Case Digest (G.R. No. 218485-86)
Facts:
On September 9, 2010, International Copra Export Corporation, Interco Manufacturing Corporation, ICEC Land Corporation, and Kimmee Realty Corporation filed a Petition for Suspension of Payments and Rehabilitation under the Financial Rehabilitation and Insolvency Act (FRIA) before the Regional Trial Court of Zamboanga City, which issued a Stay Order, appointed a rehabilitation receiver, and on July 8, 2011 approved a modified rehabilitation plan. The Court of Appeals partially granted petitions of certain creditor-banks, found noncompliance with Section 64 of FRIA, remanded for the receiver to convene creditors to vote, and its decision was taken to the Supreme Court by multiple petitions for review.
Issues:
- Did Interco, et al. commit forum shopping by filing multiple petitions raising the same issues?
- Is the Financial Rehabilitation and Insolvency Act (FRIA) applicable to the petition filed on September 9, 2010 despite the absence of its implementing rules?
- Did the Court of Appeals correctly remand the case for compliance with the voting requirement under Section 64 of FRIA?
Ruling:
The Court found that Interco, et al. committed forum shopping, but exercised its discretion to relax the sanction and resolve the merits. The Court held that FRIA governs petitions filed after its effectivity and that the absence of implementing rules did not render the law inoperative. The Court reversed and set aside the Court of Appeals' November 18, 2014 Decision and May 13, 2015 Resolution, reinstated the RTC's July 8, 2011 approval of the modified rehabilitation plan, and directed the rehabilitation court to proceed in accordance with FRIA and the 2013 Financial Rehabilitation Rules of Procedure.
Ratio:
The Court relied on the presumption of validity of statutes and precedent that a statute is operative if susceptible of reasonable construction; hence the lack of implementing rules did not nullify FRIA. Section 146 was read to require application of FRIA to petitions filed after its effectivity, and the 2008 Rules were available to supply gaps where consistent. The RTC's Stay Order contained the essential elements of a commencement order under FRIA, and the Court deemed a remand unnecessary because creditors had ample opportunities to present claims and objections during the rehabilitation proceedings.
Doctrine:
- A statute is presumptively valid and its provisions are binding even in the absence of implementing rules if reasonably susceptible of execution.
- Section 146, FRIA governs that petitions filed after the law's effectivity are subject to FRIA unless application would be infeasible or unjust.
- A Stay Order that contains the substantive requisites of a commencement order under FRIA satisfies the commencement requirement when issued before the FR Rules.
- The rehabilitation court may apply prior rehabilitation rules suppletorily so long as they are not inconsistent with FRIA.
- The constitutional non‑impairment clause yields to valid exercises of the State's police power in rehabilitation, and the court may confirm a plan under the statutory *cram‑down* conditions.
- Procedural lapses such as forum shopping may be relaxed when compelling reasons favor resolution on the merits to serve substantial justice.