors are given some measure of
protection by the law from the abuses and impositions of the majority, more so
in this case, considering the give-away
signs of private respondents perfidy strewn all over the factual landscape. Indeed, equity cannot deprive the minority of
a remedy against the abuses of the majority, and the present action has been
instituted precisely for the purpose of protecting the true and legitimate
interests of Ruby against the Majority Stockholders. On this score, the Supreme Court, has ruled
that:
Generally
speaking, the voice of the majority of the stockholders is the law of the
corporation, but there are exceptions to this rule. There must necessarily be a limit upon the
power of the majority. Without such a
limit the will of the majority will be absolute and irresistible and might
easily degenerate into absolute tyranny.
x x x[67] (Additional emphasis supplied.)
Lamentably,
the SEC refused to heed the plea of the minority stockholders and MANCOM for
the SEC to order RUBY to commence liquidation proceedings, which is allowed
under Sec. 4-9 of the Rules on Corporate Recovery. Under the circumstances, liquidation was the
only hope of the minority stockholders for effecting an orderly and equitable
settlement of RUBYs obligations, and compelling the majority stockholders to
account for all funds, properties and documents in their possession, and make
full disclosure on the nullified credit assignments. Oblivious to these pending incidents so
crucial to the protection of the interest of the majority of creditors and
minority shareholders, the SEC simply stated that in the interim, RUBYs
corporate term was validly extended, as if such extension would provide the solution
to RUBYs myriad problems.
Extension
of corporate term requires the vote of 2/3 of the outstanding capital stock in
a stockholders meeting called for the purpose.[68] The actual percentage of shareholdings in
RUBY as of September 3, 1996 -- when the majority stockholders allegedly
ratified the board resolution approving the extension of RUBYs corporate life
to another 25 years was seriously disputed by the minority stockholders, and we find the evidence of compliance with
the notice and quorum requirements submitted by the majority stockholders
insufficient and doubtful. Consequently,
the SEC had no basis for its ruling denying the motion of the minority
stockholders to declare as without force and effect the extension of RUBYs
corporate existence.
Liquidation,
or the settlement of the affairs of the corporation, consists of adjusting the
debts and claims, that is, of collecting all that is due the corporation, the
settlement and adjustment of claims against it and the payment of its just
debts.[69] It involves the winding up of the affairs of
the corporation, which means the collection of all assets, the payment of all
its creditors, and the distribution of the remaining assets, if any, among the
stockholders thereof in accordance with their contracts, or if there be no
special contract, on the basis of their respective interests.[70]
Section
122 of the Corporation Code, which is applicable to the present case,
provides:
SEC.
122. Corporate
liquidation. -- Every corporation whose charter expires by
its own limitation or is annulled by forfeiture or otherwise, or whose
corporate existence for other purposes is terminated in any other manner, shall
nevertheless be continued as a body corporate for three (3) years after the
time when it would have been so dissolved, for the purpose of prosecuting and
defending suits by or against it and enabling it to settle and close its
affairs, to dispose of and convey its property and to distribute its assets,
but not for the purpose of continuing the business for which it was
established.
At any time
during said three (3) years, said corporation is authorized and empowered to
convey all of its property to trustees for the benefit of stockholders,
members, creditors, and other persons in interest. From and after any such conveyance by the
corporation of its property in trust for the benefit of its stockholders,
members, creditors and others in interest, all interests which the corporation
had in the property terminates, the legal interest vests in the trustees, and
the beneficial interest in the stockholders, members, creditors or other
persons in interest.
Upon winding
up of the corporate affairs, any asset distributable to any creditor or
stockholder or member who is unknown or cannot be found shall be escheated to
the city or municipality where such assets are located.
Except by
decrease of capital stock and as otherwise allowed by this Code, no corporation
shall distribute any of its assets or property except upon lawful dissolution
and after payment of all its debts and liabilities.
Since the corporate life of RUBY as
stated in its articles of incorporation expired, without a valid extension
having been effected, it was deemed dissolved by such expiration without need
of further action on the part of the corporation or the State.[71] With greater reason then should liquidation
ensue considering that the last paragraph of Sec. 4-9 of the Rules of
Procedure on Corporate Recovery mandates the SEC to order the dissolution and liquidation proceedings under Rule
VI. Sec. 6-1, Rule VI likewise
authorizes the SEC on motion or motu
proprio, or upon recommendation of the management committee, to order
dissolution of the debtor corporation and the liquidation of its remaining assets,
appointing a Liquidator for the purpose, if the continuance in business of the
debtor is no longer feasible or profitable or no longer works to the best
interest of the stockholders, parties-litigants, creditors, or the general
public.
It cannot be denied that with the
current divisiveness, distrust and antagonism between the majority and minority
stockholders, the long agony and extreme prejudice caused by numerous
litigations to the creditors, and the bleak prospects for business recovery in
the light of problems with the local government which are implementing more restrictions
and anti-pollution measures that practically banned the operation of RUBYs
glass plant liquidation becomes the only viable course for RUBY to stave off
any further losses and dissipation of its
assets. Liquidation would also
ensure an orderly and equitable settlement of all creditors of RUBY, both secured and unsecured.
The SECs utter disregard of the
rights of the minority in applying the provisions of the Rules of Procedure
on Corporate Recovery is inconsistent with the policy of liberal
construction of the said rules to assist the parties in obtaining a just, expeditious and inexpensive settlement
of cases.[72] Petitioners majority stockholders, however,
assert that the findings and conclusions of the SEC on the matter of the
dismissal of RUBYs petition are binding and conclusive upon the CA and this
Court. They contend that reviewing
courts are not supposed to substitute their judgment for those made by administrative
bodies specifically clothed with authority to pass upon matters over which they
have acquired expertise.[73] Given our foregoing findings clearly showing
that the SEC acted arbitrarily and committed patent errors and grave abuse of
discretion, this case falls under the exception to the general rule.
As
we held in Ruby Industrial Corporation v.
Court of Appeals:
The settled
doctrine is that factual findings of an administrative agency are accorded
respect and, at times, finality for they have acquired the expertise inasmuch
as their jurisdiction is confined to specific matters. Nonetheless, these doctrines do not apply
when the board or official has gone beyond his statutory authority, exercised
unconstitutional powers or clearly acted arbitrarily and without regard to his
duty or with grave abuse of discretion.
In Leongson vs. Court of Appeals, we
held: once the actuation of the administrative official or administrative
board or agency is tainted by a failure to abide by the command of the law,
then it is incumbent on the courts of justice to set matters right, with this
Tribunal having the last say on the matter.[74]
Petitioners majority stockholders
further insist that the minority stockholders were mistaken when they contended
that the rehabilitation of RUBY is dependent on the unwinding by the SEC of the
illegal assignments and mortgages. They
assert that aside from the fact that the SEC had nothing to unwind because the
alleged illegal assignments and mortgages were already declared null and void,
the said assignments and mortgages will not affect the rehabilitation of Ruby;
the same affecting only the issue of how,
as to who will be its creditors.
Such contention is untenable and
contrary to our previous ruling in G.R. Nos. 124185-87. With the nullification of the deeds of
assignments of credit executed by some of Rubys secured creditors in favor of
BENHAR, it logically follows that the assignors or the original bank creditors
remain as the creditors on record of RUBY.
We have noted that BENHAR, which is controlled by the family of Henry Yu
who is also a director and stockholder of RUBY, was not listed as one of RUBYs
creditors at the time RUBY filed the petition for suspension of payment. Petitioners majority stockholders
insinuation that RUBYs credits may have been assigned to third parties, if not
referring to BENHAR or its conduits, implies two things: either the assignments
declared void by this Courts January 20, 1998 decision continues to be
recognized by the majority stockholders, in violation of the said decision, or other third parties in connivance with BENHAR
and/or the controlling stockholders had subsequently entered the picture, without
approval of the SEC and while the SEC
December 20, 1983 Order enjoining the disposition of RUBYs properties was in
force.
The majority stockholders eagerness
to have the suspension order lifted or vacated by the SEC without any order for
its liquidation evinces a total disregard of the mandate of Sec. 4-9 of the Rules
of Procedure on Corporate Recovery, and their obvious lack of any intent to
render an accounting of all funds, properties and details of the unlawful
assignment transactions to the prejudice of RUBY, minority stockholders and the
majority of RUBYs creditors. The majority stockholders and BENHARs
conduits must not be allowed to evade the duty to make such full disclosure and
account any money due to RUBY to enable the latter to effect a fair, orderly
and equitable settlement of all its obligations, as well as distribution of any
remaining assets after paying all its debtors.
In fine, no error was committed by the
CA when it set aside the September 18, 2002 Order of the SEC and declared the
nullity of the acts of majority stockholders in implementing capital infusion
through issuance of additional shares in October 1991, the board resolution
approving the extension of RUBYs corporate term for another 25 years, and any
illegal assignment of credit executed by RUBYs creditors in favor of third
parties and/or conduits of the controlling stockholders. The CA likewise correctly ordered the
delivery of all documents relative to the said assignment of credits to the
MANCOM or the Liquidator, the unwinding of these void deeds of assignment, and
their full accounting by the majority stockholders.
The petitioners majority stockholders
and China Bank cannot be permitted to raise any issue again regarding the
validity of any assignment of credit
made during the effectivity of the suspension order and before the finality of the September 18, 2002 Order lifting the
same. While China Bank is not precluded
from questioning the validity of the
The
unwinding process of all such illegal assignment of RUBYs credits is critical
and necessary, in keeping with good faith and as a matter of fairness and
justice to all parties affected, particularly the unsecured creditors who
stands to suffer most if left with nothing of the assets of RUBY, and the
minority stockholders who waged legal battles to defend the interest of RUBY and
protect the rights of the minority from the abuses of the controlling
stockholders. As correctly stated by the
CA:
Liquidation
is imperative because the unsecured creditor must negotiate the amount of the
imputable interest rate on its long unpaid credit, the decision on which assets
are to be sold to liquidate the illegally assigned credits must be made, the
other secured credits and the trade credits must be determined, and most
importantly, the restoration of the 40.172% minority percentage of ownership
must be done.[76]
However, we do not agree that it is
the SEC which has the authority to supervise RUBYs liquidation.
In the case of Union Bank of the Philippines v. Concepcion,[77]
the Court is presented with the issue of whether the SEC had jurisdiction to
proceed with insolvency proceedings after it was shown that the debtor
corporation can no longer be rehabilitated. We held that although jurisdiction
over a petition to declare a corporation in a state of insolvency strictly lies
with regular courts, the SEC possessed ample power under P.D. No. 902-A, as
amended, to declare a corporation insolvent as an incident of and in
continuation of its already acquired jurisdiction over the petition to be
declared in a state of suspension of payments in the two instances provided in
Sec. 5 (d)[78]
thereof.
Subsequently, in Consuelo Metal Corporation v. Planters Development Bank[79]
the Court was again confronted with the same issue. The original petition filed by the debtor
corporation was for suspension of payment, rehabilitation and appointment of a
rehabilitation receiver or management committee. Finding the petition
sufficient in form and substance, the SEC issued an order suspending
immediately all actions for claims against the petitioner pending before any
court, tribunal or body until further orders from the court. It also created a
management committee to undertake petitioners rehabilitation. Four years
later, upon the management committees recommendation, the SEC issued an
omnibus order directing the dissolution and liquidation of the petitioner, and
that the proceedings on and implementation of the order of liquidation be
commenced at the Regional Trial Court to which the case was transferred. However, the trial court refused to act on
the motion filed by the petitioner who requested for the issuance of a TRO
against the extrajudicial foreclosure initiated by one of its creditors. The trial court ruled that since the SEC had
already terminated and decided on the merits the petition for suspension of
payment, the trial court no longer had
legal basis to act on petitioners motion.
It likewise denied the motion for reconsideration stating that petition
for suspension of payment could not be converted into a petition for
dissolution and liquidation because they covered different subject matters and
were governed by different rules. Petitioners remedy thus was to file a new
petition for dissolution and liquidation either with the SEC or the trial
court.
When the case was elevated to the CA,
the petition was dismissed affirming that under Sec. 121 of the Corporation
Code, the SEC had jurisdiction to hear the petition for dissolution and
liquidation. On motion for
reconsideration, the CA remanded the case to the SEC for proceedings under Sec.
121 of the Corporation Code. The
CA denied the motion for reconsideration filed by the respondent creditor, who
then filed a petition for review with this Court.
We ruled that the SEC observed the
correct procedure under the present law, in cases where it merely retained
jurisdiction over pending cases for suspension of payments/rehabilitation,
thus:
Republic Act
No. 8799 (RA 8799) transferred to the appropriate regional trial courts the
SECs jurisdiction defined under Section 5(d) of Presidential Decree No. 902-A.
Section 5.2 of RA 8799 provides:
The Commissions jurisdiction over
all cases enumerated under Sec. 5 of Presidential Decree No. 902-A is hereby
transferred to the Courts of general jurisdiction or the appropriate Regional
Trial Court: Provided, That the Supreme Court in the exercise of its
authority may designate the Regional
Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over
pending cases involving intra-corporate disputes submitted for final resolution
which should be resolved within one (1) year from the enactment of this
Code. The Commission shall retain
jurisdiction over pending suspension of payments/rehabilitation cases filed as
of
The SEC assumed
jurisdiction over CMCs petition for suspension of payment and issued a
suspension order on 2 April 1996 after it found CMCs petition to be sufficient
in form and substance. While CMCs petition was still pending with the SEC as
of
However, the
SECs jurisdiction does not extend to the liquidation of a corporation. While the SEC has jurisdiction to order the
dissolution of a corporation, jurisdiction over the liquidation of the
corporation now pertains to the appropriate regional trial courts. This is
the reason why the SEC, in its
In
view of the foregoing, the SEC should now be directed to transfer this case to
the proper RTC which shall supervise the liquidation proceedings under Sec. 122
of the Corporation Code. Under
Sec. 6 (d) of P.D. 902-A, the SEC is
empowered, on the basis of the findings and recommendations of the management
committee or rehabilitation receiver, or on its own findings, to determine that
the continuance in business of a debtor corporation under suspension of payment
or rehabilitation would not be feasible or profitable nor work to the best
interest of the stockholders, parties-litigants, creditors, or the general
public, order the dissolution of such corporation and its remaining assets
liquidated accordingly. As mentioned
earlier, the procedure is governed by Rule VI of the SEC Rules of Procedure
on Corporate Recovery.
However,
R.A. No. 10142[81] otherwise known
as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, now
provides for court proceedings in the rehabilitation or liquidation of debtors,
both juridical and natural persons, in a manner that will ensure or maintain
certainty and predictability in commercial affairs, preserve and maximize the
value of the assets of these debtors, recognize creditor rights and respect
priority of claims, and ensure equitable treatment of creditors who are
similarly situated. Considering that
this case was still pending when the new law took effect last year, the RTC to
which this case will be transferred shall be guided by Sec. 146 of said law,
which states:
SEC. 146. Application to Pending Insolvency, Suspension of Payments
and Rehabilitation Cases. This Act shall govern all petitions filed after
it has taken effect. All further proceedings in insolvency, suspension of
payments and rehabilitation cases then pending, except to the extent that in
opinion of the court their application would not be feasible or would work
injustice, in which event the procedures set forth in prior laws and
regulations shall apply.
WHEREFORE, the petitions for review on certiorari are
DENIED.
The Decision dated May 26, 2004 and Resolution dated November 4,
2004 of the Court of Appeals in CA-G.R. SP No. 73195 are hereby AFFIRMED with MODIFICATION in that the Securities and Exchange Commission is
hereby ordered to TRANSFER SEC Case
No. 2556 to the appropriate Regional Trial Court which is hereby DIRECTED
to supervise the liquidation of Ruby Industrial Corporation under the
provisions of R.A. No. 10142.
With costs against the petitioners.
SO ORDERED.
|
|
MARTIN S. VILLARAMA, JR. Associate Justice |
WE
CONCUR: CONCHITA CARPIO MORALES Associate Justice Chairperson |
|
|
ARTURO D. BRION Associate Justice |
LUCAS P. BERSAMIN Associate Justice |
|
ROBERTO A. ABAD Associate Justice |
|
A T T E S T A T I O N
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.
|
|
CONCHITA CARPIO
MORALES Associate Justice Chairperson, Third
Division |
C E R T I F I C A T I O N
Pursuant to Section
13, Article VIII of the 1987 Constitution and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
|
|
RENATO
C. CORONA Chief Justice |
|
*
Designated additional member per
Special Order No. 997 dated
[1] G.R. Nos. 124185-87,
[2] CA rollo, pp. 95-111. Decision dated April 27, 1989, penned by Associate Justice Cecilio L. Pe and concurred in by Associate Justices Vicente V. Mendoza (now a retired Member of this Court) and Pedro A. Ramirez.
[3]
[4]
[5]
[6]
[7] Supra note 1.
[8]
[9]
[10] SEC records (Vol. 10), p. 3488.
[11]
[12]
[13] CA rollo, p. 345.
[14]
[15]
[16] Rollo (G.R. No. 165929), pp. 1340-1345.
[17] CA rollo, pp. 127-136.
[18] Rollo (G.R. No. 165929), pp. 1342-1343.
[19]
[20] SEC records (Vol. 11), pp. 3586-3587.
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
[31]
[32]
[33]
[34]
[35] Supra note 33.
[36]
[37]
[38]
[39]
[40]
[41] SEC records (Vol. 12), pp. 4308-4318.
[42] Rollo (G.R. No. 165929), pp. 83-89.
[43]
[44]
[45]
[46]
[47] G.R.
Nos. 80908 & 80909,
[48] Rollo (G.R.
No. 165887), p. 11.
[49] Supra
note 1, at 462-463.
[50] Rollo (G.R. No. 165887), pp. 719-721.
[51] Chua v. Court of Appeals, G.R. No.
150793,
[52] Western Institute of Technology, Inc. v.
Salas, G.R. No. 113032,
[53] R.N. Symaco Trading Corporation v. Santos,
G.R. No. 142474, August 18, 2005, 467
SCRA 312, 329.
[54] Jose
Campos, Jr. & Maria Clara L. Campos, The
Corporation Code: Comments, Notes and Selected Cases, Vol. I (1990
ed.), p. 820, citing Gamboa v.
Victoriano, No. L-40620,
[55] Approved
on
[56] Rollo (G.R. No. 165887), p. 61.
[57] SEC
records (Vol. 12), pp. 4079-4080.
[58]
[59] Corporation Code, Sec. 36, par. 6.
[60] Dee v.
Securities and Exchange Commission, G.R. Nos. 60502 and 63922,
238, 252.
[61] CA rollo, pp. 263-266.
[62] SEC records (Vol. 9), pp. 2955-2965, 2842-2850, 2976-2985, 3058-3065.
[63] SEC records (Vol. 7), p. 2156.
[64] SEC
records (Vol. 13), pp. 4403, 4408 and 4443.
[65] Jose
Campos, Jr. & Maria Clara L. Campos, The
Corporation Code: Comments, Notes and Selected Cases, Vol. II (1990
ed.), p. 58.
[66]
[67] CA
rollo, p. 266.
[68] Corporation Code, Sec. 37.
[69] China Banking Corporation and Kahn v. M.
Michelin & Cie, 58 Phil. 261, 268 (1933).
[70] Supra
note 65, at 415.
[71] See
Villanueva, Philippine Corporate Law
(2010 ed.), p. 841, citing Sec. 11, Corporation Code; Philippine National Bank v. CFI of Rizal,
Pasig, Br. XXI, G.R. No. 63201, May 27, 1992, 209 SCRA 294.
[72] Sec.
1-2, Rules of Procedure on Corporate Recovery.
[73] Rollo (G.R. No. 165887), p. 744.
[74] Supra
note 1, at 455, citing Alejandro v. Court of Appeals, G.R. Nos.
84572-73, November 27, 1990, 191 SCRA 700, 709-710; Pajo,
etc., et al. v. Ago and Ortiz, etc., 108 Phil. 905, 915-916 (1960) and No.
L-32255,
[75] Union Bank of the Philippines v. ASB Development Corporation, G.R. No. 172895, July 30, 2008, 560 SCRA 578, 600, citing People v. Pinuila, et al., 103 Phil. 992, 999 (1958).
[76] Rollo (G.R. No. 165887), p. 62.
[77] G.R. No. 160727,
[78] SEC.
x x x x
d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where [it] possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where [it] has no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree.
[79] G.R. No. 152580,
[80]
[81] Lapsed into law on