G.R. Nos. 218485-86 and 218493-97, April 28, 2021
Banco De Oro Unibank, Inc., Petitioner, vs. International Copra Export Corporation, Interco Manufacturing Corporation, ICEC Land Corporation, and Kimee Realty Corporation, Respondent. [G.R. Nos. 218487 and 218498-503] Development Bank of the Philippines, Petitioner, vs. International Copra Export Corporation, Interco Manufacturing Corporation, ICEC Land Corporation, and Kimee Realty Corporation, Respondents. [G.R. Nos. 218488-90 and 218504-07] International Copra Export Corporation, Interco Manufacturing Corporation, ICEC Land Corporation, and Kimee Realty Corporation, Petitioners, vs. Banco De Oro Unibank, Inc. and Development Bank of the Philippines, Respondents. [G.R. Nos. 218491 and 218508-13] International Copra Export Corporation, Interco Manufacturing Corporation, ICEC Land Corporation, and Kimee Realty Corporation, Petitioners, vs. Allied Banking Corporation and Philippine National Bank, Respondents. [G.R. Nos. 218523-29] International Copra Export Corporation, Interco Manufacturing Corporation, ICEC Land Corporation, and Kimee Realty Corporation, Petitioners, vs. Rizal Commercial Banking Corporation, Allied Banking Corporation, Philippine National Bank, Development Bank of the Philippines, Banco De Oro Unibank, Inc., and Bank of the Philippine Islands, Respondents.

FACTS

On September 9, 2010, International Copra Export Corporation (Interco), Interco Manufacturing Corporation, ICEC Land Corporation, and Kimee Realty Corporation (collectively, Interco, et al.) filed a Petition for Suspension of Payments and Rehabilitation before the Regional Trial Court (RTC) of Zamboanga City pursuant to the Financial Rehabilitation and Insolvency Act (FRIA), citing liquidity problems. The RTC found the Petition sufficient and issued a Stay Order on September 13, 2010, appointing Atty. Julio Elamparo as rehabilitation receiver. During the initial hearing on November 12, 2010, the RTC declared the proceedings would be governed by the 2008 Rules on Corporate Rehabilitation. Creditor-banks, including Development Bank of the Philippines (DBP), Banco De Oro Unibank, Inc. (BDO), Rizal Commercial Banking Corporation (RCBC), Allied Banking Corporation, Philippine National Bank (PNB), and Bank of the Philippine Islands (BPI), filed comments/oppositions. The RTC gave due course to the Petition on February 11, 2011. The rehabilitation receiver convened a creditors’ meeting on April 6, 2011, and subsequently submitted a modified rehabilitation plan, which the RTC approved in its July 8, 2011 Resolution. Several creditor-banks filed Petitions for Review before the Court of Appeals (CA). The CA, in its November 18, 2014 Decision, partially granted the petitions, remanding the case to the rehabilitation court and ordering it to direct the rehabilitation receiver to convene the creditors to vote on the rehabilitation plan in accordance with Section 64 of FRIA, which it found had not been complied with. The CA held that FRIA applied to the petition filed after its effectivity and that the absence of implementing rules did not render FRIA inoperative. Motions for reconsideration were denied. The parties elevated the case to the Supreme Court via separate Petitions for Review on Certiorari.

ISSUE

The primary issue is whether the Financial Rehabilitation and Insolvency Act (FRIA) applies to Interco, et al.’s Petition for Suspension of Payments and Rehabilitation filed after FRIA’s effectivity, despite the absence of its implementing rules, and whether the Court of Appeals correctly remanded the case for compliance with the creditor voting requirement under Section 64 of FRIA.

RULING

The Supreme Court denied the petitions and affirmed the Court of Appeals’ Decision and Resolution. The Court held that FRIA is a self-executing law and its provisions are immediately effective and enforceable even in the absence of implementing rules and regulations. Every law carries a presumption of validity and is presumed to be complete and self-executing. The directive for the Supreme Court to promulgate rules of procedure under FRIA does not negate its immediate effectivity. Since Interco, et al.’s petition was filed on September 9, 2010, after FRIA took effect on July 18, 2010, FRIA governs the proceedings. The RTC erred in applying the 2008 Rules on Corporate Rehabilitation. The Court further ruled that the creditor voting requirement under Section 64 of FRIA is mandatory. The rehabilitation court’s approval of the plan without convening the creditors to vote, as expressly required by FRIA, was a reversible error. The Court of Appeals correctly remanded the case to the rehabilitation court to direct the rehabilitation receiver to convene the creditors for voting and to subsequently confirm or reject the plan in accordance with Sections 64 and 65 of FRIA. The Court also found Interco, et al.’s Petition for Suspension of Payments and Rehabilitation to be sufficient in form and substance.