Uniwide Sales, Inc., et al. vs. Hearing Panel in SEC Case No. 06-99-6340

February 4, 2014 SEC EN BANC CASE NO. 12-09-183 (SEC Case No. 06-99-6340) UNIWIDE SALES, INC., UNIWIDE HOLDINGS, INC., NAIC RESOURCES AND DEVELOPMENT CORP., UNIWIDE SALES REALTY AND RESOURCES CORP., FIRST PARAGON CORPORATION, AND UNIWIDE WAREHOUSE CLUB, INC. , petitioners , vs. THE HEARING PANEL IN SEC CASE NO. 06-99-6340 , respondent . SEC EN BANC CASE NO. 01-10-193 (SEC Case No. 06-99-6340) IN THE MATTER OF THE PETITION FOR DECLARATION OF SUSPENSION OF PAYMENT, FORMATION AND APPOINTMENT OF A REHABILITATION RECEIVER/COMMITTEE AND APPROVAL OF A REHABILITATION PLAN, UNIWIDE SALES, INC., UNIWIDE HOLDINGS, INC., NAIC RESOURCES AND DEVELOPMENT CORP., UNIWIDE SALES REALTY AND RESOURCES CORP., FIRST PARAGON CORPORATION, AND UNIWIDE WAREHOUSE CLUB, INC. , petitioners-appellants , vs. PHILIPPINE NATIONAL BANK , oppositor-appellee . CLARIFICATORY ORDER On 30 May 2013, the Commission En Banc issued a Decision the dispositive portion stating as follows: "WHEREFORE, premises considered, the Petition for Certiorari (SEC En Banc Case No. 12-09-183) is hereby DENIED. The Order of the Hearing Panel dated 30 July 2009 and the Order of the Special Hearing Panel dated 17 September 2009 are hereby AFFIRMED. The Appeal by the Uniwide Group of Companies (SEC En Banc Case No. 01-10-193) is hereby DENIED, and Special Hearing Panel Resolution dated 13 January 2010 is hereby AFFIRMED. The Urgent Manifestations and Motions to Withdraw from the pending cases SEC En Banc case No. 12-09-183 and SEC En Banc case No. 12-09-183 filed by Uniwide Sales Realty and Resources Corporation, Uniwide Sales, Inc. and Uniwide Holdings, Inc. are hereby DENIED. The DISSOLUTION of all the companies in the group, namely: 1) Uniwide Sales, Inc. 2) Uniwide Holdings, Inc. 3) Naic Resources & Development Corporation 4) Uniwide Sales Realty and Resources Corp. 5) First Paragon Corporation and 6) Uniwide Sales Warehouse Club, Inc. is hereby ORDERED pursuant to Section 6-1 of the SEC Rules of Procedure on Corporate Recovery, after which, LIQUIDATION SHALL FOLLOW." Thereafter, several pleadings were submitted by the parties in relation to the appointment of a liquidator supposedly pursuant to the above-quoted Decision . ADCEcI An Urgent Motion to Appoint a Liquidator dated 27 August 2013 was filed by Division 16 (Philippines), Inc., one of the Creditor-Oppositors in the original rehabilitation proceedings involving the Uniwide Group before the Commission docketed as SEC Case No. 06-99-6340 requesting that the Commission immediately appoint a liquidator pursuant to the dispositive portion of the 30 May 2013 SEC En Banc Decision in relation to Section 6-1, Rule VI of the SEC Rules of Procedure on Corporate Recovery. 1 The Uniwide Group filed an Opposition to the Urgent Motion to Appoint a Liquidator dated 03 September 2013 stating therein that the 30 May 2013 Decision is now the subject of a Petition for Review docketed as CA G.R. No. 130736 pending before the Court of Appeals. Hence, the said Decision, not having reached finality, the same should not be executed. Further, the Uniwide Group argued that the Commission no longer has jurisdiction over cases of liquidation based on R.A. No. 8799 as amended by P.D. 902-A. In its Reply (Re: Petitioners' Opposition dated 03 September 2013) dated 16 September 2013, Division 16 (Philippines), Inc. maintained that the "Commission has jurisdiction and power to order and implement the dissolution of petitioners and the liquidation of their assets" since R.A. No. 8799 provides that the Commission shall retain jurisdiction over pending payment/rehabilitation cases filed as of 30 June 2000. 2 Further, the Decision being one in relation to rehabilitation proceedings, the same is immediately executory despite the same being raised on appeal with the Court of Appeals. In this connection, they also note that the Court of Appeals has not issued a temporary restraining order or status quo order against the Commission despite the Petitioners' prayer. Several other pleadings were submitted by the parties with the same arguments in relation to whether or not the Commission retained jurisdiction over the present matter and, hence, the authority to appoint a liquidator. aSTECA Discussion At this point, it should be noted that the Supreme Court in the case of Consuelo Metal Corporation vs. Planters Development Bank 3 has already stated that: "However, the SEC's jurisdiction does not extend to the liquidation of a corporation. While the SEC has jurisdiction to order the liquidation of the corporation, jurisdiction over the liquidation of the corporation now pertains to the appropriate regional trial courts." In this connection, the Supreme Court, in the above-mentioned case, stated that Republic Act No. 8799 transferred to the appropriate RTC's the SEC's jurisdiction over intra-corporate disputes. However, the SEC shall maintain its jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution and pending suspension or payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. The Uniwide Group's petition for suspension of payments, being filed before 2000, the SEC had jurisdiction over the same until finally terminated based on the 30 May 2013 SEC En Banc Decision . However, the SEC's jurisdiction does not extend to the liquidation of the corporation and the same now pertains to the appropriate RTC's as the latter is "in the best position to convene all the creditors of the corporation, ascertain their claims, and determine their preference" 4 in complete settlement of claims in the liquidation proceedings. Hence, the Uniwide Group's Opposition to the pending Motion is well taken as it argued that, although the Commission has the authority to order the liquidation of a corporation, the actual liquidation proceedings of the a corporation is no longer under the jurisdiction of the Commission as the same has been transferred to the Regional Trial Courts (RTC) pursuant to the Securities Regulation Code, RA 8799, in relation to Section 5 of P.D. 902-A. The Commission in stating that "LIQUIDATION SHALL FOLLOW." at the end of the dispositive portion of the SEC En Banc Decision of 30 May 2013, merely stated the same as liquidation should, logically, commence after the termination of rehabilitation proceedings wherein there is a finding that the rehabilitation of the corporation is no longer feasible. The Commission did not attempt to arrogate upon itself the power and authority to conduct liquidation proceedings. aATESD From the foregoing, the Commission cannot appoint a liquidator to carry out and complete the liquidation of the Uniwide Group as liquidation is, we reiterate, no longer within the jurisdiction of the Commission. The request for the appointment of a liquidator is more appropriately addressed to the RTC. WHEREFORE, the Urgent Motion to Appoint a Liquidator dated 27 August 2013 filed by Division 16 (Philippines), Inc. is hereby DENIED. SO ORDERED. Mandaluyong City, February 4, 2014. * (SGD.) TERESITA J. HERBOSA Chairperson (SGD.) MA. JUANITA E. CUETO Commissioner On official leave MANUEL HUBERTO B. GAITE Commissioner (SGD.) ELADIO M. JALA Commissioner (SGD.) ANTONIETA F. IBE Commissioner Footnotes 1. Section 6-1. Order of Dissolution. In case of termination of the proceedings under the foregoing Rule, for a reason other than the success thereof, the Commission may, motu proprio , or upon motion by any interested party, or on the basis of the findings and recommendation of the Management Committee, Interim Receiver, or Rehabilitation Receiver, as the case may be, that the continuance in business of the debtor is no longer feasible or profitable, or no longer works to the best interest of the stockholders, parties-litigants, creditors, or the general public, order the dissolution of the debtor and the liquidation of the remaining assets appointing a Liquidator for the purpose. 2. Section 5.2 of R.A. No. 8799. 3. G.R. No. 152580, June 26, 2008. 4. Ibid. * Signed on February 6, 2016.