GR 190462; (November, 2010) (Digest)
G.R. No. 190462 and G.R. No. 190538; November 17, 2010
STEEL CORPORATION OF THE PHILIPPINES, Petitioner, vs. EQUITABLE PCI BANK, INC., (now known as BDO UNIBANK, INC.), Respondent. / DEG – DEUTSCHE INVESTITIONS-UND ENTWICKLUNGSGESELLSCHAFT MBH, Petitioner, vs. EQUITABLE PCI BANK, INC., (now known as BDO UNIBANK, INC.) and STEEL CORPORATION OF THE PHILIPPINES, Respondents.
FACTS
Steel Corporation of the Philippines (SCP), facing financial distress, was placed under corporate rehabilitation upon a creditor-initiated petition filed by Equitable PCI Bank (now BDO-EPCIB). The Rehabilitation Court appointed a Receiver who evaluated the proposed plans and submitted a recommended Rehabilitation Plan. After consultative meetings, the Rehabilitation Court approved a modified rehabilitation plan on December 3, 2007. BDO-EPCIB appealed this approval to the Court of Appeals (CA).
The CA, in its Decision, set aside the Rehabilitation Court’s approval of the plan. Furthermore, the CA proceeded to order the termination of SCP’s corporate rehabilitation proceedings. This termination was a relief not sought by BDO-EPCIB in its appeal, which only assailed the approval of the specific rehabilitation plan. SCP and another creditor, DEG, filed separate petitions before the Supreme Court challenging the CA’s decision.
ISSUE
Whether the Court of Appeals erred in granting the relief of terminating the corporate rehabilitation proceedings, which was not prayed for in BDO-EPCIB’s petition for review.
RULING
Yes, the Court of Appeals committed reversible error. The Supreme Court emphasized the fundamental rule that a court cannot grant a relief not prayed for in the pleadings or incidental thereto. This principle is rooted in due process, as it prevents surprise and ensures that parties are afforded the opportunity to be heard on the specific relief sought. In this case, BDO-EPCIB’s petition for review before the CA solely questioned the approval of the rehabilitation plan; it did not include a prayer for the termination of the entire rehabilitation proceedings.
The legal logic is clear: a judgment must conform to the pleadings and the evidence presented (secundum allegata et probata). The CA’s grant of termination exceeded the scope of the relief sought by BDO-EPCIB. Since the issue of termination was not properly litigated, SCP and other creditors were deprived of the chance to argue against it. Consequently, the Supreme Court reversed and set aside the CA’s Decision and Resolution insofar as they terminated the rehabilitation. The cases were remanded to the CA for consolidation with other related petitions for proper proceedings.