Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83400:57571&catid=1587&Itemid=566
Timestamp: 2019-04-23 19:59:14+00:00

Document:
PUERTO AZUL LAND, INC., Petitioner, v. PACIFIC WIDE REALTY DEVELOPMENT CORPORATION*, Respondent.
Assailed in this petition for review on certiorari1 are the Decision2 dated February 21, 2008 and the Resolution3 dated July 22, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 92691 which set aside the Decision4 dated December 13, 2005 of the Regional Trial Court of Manila, Branch 24 (RTC) in Civil Case No. 04-110914, thereby dismissing the revised rehabilitation plan of petitioner Puerto Azul Land, Inc. (PALI).
On September 17, 2004, the RTC, finding PALI’s petition to be sufficient in form and substance, issued a Stay Order10 pursuant to Section 6, Rule 4 of the Interim Rules on Corporate Rehabilitation11 (Interim Rules), among others, (a) staying the enforcement of all claims against the debtor, its guarantors, and sureties not solidarily liable with the debtor, (b) prohibiting PALI from making any payment of its liabilities outstanding as of the date of filing of the petition, (c) prohibiting PALI from selling, encumbering, transferring, or disposing any of its properties except in the ordinary course of business, and (d) appointing Mr. Patrick V. Caoile as Rehabilitation Receiver, conditioned upon his posting of a bond in the amount of P1,000,000.00.
a) The properties offered by the petitioner shall be appraised by three appraisers, one to be chosen by the petitioner, a second to be chosen by the bank creditors and the third to be chosen by the Receiver. The average of the appraisals of the three (3) chosen appraisers shall be the value to be applied in arriving at the dacion value of the properties. In case the dacion amount is less than the total of the secured creditor’s principal obligation, the balance shall be restructured in accordance with the schedule of payments under option 2, paragraph (a). In case of excess, the same shall [be] applied in full or partial payment of the accrued interest on the obligations. The balance of the accrued interest, if any, together with the penalties shall [be] condoned.
a) The obligations to secured creditors will be subject to a 50% haircut of the principal, and repayment shall be semi-annually over a period of 10 years, with 3-year grace period. Accrued interests and penalties shall be condoned. Interest shall be paid at the rate of 2% p.a. for the first 5 years, and 5% p.a. thereafter until the obligations are fully paid. The petitioner shall allot 50% of its cash flow available for debt service for secured creditors. Upon completion of payments to government and employee accounts, the petitioner’s cash flow available for debt service shall be used until the obligations are fully paid.
b) One half (1/2) of the principal of the petitioner’s unsecured loan obligations to other creditors shall be settled through non-cash offsetting arrangements, with the balance payable semi-annually over a period of 10 years, with 3-year grace period, with interest at the rate of 2% p.a. for the first 5 years and 5% p.a. from the 6th year onwards until the obligations are settled in full. Accrued interest and penalties shall be condoned.
CGAM was later substituted by its assignee, herein respondent Pacific Wide Realty Development Corporation (PWRDC),19 in the proceedings before the CA.
In a Decision20 dated February 21, 2008, the CA granted PWRDC’s petition for review and reversed the December 13, 2005 RTC Decision, thereby dismissing PALI’s petition for rehabilitation.
PALI moved for reconsideration which the CA denied in a Resolution24 dated July 22, 2008, prompting the filing of the instant petition.
The core issue for resolution is whether or not the CA erred in reversing the December 13, 2005 RTC Decision, thereby dismissing PALI’s Revised Rehabilitation Plan.
The Court finds in favor of PALI.
In G.R. No. 180893, the rehabilitation plan is contested on the ground that the same is unreasonable and results in the impairment of the obligations of contract. PWRDC contests the following stipulations in PALI’s rehabilitation plan: fifty percent (50%) reduction of the principal obligation; condonation of the accrued and substantial interests and penalty charges; repayment over a period of ten years, with minimal interest of two percent (2%) for the first five years and five percent (5%) for the next five years until fully paid, and only upon availability of cash flow for debt service.
We find nothing onerous in the terms of PALI’s rehabilitation plan. The Interim Rules on Corporate Rehabilitation provides for means of execution of the rehabilitation plan, which may include, among others, the conversion of the debts or any portion thereof to equity, restructuring of the debts, dacion en pago, or sale of assets or of the controlling interest.
Since the issue on the validity, as well as regularity of the December 13, 2005 RTC Decision approving PALI’s Revised Rehabilitation Plan had already been resolved, the Court, in line with the res judicata principle, is constrained to grant the present petition and, consequently, reverse the assailed CA decision.
As may be gleaned from the foregoing antecedents, the present case and G.R. No. 180893 involve the same parties, i.e., PWRDC and PALI, the same subject matter, i.e., PALI’s rehabilitation, and the same causes of action, i.e., the alleged violation of PWRDC’s rights as creditor by virtue of the RTC’s approval of PALI’s Revised Rehabilitation Plan. Thus, with the identity of all three (3) elements present in the previously decided case and this one, it is then clear that the principle of res judicata should heretofore apply. Accordingly, the Court’s November 25, 2009 Decision in G.R. No. 180893 (consolidated with G.R. No. 178768) bars the re-litigation of the issue of the validity and regularity of the approved Revised Rehabilitation Plan between PWRDC and PALI. As the plan’s validity had already been upheld, PWRDC is now bound by such adverse ruling which had long attained finality. As a result, the CA Decision opposite to the aforestated Court Decision should be set aside, and the petition herein be granted.
WHEREFORE, the petition is GRANTED. The Decision dated February 21, 2008 and the Resolution dated July 22, 2008 of the Court of Appeals in CA-G.R. SP No. 92691 are hereby SET ASIDE.
2 Id. at 51-67. Penned by Associate Justice Ramon M. Bato, Jr. with Associate Justices Jose C. Mendoza (now a member of this Court) and Marlene Gonzales-Sison, concurring.
4 Id. at 132-145. Penned by Judge Antonio M. Eugenio, Jr.
9 Id. at 52 and 73. See also id. at 146-166.
11 A.M. No. 008-10-SC (2000).
14 Id. at 81-112 (with Annexes).
19 See footnote 1 in the CA Decision; id. at 51.
28 See CA Decision dated May 17, 2007 penned by Associate Justice Lucenito N. Tagle with Associate Justices Amelita G. Tolentino and Mariflor Punzalan-Castillo, concurring; id. at 167-179.
34Union Bank of the Phil. v. ASB Development Corp., 582 Phil. 559, 579 (2008).
35 See Pryce Corporation v. China Banking Corporation, G.R. No. 172302, February 18, 2014, citing Antonio v. Sayman Vda. de Monje, G.R. No. 149624, September 29, 2010, 631 SCRA 471, 479-480.
36Borra v. CA, G.R. No. 167484, September 9, 2013, 705 SCRA 222, 236-237, citing Antonio v. Sayman Vda. de Monje, id. at 480-481.
37Borra v. CA , id. at 236.

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