GR 183140; (August, 2010) (Digest)
G.R. No. 183140 ; August 2, 2010
NORTH BULACAN CORPORATION, Petitioner, vs. PHILIPPINE BANK OF COMMUNICATIONS, Respondent.
FACTS
Petitioner North Bulacan Corporation (NBC), a housing developer, filed a petition for corporate rehabilitation with the Regional Trial Court (RTC) after its funding from respondent Philippine Bank of Communications (PBCom) was discontinued. NBC alleged that PBCom reneged on its commitment to finance a housing project, leading to a construction stoppage. The RTC initially granted certain motions filed by NBC and later gave due course to the rehabilitation petition.
PBCom challenged the RTC order via certiorari before the Court of Appeals (CA). The CA granted PBCom’s petition and ordered the dismissal of NBC’s rehabilitation case. The CA ruled that the RTC failed to approve a rehabilitation plan within 180 days from the initial hearing as mandated by the Interim Rules on Corporate Rehabilitation. NBC elevated the case to the Supreme Court.
ISSUE
Whether the Court of Appeals erred in dismissing NBC’s petition for corporate rehabilitation.
RULING
The Supreme Court denied NBC’s petition and affirmed the CA decision. The Court emphasized that while the Interim Rules on Corporate Rehabilitation are to be construed liberally to achieve a just and expeditious resolution, such liberality cannot justify a disregard of the rules or cause needless delay. The Court found that NBC committed several procedural violations, including filing prohibited pleadings like motions for extension and a memorandum, and submitting various unverified pleadings and motions for indirect contempt.
More critically, NBC’s submitted documentation was substantively inadequate. Its Schedule of Debts and Liabilities lacked creditors’ addresses and details on accrued interests and security arrangements. Its Inventory of Assets failed to state the nature, location, condition, and encumbrances on its properties. Due to these procedural lapses and the filing of numerous prohibited pleadings, the RTC was unable to approve a rehabilitation plan within the 180-day period. While an extension is permissible under compelling circumstances, the RTC extended the period without a motion and without strong evidence of NBC’s feasibility for successful rehabilitation. The creditors’ substantial opposition, which indicated NBC’s liabilities far exceeded its assets, critically placed the likelihood of rehabilitation in serious doubt. Consequently, the RTC should have dismissed the petition as the CA correctly ordered.