THIRD DIVISION
[G.R. Nos. 225748-49. March 5, 2018.]
DAVID YU KIMTENG, MARY L. YU, WINNIE L. YU, VIVIAN L. YU, ROSA GAN, LILIAN CHUA WOO YU KIMTENG, MARCELO YU, SIN CHIAO YU LIM, AND SANTOS YU, petitioners, vs. GERARDO VALENTIN, JR., PILIPINAS SHELL CORPORATION, ALLIED LEASING AND FINANCE CORPORATION, EXXONMOBIL PETROLEUM AND CHEMICAL CORPORATION, FIDELITY INSURANCE COMPANY, INC., ANTHONY LIM AND YOUNG REVILLA GAMBOL AND MAGAT, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedMarch 5, 2018, which reads as follows: HTcADC
"G.R. Nos. 225748-49 (David Yu Kimteng, Mary L. Yu, Winnie L. Yu, Vivian L. Yu, Rosa Gan, Lilian Chua Woo Yu Kimteng, Marcelo Yu, Sin Chiao Yu Lim, and Santos Yu, petitioners v. Gerardo Valentin, Jr., Pilipinas Shell Corporation, Allied Leasing and Finance Corporation, Exxonmobil Petroleum and Chemical Corporation, Fidelity Insurance Company, Inc., Anthony Lim and Young Revilla Gambol and Magat, respondents.). — Before this Court is a Petition for Review 1 seeking a reversal of the Court of Appeals January 22, 2016 Decision 2 and June 30, 2016 Resolution 3 in CA-G.R. SP Nos. 133312 and 133231. The Court of Appeals denied David Yu Kimteng, Mary L. Yu, Winnie L. Yu, Vivian L. Yu, Rosa Gan, Lilian Chua Woo Yu Kimteng, Marcelo Yu, Sin Chiao Yu Lim, and Santos Yu's (petitioners) Petition for Certiorari against the Regional Trial Court Orders, which upheld the validity of a liquidator's election.
This case originated from a Petition for Suspension of Payments filed by Ruby Industrial Corporation (Ruby Industrial) on December 13, 1983 before the Securities and Exchange Commission (SEC). 4 On December 20, 1983, SEC declared Ruby Industrial under suspension of payments. On August 10, 1984, the SEC Hearing Panel created a Management Committee composed of representatives from Allied Leasing and Finance Corporation (ALFC), Philippine Bank of Communications, China Banking Corporation, Pilipinas Shell Petroleum Corporation (Pilipinas Shell), and Ruby Industrial represented by Mr. Yu Kim Giang. 5
Thereafter, two (2) rehabilitation plans 6 were submitted by petitioners, who were majority stockholders of Ruby Industrial, but were eventually enjoined in implementation 7 and/or disapproved. 8
On March 14, 2000, Bank of the Philippine Islands, one of Ruby Industrial's secured creditors, filed a Motion to Vacate Suspension Order. 9 The Management Committee also moved for SEC to conduct further proceedings for the eventual liquidation of Ruby Industrial due to the impossibility of its proposed rehabilitation. 10
On September 18, 2002, SEC issued an Order denying the petition for suspension of payments and dissolving the Management Committee. 11 On May 26, 2004, the Court of Appeals set aside this SEC Order and directed, among others: (1) the unwinding of all illegal assignments of credits of Ruby Industrial's creditors during the suspension of payments order and requiring the majority stockholders to account for all illegal assignments; and (2) SEC's supervision of Ruby Industrial's liquidation. 12
This Court affirmed 13 the Court of Appeals May 26, 2004 Decision with the modification that the appropriate Regional Trial Court, instead of SEC, be directed to supervise the liquidation proceedings.
Accordingly, SEC transferred the case to the Regional Trial Court of Mandaluyong City. The case was raffled to Branch 211 and docketed as SEC Case Nos. MC12-133 and 134 entitled In Re: Involuntary Liquidation of Ruby Industrial Corporation. The trial court eventually scheduled the election and appointment of a liquidator. 14
Respondent ALFC nominated as liquidator Gerardo C. Valentin, Jr. (Valentin), a former employee of Shell Global Oil Business. He represented Pilipinas Shell in the dissolved Management Committee. 15 On the other hand, the heirs of Miguel Lim 16 proposed that the dissolved Management Committee be appointed to handle Ruby's liquidation. 17
Petitioners objected to the nominations of Valentin and the Management Committee and nominated Dean Danilo L. Concepcion, Ex-Commissioner Evangeline Crisostomo Escobillo, Atty. Rosario S. Bernaldo, and Atty. Norma Singson-De Leon instead. 18
On August 30, 2013, Valentin was elected as liquidator. Petitioners filed a Motion to Invalidate Election and/or to Disqualify him,
[C]laiming that the election was defective because: (1) the Amended Liquidation Order did not set the period for the filing of claims of those allowed to vote, and; (2) the trial court did not require those whom it allowed to vote to file their claims prior to the election proceedings. 19
Petitioners also alleged that he was disqualified to be a liquidator for being a former representative of Pilipinas Shell in the Management Committee and for failing to file a bond upon appointment. 20
The trial court denied petitioners' motion in its September 20, 2013 Order and held that "petitioners [were] not entitled to vote for the election of a liquidator [or] to move for the latter's removal." 21 It then instructed Valentin to assume his functions upon filing a P5,000,000.00 bond. 22 HEITAD
Petitioners sought for a reconsideration of the Regional Trial Court September 20, 2013 Order. They emphasized that as Ruby Industrial's majority stockholders, "they [were] entitled to participate in the election of the liquidator and moved for his disqualification to protect their interests. . . . [T]hey reiterated that [Valentin's election and oath taking] on the same day . . . were irregular and void." 23
During the pendency of petitioners' motion for reconsideration, Valentin filed a Manifestation with Motion to Cite for Contempt (Motion for Contempt) the petitioners for re-executing a deed of assignment of credits with Benhar International, Inc. in favor of Philippine Trust Company (Philtrust Bank), contrary to this Court's June 6, 2011 Decision. 24
Atty. Walter T. Young, Valentin's counsel, also filed a Request for Subpoena Duces Tecum Ad Testificandum against Mary L. Yu, David Yu Kimteng, and Martin B. Isidro, "directing them to appear and to bring before the court the original owner's duplicate copies of transfer certificate of titles of [real properties and] . . . to explain to the court the execution of another deed of assignment with Philtrust Bank." 25
Petitioners moved for the dismissal of Valentin's Motion for Contempt for being contrary to Rule 71, Section 4 of the Rules of Court. They contended that Valentin's capacity to act as liquidator remained unresolved. Petitioners also filed an Urgent Motion to Quash the Subpoena. They argued that "the calling of witnesses and the production of documents were contrary to the summary and non-adversarial nature of a liquidation proceeding." 26
In its December 5, 2013 Joint Order, the Regional Trial Court denied petitioners' motions. According to the trial court, Valentin was validly elected as liquidator, and petitioners, not being creditors of Ruby Industrial, were not entitled to participate in the election. 27
In a hearing conducted on December 6, 2013, the trial court likewise denied petitioners' motion to quash the subpoena duces tecum ad testificandum. It held that the issuance of the subpoena to Mary L. Yu, David Yu Kimteng, and Martin B. Isidro was in accordance with Valentin's duties as the liquidator to recover all the assets of Ruby Industrial. 28
Petitioners filed two (2) Petitions for Certiorari before the Court of Appeals. The first petition, docketed as CA-G.R. SP No. 133312, was directed against the Orders of the Regional Trial Court, which upheld Valentin's election as liquidator. The second petition, docketed as CA-G.R. SP No. 133231, assailed the trial court's cognizance of Valentin's Motion for Contempt. These two (2) cases were subsequently consolidated. 29
In its January 22, 2016 Decision, the Court of Appeals denied the petitions 30 and held that petitioners were not creditors as contemplated by law and jurisprudence. Hence, they were not entitled to participate in the election of a liquidator or to move for Valentin's disqualification. According to the Court of Appeals, "the powers to elect and remove [a] liquidator [were] reserved solely to creditors and [did] not extend to stockholders of the [insolvent] corporation." 31
The Court of Appeals further rejected petitioners' claim that Valentin was disqualified because of a conflict of interest. It found that Pilipinas Shell abstained in the election of a liquidator. It also held that the acts of the creditors in nominating and voting for Valentin "clearly showed that they ha[d] already waived their right to raise their objection to [his] nomination and . . . election." 32
On the contested participation of ALFC in the election proceedings despite non-filing of its claim, the Court of Appeals held that Ruby Industrial had long acknowledged its outstanding obligation with ALFC even during the proceedings for suspension of payment, which was validated by this Court in its June 6, 2011 Decision. Hence, to nullify the election of the liquidator on the ground that ALFC did not file its Notice of Claim would cause great injustice. 33
Finally, the Court of Appeals held that CA-G.R. SP No. 133312 was mooted by Valentin's withdrawal of his Motion for Contempt against petitioners, which the trial court granted. 34
Petitioners filed a Motion for Reconsideration, which the Court of Appeals denied in its June 30, 2016 Resolution. 35
On August 23, 2016, petitioners filed their Petition before this Court. They contend that they are considered parties in the liquidation proceedings under Section 4 (bb) 36 of the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, who would be benefitted or injured by the outcome of the liquidation of their corporation. Hence, the Court of Appeals erred in ruling that they had no right to participate in or question the election of the liquidator because they were not creditors. They claim that the Court of Appeals' ruling is unduly restrictive and unfair to them and goes against the spirit and intent of FRIA and of the 2015 Financial Liquidation and Suspension of Payments Rules of Procedure for Insolvent Debtors. 37 ATICcS
Respondents Pilipinas Shell, 38 ALFC, 39 Anthony Lim, 40 and liquidator Valentin and Young Gambol and Magat, 41 through their counsels, filed their respective Comments. They principally argue for the validity of the liquidator's election.
However, on August 17, 2017, the parties filed their Joint Motion to Dismiss, 42 stating that they had reached a settlement of their claims and defenses. They jointly move for the dismissal of this case. The Joint Motion to Dismiss was signed by Atty. Walter T. Young of the Young Gambol and Magat Law Offices, counsel for liquidator Valentin; Atty. Jacinto D. Jimenez of Romulo Mabanta Buenaventura Sayoc and De los Angeles for respondent Anthony Lim; and Attys. Ma. Preciosa L. Gumaru and Florina P. Tan of Balgos Gumaru Faller Tan and Javier for the petitioners.
This Court finds the Joint Motion to Dismiss to be in order, and therefore, grants it.
WHEREFORE, this Court resolves as follows:
(1) the Motion for Substitution with Entry of Appearance filed by Grandholdings Investments, Inc. for Allied Leasing Finance Corporation be GRANTED, and the Entry of Appearance of Atty. Verna Lynn V. Aceveda of Erwin C. Go and Associates as counsel for Grandholdings Investments, Inc. be NOTED;
(2) petitioners' Opposition to respondent's Motion to Strike out petitioners' reply be NOTED WITHOUT ACTION, in view of this Court's June 28, 2017 Resolution, which noted without action respondents' Motion to Strike;
(3) the Joint Motion to Dismiss dated August 14, 2017 filed by the parties be GRANTED. The Petition is DISMISSED. The case is deemed CLOSED AND TERMINATED;
(4) the Formal Entry of Appearance with Manifestation dated August 11, 2017 filed by Atty. Joseph Omar A. Castillo of Puyat Jacinto and Santos as counsel for respondent Exxonmobil Petroleum and Chemical Corporation be NOTED, and his Motion for Extension of Time to File Comment or Proper Pleading on the petition for review be NOTED WITHOUT ACTION, in view of the foregoing dismissal of the petition; and
(5) the Second Motion for Extension of Time to File Comment or Proper Pleading filed by respondent Exxonmobil Petroleum and Chemical Corporation be NOTED WITHOUT ACTION, in view of the dismissal of the petition.
The Court further resolves to DISPENSE with the comments of Exxonmobil Petroleum and Chemical Corporation and of Fidelity Insurance in view of the dismissal of the petition.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 38-61. The Petition is filed under Rule 45.
2.Id. at 64-78. The Decision was penned by Associate Justice Ramon Paul L. Hernando and concurred in by Associate Justices Jose C. Reyes, Jr. and Stephen C. Cruz of the Fifth Division, Court of Appeals, Manila.
3.Id. at 81-83. The Resolution was penned by Associate Justice Ramon Paul L. Hernando and concurred in by Associate Justices Jose C. Reyes, Jr. and Stephen C. Cruz of the Fifth Division, Court of Appeals, Manila.
4. Docketed as SEC Case No. 2556.
5. See Majority Stockholders of Ruby Industrial Corp. v. Lim, 665 Phil. 600, 605 (2011). [Per J. Villarama, Jr., Third Division].
6. The first was the BENHAR/RUBY Plan, and the second was the Revised BENHAR/RUBY Plan.
7.Majority Stockholders of Ruby Industrial Corp. v. Lim, 665 Phil. 600, 607 (2011) [Per J. Villarama, Jr., Third Division].
8.Id. at 609-610.
9.Id. at 614.
10.Id. at 622.
11.Id. at 623-624.
12.Id. at 625-626.
13.Id. at 657.
14.Rollo, pp. 66-67.
15.Id. at 68 and 74.
16. Miguel Lim was one of the respondents in Majority Stockholders of Ruby Industrial Corp. v. Lim, 665 Phil. 600 (2011) [Per J. Villarama, Jr., Third Division]. His heirs were represented by Romulo Mabanta Buenaventura Sayoc and De los Angeles. See rollo, p. 68.
17.Rollo, p. 68.
18.Id.
19.Id.
20.Id.
21.Id. at 68-69.
22.Id. at 69.
23.Id.
24.Id.
25.Id. at 69-70.
26.Id. at 70.
27.Id.
28.Id.
29.Id. at 65-66.
30. Id. at 77.
31. Id. at 73-74.
32. Id. at 76.
33. Id. at 76-77.
34. Id. at 77.
35. Id. at 83.
36. Rep. Act No. 10142, sec. 4 (bb) provides:
Party to the proceedings shall refer to the debtor, a creditor, the unsecured creditors' committee, a stakeholder, a party with an ownership interest in property held by the debtor, a secured creditor, the rehabilitation receiver, liquidator or any other juridical or natural person who stands to be benefited or injured by the outcome of the proceedings and whose notice of appearance is accepted by the court. (Emphasis in the original)
37. Rollo, pp. 47-48.
38. Id. at 270-274.
39. Id. at 254-269.
40. Id. at 92-111.
41. Id. at 188-203.
42. Id. at 437-441.