Case Digest (G.R. No. 177382)
Facts:
In Viva Shipping Lines, Inc. (petitioner) versus Keppel Philippines Mining, Inc., Metropolitan Bank & Trust Company (Metrobank), Pilipinas Shell Petroleum Corporation, the Cities of Batangas and Lucena, the Province of Quezon, Alejandro Olit, Nida Montilla, Pio Hernandez, Eugenio Baculo, and Harlan Bacaltos (respondents), petitioner sought corporate rehabilitation under the Interim Rules of Procedure on Corporate Rehabilitation before the Regional Trial Court (RTC) of Lucena City. On October 4, 2005, Viva Shipping Lines filed its petition, which the RTC initially denied for failure to meet the minimum contents of Rule 4, Sections 2 and 3. An Amended Petition dated October 14, 2005, claimed ownership of 19 vessels and a shopping mall, but attachments showed only two vessels and a mall while actual asset values and encumbrances differed dramatically from the narrative. Petitioner declared total liabilities of over P220 million and submitted a rehabilitation plan involving the saleCase Digest (G.R. No. 177382)
Facts:
- Filing and initial disposition
- On October 4, 2005, Viva Shipping Lines, Inc. filed a Petition for Corporate Rehabilitation before RTC Lucena City, Branch 57.
- RTC denied the petition for failure to comply with Interim Rules on Corporate Rehabilitation (Rule 4, Secs. 2–3).
- Amended Petition and attachments
- On October 17, 2005, Viva filed an Amended Petition claiming ownership of 19 vessels and Ocean Palace Mall, with assessed assets at ₱45,172,790.
- Attachments (Property Inventory List) showed only two vessels and total assets valued at ₱447,860,000, with only ₱147,630,000 “free” (unencumbered).
- Debts and rehabilitation plan
- Declared debts: Metrobank loan secured by mortgage (₱176,428,745.50), Keppel repair charges (₱9,000,000+), local realty taxes (₱35,000,000+), total ~₱220,428,745.50+.
- Alleged causes of distress: peso devaluation, competition, mismanagement, and aging vessels.
- Proposed plan: sell old vessels and sister-company lots, convert mall to hotel, acquire two new vessels, re-operate an oil mill; nominated three rehabilitation receiver candidates.
- RTC proceedings and dismissal
- October 19, 2005: RTC found the Amended Petition sufficient, issued stay order, and appointed Judge Mendoza as receiver.
- Creditors (Metrobank, Keppel, Shell, City of Batangas, Province of Quezon, City of Lucena), former employees, and SEC filed oppositions or comments.
- March 24, 2006: Judge Mendoza withdrew; new nominees were named. Metrobank’s motion for documents was granted; Viva failed to comply.
- September 27, 2006: former employees filed labor-claim comments.
- October 30, 2006: RTC lifted stay, dismissed petition for failure to show viability and feasibility; summarized creditors’ claims (₱233,061,247.89) versus free assets (₱147,630,000), found assets non-performing and plan unworkable.
- Appeals and Supreme Court proceedings
- November 21, 2006: Viva filed Rule 43 petition for review to the CA, impleading only the presiding judge—not its creditors—and failed to serve all parties (including the RTC and some creditors).
- January 5, 2007: CA dismissed for procedural non-compliance; March 30, 2007: CA denied reconsideration.
- Viva elevated a petition for certiorari to the SC; respondents filed comments; Viva changed counsel, sought extensions, filed consolidated reply; memoranda were submitted.
Issues:
- Procedural compliance
- Whether the CA erred in dismissing Viva’s Rule 43 petition for failure to implead indispensable parties (creditors) and to serve required copies on respondents and the originating court.
- Substantial justice and liberality
- Whether Viva was denied substantial justice when the CA refused to give due course to its petition and whether procedural liberality under Interim Rules justifies relief from strict Rule 43 requirements.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)