MWSS v Daway
MWSS granted Maynilad a 20-year concession to manage, repair,
refurbish, and upgrade existing MWSS water delivery and sewerage.
To secure its obligations, Maynilad for a three-year facility with
a number of foreign banks led by Citicorp Intl for the issuance of
an irrevocable standby letter of credit (SLC) in the amount of $
120 million in favor of MWSS for the full and prompt payment of
Maynilads obligations to MWSS. Although the concession contract was
amended to incorporate a mechanism that would protect Maynilad from
foreign exchange losses, the depreciation of the peso, still took
its toll on Maynilad, forcing the latter to file a notice of early
termination of the concession contract citing MWSS failure to
protect the company from foreign exchange losses under the amended
concession accord. MWSS then filed a notice with Citicorp that it
would draw $98 million on the SLC of Maynilad, prior to which
Maynilads petitition had been granted so a stay order was issued
that prohibit claims against the concerned corporation, its
guarantors, and sureties not solidarily liable with Maynilad.
ISSUE:
Whether or not the rules on corporate rehabilitation bar
recovery on an Standby Letter of Credit
HELD:
MWSS can properly draw on Maynilads SLC with Citicorp. The rules
on corporate rehabilitation do not apply to SLCs. The rules on
corporate rehabilitation (particularly Section 6b of Rule 4) do not
apply to MWSS as the prohibition is against the enforcement of
claims against guarantors, or sureties of debtors whose obligations
are NOT solidary with the debtor. Being a solidary obligation, a
Standby Letter of Credit is excluded.
Panlilio v RTCPetitioners as corporate officers of SIHI filed
with the RTC a petition for Suspension of Payments and
Rehabilitation and so it issued an Orderstaying all claims against
SIHI upon finding the petition sufficient in form and substance. At
the time of the filing of the petition for rehabilitation, there
were a number of criminal charges initiated by SSS and estafa
charges pending against petitioners in Branch 51 of the RTC of
Manila. Thus, petitioners filed with the RTC of Manila, Branch 51,
a Manifestation and Motion to Suspend Proceedings.Petitioners
argued that the stay order issued by Branch 24 should also apply to
the criminal charges pending in Branch 51. Petitioners, thus,
prayed that Branch 51 suspend its proceedings until the petition
for rehabilitation was finally resolved but Branch 51 issued an
Orderdenying petitioners motion to suspend the proceedings. It
ruled that the stay order issued by Branch 24 did not cover
criminal proceedings. Petition for certiorati was also denied.
Hence petitioners filed before the Supreme Court a petition for
review on certiorari.ISSUE:Whether or not the suspension of "all
claims" as an incident to a corporate rehabilitation also includes
the suspension of criminal charges filed against the corporate
officers of the distressed corporation.RULING:No, the criminal
charges are not included.A criminal action has a dual purpose,
namely, the punishment of the offender and indemnity to the
offended party. The dominant and primordial objective of the
criminal action is the punishment of the offender. The civil action
is merely incidental to and consequent to the conviction of the
accused. The prosecution of the officers of the corporation has no
bearing on the pending rehabilitation of the corporation,
especially since they are charged in their individual capacities.
Such being the case, the purpose of the law for the issuance of the
stay order is not compromised, since the appointed rehabilitation
receiver can still fully discharge his functions as mandated by
law. If there is anything that the rehabilitation receiver might be
remotely interested in is whether the court also rules that
petitioners are civilly liable. Such a scenario, however, is not a
reason to suspend the criminal proceedings, because should the
court prosecuting the officers of the corporation find that an
award or indemnification is warranted, such award would fall under
the category of claims, the execution of which would be subject to
the stay order issued by the rehabilitation court.The penal
sanctions as a consequence of violation of the SSS law, in relation
to the revised penal code can therefore be implemented if
petitioners are found guilty after trial. However, any civil
indemnity awarded as a result of their conviction would be subject
to the stay order issued by the rehabilitation court. Only to this
extent can the order of suspension be considered obligatory upon
any court, tribunal, branch or body where there are pending actions
for claims against the distressed corporation.
