Corporate Rehabilitation Cases

METROBANK v. ASB HOLDINGS

Facts: Petitioner MBTC is a creditor bank of respondent corporations ASB Group of Companies over loans secured by real estate mortgages. Because it foresees that it cannot pay its debts within the due date ASB filed a petition for rehabilitation.

o SEC, upon finding the petition for rehabilitation sufficient in form and substance, allowed the petition.

o Petitioner bank objected to the rehabilitation plan, specifically the arrangement concerning the mode of payment by dacion en pago of the loan obligations.

Issue: WON the rehabilitation plan would impair petitioner’s lien over the mortgaged properties.

Held: No. By the statutory provision of Section 6[c] of P.D. No. 902-A it is clear that the approval of the Rehabilitation Plan and the appointment of a rehabilitation receiver merely suspend the actions for claims against respondent corporations. Petitioner bank’s preferred status over the unsecured creditors relative to the mortgage liens is retained, but the enforcement of such preference is suspended. The loan agreements between the parties have not been set aside and petitioner bank may still enforce its preference when the assets of ASB will be liquidated. Considering that the provisions of the loan agreements are merely suspended, there is no impairment of contracts, specifically its lien in the mortgaged properties.

o As we stressed in Rizal Commercial Banking Corporation v. Intermediate Appellate Court, such suspension “shall not prejudice or render ineffective the status of a secured creditor as compared to a totally unsecured creditor,” for what P.D. No. 902-A merely provides is that all actions for claims against the distressed corporation, partnership or association shall be suspended. Likewise, there is no compulsion on the part of petitioner bank to accept a dacion en pago arrangement of the mortgaged properties. Based on the Rehabilitation Plan, the dacion en pagonot compulsory in nature program and the intent of respondent ASB to ask creditors to waive the interests, penalties and related charges are . They are merely proposals for the creditors to accept.

TYSON’S SUPER CONCRETE, INC. v. CA

Facts: Romana dela Cruz entered into a contract of lease with Tyson where it was agreed that the latter shall occupy the property as lessee.

o Due to internal squabbling, stockholders of Tyson filed a joint motion with the SEC praying for the appointment of a receiver to oversee the functions of the corporation. Thereafter SEC issued an order creating a Management Committee.

o A complaint for ejectment was filed by dela Cruz against Tyson’s with the MeTC for the alleged failure to pay rentals. MeTC ordered Tyson to vacate the premises and to pay dela Cruz.

o The case was appealed to the RTC then to the CA, which courts all decided against Tyson.

o Tyson contended that the ejectment action should be suspended because of the Management Committee created by SEC.

Issue: WON the ejectment should be suspended.

Held: While there may be merit in petitioners’ contention that the action for ejectment filed with the MeTC should have been suspended on the ground that the SEC has already created a management committee under P.D. No. 902-A, considering the peculiar circumstances of the case and in the higher interest of substantial justice, we do not find any cogent reason or useful purpose to nullify all the proceedings taken in the courts below and order the suspension of the complaint for ejectment at this stage of the proceedings.

o As to petitioners’ contention that the MeTC was ousted of its jurisdiction when the SEC created the management committee, settled is the rule that the jurisdiction of a court is conferred by the Constitution and by the laws in force at the time of the commencement of the action. Under the amendatory provisions of RA 7691, which is the law in force at the time Dela Cruz filed the ejectment case, it is clearly provided that MeTCs, MTCs, and MCTCs have exclusive original jurisdiction over cases of forcible entry and unlawful detainer. The fact that a management committee had already been created by the SEC does not divest the first level courts of their exclusive jurisdiction. Under P.D. No. 902-A, the existence of an executive committee merely suspends the proceedings in civil actions.The avowed objective of suspending all actions against a distressed corporation when a management committee or rehabilitation receiver is appointed, as enunciated by this Court in Rubberworld Inc. v. NLRC and in RCBC v. IAC, is to enable such management committee or rehabilitation receiver to effectively exercise its powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the rescue of the distressed company. However, this purpose can no longer be effectively met in the present case as the proceedings herein have already been pending for almost 10 years and have already reached this Court. The management committee has been unduly burdened enough, its time and resources wasted by the proceedings that took place before the RTC and CA. Hence, to decree the annulment of the previous proceedings in the lower courts will only result in further delay. The greater interest of justice demands that we now dispose of the issues raised in the present petition.