SEC En Banc Case No. 12-15-392 China Banking Corporation, Petitioner -versus- Atty. Daniel P. Gabuyo and Atty. Myrla B. Barribal, et. al., Respondents

Securities and Exchange Commission Republic of the Philippines Department of Finance

CHINA BANKING CORPORATION Petitioner

-versus- SEC En Banc Case No. 12-15-392

MYRLA B.BARRIBAL, ET.AL ATTY.DANIEL P.GABUYO and ATTY. Respondents.

DECISION

Holdings, Inc." pending before the Special Hearing Panel 2 (SHP2) of the entitled "In the Matter of: Petition for Rehabilitation with Prayer for Suspension of Actions and Proceedings against Petitioners, ASB Holdings, Inc., ASB Realty Corp.. ASB Development Corp.(formerly Tiffany Tower Realty Corp.), ASB Land, Inc., ASB Trading, Inc., VYL Development Corp., Genrick Holdings Corp., and Neighborhood Commission. Finance, Inc., Makati Hope Christian School, Inc., Bel-Air Holdings Corp., Winchester The present case is yet another offshoot of SEC Case No. 05-00-6609

For resolution of the Commission En Banc is the Petition for Review on Certiorari with Prayer for the Issuance of a Stay/Status Quo Order (Petition), dated 10 December 2015,filed by China Banking Corporation (Petitioner) on 11

02 December 2015, granting the Motion (To Allow Pro-Rata Distribution of Php 30 December 2015, seeking, among others, the nullification of SHP2's Order dated

Million to Unsecured Creditors) filed by ASB Group of Companies (Movants)

unsecured creditors is not in accordar Petitioner avers that the proposed distribution of P30 Million to Movants with the ASB Rehabilitation Plan (ARP) as it is beyond the C Board (PGB) to disburse funds from the aim 1 that the ARP specifically provide see the completion of the bu anked roperties and thereforePGBs l is limited td the disbursem 1 VC jects, e.g. The Legaspi Place assei must be utilized to complete the ARP. bef ortior thereof may be distributed to C editors,who were not identified in the motion

Finance,Inc..Annex Bof the Petitior Rehabiitation PlanDefinition of TermsASB HoldingsInc. ASB Realty Corp.ASB Development Corp. ASB Land Inc. ASB

China Banking Corporation vs. Atty. Gabuyo, et. a SEC En BancCase No.12-15-392 Page 2 of 5

Petitioner further claims that Movants failed to mention much less show that the disbursement will be in accordance with the payment mechanism embodied in the ARP.It alleges that the SHP2 should have, at the very least required the Movants to submit a more detailed and comprehensive description of the manner by which the P30 Million would be distributed in order to ascertain that it would be in consonance with the ARP. But SHP2,allegedly in grave abuse of discretion, failed and refused to do. Moreover, SHP2 issued Orders, dated 25 March 2014 and 22 December 2014,directing Petitioner to release the mortgage on the properties that secured Movants' indebtedness to Petitioner, which would make the latter an unsecured creditor. Said Orders are now subject of separate Petitions for Review with the Commission En Banc Petitioner avers that the distribution of P30 Million to unidentified unsecured creditors by way of this scheme,would give undue preference to these creditors to the prejudice of the Petitioner.2

distribution is in accordance with ARP. In the implementation of the ARP, an In response to Petitioner's allegations, Movants counter that the

which authorized the PGB to approve disbursement of funds from the Asset Pool Amended Trust Servicing Agreement (ATSA) was approved by the Commission, for the settlement of debts of unsecured creditors.3 Further,Movants have made several offers to settle Petitioner's loan, but the latter has continuously rejected said offers. In view thereof, the unsecured creditors should also be given the same opportunity.4 Moreover, the P30 Million shall be distributed pro-rata to all the unsecured creditors.5 Besides, said distribution has been done for the past

Petition is already fait accompli as the pro-rata distribution to the unsecured several years. Petitioner is now estopped from questioning it. Lastly, the present creditors was already held last December 17 and 18,2015.7

The Petition has no merit.

The ARP provides:

"2. Creation of an Asset Pool

It is the intention of this rehabilitation plan to create an Asset Pool.

Definition

otherwise unencumbered, whether developed or unfinished, will be Bank and the asset development managed by a Project Governing Boarc An Asset Pool is an unincorporated entity administered by a Trustee ('PGB') into which assets of ASB released from the secured creditors or

contributed.

5 id.. paragraph 4. 6 Id., paragraph 6 210 December2015 Petition.pp.9-11 7 id., paragraph 8. 3 o4 January 2016 Answer, paragraphs 1 and 2. Id.. paragraph3

China Banking Corporation vs. Atty. Gabuyo, et. a SEC En Banc Case No.12-15-392 Page 3 of 5

The unsecured creditors may be paid either with properties already from the development and sale of properties contributed to the pool. developed or properties still to be completed or with monies generated

state would not be sufficient to settle all of the obligations.Xxx The Asset Pool is an important component for the settlement of the obligations of ASB to the unsecured creditors and the rehabilitation of the ASB Group of Companies. With the Asset Pool, funds could be be started and the assets properly managed for the benefit and interest of the creditors. Without the asset pool, the properties in their present generated to complete the unfinished developments; new projects could

Administration of the Asset Pool

A reputable bank acceptable to the creditors and ASB shall be chosen as Trustee and it shall administer the Asset Pool. For this purpose, a special trusteeship agreement shall be executed by and between ASB and the Trustee Bank.

The Trustee Bank shall hold the assets contributed by the ASB to the pool for the benefit and interest of the creditors and ASB."8

SETTLE THE OBLIGATIONS of Movants to UNSECURED creditors,and that the It is clear from the foregoing that the Asset Pool is created primarily To

terms of administration and management of the Asset Pool shall be provided in the special trusteeship agreement. Section 2.02, Article II of the ATSA states:

"Section 2.02 (Role and Functions) - The [PGB] shall have the following functions:

(a) Development and management of the assets in the Asset Pool;

(b) Approval of any disbursement of the funds form (sic) 1.02 (a); the Asset Pool for the purposes mentioned in Section

X X X

(c) Approve such plans and budgets submitted by the ASB GROUP OF COMPANIES and recommend the same to the RECEIVER."

Section 1.02(a) provides:

"Section 1.02 (Uses, Purposes, and Priorities) -The Asset Pool shall be utilized for the purposes and in the priority hereinafter set forth:

a) LIQUID FUNDS. Liquid funds, consisting of (1) cash, bank guaranteed by the government of the Republic of the deposit instruments and government securities issued or

9 Emphasis and underscoring supplied. 8 Note 1. p. 21and 23. Emphasis and underscoring supplied.

China Banking Corporation vs.AttyGabuyoet.al SEC En Banc Case No.12-15-392 Page 4 of s

companies listed in the Philippine Stock Exchange; and (2) be utilized as may be approved by the [PGB] for the following: Philippines, its instrumentalities and subdivisions, shares of receivables listed in Annex"M" hereof,when collected shall

(i) For the completion and undertaking of as approved by the RECEIVER and the SEC, projects contained in the Rehabilitation Plan such as the BSA Twin Towers and Legaspi Place where units have been sold;

(ii) For the settlement of debts of TRUSTORS approved by the RECEIVER and the SEC. for set-off, exchange or other arrangements under such terms and conditions as may be owing to creditors pursuant to such plans

X X X"10

There is, therefore, no merit in Petitioner's contention that the authority of the PGB to disburse funds from the Asset Pool is limited only for the purpose

Movants'projects,must be completed first before any money from the Asset Pool of completing Movants' projects. Likewise, the argument of Petitioner that

can be distributed pro-rata to unsecured creditors is untenable.

"still have unfinished projects, one of which is The Legaspi Place."12 It failed to been SOLD...11 Here, Petitioner just made a sweeping allegation that Movants adduce any specific evidence proving that the unfinished projects are units which have been sold, or assuming that they are, that Movants failed to earmark Notably,the preference is accorded to the "units which have already

the amount of money required to complete such units before authorizing the

the legal presumption that official duty has been regularly performed stands.13 disbursement of P30 Million. It is settled that absent any contradictory evidence,

MOVANTS' INDEBTEDNESS TO UNSECURED CREDITORS.And said creditors Moreover, and as stated earlier, the Asset Pool is established to SETTLE

properties contributed to the pool."14 Clearly, the completion of the units has for completed or with monies generated from the development and sale of its object the satisfaction of Movants' obligations to unsecured creditors. "may be paid either with properties already developed or properties still to be

It must be stressed that the status of the Petitioner as a SECURED creditor remain unchanged. As a matter of fact, only those properties released by the secured creditors or otherwise unencumbered can be contributed to the Asset Pool. Thus, the questioned P30 Million pro-rata distribution to unsecured

10 Emphasis and underscoring supplied. I Note I. p. 25. 13 Section 3(m). Rule 131, Rules of Court. Note I. p.2 12 Note 2. p.9

China Banking Corporation vs.AttyGabuyo, et.a SEC En Banc Case No.12-15-392 Page 5 of 5

creditor will not prejudice Petitioner, as its liens over the mortgaged properties have been preserved.

lack of merit.The SHP2's Order dated 02 December 2015 is hereby AFFIRMED with Prayer for the Issuance of a Stay/Status Quo Order is hereby DISMISSED for WHEREFORE, premises considered, the Petition for Review on Certiorari

SO ORDERED.

Pasay City, Philippines, 22 September 2017.

TERESITA J. HERBOSA * Chairperson

ANTONIETA F.IBE* EPHYRO LUIS B.AMATONG

Commissioner Commissioner

bs C BVASJAMESG.WITERBO commissioner EMILIO\B.AQUINO Commj issioner

*On Leave