Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83416:57628&catid=1587&Itemid=566
Timestamp: 2019-04-19 10:23:08+00:00

Document:
G.R. No. 195289, September 24, 2014 - ROBINSON’S BANK CORPORATION (FORMERLY THE ROYAL BANK OF SCOTLAND [PHILS.], INC.), Petitioner, v. HON. SAMUEL H. GAERLAN, HON. HAKIM S. ABDULWAHID AND HON. RICARDO R. ROSARIO, IN THEIR CAPACITY AS ASSOCIATE JUSTICES RESPECTIVELY OF THE TENTH DIVISION OF THE COURT OF APPEALS, AND TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES, Respondents.
ROBINSON’S BANK CORPORATION (FORMERLY THE ROYAL BANK OF SCOTLAND [PHILS.], INC.), Petitioner, v. HON. SAMUEL H. GAERLAN, HON. HAKIM S. ABDULWAHID AND HON. RICARDO R. ROSARIO, IN THEIR CAPACITY AS ASSOCIATE JUSTICES RESPECTIVELY OF THE TENTH DIVISION OF THE COURT OF APPEALS, AND TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES, Respondents.
This Petition for Certiorari1 assails the July 19, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 104141, entitled “Trade and Investment Development Corporation of the Philippines, Petitioner, versus World Grannary Corporation, Respondent,” as well as its December 6, 2010 Resolution3 denying the Motion for Reconsideration4 of herein petitioner Robinson’s Bank Corporation5 (RBC).
On December 4, 2006, Nation Granary, Inc. (now World Granary6 Corporation, or WGC) filed a Petition for Rehabilitation with Prayer for Suspension of Payments, Actions and Proceedings7 before the Regional Trial Court (RTC) of Lucena City, which was docketed as Special Proceedings No. 2006-77 and assigned to Branch 57.
On December 12, 2006, the RTC issued a Stay Order10 staying the enforcement of creditors’ claims; prohibiting WGC from disposing or encumbering its properties and paying its outstanding liabilities; prohibiting its suppliers from withholding their goods and services; appointing a rehabilitation receiver; and directing creditors and interested parties to file their respective comments to the Petition.
RBC filed its Opposition11 to the Petition for Rehabilitation.
In its Comment, TIDCORP among others took exception to the proposed pari passu sharing, insisting that as a secured creditor, it should enjoy preference over unsecured creditors, citing law and jurisprudence to the effect that the law on preference of credits shall be observed in resolving claims against corporations under rehabilitation.16 It likewise claimed that WGC violated its Indemnity Agreement17 with TIDCORP – which required that while the agreement subsisted, WGC shall not incur new debts without TIDCORP’s approval18 – by obtaining additional loans without the knowledge and consent of the latter.
RBC filed an Opposition19 to TIDCORP’s Comment, arguing pertinently that TIDCORP’s objection to a pari passu sharing of WGC’s cash flow proceeds and insistence on preferential treatment goes against the legal principle that during rehabilitation, both secured and unsecured creditors stand on equal footing, and that it is only when rehabilitation is no longer feasible – and liquidation is the remaining option – that secured creditors shall enjoy preference over unsecured creditors;20 that giving preference to TIDCORP would violate the Stay Order and impair the powers of the receiver; and that any change in the contractual relations between TIDCORP and WGC relative to their Indemnity Agreement comes as a necessary consequence of rehabilitation, which TIDCORP may not be heard to complain.
5. that the Petitioner should include in the Rehabilitation Program the repayment terms of the creditors on record not included therein, among whom is creditor Belmont Agricorp, Inc., furnishing copy thereof the concerned creditors.
The Petitioner is enjoined to strictly comply with the provisions of the Rehabilitation Program, performing its obligations thereunder, and to take all the actions necessary to carry out the program, failing which the Court shall either upon motion, motu propio, or upon the recommendation of the Rehabilitation Receiver, terminate the proceedings as provided for under the Rules.
The Rehabilitation Receiver is directed to strictly monitor the implementation of the program and submit a quarterly report on the progress thereof.
TIDCORP argued that the banks – including RBC – which granted new loans to WGC in violation of its Indemnity Agreement contributed to TIDCORP’s present “iniquitous predicament” – that is, its rights as a secured creditor were “greatly impaired”; thus, these banks “should be held accountable” pursuant to the Civil Code provision that any “person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.”25 It maintained that for these reasons, it should be given preferential and special treatment among the WGC creditors.
TIDCORP thus prayed in its Petition that the portion of the assailed June 6, 2008 Order specifically directing that all WGC obligations be settled on a pari passu basis be reversed and set aside. It likewise sought injunctive relief.
RBC filed an Urgent Motion for Intervention with attached Comment in Intervention,26 which is anchored on its original claim and objection to TIDCORP’s position – that the latter may not enjoy preferential treatment over the other WGC creditors.27 Additionally, RBC argued that as an unsecured creditor which stood to be affected by the outcome of TIDCORP’s Petition, it should have been impleaded in the Petition; since it was not impleaded, the Petition for review should be dismissed. Finally, RBC pointed out that TIDCORP actually knew of the additional loans WGC obtained as it approved, on July 26, 2006, WGC’s request for TIDCORP to increase its guarantee on these additional loans.28 RBC therefore prayed that TIDCORP’s Petition for Review be dismissed; that the RTC’s June 6, 2008 Order be affirmed in toto; and that TIDCORP’s application for injunctive relief be denied.
In its Opposition29 seeking the dismissal of RBC’s Urgent Motion for Intervention, TIDCORP maintained that intervention is not allowed in rehabilitation proceedings, citing Rule 3, Section 1 of the Interim Rules of Procedure on Corporate Rehabilitation30 (Interim Rules), which applies even on appeal, since an appeal is merely a continuation of the original action for rehabilitation.31 It added that the cases cited by RBC do not apply to the instant case, since they involved petitions for suspension of payments, while the instant case involves a petition for rehabilitation pursuant to the Interim Rules. Next, it claimed that RBC failed to show that its participation would not delay the proceedings on appeal. Finally, it argued that a final determination of the appeal does not depend on RBC’s participation since rehabilitation proceedings are in rem and binding on all interested and affected parties even if they did not participate in the proceedings.
In view of the foregoing, the instant motion is DENIED. The parties are directed to file their respective memoranda within fifteen (15) days from notice.
Section 1. Nature of Proceedings. – Any proceeding initiated under these Rules shall be considered in rem. Jurisdiction over all those affected by the proceedings shall be considered as acquired upon publication of the notice of the commencement of the proceedings in any newspaper of general circulation in the Philippines in the manner prescribed by these Rules.
In its Comment/Opposition,37 TIDCORP essentially argued that the cited pronouncement in the Leca Realty case is a mere obiter dictum; that since RBC failed to file a Petition for Review of the trial court’s June 6, 2008 Order, it cannot now move to intervene in TIDCORP’s Petition for Review as a substitute for its lost appeal; that there are no valid reasons for intervention; and that intervention would unnecessarily delay the proceedings.
Hence, RBC filed the instant Petition.
1. WHEN THEY ERRED IN DECIDING THAT THE PROPER REMEDY OF THE PETITIONER WAS TO FILE A PETITION FOR REVIEW INSTEAD OF A MERE MOTION FOR INTERVENTION.
In its Petition and Reply,40 petitioner RBC maintains that the CA committed patent error and grave abuse of discretion in failing to discern that it is not assailing the trial court’s judgment – specifically its June 6, 2008 Order – but rather seeks its affirmance in toto, and that its sole objective was simply to obtain a dismissal of TIDCORP’s Petition for Review; that it would have been improper for it to initiate a new case given that its rights and liabilities as WGC creditor are so interwoven with and inseparable from TIDCORP’s; that intervention was prompted by TIDCORP’s allegation in its Petition for Review that the creditor banks – including RBC – are responsible for TIDCORP’s present situation and must be held accountable to it for their willful acts; that in claiming preferential treatment over the other creditors in the Petition for Review, TIDCORP disregards law and settled jurisprudence to the effect that during rehabilitation proceedings, creditors should stand on equal footing; that in view of TIDCORP’s actions, RBC stood to be affected and thus must intervene to protect its rights and interests; that intervention is necessary to prevent multiplicity of suit and conflicting decisions that may arise from cases that may be filed by the other creditors.
Petitioner thus prays that the assailed dispositions be reversed and that it be allowed to intervene in CA-G.R. SP No. 104141.
In its Comment,41 TIDCORP insists that the Rules of Procedure on Corporate Rehabilitation apply even on appeal, as it is merely a continuation of the proceedings below; that intervention is prohibited under the said Rules; that the CA exercised sound discretion in disallowing RBC’s motion to intervene; that intervention would have resulted in delay; that the conditions for intervention are not present in RBC’s case, since RBC’s interest in the case is merely inchoate and indirect; that since RBC is already a party to the rehabilitation case, intervention on its part was improper as it may be availed of only by a third party, not an original party to the case; that RBC’s arguments are speculative; and that the Petition lacked a valid verification and certification against forum-shopping for lack of proof of authority that the individual who prepared the Petition was authorized to sign or file the same.
The Court partially grants the Petition.
Next, it is beyond question that under Rule 3, Section 5 of the Rules of Procedure on Corporate Rehabilitation, the review of any order or decision of the rehabilitation court or on appeal therefrom shall be in accordance with the Rules of Court, unless otherwise provided.44 This being the case, there is no visible objection to RBC’s participation in CA-G.R. SP No. 104141 as it stands to be injured or benefited by the outcome of TIDCORP’s Petition for Review – being both a secured and unsecured creditor of WGC.
Thus, the nature of TIDCORP’s Petition in CA-G.R. SP No. 104141 is such that the other creditors like RBC must be allowed to participate in the proceedings. They have an interest in the controversy where a final decree would necessarily affect their rights. Indeed, the appellate court, on its own, should have seen that the rights of RBC stand to be adversely affected by the remedies prayed for by TIDCORP. Thus, the CA could have ordered RBC to file its comment in CA-G.R. SP No. 104141 and allowed to participate therein. Just as the trial court allowed RBC and TIDCORP to participate in the proceedings below, the CA should have likewise allowed RBC to participate in the proceedings before it. This is only fair and logical considering that, as admitted by TIDCORP, RBC is already a party in the rehabilitation case, and that the instant Petition for Review is merely a continuation of the proceedings below.
To disallow the participation of RBC constitutes an evasion of the appellate court’s positive duty to observe due process, a gross and patent error that can be considered as grave abuse of discretion.46 Likewise, when an adverse effect on the substantial rights of a litigant results from the exercise of the court’s discretion, certiorari may issue.47 If not, this Court possesses the prerogative and initiative to take corrective action when necessary to prevent a substantial wrong or to do substantial justice.
While TIDCORP is correct in arguing that intervention is not the proper mode for RBC coming to the CA since it is already a party to the rehabilitation proceedings, this merely highlights the former’s error in not allowing the latter to participate in the proceedings in CA-G.R. SP No. 104141 just as it underscores the appellate court’s blunder in not ordering that RBC be allowed to comment or participate in the case so that they may be given the opportunity to be heard on TIDCORP’s allegations and accusations. And while RBC chose the wrong mode for interposing its comments and objections in CA-G.R. SP No. 104141, this does not necessarily warrant the outright denial of its chosen remedy; the Court is not so rigid as to be precluded from adopting measures to insure that justice would be administered fairly to all parties concerned. If TIDCORP must pursue its Petition for Review, then RBC should be allowed to comment and participate in the proceedings. There is no other solution to the impasse.
Finally, the CA committed another patent error in declaring that RBC’s proper remedy was not to move for intervention, but to file a Petition for Review of the trial court’s June 6, 2008 Order. It failed to perceive the obvious fact that there is nothing about the trial court’s order that RBC questioned; quite the contrary, it sought to affirm the said order in toto and simply prayed for the dismissal of TIDCORP’s Petition for Review. There is thus no legal and logical basis for its conclusion that RBC should have resorted to a Petition for Review just the same.
With the foregoing conclusions arrived at and the view taken of the case, the CA is hereby directed to allow RBC to file its comment and participate in the proceedings; thereafter, the CA shall continue with the proceedings in CA-G.R. SP No. 104141.
WHEREFORE, the Petition is partially GRANTED. The assailed July 19, 2010 and December 6, 2010 Resolutions of the Court of Appeals in CA-G.R. SP No. 104141 are SET ASIDE. The Court of Appeals is hereby directed to allow petitioner Robinson’s Bank Corporation to file its comment and to participate in CA-G.R. SP No. 104141.
Brion, (Acting Chairperson), Villarama, Jr.,*Mendoza, and Leonen, JJ., concur.
* Per Raffle dated September 15, 2014.
2 Id. at 31-32; penned by Associate Justice Samuel H. Gaerlan and concurred in by Associate Justices Hakim S. Abdulwahid and Ricardo R. Rosario.
5 Formerly ABN-AMRO Bank and Royal Bank of Scotland (Philippines), Inc.
6 Or Grannary, per records.
14 Id. at 99-116 (RBC Comment); 117-132 (TIDCORP Comment).
16 Citing State Investment House, Inc. v. Court of Appeals, 342 Phil. 893 (1997).
20 Citing Rizal Commercial Banking Corporation v. Intermediate Appellate Court, 378 Phil. 10 (1999); Alemar’s Sibal & Sons, Inc. v. Elbinias, G.R. No. 75414, June 4, 1990, 186 SCRA 94; and the Interim Rules of Procedure on Corporate Rehabilitation.
21Rollo, pp. 156-161; penned by Judge Adolfo V. Encomienda.
27Reiterating Rizal Commercial Banking Corporation v. Intermediate Appellate Court, supra note 20; Alemar’s Sibal & Sons, Inc. v. Elbinias, supra note 20; and its arguments in its Comment and Opposition to TIDCORP’s Comment on the receiver’s September 27, 2007 Report with Recommendation.
28Rollo, pp. 215-217; TIDCORP Secretary’s Certificate dated August 1, 2006.
31 Citing People v. Hon. Laguio, Jr., 547 Phil. 296 (2007) and Guy v. Asia United Bank, 561 Phil. 103 (2007).
34 1997 RULES OF CIVIL PROCEDURE.
35 560 Phil. 369 (2007).
Section 2. Review of Decision or Order on Rehabilitation Plan. - An order approving or disapproving a rehabilitation plan can only be reviewed through a petition for review to the Court of Appeals under Rule 43 of the Rules of Court within fifteen (15) days from notice of the decision or order.
Section 5. Executory Nature of Orders. - Any order issued by the court under these Rules is immediately executory. A petition to review the order shall not stay the execution of the order unless restrained or enjoined by the appellate court. Unless otherwise provided in these Rules, the review of any order or decision of the court or an appeal therefrom shall be in accordance with the Rules of Court; provided, however, that the reliefs ordered by the trial or appellate courts shall take into account the need for resolution of proceedings in a just, equitable and speedy manner.
45Philippine National Construction Corporation v. National Labor Relations Commission, 354 Phil. 274, 282 (1998).
46 See Land Bank of the Philippines v. Pagayatan, G.R. No. 177190, February 23, 2011, 644 SCRA 133, 148 (citation omitted).
47Negros Oriental Planters Association, Inc. v. Hon. Presiding Judge, RTC-Negros Occ., Br. 52, Bacolod City, 595 Phil. 1158, 1168 (2008).
48 Gutib v. Court of Appeals, 371 Phil. 293, 307 (1999).

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