Orendain vs BF Homes

The reason behind Rule 59, Section 6, which requires leave of court for all suits by or against the present receiver, is to forestall any undue interference with the receivers performance of duties through improvident suits. Apparently, such situation cannot apply to Orendain who is no longer BF Homes receiver.

FACTS

BF Homes (respondent) is a domestic corporation developing and selling lots and houses. It had to avail itself of financial assistance from various sources to enable it to buy properties and convert them into residential subdivisions. Despite its solvent status, respondent filed a Petition for Rehabilitation and for Declaration in a State of Suspension of Payments under Section 4 of PD No. 1758 before the Securities and Exchange Commission (SEC). and that a receiver was imperative so that its business may not be paralyzed and the interest of the creditors and the public may not be prejudiced.

SEC then ordered the appointment of a rehabilitation receiver, FBO Management Networks, Inc., with petitioner Orendain as Chairman to prevent paralyzation of BF Homes business operations.

Later, a Deed of Absolute Sale was executed between BF Homes represented by petitioner Orendain as absolute and registered owner, and the Local Superior of the Franciscan Sisters of the Immaculate Phils., Inc. (LSFSIPI) over a parcel of land worth more or less 19Million .

Meanwhile, SEC hearing panel appointed a new Committee of Receivers composed of the 11 members of the Board of Directors of BF Homes. Consequently, receiver Orendain was relieved of his duties and responsibilities. Later, BF Homes filed a Complaint before the RTC against LSFSIPI and petitioner Orendain, for reconveyance of the property alleging: (1) that the LSFSIPI transacted with Orendain in his individual capacity and therefore, Orendain had no title to the property transferred; (2) That the selling price is grossly inadequate. Hence, it prayed in the Complaint that LSFSIPI reconvey the disputed property or, if reconveyance was no longer feasible, pay the present value of the property.

Petitioner Orendain filed a Motion to Dismiss stating that BF Homes, acting through its Committee of Receivers, had neither the interest nor the personality to prosecute the said action, in the absence of SECs clear and actual authorization for the institution of the said suit.

RTC denied petitioners motion to dismiss for lack of merit.CA affirmed RTCs ruling.

ISSUE: Whether or not the Committee of Receivers may institute an action against a former receiver without prior SEC approval.

RULINGYES. The relevant law here is R59 Sec 6 on the General powers of receiver.

Petitioner argues that the Committee of Receivers should have sought prior clearance from the SEC before instituting the action for reconveyance before the RTC, because it does not have the legal capacity to sue. This is incorrect. One of the general powers of a receiver under Rule 59, Section 6 of the Rules of Court is the power to bring and defend suits in such capacity.

Petitioner also contends that an action filed by a successor-receiver against him as predecessor-receiver is not allowed under Rule 59, Section 6 without leave of court which appointed him; as Section 6 provides that "no action may be filed by or against a receiver without leave of the court which appointed him." This is bereft of merit.The rule talks of the current receiver of the company and not the previous receiver like petitioner Orendain. The reason behind Rule 59, Section 6, which requires leave of court for all suits by or against the present receiver, is to forestall any undue interference with the receivers performance of duties through improvident suits. Apparently, such situation cannot apply to Orendain who is no longer BF Homes receiver.Traders Royal Bank vs IAC

When the services of a receiver who has been properly appointed terminates, his compensation is to be charged against the defeated party, or the prevailing litigant may be made to share the expense, as justice requires.

Note: this is already the courts resolution; the factual aspects have already been ruled in G.R. No. 63855, where:

Facts:Spouses Jose and Salvacion Tayengco (Private respondents) were ruled to be the lawful owners of the properties under receivership, and G.R. No. 60076, the SC affirmed the validity of the appointment of petitioner Traders Royal Bank (TRB) as receiver pendente lite.

In view of these rulings, the receivership proceeding was duly terminated. Thus, TRB rendered its final accounting of the funds under receivership wherein it retained the amount of P219,016.24 as its receiver's fee, instead of turning over the entire fund to the Tayengcos.

RTC approved the final accounting submitted by TRB, including the deduction of its fee from the fund under receivership.

Private Respondents Tayengcos assailed said order before the CA, that TRB's compensation should have been charged against the losing party and not from the funds under receivership.

CA ruled in favor of the Tayencos: that TRB cannot deduct its fee from the funds under its receivership since this must be shouldered by the losing party or equally apportioned among the parties-litigants.

The losing parties, Cu Bie, et al., were held solely liable for TRB's compensation.

Issue: Who is responsible for TRB's receiver's fee?

Ruling:The defeated party Cu Bie et al, OR both Sps Tayenco (party litigant) and Cu bie, et al., as justice requires.

"SEC. 8. Termination of receivership; compensation of receiver.- -Xxx-The court shall allow the receiver such reasonable compensation as the circumstances of the case warrant, to be taxed as costs against the defeated party, or apportioned, as justice requires." (Underscoring supplied)

It is, therefore, clear that when the services of a receiver who has been properly appointed terminates, his compensation is to be charged against the defeated party, or the prevailing litigant may be made to share the expense, as justice requires. The RTCs order approving TRB's compensation to be charged solely against the funds under its receivership is without legal justification.

Hence, it was correctly reversed by the Court of Appeals. Holding Cu Bie solely liable for TRBs compensation is correct.

Chas Realty & Devt Corp vs TalaveraAng ruling ang naka taas ani. Just get the gist of it based on your own understanding. I put a lengthy ruling para mas maka sabot mu sa reasoning sa court. Hahaha :D

Facts: Petitioner Chas Realty and Development Corporation (CRDC) is the owner and developer of a shopping complex, the Megacenter Mall (Megacenter).

Due to low occupancy rate, sluggishness of the economy and the freezing of its bank account by its main creditor, the Land Bank of the Philippines, CRDC encountered difficulty in paying its obligations as and when they fell due and had to contend with collection suits and related cases.

CRDC filed a petition for rehabilitation attaching thereto a proposed rehabilitation plan, accompanied by a secretarys certificate, consonantly with paragraph 2(k), Section 2, Rule 4, of the Interim Rules of Procedure on Corporate Rehabilitation. CRDC claimed that it had sufficient assets and a workable rehabilitation plan both of which showed that the continuance of its business was still feasible.

RTC issued an order staying all claims against CRDC and prohibited it from making any payment on its outstanding obligations and selling, or otherwise disposing or encumbering, its property. Later, such court appointed a rehabilitation receiver.

Angel D. Concepcion, Sr., herein private respondent, filed a complaint in intervention opposing the appointment of CRDCs nominee for the post of rehabilitation receiver. He claimed that the predicament of the corporation was due to serious "mismanagement and fraud, gross/evident violation of the fiduciary duties of CHAS officers." Concepcion moved to dismiss the petition for rehabilitation on the ground that there was no approval by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock as required by the Interim Rules on Corporate Rehabilitation.

RTC then ordered Chas Realty to secure from its directors and stockholders the desired certification and submit the same to this Court in accordance with the above-mentioned provision of the Interim Rules of Procedure on Corporate Rehabilitation.

CRDC filed before the Court of Appeals a petition for certiorari, with prayer for temporary restraining order and/or preliminary injunction, which sought to have the order of the trial court set aside. CA denied such for lack of merit.

Issue: WON Public respondent acted with grave abuse of discretion amounting to lack and/or excess of jurisdiction in requiring CRDCs compliance with paragraph 2(k), Section 2, Rule 4 of the Rehab rules when CRDC already complied therewith.

Ruling:YES.

Rule 4, Section 2(k), prescribes the need for a certification; one, to state that the filing of the petition has been duly authorized, and two, to confirm that the directors and stockholders have irrevocably approved and/or consented to, in accordance with existing laws, all actions or matters necessary and desirable to rehabilitate the corporate debtor, including, as and when called for, such extraordinary corporate actions as may be marked out.

The phrase, "in accordance with existing laws," refers to that which is, or to those that are, intended to be done by the corporation in the pursuit of its plan for rehabilitation. Thus, if any extraordinary corporate action (mentioned in Rule 4, Section 2(k), of the Interim Rules on Corporate Rehabilitation) are to be done under the proposed rehabilitation plan, the petitioner would be bound to make it known that it has received the approval of a majority of the directors and the affirmative votes of stockholders representing at least two-thirds (2/3) of the outstanding capital stock of the corporation. Where no such extraordinary corporate acts (or one that under the law would call for a two-thirds (2/3) vote) are contemplated to be done in carrying out the proposed rehabilitation plan, then the approval of stockholders would only be by a majority, not necessarily a two-thirds (2/3), vote, as long as, of course, there is a quorum a fact which is not here being disputed.

Nowhere in the aforequoted paragraph can it be inferred that an affirmative vote of stockholders representing at least two-thirds (2/3) of the outstanding stock is invariably necessary for the filing of a petition for rehabilitation regardless of the corporate action that the plan envisions. It only requires in the filing of the petition that the corporate actions therein proposed have been duly approved or consented to by the directors and stockholders "in consonance with existing laws." The requirement is designed to avoid a situation where a rehabilitation plan, after being developed and judicially sanctioned, cannot ultimately be seen through because of the refusal of directors or stockholders to cooperate in the full implementation of the plan. In fine, a certification on the approval of stockholders is required but the question, whether such approval should be by a majority or by a two-thirds (2/3) vote of the outstanding capital stock, would depend on the existing law vis--vis the corporate act or acts proposed to be done in the rehabilitation of the distressed corporation.

The rehabilitation plan submitted by petitioner merely consists of a repayment or re-structuring scheme of CRDCs bank loans to Land Bank of the Philippines and Equitable-PCI Bank and of leasing out most of the available spaces in the Megacenter, including the completion of the construction of the fourth floor, to increase rental revenues. None of the proposed corporate actions would require a vote of approval by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock.