ADVENT CAPITAL AND G.R. No. 183050
FINANCE CORPORATION,
Petitioner, Present:
VELASCO, JR., J., Chairperson,
- versus - PERALTA,
ABAD,
VILLARAMA,
JR.,* and
MENDOZA,
JJ.
NICASIO
EDITHA
Respondents.
January 25, 2012
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ABAD, J.:
This
case is about the validity of a rehabilitation courts order that compelled a
third party, in possession of money allegedly belonging to the debtor of a company
under rehabilitation, to deliver such money to its court-appointed receiver
over the debtors objection.
The Facts and the Case
On July 16, 2001 petitioner Advent
Capital and Finance Corporation (Advent Capital) filed a petition for rehabilitation[1]
with the Regional Trial Court (RTC) of P27,398,026.59, representing trust fees that
it supposedly earned for managing their several trust accounts.[4]
Prompted by this finding, Atty.
Concepcion requested Belson Securities, Inc. (Belson) to deliver to him, as Advent
Capitals rehabilitation receiver, the P7,635,597.50 in cash dividends that
Belson held under the Alcantaras Trust Account 95-013. Atty. Concepcion claimed that the dividends,
as trust fees, formed part of Advent Capitals assets. Belson refused, however, citing the
Alcantaras objections as well as the absence of an appropriate order from the
rehabilitation court.[5]
Thus,
Atty. Concepcion filed a motion before the rehabilitation court to direct
Belson to release the money to him. He
said that, as rehabilitation receiver, he had the duty to take custody and
control of Advent Capitals assets, such as the sum of money that Belson held on
behalf of Advent Capitals Trust Department.[6]
The
Alcantaras made a special appearance before the rehabilitation court[7] to
oppose Atty. Concepcions motion. They claimed
that the money in the trust account belonged to them under their Trust
Agreement[8]
with Advent Capital. The latter, they
said, could not claim any right or interest in the dividends generated by their
investments since Advent Capital merely held these in trust for the Alcantaras,
the trustors-beneficiaries. For this
reason, Atty. Concepcion had no right to compel the delivery of the dividends to
him as receiver. The Alcantaras concluded
that, under the circumstances, the rehabilitation court had no jurisdiction
over the subject dividends.
On
February 5, 2007 the rehabilitation court granted Atty. Concepcions motion.[9] It held that, under Rule 59, Section 6 of the
Rules of Court, a receiver has the duty to immediately take possession of all
of the corporations assets and administer the same for the benefit of
corporate creditors. He has the duty to collect
debts owing to the corporation, which debts form part of its assets. Complying with the rehabilitation courts
order and Atty. Concepcions demand letter, Belson turned over the subject dividends
to him.
Meanwhile,
the Alcantaras filed a special civil action of certiorari before the Court of Appeals (CA), seeking to annul the
rehabilitation courts order. On January
30, 2008 the CA rendered a decision,[10]
granting the petition and directing Atty. Concepcion to account for the
dividends and deliver them to the Alcantaras. The CA ruled that the Alcantaras owned those
dividends. They did not form part of Advent
Capitals assets as contemplated under the Interim Rules of Procedure on
Corporate Rehabilitation (Interim Rules).
The CA pointed out that the rehabilitation
proceedings in this case referred only to the assets and liabilities of the
company proper, not to those of its Trust Department which held assets
belonging to other people. Moreover,
even if the Trust Agreement provided that Advent Capital, as trustee, shall
have first lien on the Alcantaras financial portfolio for the payment of its
trust fees, the cash dividends in Belsons care cannot be summarily applied to
the payment of such charges. To enforce
its lien, Advent Capital has to file a collection suit. The rehabilitation court cannot simply
enforce the latters claim by ordering Belson to deliver the money to it.[11]
The
CA denied Atty. Concepcion and Advent Capitals motion for reconsideration,[12] prompting
the filing of the present petition for review under Rule 45.
The Issue Presented
The sole issue in this case is whether
or not the cash dividends held by Belson and claimed by both the Alcantaras and
Advent Capital constitute corporate assets of the latter that the rehabilitation
court may, upon motion, require to be conveyed to the rehabilitation receiver for
his disposition.
Ruling of the Court
Advent Capital asserts that the cash
dividends in Belsons possession formed part of its assets based on paragraph 9
of its Trust Agreement with the Alcantaras, which states:
9. Trust Fee: Other Expenses As
compensation for its services hereunder, the TRUSTEE shall be entitled to a
trust or management fee of 1 (one) % per annum based on the quarterly average
market value of the Portfolio or a minimum annual fee of P5,000.00,
whichever is higher. The said trust or
management fee shall automatically be deducted from the Portfolio at the end of
each calendar quarter. The TRUSTEE shall
likewise be reimbursed for all reasonable and necessary expenses incurred by it
in the discharge of its powers and duties under this Agreement, and in all
cases, the TRUSTEE shall have a first lien on the Portfolio for the payment of
the trust fees and other reimbursable expenses.
According
to Advent Capital, it could automatically deduct its management fees from the
Alcantaras portfolio that they entrusted to it. Paragraph 9 of the Trust Agreement provides
that Advent Capital could automatically deduct its trust fees from the
Alcantaras portfolio, at the end of each calendar quarter, with the
corresponding duty to submit to the Alcantaras a quarterly accounting report
within 20 days after.[13]
But the problem is that the trust
fees that Advent Capitals receiver was claiming were for past quarters. Based
on the stipulation, these should have been deducted as they became due. As it happened, at the time Advent Capital
made its move to collect its supposed management fees, it neither had
possession nor control of the money it wanted to apply to its claim. Belson, a third party, held the money in the
Alcantaras names. Whether it should
deliver the same to Advent Capital or to the Alcantaras is not clear. What is clear is that the issue as to who
should get the same has been seriously contested.
The practice in the case of banks is
that they automatically collect their management fees from the funds that their
clients entrust to them for investment or lending to others. But the banks can freely do this since it
holds or has control of their clients money and since their trust agreement
authorized the automatic collection. If
the depositor contests the deduction, his remedy is to bring an action to
recover the amount he claims to have been illegally deducted from his account.
Here, Advent Capital does not allege
that Belson had already deducted the management fees owing to it from the
Alcantaras portfolio at the end of each calendar quarter. Had this been done, it may be said that the
money in Belsons possession would technically be that of Advent Capital. Belson would be holding such amount in trust
for the latter. And it would be for the Alcantaras
to institute an action in the proper court against Advent Capital and Belson
for misuse of its funds.
But the above did not happen. Advent Capital did not exercise its right to cause
the automatic deduction at the end of every quarter of its supposed management
fee when it had full control of the dividends.
That was its fault. For their
part, the Alcantaras had the right to presume that Advent Capital had deducted its
fees in the manner stated in the contract. The burden of proving that the fees
were not in fact collected lies with Advent Capital.
Further, Advent Capital or its
rehabilitation receiver cannot unilaterally decide to apply the entire amount
of cash dividends retroactively to cover the accumulated trust fees. Advent Capital merely managed in trust for the
benefit of the Alcantaras the latters portfolio, which under Paragraph 2[14]
of the Trust Agreement, includes not only the principal but also its income or
proceeds. The trust property is only
fictitiously attributed by law to the trustee to the extent that the rights
and powers vested in a nominal owner shall be used by him on behalf of the real owner.[15]
The real owner of the trust property
is the trustor-beneficiary. In this
case, the trustors-beneficiaries are the Alcantaras. Thus, Advent Capital could not dispose of the
Alcantaras portfolio on its own. The
income and principal of the portfolio could only be withdrawn upon the
Alcantaras written instruction or order to Advent Capital.[16] The latter could not also assign or encumber
the portfolio or its income without the written consent of the Alcantaras.[17] All these are stipulated in the Trust
Agreement.
Ultimately, the issue is what court
has jurisdiction to hear and adjudicate the conflicting claims of the parties
over the dividends that Belson held in trust for their owners. Certainly, not the rehabilitation court which
has not been given the power to resolve ownership disputes between Advent
Capital and third parties. Neither
Belson nor the Alcantaras are its debtors or creditors with interest in the
rehabilitation.
Advent Capital must file a separate
action for collection to recover the trust fees that it allegedly earned and,
with the trial courts authorization if warranted, put the money in escrow for
payment to whoever it rightly belongs. Having
failed to collect the trust fees at the end of each calendar quarter as stated
in the contract, all it had against the Alcantaras was a claim for payment
which is a proper subject for an ordinary action for collection. It cannot enforce its money claim by simply
filing a motion in the rehabilitation case for delivery of money belonging to the
Alcantaras but in the possession of a third party.
Rehabilitation proceedings are
summary and non-adversarial in nature, and do not contemplate adjudication of
claims that must be threshed out in ordinary court proceedings. Adversarial proceedings similar to that in
ordinary courts are inconsistent with the commercial nature of a rehabilitation
case. The latter must be resolved
quickly and expeditiously for the sake of the corporate debtor, its creditors
and other interested parties. Thus, the Interim Rules incorporate the concept
of prohibited pleadings, affidavit evidence in lieu of oral testimony,
clarificatory hearings instead of the traditional approach of receiving
evidence, and the grant of authority to the court to decide the case, or any
incident, on the basis of affidavits and documentary evidence.[18]
Here, Advent Capitals claim is
disputed and requires a full trial on the merits. It must be resolved in a separate action where
the Alcantaras claim and defenses may also be presented and heard. Advent Capital
cannot say that the filing of a separate action would defeat the purpose of
corporate rehabilitation. In the first
place, the Interim Rules do not exempt a company under rehabilitation from
availing of proper legal procedure for collecting debt that may be due it. Secondly, Court records show that Advent
Capital had in fact sought to recover one of its assets by filing a separate
action for replevin involving a car
that was registered in its name.[19]
WHEREFORE, the petition is DENIED for lack of merit and the
assailed decision and resolution of the Court of Appeals in CA-G.R. SP 98692
are AFFIRMED, without prejudice to
any action that petitioner Advent Capital and Finance Corp. or its
rehabilitation receiver might institute regarding the trust fees subject of
this case.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice
WE
CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
DIOSDADO M. PERALTA
MARTIN S. VILLARAMA, JR.
Associate Justice Associate Justice
JOSE CATRAL MENDOZA
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.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division
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
*
Designated as additional member in lieu of Associate Justice Estela M.
Perlas-Bernabe, per Raffle dated January 18, 2012.
[1] Rollo, pp. 157-168.
[2] Branch 142.
[3] Rollo, pp. 49-50. The RTC was presided by Judge (now Supreme Court Justice) Estela M. Perlas-Bernabe.
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
8. Reporting Requirements. The TRUSTEE shall prepare and submit to the TRUSTOR within twenty (20) days after the end of each quarter, a quarterly report on the Portfolio in such form and substance as may be required by the Central Bank rules and regulations, unless at the interim the TRUSTEE shall have submitted to the TRUSTOR from time to time a written statement of account on specific and one-time transactions of the portfolio the statement of details of which substantially comply with the Central Bank rules and regulations. The TRUSTOR may, at cost to him, require the preparation and submission to him of reports other than the quarterly reports, on the Portfolio. The accounting reports shall be deemed approved if the TRUSTOR fails to express his objection thereto within thirty (30) days from his receipt thereof or within a specified period otherwise stated in a separate written agreement.
[14] 2. The Portfolio.- The cash and other assets which the TRUSTOR has delivered or shall from time to time hereafter deliver to the TRUSTEE under this Agreement, the conversions thereof to other forms of assets as well as the proceeds, interests, dividends, accruals and income or profits realized from the management, investment, and reinvestment thereof, less the withdrawals and/or charges thereto which at the time of reference shall have been made, shall constitute the trust of managed funds and shall hereafter be referred to as the Portfolio. For purposes of this Agreement, the term securities shall be deemed to include commercial shares and financial instruments, both debt and equity.
[15] See Hector S. De Leon and Hector M. De Leon, Jr., Comments and Cases on Partnership, Agency and Trusts, 4th Ed., 606-607.
[16] Trust Agreement, Paragraph 10 which states:
10. Withdrawal of Income and Principal.- Subject to availability of funds, the TRUSTOR may withdraw the income and principal of the Portfolio or portion thereof upon the TRUSTORs written instruction or order given to the TRUSTEE. The TRUSTEE is under no duty to see to the application of the income and principal so withdrawn from the Portfolio. Any income of the Portfolio not withdrawn shall be accumulated and added to the Principal of the Portfolio for further investment and reinvestment.
[17] Trust Agreement, Paragraph 11 which states:
11. Non-Alienation or Encumbrance of the Portfolio or Income. During the effectivity of this Agreement, the TRUSTOR shall not assign or encumber the Portfolio or its income or any portion thereof in any manner whatsoever to any person or entity without the written consent of the TRUSTEE.
[18] Dean Cesar Lapuz Villanueva, Philippine Corporate Law, 2010 Ed., 738, citing Committee Memorandum Re: Interim Rules of Procedure on Corporate Rehabilitation dated October 30, 2000.
[19] See Advent Capital & Finance Corporation v. Roland Young, G.R. No. 183018, August 3, 2011.