SEC En Banc Case No. 01-15-353 In the matter of the Petition for declaration of a state of suspension of payments; for the approval of a rehabilitation plan; and the appointment of management committee Victorias Miling Company, Inc. Appellant, - versus - The Special Hearing Panel 1 and Dao Heng Bank, Inc. Appellees.

Securities.and Exchange Commission Republic of the Philippines Department of Finance

IN THE MATTER MANAGEMENT COMMITTEE PETITION FOR DECLARATION OF A STATE OF SUSPENSIONOF PAYMENTS; FOR THE APPROVAL OF A REHABILITATION PLAN; AND THE APPOINTMENT OF A OF THE

VICTORIAS MILLING COMPANY, INC. Appellant, SEC En Banc Case No.01-15-353

versus -

and DAO HENG BANK, INC. THE SPECIAL HEARING PANEL 1 Appellees.

DECISION

Milling Company, Inc. (VMC) seeking to reverse and set aside the Order dated 06 dispositive portion is read as follows: January 2015 (Assailed Order) of the Special Hearing Panel 1 (SHP1), the This resolves the pending Appeali filed, on 23 January 2015, by Victorias

38492 to intervenor Dao Heng Bank or its duly authorized representative. In case the release of 105,000 bags of refined sugar is no longer available, Victorias Milling Company will pay for the monetary equivalent of their value, in the total amount of Sixty- Hundred Ninety Eight Thousand Eight Hundred Twenty Four and of refined sugar covered by RSD0 Nos. 38487 and 38488." "WHEREFORE, premises considered, Victorias Milling Company is directed to release the remaining 105,000 bags of refined sugar coVered by RSD0 Nos.38474 to 384482 and RSDO Nos.38487 to Three Million Five Hundred Seventy-Four Thousand Three Hundred Fifty Pesos (P63,574,350.00),to Dao Heng Bank or its duly authorized representative with payment of legal interest from receipt of the demand letter on.21 May 1997.VMC is also directed to pay the tolling fees and charges in the amount of Four Million Six 25/100 Pesos (P4,698,824.25) intended for the hauling of the bags

The Facts and Proceedings

Investigation and Clearing Department (SICD) a Petition for Declaration of On 04 July 1997, VMC filed before the Commission, through the Securities

Notice of Appeal and Memorandum of Appeal datea.01 April 2016, Records. pages 305-331.

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Suspension of Payments; for the Approval of a Rehabilitation Plan; and the gave due course to the Petition. Thereafter, the SICD issued an Order dated 08 Appointment of a Management Committee in SEC Case No. 07-97-5693. The SICD July 1997 suspending all actions or claims against VMC pending before any court, tribunal, office, board and/or Commission.

Inc. (DHB), filed, on 03 July 1997, a Complaint for Recovery of Personal Property Sugar Delivery Order (RSD0) Nos. 384474-38482 and, after the trial on the and/or Payment of a Sum of Money and Damages with prayer for Replevin2 against VMC before the Regional Trial Court (RTC), Branch 60 of Makati City which Was docketed as Civil Case No. 97-1520.DHB prays for the issuance of a Writ of merits, for VMC to be ordered to pay the amount of Php 63,568,050.00, including Replevin for the seizure of 105,000 bags of refined sugar, covered by Refined tolling fees and charges of Php 4,698,824.25. Prior to filing of VMC's petition, Dao Heng Bank, Inc., now BDO Unibank,

archived the same on the ground that there is a pending Petition for Suspension of Payments filed by VMC with the Commission in SEC Case No. 07-97-56934. The RTC, upon VMC's motion3, suspended the proceedings therein and

Hearing Panel praying that it be granted to intervene in VMC's rehabilitation Hearing Panel's Omnibus Order and allowing DHB's Motion for Leave to Intervene9. Consequently, DHB filed its Complaint-in-Intervention in compliance DHB's motion7. DHB appealed the said order to the Commission En Banc. In its Decision8, the Commission En Banc granted DHB's appeal modifying SICD to the Commission En Banc's directive. proceedings as a creditor. In an Omnibus Order6, the SICD's Hearing Panel denied Thereafter, DHB filed a Motion for Leave to Intervenes with the SICD

November 1996, it granted North Negros Marketing Company, Inc. (NNMCI), a secured by 150,000 bags of refined sugar covered RSD0 No. 3797711 dated 02 subsidiary of VMC, credit facilities, including a credit line. The said grant was In DHB's Complaint-in-Intervention10, it alleges that sometime in

9 Ibid. - In view of the foregoing. the instant appeal is hereby GRANTED. The Omnibus Order of the Hearing Panel dated 03 November 1997 is thus MODIFiED,llowing the Motionfor Leave.to intervene filed by Intervenor-Appeillant DHB before 1 DHB's Complaintin-Inteivention dated17 August 1998, Annex H of VMCs Memorandum of Appeal, Records. pages 5Dated 17 September 1997,Records pages 211-25.attached as Annex Ois the Complaintin-Intervention dated 15 6 Dated 03 November 1997,Records.pages 157-159.dec 7 Ibia. - Premises considered, the Motion for Leave to Intervene by Da Heng Bank, Inc. is hereby DENIED, and the Motion for Reconsideration of UB and U!I is hereby GRANTED.Accordingly. the Order dated September23, 1997 is hereby set aside. 8 Dated 10 March 1998, Annex *G" of the Memorandum of Appeal, Records, pages 149-152. I1 Annex "A" of DHB's Complaint-inIntervention, Records. page I 29. 4 Annex D of the Appeat, RTC Branch 60, Makati City Second Order dated 08 August 1997, Records, pages 216-219 GRANTED:10.2Accordingy.the proceedings suspended10.3.Thecase ARCHIVIED SICD 1301 46 2 Dated 03 July 1997. Records, pages 226-293 3 Motion to Suspend Proceedings dated09 July1999.lleging that it has filedwith the SEC the pettion for the immediate issuance of an Order suspending all actions against it until final orders from the Commssion WHEREFORE,the Court hereby orders:10.1The MOTION TQ SUSPEND PROCEEDiNGS dated July 9,i997(pp.124-126,id.) is not with the Commission but with regular courts. Septemt 199 eclaring that the jurisdiction in establishing claims such as that of DHB

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December 1996 issued by VMC. To further secure NNMCI's loan application, VMC issued a Certification12 dated 03 December 1996.stating that it certifies the RSD0 No. 37977 issued in favor of NNMCI and that 150,000 bags of refined sugar shall be available upon demand and surrender of the refined sugar invoice/delivery order.

with DHB. Then, NNMCI, on 10 December 1996, borroWed Php 50,000,000.00 borrowed again from DHB another Php 50,000,000.00 as evidenced by No. 502-00611TW dated 10 December 199614. On 16 December 1996, NNMCI Promissory Note with Deed of Assignment of Assets No. 502-00633TW dated 16 December 199615: Under the terms of the Promissory Notes, said loans were secured by assignment of RSDO No.37977 issued by VMC in favor of DHB. Subsequently, NNMCI defaulted in the payment of interest on the due date. Thus, the remaining obligation became immediately due and demandable.16 from DHB as evidenced by a Promissory:Note with Deed of Assignment of Assets NNMCI, on 09 December 1996, entered into a General Loan Agreement13

Products Philippines, Inc. (PEPSI) the 150,000 bags of refined sugar covered by 5912518. DHB, with NNMCI's consent, delivered RSDO No. 37977 to PEPSI with the express agreement that the proceeds of the sale will be delivered to the former to partially pay for the loans obtained by NNMCI. RSD0 No. 37977,as evidenced by PEPSI's Purchase Orders Nos. 5912317 and On 18 March 1997,NNMCI,with DHB's conformity, sold to Pepsi Cola

the same for the reason that the latter could not deliver the entire lot at once. As a replacement,it issued twenty (20) RSDOs in the name of PEPSI,to wit: i.) RSDO Nos. 38473 to 3848219 (5,000 bags each);: and ii.) RSD0 Nos. 38483 to 3849220 (10,000 bags each). Thereafter, PEPSI surrendered RSDO No. 37977 to VMC which cancelled

38488 (65,000 bags of refined sugar) to VMC and paid in advance the at Php 27,243,450.00 covered by RSDO Nos. 38473 and 38483-38486. corresponding tolling fees amounting to Php 10,123,845.76 for hauling the refined sugar. HoweverVMC only released 45,000 bags of refined sugar valued Then, PEPSI surrendered RSD0 Nos. 38473, 38483-38486, 38487 and

20 Annexes "H-10* to "H-18* of the Complaint-in-intervention, Records pages 10 1-109. I2 Annex B of DHB's Complaintinntervention, Records. pages I28. 14 Annex "D of the Complainttin-Intervention, Records, page 123. 16 Note 13 and 14. Supra Upon the happening as to the Borrower or indorsees of any of the following events (hereinafter and payable without demand or notice: { I) failure to pay any instalment or interest on the due date thereof; xx. 15 Annex ~E" of the Complaint-in-Intervention, Records, page 1 22. referred to as events of default'). the whole sum remaining unpaid under this Note shall thereupon become immediately due 17 Annex "F" of the Complaint-in-Intervention. Records page I21. 13 Annex C of the Complaint-in-Intervention, Records, pages 124-127. 18 Annex "G" of the Complaint-in-Intervention. Records page 120. 19 Annexes "H" to "H-9" of the Complaint-in-Intervention, Records pages I 10-1 19.

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release of the remaining 105,000 bags of refined sugar covered by RSD0 Nos. 38474 to 38482 and 38487 to 38492. Despite demand, VMC still failed to comply. Thus, on 25 June 1997, PEPSI executed a Deed of Assignment22 wherein it assigned, conveyed and transferred in favor of DHB all of its rights and interests over the remaining 105,000 bags of refined sugar covered by the subject RSD0s. It was further stipulated that DHB, upon recovery, may sell to PEPSI the remaining 105,000 bags of refined sugar and the proceeds of the same will be considered as partial payment of NNMCI's loan. Because of this, DHB, through a letter21, demanded from VMC for the

in-Intervention)23 praying for the dismissal of DHB's Complaint-in-Intervention on the ground that: 1.) the complaint states no cause of action because there is no subject goods because no warehouse receipt was presented or surrender; and 3.) the Commission has no jurisdiction over the claim because of non-payment of the privity of contract between DHB and VMC; 2.) VMC is not obligated to deliver the correct docket fees. On the other hand, VMC filed its Answer (To Dao Herig Bank's Complaint-

support to their respective claims. Then,SHP1 issued the Assailed Order where it ruled that: Subsequently, the parties were allowed to submit their evidence24 in

with the Intervenor, partake of the nature of an obligation. By their acts, an implied contract between VMC and DHB was created NNMCI, for the loan availment of the latter. "In this case, a quasi-contract was the source of the obligation of VMC to deliver 150,000 bags of refined sugar to Pepsi. The undertaking to make the subject bags of refined sugar available upon demand and upon surrender of the RSDOs in issue, as embodied in the Certification issued by VMC for the purpose of loan availment when DHB required for the issuance of a certification and VMC complied by issuing the subject certification to its subsidiary,

Lending Market of Intervenor DHB, testified in part, as follows: The Certification was an essenitial requirement that led the bank to grant the application and release the funds to NNMCI. In fact, without it, the bank would not have granted the loan applied for by NNMCI. Ms. Ma. Lourdes Molina, Vice President of Commercial

X X X

Based on Ms. Molina's testimony, Dao Heng Bank actually relied VMC. Considering that it was VMC that issued the certification requested by the bank, an obligation based on an implied contract, upon the Certification when it granted the loan availment of

2424DHBin iFormalOfferof Evidenceated2Juy 199fferedExhibitAtoZwhileVMCin iFormal Offer of 21 Letter dated 20 May 1997, Annex "T f the Complaintinntervention, Records, pages 99-100. 22 Annex "J" of the Complaintin-Intervention, Records pages 96-98. 23 Dated 28 September 1998, Records, pages 71-81: Evidence dated 27 July 1999, offered Exhibits I" to "2

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for the grant of the loan by Intervenor Dao Heng Bank and arose on the part of VMC when it issued a Certification in exchange 37977 upon surrender of the said delivery order. undertook to deliver the bags of refined sugar covered RSDO No.

Furthermore, SHP1 ruled that:

possible intervenor DHB prayed for the payment of their monetary monetary equivalent of the bags of refined sugar. Based on Purchase can easily be computed using this formula: "Should the turnover of the bags of refined sugar be no longer equivalent. Thus, it necessary to determine the value of the Orders No. 59123 and 59125, each bag of refined sugar is priced at P605.47. Therefore, the monetary value of the bags of refined sugar

(Number of bags of refined'sugar) x (Price of each bag of refined sugar)

refined sugar is P63,574,350:00 Hence, the monetary value of the remaining 105,000 bags of

sugar covered RSD0 Nos. 38487 and 38488" Aside from the foregoing obligation, VMC is also obliged to pay the tolling fees for the hauling of the bags of refined sugar to Dao Heng Bank, as assignee of Pepsi Products, Inc. VMC itself admitted having received the amount of P10,123,845.76 for the fees mentioned. Despite its receipt of the advanced tolling fees,VMC never released the sugar covered by RSDO Nos.38474 to 38482 and RSD0 Nos. 38487 to 38492.Intervenor Dao Heng Bank prayed for the recovery of the tolling fees it advanced for the hauling of the bags of refined

value plus tolling fees, charges and interests on the following grounds: that the former is obliged to deliver 105,000 bags of refined sugar or pay its acted without or in excess of its jurisdiction or with grave abuse of discretion when it issued the Assailed Order. Corollary to this, VMC assails SHP1's ruling Aggrieved, VMC now comes before this Commission arguing that SHP1

iv. that SHP1 erroneously considered the Answer to Request for I I that a quasi-contract could not have been created between VMC that SHP1 has no jurisdiction to adjudicate and award the alleged that SHP1 erroneously considered the Affidavit of Ma. Lourdes I. Molina in computing the monetary.value of the alleged remaining bags of refined sugar; and the said pleading was notauthorized by VMC or its Board of Directors or the VMC Mancom... claims in DHB's Complaint-in-Intervention; and DHB since VMC was not unjustly enriched at DHB's expense; Admission dated 26 April1999. submitted by Atty. Pacifico Agabin despite the fact.that the preparation and submission of

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In its Reply Memorandum25, DHB argues that:

Ii. SHP1 has jurisdiction under the law to adjudicate the claim of SHP1 did not err in ruling that VMC is liable to DHB for the value DHB against VMC;

ii. that SHP1 did not err in ruling that VMC is liable to DHB on the Iv. V. Vi SHP1 did not err in considering the Affidavit of Ma. Lourdes SHP1 did not err in considering as valid the RSDOs and of the remaining bags of refined 'sugar; basis of the principle of quasi-contracts; SHP1 did not err in considering the Answer to the Request for Molina in computing the monetary value of the 105,000 bags of refined sugar; Admission submitted by VMC's own.counsel of record;

vii. SHP1 did not err in ruling that VMC's claim that it was unable to vii.SHP1 did not err in ruling that VMC is liable to DHB on the basis Certification issued by VMC; honor the RSDOs on account of the directive of the Sugar Regulatory Authority (SRA); and of the RSDOs it issued.

Isues

jurisdiction over DHB's Complaint-in-Intervention; 2.) whether or not VMC is liable to DHB for RSDO Nos. 38474 to 38482 and 38487 to 38492 involving 105,000 bags of refined sugar. The issues to be resolved are: 1.) whether or not the Commission has

Ruling

We find the instant petition bereft of merit.

The Commission's jurisdiction over DHB's Complainant-in-Intervention

in excess of its jurisdiction or with abuse of discretion in issuing the same. award DHB's claims as alleged in the latter's Complaint-in-Intervention, VMC contends that rehabilitation proceedings are summary and non-adversarial in nature. In other words, these proceedings are not intended to adjudicate opposing claims. Thus, the Assailed Order is void because SHP1 acted without or cited several cases26 declaring that jurisdiction is conferred by law. Further, VMC In support of its argument that SHP1 has no jurisdiction to adjudicate and

contends that VMC is simply asserting that the Commission should not take complaint as provided in P.D. No. 902-A,as amended by P.D. No. 1758. It On the other hand, DHB maintains that SHP1 has jurisdiction over its

25 Dated 16 February 2015, Records, pages 336-369. 26 Advent Capital vs.Alcantara,et al. G.RNo. 183050, 25 January 2012 and Express investment I Private Ltd.et al. vs. Bayan Telecommunications, Inc. et al.G.R. No. I74457-59.

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jurisdiction because there is a pending civil case before RTC, Branch 60 of Makati answer to DHB's Complaint-in-Intervention, seeking affirmative reliefs from the suspension of said civil case then pending with the RTC on the ground that the that VMC already submitted to the Comimission's jurisdiction when it filed its City. Similarly, DHB raises the fact that it was VMC who moved for the Commission has exclusive jurisdiction over its claim. Furthermore, DHB argues Commission.

officer or government agency, over the nature and subject matter of a petition or complaint is determined by the material allegations therein and the character of the relief prayed for, irrespective of whether the petitioner or complainant is entitled to any or all such reliefs.27 It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial

petitions for suspension of payments or rehabilitation of corporations, as well as incidents thereof, is clearly provided"in Sections 5 (d)28 and 6 (c)29 (d)30 of P.D. no. 902-A, as amended by P.D. No. 1758. In this case, the Commission's exclusive and original jurisdiction over

what constitute suspension of claims falling under the exclusive and original In this connection, the.Supreme Court has ruled in the following cases

27 Herrera v.BernardoG.No.17025.June I,20.cting Heir of JulianDela Cruz and Leonora Talaro v.Heir of Alberto 28 Section 5. In addition to the regulatory and ajudicative functions of the Securities and Exchange Commision over partnerships or associations to be declared in the state of suspension of payments in cases where. the corporation. 30 a) To create and appoint a management committee, board, or body upon pettion or motu propio to undertake the the Commission until dissolved by order of the Commission. Provided, however, That the Commission, may, on the basis of Cruz, G.R. No. 162890, November 22, 2005, 475 SCRA 743, 755-756. partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meting them its liabilities. but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this however, That the Commission.may. in appropriate cases. appoint a Rehabilitation Receiver who shall have in addition to the succeeding paragraph d) hereof, Provided, further. that upon appointment of a management committee. rehabilitation receiver board or body, pursuant to this Decree, all actions for claims against corporations. partnerships or associations under dissipation, loss, wastage or destruction of assets or other properties or paralyzation of business operations of such over. all the existing assets and property_of such entities under management: to evaluate the existing assets and tiabitities earnings and operations of such corporations, partnerships.or other associations; to determine the best way to salvage and restructure and rehabilitate such entities if determined to be feasible by the Commission. it shall report and be responsible to corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and when they respectively fall due or in cases where the corporation partnership or association has ho sufficient assets to cover order to preserve the rights of the parties-litigants and/or protect the interest of the investing public and creditors. Provided powers of a regular receiver under the provisions of the Rules of Courtsuch functions and powers as are provided for in the management or receivership pending before any. court. tribunal, board or body shall be suspended accordingly. management of corporations, partnerships or other associations in appropriate cases when there is imminent danger of corporations or entities which may be prejudicial tothe interestof minority stockholders. parties-litigants or the general public. The management committee or rehabilitation receiverboard or body shall have the power to take custody of and control the findinas and recom decrees, it shall have original and exclusive jurisdiction to hear and decide cases invoiving: x x x d) Petitions of corporations Decree. appoint one or more receivers of the property_real or personal which is the subject of the action pending before the Commission in accordance with the pertinent provisions of the Rules of Court in such other cases whenever necessary in findings, 29 Section 6, In order to effectively exercise such jurisdiction, the Commissionshall possess the following powers: x x c T F e interest of the investors and creditors: to study review and evaluate the feasibility of continuing operations and etermine that the continuance in business of-such corporation or entity would not be feasible or profitable nor nendation of the management committee. or rehabilitation receiver-board or body. or on its own

for, or in connection with, any act done or omitted to be done by it in good faith in the exercise of its functions, or in The management committee. or rehabilitation receiver, board or body shall not be subject to any action, claim or demand connection with the exercise of its power herein conferred. work to the best interest of the stockholders. parties-litigants, creditors, or the general public. order the dissolution of such corporation entity and its remaining assets liquidaited accordingly. The management committee or rehabilitation receiver board or e ntities under management notwithstanding any provision of law, articles of incorporation or by-laws to the contrary. body may overrule or revoke the actions of the previous management and board of directors of the entity or

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jurisdiction of the Commission pursuant to Sections 5 and 6 (c) of P.D. No. 902-A, to wit:

1. In the case of Alemar's Sibal & Sons, Inc. vs. Elbinias31, which raises the issue of whether or not the respondent court can validly proceed with the execution of a final decision for the payment of a sum of money despite the fact that the judgment debtor has been placed under receivership, the Supreme ruled that:

"During rehabilitation receivership, the assets are held in trust for the equal benefit of all creditors to preclude one from obtaining an advantage or preference over another by the expediency of an attachment, execution or otherwise. For what would prevent an alert creditor, upon learning of the receivership, from rushing posthaste to the courts to secure judgments for. the satisfaction of its claims to the prejudice of the less alert creditors,.

should be given any preference by paying one or some of them ahead As between creditors, the key phrase is "equality is equity." When a corporation threatened by bankruptcy is taken over by a receiver, all the creditors.should stand on an equal footing. Not anyone of them of the others. This is precisely the reason for the suspension of all pending claims against the corporation under receivership. Instead of creditors vexing the courts with suits against the distressed firm, they are directed to file their claims with the receiver who is a duly appointed officer of the SEC." 2.In PAL vs. Zamora32, where the respondent therein filed a complaint for illegal dismissal against PAL before the National Labor Relations Commission (NLRC), the Court ruled:

"The raison d'etre behindthe suspension of claims pending rehabilitation proceedings was explained in this wise:

and rehabilitation. hinder or prevent the "rescue" of the debtor company. To allow such management committee or. rehabilitation receiver, whose time the corporation instead of being directed toward its restructuring In light of these powers, the reason for suspending actions for claims really to enable the management committee or the rehabilitation receiver to substitute the defendant in any pending action against it before any court, tribunal, board or body. Obviously the real justification is to enable the management committee or from any judicial or extra-judicial interference that might unduly other action to continue would only add to the burden of the effort and resources would be wasted in defending claims against against the corporation should not be difficult to discover. It is not rehabilitation receiver to effectively exercise its/his powers free

32 G.R. No. 166996, 02 February 2007. 31 G.R. No. 75414 June 4, 1990.

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XXX XXX X X X

It is plain from the foregoing provisions of law that"upon the appointment [by the SEC] of a management committee or a pending before any court, tribunal or board shall ipso jure be rehabilitation receiver." all actions for claims against the corporation suspended. x x x. (Emphasis supplied.)"

3.In RCBC vs. IAC33 the petitioner contends that P.D. No.902-A is not yet it foreclosed on the mortgage prior to the appointment of the management applicable, hence it may still be allowed to assert its preferred status because committee. It was ruled that:

1. All claims against corporations, partnerships, or associations that are pending before any court, tribunal, or board, withoutdistinction as to whether or not a creditor is secured or unsecured, shall be committee rehabilitation receiver board, or body in accordance which the provisions of Presidential Decree No. 902-A. suspended effective upon the appointment of a management

2. Secured creditors retain their preference over A unsecured

upon the appointment of a management committee, rehabilitation receiver, board, or body. In the event that the assets of the creditors, but enforcement of such preference is equally suspended however, secured and preferred credits under theapplicable unsecured ones. corporation,partnership. or association are finally liquidated provisions of the Civil Code will definitely have preference over

4. In Bank of Philippine Islands vs. Sarabia Manor Hotel Corporation34, the Supreme ruled that:

be paid their claims from its earnings. Thus, rehabilitation shall plan, more, if the corporation continues as a going concerfn than if it be undertaken when it is shown that the continued operation of the corporation is economically more feasible and its creditors can recover, by way of the present value of payments projected in the is immediately liquidated." "Verily, the purpose of rehabilitation proceedings is to enable the company to gain a new lease on life and thereby allow creditors to

rehabilitation proceedings seek to prevent the creditors from pursuing separate process of being able to sort.out among the debtor, thecreditors and other and disparate remedies in various fora to enforce their claim. The principle of "equality is equity" lies at the heart of ensuring as much as possible that the In view of the foregoing jurisprudence, it is clear that the stay order of

34 G.R. No. 175844, July 29, 2013. 33 G.R. No. 74851, 09 December I999.

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stakeholders, the most feasible means possible to work-out a rehabilitation plan to the best interest of all stakeholders.35

Securities Regulation Code (SRC), is empowered to hear and determine all pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. This is the reason why the Commission should retain jurisdiction over the instant case, and any incidents thereof. the SRC further declared that the Commission shall retain jurisdiction over claims by creditors against the distressed corporation.36 Indeed, Section 5 of Thus, the Commission, prior to the enactment of R.A. No. 8799 or the

Pool A (SPV-AMC), Inc. vs. Armando Pan Jr., et al.", SEC En Banc Case No. 12-12- by the Court of Appeals37 and Supreme Court38. the applicability to the instant case of the previous consolidated cases of "Asset 276 and "Bank of the Philippine Islands, et al. vs. SEC Special Hearing Panel 1, et al." SEC En Banc Case No. 12-12-279 (VMC vs: APAA & BPI), which was affirmed On a similar note, we like to take this opportunity to clarify and discuss

stipulation (the exercise of VMC's right of first refusal) in the Mortgage Trust (BPI). Similarly, BPI assigned its right over VMC's obligation in the MTIA to Asset Pool A (SPV-AMC), Inc. (APAA). The Commission does ruled that it does not have jurisdiction to determine issues/matters which are not necessary or incidental to the rehabilitation proceedings and does not serve the purpose of rehabilitation. However, in the instant case, we are now asked to determine DHB's claim against VMC based on the subject issued RSDOs. Specifically, DHB's right to claim the 105,000 bags of refined sugar covered by the subject RSD0s which was assigned by PEPSI to the former. Indenture Agreement39 (MTIA) between VMC and Bank of the Philippine Islands In the said consolidated cases, the Commission was asked to interpret a

has no jurisdiction over the same. While in the present case, the issue to be corporation, we rule that we have jurisdiction over the instant case. determination of a right in an agreement/contract (MTIA), thus the Commission resolve is a determination of a claim against the distressed corporation. Since the differently situated. In VMC vs. APAA & BPI, the issue to be resolve is a Commission is empowered to resolve and determine claims against a distressed Otherwise stated, VMCvs. APAA & BPI and the present case are

it issued stay orders, it should also be pointed out that the Supreme Court had the occasion to rule on the coverage of claims specifically with regard to the VMC's rehabilitation. In Malayan Insurance Company, Inc. vs. Victorias Milling Having settled that the Commission has jurisdiction over all claims when

38 Annex N of the Appeat Supreme Court nDivisions Notice dated 03 August 2015 and AnnexO of the Appeal, Supreme Court 2nd Division's Notice dated 21 October 2015: 35 Philipine Corporate Law, 20 10, Cesar Vilinueva, page 760. 37 Annex "M~ of the Appeal, Court of Appeals 5th Division's Decision dated 05 December 2014. 39`Executed on 03 September 1 991. 36 Note 27, Supra.

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the proceedings on its claim for reimbursement against VMC, the Supreme Court Company, Inc.4o, Malayan assails the CA's Decision affirming the suspension of ruled that:

falls under the category of "claim" whether under our rulings in considering that it is for pecuniary considerations. "Clearly then, the complaint filed by petitioner against respondent Finasia, Arranza or Kurangking, or as defined in the Interim Rules,

in Section 6 (c) of Presidential Decree No. 902-A, which pertinently We have consistently held in Rubberworld (Phils.) Inc. v. NLRC, in Sobrejuanite v. ASB Development Corporation,and in Garcia v. Philippine Airlines, that the suspension of proceedings referred to provides -

X x x Provided, finally, that. upon appointment of a body, pursuant to this Decree, all actions for claims against management committee, rehabilitation receiver, board or management or receivership pending before any court, tribunal, board or body, shall be suspended accordingly. corporations, .partnerships.or associations. under

receivership, without distinction. uniformly applies to "all actions for claims" filed against a corporation, partnership or association under management or

Aptly cited in the assailed Court of Appeals decision is our pronouncement in Rubberworld, viz:

x x x The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions shall be suspended accordingly." x x x Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos.

Along the same vein, in Sobrejuanite, we enunciated:

x x x The interim rules define a claim as referring to all claims or demands, of whatever 'nature or character against a definition is all-encompassing as it refers to all actions whether for money or otherwise. There are no distinctions or debtor or its property, whether for money or otherwise. The exemptions.

Similarly, in Garcia v. Philippine Airlines, we said.

Since petitioners' claim against PAL is a money claim for their wages during the pendency of PAL's appeal to the

40G.R. No. 167768, Apri 17, 2009.

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receiver. NLRC, the same should have been suspended pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained from resolving _petitioners' case for illegal dismissal and should instead have directed them to lodge their claims before PAL's

Garcia v. Philippine Airlines, we had the occasion to restate this oft- repeated verdict, thus: and, very recently, in this Court's en banc Decision in the same

It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver. court, tribunal or board against the corporation shall ipso jure be suspended. As stated early on, during the pendency of petitioners' complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver.

before this Court. Otherwise stated, what are automatically stayed or The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all payment of claims. Furthermore, the actions that are suspended collection suits or any other claims of a pecuniary nature." phases of the suit, be it before the trial court or any tribunal or suspended are the proceedings of an action or suit and not just the cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases

definition of the term "claims", to wit: A year later, the Supreme Court reiterated, in Castillo vs. Uniwide4i, the

whether or not it is reduced to judgment, liquidated or the new rules on corporate rehabilitation, as well as the interim disputed or undisputed, legal or equitable, and secured or claims against a distressed .corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. More importantly. Appeals, the term "claim" has been construed to refer to debts or involving monetary considerations and in Philippine Airlines v. Kurangking,the term was identified as the right to payment, unliquidated, fixed or contingent, matured or unmatured, unsecured. Furthermore, the actions that were suspended cover all demands of a pecuniary nature, or the assertion to have money paid. It was referred to, in Arranza v. B.F. Homes, Inc., as an action "In Finasia. Investments and Finance Corporation v. Court of

41 G.R. No. 169725, 30 April 2010.

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include all claims or demands of whatever nature or character by the suspension order issued by the SEC, as it is one for pecuniary rules, provide an all-encompassing definition of the term and, thus against a debtor or its property, whether for money or arising as it does from his alleged illegal dismissal, is a claim covered otherwise.There is no doubt that petitioner's claim in this case, consideration."

bags of refined sugar covered by the subject RSDOs, falls within the definition of This is because DHB's claim emanates from its right over VMC's RSDOs. DHB's "claims" covered by the stay order. Thus, it should be filed with the Commission. Based on the above-discussion, DHB's claim for the delivery of 105,000

right was conveyed, transferred and assigned by PEPSI,as evidenced by the Deed of Assignment between DHB and PEPSI42

No. 97-1520) for recovery of personal property with prayer for Replevin over the 105,000 bags of refined sugar was suspended and archived by the RTC pursuant to the stay order. In fact in the said case, it was VMC who moved for the suspension of this separate action. Likewise, VMC admitted and recognized the Commission's jurisdiction over DHB's claim when it filed its motion to suspend proceedings, to wit: Moreover, it was never disputed that DHB's separate action (Civil Case

"C) Based on the allegations on the Complaint, it is evident that Plaintiff (DHB) considers itself to be a creditor of Defendant (VMC). Whether or not there is any merit at all to this claim, the proper forum before which to ventilate it is the SEc and not this Honorable Court."43

Intervene, when it ruled: Additionally, the Commission En Banc already allowed DHB's Motion to

"During the 18 February 1998 hearing, both parties were duly represented by their respective counsels and there ensued an respective argument of. both. parties. Petitioner-appellee VMC objections to the SEC deciding the present controversy. exhaustive discussion on the pertinent issues of the case and the clarified that it has no objection to the intervention filed by DHB. Both parties declared during the hearing that they have no

upheld by the Supreme court in the case of RCBC vs. IAC (213 SCRA 83 Theexclusive jurisdiction of the SEC over cases involving the assets and properties of a distressed firm under sec. 5 (d) of P.D. 902-A was

Omnibus Order of the Hearing Panel dated 03 November 1997 is In view of the foregoing, the instant appeal is hereby GRANTED. The

43 Note 3, Supra, Records, page 217. 42 Note 22, Supra.

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thus MODIFIED, allowing the Motion for Leave to Intervene filed by Intervenor-Appellant DHB before the SICD."44

its present position which casts doubt to the arguments it has presented in this instant appeal. Clearly,VMC's admissions in the RTC and SHP proceedings are contrary to

applications over a parcel of public land. On appeal to the Supreme Court, Banaga Problems (COSLAP) on the ground that COSLAP has no jurisdiction to hear and seeks the annulment of the decision Commission on the Settlement of Land jurisdiction over the dispute between the parties herein. It was held that: resolve the controversy, and that it is the Bureau of Lands which has the In Banaga, et al. vs. COSLAP, et al.45 the parties had conflicting free patent

"Finally, assuming, in gratia argumenti, that the Provincial PACLAP Committee had no jurisdiction over the controversy, petitioners are already estopped from raising the issue of jurisdiction and from alleging at the same time that the case falls within the jurisdiction of later replaced by the COSLAP.What they alleged in their appeal, as be properly within the jurisdiction of the civil courts. This is not the issue of jurisdiction which they are now raising before Us. In the instant petition, they now claim that jurisdiction belongs to the Bureau of Lands and not to the PACLAP. the Bureau of Lands. Petitioners had not raised this matter of lack of jurisdiction in their appeal to the PACLAP which was one of their assigned errors, was that the PACLAP Provincial Committee exceeded its jurisdiction in ruling on the validity of the verbal agreement between the parties herein, which they contend to

decide for the first time, a question not raised in the administrative practice of party submitting his case for decision and then applies. Hence, a party may be estopped or barred from raising the proceedings. This principle should deter those who are disposed to trifle with the courts by taking inconsistent positions contrary to the rule is settled that this Court cannot allow a litigant to assume a position whereby the court, which is supposed to review This Court has time and again frowned upon the undesirable accepting the judgment only if favorable, and attacking it for lack of jurisdiction when adverse. Here, the principle of estoppel question of jurisdiction for the first time in a petition before the Supreme Court when it failed to do so in the early stages of the elementary principles of right dealing and good faith. Further, the different posture when he comes before the court and challenges the administrative determinations, would not review, but determine and forum."

Marquez v.Secretary of Labor,G.R.80685,March 16,1989.Cuerdo v.Commission on Audit.G.R.No.84592,October 27 45G.R No.L-66386 January 30.1990 citing Capitan v.de la Cruz Nos. L29536-37,February 28, 1974. 55 SCRA 706 '44 Note.'7 Supra 1 988.

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proceedings with the RTC on the ground that the Commission had already In fact, it presented evidence in support of its defense. However, after failing to lack of jurisdiction over DHB's claim. Pursuant to principles laid down in Banaga,which cited Tijam vs. Sibonghanoy46,VMC should be estopped from acquired jurisdiction over the rehabilitation case when it issued a Stay Order. Moreover, VMC participated in the proceedings before the SICD Hearing Panel. obtain an affirmative relief from the SHP, VMC now invokes the Commission's questioning the Commission's jurisdiction based not only on estoppel in pais but estoppel by laches as well To reiterate, it was VMC which filed, on 09 July 1999, a motion to suspend

non-adversarial in nature, we are not persuaded. VMC anchored its argument on reading of the same would, however, show that these cases find no application. the Supreme Court cases of Advent Capital vs. Alcantara, et al.47 and Express Investment III Private Ltd. et al. vs. Bayan Telecommunications, Inc. et al.48, A close As to VMC's argument that rehabilitation proceedings are summary and

creditor seeking to recover its .claim from a third party in the rehabilitation to resolve disputes between Advent (as creditor) and its claim against third recovery of its claim. In the instant case, PEPSI is not a third party. VMC parties. Thus, the Supreme Court ruled that it should file a separate action for not disputing the claim (RSDOs) but merely argues that "since no warehouse receipt was presented to VMC, there is no obligation or latter's part to deliver the goods" 49 proceedings. The Supreme Court ruled that the rehabilitation court has no power recognized and even paid for several RSDOs that PEPSI presented.Thus,VMC is In Advent Capital case, it is the distressed corporation which is the

of costs (payment to accountants, financial experts, lawyers, etc.) incurred by creditors in pursuing their claim cannot be included in the rehabilitation proceedings. Similarly, in Express Investment case, the Supreme Court ruled that claim

hence these are not applicable. Both of these cases do not fall squarely to the facts of the instant case,

on Corporate Recovery that: Finally, it is clearly provided in Section 2-4 of the SEC Rules of Procedure

intervene generally or with respect to any specified matter." cause shown, the Commission may permit any interested party to "Section 2-4. Permissive intervention - On motion and for good

49 Paragraph 12, page 5, VMC's Answer. Records. page 77. 46-131 Phil. 556, the Court held that a party may be barred by laches from invoking lack of jurisdiction at a late hour for the purpose of annulling everything done in the case with the active 48 G.R. No. 1 74457-59, 05 December 2012 participation of said party invoking the plea of lack of jurisdiction. 47 G.R. No. 183050, 25 January 2012.

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intervene in VMC's rehabilitation proceedings. The Commission is given the discretion to determine which interested party may participate in the rehabilitation proceedings of a distressed corporation. As above-provided, the Commission can allow an interested party to

VMC's liabilitv to DHB vis-a-vis the RSD0s covering 105,000 bags of refined sugar

between the VMC and DHB. It argues that VMC was not privy or a party to the same. It contends that there is no categorical or definite finding showing that considering the Affidavit of Ma. Lourdes L. Molina in computing the monetary was not the one who prepared the Purchase Order Nos. 5912350 and 5912551 which was the basis for the said computation. loan transactions between NNMCI and DHB nor it received the proceeds of the VMC benefited from DHB.Aside from that,VMC claims that SHP1 also erred in value of the remaining 105,000 bags of refined sugar. It claims that Ms. Molina VMC's asserts that SHP1 erred in ruling that a quasi-contract was created

the same, it was unjustly enriched when it refused to release the remaining bags of sugar to PEPSI and DHB. Likewise,DHB avers that VMC acknowledged these 45,000 bags to PEPSI. It further argues that SHP1 was correct in computing the NNMCI's loan and these RSDOs were assigned to the former, hence it has a right to claim the same. RSDOs and even partially performed its obligation when the latter delivered monetary value of the remaining bags since VMC did not present any contrary evidence. Lastly, DHB maintains that the RSDOs were intended as collateral to While, DHB argues that when VMC issued the subject RSDOs and certified

We find merit in DHB's position.

voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another52. In this case,there was no definite determination that VMC benefitted from the NNMCI's loan with DHB. Thus,it cannot be said that VMC was unjustly enriched with NNMCI's loan. A quasi-contracts are those juridical relations arising from lawful,

which case, the assignment has an effect similar to that of a sale.53 In an transferring the right of the assignor to the assignee, who would then be allowed to proceed against the debtor. It may be done either gratuitously or onerously, in On the other hand, an assignment of credit/right is the process of

53 Nyco Sales Corporation vs. BA Finance Corporation, et al. G.R. No. 7 1594, 16 August 199 f. 50 Note i17. Supra. 52 Article 2142 of the New Civil Code 51 Note I8, Supra.

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it may produce legal effects. Hence, the duty to pay does not depend on the consent of the debtor; otherwise, all creditors would be prevented from assigning their credits/rights because of the possibility of the debtors' refusal to assignment of credit/right, the consent of the debtor is not essential in order that give consent.54

became the holder/owner of VMC's Shipping List/Delivery Receipts (SLDRs), the Supreme Court ruled that when there is a transfer of title to the buyer or its assignee, VMC is obliged to deliver the same to the said buyer or its assignee, thus: Consolidated Sugar Corporation55, wherein Consolidated Sugar Corporation Furthermore, in Victorias Milling Co., Inc. vs. Court of Appeals and

transferred title to the sugar to the buyer or his assignee upon payment of the purchase price. Said terms clearly establish a contract of sale, not a contract to sell. Petitioner is now estopped from alleging the contrary. The contract is the law between the contracting parties.And where the terms and conditions so stipulated are not contrary to law, morals, good customs, public policy or public order, the .contract is valid and must be petitioner is now obliged to deliver it to the purchaser or its assignee." "The aforequoted terms and conditions clearly show that petitioner upheld. Having_transferred title to the sugar in question

right to claim the remaining 105,000 bags of refined sugar to DHB, the latter is now claiming the right to the refined sugar covered by the subsequent RSDOs. Moreover, it indubitable that VMC has an agreement with PEPSI to deliver the remaining bags of refined sugar for the reason that it already partially performed RSDOs to PEPSI; 2.) it delivered.45,000 bags to PEPSI when the latter hauling the refined sugar. Based on this established fact, VMC is estopped from denying its obligation to DHB to deliver 150,000 bags of refined sugar. its obligation to the latter when: 1.) it cancelled RSD0 No.37977 and issued 20 surrendered RSD0 Nos. 38473, 38483-38486, 38487 and 38488; 3.) it received payment of the corresponding tolling fees amounting to Php 10,123,845.76 for In the instant case, VMC cannot deny the fact that when PEPSI assigned its

latter's right to claim the 105,000 bags of refined sugar. In essence, DHB became the subject RSDOs, comes from PEPSI by virtue of the Deed of Assignment dated 25 June 199756 and not from VMC's.certification dated 03 December 1996. Thus, DHB (assignee) steps into the shoes of PEPSI (assignor), the former acquiring the In other words,DHB's right to claim the 105,000 bags of sugar, covered by

56 Note 22 Supra Section I.SALE The ASSIGNOR (PEPSII hereby transfers. Conveys and assigns to the ASIGNFE (DHB) a 54 Sison vs. Yap Tico. 37'Phil. 87 (1918): Rodriguez vs. Court of Appeals. 207 SCRA 553 (1992). bags of rfined sugar covered by the RSDOs enumerated in AnnexA hereof fromVictorias Miling Company. Inc.and to collect any tolling fees already paid, but not due, to saia Company. 55 G.R. No. 117356, 19 June 2000. its rights. title and interests under Purchase Order Nos. 59123 and 59125 both dated 18 March 1997 and the fteen (15) RSDOs enumerated.in Annex "A" hereof. including the right to obtain the delivery of one hundred five thousand (105.000)

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the creditor of VMC as to the remaining 105,000 bags of refined sugar, by virtue of the Deed of Assignment and not because of quasi-contract.

PEPSI's Purchase Order Nos. 59123 and 59125. This was further corroborated by given any credence on the ground that the latter has no personal knowledge in agree with the SHP1's computation. The basis for such computation is found in the Affidavit of Ms. Ma. Lourdes Molina who testified as to the amount of Php 605.47 per bag of sugar. VMC argues that Ms. Molina's affidavit should not be the preparation of the said purchase orders. However, a close reading of Ms Molina's affidavit will show that she facilitated in the processing of the subject purchase orders57. Hence, she has personal knowledge of these transactions. As to the monetary equivalent of the 105,000 bags of refined sugar, we

between VMC and PEPSi still remains. Hence, the terms and conditions, which includes the value of bags of refined sugar is still the same. Thus, it was correct for SHP1 to use as basis the amount stated in said purchase orders in computing the monetary value of the bags of refined sugar. Thus, when DHB steps into the shoes of PEPSI, the original agreement

based on the facts and evidence presented that PEPSI paid to VMC tolling fees was admitted by VMC's counsel in the latter's Answer to the Request for Admission58 in the SICD proceedings. VMC however, argues that its former the subject Answer to the Request for Admission. VMC's argument is fault or negligence to support the client's case and obtain remedies and reliefs already lost by the operation of law.59 amounting to Php 10,123,845.76 for the delivery of 65,000 bags of refined. This counsel, Atty. Pacifico Agabin, was not authorized by VMC or its board to submit unmeritorious. Records reveal that Atty. Agabin is VMC's counsel of record during that time. It has been consistently ruled by the Supreme Court that the negligence and mistakes of counsel bind the client. A departure from this rule would bring about never-ending suits, so long as lawyers could allege their own As for the tolling fees, we affirm the SHP1's ruling. It was established

in PEPSI's assignment to DHB. Hence, DHB may demand such amount from VMC. VMC still holds tolling fees, advanced by PEPSI, for the undelivered 20,000 bags of refined sugar60. These remaining tolling fees in VMC's possession are included 10,123,848.76 but only delivered 45,000 bags of refined sugar to PEPSI. Thus, Likewise, it is also established that VMC received the amount of Php

executed a Debt Restructuring Agreement with its creditors. Section 20 thereof provides: Finally, records of the Commission show that, on 29 April 2002, VMC

59 Building Care Corporation,etal. vs. Macaraeg. G.R. No. 198357, 10 December 2012. 57 Pages 10-18 of Lourdes Molina's Affdavit dated 30 March 1999. 58 Answer to the Request for Admission dated 26- April 1999. 60 Covered by RSDO Nos. 38487 and 38488.

vs. The Special Hearing Panel 1 and Dao Heng Bank, Inc SEC En Banc Case No. 0 1-15-353 Victorias Milling Company Inc

Page 19 of 19 "19.1 VMC's subsidiary, North Negros Marketing Company, Inc. Bank of the Philippines; BPI, Metrobank and Asian Bank (the "RSDO RSDO Claims are still subject of a pending litigation before the SEC. judgment to pay such RSDO Claims or a portion thereof, VMC shall UNSECURED CREDITORS. x X x (Nonemarco)usedRefined SugarDelivery.Orders(RSDOs) purportedly issued by VMC to avail of loans from Dao Heng Bank, Land Claimants") allegedly in the total principal amount of approxiamately One Billion One Hundred Thirty Four Million Pesos (P1.134 Billion). The RSDO Claimants are asking VMC to either deliver to them the quantity of sugar covered by their irespective RSDOs. or absorb the debts of Nonemarco. AS of date of execution of this Agreement, the However, in the event that VMC shall eventually be held liable by final restructure the RSDO Claims or a portion thereof under the same terms and conditions of the terms of restructuring for VMC.s currently

MODIFICATIONS. VMC is DIRECTED to comply with said SHP's Order pursuant to Section 19 of the Debt Restructuring Agreement dated 29 April 2002. The Special Hearing Panel 1's Order dated 06. January 2015 is AFFIRMED with WHEREFORE, premises considered, the instant appeal is hereby DENIED.

SO ORDERED

Pasay City, 29 November 2016

TERESITA J. HERBOSA Chairperson

MANUE Commissioner ERTO B.GAITE ANTONIETA F. IBE darita Commissioner buaae.dhe

EPHYRO LUIS B. AMATONG Commissioner 1WaX BLASJAMES Commissioner ER!