Spouses Sobrejuanite v. ASB Development Corporation
REITERATIONFacts
The Antecedents: On March 7, 2001, petitioners spouses Eduardo and Fidela Sobrejuanite filed a complaint before the Housing and Land Use Regulatory Board (HLURB) for rescission of contract, refund of payments and damages against ASB Development Corporation (ASBDC), alleging failure to deliver a condominium unit and parking space despite payment. ASBDC moved to dismiss or suspend the HLURB proceedings due to the Securities and Exchange Commission's (SEC) approval on April 26, 2001 of a rehabilitation plan for ASB Group of Companies and appointment of a rehabilitation receiver. The HLURB arbiter denied the motion to suspend and ordered rescission with monetary awards in favor of the petitioners. The HLURB Board of Commissioners affirmed the arbiter and noted monetary awards could be filed as claims with the rehabilitation receiver. Procedural History: ASBDC appealed to the Office of the President which dismissed its appeal. Thereafter ASBDC filed a petition under Section 1, Rule 43 before the Court of Appeals (CA-G.R. SP No. 79420). On June 29, 2004, the Court of Appeals reversed and set aside the Office of the President decision, holding that approval of the rehabilitation plan and appointment of a receiver suspended the HLURB proceedings because the complaint constituted a "claim" under Presidential Decree No. 902-A and the Interim Rules. The Court of Appeals further found that the delivery period under the Contract to Sell was extended due to the developer's financial reverses. Petitioners' motion for reconsideration before the Court of Appeals was denied. Petitioners filed the present petition for review on certiorari to the Supreme Court. The Petition: Petitioners contended that the Court of Appeals erred in ruling that the SEC, and not the HLURB, had jurisdiction over their complaint; that the approval of the rehabilitation plan and appointment of a receiver did not suspend HLURB proceedings; and that the appellate court erroneously allowed an extension of the agreed delivery date based on respondent's financial difficulties.
Issue(s)
Whether the Court of Appeals erred in ruling that the Securities and Exchange Commission, and not the Housing and Land Use Regulatory Board, has jurisdiction over petitioners' complaint. Whether the approval of the corporate rehabilitation plan and the appointment of a receiver had the effect of suspending the HLURB proceedings and precluding monetary awards from being executed outside the rehabilitation process. Whether the Court of Appeals erred in ruling that respondent was justified in extending the agreed date of delivery due to financial reverses, amounting to an unlawful novation of the delivery date under the Contract to Sell.
Ruling
The petition is DENIED. The Decision of the Court of Appeals dated June 29, 2004 in CA-G.R. SP No. 79420 and its Resolution dated October 18, 2004 are AFFIRMED. The Court held that the complaint for rescission with damages constitutes a "claim" under the Interim Rules of Procedure on Corporate Rehabilitation and Presidential Decree No. 902-A, thus the HLURB proceedings should have been suspended upon approval of the rehabilitation plan and appointment of the receiver; furthermore, the extension of the delivery date under the Contract to Sell was justified under the contract's Section 7 due to financial reverses.
Ratio Decidendi
On Whether the SEC, not the HLURB, has jurisdiction: The Court analyzed the definition of "claim" under applicable law and jurisprudence. It cited Finasia Investments and Finance Corp. v. Court of Appeals for the traditional construction that a "claim" under Section 6(c) of P.D. 902-A refers to debts or pecuniary demands, and noted that actions founded upon contract typically fall within that category. The Court then compared that authority with the subsequent Interim Rules of Procedure on Corporate Rehabilitation which define "claim" as "all claims or demands, of whatever nature or character... whether for money or otherwise," thus broadening the scope to include non-pecuniary claims as within the rehabilitational filing regime. Because the petitioners sought monetary relief (refund and damages) their complaint falls squarely within the definition of a "claim" and therefore the SEC rehabilitation proceeding, not the HLURB, had primacy while the rehabilitation process was ongoing. The Court concluded that the Court of Appeals correctly ruled that the SEC has jurisdiction over the claim aspects that are pecuniary in nature and that the HLURB should have suspended proceedings. On Whether approval of the rehabilitation plan and appointment of a receiver suspended the HLURB proceedings and precluded execution of monetary awards: The Court examined Section 6(c) of Presidential Decree No. 902-A which provides that "all actions for claims against corporations... pending before any court, tribunal, board or body shall be suspended accordingly" upon appointment of a receiver. The Court explained the policy rationale: suspension prevents preferential treatment of one creditor over others and permits the receiver to focus on rehabilitation without diversion by multiple litigations. Citing the Interim Rules' expanded definition of "claim," the Court held that monetary claims asserted before HLURB are to be suspended and ultimately filed with the receiver for proper disposition, and that even the execution of final judgments may be held in abeyance during rehabilitation. The suspension serves to maintain equality among creditors and preserve assets for rehabilitation, and the Court therefore affirmed the Court of Appeals' application of suspension to the instant complaint. On Whether respondent was justified in extending the agreed date of delivery due to financial reverses: The Court reviewed the parties' Contract to Sell and specifically Section 7 which permits the developer to extend the period of delivery for causes beyond its control, including financial reverses. The Court recognized that while the original due date for delivery was December 1999, the developer experienced financial difficulties which, under the contractual clause, warranted extension of the delivery period. The appellate court's factual finding that the period was extended because of financial reverses was accepted, and the Supreme Court found no reversible error in that determination. Accordingly, the Court held that the extension was not an unlawful novation of the contractually agreed delivery date but was within the contractual authority granted to the developer under Section 7 of the Contract to Sell.
Main Doctrine
Under the Interim Rules of Procedure on Corporate Rehabilitation, a "claim" encompasses all claims or demands, whether for money or otherwise; consequently, upon approval of a rehabilitation plan and appointment of a receiver under Presidential Decree No. 902-A, pending actions that are "claims" must be suspended and monetary claims falling within that definition are to be treated as claims to be filed with the rehabilitation receiver.