G.R. No. 165675 September 30, 2005
Spouses Eduardo Sobrejuanite and Fidela Sobrejuanite, Petitioners, vs. ASB Development Corporation, Respondent.

FACTS

Petitioners Spouses Sobrejuanite entered into a Contract to Sell with respondent ASB Development Corporation (ASBDC) for a condominium unit and parking space, with delivery stipulated on or before December 1999. Despite full payment, ASBDC failed to deliver. The spouses filed a complaint for rescission, refund, and damages before the Housing and Land Use Regulatory Board (HLURB). ASBDC moved to dismiss or suspend proceedings, citing the Securities and Exchange Commission’s (SEC) approval of a rehabilitation plan for the ASB Group, which included ASBDC, and the appointment of a rehabilitation receiver.
The HLURB arbiter denied the motion, ruled in favor of the Sobrejuanites, and ordered contract rescission with monetary awards. The HLURB Board of Commissioners affirmed, holding that the SEC rehabilitation did not suspend HLURB proceedings and any monetary award could be filed as a claim with the receiver. The Office of the President dismissed ASBDC’s appeal. The Court of Appeals reversed, ruling that the SEC-approved rehabilitation suspended the HLURB proceedings and that jurisdiction over the claim lay with the SEC.

ISSUE

The primary issue is whether the approval of a corporate rehabilitation plan by the SEC suspends proceedings before the HLURB in a complaint for rescission and damages filed by a buyer against a developer.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic centers on the application of Section 6(c) of Presidential Decree No. 902-A. This provision states that upon the appointment of a rehabilitation receiver, all actions for claims against the corporation under receivership pending before any court, tribunal, or body shall be suspended. The Court clarified that the term “claim” includes a money claim or a demand for payment arising from a contractual obligation. The Sobrejuanites’ complaint, which sought the refund of payments and damages, constituted a pecuniary demand or claim against ASBDC. Therefore, the HLURB proceedings were correctly suspended upon the SEC’s approval of the rehabilitation plan and appointment of a receiver.
The purpose of this automatic suspension is to prevent a disorderly scramble for the debtor’s assets and to provide the rehabilitation receiver with the necessary breathing space to effectively formulate and implement a recovery plan for the benefit of all creditors and the corporation itself. The Court emphasized that allowing the HLURB case to continue would undermine the statutory stay order, potentially grant the petitioners an undue advantage over other creditors, and frustrate the objectives of corporate rehabilitation. Consequently, the claim must be pursued within the rehabilitation proceedings before the SEC.