G.R. No. 74851 , December 9, 1999
RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. INTERMEDIATE APPELLATE COURT AND BF HOMES, INC., respondents.

FACTS

BF Homes, Inc. filed a petition for rehabilitation with the Securities and Exchange Commission (SEC) on September 28, 1984. RCBC, a listed creditor, subsequently requested the extrajudicial foreclosure of its real estate mortgage on BF Homes’ properties. The SEC issued a temporary restraining order on November 28, 1984, enjoining the scheduled auction. The sale was rescheduled, and on January 25, 1985, the SEC ordered a writ of preliminary injunction upon RCBC’s filing of a bond. RCBC filed the bond only on January 29, 1985, the day of the rescheduled auction. Presumably unaware of the bond filing, the sheriff proceeded with the sale where RCBC was the highest bidder. The SEC belatedly issued the writ of preliminary injunction on February 13, 1985. RCBC then filed a mandamus action in the Regional Trial Court to compel the sheriff to execute a certificate of sale, which the trial court granted via judgment on the pleadings.

ISSUE

The core issue is whether the extrajudicial foreclosure initiated by RCBC was valid, or whether it was suspended by the SEC’s assumption of jurisdiction over BF Homes’ rehabilitation.

RULING

The Supreme Court granted RCBC’s motion for reconsideration and reversed its prior 1992 decision. The Court clarified the legal effect of a petition for corporate rehabilitation under Presidential Decree No. 902-A. The pivotal ruling is that the suspension of all actions for claims against a distressed corporation commences only from the time a management committee, rehabilitation receiver, board, or body is officially appointed by the SEC. In this case, while BF Homes filed its rehabilitation petition in September 1984, the SEC appointed a Management Committee only on March 18, 1985. RCBC’s act of requesting the extrajudicial foreclosure on October 26, 1984, and the subsequent auction sale on January 29, 1985, both occurred prior to this critical appointment date. Therefore, these actions were not legally suspended. The Court emphasized that the mere filing of a rehabilitation petition does not automatically suspend all claims; the statutory stay attaches upon the appointment of the receiver or management committee. Consequently, RCBC’s foreclosure proceedings were validly undertaken. The decision of the Intermediate Appellate Court was set aside, and the Regional Trial Court’s judgment in the mandamus case was reinstated.