G.R. No. 163156 and G.R. No. 166845, December 10, 2008.
Negros Navigation Co., Inc. vs. Court of Appeals, Special Twelfth Division and Tsuneishi Heavy Industries (Cebu), Inc.; and Tsuneishi Heavy Industries (Cebu), Inc. vs. Negros Navigation Co., Inc., Sulficio O. Tagud, Jr., and the Rehabilitation Receiver for Negros Navigation Co., Inc.

FACTS

Negros Navigation Co., Inc. (NNC), a shipping company, engaged Tsuneishi Heavy Industries (Cebu), Inc. (THI) for vessel repair services. On February 9, 2004, THI filed a sum of money and damages case with a prayer for a writ of attachment against NNC before the Regional Trial Court (RTC) of Cebu for unpaid repair services, asserting a repairman’s lien. The Cebu RTC granted a writ of preliminary attachment on March 5, 2004, and levied on NNC’s vessel M/V St. Peter the Apostle on March 12, 2004. On March 29, 2004, NNC filed a Petition for Corporate Rehabilitation with the RTC of Manila, which issued a Stay Order on April 1, 2004, staying all claims against NNC. NNC then moved to suspend proceedings and lift the attachment in the Cebu case. On April 5, 2004, THI filed an Amended Complaint, impleading specific NNC vessels as co-defendants in an in rem action. The Cebu RTC admitted the amended complaint and issued an Order for the arrest of the vessels on April 6, 2004. On April 12, 2004, the Manila RTC clarified that its stay order applied to all claims, whether in rem or in personam. On April 29, 2004, the Court of Appeals (CA) issued a Resolution temporarily restraining the implementation of the Manila RTC’s Stay Orders. NNC filed G.R. No. 163156 assailing this CA Resolution. The CA later rendered a Decision on October 6, 2004, and a Resolution on January 24, 2005, which THI assailed in G.R. No. 166845.

ISSUE

The primary issue is whether the Stay Order issued by the Rehabilitation Court (Manila RTC) suspends the enforcement of a repairman’s maritime lien, which is an in rem claim against specific vessels, in a separate proceeding for sum of money and damages.

RULING

The Supreme Court ruled that the Stay Order issued pursuant to the Interim Rules of Procedure on Corporate Rehabilitation applies to all claims against the debtor, regardless of whether they are in personam or in rem. The Court held that the stay order is all-encompassing and suspends all actions for claims against the corporation, its guarantors, and sureties not solidarily liable. This includes the enforcement of a repairman’s lien, which, while a maritime lien enforceable in rem, is still a “claim” within the contemplation of the rehabilitation rules. The purpose of rehabilitation is to provide a breathing spell for the debtor and to allow for the efficient and equitable restructuring of its debts. Permitting the enforcement of in rem claims would undermine this purpose by allowing piecemeal dissipation of the debtor’s assets, which are essential for its rehabilitation. The Court emphasized that the rehabilitation receiver takes custody and control of all the debtor’s assets, including those subject of in rem claims, for the benefit of all creditors. Therefore, the Cebu RTC proceedings, including the writ of attachment and the arrest orders against the vessels, should be suspended in deference to the rehabilitation proceedings. The Court made the Temporary Restraining Order it had issued permanent and reinstated the Stay Order of the Manila RTC.