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Issue of MR: W/N preferred creditors of distressed corporations stand on equal footing with
other creditors only after the creation of a management committee
Held. Supreme Court granted motion for reconsideration
RCBC: were still allowed to exercise its preferred status because it foreclosed mortgage before
appointment of management committee, PD 902-A not applicable
PD 902-A
c) To 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 order to preserve the rights of the parties-
litigants and/or protect the interest of the investing public
and creditors. Provided, however, That the Commission may, in appropriate cases, appoint a
Rehabilitation Receiver who shall have, in addition to the powers of a regular
receiver under the provisions of the Rules of Court, such functions and powers as are provided for in
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 management or receivership pending
before any court, tribunal, board or body shall be
suspended accordingly
SC:
1. Therefore, suspension of claims against a corporation under rehabilitation is counted upon the
appointment of management committee, not when the petition for rehabilitation is filed.
In this case, RCBC requesting for foreclosure and filing of petition for
mandamus to award certificate of title are valid.
2. *STAT CON* First and fundamental duty of Court is to apply the law. When the law
is clear, there is no room for construction or occasion for interpretation, only
application. When the law is ambiguous or of doubtful , court must interpret.
Petition for rehabilitation does not give rise to the creation of a
management committee. SEC has the discretion to determine whether such
appointment is appropriate.
Management committee is organized for the purpose of preserving
existing assets when:
1. Imminent danger of dissipation, lose, wastage or destruction
2. Paralization of business operations of such corporations
In this case, when BF Homes filed a petition for rehabilitation and
suspension of payments, this did not give rise to the creation of a
management committee. Only when SEC created did the suspension of
claims commence.
RCBC: being a mortgage creditor, can rely on its own security, and doesn't need to join the
unsecured creditors in filing claims before the SEC
SC:
secured creditors retain preference over unsecured creditors but enforcement of such
preference is suspended upon appointment of a management committee. Regain
preference after liquidation.
Secured creditors do not lose their status as opposed to unsecured creditors, PD 902-A
does not state anything to this effect. They however, cannot assert preferences before
the SEC upon creation of management committee
Decision: MR granted, RCBC had the right to move for foreclosure of mortgage because
management committee was not appointed until almost a year later.