corpo part 2 fulltext

8/13/2019 CORPO Part 2 Fulltext

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EN BANC

[G.R. No. 176579 : April 10, 2012]

WILSON . GA!BOA, E"I"IONER, #S. $INANCE SECRE"AR%!ARGARI"O B. "E#ES, E" AL. RES ON&EN"S.

Sir'(!)'*+ )':

Please take notice that the Court en banc issued a Resolutiondated A RIL 10, 2012 , which reads as follows:cralaw

"G.R. No. 176579 -WILSON . GA!BOA, petitioner , '.$INANCE SECRE"AR% !ARGARI"O B. "E#ES, )/+l. respondents .

RESOL "ION

The Office of the Clerk of Court-En Banc process server reportedthat upon service of the 6 arch 2!12 Resolution settin this casefor oral ar u#ent on 1$ April 2!12 on petitioner %ilson P& 'a#(oa)*ho represented hi#self) the latter+s son received the Resolutionand at the sa#e ti#e infor#ed the process server that petitioner isno* deceased&

,t #ust (e noted that petitioner filed a pleadin in epte#(er 2!11)#anifestin that he *as alread. ver. ill and could no lon er"perfor# his duties /// as his o*n counsel)0 and therefore) he *as*ithdra*in as counsel" and that "a la*.er shall enter his

appearance as his counsel of record&" ntil the present) no ne*counsel has entered his or her appearance on petitioner s (ehalf&

%hen a part. dies durin the pendenc. of a case) such as in thiscase) ection 16) Rule 3 of the 144$ Revised Rules of CivilProcedure applies) viz 5

ec& 16&Death of party; duty of counsel & - %henever a part. to pendin action dies) and the clai# is not there(. e/tin uished) itshall (e the dut. of his counsel to infor# the court *ithin thirt. 3!7da.s after such death of the fact thereof) and to ive the na#e andaddress of his le al representative or representatives& 8ailure ofcounsel to co#pl. *ith this dut. shall (e a round for disciplinar.action&

The heirs of the deceased #a. (e allo*ed to (e su(stituted for thedeceased) *ithout re9uirin the appoint#ent of an e/ecutor orad#inistrator and the court #a. appoint a uardian ad lite# for the#inor heirs&

The court shall forth*ith order said le al representative orrepresentatives to appear and (e su(stituted *ithin a period ofthirt. 3!7 da.s fro# notice&

,f no le al representative is na#ed (. the counsel) for the deceasedpart.) or if the one so na#ed shall fail to appear *ithin the specifiedperiod) the court #a. order the opposin part.) *ithin a specifiedti#e) to procure the appoint#ent of an e/ecutor or ad#inistrator forthe estate of the deceased and the latter shall i##ediatel. appearfor and on (ehalf of the deceased& The court char es in procurinsuch appoint#ent) if defra.ed (. the opposin part.) #a. (erecovered as costs&

The present action survives or is not e/tin uished (. petitioner sdeath (ecause *hat is solel. in issue is the definition of the ter#"capital" in ection 11) Article :,, of the 14;$ Constitution) *hich is

a purel. le al 9uestion&


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>ota(l.) petitioners-in-intervention Pa(lito ?& anidad and Arno ?&anidad @oin deceased petitioner s cause of action "in seekin )

a#on others) to en@oin or nullif. the sale / / / of the 111) 1Philippine Teleco##unications ,nvest#ent Corporation shares to8irst Pacific Co#pan. td&" Petitioners-in-intervention further clai#that the. have a le al and direct interest in the #atter in liti ationsince the. are su(scri(ers) hence also stockholders) of Philippine

on Distance Telephone Co#pan.& 8or these reasons) the Courtranted their #otion to intervene o& 3 Fu((ard t&) 8ilinvest ,)GueHon Cit.&"

Perlas-Bernabe, ! ) on official leave&

IIIIIII G.R. NOS. 173357459

E RESS IN#ES"!EN"S III RI#A"E L"&. AN& E OR"&E#ELO !EN" CANA&A, Petitioner)

vs&&A%AN "ELECO!! NICA"IONS, INC., " E BAN O$ NEW

%OR -AS "R S"EE $OR " E OL&ERS O$ " ES 200,000,000 18.5 SENIOR NO"ES O$ &A%AN

"ELECO!! NICA"IONS, INC. AN& A""%. RE!IGIO A. NO#AL-AS " E CO R"4A OIN"E& RE ABILI"A"ION RECEI#ER O$BA%AN"EL , Respondents&

/ - - - - - - - - - - - - - - - /

G.R. No'. 17531 420

IN " E !A""ER O$:" E COR ORA"E RE ABILI"A"ION O$ &A%AN"ELECO!! NICA"IONS, INC. RS AN" "O " E IN"ERI!R LES O$ ROCE& RE ON COR ORA"E RE ABILI"A"ION-A.!. NO. 004 4104SC" E BAN O$ NEW %OR AS "R S"EE $OR " E OL&ERS O$" E S 200,000,000 18.5 SENIOR NO"ES O$ &A%AN"ELECO!! NICA"IONS, INC.& E 2006 AC"ING ON " E INS"R C"IONS O$ " E IN$OR!ALS"EERING CO!!I""EE: A#EN E ASIA IN#ES"!EN"S, L. .,A#EN E ASIA IN"ERNA"IONAL, L"&., A#EN E ASIA S ECIALSI" A"IONS $ N& II, L. . AN& A#EN E ASIA CA I"AL

AR"NERS, L. ., Petitionvs&&A%AN "ELECO!! NICA"IONS, INC., Respondents&

/ - - - - - - - - - - - - - - - /

IN " E !A""ER O$:" E COR ORA"E RE ABILI"A"ION O$ BA% AN"ELECO!! NICA"IONS, INC. RS AN" "O " E IN"ERI!R LES O$ ROCE& RE ON COR ORA"E RE ABILI"A"ION-A.!. NO. 004 4104SC


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A#EN E ASIA IN#ES"!EN"S, L. ., A#EN E ASIAIN"ERNA"IONAL, L"&., A#EN E ASIA S ECIAL SI" A"IONS$ N& II, L. ., A#EN E ASIA CA I"AL AR"NERS, L. . AN&A#EN E ASIA S ECIAL SI" A"IONS $ N& III, L. ., Petitioner)vs&&A%AN "ELECO!! NICA"IONS, INC., Respondents&

/ - - - - - - - - - - - - - - - /

G.R. No. 177270 &);)

#ILLARA!A, =R., J.:

Before us are seven consolidated petitions for revie* on certiorarifiled # connection *ith the corporate reha(ilitation of Ba.an

Teleco##unications) ,nc& Ba.antel7&

The Petition for Partial Revie* on Certiorari 1 in '&R& >os& 1$ $- 4*as filed (. E/press ,nvest#ents ,,, Private td& and E/portDevelop#ent Canada to assail the Au ust 1;) 2!!6 Decision 2 of theCourt of Appeals in CA-'&R& P >o& ;$2!3&

On the other hand) the Petition for Revie* on Certiorari 3 in '&R& >os&1$ 1;-2! *as filed (. The Bank of >e* Jork Avenue Asia,nvest#ents) &P& Avenue Asia ,nternational) td& Avenue Asia

pecial ituations 8und ,,) &P& Avenue Asia Capital Partners) &P&and Avenue Asia pecial ituations 8und ,,,) &P& aid petition

9uestions as *ell the said Au ust 1;) 2!!6 Court of AppealsDecision) and also the >ove#(er ;) 2!!6 Resolution of the Coof Appeals in CA-'&R& P >os& ;$1!! and ;$111 affir#in the Kune2;) 2!! Decision of the Re ional Trial Court RTC7 of Pasi Cit.)Branch 1 ;) in EC Case >o& !3-2 &

ean*hile) the Petition for Revie* on Certiorari 6 in '&R& >o& 1$*as filed (. The Bank of >e* Jork) in its capacit. as trustee for theholders of the L2!! #illion 13& M enior >otes of Ba.antel andupon the instructions of the ,nfor#al teerin Co##ittee) to contestthe Decision $ and Resolution ; of the Court of Appeals in CA-'&R& >o& ;4;4 *hich nullified the >ove#(er 4) 2!! and arch 1 )2!! Orders of the Pasi RTC) Branch 1 ;) in EC Case >o& !3-2insofar as it defined the po*ers and functions of the onitorinCo##ittee&

The facts) as culled fro# the records of these cases) follo*5

Respondent Ba.antel is a dul. or aniHed do#estic corporationen a ed in the (usiness of providin teleco##unication services& ,tis 4;&6M o*ned (. Ba.an Teleco##unications Foldin sCorporation BTFC7) *hich in turn is ; & M o*ned (. the opeH'roup of Co#panies and Benpres Foldin s Corporation&

On various dates (et*een the .ears 144 and 2!!1) Ba.antelentered into several credit a ree#ents *ith E/press ,nvest#ents ,,,Private td& And E/port Develop#ent Canada petitioners in '&R&>os& 1$ $- 47) Asian 8inance and ,nvest#ent Corporation)Ba.erische andes(ank in apore Branch7 and Clear*ater Capital

Partners in apore Pte td&) as a ent for Credit ,ndustriel etCo##ercial in apore7) Deutsche Bank A') E9uita(le PC, Bank) KPor an Chase Bank) etropolitan Bank and Trust Co&) P&T& Bank

>e ara ,ndonesia Persero7) TBN) Fon Non Branch) RiHalCo##ercial Bankin Corporation and tandard Chartered Bank& Tosecure said loans) Ba.antel e/ecuted an O#ni(us A ree#ent dated
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epte#(er 14) 144 and an E?TE CO ort a e Trust ,ndenture4dated Dece#(er 12) 144$& 1!

Pursuant to the O#ni(us A ree#ent) Ba.antel e/ecuted anAssi n#ent A ree#ent in favor of the lenders under the O#ni(usA ree#ent hereinafter) O#ni(us Creditors) Bank Creditors) orsecured creditors7& ,n the Assi n#ent A ree#ent) Ba.antel (ounditself to assi n) conve. and transfer to the Collateral A ent) thefollo*in properties as collateral securit. for the pro#pt andco#plete pa.#ent of its o(li ations to the O#ni(us Creditors5

i7 all #onies pa.a(le to Ba.antel under the Pro@ect Docu#ents asthe ter# is defined (. the O#ni(us A ree#ent7

ii7 all Pro@ect Docu#ents and all Contract Ri hts arisin thereunder

iii7 all receiva(les

iv7 all eneral intan i(les

v7 each of the Accounts as the ter# is defined (. the O#ni(usA ree#ent7

vi7 all a#ounts #aintained in the Accounts and all #onies)securities and instru#ents deposited or re9uired to (e deposited inthe Accounts

vii7 all other chattel paper and docu#ents

viii7 all other propert.) assets and revenues of Ba.antel) *hethertan i(le or intan i(le and

i/7 all proceeds and products of an. and all of the fore oin & 11

,n Kul. 1444) Ba.antel issued L2!! #illion *orth of 13& M enior>otes pursuant to an ,ndenture 12 dated Kul. 22) 1444 that it enteredinto *ith The Bank of >e* Jork petitioner in '&R& >os& 1$ 1;-2!7as trustee for the holders of said notes& Pursuant to the said,ndenture) the notes are due in 2!!6 and Ba.antel shall pa. intereston the# se#i-annuall.& Ba.antel #ana ed to #ake t*o interestpa.#ents) on Kanuar. 1 ) 2!!! and Kul. 1 ) 2!!!) (efore itdefaulted on its o(li ation&

8oreseein the i#possi(ilit. of further #eetin its o(li ations)Ba.antel sent) in Octo(er 2!!1) a proposal for the restructurin ofits de(ts to the Bank Creditors and the Folders of >otes& Tofacilitate the ne otiations (et*een Ba.antel and its creditors) an,nfor#al teerin Co##ittee *as for#ed co#posed of Avenue Asia,nvest#ents) &P&) Avenue Asia ,nternational) td&) Avenue Asia

pecial ituations 8und ,,) &P&) Avenue Asia Capital Partners) &P&petitioners in '&R& >os& 1$ 1;-2!7 and ?an Eck 'lo(al Opportunit.asterfund) td& The #e#(ers of the ,nfor#al teerin Co##ittee

are the assi nees of the unsecured credits e/tended to Ba.antel (. K&P& or an Europe) td&) Ba.erische andes(ank in apore Branchand Deutsche Bank A') ondon in the total principal a#ount of

L13)63$) ; &2!& The. are holders) as *ell) of the >otes issued (.Ba.antel pursuant to the ,ndenture dated Kul. 22) 1444&

,n its initial proposal called the "8irst Ter# heet)" Ba.antelsu ested a 2 M *rite-off of the principal o*in to the Folders of>otes& The ,nfor#al teerin Co##ittee re@ected the idea) (utaccepted Ba.antel+s proposal to pa. the restructured de(t)

passu )13 out of its cash flo* ! This pari passu or e9ual treat#ent of

de(ts) ho*ever) *as opposed (. the Bank Creditors *ho invokedtheir securit. interest under the Assi n#ent A ree#ent&

Ba.antel continued to pa. reduced interest on its de(t to the BankCreditors (ut stopped pa.in the Folders of >otes startin Kul. 1$)2!!!& B. a. 31) 2!!3) Ba.antel+s total inde(tedness had reached
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L6$ #illion or P3 &42; (illion in unpaid principal and interest)(ased on the prevailin conversion rate of L1 P 3&2;2& Out ofits total lia(ilities) Ba.antel alle edl. o*es 3&2M or L241 #illion

P1 & 34 (illion7 to the Folders of the >otes&

On Kul. 2 ) 2!!3) The Bank of >e* Jork) as trustee for the Foldersof the >otes) *rote Ba.antel an Acceleration etter declarini##ediatel. due and pa.a(le the principal) pre#iu# interest) andother #onetar. o(li ations on all outstandin >otes& Then) on Kul.3!) 2!!3) The Bank of >e* Jork filed a petition 1 for the corporatereha(ilitation of Ba.antel upon the instructions of the ,nfor#al

teerin Co##ittee&

On Au ust ;) 2!!3) the Pasi RTC) Branch 1 ;) issued a ta.Order 1 *hich directed) a#on others) the suspension of all clai#sa ainst Ba.antel and re9uired the latter+s creditors and otherinterested parties to file a co##ent or opposition to the petition&

The court appointed Dr& Conchita & ana(at to act as reha(ilitationreceiver (ut the latter declined& 16 ,n her stead) the court appointedAtt.& Re#i io A& >oval Att.& >oval7 *ho took his oath and posted a(ond on epte#(er 26) 2!!3& 1$

On >ove#(er 2;) 2!!3) the Reha(ilitation Court ave due course tothe petition and directed the Reha(ilitation Receiver to su(#it hisreco##endations to the court *ithin 12! da.s fro# the initialhearin & 1; After several e/tensions) Att.& >oval filed on arch 22)2!! a Co#pliance and u(#ission of the Report as Co#pellinEvidence that Ba.antel #a. (e uccessfull. Reha(ilitated& 14

,n his report) Att.& >oval classified Ba.antel+s de(ts into three5 17those o*ed to secured Bank Creditors pursuant to the O#ni(usA ree#ents O#ni(us Creditors7 in the total a#ount of L33#illion or P1$&$;1 (illion 27 those o*ed to Folders of the enior>otes and Bank Creditors co#(ined Chattel Creditors7) co#prisin

L62 #illion) of *hich L $3 #illion P2 &21 (illion7 is

principal and L1 2 #illion P;&1!6 (illion7 is accrued unpaidinterest and 37 those that Ba.antel o*ed to persons other than8inancial Creditors unsecured creditors in the a#ount of L 4#illion or P2&6!; (illion&

Accordin to The Bank of >e* Jork) out of the L6$ #illion thatrespondent o*es its creditors under roups 2 and 3 a(ove) thea#ount outstandin under the enior >otes represent 3&2M of itslia(ilities as of a. 31) 2!!3& u(se9uentl.) ne otiations for therestructurin of Ba.antel+s de(t reached an i#passe *hen the,nfor#al teerin Co##ittee insisted on a pari passu treat#ent the clai#s of (oth secured and unsecured creditors&

ean*hile) on Kanuar. 2!) 2!! ) Ba.antel filed a " otion to ,ncludeRadio Co##unications Philippines) ,nc& a a TelephoneCo#pan. a atel= as De(tor-Corporations for Reha(ilitation / //&"2!

The Reha(ilitation Court denied said #otion in an Order 21 dApril 14) 2!! & The fallo of said order reads5

%FERE8ORE) the Court resolves the pendin incidents as follo*s5

1& The r ent otion to Resolve of petitioner is here(. ranted& Thecreditors of Ba.antel) *hether secured or unsecured) should (etreated e9uall. and on the sa#e footin or pari passu untilreha(ilitation proceedin s is ter#inated in accordance *ith the,nteri# Rules

2& The otion of Ba.antel to ,nclude RCP, and >a atel in the presentreha(ilitation proceedin s as de(tor-corporations is denied

3& The otion of Ba.antel to E/e#pt fro# the ta. Order thepa.#ent of the co#pensation packa e of its for#er e#plo.ees perAnne/ "A" attached to said #otion is ranted) su(@ect to the


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verification and confir#ation of the ite#s therein (. theReha(ilitation Receiver

& The otion of Petitioner to trike Out the proposed reha(ilitationplan of Ba.antel is denied&

O ORDERED&22

On Kune 2;) 2!! ) the Pasi RTC) Branch 1 ;) actin as aReha(ilitation Court) approved the Report andReco##endations 23 attached (. the Receiver to his " u(#ission*ith Pra.er for 8urther 'uidance fro# the Fonora(leCourt)" 2 su(@ect to the follo*in clarifications and or a#end#ents5

1& The rulin on the pari passu treat#ent of all creditors *hoseclai#s are su(@ect to restructurin shall (e #aintained and shalle/tend to all pa.#ent ter#s and treat#ent of past due interest&

2& Due re ard shall (e iven to the ri hts of the secured creditorsand no chan es in the securit. positions of the creditors shall (e

ranted as a result of the reha(ilitation plan as a#ended andapproved herein&

3& The level of sustaina(le de(t of the reha(ilitation plan) asa#ended) shall (e reduced to the a#ount of < =L32 )!!!)!!! for aperiod of 14 .ears&

& nsustaina(le de(t shall (e converted into an appropriateinstru#ent that shall not (e a financial (urden for Ba.antel&

& All provisions relatin to e9uit. in the reha(ilitation plan) asapproved and a#ended) #ust strictl. confor# to the re9uire#entsof the Constitution li#itin forei n o*nership to !M&

6& A onitorin Co##ittee shall (e for#ed co#posed ofrepresentatives fro# all classes of the restructured de(t& TheReha(ilitation Receiver+s role shall (e li#ited to the po*ers of#onitorin and oversi ht as provided in the ,nteri# Rules&

All po*ers provided for in the Report and Reco##endations) *hiche/ceed the #onitorin and oversi ht functions #andated (. the,nteri# Rules shall (e a#ended accordin l.&

O ORDERED&2

Dissatisfied) The Bank of >e* Jork filed a >otice of AppealAu ust 6) 2!! & o did Avenue Asia ,nvest#ents) &P&) Avenue Asia,nternational) td&) Avenue Asia pecial ituations 8und ,,) &P&)Avenue Asia Capital Partners) &P&) and Avenue Asia pecial

ituations 8und ,,,) &P& *hich filed a Koint Record on AppealAu ust 4) 2!! &

On epte#(er 2;) 2!! ) Ba.antel su(#itted an ,#ple#entin Ter#heet to the Reha(ilitation Court and the Receiver& Clai#in that

said Ter# heet *as inade9uate to protect the interest of thecreditors) The Bank of >e* Jork petitioner in '&R& >o& 1$$2$!7 fileda anifestation 2; dated Octo(er 1 ) 2!! pra.in for theconstitution of a onitorin Co##ittee and the creation of aconverti(le de(t instru#ent to cover the unsustaina(le portion ofthe restructured de(t&

On >ove#(er 4) 2!! ) the Reha(ilitation Court issued anOrder 24 directin the creation of a onitorin Co##ittee to (e

co#posed of one #e#(er each fro# the roup of O#ni(usCreditors and unsecured creditors) and a third #e#(er to (echosen (. the unani#ous vote of the first t*o #e#(ers& ,n thesa#e Order) the court defined the scope of the onitorinCo##ittee+s authorit.) as follo*s5
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/ / / The onitorin Co##ittee shall participate *ith the Receiverin #onitorin and overseein the actions of the Board of Directorsof Ba.antel and #a.) (. #a@orit. vote) adopt) #odif.) revise orsu(stitute) an. of the follo*in ite#s5

17 an. proposed Annual OPE: Bud ets

27 an. proposed Annual CAPE: Bud ets

37 an. proposed Reschedule

7 an. proposed actions (. the Receiver on a pa.#ent default

7 ter#s of ana e#ent ,ncentivisation che#e and ana e#ent Tar ets

67 the EB,TDA Revenue ratios set (. the Ba.antel Board ofDirectors and

$7 an. other proposed actions (. the Ba.antel Board of Directorsincludin ) *ithout li#itation) issuance of ne* shares) sale of coreand noncore assets) chan e of (usiness) etc& that *ill #ateriall.affect the ter#s and conditions of the reha(ilitation plan and itsi#ple#entation&

,n case of disa ree#ent (et*een the onitorin Co##ittee and theBoard of Directors of Ba.antel on an. of the fore oin #atters) thesa#e shall (e su(#itted to the Court for resolution& 3!

On >ove#(er 16) 2!! ) The Bank of >e* Jork filed a Petition forRevie* 31 (efore the Court of Appeals& The petition *as docketed asCA'& R& P >o& ;$1!! in the 8ifteenth Division of the Court ofAppeals& On even date) Avenue Asia ,nvest#ents) &P&) Avenue Asia,nternational) td&) Avenue Asia pecial ituations 8und ,,) &P&)Avenue Asia Capital Partners) &P&) and Avenue Asia pecial

ituations 8und ,,,) &P Avenue Asia Capital 'roup7 filed a si#ilarpetition 32 *hich *as docketed as CA-'&R& P >o& ;$111 in the

econd Division of the Court of Appeals& Both petitions contest theReha(ilitation Court+s Kune 2;) 2!! Decision for) a#on others)fi/in the level of Ba.antel+s sustaina(le de(t at L32 #illion to(e paid in 14 .ears&

Thereafter) on >ove#(er 3!) 2!! ) petitioners E/press ,nvest#ents,,, Private td& and E/port Develop#ent Canada alon *ithBa.erische andes(ank in apore Branch7) Credit ,ndustriel etCo##ercial) Deutsche Bank A') P&T& Bank >e ara ,ndonesia

Persero7) TBN) Fon Non Branch and RiHal Co##ercial BankinCorporation filed a Petition for Revie* 33 *hich *as docketed as CA-'&R& >o& ;$2!3 in the Tenth Division of the Court of Appeals& Thesecured creditors like*ise assailed the Reha(ilitation Court+s Kune2;) 2!! Decision insofar as it ordered the pari passu treat#ent all clai#s a ainst Ba.antel& aid petitioners invoke a lien over thecash flo* and receiva(les of Ba.antel (. virtue of the Assi n#entA ree#ent&

On Dece#(er 23) 2!! ) Ba.antel filed an O#ni(us otion 3 foconsolidation of CA-'&R& P >os& ;$111 and CA-'&R& P >o& ;$2!3*ith CA-'&R& P >o& ;$1!!) the lo*est-nu#(ered case&

,n a Resolution dated Kanuar. 2!) 2!! ) the Court of Appeals)8ifteenth Division) ordered the consolidation of CA-'&R& P >o&;$2!3 *ith CA-'&R& P >o& ;$1!!& This *as accepted (. the Courtof Appeals) eventh Division) in a Resolution 3 dated arch 22!! & Then) in the Resolution 36 dated Kune 1!) 2!! ) the Court ofAppeals) 8irst Division) ordered the consolidation of CA-'&R& P >o&;$111 *ith ;$1!! and the trans#ittal of the records of the threecases to the eventh Division&

ean*hile) on Kanuar. 1!) 2!! ) Att.& >oval su(#itted to theReha(ilitation Court an ,#ple#entin Ter# heet 3$ to serve a


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uide for Ba.antel+s Reha(ilitation& The sa#e *as approved in anOrder 3; dated arch 1 ) 2!! & ,n the sa#e Order) the Reha(ilitationCourt appointed Avenue Asia ,nvest#ents &P& and E/portDevelop#ent Canada to represent the unsecured and securedcreditors) respectivel.) in the onitorin Co##ittee&

On a. 26) 2!! ) Ba.antel filed a petition for certiorari andProhi(ition 34 docketed as CA-'&R& P >o& ;4;4 in the Court ofAppeals& aid petition assailed the Reha(ilitation Court+s Ordersdated >ove#(er 4) 2!! and arch 1 ) 2!! ) for purportedl.conferrin upon the onitorin Co##ittee) po*ers of #ana e#entand control over its operations&

The Court of Appeals Decision in CA-G.R. Nos. 87100 87111and 87!0"

,n the assailed Au ust 1;) 2!!6 Decision) the Court of Appealsdis#issed the petitions in CA-'&R& P >os& ;$1!!) ;$111 and ;$2!3for lack of #erit& The appellate court upheld the Reha(ilitationCourt+s deter#ination of Ba.antel+s sustaina(le de(t at L32#illion pa.a(le in 14 .ears& ,t re@ected the Receiver+s proposal toset the sustaina(le de(t at L3$! #illion pa.a(le in 1 .ears) andthe proposal of the Avenue Asia Capital 'roup to set it at L $1#illion pa.a(le in 12 .ears&

The Court of Appeals a reed *ith the Reha(ilitation Court that it isreasona(le to adopt a level of sustaina(le de(t that appro/i#atesrespondent Ba.antel+s proposal (ecause the latter is in the (estposition to deter#ine the level of sustaina(le de(t that it can#ana e& ,t found Ba.antel+s proposal #ore credi(le considerinthat it *as prepared usin "updated financial infor#ation *ithrealistic cash flo* fi ures&"< 30 = The appellate court noted thatBa.antel+s proposal *as drafted *ithout re ard for its status as a"niche pla.er" in the teleco##unications #arket and after factorinthe cost of reor aniHation& ,n contrast) it e/pressed concern that the

proposals su(#itted (. Avenue Asia Capital 'roup and the Receiver#i ht eventuall. leave Ba.antel *ith an un*orka(le financial de(t-to-revenue ratio&

The Court of Appeals also confir#ed the Reha(ilitation Court+sauthorit. to approve) re@ect) su(stitute) or even chan e the

reha(ilitation plans su(#itted (. the Receiver and the parties& ,tupheld the trial court in adoptin the Receiver+s reco##endation toli#it the e9uit. conversion of Ba.antel+s unsustaina(le de(t to !Mof its paid-up capital& This percenta e) the appellate court e/plains)is consistent *ith the constitutional li#itation on the allo*a(leforei n e9uit. in 8ilipino corporations& ,t also #aintained the *rite-off of penalties and default interest and reco#putation of Ba.antel+spast due interest) as a valid e/ercise of discretion (. theReha(ilitation Court under the ,nteri# Rules of Procedure onCorporate Reha(ilitation ,nteri# Rules7& The appellate courtne ated an. violation of the pari passu principle *ith the use othese #easures since the. shall appl. to all classes of creditors&

As to the clai# of the secured creditors in CA-'&R& P >o& ;$2!3)the Court of Appeals ruled that *hile reha(ilitation is on oin ) thesole control over the securit. on the receiva(les and cash flo* ofBa.antel is vested in the Reha(ilitation Court& To allo* other*ise*ould not onl. violate the ta. Order (ut interfere as *ell *ith thedut. of the Receiver to "take possession) control and custod. of thede(tor+s assets&" 1 lti#atel.) the Court of Appeals ruled thatpreference in pa.#ent cannot (e accorded the secured creditorssince preference applies onl. in li9uidation proceedin s&

Discontented) The Bank of >e* Jork and the Avenue Asia Capital'roup petitioners in CA-'&R& P >os& ;$1!! and ;$1117 filed a

otion for Partial Reconsideration& 2 aid #otion *as) ho*ever)denied in the Resolution dated >ove#(er ;) 2!!6&


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,n the #eanti#e) E/press ,nvest#ents ,,, Private td& and E/portDevelop#ent Canada had filed (efore this Court a Petition forPartial Revie* on Certiorari of the Court of Appeals Decisiondocketed as '&R& >os& 1$ $- 4& Accordin to petitioners) theother secured creditors *ho *ere also petitioners in CA-'&R& P >o&;$2!3 had not re#ained in contact *ith the# and had not

authoriHed the# to file further petitions on their (ehalf&

On Dece#(er 2;) 2!!6) The Bank of >e* Jork and the Avenue AsiaCapital 'roup also filed their o*n Petition for Revie* on Certiorari*hich *as docketed as '&R& >os& 1$ 1;-2!&

The Court of Appeals Decision in CA-G.R. #$ No. 8%8%&

,n CA-'&R& P >o& ;4;4 ) the Court of Appeals rendered the assailedDecision dated Octo(er 2$) 2!!6 declarin null and void the>ove#(er 4) 2!! and arch 1 ) 2!! Orders of the Reha(ilitationCourt insofar as the. defined the po*ers and functions of the

onitorin Co##ittee&

The appellate court found rave a(use of discretion on the part ofthe Reha(ilitation Court for conferrin upon the onitorinCo##ittee the po*er to #odif.) reverse or overrule the proposalsof Ba.antel+s Board of Directors relative to operations& ,t stressedthat the Co##ittee+s functions are confined to #onitorin andoverseein the operations of Ba.antel to ensure its co#pliance *iththe ter#s and conditions of the Reha(ilitation Plan& To confor#there*ith) the appellate court restated the Co##ittee+s po*ers asfollo*s5

The onitorin Co##ittee shall participate *ith the Receiver in#onitorin and overseein the operations of Ba.antel to ensureco#pliance (. Ba.antel *ith the ter#s and conditions of theReha(ilitation Plan& ,n the event Ba.antel fails to #eet an. of the#ilestones under the Reha(ilitation Plan or fails to co#pl. *ith an.

#aterial provision thereunder) the onitorin Co##ittee #a.) (.#a@orit. vote) r);o )>* #odifications) revisions andsu(stitutions of the follo*in ite#s5

/ / / / 3 E#phasis supplied7

The Court of Appeals like*ise approved of the ,#ple#entin Ter#heet) clarif.in that the sa#e is not intended to address ever.contin enc. that #a. arise in the i#ple#entation of the Plan& ,tassured that an. dou(t in the interpretation of the Ter# heet shall(e resolved (. the Reha(ilitation Court&

astl.) the appellate court affir#ed the creation of a converti(lede(t instru#ent to cover the unsustaina(le portion of respondent+sde(t& ,t perceives such instru#ent as a tool to enerate surpluscash to satisf. Ba.antel+s de(t under Tranche B& As *ell) it servesas a (u.-(ack sche#e for the assi n#ent and transfer of credits (.the 8inancial Creditors in a #anner that *ill not undul. (urdenBa.antel&

'ssues

On Octo(er 14) 2!!6) E/press ,nvest#ents ,,, Private td& andE/port Develop#ent Canada filed a Petition for Partial Revie* onCertiorari *hich *as docketed as '&R& >os& 1$ $- 4& aidpetition) *hich seeks the reversal of the Au ust 1;) 2!!6 Decisionof the Court of Appeals insofar as it dis#issed the petition of thesecured creditors in CA-'&R& P >o& ;$2!3) essentiall. proffers thefollo*in issues for resolution5 17 *hether the clai#s of securedand unsecured creditors should (e treated pari passu dureha(ilitation 27 *hether the pari passu treat#ent of creditorsdurin reha(ilitation i#pairs the Assi n#ent A ree#ent (et*eenrespondent and petitioners 37 *hether an i#pair#ent in thesecurit. position of petitioners can (e @ustified as a valid e/ercise ofpolice po*er&
http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt43http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt44http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt43http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt44


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international practices on (ankruptc. and reha(ilitation *hichpurportedl. reco niHe the distinction (et*een the ri hts of securedand unsecured creditors& Petitioners *arn of dire conse9uences tothe international credit standin of the Philippines) the financial#arket) and the influ/ of forei n invest#ents if the pari

passu principle *ould (e upheld& 8inall.) petitioners #aintain that a

"Tri er Event"!

had occurred *hich rendered respondent+so(li ations due and de#anda(le& Thus) despite their failure to notif.respondent of the alle ed Events of Default) petitioners (elieve thatthe. can ri htfull. proceed a ainst the securities&

8or its part) respondent Ba.antel reasons that enforcin preferencein pa.#ent at this sta e of the reha(ilitation *ould onl. disrupt thepro ress it has #ade so far& ,t assures petitioners that their securit.ri hts are ade9uatel. protected in case the collateral assets aredisposed& Respondent adds that no sin le pa.#ent sche#e isapplica(le in all reha(ilitation proceedin s and the peculiarcircu#stances of its case *arrant the pari passu treat#ent of itscreditors&

'n G.R. Nos. 17+&18-!0

ainl.) petitioners Bank of >e* Jork and Avenue Asia Capital 'roupi#pute error on the Court of Appeals for affir#in the Reha(ilitationCourt+s decision *hich adopted the sustaina(le de(t level Ba.antelproposed& The court a "uo fi/ed respondent+s sustaina(le de(t at

L32 #illion pa.a(le *ithin 14 .ears a ainst the Receiver+sproposal of L3$! #illion pa.a(le in 1 .ears& Petitioners disputeBa.antel+s financial pro@ections as unrelia(le and contrived)desi ned to (ear out a reduced level of sustaina(le de(t and @ustif.a su(stantial *rite-off of its de(ts& ,n order to arrive at a reasona(lelevel of sustaina(le de(t) the. (elieve that the prospective cashflo* of Ba.antel #ust (e reckoned a ainst industr. standards&Petitioners point out that the ,nteri# Rules onl. allo*s the de(tor) ina creditor-initiated petition for corporate reha(ilitation) to file a

co##ent or opposition (ut not to su(#it its o*n reha(ilitation plan& The. *arn that if the fulfill#ent of the o(li ation *ould (e #ade todepend on the sole *ill of Ba.antel) the entire o(li ation *ould (evoid&

Petitioners fault the trial court for (asin the sustaina(le de(t on

the state of the teleco##unications industr. in the countr. ratherthan consultin the financial pro@ections and (usiness #odelssu(#itted (. petitioners and the Receiver& The. stress that thestate of the teleco##unications industr. is not a#on those *hichthe court #a. take @udicial notice of (. discretion&

Petitioners #aintain that convertin the unsustaina(le de(t to$$&$M e9uit. in Ba.antel *ill not violate the nationalit. re9uire#entof the 14;$ Constitution& The. aver that the de(ts to do#estic (ankcreditors 1 account is L $3 #illion or $!&1;M of Ba.antel+s totallia(ilities& Considerin the su(stantial *rite-off of penalties anddefault interest in the a#ount of L3 )! ) 3&!! and past dueinterest of L2 )2 3)3;1&!$) petitioners (elieve that it is onl. fairto accord the 8inancial Creditors reater e9uit. in Ba.antel toco#pensate for said losses&

oreover) it is the petitioners+ vie* that the *rite-off contravenesthe pari passu principle (ecause the. *ould suffer reater lossesthan the O#ni(us Creditors& Accordin to petitioners) appro/i#atel.;2M of the penalties and interests shall (e (orne (. the unsecuredcreditors and the Folders of >otes& ,n the sa#e vein) petitionersprotest the reco#putation of past due interest in accordance *iththe rate proposed (. the Receiver& The. clai# that reco#putation*ould result in the condonation of ;4M of the accrued interesto*in the#& The Receiver+s report sho*s that as of the filin of thepresent petition) the total accrued interest a#ounts to

L1!6)! )14$&66) of *hich) L41)1!!)!!! are due the Foldersof >otes&


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8inall.) petitioners reiterate their clai# for costs& ,n its Order datedarch 1 ) 2!! ) the Reha(ilitation Court a*arded costs of suit to

petitioner Bank of >e* Jork& ,n particular) it ranted the latter+spra.er for the pa.#ent of filin fees) costs of pu(lication andprofessional fees& Even then) petitioner (ank clai#s that a hu ea#ount of its e/penses for the professional fees of counsels and

advisers re#ain unpaid& ore i#portantl.) it asserts precedence inpa.#ent over the preferred creditors& ,n the alternative) the Bank of>e* Jork pra.s that the costs of suit (e incorporated in the a*ardto the nonfinancial or trade creditors& i#ilarl.) the Avenue AsiaCapital 'roup seeks rei#(urse#ent for the docket fees) pu(licatione/penses and the professional fees it has paid its counsels andfinancial adviser& ,t invokes Article 22!; of the Civil Code and theprovisions of the ,ndenture as le al (ases therefor&

ean*hile) the secured creditors in '&R& >os& 1$ $- 4 filed ae#orandu# 2 dated April 3!) 2!!4 *ith a pra.er for the dis#issal

of the (ondholders+ petition in '&R& >os& 1$ 1;-2!& 8or the securedcreditors) the sustaina(le de(t set (. the Courts of Appeals is a#ore #ana ea(le and realistic undertakin co#pared to hereinpetitioners+ proposal& The. add that the fact that Ba.antel+s actualrevenues are lo*er than its cash flo* pro@ections (elies an. sche#eto avoid pa.in its de(ts in full& The secured creditors a ree *iththe appellate court in li#itin the conversion of the unsustaina(lede(t to a #a/i#u# of !M shares in Ba.antel as #ore in keepin*ith the Constitution&

8urther) the secured creditors point out that there is nothin in the,nteri# Rules *hich prohi(its a de(tor co#pan. fro# su(#ittin analternative reha(ilitation plan in creditor-initiated proceedin s& ,nsupport of this) the. cite ection 22) 3 Rule of said rules *hichper#its the de(tor to #odif. its proposed plan or su(#it a revisedor su(stitute plan& Accordin to the#) Ba.antel+s su estion as tothe ter#s of pa.#ent does not constitute a potestative conditionthat *ould render the o(li ation void&

The secured creditors) ho*ever) @oin petitioners in protestin thecondonation of penalties and default interest& Rather than o(servina(solute e9ualit.) the. insist that the pari passu principle should applied such that creditors *ithin the sa#e class are treated alike&

,n response) respondent Ba.antel su(#itted on a. 21) 2!!4) a

Consolidated e#orandu# in '&R& >os& 1$ 1;-2! and '&R& >1$$2$!& ,t practicall. echoed the ratio decidendi of the CourtAppeals in dis#issin (oth petitions&

,n '&R& >os& 1$ 1;-2!) Ba.antel defends the Reha(ilitation Courtfor adoptin the sustaina(le de(t level it proposed& uch approval(. the court alone) Ba.antel reasons) did not #ake the pa.#ent ofits de(t a condition *hose fulfill#ent rests on its sole *ill) as torender the o(li ation void under Article 11;2 of the Civil CoRespondent #aintains that a#on the stakeholders) it is in the (estposition to deter#ine the level of de(t that it can pa.& oreover) it(elieves that a #a@orit. of the secured creditors are co#forta(le*ith the approved sustaina(le de(t since onl. t*o of the#appealed& Respondent insists that alterin the sustaina(le de(t atthis point *ould (e counterproductive&

Respondent e9uall. opposes the Bondholders+ proposal to reducethe co#pan.+s capital e/penditures to (et*een 4M and 11M to#ake #ore funds availa(le for de(t servicin & This approach)accordin to Ba.antel) i nores its need to #ake si nificantinvest#ents in ne* infrastructure in order to cope *ith co#petitors&Respondent disputes the value of petitioners+ pro@ections *hich*ere derived (. (ench#arkin Ba.antel+s inco#e) as a co#pan.under reha(ilitation) a ainst those of the #a@or pla.ers) P DT andDi itel&

8urther#ore) respondent #aintains that its reha(ilitation plan *as(ased on accurate financial data and operation reports& ,t insiststhat the ,nteri# Rules allo*s a de(tor) in creditor-initiated


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reha(ilitation proceedin s) to su(#it an alternative plan& ,t a rees*ith the Reha(ilitation Court+s decision to restrict conversion of theunsustaina(le de(t to !M of full. paid-up capital in Ba.antel&Respondent (elieves that the *aiver of penalties and defaultinterest and the reco#putation of past due interest *ill not violatethe pari passu principle (ecause said #easures shall appl. e9uall.

to all creditors& astl.) respondent ad#its li#ited lia(ilit. for costspursuant to the Assi n#ent A ree#ent (ut not for those incurred(. petitioners under "non-consensual scenarios&"

'n G.R. No. 177!70

,n this petition for revie*) the Bank of >e* Jork) as trustee for theholders of the 13& M enior >otes of respondent Ba.antel)challen es the Court of Appeals decision nullif.in the onitorinCo##ittee+s po*er to #odif.) reverse or overrule the decision ofBa.antel+s Board of Directors on certain #atters& ,t invokes ection23) 6 Rule of the ,nteri# Rules as le al (asis to @ustif. theReha(ilitation Court+s rant of e/tensive po*ers to the onitorinCo##ittee& The pertinent portion of said Rule states5

,n approvin the reha(ilitation plan) the court shall issue thenecessar. orders or processes for its i##ediate and successfuli#ple#entation& ,t #a. i#pose such ter#s) conditions) orrestrictions as the effective i#ple#entation and #onitorin thereof#a. reasona(l. re9uire) or for the protection and preservation ofthe interests of the creditors should the plan fail&

Petitioner contends that the #a nitude and co#ple/it. ofrespondent+s (usiness necessitate close #onitorin of its operationsto ensure successful reha(ilitation& pecificall.) the Bank of >e*

Jork e/presses concern over Ba.antel+s taciturn disposition asre ards its (ud et and e/pansion costs& Petitioner (elieves thatsuch lack of transparenc. can (e addressed (. e#po*erin the

onitorin Co##ittee to approve #easures that *ill ulti#atel.affect respondent+s a(ilit. to settle its de(ts&

oreover) petitioner assures that the ,#ple#entin Ter# heetprovides safe uards a ainst the i#provident disapproval (. the

onitorin Co##ittee of proposed #easures& Petitioner is of the

vie* that the functions of the onitorin Co##ittee *ould (erendered illusor. if all disa ree#ents on ke. areas *ould have to (eheard (. the Reha(ilitation Court& Petitioner e/plains that the

onitorin Co##ittee+s po*ers do not in an. *a. supplant those ofthe Board of Directors& The Bank of >e* Jork clai#s that it iscusto#ar. to allo* creditors to #onitor and supervise the de(tor+soperations as de#onstrated (. the restructurin e/periences ofcertain Asian countries&

Petitioner su(#its that the Reha(ilitation Court did not intend toive the onitorin Co##ittee po*ers that are concurrent *ith

those of the Receiver on account of the differin interests that the.represent in reha(ilitation& ,t ar ues that if at all) the court"uo co##itted a #ere error of @ud #ent not correcti(le (.certiorari& Petitioner adds that even if a petition for certiorari *asproper) the 6!-da. re le#entar. period provided (. the Rules ofCourt had alread. lapsed *hen Ba.antel filed its petition on a. 2$)2!! & ,t contends that Ba.antel+s anifestation and otion forClarification dated Dece#(er 1 ) 2!! *as in truth a #otion forreconsideration *hich is a prohi(ited pleadin under ection1) $ Rule 3 of the ,nteri# Rules& Petitioner concludes that suchpleadin s did not toll the period for filin a petition and) therefore)the Reha(ilitation Court+s decision had (eco#e final&

,n its Consolidated e#orandu# dated a. 21) 2!!4) Ba.antelcounters that ection 23) Rule of the ,nteri# Rules should (eunderstood as delineatin the purpose of the court+s orders andprocesses to #ere i#ple#entation and #onitorin of the plan&Respondent opposes an. interpretation of said provision *hich


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authoriHes the Co##ittee to su(stitute its @ud #ent for those of theBoard or vest it *ith po*ers reater than those of the Receiver& ,tar ues that vestin the Co##ittee *ith veto po*er over certaindecisions of the Board *ould effectivel. ive it control and#ana e#ent over Ba.antel+s operations& The necessar. effect)accordin to Ba.antel) is that ever. disa ree#ent (et*een the

Co##ittee and the Board *ould have to (e settled in court&Respondent points out that petitioner failed to cite proof of its clai#that it is custo#ar. a#on Asian countries to allo* the onitorinCo##ittee active participation durin reha(ilitation&

Ba.antel perceive the instant petition as an underhanded atte#pt(. petitioner to create a ana e#ent Co##ittee *ithout satisf.inthe re9uisites therefor& ,t reiterates that the functions of the

onitorin Co##ittee are confined to ensurin that Ba.antel #eetsthe de(t reduction #ilestones under the plan& Respondent aversthat even *ithout a onitorin Co##ittee) it is o(li ed under thePlan to co#pl. *ith certain infor#ation covenants and reportorialre9uire#ents& ,t adds that the Plan provides a #echanis# fordispute resolution throu h *hich creditors can enforce co#pliance&

Penulti#atel.) respondent assails the validit. of the Order dated>ove#(er 4) 2!! for lack of notice& Alle edl.) Ba.antel learned ofsaid Order onl. after petitioner furnished it a cop. of its Co#plianceto *hich the sa#e *as #ade an attach#ent& Thus) respondentinsists that the re le#entar. period to file an appeal or a petitionfor certiorari did not run a ainst it&

The Court(s Rulin)

'n G.R. Nos. 17&&+7-+%

Reha(ilitation is an atte#pt to conserve and ad#inister the assetsof an insolvent corporation in the hope of its eventual return fro#financial stress to solvenc.& ; ,t conte#plates the continuance of

corporate life and activities in an effort to restore and reinstate thecorporation to its for#er position of successful operation andli9uidit.& The purpose of reha(ilitation proceedin s is precisel. toena(le the co#pan. to ain a ne* lease on life and there(. allo*creditors to (e paid their clai#s fro# its earnin s& 4

Reha(ilitation shall (e undertaken *hen it is sho*n that thecontinued operation of the corporation is econo#icall. feasi(le andits creditors can recover) (. *a. of the present value of pa.#entspro@ected in the plan) #ore) if the corporation continues as a oinconcern than if it is i##ediatel. li9uidated& 6!

The la* overnin reha(ilitation and suspension of actions forclai#s a ainst corporations is PD 4!2-A) as a#ended& On Dece#(er1 ) 2!!!) the Court pro#ul ated A& & >o& !!-;-1!- C or the ,nteri#Rules of Procedure on Corporate Reha(ilitation) *hich applies topetitions for reha(ilitation filed (. corporations) partnerships andassociations pursuant to PD 4!2-A&

,n Kanuar. 2!! ) Repu(lic Act >o& ;$44 RA ;$447) other*ise kno*nas the ecurities Re ulation Code) a#ended ection of PD 4!2-A)and transferred to the Re ional Trial Courts the @urisdiction of the

ecurities and E/chan e Co##ission EC7 over petitions ofcorporations) partnerships or associations to (e declared in thestate of suspension of pa.#ents in cases *here the corporation)partnership or association possesses propert. to cover all its de(ts(ut foresees the i#possi(ilit. of #eetin the# *hen the.respectivel. fall due or in cases *here the corporation) partnershipor association has no sufficient assets to cover its lia(ilities) (ut isunder the #ana e#ent of a reha(ilitation receiver or a#ana e#ent co##ittee&

,n order to effectivel. e/ercise such @urisdiction) ection 6 c7) PD4!2-A e#po*ers the Re ional Trial Court to appoint one or #orereceivers of the propert.) real and personal) *hich is the su(@ect of
http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt58http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt59http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt60http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt58http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt59http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt60


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the pendin action (efore the Co##ission *henever necessar. inorder to preserve the ri hts of the parties-liti ants and or protectthe interest of the investin pu(lic and creditors&

nder ection 6) Rule of the ,nteri# Rules) if the court finds thepetition to (e sufficient in for# and su(stance) it shall issue) not

later than five 7 da.s fro# the filin of the petition) an Order *iththe follo*in pertinent effects5

a7 appointin a Reha(ilitation Receiver and f i/in his (ond

-< '/+?i>@ )> or;) )>/ o +ll ;l+i ', )/ )r or o>)? oro/ )r i') +>* )/ )r 'D; )> or;) )>/ i'


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epte#(er 14) 144 & nder said A ree#ent) Ba.antel assi ned)char ed) conve.ed and transferred to a Collateral A ent) thefollo*in properties as collateral for the pro#pt and co#pletepa.#ent of its o(li ations to secured creditors5

i7 All land) (uildin s) #achiner. and e9uip#ent currentl. o*ned)

and to (e ac9uired in the future (. Ba.antelii7 All #onies pa.a(le to Ba.antel under the Pro@ect Docu#ents as

the ter# is defined (. the O#ni(us A ree#ent7

iii7 All Pro@ect Docu#ents and all Contract Ri hts arisinthereunder

iv7 All receiva(les

v7 Each of the Accounts as the ter# is defined (. the O#ni(usA ree#ent7

vi7 All a#ounts #aintained in the Accounts and all #onies)securities and instru#ents deposited or re9uired to (e deposited inthe Accounts

vii7 All other Chattel Paper and Docu#ents

viii7 All other propert.) assets and revenues of Ba.antel) *hethertan i(le or intan i(le

i/7 All 'eneral ,ntan i(les and

/7 All proceeds and products of an. and all of the fore oin & 6

,n particular) petitioners refer to ection &!2 of the Assi n#entA ree#ent as (asis for de#andin full pa.#ent) ahead of other

creditors) out of respondent+s revenue fro# operations durinreha(ilitation& The relevant provision reads5

ection &!2& Pa.#ents nder Contracts and Receiva(les&

,f durin the continuance of a Tri er Event the Co#pan. shall

receive directl. fro# an. part. to an. Assi ned A ree#ent or fro#an. account de(tor or other o(li or under an. Receiva(le) an.pa.#ents under such a ree#ents or the Receiva(les)Co p+>? ' +ll r);)i ) 'D; p+? )>/' i> + ;o>'/rD;/i ) /rD'/

or / ) ) i/ o / ) S);Dr)* +r/i)' ) shall se re ate sucpa.#ents fro# its other funds) and shall forth*ith trans#it anddeliver such pa.#ents to the Collateral A ent in the sa#e for# asso received *ith an. necessar. endorse#ent7 alon *ith adescription of the sources of such pa.#ents& All a#ounts received(. the Collateral A ent pursuant to this ection &!2 shall (eapplied as set forth in Part and in the


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e/ercise its his po*ers free fro# an. @udicial or e/tra@udicialinterference that #i ht undul. hinder or prevent the "rescue" of thede(tor co#pan.& 6; ,t is intended to ive enou h (reathin space forthe #ana e#ent co##ittee or reha(ilitation receiver to #ake the(usiness via(le a ain *ithout havin to divert attention andresources to liti ation in various fora& 64

,n the 144! case of $le#ar%s &ibal ' &ons, (nc! v! ud)e*lbinias, $! the Court first enunciated the prevailin principle *hich

overns the relationship a#on creditors durin reha(ilitation& ,nsaid case) '&A& Jupan co sou ht the issuance of a *rit of e/ecutionto i#ple#ent a final and e/ecutor. default @ud #ent in its favor andafter Ale#ar+s i(al ons) ,nc& *as placed under reha(ilitation& ,norderin the sta. of e/ecution) the Court held5

&Dri>@ r) + r);)i )r' ip, / ) +'')/' +r) )l* i>/rD'/ or / ) )FD+l ) i/ o +ll ;r)*i/or' /o pr);lD*) o>)

ro oi>@ +> +* +>/+@) or pr) )r)>;) o )r +>o/ )r


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1; | C O R P O P A R T 2

are finall. li9uidated) ho*ever) secured and preferred credits underthe applica(le provisions of the Civil Code *ill definitel. havepreference over unsecured ones& $ E#phasis supplied7

Basicall.) once a #ana e#ent co##ittee or reha(ilitation receiverhas (een appointed in accordance *ith PD 4!2-A) no action for

clai#s #a. (e initiated a ainst a distressed corporation and thosealread. pendin in court shall (e suspended in *hatever sta e the.#a. (e& >ot*ithstandin ) secured creditors shall continue to havepreferred status (ut the enforce#ent thereof is like*ise held ina(e.ance& Fo*ever) if the court later deter#ines that thereha(ilitation of the distressed corporation is no lon er feasi(le andits assets are li9uidated) secured clai#s shall en@o. priorit. inpa.#ent&

%e perceive no ood reason to depart fro# esta(lished @urisprudence& %hile ection 2 d7) Rule of the ,nteri# Rulesstates that contracts and other arran e#ents (et*een the de(tor

and its creditors shall (e interpreted as continuin to appl.) thisholds true onl. to the e/tent that the. do not conflict *ith theprovisions of the plan&

Fere) the stipulation in the Assi n#ent A ree#ent to the effect thatrespondent Ba.antel shall pa. petitioners in full and ahead of othercreditors out of its cash flo* durin reha(ilitation directl. i#pin eson the provision of the approved Reha(ilitation Plan that "


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the (est #eans of reha(ilitatin a distressed corporation& Truth (etold) the Reha(ilitation Court #a. approve a reha(ilitation planeven over the opposition of creditors holdin a #a@orit. of the totallia(ilities of the de(tor if) in its @ud #ent) the reha(ilitation of thede(tor is feasi(le and the opposition of the creditors is #anifestl.unreasona(le& ,n deter#inin *hether or not the opposition of the

creditors is #anifestl. unreasona(le) the court shall consider thefollo*in 5 a7 That the plan *ould likel. provide the o(@ectin classof creditors *ith co#pensation reater than that *hich the. *ouldhave received if the assets of the de(tor *ere sold (. a li9uidator*ithin a three-#onth period (7 That the shareholders or o*ners ofthe de(tor lose at least their controllin interest as a result of theplan and c7 The Reha(ilitation Receiver has reco##endedapproval of the plan& $4

Accordin to the i9uidation Anal.sis ;! prepared (. NP ' at there9uest of the Receiver) the 8air arket ?alue of respondent+s fi/edassets is P1;&$ (illion *hile its 8orced i9uidation ?alue is P4&3

(illion& To ether *ith cash and receiva(les in the a#ount of P411#illion) respondent+s total li9uidation assets are valued at P1!&2(illion& 8ro# this a#ount) the esti#ated li9uidation return to theO#ni(us Creditors is P6)1!2)1 !)!!! or appro/i#atel. 2&4M oftheir clai#s in the a#ount of P11) 34)$$6)!!!& ean*hile) ChattelCreditors can recoup 61M of its clai#s& As re ards the nsecuredCreditors) the. *ill share in the pool of assets that respondentshave ac9uired since 144;) *hich *ere not specificall. re isteredunder the O#ni(us A ree#ent ort a e upple#ents& aid assetsare esti#ated to have a value of P3& Billion& This accounts for1!&$M of the nsecured Creditors+ clai#s&

Reckoned fro# these fi ures) the Receiver concluded that theshareholders shall receive nothin on respondent+s li9uidation *hilethe latter+s creditors can e/pect si nificantl. less than fullrepa.#ent& oreover) re ardless of *hether the shareholders *illlose at least their controllin interest as a result of the plan)

petitioners) in their e#orandu# dated April 3!) 2!!4) havesi nified their confor#it. *ith the Court of Appeals decision to li#itthe conversion of the unsustaina(le de(t to a #a/i#u# of !M ofthe full.-paid up capital of respondent corporation& astl.) theReceiver not onl. reco##ended the approval of the Plan (. theReha(ilitation Court) he) hi#self) prepared it& The concurrence of

these conditions renders the opposition of petitioners #anifestl.unreasona(le&

As re ards the second issue) petitioners su(#it that the passu treat#ent of clai#s offends the Contract Clause under the14;$ Constitution& Article ,,,) ection 1! of the Constitution#andates that no la* i#pairin the o(li ation of contracts shall (epassed& An. la* *hich enlar es) a(rid es) or in an. #annerchan es the intention of the parties) necessaril. i#pairs thecontract itself& And even *hen the chan e in the contract is done (.indirection) there is i#pair#ent nonetheless& ;1

At this point) it (ears stressin that the non-i#pair#ent clause is ali#itation on the e/ercise of le islative po*er and not of @udicial or9uasi@udicial po*er& ,n +i#, &r! v! &ecretary of $)riculture ' aturalResources, et al! );2 *e held5

/ / /& 8or it is *ell-settled that a la* *ithin the #eanin of thisconstitutional provision has reference pri#aril. to statutes andordinances of #unicipal corporations& E/ecutive orders issued (.the President *hether derived fro# his constitutional po*ers orvalid statutes #a. like*ise (e considered as such& ,t does not cover)therefore) the e/ercise of the 9uasi-@udicial po*er of a depart#enthead even if affir#ed (. the President& The ad#inistrative processin such a case partakes #ore of an ad@udicator. character& ,t is(ereft of an. le islative si nificance& ,t falls outside the scope of thenon-i#pair#ent clause& / / /& ;3
http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt79http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt80http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt81http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt82http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt83http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt79http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt80http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt81http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt82http://www.lawphil.net/judjuris/juri2012/dec2012/gr_174457_2012.html#fnt83


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The prohi(ition e#(races enact#ents of a overn#ental la*-#akin (od. pertainin to its le islative functions& trictl. speakin )it does not cover the e/ercise (. such la*-#akin (od. of 9uasi-

@udicial po*er&

?eril.) the Decision dated Kune 2;) 2!! of the Reha(ilitation Court

is not a proper su(@ect of the >on-i#pair#ent Clause&,n vie* of the fore oin ) *e find no need to discuss the third issueposed in this petition

'n G.R. Nos. 17+&18-!0

Prefatoril.) *e restate the ti#e honored principle that in a petitionfor revie* on certiorari under Rule of the Rules of Court) onl.9uestions of la* #a. (e raised& Thus) in a petition for revie* oncertiorari) the scope of the upre#e Court s @udicial revie* is li#itedto revie*in onl. errors of la*) not of fact& ; ,t is not our function to

*ei h all over a ain evidence alread. considered in theproceedin s (elo*) our @urisdiction is li#ited to revie*in onl.errors of la* that #a. have (een co##itted (. the lo*er court& ;

Before us) petitioners Bank of >e* Jork and Avenue Asia Capital'roup raise a 9uestion of fact *hich is not proper in a petition forrevie* on certiorari & A 9uestion of la* arises *hen there is dou(t asto *hat the la* is on a certain state of facts) *hile there is a9uestion of fact *hen the dou(t arises as to the truth or falsit. ofthe alle ed facts& 8or a 9uestion to (e one of la*) the sa#e #ustnot involve an e/a#ination of the pro(ative value of the evidencepresented (. the liti ants or an. of the#& The resolution of theissue #ust rest solel. on *hat the la* provides on the iven set ofcircu#stances& Once it is clear that the issue invites a revie* of theevidence presented) the 9uestion posed is one of fact& ;6

%hether the Court of Appeals erred in affir#in the sustaina(lede(t fi/ed (. the Reha(ilitation Court is a 9uestion of fact that callsfor a recali(ration of the evidence presented (. the parties (eforethe trial court& ,n order to resolve said issue) petitioners *ould havethis Court reassess the state of respondent Ba.antel+s finances atthe onset of reha(ilitation and au e the practical value of the

plans su(#itted (. the parties vis- -vis the financial #odelsprepared (. the e/perts en a ed (. the#& These tasks arecertainl. not for this Court to acco#plish& The resolution of factualissues is the function of lo*er courts) *hose findin s on these#atters are received *ith respect& ;$ This is especiall. true inreha(ilitation proceedin s *here certain courts are desi nated tohear the case on account of their e/pertise and specialiHedkno*led e on the su(@ect #atter& Thou h this doctrine ad#its ofseveral e/ceptions) ;; none is applica(le in the case at (ar

>ota(l.) the ,nteri# Rules is silent on the #anner (. *hich thesustaina(le de(t of the de(tor shall (e deter#ined& Jet) ection 2 of

the ,nteri# Rules prescri(e that the Rules shall (e li(erall.construed to carr. out the o(@ectives of ections d7) ;4 6 c746 d741 of PD 4!2-A&

ection d7) PD 4!2-A vested @urisdiction upon the EC overpetitions for reha(ilitation& ater) RA ;$44 or the ecuritiesRe ulation Code) a#ended ection d7 of PD 4!2-A (. transferrin

EC+s @urisdiction over said petitions to the RTC& ean*hile) ection6 c7 of PD 4!2-A provides for the appoint#ent of a receiver of thesu(@ect propert. *henever necessar. in order to preserve the ri htsof the parties and to protect the interest of the investin pu(lic andthe creditors& pon the appoint#ent of such receiver) all actions forclai#s a ainst the corporation pendin (efore an. court) tri(unal)(oard or (od. shall (e suspended accordin l.& On the other hand)

ection d7) PD 4!2-A e/pands the po*er of the Co##ission toallo* the creation and appoint#ent of a #ana e#ent co##ittee toundertake the #ana e#ent of the corporation *hen there is


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i##inent dan er of dissipation) loss) *asta e or destruction ofassets or other properties or paral.Hation of the (usiness of thecorporation *hich #a. (e pre@udicial to the interest of #inorit.stockholders) parties-liti ants or the eneral pu(lic&

The underl.in o(@ective (ehind these provisions is to foster the

reha(ilitation of the de(tor (. insulatin it a ainst clai#s)preservin its assets and takin steps to ensure that the ri hts of allparties concerned are ade9uatel. protected&

This Court is convinced that the Court of Appeals ruled in accord*ith this polic. *hen it upheld the Reha(ilitation Court+sdeter#ination of respondent+s sustaina(le de(t& %e find thesustaina(le de(t of L32 #illion) spread over 14 .ears) to (e a#ore realisticall. achieva(le a#ount considerin respondent+s#odest revenue pro@ections& Ba.antel pro@ected a constant rise inits revenues at the ran e of 1&16M- &41M *ith periodic reversesever. t*o .ears& 42 On the other hand) petitioner+s proposal of a

sustaina(le de(t of L $1 #illion to (e paid in 12 .ears and theReceiver+s proposal of L3$! #illion to (e paid in 1 .ears (etra.an over opti#is# that could leave Ba.antel *ith nothin to spendfor its operations&

>e/t) petitioners contest the ad#ission of respondent+sreha(ilitation plan for (ein filed in violation of the ,nteri# Rules& ,tis petitioner+s vie* that in a creditor-initiated petition forreha(ilitation) the de(tor #a. onl. su(#it either a co##ent oropposition (ut not its o*n reha(ilitation plan&

%e cannot a ree&

Rule of the ,nteri# Rules treats of reha(ilitation in eneral)*ithout distinction as to *ho (et*een the de(tor and the creditorinitiated the petition& >o*here in said Rule is there an. provisionthat prohi(its the de(tor in a creditor-initiated petition to file its o*n

reha(ilitation plan for consideration (. the court& Guite the reverse)one of the functions and po*ers of the reha(ilitation receiver under

ection 1 #7 of said Rule is to stud. the reha(ilitationplan proposed by the debtor or an. reha(ilitation plan su(#itteddurin the proceedin s) to ether *ith an. co##ents #ade thereon&

This provision #akes particular reference to a de(tor-initiated

proceedin in *hich the de(tor principall. files a reha(ilitation plan&,n such case) the receiver is tasked) a#on other thin s) to stud.the reha(ilitation plan presented (. the de(tor alon *ith an.reha(ilitation plan su(#itted durin the proceedin s& This i#pliesthat the creditors of the distressed corporation) and even thereceiver) #a. file their respective reha(ilitation plans& %e perceiveno ood reason *h. the sa#e option should not (e availa(le) (.analo .) to a de(tor in creditor-initiated proceedin s) *hich is alsofound in Rule of the ,nteri# Rules&

Third) petitioners fault the Court of Appeals for rulin that the de(t-toe9uit. conversion rate of $$&$M) as proposed (. The Bank of >e*

Jork) violates the 8ilipiniHation provision of the Constitution&Petitioners e/plain that the ac9uisition of shares (. forei n O#ni(usand 8inancial Creditors shall (e done) (oth directl. and indirectl. inorder to #eet the control test principle under RA $! 2 43 or8orei n ,nvest#ents Act of 1441& nder the proposed structure)said creditors shall o*n !M of the outstandin capital stock of theteleco##unications co#pan. on a direct (asis) *hile the re#ainin

!M of shares shall (e re istered to a holdin co#pan. that shallretain) on a direct (asis) the other 6!M e9uit. reserved for 8ilipinocitiHens&

oreover) petitioners #aintain that it is onl. fair to i#pose upon theO#ni(us and 8inancial Creditors a (i er e9uit. conversion inBa.antel considerin that petitioners *ill (ear the (ulk of theaccrued interests and penalties to (e *ritten off& ,nitiall.) theReha(ilitation Court approved the Receiver+s reco##endation to*rite-off interests and penalties in the a#ount of


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L3 )! ) 3&!!& The Reha(ilitation Court like*ise ordered a re-co#putation of past due interest in accordance *ith the rateproposed (. the Receiver& 8ollo*in this) petitioners esti#ate thetotal unpaid accrued interest of Ba.antel as of Kul. 3!) 2!!3 to (e at

L1 !)!4;)$ !&66 *hile the Reha(ilitation Court arrived at thetotal a#ount of past due interest and penalties of

L11 ); )364& 4 upon reco#putation& This #akes for adifference of L2 )2 3)3;1&!$ *hich) petitioners clai#) representsan additional *rite-off to (e (orne (. the# for a total *rite-off of

L 4)2;$)43 &!$&

The provision adverted to is Article :,,) ection 11 of the 14;$Constitution *hich states5

EC& 11& >o franchise) certificate) or an. other for# of authoriHationfor the operation of a pu(lic utilit. shall (e ranted e/cept tocitiHens of the Philippines or to corporations or associationsor aniHed under the la*s of the Philippines at least si/t. per

centu# of *hose capital is o*ned (. such citiHens) nor shall suchfranchise) certificate or authoriHation (e e/clusive in character orfor a lon er period than fift. .ears& >either shall an. such franchiseor ri ht (e ranted e/cept under the condition that it shall (esu(@ect to a#end#ent) alteration) or repeal (. the Con ress *henthe co##on ood so re9uires& The tate shall encoura e e9uit.participation in pu(lic utilities (. the eneral pu(lic& Theparticipation of forei n investors in the overnin (od. of an. pu(licutilit. enterprise shall (e li#ited to their proportionate share in itscapital) and all the e/ecutive and #ana in officers of suchcorporation or association #ust (e citiHens of the Philippines&

This provision e/plicitl. reserves to 8ilipino citiHens control overpu(lic utilities) pursuant to an overridin econo#ic oal of the 14;$Constitution5 to "conserve and develop our patri#on." and ensure"a selfreliant and independent national econo#. effecti,elcontrolled (. 8ilipinos&" 4

,n the recent case of a#boa v! .eves, 4 the Court settled once andfor all the #eanin of "capital" in the a(ove-9uoted Constitutionalprovision li#itin forei n o*nership in pu(lic utilities& ,n said case)*e held that considerin that co##on shares have votin ri hts*hich translate to control as opposed to preferred shares *hichusuall. have no votin ri hts) the ter# "capital" in ection 11)Article :,, of the Constitution refers onl. to co##on shares&Fo*ever) if the preferred shares also have the ri ht to vote in theelection of directors) then the ter# "capital" shall include suchpreferred shares (ecause the ri ht to participate in the control or#ana e#ent of the corporation is e/ercised throu h the ri ht tovote in the election of directors& ,n short) the ter# "capital" in

ection 11) Article :,, of the Constitution refers onl. to shares ofstock that can vote in the election of directors&

Appl.in this) t*o steps #ust (e follo*ed in order to deter#ine*hether the conversion of de(t to e9uit. in e/cess of !M of theoutstandin capital stock violates the constitutional li#it on forei n

o*nership of a pu(lic utilit.5 /irst, identif. into *hich class of sharesthe de(t shall (e converted) *hether co##on shares) preferredshares that have the ri ht to vote in the election of directors or non-votin preferred shares &econd, deter#ine the nu#(er of shares*ith votin ri ht held (. forei n entities prior to conversion& ,f uponconversion) the total nu#(er of shares held (. forei n entitiese/ceeds !M of the capital stock *ith votin ri hts) theconstitutional li#it on forei n o*nership is violated& Other*ise) theconversion shall (e respected&

,n its Reha(ilitation Plan) 46 a#on the #aterial financialco##it#ents #ade (. respondent Ba.antel is that its shareholdersshall "relin9uish the a reed-upon a#ount of co##on stock


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2 | C O R P O P A R T 2

Creditors *hich are forei n corporations) shall have control over$$&$M of Ba.antel) a pu(lic utilit. co#pan.& This is precisel. thescenario proscri(ed (. the 8ilipiniHation provision of theConstitution& Therefore) the Court of Appeals acted correctl. insustainin the !M de(t-to-e9uit. ceilin on conversion&

As to the fourth issue) petitioners insist that the *rite-off of thedefault interest and penalties alon *ith the re-co#putation of pastdue interest violate the pari passu treat#ent of creditors&

Petitioner+s ar u#ent lacks #erit&

ection d7) Rule of the ,nteri# Rules provides that thereha(ilitation plan shall include the #eans for the e/ecution of thereha(ilitation plan) *hich #a. include conversion of the de(ts oran. portion thereof to e9uit.) restructurin of the de(ts) dacion en

pa)o ) or sale of assets or of the controllin interest&

De(t restructurin #a. involve conversion of the de(t or an.portion thereof to e9uit.) sale of the assets of the distressedco#pan. and application of the proceeds to the o(li ation) dacionen pa)o ) de(t relief or reduction) #odification of the ter#s of theloan or a co#(ination of these sche#es&

,n this case) the approved Reha(ilitation Plan provided for a lon erperiod of pa.#ent) the conversion of de(t to !M e9uit. inrespondent co#pan.) #odification of interest rates on therestructured de(t and accrued interest and a *rite-off or relief fro#penalties and default interest& These reco##endations (. theReceiver are perfectl. *ithin the po*ers of the Reha(ilitation Courtto adopt and approve) as it did adopt and approve& ,n so doin ) noreversi(le error can (e attri(uted to the Reha(ilitation Court&

The pertinent portion of the fallo of said court+s Decision dated Kune2;) 2!! states5

1& The rulin on / ) p+ri p+''D /r)+/ )>/ o +ll ;r)*i/or' *hclai#s are su(@ect to restructurin shall (e #aintained and) /)>* /o +ll p+? )>/ /)r ' +>* /r)+/ )>/ o p+'/ *D)i>/)r)'/.[ 4; E#phasis supplied7

Thus) the court a "uo provided for a unifor# application of the passu principle a#on creditor clai#s and the ter#s (. *hich the.shall (e paid) includin past due interest& This is consistent *ith theinterpretation accorded (. @urisprudence to the pari passu printhat durin reha(ilitation) the assets of the distressed corporationare held in trust for the e9ual (enefit of all creditors to preclude onefro# o(tainin an advanta e or preference over another& Allcreditors should stand on e9ual footin & >ot an. one of the# should(e iven preference (. pa.in one or so#e of the# ahead of theothers& 44

As applied to this case) the pari passu treat#ent of clai#s durinreha(ilitation entitles all creditors) *hether secured or unsecured)

to receive pa.#ent out of Ba.antel+s cash flo*& Despite theirpreferred position) therefore) the secured creditors shall not (e paidahead of the unsecured creditors (ut shall receive pa.#ent onl. inthe proportion o*in to the#&

,n an. event) the de(t restructurin sche#es co#plained of shall (ei#ple#ented a#on all creditors re ardless of class& Both securedand unsecured creditors shall suffer a *rite-off of penalties anddefault interest and the escalatin interest rates shall (e e9uall.i#posed on the#& %e repeat) the co##it#ent e#(odied in the

passu principle onl. oes so far as to ensure that the assets of thedistressed corporation are held in trust for the e9ual (enefit of allcreditors& ,t does not espouse a(solute e9ualit. in all aspects ofde(t restructurin &

As re ards petitioners+ clai#s for costs) petitioner Bank of >e* Jorkfiled (efore the Reha(ilitation Court a >otice of Clai# 1!! d


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8e(ruar. 14) 2!! for the pa.#ent of L1)2 ); 1&3!)representin filin fee) deposit for e/penses and the professionalfees of its counsels and financial advisers& Earlier) said (ank hadfiled a clai# for the pa.#ent of L;63);24&4; for professional feesof its counsels and professional advisers and P2); !)3! &!! fordocket fees and pu(lication e/penses& On its end) the Avenue AsiaCapital 'roup clai#s a total of L 3 )!$ &6 to defra. theprofessional fees of its financial adviser) Price %aterhouse Cooperand the Bondholder Co##unications 'roup&

,n an Order 1!1 dated arch 1 ) 2!! ) the Reha(ilitation Courtapproved the clai#s for costs of petitioner Bank of >e* Jork asfollo*s5

i& filin fees of P2)$!1)$ !&!! as evidenced (. O&R& >os& 1; 6344;)1; 662;6 and ! ;!2 6 all dated Au ust 13) 2!!3 of the Re ional

Trial Court of Pasi Cit.7

ii& costs of pu(lication of the ta. Order in the a#ount ofP $) !&!! as evidenced (. O&R& >o& ;63; dated Au ust 13) 2!!3of the Peoples ,ndependent edia) ,nc&) the sa#e (ein @udicialcosts authoriHed under ec& 1) Rule 1 2 of the Rules of Court

iii& pa.#ents of professional fees to its Philippine Counsel) Belo'oHon El#a Parel Asuncion ucila) in the total a#ount of

L1 2)$; &32 as evidenced (. the Affidavit of Att.& Ro(erto Rafael?& ucila and the tate#ents of Account attached thereto

*hich the Court considers to (e reasona(le and finds authoriHedunder ec& 6&11 and 6&12 of the ,ndenture attached as Anne/ "E" to

the Petition

The Receiver is here(. directed to cause the settle#ent of pa.#entof the accounts *ithin a period of si/teen 167 #onths fro# receiptof this Order& 1!2

The trial court #ade no pronounce#ent on the clai#s for cost ofpetitioner Avenue Asia Capital 'roup) either in the sa#e Order or ina su(se9uent order&

Before us) petitioners reiterate their clai#s for costs (ased onections 6&11 1!3 and 6&12 1! of the ,ndenture 1! dated Kul. 22) 144

*hich *as e/ecuted (. respondent in their favor&

,t (ears stressin at this point that the su(@ect of petitioners+ appeal(efore the Court of Appeals *as the Reha(ilitation Court+s Decisiondated Kune 2;) 2!! & aid Decision) ho*ever) (ore no discussion oneither petitioners+ clai# for costs fro# *hich the. #a. appeal&>ota(l.) the assailed Order of the Reha(ilitation Court *aspro#ul ated on arch 1 ) 2!! or four 7 #onths after petitionershad appealed the Decision dated Kune 2;) 2!! to the Court ofAppeals on >ove#(er 16) 2!! & Evidentl.) the appellate court couldnot have ac9uired @urisdiction to revie* said Order&

>onetheless) *e dou(t the propriet. of the Reha(ilitation Court+sa*ard for costs& A perusal of the Order dated arch 1 ) 2!!reveals that the a*ard to petitioner Bank of >e* Jork *as #adepursuant to ection 1) Rule 1 2 of the Rules of Court) *hich states5

ECT,O> 1& Costs ordinarily follow results of suit &- nless other*provided in these Rules) ;o'/' ' +ll @ p+r/? as a #atter of course) (ut the court shall havepo*er) for special reasons) to ad@ud e that either part. shall pa. thecosts of an action) or that the sa#e (e divided) as #a. (ee9uita(le& >o costs shall (e allo*ed a ainst the Repu(lic of thePhilippines unless other*ise provided (. la*& E#phasis supplied7

Fo*ever) there is no prevailin part. in reha(ilitation proceedin s*hich is non-adversarial in nature& 1!6 nlike in adversariproceedin s) the court in reha(ilitation proceedin s appoints areceiver to stud. the (est #eans to revive the de(tor and to ensure
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26 | C O R P O P A R T 2

that the value of the de(tor+s propert. is reasona(l. #aintainedpendin the deter#ination of *hether or not the de(tor should (ereha(ilitated) as *ell as i#ple#ent the reha(ilitation plan after itsapproval& 1!$ The #ain thrust of reha(ilitation is not to ad@udicateopposin clai#s (ut to restore the de(tor to a position of successfuloperation and solvenc.& nder the ,nteri# Rules) reasona(le feesand e/penses are allo*ed the Receiver and the persons hired (.hi#) 1!; for those e/penses incurred in the ordinar. course of(usiness of the de(tor after the issuance of the sta. order (ute/cludin interest to creditors& 1!4

oreover) *hile it is true that the ,ndenture (et*een petitionersand respondent corporation authoriHes the Trustee to file proofs ofclai# for the pa.#ent of reasona(le e/penses and dis(urse#entsof the Trustee) its a ents and counsel) accountants and e/perts)such re#ed. is availa(le onl. in cases *here the Trustee files acollection suit a ainst respondent co#pan.& ,ndu(ita(l.) thereha(ilitation proceedin s in the case at (ar is not a collection suit)

*hich is adversarial in nature&'n G.R. No. 177!70

At issue in this petition for revie* on certiorari is the e/tent ofpo*er that the onitorin Co##ittee can e/ercise&

The pertinent portion of the fallo of the Decision dated Kune 2;)2!! provides5

6& A onitorin Co##ittee shall (e for#ed co#posed ofrepresentatives fro# all classes of the restructured de(t& The

Reha(ilitation Receiver+s role shall (e li#ited to the po*ers of#onitorin and oversi ht as provided in the ,nteri# Rules& Allpo*ers provided for in the Report and Reco##endations) *hiche/ceed the #onitorin and oversi ht functions #andated (. the,nteri# Rules shall (e a#ended accordin l.& 11!

On Octo(er 1 ) 2!! ) petitioner Bank of >e* Jork filed aanifestation *ith the Reha(ilitation Court for the creation of a

#onitorin co##ittee in accordance *ith the afore9uotedpronounce#ent& Petitioner espouses the vie* that it is essential to"provide for

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