SEC En Banc Case No. 01-15-352 China Banking Corporation, Petitioner - versus - Hon. Daniel P. Gabuyo and Hon. Myrla B. Barribal, in their respective capacities as Head and Member of the Special Hearing Panel 2, and St. Francis Square Realty Corporation, and St. Francis Square Development Corporation, Respondents.

ox Securities and Exchange Commission SEC Building,EDSA,GreenhillsMandaluyong City Republic of the Philippines Office of the General Counsel Department of Finance

CHINA BANKING CORPORATION Petitioner,

versus- SEC En Banc Case No.01-15-352

HON. DANIEL P. GABUYO and HON. MYRLA B. BARRIBAL, in their respective capacities as Head and Member of the Special Hearing Panel 2, and ST. FRANCIS SQUARE DEVELOPMENT CORPORATION, AND ST. -REALTY FRANCIS CORPORATION, Respondents. SQUARE

27 April 2016

TO:

Alcala Dumlao Alameda Tan Alano & Maningding 4th Floor Philcom Building 8755 Paseo de Roxas, Makati City ATTY. CORAZON I. MORANDO Counsel for the Petitioner 4th Floor, St.Francis Square, Bank Drive Mandaluyong City JOSE MENDOZA & ASSOCIATES Counsel for the Private Respondents CornerJ. Vargas St., OrtigasCenter

Bldg., EDSA, Greenhills Mandaluyong City Securities and Exchange Commission, SEC ATTY.DANIEL P.GABUYO ATTY. MYRLA B. BARRIBAL Special Hearing Panel 2

GREETINGS:

entitled case, the original of which is now on file with this office. Please take notice that on 27 April 2016 a DECISION was issued in the above-

Mandaluyong City, Philippines

By Authority of the Commisgion En Banc:

Office pf the Commission Secretary ARMANDO A.PANIR Officer-in-gharge

tltlavf

Republic of the Philippines Department of Finance

1936 Securities and Exchange Commission SEC Bldg., EDSA Greenhills, Mandaluyong City

CHINA BANKING CORPORATION, Petitioner,

-versus- SEC En Banc Case No. 01-15-352

HON.DANIEL P.GABUYO and HON. MYRLA B. BARRIBAL,in their respective capacities as Head and Member of the Special Hearing Panel2,and ST.FRANCIS SQUARE REALTY CORPORATION,

DEVELOPMENT CORPORATION, AND ST. FRANCIS Respondents. SQUARE

DECISION

issues arising from substantially similar facts as previously raised by the same parties This is the second time this case has come to us for the determination of interrelated

The Case

prayer for issuance of Stay/Status Quo Orderfiled,on 08 January 2015, and Supplemental Petition for Review on Certiorari with prayer for issuance of Stay/Status Quo Order and/or (Chinabank) against Attys.Daniel P. Gabuyo and Myrla B. Barribal, in their respective Realty Corporation (SFSRC),and St.Francis Square Development Corporation (SFSDC Cease and Desist Order filed, on 09 January 2015, by China Banking Corporation capacities as Head and Member of the Special Hearing Panel 2 (SHP2), St.Francis Square The Commission now resolves the pending Petition for Review on Certiorari with

22 December 2014 (Assailed Order) issued in relation to SEC Case No. 05-00-6609 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 Christian School, Inc., Bel-Air Holdings Corp., Winchester Trading, Inc., VYL Development Corp.(formerly Tiffany Tower Realty Corp.), ASB Land, Inc., ASB Finance, Inc., Makati Hope The Petitioner seeks the cancellation of the Order of the SHP2 of the Commission dated

2 Dated 08 January 2015. Dated 07 January 2015.

China Banking Corporation vs, Hon. Daniel P. Gabuyo, et al SEC En Banc Case No.01-15-352 Page 2 of 8

Corp., Genrick Holdings Corp., and Neighborhood Holdings, Inc."(ASB Group). The dispositive portion of which reads as follows:

"WHEREFORE, premises considered, the Hearing Panel hereby resolves the Motion dated 18 November 2014 as follows:

1. Taking note of the Sheriff's Return dated 11 December 2014 prepared and 2. 3. Section 10, Rule 39 of the Revised Rules of Court, to execute the necessary Ordering the Register of Deeds of Makati City and the Register of Deed of Designating said Sheriff Ignacio, as he is hereby designated pursuant to 3.1 To register the aforesaid Deeds of Cancellation of Mortgage on TCT No. submitted by Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court Deeds of Cancellation of Mortgage in accordance with the Writ of Execution 3.2 To cancel or revoke, or to consider as cancelled or revoked, the Owner's 3.3 To issue new Owner's Duplicate Copies of TCT Nos.206189,201933 and of Makati City; dated October 28, 2014 issued in relation to the Order dated 25 March 2014; Caloocan City, as the case may be, as follows: 3.4 To issue Owner's Duplicate Copies of TCT Nos.298110 and 298109 to 206189, 201933, 205136, 298110 and 298109; 298109 which are in the possession or custody of China Banking 205136 to and in the name of St. Francis Square Realty Corporation (formerly ASB Realty Corporation) all free from any liens and Duplicate Copies of TCT Nos.206189, 201933,205136, 298110 and Corporation; encumbrances; and and in the name of St. Francis Square Development Corporation (formerly Tiffany Tower realty Corporation), all free from any liens and encumbrances.

The Antecedent

Commission En Banc, on 27 April 2016, are substantially the same as follows: The facts and issues in SEC Case No. 04-14-325, which was previously decided by the

"On 02 May 2000, SFSRC (formerly known as ASB Realty Corporation) and Hearing Panel, presently SHP2) after suffering financially from the Asian currency SFSDC (formerly known as ASB Development Corporation), along with several other affiliate companies, initiated rehabilitation proceedings with the Hearing Panel of the Commissions Securities Investigation and Clearing Department (SEC crisis in the late 90's.

At the time of filing of the petition for corporate rehabilitation, SFSRC is indebted Pesos (Php265,000,000.00) which is secured by two (2) real estate mortgages over Million (Php35,000,000.00) secured by a real estate mortgageover two (2) contiguous lots in Caloocan City (Caloocan Property). to Chinabank for the total principal amount of Two Hundred Sixty Five Million 1.) two (2) parcels of land located in Salcedo Street, Legaspi Village, Makati City (Legaspi Property) and 2.) a parcel of land located in Bel-Air 2, Makati City (Bel- Air Property).While, SFSDC was indebted to Chinabank in the sum of Thirty Five

China Banking Corporation vs, Hon. Daniel P. Gabuyo, et al. SEC En Banc Case No. 01-15-352 Page 3 of 8

To preserve the ASB Group's assets while the rehabilitation proceedings are on- going, a Stay Order was issued by the SEC Hearing Panel on 04 May 2000.

Hearing Panel on 26 April 2001 and, eventually, upheld by the Supreme Court in several cases filed by the various Creditor-Banks of the ASB Group namely Metropolitan Bank & Trust Company (Metrobank), Bank of the Philippine Islands (BPI) and Chinabank. After due proceedings, the ASB Rehabilitation Plan was approved by the SEC

On 13 September 2013,SFSRC and SFSDC filed an Omnibus Motion with the SHP2 alleging that the mortgaged properties' market value increase based on the 1,086,102,000.00; Bel-Air Property -Php 46,462,000.00; and Caloocan Property appraisal report of Cuervo Appraisers,Inc.(CAI), to wit:Legaspi Property -Php -Php 82,031,000.00.

In their Omnibus Motion, SFSRC and SFSDC sought that an order be issued: 1.) confirming that the SFSRC and SFSDC's loans to Chinabank are over- collateralized; 2. directing the immediate release of the Bel-Air and Caloocan Property, directing SFSRC to set aside units to fully settle the remaining balance Properties; 3.) authorizing the sale of the Bel-Air and Caloocan Properties and the proceeds to be used to pay SFSRC and SFSDC's loans to Chinabank; 4.) directing Chinabank to release the mortgage on the Legaspi Property and ASB Group will of its loan with Chinabank based on their prevailing market value. complete the construction of the same; 5.) upon completion of the Legaspi

to pay unsecured creditors. On 03 October 2013,the Rehabilitation Receiver filed his comment recommending that the secured status of Chinabank will not be diminished considering that the cash generated from the sale of the Bel-Air and Caloocan properties with a combined value of Php 128,491,000.00 will be applied to the loan of the ASB finally settle ASB Group's debt to Chinabank, allocating such number of units in Group. He also noted that the completion of the unfinished Legaspi Place will said project after completion, sufficient to pay-off the remaining loan balance and

On 25 March 2014, SHP2 issued the Assailed Order granting SFSRC and SFSDC's Omnibus Motion."

Petition for Certiorari with the Commission En Banc on 02 April 2014. The Commission En Banc did not issue any injunctive order. Thereafter, Chinabank, in SEC Case No.04-14-325, appealed the said SHP2 Order via

Issuance of Writ of Execution to implement SHP2 Order dated 25 March 2014.The SHP2 in an Order, dated 28 October 2014, issued a Writ of Execution. Subsequently, SFSRC and SFSDC filed with SHP2, on 25 April 2014, a Motion for

an extension of time to comply with the said writ3. to Chinabank, through its President, Mr. Ricardo R. Chua. However, Chinabank requested for Sheriff Rommel M. Ignacio (Sheriff Ignacio) personally served the Writ of Execution

3 Sheriff's Report dated 13 November 2014.

China Banking Corporation vs, Hon. Daniel P. Gabuyo, et al. SEC En Banc Case No. 01-15-352 Page 4 of 8

On 18 November 2014,SFSRC and SFSDC filed with SHP2 a Motion (To Cite China Banking Corporation in Indirect Contempt)4 stating that Chinabank has no intention to comply

Thereafter, SHP2 issued the Assailed Order. with the writ because it asked the Court of Appeals to enjoin the implementation of the same.

Certiorari alleging that SHP2 acted with grave abuse of discretion amounting to lack or in excess of jurisdiction when: Aggrieved, Petitioner comes before the Commission in this Petition for Review on

Y Public Respondents acted with grave abuse of discretion amounting to lack or

I I Public Respondents acted with grave abuse of discretion amounting to lack or excess of jurisdiction when they issued the writ of execution dated 28 October 2014 excess of jurisdiction when they directed the Sheriff of the Regional Trial Court of Makati City to execute Deeds of Cancellation of Mortgage over the mortgaged properties; Public Respondents acted with grave abuse of discretion amounting to lack or

excess of jurisdiction when they unlawfully ordered the cancellation of the owners duplicate copies of TCT Nos.206189,201933,205136,298110 and 29809 and the

N Public Respondents acted with grave abuse of discretion amounting to lack or issuance of new owners duplicate copies in replacement thereof; excess of jurisdiction they capriciously ordered the cancellation of all liens and encumbrances on the certificates of title covering the mortgaged properties.'

Recovery (Rules on Corporate Recovery)7. Furthermore, the Commission En Banc did not issued any injunctive writ to enjoin the implementation of SHP2 Order dated 25 March 2014. allegations and arguments in Chinabank's petition and prayed for its dismissal for lack of merit SFSRC and SFSDC argue that orders of the Commission relating to rehabilitation cases are immediately executory as expressly provided under the Rules of Procedure on Corporate On 30 January 2015,SFSRC and SFSDC filed its Reply Memorandumrefuting all the

Issues

2014 despite the fact that said order was appealed to the Commission En Banc. 1 Whether or not SHP2 was correct in implementing its Order dated 25 March

to implement its Order dated 25 March 2014; 2) Whether or not the SHP2 was correct in designating Sheriff Rommel M. Ignacio

Caloocan, Bel-Air and Legaspi properties be cancelled. 3 Whether or not the SHP2 was correct in ordering that the mortgages over the

5 Pages 8-9 of Chinabank's Petition and Supplemental Petition. Dated 30 January 2015. 4 Dated 18 November 2014. 7 Page 3 of SFSRC's Reply Memorandum.

China Banking Corporation vs, Hon. Daniel P. Gabuyo, et al. SEC En Banc Case No.01-15-352 Page 5 of 8

Ruling

Implementation of SHP2's Order dated 25 March 2014

Corporate Recovery) provides that: Section 2-5, Rule II of the Rules of Procedure on Corporate Recovery (Rules on

Section 2-5. Orders immediately executory - Every order issued by the Commission under these Rules is immediately executory. A petition for restrained or enjoined. The review of any order or decision or an appeal therefrom shall be in accordance with the provisions of P.D. 902-A and the Rules of Procedure of the Commission. review on appeal therefrom shall not stay the execution of the order unless

Banc assailing SHP2's Order dated 25 March 2014, SHP2 should not have implemented the same for it will violate due process of law and there should be judicial courtesy. Chinabank argues that upon filing of a Petition for Certiorari with the Commission En

of the Commission in rehabilitation cases are immediately executory. In fact, the filing of a time of the issuance of the Assailed Order, the Commission En Banc has not issue any petition for review on certiorari, which was docketed as SEC En Banc Case No. 04-14-325 shall not stay its execution unless it is clearly enjoined by the Commission En Banc. At the injunctive writ to enjoin the implementation of the same. Thus, the SHP2's may execute the Assailed Order. As expressly provided in Section 2-5 of the Rules on Corporate Recovery, all the orders

of Trajano v. Uniwide Sales Warehouse Club,the Supreme Court gave a brief discourse on As to the Chinabank's argument on judicial courtesy, we are not convinced. In the case

judicial courtesy, to wit:

before taking cognizance of the case and trying to render moot exactly what was x x x [t]he principle of judicial courtesy to justify the suspension of the from the higher court. In that case, we pronounced that "[d]ue respect for the Supreme Court and practical and ethical considerations should have prompted the before this [C]ourt. x x proceedings before the lower court even without an injunctive writ or order appellate court to wait for the final determination of the petition [for certiorari

expounded that: In Bernardo De Leon vs. Public Estates Authority, the Supreme Court further

"The principle of judicial courtesy, however, remains to be the exception judicial courtesy should not be applied indiscriminately and haphazardly if we are to maintain the relevance of Section 7, Rule 65 of the Rules of Court." rather than the rule. As held by this Court in Go v. Abrogar,34 the precept of

8 G.R. No. 190253, 11 June 2014. 9 G.R. Nos. 181970 and 182678, August 3, 2010.

China Banking Corporation vs, Hon. Daniel P. Gabuyo, et al SEC En Banc Case No. 01-15-352 Page 6 of 8

justification or evidence to support such claim. Hence, the principle of judicial courtesy cannot that the Commission's orders on rehabilitation are immediately executory. Moreover Chinabank merely raised the principle of judicial courtesy without providing any factual be applied on Chinabank's bare allegations. In the instant case, Section 2-5 of the Rules on Corporate Recovery expressly provides

Designation of Sheriff Ignacio to implement SHP2'S Order dated 25 March 2014

a Resolution on the designation of court Sheriffs to implement writs, to wit: In A.M. No. 14-7-224-RTC dated 26 August 2014, the Supreme Court En Banc issued

exercises quasi-judicial powers. However, Section 3(k) of the IPRA specifies that "This Court has long recognized that sheriffs are judicial officers. Thus, they are part of the judiciary and adjuncts of courts of law. The National 8371, otherwise known as "The Indigenous Peoples' Rights Act of 1997 (IPRA), the NCIP shall be under the Office of the President" Thus, the NCIP is an agency orders are not judicial orders, which are within the authority if sheriffs, as Commission on Indigenous Peoples, through Chapter IX of Republic Act No under the executive, rather than the judicial, branch of government. Its judicial officers, to execute."

by court sheriffs because these are not judicial orders, which are within the authority of the latter to execute. Department of Finance, pursuant to Executive Order No. 202, dated 22 September 199410 Thus, it is part of the executive branch of government. Therefore, its orders cannot be executed Applying the same principle to the instant case, the Commission is under the

Court of Makati City, to implement its Order dated 25 March 2014. It evidently clear from the above-stated Supreme Court Resolution that it is not within the authority of court sheriffs to In the instant case, SHP2 designated Sheriff Ignacio, Sheriff IV of the Regional Trial

execute orders from other branches of government aside from the judiciary. Hence, it was erroneous of SHP2 to designate Sheriff Ignacio to implements its order.

Anthony Glenn C. Paggao as Special Sheriff to implement the orders of the Commission, its Operating Departments, and Special Offices. Moreover,in SEC Resolution No.586, s.of 2015,we already have designated Mr

SHP2's Order to cancel the mortgage over the Legaspi, Caloocan and Bel-Air Properties

the Commission En Banc's Decision on the same. Order dated 25 March 2014, the SHP2 should make the necessary changes in conformity with Considering that we have,in SEC En Banc Case No. 04-14-325,modified SHP2's

10 TRANSPERRING THE SECURITIES AND EXCHANGE COMMISSION TO THE DEPARTMENT OF FINANCE.

China Banking Corporation vs, Hon. Daniel P. Gabuyo, et al SEC En Banc Case No. 01-15-352 Page 7 of 8

Paragraph lof the Special Hearing Panel 2's Order dated 22 December 2014: WHEREFORE, premises considered, the instant petition is hereby MODIFIED.

1. Taking note of the Sheriff's Return dated 11 December 2014 prepared and submitted by Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court of Makati City

is hereby AFFIRMED

Paragraph 2 wherein -

Cancellation of Mortgage in accordance with the Writ of Execution dated October 10, Rule 39 of the Revised Rules of Court, to execute the necessary Deeds of 28, 2014 issued in relation to the Order dated 25 March 2014; "2. Designating said Sheriff Ignacio, as he is hereby designated pursuant to Section

is hereby REVERSED and SET ASIDE.The Commission hereby designates Mr to the instant case. Anthony Glenn C. Paggao as a Special Sheriff to implement SHP2's orders relating

Paragraph 3 wherein -

"3. Ordering the Register of Deeds of Makati City and the Register of Deed of Caloocan City, as the case may be, as follows: 1.2 To cancel or revoke, or to consider as cancelled or revoked, the Owner's 1.1 To register the aforesaid Deeds of Cancellation of Mortgage on TCT No. 1.3 To issue new Owner's Duplicate Copies of TCT Nos. 206189, 201933 and 1.4 To issue Owner's Duplicate Copies of TCT Nos. 298110 and 298109 to 206189, 201933, 205136, 298110 and 298109; Duplicate Copies of TCT Nos.206189,201933,205136,298110 and Corporation; 205136 to and in the name of St. Francis Square Realty Corporation Tiffany Tower realty Corporation, all free from any liens and 298109 which are in the possession or custody of China Banking (formerly ASB Realty Corporation) all free from any liens and and in the name of St. Francis Square Development Corporation (formerly encumbrances." encumbrances; and

is hereby REVERSED and SET ASIDE. This is hereby REMANDED to SHP2 to issue an Order that conforms with the Commission En Banc's Decision in SEC En Banc Case No. 04- 14-325.

China Banking Corporation vs, Hon. Daniel P. Gabuyo, et al. SEC En Banc Case No.01-15-352 Page 8 of 8

SO ORDERED.

City of Mandaluyong, 27 April 2016

0 TERESITA J.HERBOSA Chairperson

MANUEL UB TO B.GAITE Onsinir baxur.du ANTONIETA F. IBE

Commissioner Commissioner

EPHYRO LUIS B.AMATONG Commissioner BLAS JAMES G.VITERBO** Commissioner

nDical *On Laave 82