SECOND DIVISION
[G.R. No. 197313. September 6, 2017.]
BAYAN DELINQUENT LOAN RECOVERY 1 (SPV-AMC), INC., petitionervs. INTERNATIONAL FARMS CORPORATION, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated 06 September 2017 which reads as follows:
"G.R. No. 197313 — Bayan Delinquent Loan Recovery 1 (SPV-AMC), Inc. versus International Farms Corporation
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision 1 dated October 22, 2010 (Decision) of the Court of Appeals 2 (CA) in CA-G.R. SP No. 104822, dismissing the petition filed by petitioner Bayan Delinquent Loan Recovery 1 (SPV-AMC), Inc., and the CA Resolution 3 dated June 7, 2011, denying the petitioner's motion for reconsideration.
The Facts and Antecedent Proceedings
As culled from the pleadings submitted by the parties and summarized in the CA Decision, the pertinent facts are as follows:
On May 31, 2007, the respondent [International Farms Corporation] filed a petition for rehabilitation in Branch 34 of the [Regional Trial Court] of the 4th Judicial Region stationed in Calamba City [(RTC)] which is a special commercial court designated by the Supreme Court in that area.
[[As alleged in the petition for rehabilitation, the respondent, which is one of the country's leading swine breeders,] currently owns and operates farm facilities composed of two (2) farm sites with an aggregate area of 14.9 hectares located in Bo. San Isidro, Cabuyao, Laguna where it continues to undertake swine genetic development, integrated farming system, waste water treatment and research and development efforts on animal husbandry, nutrition, facilities planning, etc., in order to improve domestic swine breeds. [The respondent's] farm is equipped with a computerized recording system and the latest technology in tunnel ventilation for nucleus boars.] 4
[[The petitioner] is the Assignee of [Union Bank] of the Philippines [(Union Bank)], one of [the respondent's] secured lenders and among the acknowledged creditors in the Petition for Corporate Rehabilitation dated [May 31, 2007] filed by [the respondent].] 5
On June 5, 2007, the [RTC] issued a Stay Order which, among others, set the initial hearing on the petition to be held on August 7, 2007. However, the said initial hearing on the petition did not push through as set. It was moved and reset to September 25, 2007, then to November 13, 2007 and then to December 11, 2007.
[On July 24, 2007, the RTC appointed Mr. Arthur R. Ponsaran as rehabilitation receiver.] 6
When December 11, 2007 came, the initial hearing on the respondent's petition for rehabilitation pushed through. However, it was not finished and the continuation thereof was set to be held on December 27, 2007. Again it was not finished on December 27, 2007, and so, continuation thereof was set to be held on January 15, 2008, then on February 19, 2008, then on June 3, 2008 and then on June 10, 2008.
On June 10, 2008, the [RTC] issued an order that the clarificatory hearing on the respondent's petition for rehabilitation was already terminated.
On June 11, 2008, the [RTC] issued an order extending up to October 11, 2008 the period for the approval or disapproval of the respondent's rehabilitation plan.
On July 8, 2008, the petitioner filed in the [RTC] a motion to terminate proceedings and lift stay order on the grounds that the clarificatory hearing on the petition already exceeded 180 days from the date of the initial hearing thereon and that no rehabilitation plan was approved by the [RTC] upon the lapse of 180 days from the date of the initial hearing on the petition.
On July 9, 2008, the Presiding Judge of the [RTC] issued an order denying the said motion of the petitioner to terminate proceedings and lift stay order in RTC SEC Case No. 73-2007-C as well as barring the petitioner from participating as a party in the further proceedings [of] the case. 7
The Ruling of the RTC
The Order dated July 9, 2008 of the RTC states:
The "Motion to Terminate Proceedings and Lift Stay Order" filed by creditor Bayan Delinquent Loan Recovery I (SPV-AMC), Inc. ("BDLR") on July 8, 2008, and the "Motion to Terminate Proceedings" filed by creditor Asiatrust Development Bank ("Asiatrust") on June 18, 2008 are hereby DENIED, said Motions having been mooted by the Order of this Court dated June 11, 2008. Moreover, the ground cited by BDLR is not one of the grounds under Sec. 27, Rule 3 of the Interim Rules of Procedure on Corporate Rehabilitation.
Further to the reasons cited by this Court in said Order of June 11, 2008, creditor Bayan Delinquent Loan Recovery I (SPV-AMC), Inc. is barred from participating in the proceedings under paragraph "h" of the Stay Order issued under Rule 14, Section 6 of the Interim Rules of Procedure on Corporate Rehabilitation for failing to file its verified opposition to or comment on the petition ten (10) days before the initial hearing, after its publication in a newspaper of general circulation and personal service of said Order. If the Court has accepted "BDLR"'s pleadings and comments, and allowed its appearance in the proceedings without leave of court as required under the Interim Rules, it was merely to hear their comments as creditors and not as regular participants in the proceedings. The records show that in addition to the publication of the Stay Order, creditor (Union Bank) Bayan Delinquent was even personally furnished a copy of the Stay Order by the sheriff of this Court. The proceedings in the rehabilitation case are in rem. Stated elsewise, Bayan Delinquent was delinquent (no pun) in its corporate duties in this case. When the Court approved the substitution of creditor Union Bank by creditor Bayan, the latter merely stepped into the existing rights, title and interest of the former (Union Bank) as of December 27, 2007. Union Bank, the original creditor, at that time, had already been barred by operation of law for having failed to comply with the Stay Order.
SO ORDERED. 8
On August 29, 2008, the petitioner filed a petition for review of the aforementioned July 9, 2008 Order of the RTC with the CA.
Meanwhile, the RTC approved the respondent's Rehabilitation Plan in its Order dated October 2, 2008. 9
The Ruling of the CA
The CA in a Decision dated October 22, 2010 dismissed the petition, the dispositive portion of which states:
WHEREFORE, in view of all the foregoing premises, we hereby DISMISS the petition filed in the case at bench.
SO ORDERED. 10
The CA explained that it is plain and manifest that the Order dated July 9, 2008 of the RTC cannot be the proper subject of an appeal by the petitioner via a petition for review under Rule 43 of the Rules of Court because it is a mere interlocutory order. Consequently, the said petition is dismissible for being improper. 11
The CA held that the Order dated October 2, 2008, approving the rehabilitation plan of the respondent, had rendered moot and academic the issues involved in the petitioner's motion to terminate proceedings and lift stay order as another ground that would warrant the dismissal of the petition. These issues were no longer of any moment because the rehabilitation proceedings proceeded and culminated in the approval of the respondent's rehabilitation plan. 12
The motion for reconsideration filed by the petitioner was denied by the CA in a Resolution 13 dated June 7, 2011.
Hence, the petition. 14 The respondent filed a Comment dated December 20, 2011. 15 The petitioner filed a Reply dated January 9, 2017. 16
The Issues
The petitioner raises the following issues:
1. Whether the CA erred in dismissing the Petition for Review dated August 29, 2008 without considering the merits of the petition and overlooking the reversible error committed by the rehabilitation court when it arbitrarily ruled in its Order dated July 9, 2008 that the petitioner shall be barred from participating in the rehabilitation proceedings.
2. Assuming without admitting that the Petition for Review dated August 29, 2008 filed by the petitioner was the improper mode of appeal, the CA still committed reversible error when it failed to consider that the rehabilitation court acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the July 9, 2008 Order. 17
The respondent adds the following issue:
3. Whether the petition should be dismissed outright since the certification against forum-shopping was signed by its legal counsel, and not by the principal party. 18
The Court's Ruling
The petition is not meritorious.
On the first issue, the petitioner contends that despite the approval of the rehabilitation plan, the CA should have addressed the issues raised in its petition. It cites Asiatrust Development Bank v. First Aikka Development, Inc. 19 (Asiatrust) in support of its argument that:
x x x In spite of the existence of a Rehabilitation Plan, the fact that a major creditor was denied its right to participate in the rehabilitation proceedings because of its alleged delay in filing a Comment, compelled the Supreme Court to nullify the approved Rehabilitation Plan in order to include a major creditor that was erroneously excluded from the proceedings. 20
The respondent counters that the petitioner's reliance on Asiatrust is misplaced. It mentions that in Asiatrust, the petitioner therein filed a Motion for Leave of Court to Admit Opposition to Rehabilitation Petition, which served as its comment; and there was a compelling reason for Asiatrust to be heard since its loan obligations could not be determined with certainty unlike the petitioner, as an acknowledged creditor of the respondent, which was fully heard in the proceedings before the RTC. 21
The petitioner invokes Asiatrust for the first time. Understandably, the assailed CA Decision and Resolution predate Asiatrust.
The Court in Asiatrust answered in the negative the issue of whether the rehabilitation court, as affirmed by the CA, correctly denied the prayer of the petitioner therein to participate in the rehabilitation proceedings because of the belated filing of its Comment/Opposition to petition for rehabilitation of the respondents therein in this wise:
The Court promulgated the [Interim Rules of Procedure on Corporate Rehabilitation (Rules)] in order to provide a remedy for summary and non-adversarial rehabilitation proceedings of distressed but viable corporations. These Rules are to be construed liberally to obtain for the parties a just, expeditious, and inexpensive disposition of the case. To be sure, strict compliance with the rules of procedure is essential to the administration of justice. Nonetheless, technical rules of procedure are mere tools designed to facilitate the attainment of justice. Their strict and rigid application should be relaxed when they hinder rather than promote substantial justice. Otherwise stated, strict application of technical rules of procedure should be shunned when they hinder rather than promote substantial justice.
In this case, instead of filing its opposition to the petition for rehabilitation at least ten days before the date of the initial hearing as required by the Rules, petitioner filed a Motion for Leave of Court to Admit Opposition to Rehabilitation Petition with the attached Opposition to Petition for Rehabilitation on the date of the initial hearing. Because the pleading was not filed on time, the RTC denied the motion. While the court has the discretion whether or not to admit the opposition belatedly filed by petitioner, it is our considered opinion that the RTC gravely abused its discretion when it refused to grant the motion, even as the factual circumstances of the case require that the Rules be liberally construed in the interest of justice.
Admittedly, petitioner is respondents' major creditor. The parties even explained that the new payment scheme adopted in the approved rehabilitation plan maintained the same scheme as that stipulated in the contracts between respondents and their creditors except that of petitioner. In other words, respondents could pay the other creditors in the same manner as that stipulated in their contracts but could not abide by the terms of their contracts with petitioner.
Moreover, petitioner and respondents differ in their assessment and computation of the latter's obligations to the former. Petitioner claims that respondents owe it P145,830,220.95, while the latter only admit a total obligation of P24,202,015. This disparity in the parties' claims makes it more important for the rehabilitation court to have given petitioner the opportunity to be heard. Besides, in their petition before the RTC, respondents sought the determination of the true and correct amount of their loan with petitioner. We consider this as a compelling reason for the liberal interpretation of the Rules, and the rehabilitation court should have admitted petitioner's comment on the petition for rehabilitation and allowed petitioner to participate in the proceedings.
Time and again, we have held that cases should, as much as possible, be resolved on the merits, not on mere technicalities. In cases where we dispense with the technicalities, we do not mean to undermine the force and effectivity of the periods set by law. In those rare cases where we did not stringently apply the procedural rules, there always existed a clear need to prevent the commission of a grave injustice, as in the present case. Our judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement of procedural laws and the guarantee that every litigant be given the full opportunity for the just and proper disposition of his cause. 22 (Emphasis and underscoring supplied)
In the present case, has the petitioner presented a compelling reason for the liberal interpretation of the Rules and a clear need thereof to prevent the commission of a grave injustice to the petitioner?
The petitioner merely presents this justification: "Petitioner was denied the right to due process and the right to be heard as creditor in the rehabilitation proceedings." 23
The Court finds the justification lame. The petitioner was not excluded in the approved rehabilitation plan. 24 The petitioner has not even clearly demonstrated the negative or unfavorable effect of the approved rehabilitation plan on the respondent's obligations to the petitioner vis-a-vis the other creditors of the respondent. The petitioner needs to substantiate that, under the approved rehabilitation plan, it does not stand pari passu with the respondent's creditors that have credits of such nature similar to the petitioner. 25 The petitioner in Asiatrust had convinced the Court of its unfair and unjust treatment in the approved rehabilitation plan which the Court did not sustain. Unfortunately, the petitioner here has not risen to the level of the petitioner in Asiatrust to warrant the liberal interpretation of the Rules.
As to the denial of the petitioner's right to due process, the respondent points out that the "[p]etitioner, as an acknowledged creditor of [the] respondent, was fully heard in the proceedings a quo." 26 The RTC Order dated July 9, 2008 confirms that, as creditor, the petitioner was duly heard and at the time that the petitioner was allowed to substitute its predecessor-in-interest (Union Bank), the latter had already been barred from participating in the rehabilitation proceedings for its failure to comply with the RTC's Stay Order, 27viz.:
x x x If the Court has accepted "BDLR"'s pleadings and comments, and allowed its appearance in the proceedings without leave of court as required under the Interim Rules, it was merely to hear their comments as creditors and not as regular participants in the proceedings. The records show that in addition to the publication of the Stay Order, creditor (Union Bank) Bayan Delinquent was even personally furnished a copy of the Stay Order by the sheriff of this Court. The proceedings in the rehabilitation case are in rem. Stated otherwise, Bayan Delinquent was delinquent (no pun) in its corporate duties in this case. When the Court approved the substitution of creditor Union Bank by creditor Bayan, the latter merely stepped into the existing rights, title and interest of the former (Union Bank) as of December 27, 2007. Union Bank, the original creditor, at that time, had already been barred by operation of law for having failed to comply with the Stay Order. 28 (Underscoring supplied)
The petitioner, indeed, cannot complain because it was duly accorded its day in court.
The second and third issues will be jointly discussed.
On the second issue, the petitioner submits that even if it had availed of the improper remedy, the CA, in the interest of justice, should have treated the allegations in the petition as allegations of grave abuse of discretion amounting to lack or excess of jurisdiction. As authorities, it relies on Yujuico v. Atienza, Jr. 29 and Tanenglian v. Lorenzo.3031
The respondent counters that the petitioner failed to allege, much less prove, that the RTC acted without or in excess of its jurisdiction, and that there was no appeal or plain, speedy and adequate remedy in the course of law. It also contends that Yujuico cannot be successfully invoked by the petitioner because the petitioner failed to implead the RTC in the Petition for Review dated August 29, 2008. 32
Regarding the third issue, the respondent argues that the present petition should be dismissed outright because the certification against forum shopping was signed by the petitioner's counsel, Atty. Emmanuel S. Ypil, and not by the principal party. 33
The first issue having been resolved against the petitioner, the resolution of the remaining two issues becomes an idle ceremony. In the second issue, the petitioner again seeks the liberal application of the procedural rules. For the same reasons as enunciated anent the first issue, the second issue is resolved against the petitioner. While the respondent's arguments in the third issue have merit, a resolution in its favor no longer has any added significance given the Court's disposition of the first issue.
WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit.
SO ORDERED."
Very truly yours,
MA. LOURDES C. PERFECTODivision Clerk of Court
By:
(SGD.) TERESITA AQUINO TUAZONDeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 46-58. Penned by Associate Justice Isaias Dicdican, with Associate Justices Stephen C. Cruz and Manuel M. Barrios concurring.
2. Special Seventeenth (17th) Division.
3.Rollo, pp. 61-62.
4. Petition for rehabilitation, pp. 1-2, id. at 143-144.
5. Petition, p. 6, id. at 18.
6.Id. at 389.
7. CA Decision, pp. 2-3, id. at 47-48.
8. RTC Order dated July 9, 2008, penned by Judge Jesus A. Santiago, id. at 123-124, 137-138.
9.Rollo, pp. 53-56.
10.Id. at 57.
11.Id. at 52.
12.Id. at 53 and 56.
13.Id. at 61-62.
14.Id. at 13-45, excluding Annexes.
15.Id. at 667-764, excluding Annexes.
16.Id. at 801-815.
17.Id. at 27.
18.Id. at 667.
19. 665 Phil. 313 (2011).
20.Rollo, p. 28.
21.Id. at 682-685.
22.Asiatrust Development Bank v. First Aikka Development, Inc., supra note 19, at 328-330.
23. Petition, p. 22, rollo, p. 34.
24. See id. at 53-56.
25.Id. The approved rehabilitation plan provides "Dacion Farm 1 property to Asiatrust Bank Deed of Conveyance executed in favor of Asiatrust Bank in April 2007" and "Dacion Farm Residence consisting of 888 sq. m. located beside Farm 1, and INFARMCO foundation property (10,400 sq. m.) to Union Bank of the Philippines to pay off the Tranch 3 Loan; excess value shall be applied to the Tranch 2 of Union Bank of the Philippines." (Id. at 53.) As to Tranch 1 — MTI Banks and Tranch 2 — MTI Banks, the interest is uniform at "4% p.a. payable semi-annual retroactive June 28, 2002 up to September 28, 2006; no interest charge from September 29, 2006 onwards until approval of rehabilitation plan. Payment starts upon approval of the rehabilitation plan; to be paid on semi-annual basis." (Id. at 54.)
26. Comment, p. 19, rollo, p. 685.
27.Id. at 377-381. The RTC Stay Order dated June 5, 2007 directed Union Bank, among other creditors, to file and serve on the petitioner a verified comment or opposition to the petition, with supporting affidavits and documents, not later than 10 days before August 7, 2007. (Id. at 379).
28.Id. at 123-124, 137-138.
29. 509 Phil. 442 (2005).
30. 573 Phil. 472 (2008).
31.Rollo, pp. 35-37.
32.Id. at 671.
33.Id. at 668.