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[G.R. No. 146698. September 24, 2002.]




In April 1997, Respondents, all Muslim Filipinos, returned to Manila from their pilgrimage to the Holy City of Mecca, Saudi Arabia, on board a Philippines Airlines (PAL) flight. Respondents claimed that they were unable to retrieve their checked-in luggage. On 05 January 1998, respondents filed a complaint with the Regional Trial Court (RTC) of Marawi City against PAL for breach of contract resulting in damages due to negligence in the custody of the missing luggages.

On 02 March 1998, PAL filed its answer invoking, among its defenses, the limitations under the Warsaw Convention. On 19 June 1998, before the case could be heard on pre-trial, PAL, claiming to have suffered serious business losses due to the Asian economic crisis, followed by a massive strike by its employees, filed a petition for the approval of a rehabilitation plan and the appointment of a rehabilitation receiver before the Securities and Exchange Commission (SEC). On 23 June 1998, the SEC issued an order granting the prayer for an appointment of a rehabilitation receiver, and it constituted a three-man panel to oversee PAL’s rehabilitation. On 25 September 1998, the SEC created a management committee conformably with Section 6(d) of Presidential Decree ("P.D.") 902, as amended, declaring the suspension of all actions for money claims against PAL pending before any court, tribunal, board or body. Thereupon, PAL moved for the suspension of the proceedings before the Marawi City RTC. On 11 January 1999, the trial court issued an order denying the motion for suspension of the proceedings on the ground that the claim of respondents was only yet to be established. PAL’s motion for reconsideration was denied by the trial court.chanrob1es virtua1 1aw 1ibrary

PAL went to the Court of Appeals via a petition for certiorari. On 16 April 1999, the appellate court dismissed the petition for the failure of PAL to serve a copy of the petition on respondents. PAL moved for a reconsideration. In its resolution, dated 08 October 1999, the appellate court denied the motion but added that a second motion for reconsideration before the trial court could still be feasible inasmuch as the assailed orders of the trial court were merely interlocutory in nature. Consonantly, PAL filed before the trial court a motion for leave to file a second motion for reconsideration. The trial court, however, denied leave of court to admit the second motion for reconsideration. Again, PAL filed a motion for reconsideration which sought reconsideration of the denial of the prayed leave to file a second motion for reconsideration. In an order, dated 28 December 2000, the trial court denied the motion.chanrob1es virtua1 1aw 1ibrary

On the thesis that there was no other plain, speedy and adequate remedy available to it, PAL went to this Court via a petition for review on certiorari under Rule 45 of the Rules of Court, raising the question of —

"Whether or not the proceedings before the trial court should have been suspended after the court was informed that a rehabilitation receiver was appointed over the petitioner by the Securities and Exchange Commission under Section 6(c) of Presidential Decree No. 902-A." 1

In their comment to the petition, private respondents posited (a) that the instant petition under Rule 45 would not lie, the assailed orders of the court a quo being merely interlocutory; (b) that PAL was already operational and thus claims and actions against it should no longer be suspended; (c) that the SEC, not the RTC, should have the prerogative to determine the necessity of suspending the proceedings; and (d) that the only claims or actions that could be suspended under P.D. 902-A were those pending with the SEC.

While a petition for review on certiorari under Rule 45 would ordinarily be inappropriate to assail an interlocutory order, in the interest, however, of arresting the perpetuation of an apparent error committed below that could only serve to unnecessarily burden the parties, the Court has resolved to ignore the technical flaw and, also, to treat the petition, there being no other plain, speedy and adequate remedy, as a special civil action for certiorari. Not much, after all, can be gained if the Court were to refrain from now making, a pronouncement on an issue so basic as that submitted by the parties.chanrob1es virtua1 1aw 1ibrary

On 15 December 2000, the Supreme Court, in A.M. No. 00-8-10-SC, adopted the Interim Rules of Procedure on Corporate Rehabilitation and directed to be transferred from the SEC to Regional Trial Courts, 2 all petitions for rehabilitation filed by corporations, partnerships, and associations under P.D. 902-A in accordance with the amendatory provisions of Republic Act No. 8799. The rules require trial courts to issue, among other things, a stay order in the "enforcement of all claims, whether for money or otherwise, and whether such enforcement is by court action or otherwise," against the corporation under rehabilitation, its guarantors and sureties not solidarily liable with it. Specifically, Section 6, Rule 4, of the Interim Rules of Procedure On Corporate Rehabilitation, provides:jgc:chanrobles.com.ph

"SEC. 6. Stay Order. — If the court finds the petition to be sufficient in form and substance, it shall, not later than five (5) days from the filing of the petition, issue an Order (a) appointing a Rehabilitation Receiver and fixing his bond; (b) staying enforcement of all claims, whether for money or otherwise and whether such enforcement is by court action or otherwise, against the debtor, its guarantors and sureties not solidarily liable with the debtor; (c) prohibiting the debtor from selling, encumbering, transferring, or disposing in any manner any of its properties except in the ordinary course of business; (d) prohibiting the debtor from making any payment of its liabilities outstanding as at the date of filing of the petition; (e) prohibiting the debtor’s suppliers of goods or services from withholding supply of goods and services in the ordinary course of business for as long as the debtor makes payments for the services and goods supplied after the issuance of the stay order; (f) directing the payment in full of all administrative expenses incurred after the issuance of the stay order; (g) fixing the initial hearing on the petition not earlier than forty-five (45) days but not later than sixty (60) days from the filing thereof; (h) directing the petitioner to publish the Order in a newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks; (l) directing all creditors and all interested parties (including the Securities and Exchange Commission) to file and serve on the debtor a verified comment on or opposition to the petition, with supporting affidavits and documents, not later than ten (10) days before the date of the initial hearing and putting them on notice that their failure to do so will bar them from participating in the proceedings; and (j) directing the creditors and interested parties to secure from the court copies of the petition and its annexes within such time as to enable themselves to file their comment on or opposition to the petition and to prepare for the initial hearing of the petition."cralaw virtua1aw library

The stay order is effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings. 3

The interim rules must likewise be read and applied along with Section 6(c) of P.D. 902-A, as so amended, directing that upon the appointment of a management committee, rehabilitation receiver, board or body pursuant to the decree, "all actions" for claims against the distressed corporation "pending before any court, tribunal, board or body shall be suspended accordingly." Paragraph (c) of Section 6 of the law reads:jgc:chanrobles.com.ph

"Section 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers:chanrob1es virtual 1aw library

x       x       x

"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, finally, That upon appointment of a management committee, the 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."cralaw virtua1aw library

A "claim" is said to be "a right to payment, whether or not it is reduced to judgment, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, legal or equitable, and secured or unsecured." 4 In Finasia Investments and Finance Corporations 5 this Court has defined the word "claim," contemplated in Section 6(c) of P. D. 902-A, as referring to debts or demands of a pecuniary nature and the assertion of a right to have money paid as well.chanrob1es virtua1 1aw 1ibrary

Verily, the claim of private respondents against petitioner PAL is a money claim for the missing luggages, a financial demand, that the law requires to be suspended pending the rehabilitation proceedings. 6 In B.F. Homes, Inc. v. Court of Appeals, 7 the Court has ratiocinated:jgc:chanrobles.com.ph

". . . (T)he reason for suspending actions for claims against the corporation should not be difficult to discover. It is not 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 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." 8chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the petition is GRANTED. The assailed orders of the Regional Trial Court, Branch 9, of Marawi City, are SET ASIDE. No costs.


Davide, Jr., CJ., Ynares-Santiago, and Carpio, concur.


1. Rollo, p. 12.

2. SEC. 2. Applicability to Rehabilitation Cases Transferred from the Securities and Exchange Commission. — Cases for rehabilitation transferred from the Securities and Exchange Commission to the Regional Trial Courts pursuant to Republic Act No. 8799, otherwise known as The Securities Regulation Code, shall likewise be governed by these Rules.

3. SEC. 11. Period of the Stay Order. — The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings.

The petition shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of one hundred eighty (l80) days from date of the initial hearing. The court may grant an extension beyond this period only if it appears by convincing and compelling evidence that the debtor may successfully be rehabilitated. In no instance, however, shall the period for approving or disapproving a rehabilitation plan exceed eighteen (18) months from the date of filing of the petition.

4. Black’s Law Legal Dictionary, p. 224, 5th ed., as cited in the case of Finasia Investments and Finance Corp. v. Court of Appeals, 837 SCRA 446.

5. 237 SCRA 446.

6. Barotac Sugar Mills, Inc. v. Court of Appeals, 275 SCRA 497; Rubberworld (Phils.) Inc. v. NLRC, 305 SCRA 721, among others.

7. 190 SCRA 262.

8. At p. 269.

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