Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
|
LEONARDO S. UMALE, [deceased]
represented by CLARISSA VICTORIA, JOHN LEO, GEORGE LEONARD, KRISTINE,
MARGUERITA ISABEL, AND MICHELLE ANGELIQUE, ALL SURNAMED UMALE, Petitioners, |
|
G.R. No. 181126 Present: VELASCO, JR., Acting Chairperson, LEONARDO-DE CASTRO, BERSAMIN,⃰ |
|
|
|
DEL CASTILLO, and |
|
- versus - |
|
PEREZ, JJ. |
|
ASB REALTY
CORPORATION, Respondent. |
|
Promulgated: June 15, 2011 |
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D E C I S I O N
DEL CASTILLO, J.:
Being placed under corporate
rehabilitation and having a receiver appointed to carry out the rehabilitation
plan do not ipso facto deprive a
corporation and its corporate officers of the power to recover its unlawfully
detained property.
Petitioners filed this Petition for
Review on Certiorari[1]
assailing the October 15, 2007 Decision[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 91096, as well as its January 2, 2008
Resolution.[3] The dispositive portion of the assailed
Decision reads:
WHEREFORE, the Decision dated March 28, 2005 of the trial
court is affirmed in toto.
SO
ORDERED.[4]
Factual Antecedents
This case involves a parcel of land identified
as Lot 7, Block 5, Amethyst Street, Ortigas Center, Pasig City which was originally
owned by Amethyst Pearl Corporation (Amethyst Pearl), a company that is, in
turn, wholly-owned by respondent ASB Realty Corporation (ASB Realty).
In 1996, Amethyst Pearl executed a
Deed of Assignment in Liquidation of the subject premises in favor of ASB Realty
in consideration of the full redemption of Amethyst Pearls outstanding capital
stock from ASB Realty.[5] Thus, ASB Realty became the owner of the
subject premises and obtained in its name Transfer Certificate of Title No.
PT-105797,[6] which
was registered in 1997 with the Registry of Deeds of Pasig City.
Sometime in 2003, ASB Realty
commenced an action in the Metropolitan Trial Court (MTC) of Pasig City for
unlawful detainer[7]
of the subject premises against petitioner Leonardo S. Umale (Umale). ASB Realty alleged that it entered into a
lease contract[8]
with Umale for the period June 1, 1999-May 31, 2000. Their agreement was for Umale to conduct a
pay-parking business on the property and pay a monthly rent of P60,720.00
to ASB Realty.
Upon the contracts expiration on
May 31, 2000, Umale continued occupying the premises and paying rentals albeit
at an increased monthly rent of P100,000.00. The last rental payment made by Umale to ASB
Realty was for the June 2001 to May 2002 period, as evidenced by the Official
Receipt No. 56511[9] dated
November 19, 2001.
On June 23, 2003, ASB Realty served
on Umale a Notice of Termination of Lease and Demand to Vacate and Pay.[10] ASB Realty stated that it was terminating the
lease effective midnight of June 30, 2003; that Umale should vacate the
premises, and pay to ASB Realty the rental arrears amounting to P1.3
million by July 15, 2003. Umale failed
to comply with ASB Realtys demands and continued in possession of the subject
premises, even constructing commercial establishments thereon.
Umale admitted occupying the
property since 1999 by virtue of a verbal lease contract but vehemently denied
that ASB Realty was his lessor. He was
adamant that his lessor was the original owner, Amethyst Pearl. Since there was no contract between himself
and ASB Realty, the latter had no cause of action to file the unlawful detainer
complaint against him.
In asserting his right to remain on
the property based on the oral lease contract with Amethyst Pearl, Umale
interposed that the lease period agreed upon was for a long period of time.[11] He then allegedly paid P1.2 million in
1999 as one year advance rentals to Amethyst Pearl.[12]
Umale further claimed that when his oral lease
contract with Amethyst Pearl ended in May 2000, they both agreed on an oral
contract to sell. They agreed that Umale did not have to pay rentals until the
sale over the subject property had been perfected between them.[13] Despite such agreement with Amethyst Pearl
regarding the waiver of rent payments, Umale maintained that he continued
paying the annual rent of P1.2 million.
He was thus surprised when he received the Notice of Termination of
Lease from ASB Realty.[14]
Umale also challenged ASB Realtys
personality to recover the subject premises considering that ASB Realty had
been placed under receivership by the Securities and Exchange Commission (SEC)
and a rehabilitation receiver had been duly appointed. Under Section 14(s), Rule 4 of the Administrative
Memorandum No. 00-8-10SC, otherwise known as the Interim Rules of Procedure on
Corporate Rehabilitation (Interim Rules), it is the rehabilitation receiver
that has the power to take possession, control and custody of the debtors
assets. Since ASB Realty claims that it
owns the subject premises, it is its duly-appointed receiver that should sue to
recover possession of the same.[15]
ASB Realty replied that it was
impossible for Umale to have entered into a Contract of Lease with Amethyst
Pearl in 1999 because Amethyst Pearl had been liquidated in 1996. ASB Realty insisted that, as evidenced by the
written lease contract, Umale contracted with ASB Realty, not with Amethyst
Pearl. As further proof thereof, ASB
Realty cited the official receipt evidencing the rent payments made by Umale to
ASB Realty.
Ruling
of the Metropolitan Trial Court
In its August 20, 2004 Decision,[16] the MTC
dismissed ASB Realtys complaint against Umale without prejudice. It held that ASB Realty had no cause to seek
Umales ouster from the subject property because it was not Umales lessor. The trial court noted an inconsistency in the
written lease contract that was presented by ASB Realty as basis for its
complaint. Its whereas clauses cited ASB
Realty, with Eden C. Lin as its representative, as Umales lessor; but its
signatory page contained Eden C. Lins name under the heading Amethyst
Pearl. The MTC then concluded from such
inconsistency that Amethyst Pearl was the real lessor, who can seek Umales
ejectment from the subject property.[17]
Likewise, the MTC agreed with Umale
that only the rehabilitation receiver could file suit to recover ASB Realtys
property.[18] Having been placed under receivership, ASB
Realty had no more personality to file the complaint for unlawful
detainer.
Ruling of the
Regional Trial Court
ASB
Realty appealed the adverse MTC Decision to the Regional Trial Court (RTC),[19] which
then reversed[20]
the MTC ruling.
The RTC held that the MTC erred in
dismissing ASB Realtys complaint for lack of cause of action. It found sufficient evidence to support the
conclusion that it was indeed ASB Realty that entered into a lease contract
with Umale, hence, the proper party who can assert the corresponding right to
seek Umales ouster from the leased premises for violations of the lease terms. In addition to the written lease contract,
the official receipt evidencing Umales rental payments for the period June
2001 to May 2002 to ASB Realty adequately established that Umale was aware that
his lessor, the one entitled to receive his rent payments, was ASB Realty, not
Amethyst Pearl.
ASB Realtys positive assertions,
supported as they are by credible evidence, are more compelling than Umales
bare negative assertions. The RTC found
Umales version of the facts incredible. It was implausible that a businessman
such as Umale would enter into several transactions with his alleged lessor a
lease contract, payment of lease rentals, acceptance of an offer to sell from
his alleged lessor, and an agreement to waive rentals sans a sliver of evidence.
With the lease contract between
Umale and ASB Realty duly established and Umales failure to pay the monthly
rentals since June 2002 despite due demands from ASB Realty, the latter had the
right to terminate the lease contract and seek his eviction from the leased
premises. Thus, when the contract
expired on June 30, 2003 (as stated in the Notice of Termination of Lease),
Umale lost his right to remain on the premises and his continued refusal to
vacate the same constituted sufficient cause of action for his ejectment.[21]
With respect to ASB Realtys
personality to file the unlawful detainer suit, the RTC ruled that ASB Realty
retained all its corporate powers, including the power to sue, despite the
appointment of a rehabilitation receiver.
Citing the Interim Rules, the RTC noted that the rehabilitation receiver
was not granted therein the power to file complaints on behalf of the
corporation.[22]
Moreover, the retention of its
corporate powers by the corporation under rehabilitation will advance the objective
of corporate rehabilitation, which is to conserve and administer the assets of
the corporation in the hope that it may eventually be able to go from financial
distress to solvency. The suit filed by
ASB Realty to recover its property and back rentals from Umale could only
benefit ASB Realty.[23]
The dispositive portion of the RTC
Decision reads as follows:
WHEREFORE,
premises considered, the appealed decision is hereby reversed and set
aside. Accordingly, judgment is hereby
rendered in favor of the plaintiff-appellant ordering defendant-appellee and
all persons claiming rights under him:
1) To immediately vacate the subject leased
premises located at Lot 7, Block 5, Amethyst St., Pearl Drive, Ortigas Center,
Pasig City and deliver possession thereof to the plaintiff-appellant;
2)
To pay plaintiff-appellant the sum of P1,300,000.00 representing rentals
in arrears from June 2002 to June 2003;
3) To pay plaintiff-appellant the amount of P100,000.00
a month starting from July 2003 and every month thereafter until they finally
vacate the subject premises as reasonable compensation for the continued use
and occupancy of the same;
4) To pay plaintiff-appellant the sum of P200,000.00
as and by way of attorneys fees; and the costs of suit.
SO
ORDERED.[24]
Umale
filed a Motion for Reconsideration[25] while
ASB Realty moved for the issuance of a writ of execution pursuant to Section 21
of the 1991 Revised Rules on Summary Procedure.[26]
In its July 26, 2005 Order, the RTC
denied reconsideration of its Decision and granted ASB Realtys Motion for
Issuance of a Writ of Execution.[27]
Umale
then filed his appeal[28] with
the CA insisting that the parties did not enter into a lease contract.[29]
Assuming that there was a lease, it was at most an implied lease. Hence its period depended on the rent
payments. Since Umale paid rent
annually, ASB Realty had to respect his lease for the entire year. It cannot terminate the lease at the end of
the month, as it did in its Notice of Termination of Lease.[30] Lastly, Umale insisted that it was the
rehabilitation receiver, not ASB Realty, that was the real party-in-interest.[31]
Pending the resolution
thereof, Umale died and
was substituted by his
widow
and legal heirs, per CA Resolution dated August 14, 2006.[32]
Ruling of the
Court of Appeals
The CA affirmed the RTC Decision in toto.[33]
According to the appellate court, ASB
Realty fully discharged its burden to prove the existence of a lease contract
between ASB Realty and Umale,[34] as well
as the grounds for eviction.[35] The veracity of the terms of the lease
contract presented by ASB Realty was further bolstered, instead of demolished,
by Umales admission that he paid monthly rents in accordance therewith.[36]
The
CA found no merit in Umales claim that in light of Article 1687 of the Civil
Code the lease should be extended until the end of the year. The said provision
stated that in cases where the lease period was not fixed by the parties, the lease period depended on the payment periods. In the case at bar, the rent payments were
made on a monthly basis, not annually; thus, Umales failure to pay the monthly
rent gave ASB Realty the corresponding right to terminate the lease at the end
of the month.[37]
The CA then upheld ASB Realtys, as
well as its corporate officers, personality to recover an unlawfully withheld
corporate property. As expressly stated
in Section 14 of Rule 4 of the Interim Rules, the rehabilitation receiver does
not take over the functions of the corporate officers.[38]
Petitioners filed a Motion for
Reconsideration,[39]
which was denied in
the
assailed
January 2, 2008 Resolution.[40]
Issues
The petitioners raise the following
issues for resolution:[41]
1. Can a corporate officer of ASB Realty (duly
authorized by the Board of Directors) file suit to recover an unlawfully
detained corporate property despite the fact that the corporation had already
been placed under rehabilitation?
2. Whether a contract of lease exists between
ASB Realty and Umale; and
3. Whether Umale is entitled to avail of the
lease periods provided in Article 1687 of the Civil Code.
Our Ruling
Petitioners ask for the dismissal of
the complaint for unlawful detainer on the ground that it was not brought by
the real party-in-interest.[42] Petitioners maintain that the appointment of
a rehabilitation receiver for ASB Realty deprived its corporate officers of the
power to recover corporate property and transferred such power to the
rehabilitation receiver. Section 6, Rule
59 of the Rules of Court states that a receiver has the power to bring actions
in his own name and to collect debts due to the corporation. Under Presidential Decree (PD) No. 902-A and
the Interim Rules, the rehabilitation receiver has the power to take custody
and control of the assets of the corporation.
Since the receiver for ASB Realty did not file the complaint for
unlawful detainer, the trial court did not acquire jurisdiction over the
subject property.[43]
Petitioners cite Villanueva
v. Court of Appeals,[44] Yam v. Court of
Appeals,[45] and Abacus Real Estate Development Center, Inc.
v. The Manila Banking Corporation,[46] as
authorities for the rule that the appointment of a receiver suspends the
authority of the corporation and its officers over its property and effects.[47]
ASB Realty counters that there is no
provision in PD 902-A, the Interim Rules, or in Rule 59 of the Rules of Court
that divests corporate officers of their power to sue upon the appointment of a
rehabilitation receiver.[48] In fact, Section 14 , Rule 4 of the Interim
Rules expressly limits the receivers power by providing that the
rehabilitation receiver does not take over the management and control of the
corporation but shall closely oversee and monitor the operations of the debtor.[49] Further, the SEC Rules of Procedure on
Corporate Recovery (SEC Rules), the rules applicable to the instant case, do
not include among the receivers powers the exclusive right to file suits for
the corporation.[50]
The Court resolves the issue in
favor of ASB Realty and its officers.
There is no denying that ASB Realty,
as the owner of the leased premises, is the real party-in-interest in the
unlawful detainer suit.[51] Real party-in-interest is defined as the
party who stands to be benefited or injured by the judgment in the suit, or the
party entitled to the avails of the suit.[52]
What petitioners argue is that the
corporate officer of ASB Realty is incapacitated to file this suit to recover a
corporate property because ASB Realty has a duly-appointed rehabilitation
receiver. Allegedly, this rehabilitation
receiver is the only one that can file the instant suit.
Corporations, such as ASB Realty,
are juridical entities that exist by operation of law.[53] As a creature of law, the powers and
attributes of a corporation are those set out, expressly or impliedly, in the
law. Among the general powers granted by
law to a corporation is the power to sue in its own name.[54] This power is granted to a duly-organized
corporation, unless specifically
revoked by another law. The question
becomes: Do the laws on corporate
rehabilitation particularly PD 902-A, as amended,[55] and its
corresponding rules of procedure forfeit the power to sue from the corporate
officers and Board of Directors?
Corporate rehabilitation is defined
as the restoration of the debtor to a position of successful operation and
solvency, if it is shown that its continuance of operation is economically
feasible and its creditors can recover by way of the present value of payments
projected in the plan more if the corporation continues as a going concern than
if it is immediately liquidated.[56] It was first introduced in the Philippine
legal system through PD 902-A, as amended.[57] The
intention of the law is to effect a feasible and viable rehabilitation by preserving a floundering business as a going concern, because the assets of a business are often more valuable when so maintained than they would be
when liquidated.[58] This concept of preserving the corporations
business as a going concern while it is undergoing rehabilitation is called debtor-in-possession
or debtor-in-place. This means that the debtor corporation (the corporation
undergoing rehabilitation), through its Board of Directors and corporate
officers, remains in control of its business and properties, subject only to the
monitoring of the appointed rehabilitation receiver.[59] The concept of debtor-in-possession, is
carried out more particularly in the SEC Rules, the rule that is relevant to
the instant case.[60] It states therein that the interim rehabilitation
receiver of the debtor corporation does not take over the control and
management of the debtor corporation.[61] Likewise, the rehabilitation receiver that
will replace the interim receiver is tasked only to monitor the successful
implementation of the rehabilitation plan.[62] There is nothing in the concept of corporate
rehabilitation that would ipso facto deprive[63] the
Board of Directors and corporate officers of a debtor corporation, such as ASB
Realty, of control such that it can no longer enforce its right to recover its
property from an errant lessee.
To
be sure, corporate rehabilitation imposes several restrictions on the debtor
corporation. The rules enumerate the prohibited corporate actions and
transactions[64]
(most of which involve some kind of disposition or encumbrance of the
corporations assets) during the pendency of the rehabilitation proceedings but
none of which touch on the debtor corporations right to sue. The implication therefore is that our concept
of rehabilitation does not restrict this particular power, save for the caveat
that all its actions are monitored closely by the receiver, who can seek an
annulment of any prohibited or anomalous transaction or agreement entered into
by the officers of the debtor corporation.
Petitioners
insist that the rehabilitation receiver has the power to bring and defend
actions in his own name as this power is provided in Section 6 of Rule 59 of
the Rules of Court.
Indeed, PD 902-A, as amended,
provides that the receiver shall have the powers enumerated under Rule 59 of
the Rules of Court. But Rule 59 is a
rule of general application. It applies
to different kinds of receivers rehabilitation receivers, receivers of
entities under management, ordinary receivers, receivers in liquidation and
for different kinds of situations. While the SEC has the discretion[65] to authorize the rehabilitation receiver, as
the case may warrant, to exercise the powers in Rule 59, the SECs exercise of
such discretion cannot simply be assumed.
There is no allegation whatsoever in this case that the SEC gave ASB
Realtys rehabilitation receiver the exclusive right to sue.
Petitioners cite Villanueva,[66] Yam,[67] and Abacus
Real Estate[68] as authorities for their theory that
the corporate officers of a corporation under rehabilitation is incapacitated
to act. In Villanueva,[69] the
Court nullified the sale contract
entered into by the Philippine Veterans Bank on the ground that the banks
insolvency restricted its capacity to act. Yam,[70] on the
other hand, nullified the compromise
agreement that Manphil Investment Corporation entered into while it was under
receivership by the Central Bank. In Abacus Real Estate,[71] it was held that Manila Banks president had no authority to execute an
option to purchase contract while the bank was under liquidation.
These jurisprudence are inapplicable
to the case at bar because they involve
banking
and financial institutions that are governed by different laws.[72] In the cited cases, the applicable banking
law was Section 29[73] of the
Central Bank Act.[74] In stark contrast to rehabilitation where the
corporation retains control and management of its affairs, Section 29 of the
Central Bank Act, as amended, expressly forbids the bank or the quasi-bank from
doing business in the Philippines.
Moreover, the nullified transactions
in the cited cases involve dispositions
of assets and claims, which are prohibited transactions even for corporate
rehabilitation[75]
because these may be prejudicial to creditors and contrary to the rehabilitation
plan. The instant case, however,
involves the recovery of assets and collection of receivables, for which there
is no prohibition in PD 902-A.
While the Court rules that ASB
Realty and its corporate officers retain their power to sue to recover its
property and the back rentals from Umale, the necessity of keeping the receiver
apprised of the proceedings and its results is not lost upon this Court. Tasked to closely monitor the assets of ASB
Realty, the rehabilitation receiver has to be notified of the developments in
the case, so that these assets would be managed in accordance with the approved
rehabilitation plan.
Coming to the
second issue, petitioners maintain that ASB Realty has no
cause
of action against them because it is not their lessor. They insist that Umale entered into a verbal
lease agreement with Amethyst Pearl only.
As proof of this verbal agreement, petitioners cite their possession of
the premises, and construction of buildings thereon, sans protest from Amethyst Pearl or ASB Realty.[76]
Petitioners concede that they may
have raised questions of fact but insist nevertheless on their review as the
appellate courts ruling is allegedly grounded entirely on speculations,
surmises, and conjectures and its conclusions regarding the termination of the
lease contract are manifestly absurd, mistaken, and impossible.[77]
Petitioners arguments have no
merit. Ineluctably, the errors they
raised involve factual findings,[78] the
review of which is not within the purview of the Courts functions under Rule
45, particularly when there is adequate evidentiary support on record.
While petitioners assail the
authenticity of the written lease contract by pointing out the inconsistency in
the name of the lessor in two separate pages, they fail to account for Umales
actions which are consistent with the terms of the contract the payment of
lease rentals to ASB Realty (instead of his alleged lessor Amethyst Pearl) for
a 12-month period. These matters cannot
simply be brushed off as sheer happenstance especially when weighed against
Umales incredible version of the facts that he entered into a verbal lease
contract with Amethyst Pearl; that the term of the lease is for a very long
period of time; that Amethyst Pearl offered to sell the leased premises and
Umale had accepted the offer, with both parties not demanding any written
documentation of the transaction and without any mention of the purchase price;
and that finally, Amethyst Pearl agreed that Umale need not pay rentals until
the perfection of the sale. The Court is
of the same mind as the appellate court that it is simply inconceivable that a
businessman, such as petitioners predecessor-in-interest, would enter into commercial
transactions with and pay substantial rentals to a corporation nary a single
documentation.
Petitioners then try to turn the
table on ASB Realty with their third argument.
They say that under Article 1687 of the New Civil Code, the period for
rent payments determines the lease period. Judging by the official receipt
presented by ASB Realty, which covers the 12-month period from June 2001 to May
2002, the lease period should be annual because of the annual rent payments.[79] Petitioners then conclude that ASB Realty
violated Article 1687 of the New Civil Code when it terminated the lease on
June 30, 2003, at the beginning of the new period. They then implore the Court to extend the
lease to the end of the annual period, meaning until May 2004, in accordance
with the annual rent payments.[80]
In arguing for an extension of lease
under Article 1687, petitioners lost sight of the restriction provided in
Article 1675 of the Civil Code. It
states that a lessee that commits any of the grounds for ejectment cited in
Article 1673, including non-payment of lease rentals and devoting the leased
premises to uses other than those stipulated, cannot avail of the periods
established in Article 1687.[81]
Moreover, the extension in Article
1687 is granted only as a matter of equity.
The law simply recognizes that there are instances when it would be
unfair to abruptly end the lease contract causing the eviction of the
lessee. It is only for these clearly
unjust situations that Article 1687 grants the court the discretion
to
extend
the lease.[82]
The particular circumstances of the
instant case however, do not inspire granting equitable relief. Petitioners have not paid, much less offered
to pay, the rent for 14 months and even had the temerity to disregard the
pay-and-vacate notice served on them. An
extension will only benefit the wrongdoer and punish the long-suffering
property owner.[83]
WHEREFORE,
the petition is DENIED. The October
15, 2007 Decision and January 2, 2008 Resolution of the Court of Appeals in
CA-G.R. SP No. 91096 are hereby AFFIRMED. ASB Realty Corporation is ordered to FURNISH a copy of the Decision on its
incumbent Rehabilitation Receiver and to INFORM
the Court of its compliance therewith within 10 days.
SO
ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Acting Chairperson
|
TERESITA J. LEONARDO-DE CASTRO Associate Justice |
LUCAS P. BERSAMIN Associate Justice |
JOSE
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13,
Article VIII of the Constitution, it is hereby certified 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
⃰ In lieu of Chief
Justice Renato C. Corona, per Special Order No. 1000 dated June 8, 2011.
[1] Rollo, pp. 32-58.
[2]
[3]
[4] CA
Decision, p. 16; id. at 75.
[5] Id. at 167-168.
[6]
[7] The original complaint was filed on
September 3, 2003 (CA rollo, pp.
83-86) but was amended on October 1, 2003 (
[8] Rollo, pp. 175-179.
[9]
[10]
[11] Defendants
Position Paper, p. 3; CA rollo, p.
148.
[12]
[13]
[14]
[15]
[16] Rollo, pp. 226-241; penned by Presiding
Judge Jose P. Morallos.
[17] MTC
Decision, p. 14; rollo, p. 239.
[18]
[19] The appeal was docketed as SCA No. 2724 and raffled off to Branch 161
of the RTC Pasig.
[20] Rollo, pp. 307-319; penned by Pairing
Judge Amelia A. Fabros.
[21] RTC Decision, pp. 9-11; rollo,
pp. 315-317.
[22]
[23]
[24]
[25] Rollo, pp. 320-340.
[26]
[27]
[28] The
appeal was docketed as CA-G.R. CV No. 91096.
CA rollo, pp. 2-41.
[29] Petition
for Review, pp. 25-30; id. at 26-31.
[30]
[31] Id. at 12-16; id. at 13-17.
[32] Rollo, pp. 589-590.
[33] CA
Decision, p. 16; CA rollo, p. 666.
[34]
[35]
[36]
[37]
[38]
[39] CA rollo,
pp. 667-678.
[40]
[41] Petitioners Memorandum, p. 11; rollo, p. 651.
[42]
[43]
[44] 314
Phil. 297 (1995).
[45] 362
Phil. 344 (1999).
[46] 495
Phil. 86 (2005).
[47] Petitioners
Memorandum, pp. 13-15; rollo, pp.
653-655.
[48] Respondents
Memorandum, p. 9; id. at 673.
[49]
[50]
[51] Consumido v. Ros, G.R.
No. 166875, July 31, 2007, 528 SCRA 696, 702.
[52] Rules of Court, Rule 3, Section 2.
[53] Corporation Code,
Section 2.
[54] Corporation Code,
Section 36(1).
[55] On July 18, 2010, a new law on rehabilitation was enacted
Republic Act No. 10142 or the Financial Rehabilitation and Insolvency Act
(FRIA) of 2010. Section 146 thereof states that the new law governs rehabilitation
petitions filed after FRIA has taken
effect.
[56] 2009 Rules of Procedure on
Corporate Rehabilitation, Rule 2, Section 1.
[57] Reorganization
of the Securities and Exchange Commission with Additional Powers and Placing
the Said Agency Under the Administrative Supervision of the Office of the
President.
[58] China Banking Corporation v.
ASB Holdings, G.R. No. 172192, December 23, 2008, 575 SCRA 247, 260.
[59] Catindig, Notes on Selected Commercial Laws, 161 (2003).
[60] While The Securities Regulation Code (Republic Act No. 8799),
transferred SECs jurisdiction over corporate rehabilitation proceedings to the
regular courts, it retained within SECs jurisdiction all pending
rehabilitation cases as of June 30, 2000 until finally disposed. ASB Realtys
petition for rehabilitation was filed on May 2, 2000 and remained pending as of
June 30, 2000, such that it remained within the SEC jurisdiction.
[61] SEC Rules of Procedure on Corporate Recovery,
Section 4-12.
[62] SEC Rules of Procedure on Corporate Recovery,
Section 4-25.
[63] All of this is not to say that a corporation under rehabilitation
cannot be deprived of control and management at all. To be sure, in warranted cases, the SEC is
authorized to place the corporation under a management committee that would
replace its corporate management and board of directors and assume their powers
over the corporation (Presidential Decree No. 902-A, as amended, Section 6(d);
SEC Rules of Procedure on Corporate Recovery, Rule V, Sections 5-1 and 5-3). This instance however is not the case before
us. There is no allegation whatsoever
that ASB Realty had been placed under a management committee.
[64] According
to Section 2-12 of the SEC Rules of Procedure on Corporate Recovery, the
following acts are prohibited and, if done, may be nullified by the SEC:
1.
any sale, encumbrance, transfer, or disposition of the debtors property
outside the normal course of business in which the corporation is engaged
(Section 4-4 (c), SEC Rules of Procedure on Corporate Recovery); and
2.
any payments of the debtor corporations outstanding liabilities
(Section 4-4(d), SEC Rules of Procedure on Corporate Recovery).
[65] Presidential Decree No. 902-A, as amended, Section 6(m); SEC Rules of Procedure on Corporate Recovery,
Section 4-25 (f).
[66] Supra
note 44.
[67] Supra
note 45.
[68] Supra
note 46.
[69] Supra
note 44 at 309-311.
[70] Supra
note 45 at 351.
[71] Supra
note 46 at 97-98.
[72] The prevailing law is Republic Act No. 8791 or the General Banking
Law of 2000. Section 69 thereof (in relation
to Section 30 of Republic Act No. 7653, entitled The New Central Bank Act)
continues to forbid banks or non-bank financial corporations from doing
business upon a finding of insolvency.
[73] Sec. 29. Proceedings upon insolvency. Whenever, upon examination by the head of the appropriate supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts, and the Board may, upon finding the statements of the department head to be true, forbid the institution to do business in the Philippines x x x
The Monetary Board shall thereupon determine within sixty days whether the institution may be reorganized or otherwise placed in such a condition so that it may be permitted to resume business with safety to its depositors and creditors and the general public and shall prescribe the conditions under which such resumption of business shall take place as well as the time for fulfillment of such conditions. x x x (Emphasis supplied.)
[74] Republic Act No. 265, as amended.
[75] SEC Rules of Procedure on
Corporate Recovery, Section 4-4.
[76] Petitioners
Memorandum, pp. 17-20; rollo, pp.
657-660.
[77] Id. at 7-8; id. at 647-648.
[78] U-bix Corporation v.
Milliken & Company, G.R. No. 173318, September 23, 2008, 566 SCRA 284,
288; Solar Harvest Inc. v. Davao
Corrugated Carton Corporation, G.R. No. 176868, July 26, 2010, 625 SCRA
448, 457.
[79] Petitioners Memorandum, pp. 21-22; rollo, pp. 661-662.
[80] Id. at 22; id. at 662.
[81] LL and Company Development
& Agro-Industrial Corporation v. Huang Chao Chun, 428 Phil. 665,
674-675 (2002).
[82] Id.
[83] Lo Chua v. Court of Appeals, 408 Phil.
877, 893 (2001); Guiang v. Samano, G.R.
No. 50501, April 22, 1991, 196 SCRA 114, 120.