Spouses Sobrejuanite v. ASB Devt. Corp.

Spouses Sobrejuanite

v.

ASB Development Corp., G.R. No. 165675

FACTS OF THE CASE

1. On March 7, 2001, spouses Eduardo and Fidela Sobrejuanite (Sobrejuanite) filed a Complaint for rescission of contract, refund of payments and damages, against ASB Development Corporation (ASBDC) before the Housing and Land Use Regulatory Board (HLURB).

2. Sobrejuanite alleged that they entered into a Contract to Sell with ASBDC over a condominium unit and a parking space in the BSA Twin Tower-B Condominum located at Bank Drive, Ortigas Center, Mandaluyong City.  They averred that despite full payment and demands, ASBDC failed to deliver the property on or before December 1999 as agreed.  They prayed for the rescission of the contract; refund of payments amounting to P2,674,637.10; payment of moral and exemplary damages, attorney’s fees, litigation expenses, appearance fee and costs of the suit.

3. ASBDC filed a motion to dismiss or suspend proceedings in view of the approval by the Securities and Exchange Commission (SEC) on April 26, 2001 of the rehabilitation plan of ASB Group of Companies, which includes ASBDC, and the appointment of a rehabilitation receiver.  The HLURB arbiter however denied the motion and ordered the continuation of the proceedings.

ISSUE:

 Whether the SEC’s approval of the corporate rehabilitation plan has the effect of suspending the proceeding before HLURB.

RULING:

Yes. Section 6(c) of PD No. 902-A empowers the SEC:

c)         To appoint one or more receivers of the property, real and personal, which is the subject of the action pending before the Commission … whenever necessary in order to preserve the rights of the parties-litigants and/or protect the interest of the investing public and creditors: … Provided, finally, 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 management or receivership pending before any court, tribunal, board or body shall be suspended accordingly.

The purpose for the suspension of the proceedings is to prevent a creditor from obtaining an advantage or preference over another and to protect and preserve the rights of party litigants as well as the interest of the investing public or creditors. Such suspension is intended to give enough breathing space for the management committee or rehabilitation receiver to make the business viable again, without having to divert attention and resources to litigations in various fora. 

The suspension would enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the “rescue” of the debtor company.  

To allow such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation.