G.R. No. 163235; April 27, 2007
VIVA FOOTWEAR MANUFACTURING CORPORATION, Petitioner, vs. SECURITIES AND EXCHANGE COMMISSION, PHILIPPINE NATIONAL BANK and PHILIPPINE BANK OF COMMUNICATIONS, Respondents.

FACTS

Petitioner Viva Footwear Manufacturing Corporation filed a petition for rehabilitation and declaration of suspension of payments with the Securities and Exchange Commission (SEC) in 1996. The SEC issued an order declaring a state of suspension and formed an Interim Management Committee. Over several years, petitioner submitted multiple revised rehabilitation plans, including a 1998 plan proposing consolidation with Coco Manila Food Corp., a 2001 second revised plan, and a final Third Revised Rehabilitation Plan in May 2002. Respondent Philippine National Bank (PNB) consistently objected to these plans, while Philippine Bank of Communications (PBCom) initially objected but later conformed to the consolidation idea.
During the proceedings, petitioner filed a motion to transfer the case to the Regional Trial Court following the enactment of the Securities Regulation Code, but the SEC denied it, citing its retained jurisdiction over pending rehabilitation cases as of June 30, 2000. Ultimately, the SEC dismissed the petition for rehabilitation in July 2002, finding the final plan incomplete and unfeasible. The Court of Appeals affirmed this dismissal.

ISSUE

Whether the Court of Appeals erred in affirming the SEC’s order dismissing the petition for rehabilitation, particularly on grounds of inordinate delay and alleged violation of due process.

RULING

The Supreme Court denied the petition, upholding the appellate court’s decision. On the issue of delay, the Court found petitioner’s claim that the SEC unreasonably sat on the petition for seven years to be inaccurate. The delay was attributable to petitioner’s own repeated revisions of its rehabilitation plans, with the final plan submitted only in May 2002. The SEC’s dismissal order in July 2002, issued less than two months later, was therefore not overdue. The Court emphasized that rehabilitation is a privilege contingent on a feasible plan, and the SEC correctly exercised its discretion in dismissing an unfeasible one.
Regarding due process, the Court ruled that the SEC’s internal referral of the rehabilitation plan to its Financial Analysis and Audit Division without notice to petitioner did not constitute a violation. In administrative proceedings, due process simply requires an opportunity to be heard and a decision based on substantial evidence. Petitioner was afforded this through its multiple submissions and opportunities for reconsideration. The preliminary internal report was not the final order, and petitioner had no right to be notified of such internal evaluations. Thus, no grave abuse of discretion attended the SEC’s dismissal or the Court of Appeals’ affirmation thereof.