Republic of the
Supreme Court
THIRD DIVISION
|
JAPRL
DEVELOPMENT CORP., PETER RAFAEL C. LIMSON and JOSE UY AROLLADO, Petitioners, - versus - SECURITY BANK
CORPORATION, Respondent. |
G.R. No. 190107
Present: CARPIO
MORALES, J., Chairperson, BRION, BERSAMIN, ABAD,* and VILLARAMA,
JR., JJ. Promulgated: June
6, 2011 |
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D E C I S I O N
CARPIO MORALES, J.,
JAPRL
Development Corporation (JAPRL), a domestic corporation engaged in fabrication,
manufacture and distribution of steel products, applied for a credit facility
(Letter of Credit/Trust Receipt) in the amount of Fifty Million (P50,000,000)
Pesos with Security Bank Corporation (SBC). The application was approved and the
Credit Agreement took effect on
On
November 5, 2001, petitioners Peter Rafael C. Limson (Limson) and Jose Uy Arollado (Arollado), JAPRL Chairman
and President, respectively, executed a Continuing Suretyship Agreement (CSA)[2] in
favor of SBC wherein they guaranteed the due and full payment and performance
of JAPRLs guaranteed obligations under the credit facility.[3]
In
2002, on JAPRLs proposal, SBC extended the period of settlement of his
obligations.
In
2003, JAPRLs financial adviser, MRM Management Incorporated (MRM), convened JAPRLs
creditors, SBC included, for the purpose of restructuring JAPRLs existing loan
obligations. Copies of JAPRLs financial statements from 1998 to 2001 were
given for the creditors to study.
SBC
soon discovered material inconsistencies in the financial statements given by
MRM vis--vis those submitted by JAPRL when it applied for a credit facility, drawing
SBC to conclude that JAPRL committed misrepresentation.
As
paragraph 10 (c) of the Credit Agreement[4]
provided, if any representation or warranty, covenant or undertaking embodied [therein]
and [in] the Credit Instrument or in any certificate, statement or document
submitted to SBC turns out to be untrue or ceases to be true in any material
respect, or is violated or not complied with, such will constitute an event of
default committed by JAPRL and its sureties.
On the basis of Item 2 of the CSA,[5]
SBC sent a formal letter of demand[6]
dated August 20, 2003 to petitioners JAPRL, Limson and Arollado for the immediate
payment of Forty Three Million Nine Hundred Twenty Six Thousand and Twenty One
Pesos and 41/100 (P43,926,021.41) representing JAPRLs outstanding
obligations.
Petitioners
failed to comply with SBCs demand, hence, SBC filed on September 1, 2003 a
complaint for sum of money with application for issuance of writ of preliminary
attachment[7]
before the Regional Trial Court (RTC) of
During
the hearing on the prayer for the issuance of writ of preliminary attachment on
September 16, 2003, SBCs counsel manifested that it received a copy of a Stay
Order dated September 8, 2003 issued by the RTC of Quezon City, Branch 90 wherein
JAPRLs petition for rehabilitation was lodged.
The Makati RTC at once ordered in open court the archiving of SBCs
complaint for sum of money until disposition by the Quezon City RTC of JAPRLs
petition for rehabilitation.[8]
When the Makati RTC reduced to
writing its open court Order of September 16, 2003, however, it instead declared
the dismissal of SBCs complaint without prejudice:
When
this case was called for hearing, plaintiffs counsel manifested that they
received a Stay Order from Regional Trial Court, Br. 190,
WHEREFORE, let the present case be ordered DISMISSED without prejudice to a refiling or having a claim filed with the appropriate forum.
SO
ORDERED.[9] (underscoring supplied)
On
SBCs motion for reconsideration, however, the Makati RTC, by Order of January
9, 2004,[10] reverted
to its oral order of archiving SBCs complaint.
SBC
moved to clarify the Makati RTC January 9, 2004 Order, positing that the
suspension of the proceedings should only be with respect to JAPRL but not with
respect to Limson and Arollado.[11] The Makati RTC, by Order of February 25, 2004,
mantained its order archiving the complaint against all petitioners herein, however.
SBC
filed a motion for reconsideration[12]
of the February 25, 2004 Order, to which Limson and Arollado separately filed an
Opposition (Ad Cautelam)[13] wherein
they claimed that summons were not served on them, hence, the Makati RTC failed
to acquire jurisdiction over their person. At any rate, they raised defenses against
SBCs claim that they acted as sureties of JAPRL.
Meanwhile,
the proposed rehabilitation plan before the Quezon City RTC was disapproved by Order
of May 9, 2005.[14] On SBCs
motion, the
Makati RTC thus reinstated SBCs complaint to its docket, by Order of February
27, 2006.[15]
Petitioners later filed before the
Makati RTC a Manifestation (Ad Cautelam)[16] informing that a Stay Order dated March
13, 2006[17] was
issued, this time by the Calamba RTC, Branch 34, in a new petition for
rehabilitation filed by JAPRL and its subsidiary, RAPID Forming Corporation,
and praying for the archiving of SBCs complaint.
By
Order of June 30, 2006,[18] the
Makati RTC again archived SBCs complaint against petitioners. SBC, by
Consolidated Motion, moved for the reconsideration of the June 30, 2006 Order,
averring that its complaint should not have been archived with respect to sureties
Limson and Arollado; and that since the
two failed to file their respective Answers within the reglementary period, they
should be declared in default.
The
Makati RTC denied, by Order of October 2, 2006,[19] the
Consolidated Motion of SBC, prompting SBC to file a petition for certiorari
before the Court of Appeals.
By
Decision of September 25, 2008,[20]
the appellate court held that Limson and Arollado voluntarily submitted
themselves to the jurisdiction of the Makati RTC, despite the qualification that
the filing of their respective Opposition[s] Ad Cautelam and Manifestation[s] Ad Cautelam, was by way of special appearance they having
sought affirmative relief by praying for the archiving of SBCs complaint.
The
Manifestations and Oppositions filed by the individual private respondents to
the court a quo have the purpose of
asking the court to archive the case until the final resolution of either the
Petition for Rehabilitation filed by private respondent corporation JAPRL in
To
the appellate court, SBCs claim against Limson and Arollado in their capacity
as sureties could proceed independently of JAPRLs petition for rehabilitation:
x x x [T]he property of the surety cannot be taken into custody by the rehabilitation receiver (SEC) and said surety can be sued separately to enforce his liability as surety for the debts or obligations of the debtor. The debts or obligations for which a surety may be liable include future debts, an amount which may not be known at the time the surety is given.
Aside from that, it is specifically stated under Rule 4, Section 6 (b) of the Interim Rules of Procedure on Corporate Rehabilitation, that the issuance of a Stay order will have an effect of:
(b) staying enforcement of all claims whether for money or otherwise and whether such enforcement is by court action otherwise, against the debtor, its guarantors and sureties not solidarily liable with the debtor.[22] (emphasis and italics in the original; underscoring supplied)
The
appellate court denied petitioners motion for reconsideration by Resolution of
October 29, 2009,[23]
hence, the present petition for review on certiorari.[24]
The
petition fails.
A
reading of the separate Oppositions Ad
Cautelam by Limson and Arollado to SBCs Motion for Reconsideration[25] shows
that they did not challenge the trial courts jurisdiction. Albeit both pleadings contained prefatory
statements that the two did not receive summons, they pleaded defenses in their
favor, viz:
Limsons Opposition Ad
Cautelam
6. First of all, there is no gainsaying that herein defendant LIMSON as well as defendant AROLLADO are being sued in their alleged capacities as SURETIES, with defendant JAPRL being the DEBTOR. As SURETIES, they are covered by the Stay Order issued by the court hearing the petition for corporate rehabilitation filed by Rapid Forming Corp. and defendant JAPRL. The Stay Order directed, among others, the stay of enforcement of ALL CLAIMS, WHETHER FOR MONEY OR OTHERWISE, AND WHETHER SUCH ENFORCEMENT IS BY COURT ACTION OR OTHERWISE, against the petitioner/s, and its/their guarantors and SURETIES not solidarily liable with petitioner/s,[26] x x x (all caps in the original)
Arollados Opposition (Ad Cautelam)
11. Certainly, the plaintiff cannot unjustly enrich itself and be allowed to recover from both the DEBTOR JAPRL in accordance with the rehabilitation plan, and at the same time from the alleged SURETIES LIMSON and AROLLADO through the present complaint.
12.
Moreover, defendant AROLLADO, as surety, can set up against the plaintiff
all the defenses which pertain to the principal DEBTOR JAPRL and even those
defenses that are inherent in the debt. Likewise, defendant AROLLADO
would, in any case, have a right of action for reimbursement against JAPRL,
the principal DEBTOR. Additionally, defendant AROLLADO is given the right, under Article 1222 of the New Civil Code,
to avail himself of all the defenses which are derived from the nature of
the obligation. Since the plaintiff, and even defendants LIMSON and AROLLADO,
are temporarily barred from enforcing a claim against JAPRL, there is,
therefore, every reason to
suspend the proceedings against defendants LIMSON and AROLLADO while the
complaint is archived and cannot be prosecuted against the DEBTOR JAPRL.[27] (capitalization and emphasis in the original; underscoring
supplied)
When
a defendants appearance is made precisely to object to the jurisdiction of the
court over his person, it cannot be considered as appearance in court.[28] Limson and Arollado glossed over the alleged
lack of service of summons, however, and proceeded to exhaustively discuss why
SBCs complaint could not prosper against them as sureties. They thereby voluntarily
submitted themselves to the jurisdiction of the Makati RTC .
On
a trial courts suspension of proceedings against a surety of a corporation in
the process of rehabilitation, Banco de
Oro-EPCI, Inc. v. JAPRL Development Corporation[29] holds
that a creditor can demand payment from the surety solidarily liable with the corporation seeking rehabilitation, it
being not included in the list of stayed claims:
Indeed, Section 6(b) of the Interim
Rules of Procedure of Corporate Rehabilitation which the appellate court cited
in the earlier-quoted portion of its decision, provides that a stay order does
not apply to sureties who are solidarily
liable with the debtor. In Limson and Arollados case, their solidary liability with JAPRL is
documented.
3. Liability of the Surety The liability of the Surety is solidary and not contingent upon the pursuit by the Bank of whatever remedies it may have against the Debtor or the collaterals/liens it may possess. If any of the Guaranteed Obligation is not paid or performed on due date (at stated maturity or by acceleration), the Surety shall, without need for any notice, demand or any other act or deed, immediately become liable therefor and the Surety shall pay and perform the same. [30] (emphasis and underscoring supplied)
Limson
and Arollado, as sureties, whose liability is solidary cannot, therefore, claim
protection from the rehabilitation court, they not being the
financially-distressed corporation that may be restored, not to mention that
the rehabilitation court has no jurisdiction over them. Article 1216 of the Civil Code clearly is
not on their side:
ART. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against any one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected. (underscoring supplied)
IN
FINE, SBC can pursue its claim against Limson and Arollado despite the pendency
of JAPRLs petition for rehabilitation. For,
by the CSA in favor of SBC, it is the obligation of the sureties, who are
therein stated to be solidary with JAPRL, to see to it that JAPRLs debt is fully paid.[31]
Finally,
contrary to petitioners position, the appellate courts decision only
nullified the suspension of proceedings against Limson and Arollado.[32] The suspension with respect to JAPRL remains,
in line with Philippine Blooming Mills v.
Court of Appeals.[33]
WHEREFORE, the petition is DENIED.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
WE CONCUR:
|
ARTURO D. BRION Associate Justice |
LUCAS P. BERSAMIN Associate Justice |
|
ROBERTO A. ABAD Associate Justice |
MARTIN S. VILLARAMA, JR. Associate Justice |
ATTESTATION
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
CERTIFICATION
Pursuant to Section 13, Article VIII
of the 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
* Additional
member Per Special Order No. 997 dated June 6, 2011 in lieu of Associate
Justice Ma.
[1] Records, pp. 14-17.
[2]
[3] JAPRL, Limson and Arollado shall be collectively referred to as petitioners.
[4] Records, pp. 14-17.
[5] Item No. 2 provides: Binding Effect of Credit Instruments The Surety shall be bound by all the terms and conditions of the Credit Instruments.
Credit Instruments as defined in Item 1 (c) of the CSA refer to the agreements and promissory notes covering the credit accommodations granted by the Bank to the Debtor, including the collaterals given as a security for the credit accommodations.
[6] Records, p. 69.
[7]
[8] Transcript of Stenographic Notes (TSN) dated September 16, 2003, p. 75.
[9]
[10]
[11]
[12]
[13]
[14] CA rollo, pp. 72-74.
[15] Records, p. 276.
[16]
[17]
[18]
[19]
[20] Penned by Associate Justice Pampio A. Abarintos with the concurrence of Associate Justices Arcangelita Romilla Lontok and Ricardo R. Rosario, rollo, pp. 268-279.
[21]
[22]
[23] CA rollo, pp. 364-365. Penned by Associate Justice Pampio A. Abarintos with the concurrence of Associate Justices Arcangelita Romilla Lontok and Ricardo R. Rosario.
[24] Rollo, pp. 26-70.
[25] SBC filed a Motion for Reconsideration to the Order dated February 25, 2004 of the RTC archiving the case against all the defendants, including Limson and Arollado as individual sureties.
[26] Records, p. 121.
[27]
[28] French Oil Mill Machinery Co., Inc. v. Court of Appeals, G.R. No. 126477, September 11, 1998, 295 SCRA 463.
[29] G.R. No. 179901, April 14, 2008, 551 SCRA 342.
[30] Records, p. 11.
[31] Paramount Insurance Corporation v. Court of Appeals, G.R. No. 110086, July 19, 1999, 310 SCRA 377.
[32] The pertinent portion of the Court of Appeals Decision reads: Thusly, being bound solidarily with the private respondent corporation, the complaint for sum of money docketed as Civil Case No. 03-1026 should continue against the private respondent individuals [referring to Limson and Arollada] for they are excluded from the jurisdiction of the rehabilitation court, rollo, p. 82.
[33] G.R. No. 142381, October 15, 2003, 413 SCRA 445