FIRST DIVISION
CHAS REALTY AND
DEVELOPMENT CORPORATION,
Petitioner,
G.R.
No.
151925
February 6, 2003
-versus-
HON. TOMAS B.
TALAVERA,
IN HIS CAPACITY AS
PRESIDING JUDGEOF THE REGIONAL
TRIAL COURT
OF CABANATUAN CITY, BRANCH 28,
AND ANGEL D.
CONCEPCION,
SR.,
Respondents.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
D E C I S I O N
chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
VITUG,
J.: chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Petitioner Chas Realty
and Development Corporation (CRDC) is a domestic corporation engaged in
property development and management. It is the owner and developer of a
three-hectare shopping complex, also known as the Megacenter Mall
(Megacenter),
in Cabanatuan City.chanrobles virtuallaw libraryred
The construction of
Megacenter commenced in January 1996, but by the time of its so-called
"soft opening" in July 1998, it was only partly completed due to lack
of
funds, said to have been brought about by construction overages due to
the massive devaluation of the peso during the economic crisis in 1997,
low occupancy, and rental arrearages of tenants. The opening of the
upper
ground floor and the second floor of the building followed,
respectively,
in August 1998 and towards the end of 1998. Eventually, Megacenter
opened
its third floor in 1999.chanrobles virtuallaw libraryred
Purportedly on account
of factors beyond the control of CRDC, such as high interest rates on
its
loans, unpaid rentals of tenants, low occupancy rate, sluggishness of
the
economy and the freezing of its bank account by its main creditor, the
Land Bank of the Philippines, CRDC encountered difficulty in paying its
obligations as and when they fell due and had to contend with
collection
suits and related cases.chanrobles virtuallaw libraryred
On 04 June 2001, CRDC
filed a petition for rehabilitation attaching thereto a proposed
rehabilitation
plan, accompanied by a secretary’s certificate, consonantly with
paragraph
2(k), Section 2, Rule 4, of the Interim Rules of Procedure on Corporate
Rehabilitation. CRDC claimed that it had sufficient assets and a
workable
rehabilitation plan both of which showed that the continuance of its
business
was still feasible. It alleged that, prior to the filing of the
petition
for rehabilitation, a special meeting of its stockholders was held on
18
April 2001 during which the majority of the outstanding capital stock
of
CRDC approved the resolution authorizing the filing of a petition for
rehabilitation.chanrobles virtuallaw libraryred
On 08 June 2001, the
Regional Trial Court, Branch 28, of Cabanatuan City, to which the
petition
was assigned, issued an order staying all claims against CRDC and
prohibited
it from making any payment on its outstanding obligations and selling,
or otherwise disposing or encumbering, its property. Forthwith, the
court
appointed a rehabilitation receiver.chanrobles virtuallaw libraryred
On 20 July 2001, Angel
D. Concepcion, Sr., herein private respondent, filed a complaint in
intervention
opposing the appointment of CRDC’s nominee for the post of
rehabilitation
receiver. He belied CRDC’s factual allegations and claimed that the
predicament
of the corporation was due to serious "mismanagement, fraud,
embezzlement,
misappropriation and gross/evident violation of the fiduciary duties of
CHAS officers." Concepcion moved to dismiss and/or to deny the petition
for rehabilitation on the ground that there was no approval by the
stockholders
representing at least two-thirds (2/3) of the outstanding capital stock
which, according to him, would be essential under paragraph 2(k),
Section
2, Rule 4, of the Interim Rules on Corporate Rehabilitation. Concepcion
further asserted that the supposed approval of the directors of the
filing
of the petition for rehabilitation was inaccurate considering that the
membership of petitioner CRDC’s board of directors was still then being
contested and pending final resolution.chanrobles virtuallaw libraryred
On 10 August 2001, CRDC
submitted its opposition chanrobles virtuallaw libraryred
ex abundante cautelam
contending that the complaint in intervention was a prohibited pleading
and that there was no need for it to secure the irrevocable consent and
approval of its stockholders representing at least two-thirds (2/3) of
its outstanding capital stock because the petition did not include in
its
plan for rehabilitation acts that would need any amendment of its
articles
of incorporation and/or by-laws, increase or decrease in the authorized
capital stock, issuance of bonded indebtedness, or the like, where such
two-thirds (2/3) vote would be required.chanrobles virtuallaw libraryred
The trial court issued
an order, dated 15 October 2001, the decretal portion of which was to
the
following effect; viz:chanrobles virtuallaw libraryred
WHEREFORE, premises
considered, in the absence of any showing that the petitioner has
complied
with the certification required under Section 2, Rule 4(K) of the
Interim
Rules of Procedure on Corporate Rehabilitation, the petitioner is
hereby
given a period of 15 days from receipt of a copy of this order to
secure
from its directors and stockholders the desired certification and
submit
the same to this Court in accordance with the above-mentioned provision
of the Interim Rules of Procedure on Corporate Rehabilitation.chanrobles virtuallaw libraryred
With respect to the
other oppositions to the petition for rehabilitation including the
opposition
to the appointment of the rehabilitation receiver, opposition filed by
the land bank and the EEI, Inc., the resolution of the same is hereby
held
in abeyance till after the period given to the petitioner to comply
with
this order as it may become moot and academic after the expiration of
the
period given to the petitioner.[1]chanrobles virtuallaw libraryred
On 29 October 2001,
CRDC filed before the Court of Appeals a petition for certiorari, with
prayer for temporary restraining order and/or preliminary injunction,
which
sought to have the 15th October 2001 order of the trial court set
aside.chanrobles virtuallaw libraryred
The Court of Appeals
rendered a decision on 18 January 2002 and held:chanrobles virtuallaw libraryred
"WHEREFORE, the foregoing
premises considered, the petition for certiorari, with prayer for
temporary
restraining order and/or writ of preliminary injunction, is DENIED for
lack of merit."[2]chanrobles virtuallaw libraryred
Hence, the instant petition
on the following grounds:chanrobles virtuallaw libraryred
I
Public respondent acted
with grave abuse of discretion amounting to lack and/or excess of
jurisdiction
in issuing the assailed order considering that:chanrobles virtuallaw libraryred
A. The petition for
rehabilitation and the proposed rehabilitation plan do not require
extraordinary
corporate actions.chanrobles virtuallaw libraryred
B. Since no extraordinary
corporate actions are required or even contemplated as necessary and
desirable
for the rehabilitation of CRDC, the requirements of the corporation
code
for the approval of such actions cannot be complied with.chanrobles virtuallaw libraryred
C. The rehab rules and
the corporation code do not allow or intend blind blanket approvals of
extraordinary corporate actions.chanrobles virtuallaw libraryred
D. To require 2/3 stockholders’
approval for corporate actions requiring only a majority violates the
right
of the majority stockholders.chanrobles virtuallaw libraryred
II
"Public respondent acted
with grave abuse of discretion amounting to lack and/or excess of
jurisdiction
in requiring CRDC’s compliance with paragraph 2(k), Section 2, Rule 4
of
the Rehab rules when CRDC already complied therewith."[3]chanrobles virtuallaw libraryred
Rule 4, Section 2(k),
of the Interim Rules on Corporate Rehabilitation provides:chanrobles virtuallaw libraryred
Sec. 2. Contents of
the Petition. The petition filed by the debtor must be verified
and
must set forth with sufficient particularity all the following material
facts: (a) the name and business of the debtor; (b) the nature of the
business
of the debtor; (c) the history of the debtor; (d) the cause of its
inability
to pay its debts; (e) all the pending actions or proceedings known to
the
debtor and the courts or tribunals where they are pending; (f) threats
or demands to enforce claims or liens against the debtor; and (g) the
manner
by which the debtor may be rehabilitated and how such rehabilitation
may
benefit the general body of creditors, employees, and stockholders.chanrobles virtuallaw libraryred
The petitioner shall
be accompanied by the following documents:chanrobles virtuallaw libraryred
x x x x x x x x x.chanrobles virtuallaw libraryred
"k. A Certificate attesting,
under oath, that (a) the filing of the petition has been duly
authorized;
and (b) the directors and stockholders have irrevocably approved and/or
consented to, in accordance with existing laws, all actions or matters
necessary and desirable to rehabilitate the debtor including, but not
limited
to, amendments to the articles of incorporation and by-laws or articles
of partnership; increase or decrease in the authorized capital stock;
issuance
of bonded indebtedness; alienation, transfer, or encumbrance of assets
of the debtor; and modification of shareholders’ rights."[4]chanrobles virtuallaw libraryred
Rule 4, Section 2(k),
distinctly provides that, first, under letter (a), the filing of the
petition
has been duly authorized; and, second, under letter (b), the directors
and stockholders have irrevocably approved and/or consented to, in
accordance
with existing laws, all actions or matters necessary and desirable to
rehabilitate
the debtor including, but not limited to, amendments to the articles of
incorporation and by-laws or articles of partnership; increase or
decrease
in the authorized capital stock; issuance of bonded indebtedness,
alienation,
transfer, or encumbrance of assets of the debtor; and modification of
shareholder’s
rights.chanrobles virtuallaw libraryred
Observe that Rule 4,
Section 2(k), prescribes the need for a certification; one, to state
that
the filing of the petition has been duly authorized, and two, to
confirm
that the directors and stockholders have irrevocably approved and/or
consented
to, in accordance with existing laws, all actions or matters necessary
and desirable to rehabilitate the corporate debtor, including, as and
when
called for, such extraordinary corporate actions as may be marked out.
The phrase, "in accordance with existing laws," obviously would refer
to
that which is, or to those that are, intended to be done by the
corporation
in the pursuit of its plan for rehabilitation. Thus, if any
extraordinary
corporate action (mentioned in Rule 4, Section 2(k), of the Interim
Rules
on Corporate Rehabilitation) are to be done under the proposed
rehabilitation
plan, the petitioner would be bound to make it known that it has
received
the approval of a majority of the directors and the affirmative votes
of
stockholders representing at least two-thirds (2/3) of the outstanding
capital stock of the corporation. Where no such extraordinary corporate
acts (or one that under the law would call for a two-thirds (2/3) vote)
are contemplated to be done in carrying out the proposed rehabilitation
plan, then the approval of stockholders would only be by a majority,
not
necessarily a two-thirds (2/3), vote, as long as, of course, there is a
quorum[5]
a fact which is not here being disputed.chanrobles virtuallaw libraryred
The trial court and
appellate court, unfortunately, have taken an inaccurate understanding
of the memorandum to the Supreme Court of Justice Reynato S. Puno, the
committee chair on the draft of the rules on corporate rehabilitation,
still then being proposed; the memorandum reads, in part, thusly:chanrobles virtuallaw libraryred
3. Rule 4. - Rehabilitationchanrobles virtuallaw libraryred
The following are the
principal deviation from the SEC Rules:chanrobles virtuallaw libraryred
"a) The proposed Rules
now require, as an attachment to the petition, a Certificate attesting,
among others, that the governing body and owners of the petitioning
debtor
have approved and consented to whatever is necessary or desirable
(including
but not limited to increasing or decreasing the authorized capital
stock
of the company and modification of stockholders’ right) to rehabilitate
the debtor (Sec. 2, par. (k), Rule 4). This is to avoid a situation
where
a rehabilitation plan, after being developed for years, cannot be
implemented
because of the refusal of shareholders to approve the arrangements
necessary
for its implementation."[6]chanrobles virtuallaw libraryred
Nowhere in the aforequoted
paragraph can it be inferred that an affirmative vote of stockholders
representing
at least two-thirds (2/3) of the outstanding stock is invariably
necessary
for the filing of a petition for rehabilitation regardless of the
corporate
action that the plan envisions. Just to the contrary, it only requires
in the filing of the petition that the corporate actions therein
proposed
have been duly approved or consented to by the directors and
stockholders
"in consonance with existing laws." The requirement is designed to
avoid
a situation where a rehabilitation plan, after being developed and
judicially
sanctioned, cannot ultimately be seen through because of the refusal of
directors or stockholders to cooperate in the full implementation of
the
plan. In fine, a certification on the approval of stockholders is
required
but the question, whether such approval should be by a majority or by a
two-thirds (2/3) vote of the outstanding capital stock, would depend on
the existing law vis-à-vis the corporate act or acts proposed to
be done in the rehabilitation of the distressed corporation.chanrobles virtuallaw libraryred
The rehabilitation plan[7]
submitted by petitioner merely consists of a repayment or
re-structuring
scheme of CRDC’s bank loans to Land Bank of the Philippines and
Equitable-PCI
Bank and of leasing out most of the available spaces in the Megacenter,
including the completion of the construction of the fourth floor, to
increase
rental revenues. None of the proposed corporate actions would require a
vote of approval by the stockholders representing at least two-thirds
(2/3)
of the outstanding capital stock.chanrobles virtuallaw libraryred
Relative to the contention
that a motion for reconsideration is required prior to bringing up the
petition for certiorari (with the Court of Appeals), it should suffice
to say that the filing of a motion for reconsideration before availing
of the remedy of certiorari is not always sine qua non such as when the
issue raised is one purely of law, or where the error is patent or the
questions raised on certiorari are exactly the same as those already
squarely
presented to and passed upon by the court a quo.[8]
WHEREFORE, the instant
petition is GRANTED and the questioned decision of the Court of
Appeals,
dated 18 January 2002, and the order of the Regional Trial Court,
Branch
28, Cabanatuan City, dated 15 October 2001, in Civil Case No. 4036-AF,
are REVERSED and SET ASIDE. The Regional Trial Court is directed to
give
due course to the Petition for Rehabilitation and conduct with dispatch
the necessary proceedings still required thereon. No costs.chanrobles virtuallaw libraryred
SO ORDERED.chanrobles virtuallaw libraryred
Davide, Jr.,
C.J.
,
(Chairman)
,
Ynares-Santiago, Carpio, and Azcuna,
JJ.
,
concur.chanrobles virtuallaw libraryred
____________________________
Endnotes:
[1]
Rollo, p. 73.chanrobles virtuallaw libraryred
[2]
Rollo, p. 44.chanrobles virtuallaw libraryred
[3]
Rollo, pp. 37-38.chanrobles virtuallaw libraryred
[4]
.A.M. No. 00-8-10-SC.chanrobles virtuallaw libraryred
[5]
Jose C. Campos, Maria Clara L. Campos, The Corporation Code Comments,
Notes
and Selected Cases, 1990 Ed., p. 419.
[6]
Rollo, p. 72.chanrobles virtuallaw libraryred
[7]
Rollo, pp. 94-122.chanrobles virtuallaw libraryred
[8]
Progressive Development Corp. vs. Court of Appeals, 301 SCRA 637.chanrobles virtuallaw libraryred |