and in hi C .

The e m be iden i f a ie in e e
e e en ed, igh a e ed and elief gh in diffe en
ib nal . In he ca e a ba , two groups of private respondents
appear to have acted independently of each other when they sought
relief from the appellate court. Both groups sought relief from the
same tribunal. I ld n ma e e en if he e a e e e al
di i i n in he C f A eal . The ad e e a can al a
G.R. No. 165887. J ne 6, 2011.* a kf he c n lida i n f he ca e . In he ca e a ba ,
i ae e nden e e en diffe en g i h diffe en
MAJORITY STOCKHOLDERS OF RUBY INDUSTRIAL in e e he min i ckh lde g , e e en ed b
CORPORATION, pe i ioner , vs. MIGUEL LIM, in hi i ae e nden Lim; he n ec ed c edi g , Allied
per onal capaci a S ockholder of R b Ind rial Lea ing & Finance C a i n; and he ld managemen g .
Corpora ion and repre en ing he MINORITY Each g ha di inc igh ec . In line i h ling
STOCKHOLDERS OF RUBY INDUSTRIAL in Ramos, he ca e filed b i ae e nden h ld be
CORPORATION and he MANAGEMENT COMMITTEE c n lida ed. In fac , BENHAR and RUBY did j ha in hei
OF RUBY INDUSTRIAL CORPORATION, re ponden . gen m i n filed n Decembe 1, 1993 and Decembe 6, 1993,
e ec i el , he a ed f he c n lida i n f he ca e bef e
G.R. No. 165929. J ne 6, 2011.* he C f A eal .

CHINA BANKING CORPORATION, pe i ioner, vs. Corporation Law; Derivative Suits; An individual stockholder
MIGUEL LIM, in hi per onal capaci a a ockholder of is permitted to institute a derivative suit on behalf of the
R b Ind rial Corpora ion and repre en ing he corporation wherein he holds stock in order to protect or vindicate
MINORITY STOCKHOLDERS OF RUBY INDUSTRIAL corporate rights, whenever officials of the corporation refuse to sue
CORPORATION, re ponden . or are the ones to be sued or hold the control of the corporation—in
such actions, the suing stockholder is regarded as the nominal
party, with the corporation as the party in interest. A de i a i e
Actions; Pleadings, Practice and Procedure; Forum Shopping;
ac i n i a i b a ha eh lde enf ce a c a e ca e f
Parties can be considered to have engaged in forum shopping if all
ac i n. I i a emed de igned b e i and ha been he
of them, acting as one group, filed identical special civil actions in
inci al defen e f he min i ha eh lde again ab e b
the Court of Appeals and in the Supreme Court. On he cha ge f
he maj i . F hi e, i i en gh ha a membe a
f m h ing, e ha e al ead led n he ma e in G.R. N .
min i f ckh lde file a de i a i e i f and in behalf f a
124185-87. Th : We h ld ha i ae e nden a e n g il
c a i n. An indi id al ckh lde i e mi ed in i e a
ff m-
de i a i e i n behalf f he c a i n he ein he h ld ck
in de ec indica e c a e igh , hene e fficial
f he c a i n ef e e a e he ne be ed h ld
he c n l f he c a i n. In ch ac i n , he ing
* HI D DI I I N.
ckh lde i ega ded a he n minal a , i h he
c a i n a he a in in e e .
462
463

462 E EC E A A ED . 650, E 6, 2011 463

Ma i S c h de fR b I d ia C ai . Li Ma i S c h de fR b I d ia C ai . Li

h ing. In Ramos, Sr. v. Court of Appeals, 173 SCRA 550

(1989), e led: The i a e e nden can be c n ide ed Same; Shares of Stock; The power to issue shares of stock in a
ha e engaged in f m h ing if all f hem, ac ing a ne corporation is lodged in the board of directors and no stockholders
g , filed iden ical ecial ci il ac i n in he C f A eal meeting is required to consider it because additional issuances of
shares of stock does not need approval of the stockholders—what is
only required is the board resolution approving the additional ele an b e ai n h ld ha e ignaled g ea e
issuance of shares. A ck c ai ni e e l g an ed he ci c m ec i n n he a f he SEC n he hi d and la
e i e ell ck . The e i e ha e f ck in emand i an Jan a 20, 1998 deci i n
a c a i n i l dged in he b a d f di ec and n demand an a enc and acc n abili f m he maj i
ckh lde mee ing i e i ed c n ide i beca e addi i nal ckh lde , in ie f he illegal a ignmen and bjec i nable
i ance f ha e f ck d e n need a al f he fea e f he Re i ed BENHAR/RUBY Plan, a f nd b he CA
ckh lde . Wha i nl e i ed i he b a d e l i n and a affi med b hi C .
a ing he addi i nal i ance f ha e . The c a i n hall Same; Liquidation; Words and Phrases; Liquidation, or the
al file he nece a a lica i n i h he SEC e em he e settlement of the affairs of the corporation, consists of adjusting
f m he egi a i n e i emen nde he Re i ed Sec i ie the debts and claims, that is, of collecting all that is due the
Ac (n he Sec i ie Reg la i n C de). corporation, the settlement and adjustment of claims against it
Same; Same; Pre-Emptive Right; Words and Phrases; Pre- and the payment of its just debts. Liquidation, he e lemen
emptive right under Section 39 of the Corporation Code refers to f he affai f he c a i n, c n i f adj ing he deb
the right of a stockholder of a stock corporation to subscribe to all and claim , ha i , f c llec ing all ha i d e he c a i n, he
issues or disposition of shares of any class, in proportion to their e lemen and adj men f claim again i and he a men
respective shareholdings. P e-em i e igh nde Sec. 39 f he f i j deb . I in l e he inding f he affai f he
C a i n C de efe he igh f a ckh lde f a ck c a i n, hich mean he c llec i n f all a e , he a men
c ai n b c ibe all i e di i i n f ha e f f all i c edi , and he di ib i n f he emaining a e , if
an cla , in i n hei e ec i e ha eh lding . The an , am ng he ckh lde he e f in acc dance i h hei
igh ma be e ic ed denied nde he a icle f c n ac , if he e be n ecial c n ac , n he ba i f hei
inc a i n, and bjec ce ain e ce i n and limi a i n . e ec i e in e e .
The ckh lde m be gi en a ea nable ime i hin hich Same; Same; Where the corporate life of a corporation as
e e ci e hei eem i e igh . U n he e i a i n f aid stated in its articles of incorporation expired, without a valid
e i d, an ckh lde h ha n e e ci ed ch igh ill be extension having been effected, it was deemed dissolved by such
deemed ha e ai ed i . expiration without need of further action on the part of the
Same; Same; Same; Even if the pre-emptive right does not corporation of the State. Since he c a e life f RUBY a
exist, either because the issue comes within the exceptions in a ed in i a icle f inc a i n e i ed, i h a alid
Section 39 or because it is denied or limited in the articles of e en i n ha ing been effec ed, i a deemed di l ed b ch
incorporation, an issue of shares may still be objectionable if the e i ai n ih need f f he ac i n n he a f he
directors acted in breach of trust and their primary purpose is to c ai n he S a e. Wi h g ea e ea n hen h ld
perpetuate or shift control of the corporation, or to “freeze out” the li ida i n en e c n ide ing ha he la a ag a h f Sec. 4-9
minority interest. The alidi f i ance f addi i nal ha e f he R le f P ced e n C a e Rec e manda e he
ma be e i ned if d ne in b each f b he c n lling SEC de he di l i n and li ida i n ceeding nde
ckh lde . Th , e en if he e-em i e igh d e n e i , R le VI. Sec. 6-1, R le VI like i e a h i e he SEC n m i n
ei he beca e he i e c me i hin he e ce i n in Sec i n 39 motu proprio, n ec mmenda i n f he managemen
beca e i i denied limi ed in he a icle f inc a i n, c mmi ee, de di l i n f he deb c a i n and he
an i e f ha e ma ill be bjec i nable if he di ec ac ed li ida i n f i emaining a e , a in ing a Li ida f he
in b each f and hei ima e, if he c n in ance in b ine f he deb i n l nge
fea ible fi able n l nge k he be in e e f he
464 ckh lde , a ie -li igan , c edi , he gene al blic.

465
464 E EC E A A ED

Ma i S c h de fR b I d ia C ai . Li . 650, E 6, 2011 465

Ma i S c h de fR b I d ia C ai . Li
ei e e ae hif c n l f he c a i n,
f ee e he min i in e e . In hi ca e, he f ll ing
 466 E EC E A A ED
Same; Same; Securities and Exchange Commission;
Administrative Law; The rule that reviewing courts do not Ma i S c h de fR b I d ia C ai . Li
substitute their judgment for those made by administrative bodies
specifically clothed with authority to pass upon matters over which
its liquidation evinces a total disregard of the mandate of Sec. 4-9
they have acquired expertise does not apply where there is a clear
of the Rules of Procedure on Corporate Recovery, and their obvious
showing that an administrative body, such as the SEC, acted
lack of any intent to render an accounting of all funds, properties
arbitrarily and committed patent errors and grave abuse of
and details of the unlawful assignment transactions to the
discretion; The Securities and Exchange Commission s (SEC s)
prejudice of the corporation, minority stockholders and the
utter disregard of the rights of the minority in applying the
majority the corporation s creditors. The maj i ckh lde
provisions of the Rules of Procedure on Corporate Recovery is
eage ne ha e he en i n de lif ed aca ed b he
inconsistent with the policy of liberal construction of the said rules
SEC i h an de f i li ida i n e ince a al di ega d
“to assist the parties in obtaining a just, expeditious and
f he manda e f Sec. 4-9 f he R le f P ced e n C ae
inexpensive settlement of cases.” The SEC e di ega d f he
Rec e , and hei b i lack f an in en ende an
igh f he min i in a l ing he i i n f he R le f
acc n ing f all f nd , e ie and de ail f he nla f l
P ced e n C a e Rec e i inc n i en i h he lic f
a ignmen an ac i n he ej dice f RUBY, min i
libe al c n c i n f he aid le a i he a ie in
ckh lde and he maj i f RUBY c edi . The maj i
b aining a just, expeditious and inexpensive e lemen f ca e .
ckh lde and BENHAR c nd i m n be all ed
Pe i i ne maj i ckh lde , h e e , a e ha he
e ade he d make ch f ll di cl e and acc n an
finding and c ncl i n f he SEC n he ma e f he
m ne d e RUBY enable he la e effec a fai , de l
di mi al f RUBY e i i n a e binding and c ncl i e n he
and e i able e lemen f all i bliga i n , a ell a
CA and hi C . The c n end ha e ie ing c a e n
di ib i n f an emaining a e af e a ing all i deb .
ed b i e hei j dgmen f h e made b
admini a i e b die ecificall cl hed i h a h i a Judgments; Appeals; Law of the Case; When the validity of an
n ma e e hich he ha e ac i ed e e i e. Gi en interlocutory order has already been passed upon on appeal, the
f eg ing finding clea l h ing ha he SEC ac ed a bi a il Decision of the Court on appeal becomes the law of the case
and c mmi ed a en e and g a e ab e f di c e i n, hi between the parties; Law of the case means that whatever is once
ca e fall nde he e ce i n he gene al le. A e held in irrevocably established as the controlling legal rule of decision
Ruby Industrial Corporation v. Court of Appeals, 284 SCRA 445 between the same parties in the same case continues to be the law
(1998): The e led d c ine i ha fac al finding f an of the case, whether correct on general principles or not, so long as
admini a i e agenc a e acc ded e ec and, a ime , finali the facts on which such decision was predicated continue to be the
f he ha e ac i ed he e e i e ina m ch a hei facts of the case before the court. The e i i ne maj i
j i dic i n i c nfined ecific ma e . N ne hele , he e ckh lde and China Bank cann be e mi ed ai e an
d c ine d n a l hen he b a d fficial ha g ne be nd i e again ega ding he alidi f any a ignmen f c edi
hi a a h i , e e ci ed nc n i i nal e made d ing he effec i i f he en i n de and before he
clea l ac ed a bi a il and i h ega d hi d ih finali f he Se embe 18, 2002 O de lif ing he ame. While
g a e ab e f di c e i n. In Leongson vs. Court of Appeals, e China Bank i n ecl ded f m e i ning he alidi f he
held: nce he ac a i n f he admini a i e fficial Decembe 20, 1983 en i n de n he ba i f res judicata,
admini a i e b a d agenc i ain ed b a fail e abide b i i , h e e , ba ed f m d ing b he inci le f law of the
he c mmand f he la , hen i i inc mben n he c f case. We ha e held ha hen he alidi f an in e l c
j ice e ma e igh , i h hi T ib nal ha ing he la a de ha al ead been a ed n n a eal, he Deci i n f he
n he ma e . C n a eal bec me he la f he ca e be een he ame
a ie . Law of the case ha been defined a he ini n deli e ed
Same; Same; The majority stockholders eagerness to have the
n a f me a eal. M e ecificall , i mean ha ha e e i
suspension order lifted or vacated by the SEC without any order
nce i e cabl e abli hed a he c n lling legal le f
for
deci i n be een he ame a ie in he ame ca e c n in e
466
be he la f he ca e, he he c ec n gene al inci le
n ,
 Ma i S c h de fR b I d ia C ai .
467
Li

. 650, E 6, 2011 467 VILLARAMA, JR., J.:

Thi ca e i bro gh o on appeal for he fourth ime,
Ma i S c h de fR b I d ia C ai . Li in ol ing he ame par ie and in ere li iga ing on
i e ari ing from rehabili a ion proceeding ini ia ed b
l ng a he fac n hich ch deci i n a edica ed c n in e R b Ind rial Corpora ion a back in 1983.
be he fac f he ca e bef e he c . Follo ing i he fac al backdrop of he pre en
con ro er , a c lled from he record and fac e for h
Corporation Law; Financial Rehabilitation and Insolvency
in he ponencia of Chief J ice Re na o S. P no in Ruby
Act (FRIA) of 2010 (R.A. No. 10142); Financial Rehabilitation and 1
Industrial Corporation v. Court of Appeals.
Insolvency Act (FRIA) now provides for court proceedings in the
rehabilitation or liquidation of debtors, both juridical and natural
The A ecede
persons. R.A. N . 10142 he i e kn n a he Financial
Rehabili a i n and In l enc Ac (FRIA) f 2010, n ide R b Ind rial Corpora ion (RUBY) i a dome ic
f c ceeding in he ehabili a i n li ida i n f corpora ion engaged in gla man fac ring. Reeling from
deb , b h j idical and na al e n , in a manne ha ill e ere liq idi problem beginning in 1980, RUBY filed on
en e main ain ce ain and edic abili in c mme cial December 13, 1983 a pe i ion for pen ion of pa men
affai , e e e and ma imi e he al e f he a e f he e i h he Sec ri ie and E change Commi ion (SEC)
deb , ec gni e c edi igh and e ec i i f claim , docke ed a SEC Ca e No. 2556. On December 20, 1983,
and en e e i able ea men f c edi h a e imila l he SEC i ed an order declaring RUBY nder pen ion
i a ed. C n ide ing ha hi ca e a ill ending hen he of pa men and enjoining he di po i ion of i proper ie
ne la k effec la ea , he RTC hich hi ca e ill be pending hearing of he pe i ion, e cep in ofar a nece ar
an fe ed hall be g ided b Sec. 146 f aid la , hich a e : in i ordinar opera ion , and making pa men o ide of
SEC. 146. Application to Pending Insolvency, Suspension of he nece ar or legi ima e e pen e of i b ine .
Payments and Rehabilitation Cases. Thi Ac hall g e n all On A g 10, 1984, he SEC Hearing Panel crea ed he
e i i n filed af e i ha aken effec . All f he ceeding in managemen commi ee (MANCOM) for RUBY, compo ed
in l enc , en i n f a men and ehabili a i n ca e hen of repre en a i e from Allied Lea ing and Finance
ending, e ce he e en ha in ini n f he c hei Corpora ion (ALFC), Philippine Bank of Comm nica ion
a lica i n ld n be fea ible ld k inj ice, in (PBCOM), China Banking Corpora ion (China Bank),
hich e en he ced e e f h in i la and eg la i n Pilipina Shell Pe role m Corpora ion (Pilipina Shell),
hall a l . and RUBY repre en ed b Mr. Y Kim Giang. The
MANCOM a a ked o perform he follo ing f nc ion :
PETITIONS for re ie on cer iorari of a deci ion of he (1) nder ake he managemen of RUBY; (2) ake c od
Co r of Appeal . and con rol o er all e i ing a e and liabili ie of RUBY;
The fac are a ed in he opinion of he Co r . (3) e al a e RUBY e i ing a e and liabili ie ,
  Lim, Vigilia, Alcala, Dumlao & Orencia for pe i ioner earning and opera ion ; (4) de ermine
in G.R. No. 165929.
  Balgos, Fernando & Gumaru for pe i ioner in G.R. No.
_______________
165887.
  Romulo, Mabanta, Buenaventura, Sayoc & Delos 1 G.R. Nos. 124185-87, January 20, 1998, 284 SCRA 445.
Angeles Law Offices for re ponden Mig el Lim.
  Santiago & Santiago for R b Ind rial Corpora ion. 46
  Walter T. Young for Managemen Commi ee.

46
. 650, 6, 2011 469
Ma i S c h de fR b I d ia C ai .
Li
468 C A A D
 he be a o al age and pro ec he in ere of i BENHAR/RUBY Plan. On December 20, 1988 af er he
in e or and credi or ; and (5) d , re ie and e al a e e pira ion of he emporar re raining order (TRO), he
he propo ed rehabili a ion plan for RUBY. SEC En Banc gran ed he ri of preliminar inj nc ion
S b eq en l , o (2) rehabili a ion plan ere again he enforcemen of he BENHAR/RUBY Plan.
bmi ed o he SEC: he BENHAR/RUBY Rehabili a ion BENHAR, Henr Y , RUBY and Y Kim Giang q e ioned
Plan of he majori ockholder led b Y Kim Giang, and he i ance of he ri in heir pe i ion filed in he Co r
he Al erna i e Plan of he minori ockholder of Appeal (CA), docke ed a CA-G.R. SP No. 16798. The
repre en ed b Mig el Lim (Lim). CA denied heir appeal.2 Upon ele a ion o hi Co r (G.R.
Under he BENHAR/RUBY Plan, Benhar In erna ional, No. L-88311), e i ed a min e re ol ion da ed
Inc. (BENHAR) a dome ic corpora ion engaged in he Febr ar 28, 1990 den ing he pe i ion and pholding he
impor a ion and ale of ehicle pare par hich i holl inj nc ion again he implemen a ion of he
o ned b he Y famil and headed b Henr Y , ho i BENHAR/RUBY Plan.
al o a direc or and majori ockholder of RUBY hall Mean hile, BENHAR paid off Far Ea Bank & Tr
lend i P60 million credi line in China Bank o RUBY, Compan (FEBTC), one of RUBY ec red credi or . B
pa able i hin en (10) ear . Moreo er, BENHAR hall Ma 30, 1988, FEBTC had alread e ec ed a deed of
p rcha e he credi of RUBY credi or and mor gage a ignmen of credi and mor gage righ in fa or of
RUBY proper ie o ob ain credi facili ie for RUBY. BENHAR. BENHAR like i e paid he o her ec red
Upon appro al of he rehabili a ion plan, BENHAR hall credi or ho, in rn, a igned heir righ in fa or of
con rol and manage RUBY opera ion . For i er ice, BENHAR. The e ac ere done b BENHAR de pi e he
BENHAR hall recei e a managemen fee eq i alen o SEC TRO and inj nc ion and e en before he SEC
7.5% of RUBY ne ale . Hearing Panel appro ed he BENHAR/RUBY Plan on
The BENHAR/RUBY Plan a oppo ed b 40% of he Oc ober 28, 1988.
ockholder , incl ding Lim, a minori hareholder of ALFC and Mig el Lim mo ed o n llif he deed of
RUBY. ALFC, he bigge n ec red credi or of RUBY and a ignmen e ec ed in fa or of BENHAR and ci e he
chairman of he managemen commi ee, al o objec ed o par ie here o in con emp for illf l iola ion of he
he plan a i o ld ran fer RUBY a e be ond he December 20, 1983 SEC order enjoining RUBY from
reach and o he prej dice of i n ec red credi or . di po ing i proper ie and making pa men pending he
On he o her hand, he Al erna i e Plan of RUBY hearing of i pe i ion for
minori ockholder propo ed o: (1) pa all RUBY
credi or i ho ec ring an bank loan; (2) r n and _______________
opera e RUBY i ho charging managemen fee ; (3) b -
o he majori hare or ell heir hare o he majori 2 CA R , pp. 95-111. Decision dated April 27, 1989, penned by
ockholder ; (4) rehabili a e RUBY o plan ; and (5) Associate Justice Cecilio L. Pe and concurred in by Associate Justices
ec re a loan a 25% in ere , a again he 28% in ere Vicente V. Mendo a (now a retired Member of this Court) and Pedro A.
charged in he loan nder he BENHAR/RUBY Plan. Ramire .

470 471

470 C A A D . 650, 6, 2011 471

Ma i S c h de fR b I d ia C ai . Ma i S c h de fR b I d ia C ai .
Li Li

Bo h plan ere endor ed b he SEC o he MANCOM
for e al a ion.
On Oc ober 28, 1988, he SEC Hearing Panel appro ed
he BENHAR/RUBY Plan. The minori ockholder hr
Lim appealed o he SEC En Banc hich, in i No ember
15, 1988 Order, enjoined he implemen a ion of he
pen ion of pa men . The al o charged ha in pa ing
off FEBTC credi , FEBTC a gi en nd e preference
o er he o her credi or of RUBY. Ac ing on he mo ion ,
he SEC Hearing Panel n llified he deed of a ignmen
e ec ed b RUBY credi or in fa or of BENHAR and
declared he par ie here o g il of indirec con emp .
BENHAR and RUBY appealed o he SEC En Banc hich
denied heir appeal. BENHAR and RUBY joined b Henr
Y and Y Kim Giang appealed o he CA (CA-G.R. SP No.
18310). B Deci ion3 da ed A g 29, 1990, he CA
affirmed he SEC r ling n llif ing he deed of
a ignmen . The CA al o declared i deci ion final and
e ec or a o RUBY and Y Kim Giang for heir fail re
o file heir pleading i hin he reglemen ar period. B
Re ol ion da ed A g 26, 1991 in G.R. No. 96675,4 hi
Co r affirmed he CA deci ion.
Earlier, on Ma 29, 1990, af er he SEC En Banc
enjoined he implemen a ion of BENHAR/RUBY Plan,
RUBY filed i h he SEC En Banc an ex parte pe i ion o
crea e a ne managemen commi ee and o appro e i
re i ed rehabili a ion plan (Re i ed BENHAR/RUBY
Plan). Under he re i ed plan, BENHAR hall recei e
P34.068 million of he P60.437 Million credi facili o be
e ended o RUBY, a reimb r emen for BENHAR
pa men o ome of RUBY credi or . The SEC En Banc
direc ed RUBY o bmi i re i ed rehabili a ion plan o
i credi or for commen and appro al hile he pe i ion
for he crea ion of a ne managemen commi ee a
remanded for f r her proceeding o he SEC Hearing
Panel. The Al erna i e Plan of RUBY minori
ockholder a al o for arded o he hearing panel for
e al a ion.
On April 26, 1991, o er nine percen (90%) of RUBY
credi or objec ed o he Re i ed BENHAR/RUBY Plan and
_______________
3 Id., at pp. 117-124. Penned by Associate Justice Jose C. Campos, Jr.
and concurred in by Associate Justices Oscar M. Herrera and Artemon D.
Luna.
4 Id., at p. 125.
472 C A
Ma i S c h de fR b I d ia C
Li
he crea ion of a ne managemen commi ee. In ead,
he endor ed he minori ockholder Al erna i e Plan.
A he hearing of he pe i ion for he crea ion of a ne
managemen commi ee, hree (3) member of he original
managemen commi ee (Lim, ALFC and Pilipina Shell)
oppo ed he Re i ed BENHAR/RUBY Plan on gro nd
ha : (1) i o ld legi imi e he en r of BENHAR, a o al
ranger, o RUBY a BENHAR o ld become he bigge
credi or of RUBY; (2) i o ld p RUBY a e be ond
he reach of he n ec red credi or and he minori
ockholder ; and (3) i a no appro ed b RUBY
ockholder in a mee ing called for he p rpo e.
No i h anding he objec ion of 90% of RUBY
credi or and hree member of he MANCOM, he SEC
Hearing Panel appro ed on Sep ember 18, 1991 he
Re i ed BENHAR/RUBY Plan and di ol ed he e i ing
managemen commi ee. I al o crea ed a ne managemen
commi ee and appoin ed BENHAR a one of i member .
In addi ion o he po er originall conferred o he
managemen commi ee nder Pre iden ial Decree (P.D.)
No. 902-A, he ne managemen commi ee a a ked o
o er ee he implemen a ion b he Board of Direc or of
he re i ed rehabili a ion plan for RUBY.
The original managemen commi ee (MANCOM), Lim
and ALFC appealed o he SEC En Banc hich affirmed
he appro al of he Re i ed BENHAR/RUBY Plan and he
crea ion of a ne managemen commi ee on J l 30, 1993.
To en re ha he managemen of RUBY ill no be
con rolled b an gro p, he SEC appoin ed SEC la er
R ben C. Ladia and Tere i a R. Siao a addi ional
member of he ne managemen commi ee. F r her, i
declared ha BENHAR member hip in he ne
managemen commi ee i bjec o he condi ion ha
BENHAR ill e end i credi facili ie o RUBY i ho
ing he la er a e a ec ri or colla eral.
473
. 650, 6, 2011 473
Ma i S c h de fR b I d ia C ai .
Li
472
Lim, ALFC and MANCOM mo ed for recon idera ion
A D hile RUBY and BENHAR a ked he SEC o recon ider
he por ion of i Order prohibi ing BENHAR from ili ing
ai . RUBY a e a colla eral. On Oc ober 15, 1993, he SEC
denied he mo ion of Lim, ALFC and he original
managemen commi ee b gran ed RUBY and BENHAR
mo ion and allo ed BENHAR o e RUBY a e a
colla eral for loan , bjec o he appro al of he majori
of all he member of he ne managemen commi ee.
Lim, ALFC and MANCOM appealed o he CA (CA-G.R. SP
No . 32404, 32469 & 32483) hich b Deci ion5 da ed
March 31, 1995 e a ide he SEC appro al of he Re i ed
BENHAR/RUBY Plan and remanded he ca e o he SEC a ignmen be een BENHAR and RUBY c edi had been
for f r her proceeding . The CA r led ha he re i ed plan ca eg icall decla ed id b he SEC Hea ing Panel in (2)
circ m en ed i earlier deci ion (CA-G.R. SP No. 18310) de i ed n Jan a 12, 1989 and Ma ch 15, 1989.
n llif ing he deed of a ignmen e ec ed b RUBY
credi or in fa or of BENHAR. Since nder he re i ed The e de e e held b he SEC en banc and he C f
plan, BENHAR a o recei e P34.068 Million of he A eal . In CA-G.R. SP N . 18310, he C f A eal led a
P60.437 Million credi facili o be e ended o RUBY, a f ll :
e lemen for i ad ance pa men o RUBY e en (7)
ec red credi or , ch pa men made b BENHAR nder 1) hen he Deed f A ignmen a e ec ed n
he oid Deed of A ignmen , in effec ere recogni ed a Ma 30, 1988 b and be een R b Ind ial C .,
pa able o BENHAR nder he re i ed plan. The mo ion Benha In e na i nal, Inc., and FEBTC, the Rehabilitation
for recon idera ion filed b BENHAR and RUBY a Plan proposed by petitioner Ruby Industrial Corp. for
like i e denied b he CA.6 Benhar International, Inc. to assume all petitioner s
Unda n ed, RUBY and BENHAR filed a pe i ion for obligation has not been approved by the SEC. The
re ie in hi Co r (G.R. Nos. 124185-87 en i led Ruby Rehabili a i n Plan a n a ed n il Oc be 28,
Industrial Corporation v. Court of Appeals) alleging ha 1988. There was a willful and blatant violation of the SEC
he CA gra el ab ed i di cre ion in b i ing i order dated December 20, 1983 n he a f e i i ne
j dgmen for ha of he SEC, and in allo ing Lim, ALFC R b Ind ial C ., e e en ed b Y Kim Giang, b
and MANCOM o file epara e pe i ion prepared b Benha In e na i nal, Inc., e e en ed b Hen Y and b
la er repre en ing hem el e a belonging o differen FEBTC .
firm . B Deci ion da ed 2) The magni de and c e age f he an ac i n
in l ed e e ch ha Y Kim Giang and he he
_______________ igna ie cann feign ign ance e end lack f
kn ledge he e in ie f he fac ha he e e all
5 Id., at pp. 243-267. Penned by Associate Justice Consuelo Ynares- igna ie he an ac i n and i all he
Santiago (now a retired Member of this Court) and concurred in by neg ia i n leading he e i ned an ac i n . In
Associate Justices Antonio M. Martine and Ruben T. Reyes. executing the Deeds of Assignment, the petitioners totally
6 Id., at pp. 269-287. disregarded the mandate contained in the SEC
7S a note 1.
475
474

. 650, E 6, 2011 475

474 C A A D Ma i S c h de fR b I d ia C ai . Li
Ma i S c h de fR b I d ia C ai .
Li order not to dispose the properties of Ruby Industrial Corp.
in an manne ha e e ending he a al f he
Rehabili a i n Plan and ende ed ill he SEC eff
Jan ar 20, 1998, e ained he CA r ling ha he
ehabili a e he e i i ne c ai n he be in e e
Re i ed BENHAR/RUBY Plan con ained pro i ion hich
f all he c edi .
circ m en ed i final deci ion in CA-G.R. SP No. 18310,
3) The assignments were made without prior approval
n llif ing he deed of a ignmen of credi and mor gage
of the Management Committee c ea ed b he SEC in an
e ec ed b RUBY credi or in fa or of BENHAR, a ell
O de da ed A g 10, 1984. Unde Sec. 6, a . d, b. a .
a hi Co r Re ol ion in G.R. No. 96675, affirming he
(2) f P.D. 902-A a amended b P.D. 1799, he
aid CA deci ion. We h held:
Managemen C mmi ee, ehabili a i n ecei e , b a d
S ecificall , he Re i ed BENHAR/RUBY Plan c n ide ed b d hall ha e he e ake c d and c n l e
a alid he ad ance a men made b BENHAR in fa f all e i ing a e f ch en i ie nde managemen
me f RUBY c edi . The n lli f BENHAR na h i ed n i h anding an i i n f la , a icle f
dealing i h RUBY c edi i e led. The deed f inc ai n b -la he c n a . The SEC he ef e
 ha he e and a h i , h gh a Managemen migh fa , he ej dice f he he c edi .A a e f
C mmi ee c m ed f e i i ne c edi h gh a c a de ehab a ece e h a e he d
i elf di ec l , decla e all a ignmen f a e f he f he e a be ef f a c ed ec de
e i i ne C a i n decla ed nde en i n f e f b a g a ad a age efe e ce e
a men , n ll and id, and c n e e he ame in de a he b he e edienc f a achmen , e ec i n he i e.
effec a fai , e i able and meaningf l ehabili a i n f A be een he c edi , he ke h a e i e ali in e i .
he in l en c a i n. Once he c a i n h ea ened b bank c i aken e b a
4) . The ac f hich e i i ne e e held in ecei e , all he c edi gh and n e al f ing. N
indi ec c n em b he SEC a e f m he fail e a e f he h d be a d ahead f he he . Th
illf l ef al b e i i ne be he la f l de f he ec e he ea f e d g a e d g ca
SEC n di e f an f i e ie in an manne aga he c a de ece e h . 8 (Addi i nal
ha e e ih a h i a al f he SEC. The em ha i lied.)
execution of the Deeds of Assignment tend to defeat or
obstruct the administration of justice. S ch ac a e ffen e A ide from he nd e preference ha o ld ha e been
again he SEC beca e they are calculated to embarrass, gi en o BENHAR nder he Re i ed BENHAR/RUBY
hinder and obstruct the tribunal in the administration of Plan, e al o fo nd RUBY dealing i h BENHAR highl
justice or lessen its authority. irreg lar and i propo ed financing cheme more co l
and l ima el prej dicial o RUBY. Th :
E en he SEC en banc, in i J l 30, 1993 O de affi ming he
Pa en he icall , BENHAR i a d me ic c a i n engaged
a al f he Re i ed BENHAR/RUBY Plan, ha ackn ledged
in im ing and elling ehicle a e a i h an a h i ed
he in alidi f he bjec deed f a ignmen . H e e ,
ca i al ck f hi milli n e . Ye , i ffe ed lend i
j if i a al f he lan and he a in men f BENHAR
c edi facili in he am n f i eigh milli n e
he ne managemen c mmi ee, i ga e he lame e c e ha
RUBY. I i be n ed ha BENHAR i n a lending
BENHAR became RUBY c edi f ha ing aid RUBY deb .
financing c a i n and lending i c edi facili ie , hm e
han d ble i a h -

F i a , he C f A eal n ed ha he a ed
Re i ed BENHAR/RUBY Plan ga e nd e efe ence
BENHAR. The 8 I ., . 455-460.

476 477

476 E EC E A A ED . 650, E 6, 2011 477

Ma i S c h de fR b I d ia C ai . Li Ma i S c h de fR b I d ia C ai . Li

ec d , indeed, h ha BENHAR ffe lend i c edi i ed ca i ali a i n, i n ne f he e g an ed i nde i

facili in fa f RUBY i c ndi i ned n he a men f he A icle f Inc a i n. Significan l , Hen Y , a di ec and a
am n i ad anced RUBY c edi , maj i ckh lde f RUBY i , a he ame ime, a ckh lde
f BENHAR, a c ai n ned and c n lled b hi famil .
In fac , BENHAR hall ecei e P34.068 Milli n f he The e ci c m ance ende he deal be een BENHAR and
P60.437 Milli n c edi facili be e ended RUBY f he RUBY highl i eg la .
la e ehabili a i n.
Rehabili a i n c n em la e a c n in ance f c a e life and M e e , hen RUBY ini ia ed i eii n f en i n f
ac i i ie in an eff e e and ein a e he c ai n a men i h he SEC, BENHAR a n li ed a ne f
i f me i i n f cce f l e a i n and l enc . When a RUBY c edi . BENHAR i a al ange RUBY. If a all,
di e ed c m an i laced nde ehabili a i n, he BENHAR nl e ed a a c nd i f RUBY. A a l a ed in
a in men f a managemen c mmi ee f ll a id he challenged C f A eal deci i n:
c ll i n be een he e i managemen and c edi i
 Benha le in he Re i ed Benha /R b Plan, a Reco er , RUBY poin ed o ha hi ca e a filed long
en i i ned b he maj i ckh lde , i c n ac he before he effec i i of aid r le . I al o poin ed o ha
l an f R b and, e ing he le f a financie , elend he he nd e dela in he appro al of he rehabili a ion plan
ame R b . Benha i me el e ending i c edi line being d e o he n mero appeal aken b he minori
facili i h China Bank, nde hich he bank ag ee ockholder and MANCOM o he CA and hi Co r , from
ad ance f nd he c m an h ld he need a i e. Thi i he SEC appro al of he BENHAR/RUBY Plan. Since here
nlikel a l an in hich he en i e am n i made ha e alread been ep aken o finall e le RUBY
a ailable he b e ha i can be ed and obliga ion i h i credi or , i a con ended ha he
g ammed f he benefi f he c m an financial and applica ion of he manda or period nder he ci ed
e a i nal need . Thus, it is actually China Bank which pro i ion o ld ca e prej dice and inj ice o RUBY.
will be the source of the funds to be relent to Ruby. Benhar I appear ha e en earlier d ring he pendenc of he
will not shell out a single centavo of its own funds. It is the appeal in he CA, BENHAR and RUBY ha e performed
assets of Ruby which will be mortgaged in favor of Benhar. o her ac in p r ance of he BENHAR/RUBY Plan
Be ha a c a a e he appro ed b he SEC.
ehab a a e c a d, beca e f he On Sep ember 1, 1996, Lim recei ed a No ice of
gage f (R b ) a e a e c ed , S ockholder Mee ing ched led on Sep ember 3, 1996
c ea e a a h ch e ha he e e . igned b a cer ain Mr. Edgardo M. Mag ala , he
De igna ed Secre ar of RUBY and a ing he ma er o
9
We need n a m e. (Addi i nal em ha i lied.) be aken p in aid mee ing, hich incl de he e en ion of
RUBY corpora e erm for ano her en -fi e (25) ear
Af er he finali of he abo e deci ion, he SEC e he and elec ion of Direc or .13 A he ched led ockholder
ca e for f r her proceeding .10 On March 14, 2000, Bank of mee ing of Sep ember 3, 1996, Lim oge her i h o her
he Philippine I land (BPI), one of RUBY ec red minori ockholder , appeared in order o p on record
credi or , filed a Mo ion o Vaca e S pen ion Order11 on heir objec ion on he alidi of holding hereof and he
gro nd ha here i no e i ing managemen commi ee ma er o be aken herein. Specificall ,
and ha no deci-
_______________
_______________
12 Id., at pp. 3545-3549.
9 Id., at pp. 461-462. 13 CA R , p. 345.
10 SEC records (Vol. 10), p. 3488.
11 Id., at pp. 3533-3535. 47

47
. 650, 6, 2011 479

478 C A A D Ma i S c h de fR b I d ia C ai .
Li
Ma i S c h de fR b I d ia C ai .
Li
he q e ioned he percen age of ockholder pre en in
he mee ing hich he majori claimed ood a 74.75% of
ion ha been rendered in he ca e for more han 16 ear he o anding capi al ock of RUBY.
alread , hich i be ond he period manda ed b Sec. 3-8 The afore aid ockholder mee ing a he bjec of
of he R le of Proced re on Corpora e Reco er . RUBY he Mo ion o Ci e For Con emp 14 and S pplemen o
filed i oppo i ion,12 a er ing ha he MANCOM ne er Mo ion o Ci e For Con emp 15 filed b Lim before he CA
relinq i hed i a a he d l appoin ed managemen here heir pe i ion for re ie (CA-G.R. No . 32404,
commi ee a i re i ed he order of he econd and hird 32469 and 32483) ere hen pending. Lim arg ed ha he
managemen commi ee b eq en l crea ed, hich ha e majori ockholder claimed o ha e increa ed heir
been n llified b he CA and la er hi Co r . A o he hare o 74.75% b b cribing o he ni ed hare of
applicabili of he ci ed r le nder he R le on Corpora e he a hori ed capi al ock (ACS). Lim poin ed o ha
 ch mo e of he majori a in implemen a ion of he Decembe 31, 1982, be b c ibed and aid in f ll b he
BENHAR/RUBY Plan hich call for capi al inf ion of e en ckh lde in i n hei e en ckh lding in
P11.814 Million repre en ing he ni ed and he c a i n n agge ed ba i a ing Oc be 28, Decembe
n b cribed por ion of he pre en ACS of P23.7 Million, 27 hen Feb a 28 and A il 28 a he la in allmen da e a
and he Re i ed BENHAR/RUBY Plan hich propo ed an 25% f each e i d. I a al m ed and ec nded ha h ld
addi ional b crip ion of P30 Million. Since he an f he ckh lde fail e e ci e hei igh b he
implemen a ion of bo h majori plan ha e been enjoined n mbe f ha e he a e alified b b making he fi
b he SEC and CA, he calling of he pecial ockholder in allmen a men f 25% n bef e Oc be 13, 1991, hen
mee ing b he majori ockholder clearl iola ed he he he ckh lde ma b he ame and ha nl hen
aid inj nc ion order . Thi circ m ance cer ainl affec n ne f he e en ckh lde a e in e e ed in he ha e ma
he de ermina ion of q or m, he o ing req iremen for he e be a e elling hem b blic a c i n. 18
corpora e erm e en ion, a ell a he elec ion of
Direc or p r an o he J l 30, 1993 Order and Oc ober A reflec ed in he Min e of he pecial board mee ing,
15, 1993 Re ol ion of he SEC enjoining no onl he a repre en a i e of he ab en direc or (Tan Chai, Toma
implemen a ion of he re i ed plan b al o he doing of Lim, Mig el Lim and Yok Lim) came o bmi heir le er
an ac ha ma render he appeal from he appro al of addre ed o he Chairman gge ing ha aid mee ing be
he aid plan moo and academic. deferred n il he Sep ember 18, 1991 SEC Order become
The aforemen ioned capi al inf ion a aken p b final and e ec or . The direc or pre en ne er hele
RUBY board of direc or in a pecial mee ing16 held on proceeded i h he mee ing pon heir belief ha nei her
Oc ober 2, 1991 follo ing he i ance b he SEC of i appeal nor mo ion for recon idera ion can a he SEC
Order da ed Sep ember 18, 19911 appro ing he Re i ed order.1
BENHAR/RUBY Plan and crea ing a ne managemen The re ol ion o e end RUBY corpora e erm, hich
commi ee a o e pire on Jan ar 2, 1997, a appro ed d ring he
Sep ember 3, 1996 ockholder mee ing, a recommended
b he board of direc or compo ed of Henr Y
_______________
(Chairman), Jame Y , Da id Y kim eng, Harr L. Y , Y
14 Id., at pp. 337-344. Kim Giang, Mar L. Y and Vi ian L. Y . The board
15 Id., at pp. 346-355. cer ified ha aid
16 R (G.R. No. 165929), pp. 1340-1345.
17 CA R , pp. 127-136. _______________

4 0 18 R (G.R. No. 165929), pp. 1342-1343.

19 Id., at p. 1342.

480 C A A D 4 1
Ma i S c h de fR b I d ia C ai .
Li . 650, 6, 2011 481
Ma i S c h de fR b I d ia C ai .
o o er ee i implemen a ion. D ring he aid mee ing, he
Li
board a er ed i a hori and re ol ed o ake o er he
managemen of RUBY f nd , proper ie and record and
o demand an acco n ing from he MANCOM hich a re ol ion a appro ed b ockholder repre en ing o-
ordered di ol ed b he SEC. The board h re ol ed hird (2/3) of RUBY o anding capi al ock.20 Per
ha : Cer ifica ion21 da ed A g 31, 1995 i ed b Y Kim
Giang a E ec i e Vice-Pre iden of RUBY, he majori
The c a i n be a h i ed i e f he ni ed ockholder o n 74.75% of RUBY o anding capi al
i n f he a h i ed ca i al ck f he c a i n in he ock a of Oc ober 27, 1991. The Amended Ar icle of
f m f c mm n ck 11.8134.00 [Milli n] af e c m a ing hi Incorpora ion a filed i h he SEC on Sep ember 24,
i h he a di ed financial a emen e a ed b SGV a f 1996.22
 On March 17, 2000, Lim filed a Mo ion23 informing he ockholder e ending he corpora e life of RUBY for
SEC of ac being performed b BENHAR and RUBY ano her en -fi e (25) ear .
hro gh direc or ho ere illegall elec ed, de pi e he The MANCOM conc rred i h Lim and made a imilar
pendenc of he appeal before hi Co r q e ioning he manife a ion/commen 24 regarding he irreg lar and
SEC appro al of he BENHAR/RUBY Plan and crea ion of in alid capi al inf ion and e en ion of RUBY corpora e
a ne managemen commi ee, and af er hi Co r had erm appro ed b ockholder repre en ing onl 60% of
denied heir mo ion for recon idera ion of he Jan ar 20, RUBY o anding capi al ock. I f r her a ed ha
1998 deci ion in G.R. No . 124185-87. Lim rei era ed ha he foregoing ac ere perpe ra ed b he majori
before he ma er of e en ion of corpora e life can be ockholder i ho e en con l ing he MANCOM, hich
pa ed pon b he ockholder , i i nece ar o echnicall epped in o he hoe of RUBY board of
de ermine he percen age o ner hip of he o anding direc or . Since RUBY a ill nder a a e of pen ion
hare of he corpora ion. The majori ockholder of pa men a he ime he pecial ockholder mee ing
claimed ha he ha e increa ed heir hareholding from a called, all corpora e ac ho ld ha e been made in
59.828% o 74.75% a a re l of he illegal and in alid con l a ion and clo e coordina ion i h he MANCOM.
ockholder mee ing on Sep ember 3, 1996. The addi ional Lim like i e filed an Oppo i ion25 o BPI Mo ion o
b crip ion of hare canno be done a i implemen he Vaca e S pen ion Order, a er ing ha he managemen
BENHAR/RUBY Plan again hich an e i ing inj nc ion commi ee originall crea ed b he SEC con in e o
i ill effec i e ba ed on he SEC Order da ed Jan ar 6, con rol he corpora e affair and proper ie of RUBY. He
1989, and hich a r ck do n nder he final deci ion al o con ended ha he SEC R le of Proced re on
of hi Co r in G.R. No . 124185-87. Hence, he Corpora e Reco er canno appl in hi ca e hich a
implemen a ion of he ne percen age ockholding of he filed long before he effec i i of aid r le .
majori ockholder and he calling of ockholder On he o her hand, RUBY filed i Oppo i ion26 o he
mee ing and he b eq en re ol ion appro ing he Mo ion filed b Lim den ing he allega ion of Lim ha
e en ion of corpora e life of RUBY for ano her en -fi e RUBY corpora e e i ence had cea ed. RUBY claimed
(25) ear , ere all done in iola ion of he deci ion of he ha d e no ice ere gi en o all ockholder of he
CA and hi Co r , and i ho compliance i h he legal Oc ober 2, 1991 pecial mee ing in hich he inf ion of
req iremen nder he Corpora ion Code. addi ional capi al a

_______________ _______________

20 SEC records (Vol. 11), pp. 3586-3587. 24 Id., at pp. 3622-3625.

21 Id., at p. 3585. 25 Id., at pp. 3576-3580.
22 Id., at pp. 3589-3598. 26 Id., at pp. 3611-3618.
23 Id., at pp. 3550-3575.
4 3
4 2

. 650, 6, 2011 483

482 C A A D
Ma i S c h de fR b I d ia C ai .
Ma i S c h de fR b I d ia C ai . Li
Li
di c ed. I f r her con ended ha he CA deci ion
There being no alid e en ion of corpora e erm, RUBY e ing a ide he SEC order appro ing he Re i ed
corpora e life had legall cea ed. Con eq en l , Lim mo ed BENHAR/RUBY Plan, hich a b eq en l affirmed b
ha he SEC: (1) declare a n ll and oid he inf ion of hi Co r on Jan ar 20, 1998, did no n llif he
addi ional capi al made b he majori ockholder and re ol ion of RUBY board of direc or o i e he
re ore he capi al r c re of RUBY o i original pre io l ni ed hare . The amendmen of i ar icle
r c re prior o he ime inj nc ion a i ed; and (2) of incorpora ion on he e en ion of RUBY corpora e erm
declare a n ll and oid he re ol ion of he majori
 a d l bmi ed i h and appro ed b he SEC a per
he Cer ifica ion da ed Sep ember 24, 1996.
The MANCOM al o filed i Oppo i ion2 o BPI
Mo ion o Vaca e S pen ion Order, a ing ha i ha
con in o l performed i primar f nc ion of pre er ing
he a e of RUBY and nder aken he managemen of
RUBY da - o-da affair . I e pre ed belief ha be een
chao ic foreclo re proceeding and collec ion i ha
o ld be riggered b he aca ion of he pen ion order
and an orderl e lemen of credi or claim before he
SEC, he la er pa h i he more pr den and logical co r e
of ac ion. On April 28, 2000, i bmi ed o he co r copie
of he min e of mee ing held from Jan ar 18, 1999 o
December 1, 1999 in p r ance of i manda e o pre er e
he a e and admini er he b ine affair of RUBY.2
On A g 23, 2000, China Bank filed a Manife a ion2
echoing he con en ion of BPI ha a here i no e i ing
managemen commi ee and no rehabili a ion plan
appro ed e en af er he 240-da period, arran he
applica ion of Sec. 4-9 of he SEC R le of Proced re on
Corpora e Reco er ch ha he pe i ion i deemed ipso
facto denied and di mi ed. China Bank lamen ed ha he
leng h of ime ha ha lap ed, a ell a he par ie
ac a ion , comple el be ra a gen ine a emp o ad i ed of he
rehabili a e RUBY morib nd opera ion all o he
di ma , damage and prej dice of
On Sep ember 11, 2000, he SEC gran ed Lim req e
for he i ance of bpoena duces tecum/ad testificandum
o M . Jocel n S a. Ana of BPI for he la er o e if and
bring all doc men and record per aining o RUBY.30
Earlier, Lim mo ed for a hearing o erif he informa ion
ha China Bank and BPI had epara el e ec ed deed of
a ignmen in fa or of Greener In e men Corpora ion, a
compan o ned b Y Kim Giang, one of RUBY majori
ockholder .31 Said hearing, ho e er, did no p h
hro gh in ie of RUBY propo al for a compromi e
agreemen .32 Lim bmi ed hi commen on he Propo ed
Compromi e Agreemen , b here a no re pon e from
RUBY and he majori ockholder .33 The minori
ockholder like i e er ed a cop of he re i ed
Compromi e Agreemen o he majori ockholder .34 Lim
mo ed ha he ca e be a igned o a ne Panel of Hearing
Officer and he majori ockholder be made o declare
in a hearing he her he accep he co n erpropo al of
he minori in heir draf Amicable Se lemen in order
ha he ca e can proceed immedia el o liq ida ion.35
On Jan ar 25, 2001, he MANCOM filed i h he SEC
i Re ol ion nanimo l adop ed on Jan ar 19, 2001
affirming ha : (1) MANCOM a ne er informed nor
_______________

30 Id., at pp. 3701-3702, 3706.

_______________
31 Id., at pp. 3697-3700.
27 Id., at pp. 3626-3629. 32 Id., at pp. 3829-3834.
28 Id., at pp. 3640-3665. 33 Id., at pp. 3838-3842.
29 Id., at pp. 3687-3695. 34 Id., at pp. 3745-3763.
35 S a note 33.
4 4
4 5

484 C A A D
. 650, 6, 2011 485
Ma i S c h de fR b I d ia C ai .
Li Ma i S c h de fR b I d ia C ai .
Li
RUBY credi or . I re ed ha he proceeding canno
be prolonged nor ed a a plo o defer indefini el he ppo ed capi al inf ion b he majori ockholder in
pa men of long o erd e obliga ion of RUBY o i Oc ober 1991 and i ne er ac all recei ed an ch
credi or . Wi h he ca e ha ing been ipso facto di mi ed, addi ional b crip ion nor igned an doc men a e ing
here i no need of f r her ac ion from he par ie or an o or a hori ing he aid increa e of RUBY capi al ock
order from he SEC. Con eq en l , RUBY credi or ma or he e en ion of i corpora e life; (2) MANCOM
no ake ha e er legal ac ion he ma deem appropria e con in o l recogni e he 60%-40% ra io of hareholding
o pro ec heir righ incl ding, b no limi ed o profile be een he majori and minori ockholder ,
e raj dicial foreclo re. i h he majori ha ing 59.828% hile he minori hold
40.172% hareholding; (3) a here a no alid increa e in regard o RUBY a e . He h concl ded ha he
he hareholding of he majori and con eq en l no alid con in ed di obedience of he majori ockholder o he
e en ion of corpora e erm, he liq ida ion of RUBY i order and deci ion of he SEC and CA, a affirmed b hi
h in order; (4) o da e, he majori ockholder or Y Co r , ha e cer ainl rendered an addi ional a ignmen ,
Kim Giang ha e no complied i h he December 22, 1989 ch a he Deed of A ignmen e ec ed b BPI and
SEC order for hem o rn o er he ca h incl ding bank China Bank i h BENHAR, Henr Y or cond i of he
depo i , all o her financial record and doc men of majori ockholder , n ll and oid.
RUBY incl ding ran fer cer ifica e of i le o er i real The MANCOM manife ed ha i i adop ing in toto he
proper ie , and render an acco n ing of all he mone Manife a ion and Mo ion da ed Jan ar 18, 2001 filed b
recei ed b RUBY; and (5) p r an o hi Co r r ling Lim. I al o mo ed for he SEC o cond c f r her
in G.R. No. 96675 da ed A g 26, 1991, he pre io proceeding a direc ed b hi Co r . Con idering ha
deed of a ignmen made in fa or of BENHAR b Florence here i no chance a all for he propo ed rehabili a ion of
Damon, Philippine Bank of Comm nica ion , Philippine RUBY in ligh of ric implemen a ion b go ernmen
Commercial In erna ional Bank, Philippine Tr a hori ie of en ironmen al la par ic larl on poll ion
Compan , PCI Lea ing and Finance, Inc. and FEBTC, con rol, and MANCOM a en o effec a liq ida ion, he
ha ing been earlier declared oid b he SEC Hearing MANCOM a er ed ha a hearing ho ld foc on he
Panel, and he CA deci ion in CA-G.R. SP No. 18310 e en al liq ida ion of RUBY. I added ha a di mi al
affirmed b hi Co r ha e no legal effec and are nder he circ m ance o ld be an amo n o a
deemed oid.36 percei ed hirking b he SEC of i manda e o afford all
On he o her hand, Lim filed a S pplemen ( o credi or ample oppor ni o reco er on heir re pec i e
Manife a ion and Mo ion da ed Jan ar 18, 2001)3 financial e po re i h RUBY.3
rei era ing hi pending mo ion filed on March 15, 2000 for On Ma 15, 2001, he MANCOM bmi ed copie of
he SEC o implemen hi Co r Jan ar 20, 1998 min e of mee ing held from April 13, 2000 o December
Deci ion in G.R. No . 124185-87 hich a e in par ha 29, 2000.3
[ ]he SEC herefore ha he po er and a hori , direc l On Sep ember 20, 2001, he SEC i ed an Order
o declare all a ignmen of a e of he pe i ioner direc ing he Managemen Commi ee o bmi a de ailed
Corpora ion declared nder pen ion of pa men , n ll repor no mere min e of mee ing on he a of he
and oid, and o con er e he ame in order o effec a fair, rehabili a ion proce and financial condi ion of RUBY,
eq i able and meaningf l rehabili a ion hich ho ld con-

_______________ _______________

36 Id., at pp. 3843-3848. 38 Id., at pp. 3870-3871.

37 Id., at pp. 3849-3868. 39 Id., at pp. 3872-3919.

4 6 4 7

486 C A A D . 650, 6, 2011 487

Ma i S c h de fR b I d ia C ai . Ma i S c h de fR b I d ia C ai .
Li Li

of he in ol en corpora ion. Lim con ended ha he SEC ain a a emen on he fea ibili of he rehabili a ion
re ain j ri dic ion o er pending pen ion of pa men / plan.40 The MANCOM complied i h he aid order on
41
rehabili a ion ca e filed a of J ne 30, 2000 n il he e are Febr ar 15, 2002. The majori ockholder and RUBY
finall di po ed, p r an o Sec. 5.2 of he Sec ri ie mo ed o di mi he pe i ion and rike from he record
Reg la ion Code (Rep blic Ac [R.A.] No. 8799). he Compliance/Repor . MANCOM filed i omnib
Con idering ha he Managemen Commi ee i in ac , he oppo i ion o he aid mo ion . There a f r her e change
majori ockholder canno ac in an illegal manner i h of pleading b he par ie on he ma er of he her he
SEC ho ld alread di mi he pe i ion of RUBY a The MANCOM is ordered o compl i h he foregoing i hin a non-
pra ed for b he majori ockholder and RUBY, or e endible period of hir (30) da s from receip of his Order. Rela i e
proceed i h per i ed liq ida ion of RUBY a propo ed o an compensa ion o ing o he MANCOM, i is lef o he
b he MANCOM and minori ockholder . de ermina ion of he par ies concerned.
No prono ncemen as o cos s.
The SEC R g SO ORDERED. 43

On Sep ember 18, 2002, he SEC i ed i Order42 The SEC declared ha ince i order declaring RUBY
den ing he pe i ion for pen ion of pa men , a follo : nder a a e of pen ion of pa men a i ed on
December 20, 1983, he 180-da period pro ided in Sec. 4-9
WHEREFORE, in ie of he foregoing, he Commission hereb
of he R le of Proced re on Corpora e Reco er had long
resol es o ermina e he proceedings and DENY he ins an pe i ion.
lap ed. Being a remedial r le, aid pro i ion can be applied
Accordingl , p rs an o Sec. 5-5 of he SEC s R les of Proced re on
re roac i el in hi ca e. The SEC al o o err led he
Corpora e Reco er , hich pro ides:
objec ion rai ed b he minori ockholder regarding
Discharge of he Managemen Commi ee The Managemen
he q e ionable i ance of hare of ock b he majori
Commi ee shall be discharged and dissol ed nder he follo ing
ockholder and e en ion of RUBY corpora e erm,
circ ms ances:
ci ing he pre mp ion of reg lari in he ac of a
a. Whene er he Commission, on mo ion or mo prop[r]io,
go ernmen en i hich ob ain pon he SEC appro al
has de ermined ha he necessi for he Managemen
of RUBY amendmen of ar icle of incorpora ion. I
Commi ee no longer e is s;
poin ed o ha Lim rai ed he i e onl in he ear 2000.
b. Upon he appoin men of a liq ida or nder hese R les;
Moreo er, he SEC fo nd ha no i h anding hi
c. B agreemen of he par ies;
allega ion of fra d, Lim ne er pro ed he illegali of he
d. Upon ermina ion of he proceedings.
addi ional inf ion of he capi ali a ion b
Upon is discharge and dissol ion, he Managemen
Commi ee shall s bmi i s final repor and render an acco n -
_______________

_______________ 43 Id., at pp. 88-89.

40 Id., at p. 3927. 4
41 SEC records (Vol. 12), pp. 4308-4318.
42 R (G.R. No. 165929), pp. 83-89.
. 650, 6, 2011 489
4
Ma i S c h de fR b I d ia C ai .
Li
488 C A A D
Ma i S c h de fR b I d ia C ai . RUBY o a o arran a finding ha here a indeed an
Li nla f l ac .44
Lim, in hi per onal capaci and in repre en a ion of
ing of i managemen i hin ch rea onable ime a he he minori ockholder of RUBY, filed a pe i ion for
Commi ion ma allo . re ie i h pra er for a emporar re raining order
he Managemen Commi ee is hereb DISSOLVED. I is like ise and/or ri of preliminar inj nc ion before he CA (CA-
ordered o: G.R. SP No. 73195) a ailing he SEC order di mi ing he
(1) Make an in en or of he asse s, f nds and proper ies of he pe i ion and di ol ing he MANCOM.
pe i ioner;
R g f he CA
(2) T rn-o er he aforemen ioned asse s, f nds and proper ies o he
proper par (ies); On Ma 26, 2004, he CA rendered i Deci ion,45 he
(3) Render an acco n ing of i s managemen ; and di po i i e por ion of hich a e :
(4) S bmi i s Final Repor o he Commission.
 WHEREFORE, he Q e i ned O de da ed 18 Se embe The CA f r her no ed ha he Oc ober 2, 1991 board
2002 i ed b he Sec i ie and E change C mmi i n in SEC mee ing a cond c ed on he ba i of he Sep ember 18,
Ca e N . 2556 en i led In the Matter of the Petition for 1991 order of he SEC Hearing Panel appro ing he
Suspension of Payments, Ruby Industrial Corporation, Petitioner, Re i ed BENHAR/RUBY Plan, hich plan a e a ide
i he eb SET ASIDE, and c n e en l : nder hi Co r Jan ar 20, 1998 Deci ion in G.R. No .
(1) he inf i n f addi i nal ca i al made b he maj i 124185-87. The CA poin ed o ha record confirmed he
ckh lde be decla ed n ll and id and e ing he ca i al propo ed inf ion of addi ional capi al for RUBY
c e f R b i iginal c e i he ime he rehabili a ion, appro ed d ring aid mee ing, a
inj nc i n a i ed, ha i , maj i ckh lde 59.828% implementing he Re i ed BENHAR/RUBY Plan.
and he min i ckh lde 40.172% f he a h i ed ca i al Nece aril hen, ch capi al inf ion i co ered b he
ck f R b Ind ial C a i n. final inj nc ion again he implemen a ion of he re i ed
(2) he e l i n f he maj i ckh lde , h plan. I m be recalled ha hi Co r affirmed he CA
e e en nl 59.828% f he anding ca i al ck f R b , r ling ha he re i ed plan no onl recogni ed he oid
e ending he c a e life f R b f an he en -fi e (25) deed of a ignmen en ered in o i h ome of RUBY
ea hich a made d ing he ed ckh lde mee ing credi or in iola ion of he CA deci ion in CA-G.R. SP
held n 03 Se embe 1996 be decla ed n ll and id; No. 18310, b al o main ained a financing cheme hich
(3) im lemen ing he in alida i n f an and all illegal ill j make he rehabili a ion plan more co l and
a ignmen f c edi / cha e f c edi and he cancella i n f crea e a or e i a ion for RUBY.
m gage c nnec ed he e i h made b he c edi f R b On he ppo ed dela of he minori ockholder in
Ind ial C a i n d ing he effec i i f he en i n f rai ing he i e of he alidi of he inf ion of addi ional
a men de incl ding ha f China Bank and BPI and capi-
deli e MAN-
_______________

46 Id., at pp. 65-66.

44 I ., . 87-88.
45 I ., . 38-67. 4 1

4 0
. 650, 6, 2011 491
490 E EC E A A ED Ma i S c h de fR b I d ia C ai .
Li
Ma i S c h de fR b I d ia C ai . Li

COM he Li ida all he iginal f he Deed f al effec ed b he board of direc or , he CA held ha

A ignmen and he egi e ed i le he e and an he lache i inapplicable in hi ca e. I no ed ha Lim o gh
d c men ela ed he e ; and de hei n inding and relief hile he ca e i ill pending before he SEC. If e er
e i ing he maj i ckh lde acc n f all illegal here a dela , he ame i no fa al o he ca e of he
a ignmen (am n , da e , in e e , e c. and e en he minori ockholder .
iginal d c men ing he ame); and The CA like i e fa l ed he SEC in rel ing on he
(4) de ing he Sec i ie and E change C mmi i n pre mp ion of reg lari on he ma er of he e en ion of
e i e he li ida i n f R b Ind ial C a i n af e he RUBY corpora e erm hro gh he filing of amended
f eg ing e hall ha e been nde aken. ar icle of incorpora ion. In doing o, he CA o all
SO ORDERED. 46 di regarded he e idence hich reb ed aid pre mp ion,
a demon ra ed b Lim: (1) i a he board of direc or
According o he CA, he SEC erred in no finding ha and no he ockholder hich cond c ed he mee ing
he Oc ober 2, 1991 mee ing held b RUBY board of i ho he appro al of he MANCOM; (2) here a no
direc or a illegal beca e he MANCOM a nei her ri en ai er of he minori ockholder pre-emp i e
in ol ed nor con l ed in he re ol ion appro ing he righ and h i a irreg lar o merel no if hem of
i ance of addi ional hare of RUBY. he board of direc or mee ing and a k hem o e erci e
 heir op ion; (3) here a an e i ing permanen he par ie in CA-G.R. SP No. 73169 (filed b MANCOM)
inj nc ion again an addi ional capi al inf ion on he and CA-G.R. SP No. 73195 (filed b Lim) are no he ame
BENHAR/RUBY Plan, hile he CA and hi Co r bo h and he do no ha e he ame in ere . Thi i e a in
rejec ed he Re i ed BENHAR/RUBY Plan; (4) here a fac alread re ol ed in G.R. No . 124185-87 herein hi
no General Informa ion Shee repor made o he SEC on Co r , ci ing Ramos, Sr. v. Court of Appeals4 declared ha
he alleged capi al inf ion, a per cer ifica ion b he SEC; pri a e re ponden Lim, he n ec red credi or (ALFC)
(5) he Cer ifica ion a ing he pre en percen age of and MANCOM canno be con idered o ha e engaged in
majori hareholding, da ed December 21, 1993 and for m hopping in filing epara e pe i ion i h he CA a
igned b Y Kim Giang hich a no orn o before a each ha e di inc righ o pro ec .
No ar P blic a ppo edl filed in 1996 i h he SEC The CA al o fo nd ha he bela ed bmi ion of he
b i doe no bear a amped da e of receip , and a onl pecial po er of a orne e ec ed b he o her minori
a ached in a 2000 mo ion long af er he Oc ober 1991 ockholder repre en ing 40.172% of RUBY o ner hip
board mee ing; (6) aid Cer ifica ion a con radic ed b ha no bearing o he con in a ion of he pe i ion filed i h
he SEC li of all ockholder of RUBY, in hich he he appella e co r . Moreo er, ince he pe i ion i in he
majori remained a 59.828% and he minori na re of a deri a i e i , Lim clearl can file he ame
hareholding a 40.172% a of Oc ober 27, 1991; (7) cer ain no onl in rep-
receip for he amo n of P1.7 million a pre en ed b
he majori ockholder onl in he ear 2000, long af er _______________
Lim q e ioned he incl ion of e en ion of corpora e erm
in he No ice of Mee ing hen Lim filed before he CA a 47 G.R. Nos. 80908 & 80909, May 24, 1989, 173 SCRA 550, cited in
mo ion o ci e for con emp (CA-G.R. No . 32404, 32469 and R b I d a C a .C fA ea , a note 1, at pp. 462-
32483); and (8) hi Co r deci ion in he ca e ele a ed 463.
o i had recogni ed he 40% ockholding of he minor-
4 3
4 2

. 650, 6, 2011 493

492 C A A D Ma i S c h de fR b I d ia C ai .
Ma i S c h de fR b I d ia C ai . Li
Li
re en a ion of he minori ockholder b al o in behalf
i . Upon he foregoing gro nd , he CA aid ha he SEC of he corpora ion i elf hich i he real par in in ere .
ho ld ha e in alida ed he re ol ion e ending he Th , no i h anding ha Lim o ner hip in RUBY
corpora e erm of RUBY for ano her en -fi e (25) ear . compri e onl 1.4% of he o anding capi al ock, a
Wi h he e pira ion of he RUBY corpora e erm, he claimed b he majori ockholder , hi pe i ion ma no
CA r led ha i a error for he SEC in no commencing be di mi ed on hi gro nd.
liq ida ion proceeding . A o he di mi al of RUBY
pe i ion for pen ion of pa men , he CA held ha he The C da ed Pe
SEC erred hen i re roac i el applied Sec. 4-9 of he
From he Deci ion of he CA, China Bank and he
R le of Proced re on Corpora e Reco er . S ch re roac i e
Majori S ockholder joined b RUBY, filed epara e
applica ion of proced ral r le admi of e cep ion , a
pe i ion before hi Co r .
hen i o ld impair e ed righ or ca e inj ice. In
In G.R. No. 165887, pe i ioner Majori S ockholder
hi ca e, he CA empha i ed ha he o deci ion of hi
and RUBY rai ed he follo ing gro nd for he re er al of
Co r ill ha e o be implemen ed b he SEC, b o da e
he a ailed deci ion and he rein a emen of he SEC
he SEC ha failed o n o nd he illegal a ignmen and
Sep ember 18, 2002 Order:
order he a ignee o rrender he Deed of A ignmen
o he MANCOM. Fi Rea n
On he i e of iola ion of he r le again for m THE COURT OF APPEALS ERRED AND WHEN IT DID, IT
hopping, he CA held ha hi i no applicable beca e ACTED CONTRARY TO LAW AND PRECEDENTS WHEN IT
GAVE DUE COURSE TO, AND, THEREAFTER, SUSTAINED, A RUBY ha hef loan obliga ion and i ha no eno gh
FORMALLY AND SUBSTANTIALLY DEFECTIVE PETITION ca h flo o pa for he ame.
FOR REVIEW. Deploring he principal par ie penchan for prolonged
Sec nd Rea n li iga ion re l ing con iderabl in irre er ible lo e o
THE COURT OF APPEALS ERRED AND WHEN IT DID, IT RUBY, China Bank main ain ha from he repor
ACTED IN A MANNER AT WAR WITH ORDERLY bmi ed b he MANCOM o he SEC, i can be clearl
PROCEDURE AND APPLICABLE JURISPRUDENCE WHEN een ha no a emp a rehabili a ion ha oe er had been
IT REVERSED THE ORDER OF DISMISSAL OF THE p r ed. Gi en he c rren i a ion, China Bank pra
SECURITIES AND EXCHANGE COMMISSION AND ha he CA Deci ion be re er ed and i Deed of
SUBSTITUTED ITS JUDGMENT FOR THAT OF THE LATTER A ignmen in fa or of Greener In e men Corpora ion be
IN THE DETERMINATION OF ISSUES WELL WITHIN THE recogni ed and gi en f ll legal effec .
EXPERTISE OF THE COMMISSION.
Thi d Rea n _______________
THE COURT OF APPEALS ERRED AND WHEN IT DID, IT
ACTED IN GRAVE ABUSE OF ITS DISCRETION AND, IN 48 R (G.R. No. 165887), p. 11.
FACT, IN EXCESS OR LACK OF JURISDICTION WHEN IT
4 5
SUS-

4 4
. 650, 6, 2011 495

494 E EC E A A ED Ma i S c h de fR b I d ia C ai .
Li
Ma i S c h de fR b I d ia C ai . Li

In fine, main i e o be re ol ed are: (1) he her

TAINED COLLATERAL ATTACKS OF FINAL
pri a e re ponden MANCOM and Lim engaged in for m
ADJUDICATIONS OF THE SECURITIES AND EXCHANGE
hopping hen he filed epara e pe i ion before he CA
COMMISSION.48
a ailing he Sep ember 18, 2002 SEC Order; (2) he her
On he o her hand, pe i ioner China Bank in G.R. No. he defec in he cer ifica ion of non-for m hopping
165929 p for h he arg men ha he principle of stare bmi ed b Lim arran he di mi al of hi pe i ion
decisis canno be gi en effec in hi ca e con idering he before he CA; (3) he her he CA a correc in re er ing
pre ailing fac al circ m ance , a o do o o ld re l he SEC order di mi ing he pe i ion for pen ion of
in manife inj ice. I con end ha he rea on for he pa men .
declara ion of n lli of he Deed of A ignmen
O R g
prono nced more han a decade ago, ha become legall
inefficacio b i ob ole cence. The credi or of RUBY The pe i ion ha e no meri .
ha e he righ o reco er heir credi . B hen he CA On he charge of for m hopping, e ha e alread r led
ordered he n llifica ion of China Bank Deed of on he ma er in G.R. No . 124185-87. Th :
A ignmen in fa or of Greener In e men Corpora ion, i
prac icall da hed i la hope for e er reco ering i We h ld ha i ae e nden a e n g il f f m-
credi . h ing. In Ramos, Sr. v. Court of Appeals, e led:
China Bank i of he ie ha he CA o er re ched he The i ae e nden can be c n ide ed ha e
impor of hi Co r Jan ar 20, 1998 deci ion in G.R. engaged in f m h ing if all f hem, ac ing a ne
No . 124185-87 hen he SEC a ordered o cond c g , filed iden ical ecial ci il ac i n in he C f
f r her proceeding , a o incl de he n inding of he A eal and in hi C . The e m be iden i f a ie
alleged illegal a ignmen of credi . The rehabili a ion of in e e e e en ed, igh a e ed and elief gh in
RUBY, if i ill ma be capable of, i no made dependen diffe en ib nal . In he ca e a ba , two groups of private
on he n inding b he SEC of he illegal a ignmen , a respondents appear to have acted independently of each
he ame concern onl he i e of ho hall no become other when they sought relief from the appellate court. Both
he credi or of RUBY, and doe no al er he fac ha groups sought relief from the same tribunal.
 I ld n ma e e en if he e a e e e al di i i n in acco n he pre io hi or of he pe i ion for re ie
he C f A eal . The ad e e a can al a a k f before he CA in ol ing he SEC Sep ember 18, 2002
he c n lida i n f he ca e . Order. I a ac all he third ime ha Lim and/or
In he ca e a ba , i ae e nden e e en diffe en MANCOM ha e challenged cer ain ac perpe ra ed b he
g i h diffe en in e e he min i ckh lde g , majori ockholder hich
e e en ed b i ae e nden Lim; he n ec ed c edi
g , Allied Lea ing & Finance C a i n; and he ld _______________
managemen g . Each g ha di inc igh ec . In
line ih ling in Ramos, he ca e filed b i ae 49 S a note 1, at pp. 462-463.
e nden h ld be c n lida ed. In fac , BENHAR and RUBY 50 R (G.R. No. 165887), pp. 719-721.
did j ha in hei gen m i n filed n Decembe 1, 1993
4 7
and Decembe 6, 1993,

4 6
. 650, 6, 2011 497

496 E EC E A A ED Ma i S c h de fR b I d ia C ai .
Li
Ma i S c h de fR b I d ia C ai . Li

are prej dicial o RUBY, ch a he e ec ion of deed of

e ec i el , he a ed f he c n lida i n f he ca e bef e
a ignmen d ring he effec i i of he pen ion order in
he C f A eal . 49
p r i of o rehabili a ion plan bmi ed b hem
In he pre en ca e, no con olida ion of CA-G.R. SP No . oge her i h BENHAR. The a ignmen of RUBY credi
73169 (filed b MANCOM) hich a earlier a igned o o BENHAR ga e he ec red credi or nd e ad an age
he Thir een h Di i ion and CA-G.R. SP No. 73195 (filed b o er RUBY prime proper ie and p he e a e be ond
Lim) decided b he Second Di i ion, ook place. In heir he reach of he n ec red credi or . Each ime he go o
Commen filed before CA-G.R. SP No. 73169, he Majori co r , Lim and MANCOM e en iall ad ance he in ere
S ockholder and RUBY (pri a e re ponden herein) of he corpora ion i elf. The ha e con i en l aken he
pra ed for he di mi al of aid ca e arg ing ha po i ion ha RUBY a e ho ld be pre er ed for he
MANCOM, of hich Lim i a member, circ m en ed he eq al benefi of all i credi or , and igoro l re i ed
pro crip ion again for m hopping. The CA Thir een h an a emp of he con rolling ockholder o fa or an or
Di i ion, ho e er, di agreed i h pri a e re ponden and ome of i credi or b en ering in o q e ionable deal or
gran ed he mo ion o i hdra pe i ion filed b MANCOM financing cheme nder o BENHAR/RUBY Plan .
hich manife ed ha he Second Di i ion in CA-G.R. SP Vie ed in hi ligh , he CA a herefore correc in
No. 73195 b Deci ion da ed Ma 26, 2004 had gran ed he recogni ing Lim righ o in i e a ockholder ac ion in
relief imilar o ho e pra ed for in heir pe i ion, aid hich he real par in in ere i he corpora ion i elf.
deci ion being binding on MANCOM hich a al o A deri a i e ac ion i a i b a hareholder o enforce a
impleaded in aid ca e (CA-G.R. SP No. 73195). The corpora e ca e of ac ion.51 I i a remed de igned b
Thir een h Di i ion al o ci ed o r prono ncemen in G.R. eq i and ha been he principal defen e of he minori
No . 124185-87 o he effec ha here a no iola ion on hareholder again ab e b he majori .52 For hi
he r le on for m hopping beca e MANCOM and Lim or p rpo e, i i eno gh ha a member or a minori of
he minori hareholder of RUBY repre en differen ockholder file a deri a i e i for and in behalf of a
in ere .50 corpora ion.53 An indi id al ockholder i permi ed o
A o he alleged defec in he cer ifica e of non-for m in i e a deri a i e i on behalf of he corpora ion
hopping bmi ed b Lim, e find no error commi ed b herein he hold ock in order o pro ec or indica e
he CA in holding ha he bela ed bmi ion of a pecial corpora e righ , hene er official of he corpora ion
po er of a orne e ec ed in Lim fa or b he minori ref e o e or are he one o be ed or hold he con rol
ockholder ha no bearing o he con in a ion of he ca e of he corpora ion. In ch ac ion , he ing ock-
a ppor ed b ample j ri pr dence. To apprecia e he
liberal ance adop ed b he CA, one m ake in o _______________
 51 Ch a . C fA ea , G.R. No. 150793, November 19, 2004, 443 _______________
SCRA 259, 267.
54 Jose Campos, Jr. & Maria Clara L. Campos, THE CORPORATION CODE:
52 We e I e f Tech g , I c. . Sa a , G.R. No. 113032,
COMMENTS, NOTES AND SELECTED CASES, Vol. I (1990 ed.), p. 820, citing
August 21, 1997, 278 SCRA 216, 225.
Ga b a . V c a , No. L-40620, May 5, 1979, 90 SCRA 40, 47.
53 R.N. S ac T ad g C a . Sa , G.R. No. 142474,
55 Approved on December 21, 1999.
August 18, 2005, 467 SCRA 312, 329.

4
4

. 650, 6, 2011 499

498 C A A D
Ma i S c h de fR b I d ia C ai .
Ma i S c h de fR b I d ia C ai .
Li
Li

Co r deci ion in G.R. No . 124185-87 in December 1998,

holder i regarded a he nominal par , ih he
ill hi ca e had gone be ond he period manda ed in he
corpora ion a he par in in ere .54
R le for a corpora ion nder pen ion of pa men o
No , on he hird and b an i e i e concerning he
ha e a rehabili a ion plan appro ed b he Commi ion.
SEC di mi al of RUBY pe i ion for pen ion of
While i i r e ha he R le of Proced re on Corpora e
pa men .
Reco er a hori e he di mi al of a pe i ion for
The SEC ba ed i ac ion on Sec. 4-9 of he R le of
pen ion of pa men here here i no rehabili a ion
Proced re on Corpora e Reco er ,55 hich pro ide :
plan appro ed i hin he ma im m period of he
SEC. 4-9. Period of Suspension Order. The en i n pen ion order, i m be recalled ha here a in fac
de hall be effec i e f a e i d f i (60) da f m he da e no one, b two rehabilitation plans (BENHAR/RUBY
fi i ance. The de hall be a ma icall aca ed n he Plan and Re i ed BENHAR/RUBY Plan) bmi ed b he
la e f he i -da e i d nle e ended b he C mmi i n. majori ockholder hich ere appro ed b he SEC.
U n m i n, he C mmi i n ma g an an e en i n he e f f The implemen a ion of he fir plan a enjoined hen i
a e i d f n m e han i (60) da in each a lica i n if he a erio l challenged in he co r b he minori
C mmi i n i a i fied ha he deb and i ffice ha e been ockholder hro gh Lim. The econd re i ed plan
ac ing in g d fai h and i h d e diligence, and ha he deb per eded he fir plan, b e en all n llified b he
ld likel be able make a iable ehabili a i n lan. Af e CA and he CA deci ion declaring i oid a affirmed b
he la e f ne h nd ed and eigh (180) da f m he i ance hi Co r in G.R. No . 124185-87. Gi en hi fac al
f he en i n de , n e en i n f he aid de hall be milie , he a oma ic applica ion of he lif ing of he
g an ed b he C mmi i n if ed in i ing b a maj i f pen ion order a in erpre ed b he SEC in i
an cla f c edi . The C mmi i n ma g an an e en i n Sep ember 18, 2002 Order o ld be nfair and highl
be nd ne h nd ed eigh (180) da nl if i a ea b prej dicial o he financiall di re ed corpora ion.
c n incing e idence ha he e i a g d chance f he cce f l Moreo er, record re eal ha he dela in he
ehabili a i n f he deb and he i i n he e b he proceeding af er he ca e a e for hearing follo ing
c edi a ea manife l n ea nable. hi Co r final j dgmen in G.R. No . 124185-87, a no
In an e en , he e dee ed ipso fac o de ed a d d e o an fa l or neglec on he par of MANCOM or he
d ed f Rehab a Pa a a ed b he minori ockholder . The idea propo nded b he
C he a e f he de he a pe i ioner majori ockholder ha hi ca e i abo a
e e he e f. I ch ca e, he deb ha c e minori in a corpora ion holding ho age he majori
de he d a d da ceed g f R e indefini el b imple a er ion ha he former righ
V f he e R e . (Em ha i lied.) ha e been ran gre ed b he la er i , do nrigh
mi leading.
According o he SEC, e en if he 180 da ma im m First, he SEC did no e en men ion in i Sep ember 18,
period of pen ion order i co n ed from he finali of 2002 Order ha hen hi Co r remanded o i he ca e
hi for f r her proceeding , here remained onl he
Al erna i e Plan of RUBY minori ockholder hich e ie ; he e ill be n a e lef f n ec ed c edi ; and
had earlier been for arded o he SEC Hearing Panel. he e ill be n e id al P600 Milli n a e di ide. 56
Wi h he CA Deci ion e ing a ide he SEC appro al of he
Re i ed BEN- _______________

500 56 R (G.R. No. 165887), p. 61.

501
500 C A A D
Ma i S c h de fR b I d ia C ai .
. 650, 6, 2011 501
Li
Ma i S c h de fR b I d ia C ai .
HAR/RUBY Plan, a affirmed b hi Co r , i behoo e on Li
he SEC o recogni e he fac ha he Al erna i e Plan a
endor ed b 90% of he RUBY credi or ho had objec ed E iden l , he minori ockholder and MANCOM had
o he Re i ed BENHAR/RUBY Plan. Ye , no a ingle ep alread fore een he impo ibili of implemen ing a iable
a aken b he SEC o addre ho e finding and rehabili a ion plan if he illegal a ignmen made b i
concl ion made b he CA and hi Co r on he highl credi or i h BENHAR and he majori ockholder ,
di ad an ageo and onero pro i ion of he Re i ed and b eq en l , i h cond i of RUBY or Henr Y , are
BENHAR/RUBY Plan. no properl n o nd and ho e direc or re pon ible for
Moreo er, he SEC failed o ac on mo ion filed b Lim he oid ran ac ion no req ired o make a f ll
and MANCOM o implemen hi Co r Jan ar 20, 1998 acco n ing. Con rar o pe i ioner China Bank
Deci ion in G.R. No . 124185-87, b declaring all deed of in in a ion ha he minori ockholder merel an o
a ignmen i h BENHAR and/or he cond i of Henr prolong he li iga ion o he grea prej dice and damage o
Y of no force and legal effec , hich of co r e nece i a e RUBY credi or , MANCOM and Lim had de ermined and
he rrender b he concerned credi or of ho e oid mo ed for SEC- per i ed liq ida ion proceeding a he
deed of a ignmen . Pe i ioner China Bank di mi e i a more pr den co r e of ac ion for an orderl and eq i able
nnece ar and imma erial o he con in ed inabili of e lemen of RUBY liabili ie .
RUBY o e le i long o erd e deb . Ho e er, he CA Record like i e re ealed ha he SEC cho e o keep
aid ha he foregoing ac ho ld ha e been done b he ilen and failed o a i he MANCOM and minori
SEC for proper doc men a ion and orderl e lemen af er ockholder in heir effor o demand compliance from he
proper acco n ing of he a ignmen ran ac ion . The majori ockholder or Y Kim Giang ( ho headed he
appella e co r hen concl ded ha di mi al of he fir MANCOM) i h he December 22, 1989 Order
pe i ion nder Sec. 4-9 of he R le of Proced re on direc ing hem o rn o er he ca h, financial record and
Corpora e Reco er o ld impair he e ed righ of he doc men of RUBY, incl ding cer ifica e of i le o er
minori ockholder nder hi Co r deci ion RUBY real proper ie , and render an acco n ing of all
in alida ing he afore aid deed of a ignmen , h : mone recei ed and pa men made b RUBY. On
Jan ar 18, 2002, he MANCOM e en filed a Mo ion5 o
We ag ee i h he b e a i n f he e i i n ha if he req ire Y Kim Giang o render repor /acco n ing of RUBY
illegal a ignmen n ha ing been n nd and he m gage from 1983 o he 1 q ar er of 1990, a ing ha de pi e a
n canceled, he maj i , hei al e eg , and/ c h ill commi men from Mr. Giang, he ha eemingl dela ed hi
claim be ec ed c edi and f eel c llec e aj diciall he compliance, hence fr ra ing he de ire of MANCOM o
bliga i n c e ed b he illegal a ignmen . R b ha e bmi a comprehen i e and comple e repor for he hole
li le m ne c m a ed he P200 Milli n bable liabili he period of 1983 p o he pre en . To nder core he
illegal a ignee a nila e all a ed b R b ih a di impor ance of making he aid record a ailable for
( e i l me el aled P34 Milli n in 1998 a a ed in he cr in of he SEC and MANCOM, Lim manife ed before
e i ed ehabili a i n lan). F ecl e f he m gage b he he SEC ha
illegal a ignee ill f ll ; R b ill l e all i ime
 Indeed, he majori is ac all n illing (and no merel nable) o doc men , f nd and proper ie in heir po e ion, and
s bmi s ch records beca se hese ill sho , among o hers: o ld nei her make a f ll acco n ing or di -

_______________ _______________

57 SEC records (Vol. 12), pp. 4079-4080. 58 Id., at pp. 4288-4289.

502 503

502 C A A D . 650, 6, 2011 503

Ma i S c h de fR b I d ia C ai . Ma i S c h de fR b I d ia C ai .
Li Li

(1) The majori o minori ra io in he corpora e o nership is clo re of RUBY ran ac ion , e peciall he ac al
59.828% :40.172%; amo n paid and ra e of in ere on he loan
(2) The ac al amo n s of he bank loans paid off b Benhar a ignmen . In hi a e of hing , he MANCOM and
In erna ional[,] Inc. and/or Henr Y o ld be er lo ; minori ockholder re ol ed ha he more rea onable
(3) The illegal pa men of he bank loans and illegal assignmen s of and prac ical op ion i o mo e for a SEC- per i ed
he mor gages o Benhar/Henr Y are con rar o he Honorable liq ida ion proceeding .
Commission s Order of 20 December 1983 for s spension of The o her gro nd in oked b Lim and MANCOM for he
pa men s; proprie of liq ida ion i he e pira ion of RUBY
(4) The earnings of he corpora ion from 1983 o 1989 amo n ed o corpora e erm. The SEC, ho e er, held ha he filing of
millions and canno be acco n ed for b he majori and he firs he amendmen of ar icle of incorpora ion b RUBY in
Mancom; 1996 complied i h all he legal req i i e and hence he
(5) The mone ma ha e been spen o pa off some of he loans o pre mp ion of reg lari and . Record ho ha he
he bank b Benhar and Henr Y fra d len l claim credi alidi of he inf ion of addi ional capi al hich re l ed
herefor.58 in he alleged increa e in he hareholding of pe i ioner
majori ockholder in Oc ober 1991 a q e ioned b
I m be no ed ha MANCOM had rejec ed he o
MANCOM and Lim e en before he majori ockholder
rehabili a ion plan propo ed b BENHAR and he
filed heir mo ion o di mi in he ear 2000.
majori ockholder . In hif ing he blame o he
A ock corpora ion i e pre l gran ed he po er o
MANCOM and minori ockholder for he dela in he
i e or ell ock .5 The po er o i e hare of ock in
appro al of a iable rehabili a ion plan, he SEC
a corpora ion i lodged in he board of direc or and no
apparen l o erlooked ha from he ime he SEC
ockholder mee ing i req ired o con ider i beca e
appro ed he Re i ed BENHAR/RUBY Plan and di ol ed
addi ional i ance of hare of ock doe no need
he MANCOM, he majori ockholder ha denied
appro al of he ockholder .60 Wha i onl req ired i he
MANCOM acce o corpora e paper , doc men
board re ol ion appro ing he addi ional i ance of
e idencing he amo n ac all paid o credi or bank /
hare . The corpora ion hall al o file he nece ar
a ignor , financial a emen and i le o er RUBY real
applica ion i h he SEC o e emp he e from he
proper ie .
regi ra ion req iremen nder he Re i ed Sec ri ie Ac
Al ho gh he SEC gran ed MANCOM and Lim req e
(no he Sec ri ie Reg la ion Code).
for a hearing and direc a repre en a i e from BPI o bring
The ne managemen commi ee crea ed p r an o
all doc men rela i e o he a ignmen of RUBY credi ,
SEC Order da ed Sep ember 18, 1991 apparen l had no
aid hearing did no ma eriali e af er he majori
par icipa ion in he Oc ober 2, 1991 board re ol ion
ockholder propo ed a compromi e agreemen i h he
appro ing he i ance of addi ional hare . The mo e a
minori ockholder . B a i rned o , hi
par of he board a er ion of con rol o er he
de elopmen onl ca ed f r her dela beca e he
managemen in RUBY follo ing he appro al of he
majori ockholder ere n illing o rn o er
Re i ed BENHAR/RUBY Plan.
_______________ he P34.068-Milli n c edi a igned Benha b he e en (7)
ec ed c edi .
59 CORPORATION CODE, Sec. 36, par. 6.
The Re i ed Benha /R b Plan, in fac , gi e Benha nd e
60 Dee . Sec e a d E cha ge C , G.R. Nos. 60502 and
efe ence n he ma e f e a men . Unde he aid lan, he
63922, July 16, 1991, 199 SCRA 238, 252.
505
504

. 650, E 6, 2011 505

504 C A A D Ma i S c h de fR b I d ia C ai . Li
Ma i S c h de fR b I d ia C ai .
Li c edi f R b ill be aid in acc dance i h he f ll ing
ched le :
The minori ockholder regi ered heir objec ion d ring
Sec ed P17.022M T be aid in ca h
he aid mee ing b a king he board o defer ac ion a he C edi China Banking i h 12% in e e
SEC Sep ember 18, 1991 Order a ill on appeal i h he C . BPIPhili ine .a.
SEC En Banc. When he SEC En Banc denied heir appeal O ien
and mo ion for recon idera ion nder i J l 30, 1993 and Un ec ed P 9.347M T be aid in ca h
Oc ober 15, 1993 order , Lim, MANCOM and ALFC filed C edi Allied in e e -f[ ]ee
Lea ingFilc Finance
pe i ion for re ie i h he CA hich e a ide he aid
Benha F ha ing P34.068M T be aid in ca h
order . A alread men ioned, hi Co r affirmed he CA aidR b bliga i n i h in e e cha ge
r ling in G.R. No . 124185-87. 7 c edi
Con rar o he a er ion of pe i ioner majori T ade/O he C edi P2.871M( .a. T alling P8.614M
ockholder , o r deci ion in G.R. No . 124185-87 n llified f 3 ea ) be aid in 3- ea
he deed of a ignmen not olel on he gro nd of in allmen , in e e -
f ee
iola ion of he inj nc ion order i ed b he SEC and
CA. A earlier men ioned, e affirmed he CA finding (Rollo, CA-G.R. SP N . 32404, . 727)
ha he re-lending cheme nder he Re i ed Needle a e, he f eg g a e ched e a
BENHAR/RUBY Plan ill no onl make rehabili a ion e b d ed he a d a h ch g e Be ha d e
more co l for RUBY, b al o or en i financial ad a age e he he c ed g e aga he e
condi ion beca e of he mor gage of i a e o a ne e e ce f ehab a , h ch e e ha c ed
credi or. To be er ill mine hi poin , e q o e from he h d be efe ed e he he . Indeed, a c m a i n f
CA deci ion in CA-G.R. SP No . 32404, 32469 and 32483 he alien fea e f he Re i ed Benha /R b Plan and he
comparing he pro i ion of he rehabili a ion propo al Al e na i e Plan ill eadil h j h acked in fa f
bmi ed b he majori ockholder (Re i ed Benha a e he i i n f he f me lan:
BENHAR/RUBY Plan) and he minori ockholder
(Al erna i e Plan): Benha /R b Plan Al e na i e Plan
1. Benha la a maj le. I 1. The iginal c edi
he e i n need f Benha ac a financie , a R b ill be aid P34.068M f a e he ne ec gni ed.
i elf can e ell ec e ch c edi acc mm da i n ing i P60.437 M al am n d e The am n a able i
a e a c lla e al. Ve il , Benha e e a magnanimi i c edi b n e lained a l e beca e in e e a e
h a i ed a . n ca i ali ed.
dece i n f he highe de c n ide ing ha : (1) a emb died in
2. Benha ill n a ign he 2. Di ec c edi f P80M
he heading S ce and U e f F nd in he Re i ed c edi facili f P80M nle he l an and ill be b ed
Benha /R b Plan, he P80-Milli n l an/c edi facili be f m he
e ended b Benha ill be ed a P60.437-Milli n l an f
R b . Of he P60.437-Milli n, P34.068-Milli n ill be aid 506
Benha a a men f he am n i aid in c n ide a i n f he
n llified a ignmen ; (2) The Deed f A ignmen f C edi 506 C A A D
Facili ill be e ec ed b Benha in fa f R b nl n
a men f R b f ch am n al ead ad anced b Benha , i.e. Ma i S c h de fR b I d ia C ai .
 Li aken in c n ide a i n. in
c n ide a i n
ill g ade
P34.068M ab e a ed i aid. bank( ) like mee
Allied, UCPB, c m e i i n.
Me bank 13. Di c imina c edi Benha - 13. N
E i able Bank ca i ali ed i h ndi cl ed a e f in e e . di c imina .
e en China 14. O iginal Fig e f illegall a igned 14. O iginal
Bank.
l an f m FEBTC, PCIB, PTC hich aled fig e ill be
3. The main a e a e be m gaged 3. M gaged
P11,419,036.87 b n en e ed a ed iginal
he c edi - a ign f Benha and if he bank( ) di ec l . P21,378,002.71. The in e e i ndi cl ed fig e lan
illegal a ignmen a e ec gni ed, hen and ma ha e been ca i ali ed. Fig e f 12% in e e
Benha hall ha e be ec gni ed a he he f (4) ec ed lende n nl .
m gagee e en hen i i a di alified a ailable indi id all . T al f e en (7)
c edi and/ m gagee. ec ed lende gi en a P34.068 M.
4. S a c P16,880 and ba ed n 4. Plan B = 15. In e e i 28% i h Benha a c nd i . 15. In e e i
1988 fig e and jec i n . P25,640 Yea IV 25% a able
e ima edP40. he bank. Thi
MPlan A = i ill bjec
22.40Yea V c en
e ima edP30. M ma ke a e
5. Rehabili a i n nl f Plan B. 5. Rehabili a i n be neg ia ed
f b h lan . b he
6. Rec gni i n f Benha e- 6. N ne min i .
lende /financie . 16. Call n ni ed ha e f P11.814 M 16. Addi i nal
7. Beca e f he SEC O de he g an MC 7. Pili ina and if min i ill ake hei e-em i e b c i i n f
ea and and he Pili ina Shell Shell igh and dil e min i ha eh lding . P16M i hin 6
e e en a i e f ade c edi a e e en a i e be m n h b he
e ained. e ained. min i
8. C edi facili i being a igned e- 8. C edi facili ckh lde .
len b Benha . di ec l R b .
9. A h i ed Benha m gage a e 9. N ne g ing 61
f R b i elf. Onl emaining he min i b Prior o he Sep ember 18, 1991 Order appro ing he
nenc mbe ed a e i ne (1) eal ac al lende .
e .T (2) ime e ie al ead Re i ed BENHAR/RUBY Plan and di ol ing he
enc mbe ed A ign f Benha . MANCOM,
10. Ca aci f nl ne (1) lan a ed a 10. Ca aci f
72% ( e a ed) (2) lan _______________
g e i e
75% 80% i h 61 CA R , pp. 263-266.
cha e f ne
machine . 50

507
508 C A A D
. 650, 6, 2011 507 Ma i S c h de fR b I d ia C ai .
Li
Ma i S c h de fR b I d ia C ai .
Li
majori of RUBY credi or (90%) ha e alread
i hdra n heir ppor o he re i ed plan and
11. P jec i n fig e ba ed n Ma , 1990 11. Min i
f e e change a e. C f im a i n and RP can be manife ed ha he ere onl la el informed abo
he l cal lie c en l cann be me . da ed a ano her plan bmi ed b he minori ockholder .
c en f eign Hence, he e credi or ro e indi id al le er o he SEC
e change a e. Hearing Panel e pre ing heir agreemen i h and
12. Ma ke and ec n mic l d n n 12. Taken
endor emen of he Al erna i e Plan of he minori The SEC remained indifferen o he relief o gh b
ockholder .62 he minori ockholder , a ing ha he i e of he
The Re i ed BENHAR/RUBY Plan had propo ed he alidi of he addi ional capi al inf ion a bela edl
calling for b crip ion of ni ed hare hro gh a Board rai ed. E en a ming he Oc ober 2, 1991 board mee ing
Re ol ion from he P11.814 million of he P23.7 million indeed ook place, he SEC did no hing o a cer ain
ACS in order o allo he long o erd e program of he he her indeed, a he minori claimed: (1) he minori
REHAB Program. RUBY ill offer for b crip ion ockholder ere no gi en no ice a req ired and
118,140 hare of ock a par al e of P100 each o all rea onable ime o e erci e heir pre-emp i e righ ; and
ockholder on record, pa able i hin 15 da , or i hin a (2) he capi al inf ion a no for he p rpo e of
rea onable period from SEC appro al of he re i ed plan.63 rehabili a ion b a mere plo o di e he minori
Thi a implemen ed b he Oc ober 2, 1991 mee ing of ockholder of heir 40.172% hareholding and red ce i o
he Board of Direc or led b Y Kim Giang. The minori a mere 25.25%.
direc or claimed he ere no no ified of aid board The foregoing ma er , along i h he per i en ref al
mee ing. A an ra e, he CA deci ion n llif ing he of he majori ockholder , led b Y Kim Giang, o gi e a
Re i ed BENHAR/RUBY Plan a affirmed b hi Co r f ll acco n ing of heir ran ac ion in ol ing RUBY
on Jan ar 20, 1998. Hence, he legi ima e concern of he credi and proper ie , ere e en i el arg ed b he
minori ockholder and MANCOM ho objec ed o he minori ockholder in heir oppo i ion o he mo ion o
capi al inf ion hich re l ed in he dil ion of heir di mi / aca e pen ion order filed b he majori
hareholding , he e pira ion of RUBY corpora e erm ockholder and BPI, a follo :
and he pending inciden on he oid deed of a ignmen
of credi all he e ho ld ha e been d l con idered and Thei ecei nl h ed a men b he maj i f
ac ed pon b he SEC hen he ca e a remanded o i a al f P1,759,150.00 f he c ec am n f
for f r her proceeding . Wi h he final rejec ion of he P7,068,079.92.00 (sic) (59.828% f P11.814 milli n e i ed
co r of he Re i ed BENHAR/RUBY Plan, i a gra e ca i al inf i n nde he MRP and RRP) hich h ld ha e been
error for he SEC no o ac deci i el on he mo ion filed he am n aid b hem nde he RRP which requires full
b he minori ockholder ho ha e main ained ha he payment. Th , he gh a ain a 74.75% e i f m a
i ance of addi ional hare did no help impro e he 59.828% iginal e i b la ing m e ick and a ing ha ,
i a ion of RUBY e cep o ifle he oppo i ion coming nde he gene al le, he a e edl all ed a -
from he MANCOM and minori ockholder b dil ing nl 25% f hei b c i i n. Unfortunately for them, in a
he la er hareholding . rehabilitation supervised by the SEC and with an existing
Mancom, the general rule does not apply. What is stated in the
rehabilitation plan must be strictly followed provided the
_______________
rehabilitation plan has been finally approved.
62 SEC records (Vol. 9), pp. 2955-2965, 2842-2850, 2976-2985, 3058- I m be emembe ed ha in Oc be 2 17, 1991, he
3065. am n ed b R b he bank h illegall a igned hei
63 SEC records (Vol. 7), p. 2156.
510

50
510 E EC E A A ED

. 650, 6, 2011 509 Ma i S c h de fR b I d ia C ai . Li

Ma i S c h de fR b I d ia C ai . l an /c edi a a ed a P34 Milli n. O e a i n needed an he

Li
P20 Milli n l . A capital infusion of P1,759,150.00 was so
miniscule and clearly not for rehabilitation but was intended to
Wor e, he SEC ignored he e idence add ced b he deprive the minority of its blocking position and property rights
minori ockholder indica ing ha he correc amo n of since distribution after liquidation is based on the percentage of
b crip ion of addi ional hare a no paid b he stockholdings. It is not only unfair, inequitable and not
majori ockholder and ha SEC official record ill meaningful—it is clearly dishonest.
reflec he 60%-40% percen age of o ner hip of RUBY.
 A ming arguendo ha he B a d f Di ec c ld ac ha no e erci ed ch righ ill be deemed o ha e ai ed
inde enden l and hi did n i la e an inj nc i n, if he i .65
ca i al inf i n a ac all made, he B a d f Di ec had he The alidi of i ance of addi ional hare ma be
d e hi he Manc m beca e he ld hen fall q e ioned if done in breach of r b he con rolling
nde e i ing a e and ld be a f he e al a i n f he ockholder . Th , e en if he pre-emp i e righ doe no
ed RRP, nece a f managemen and in he e all lan e i , ei her beca e he i e come i hin he e cep ion
f ehabili a i n. N hing f hi kind ha ened and he bela ed in Sec ion 39 or beca e i i denied or limi ed in he
f cann c ec hi i a i n. ar icle of incorpora ion, an i e of hare ma ill be
objec ionable if he direc or ac ed in breach of r and
I i n e ha he e i bene lence n he a f he heir primar p rpo e i o perpe a e or hif con rol of
maj i hen he mane e ed he illegal a ignmen and aid he corpora ion, or o free e o he minori in ere .66 In
he bank . The loan obligations remain as accounts payable of hi ca e, he follo ing rele an ob er a ion ho ld ha e
Ruby and have even been bloated to gigantic proportions and yet ignaled grea er circ m pec ion on he par of he SEC
the SEC does not even ask them to account how much these pon he hird and la remand o i p r an o o r
obligations are now and the majority should have reported these to Jan ar 20, 1998 deci ion o demand ran parenc and
the Mancom, but the majority has not. These anomalous situations acco n abili from he majori ockholder , in ie of
have been made to continue long enough and, we pray, should be he illegal a ignmen and objec ionable fea re of he
addressed by the Honorable Commission. Re i ed BENHAR/RUBY Plan, a fo nd b he CA and a
affirmed b hi Co r :
The SEC m nde and ha , being head f he fi
Manc m, YU KIM GIANG had he ame bliga i n ende a _______________
e he SEC a he e en Manc m n . T ingle he
e en Manc m d hi hen a c m le e e cann be 64 SEC records (Vol. 13), pp. 4403, 4408 and 4443.
made i h he e a ing ec d i di c imina , nfai and 65 Jose Campos, Jr. & Maria Clara L. Campos, THE CORPORATION CODE:
i la e he le f acc n anc . F e am le, he e i he COMMENTS, NOTES AND SELECTED CASES, Vol. II (1990 ed.), p. 58.
e n he illegal a ignmen and m gage c m le e i h 66 Id., at pp. 62-63.
de ail ? Whe e did he en al f he e i d f m 1983 1989
512
g ? Thi am n ed milli n . The e a e n e n he e. B
e g he f Ma c Re , he SEC
e e g he c e e c e he ab e a d 512 C A A D
f a ce f R b f be g ee
Ma i S c h de fR b I d ia C ai .
511 Li

. 650, E 6, 2011 511 The e can be n gain a ing he ell-e abli hed le in
c ae ac ice and ced e ha he ill f he maj i
Ma i S c h de fR b I d ia C ai . Li
hall g e n in all ma e i hin he limi f he ac f
64
inc a i n and la f ll enac ed b -la n c ibed b la .
a d he e g R b a d he a . (Addi i nal
I i , h e e , e all e ha he ckh lde a e aff ded
em ha i lied.)
he igh in e ene e eciall d ing c i ical e i d in he life
Pre-emp i e righ nder Sec. 39 of he Corpora ion Code fac a i n like e gani a i n, in hi ca e, en i n f
refer o he righ of a ockholder of a ock corpora ion o a men , m e , he he a ee e he
b cribe o all i e or di po i ion of hare of an cla , a d h gh f a d e ea , a e h ff
in propor ion o heir re pec i e hareholding . The righ R b a ab e a e he g ea e d ce f R b
ma be re ric ed or denied nder he ar icle of e f, a e a he c h de a d he
incorpora ion, and bjec o cer ain e cep ion and ec ed c ed .
limi a ion . The ockholder m be gi en a rea onable Ce ainl , he min i ckh lde and he n ec ed
ime i hin hich o e erci e heir preemp i e righ . c edi a e gi en me mea e f ec i n b he la f m
Upon he e pira ion of aid period, an ockholder ho he ab e and im i i n f he maj i , m e in hi ca e,
c n ide ing he g e-a a g f a e e de o ano her 25 ear a erio l di p ed b he
e fd e a e he fac a a d ca e. Indeed, e i minori ockholder , and e find he e idence of
cann de i e he min i f a emed again he ab e f he compliance i h he no ice and q or m req iremen
maj i , and he e en ac i n ha been in i ed eci el f bmi ed b he majori ockholder in fficien and
he e f ec ing he e and legi ima e in e e f do b f l. Con eq en l , he SEC had no ba i for i r ling
R b again he Maj i S ckh lde . On hi c e, he den ing he mo ion of he minori ockholder o declare
S eme C , ha led ha : a i ho force and effec he e en ion of RUBY
Gene all eaking, he ice f he maj i f he corpora e e i ence.
ckh lde i he la f he c a i n, b he e a e Liquidation, or he e lemen of he affair of he
e ce i n hi le. The e m nece a il be a limi corpora ion, con i of adj ing he deb and claim , ha
n he e f he maj i . Wi h ch a limi he i , of collec ing all ha i d e he corpora ion, he
ill f he maj i ill be ab l e and i e i ible and e lemen and adj men of claim again i and he
migh ea il degene a e in ab l e ann . 67
pa men of i j deb .6 I in ol e he inding p of
(Addi i nal em ha i lied.) he affair of he corpora ion, hich mean he collec ion of
all a e , he pa men of all i credi or , and he
Lamen abl , he SEC ref ed o heed he plea of he di rib ion of he remaining a e , if an , among he
minori ockholder and MANCOM for he SEC o order ockholder hereof in accordance i h heir con rac , or
RUBY o commence liq ida ion proceeding , hich i if here be no pecial con rac , on he ba i of heir
allo ed nder Sec. 4-9 of he R le on Corpora e Reco er . re pec i e in ere . 0
Under he circ m ance , liq ida ion a he onl hope of
he minori ockholder for effec ing an orderl and
_______________
eq i able e lemen of RUBY obliga ion , and compelling
he majori ockholder o acco n for all f nd , 68 CORPORATION CODE, Sec. 37.
proper ie and doc men in heir 69 Ch a Ba gC a a d Kah . M. M che & C e, 58 Phil.
261, 268 (1933).
_______________ 70 S a note 65, at p. 415.

67 CA R , p. 266. 514

513
514 C A A D

. 650, 6, 2011 513 Ma i S c h de fR b I d ia C ai .

Li
Ma i S c h de fR b I d ia C ai .
Li
Sec ion 122 of he Corpora ion Code, hich i applicable
o he pre en ca e, pro ide :
po e ion, and make f ll di clo re on he n llified credi
a ignmen . Obli io o he e pending inciden o SEC. 122. Corporate liquidation. E e c ai n h e
cr cial o he pro ec ion of he in ere of he majori of cha e e i e b i n limi a i n i ann lled b f fei e
credi or and minori hareholder , he SEC impl a ed he i e, h e c a e e i ence f he e i
ha in he in erim, RUBY corpora e erm a alidl e mina ed in an he manne , hall ne e hele be c n in ed
e ended, a if ch e en ion o ld pro ide he ol ion o a a b d c ae f h ee (3) ea af e he ime hen i
RUBY m riad problem . ld ha e been di l ed, f he e f ec ing and
E en ion of corpora e erm req ire he o e of 2/3 of defending i b again i and enabling i e le and cl e
he o anding capi al ock in a ockholder mee ing i affai , di e f and c n e i e and di ib e
called for he p rpo e.6 The ac al percen age of i a e ,b n f he e f c n in ing he b ine f
hareholding in RUBY a of Sep ember 3, 1996 hen he hich i a e abli hed.
majori ockholder allegedl ra ified he board A an ime d ing aid h ee (3) ea , aid c ai n i
re ol ion appro ing he e en ion of RUBY corpora e life a h i ed and em e ed c n e all f i e ee
f he benefi f ckh lde , membe , c edi , and he minori ockholder , he long agon and e reme
e n in in e e . F m and af e an ch c n e ance b he prej dice ca ed b n mero li iga ion o he credi or ,
c ai n f i e in f he benefi f i and he bleak pro pec for b ine reco er in he ligh of
ckh lde , membe , c edi and he in in e e , all problem ih he local go ernmen hich are
in e e hich he c a i n had in he e e mina e , implemen ing more re ric ion and an i-poll ion
he legal in e e e in he ee , and he beneficial in e e mea re ha prac icall banned he opera ion of RUBY
in he ckh lde , membe , c edi he e n in gla plan liq ida ion become he onl iable co r e for
in e e . RUBY o a e off an f r her lo e and di ipa ion of i
U n inding f he c a e affai , an a e a e . Liq ida ion o ld al o en re an orderl and
di ib able an c edi ckh lde membe h i eq i able e lemen of all credi or of RUBY, bo h ec red
nkn n cann be f nd hall be e chea ed he ci and n ec red.
m nici ali he e ch a e a e l ca ed. The SEC er di regard of he righ of he minori
E ce b dec ea e f ca i al ck and a he i e all ed b in appl ing he pro i ion of he R le of Proced re on
hi C de, n c a i n hall di ib e an f i a e Corpora e Reco er i incon i en i h he polic of liberal
e e ce n la f l di l i n and af e a men f all con r c ion of he aid r le o a i he par ie in
i deb and liabili ie . ob aining a just, expeditious and inexpensive e lemen of
ca e . 2 Pe i ioner majori ockholder , ho e er, a er
Since he corpora e life of RUBY a a ed in i ar icle ha he finding and concl ion of he SEC on he ma er
of incorpora ion e pired, i ho a alid e en ion ha ing of he di mi al of RUBY pe i ion are binding and
been effec ed, i a deemed di ol ed b ch e pira ion concl i e pon he CA and hi Co r . The con end ha
i ho need of f r her ac ion on he par of he re ie ing co r
1
corpora ion or he S a e. Wi h grea er rea on hen ho ld
liq ida ion en e
_______________

_______________ CFI f R a , Pa g, B . XXI, G.R. No. 63201, May 27, 1992, 209 SCRA
294.
71 See Villanueva, PHILIPPINE CORPORATE LAW (2010 ed.), p. 841, citing
Sec. 11, Corporation Code; Ph e Na a Ba . 72 Sec. 1-2, Rules of Procedure on Corporate Recovery.

515 516

. 650, 6, 2011 515 516 C A A D

Ma i S c h de fR b I d ia C ai . Ma i S c h de fR b I d ia C ai .
Li Li

con idering ha he la paragraph of Sec. 4-9 of he R le are no ppo ed o b i e heir j dgmen for ho e
of Proced re on Corpora e Reco er manda e he SEC o made b admini ra i e bodie pecificall clo hed i h
order he di ol ion and liq ida ion proceeding nder a hori o pa pon ma er o er hich he ha e
R le VI. Sec. 6-1, R le VI like i e a hori e he SEC on acq ired e per i e. 3 Gi en o r foregoing finding clearl
mo ion or motu proprio, or pon recommenda ion of he ho ing ha he SEC ac ed arbi raril and commi ed
managemen commi ee, o order di ol ion of he deb or pa en error and gra e ab e of di cre ion, hi ca e fall
corpora ion and he liq ida ion of i remaining a e , nder he e cep ion o he general r le.
appoin ing a Liq ida or for he p rpo e, if he con in ance A e held in Ruby Industrial Corporation v. Court of
in b ine of he deb or i no longer fea ible or profi able Appeals:
or no longer ork o he be in ere of he ockholder ,
The e led d c ine i ha fac al finding f an
par ie -li igan , credi or , or he general p blic.
admini a i e agenc a e acc ded e ec and, a ime , finali
I canno be denied ha i h he c rren di i i ene ,
f he ha e ac i ed he e e i e ina m ch a hei
di r and an agoni m be een he majori and
j i dic i n i c nfined ecific ma e . N ne hele , he e
d c ine d n a l hen he b a d fficial ha g ne be nd referring o BENHAR or i cond i , implie o hing :
hi a a h i , e e ci ed nc n i i nal e ei her he a ignmen declared oid b hi Co r
clea l ac ed a bi a il and i h ega d hi d ih Jan ar 20, 1998 deci ion con in e o be recogni ed b he
g a e ab e f di c e i n. In Leongson vs. Court of Appeals, e majori ockholder , in iola ion of he aid deci ion, or
held: nce he ac a i n f he admini a i e fficial o her hird par ie in conni ance i h BENHAR and/or he
admini a i e b a d agenc i ain ed b a fail e abide b con rolling ockholder had b eq en l en ered he
he c mmand f he la , hen i i inc mben n he c f pic re, i ho appro al of he SEC and hile the SEC
j ice e ma e igh , i h hi T ib nal ha ing he la a December 20, 1983 Order enjoining the disposition of
n he ma e . 74 RUBY s properties was in force.
The majori ockholder eagerne o ha e he
Pe i ioner majori ockholder f r her in i ha he pen ion order lif ed or aca ed b he SEC i ho an
minori ockholder ere mi aken hen he con ended order for i liq ida ion e ince a o al di regard of he
ha he rehabili a ion of RUBY i dependen on he manda e of Sec. 4-9 of he R le of Proced re on Corpora e
n inding b he SEC of he illegal a ignmen and Reco er , and heir ob io lack of an in en o render an
mor gage . The a er ha a ide from he fac ha he acco n ing of all f nd , proper ie and de ail of he
SEC had no hing o n ind beca e he alleged illegal nla f l a ignmen ran ac ion o he prej dice of
a ignmen and mor gage ere alread declared n ll and RUBY, minori ockholder and he majori of RUBY
oid, he aid a ignmen and mor gage ill no affec credi or . The majori ockholder and BENHAR
he rehabili a ion of cond i m no be allo ed o e ade he d o make
ch f ll di clo re and acco n an mone d e o RUBY o
_______________ enable he la er o effec a fair, orderl and eq i able
e lemen of all i obliga ion , a ell a di rib ion of
73 R (G.R. No. 165887), p. 744.
an remaining a e af er pa ing all i deb or .
74 S a note 1, at p. 455, citing A e a d . C f A ea , G.R.
Nos. 84572-73, November 27, 1990, 191 SCRA 700, 709-710; Pa , e c., e 51
a . . Ag a d O , e c., 108 Phil. 905, 915-916 (1960) and No. L-32255,
January 30, 1973, 49 SCRA 212, 220.
518 C A A D
517 Ma i S c h de fR b I d ia C ai .
Li
. 650, 6, 2011 517
In fine, no error a commi ed b he CA hen i e
Ma i S c h de fR b I d ia C ai .
Li
a ide he Sep ember 18, 2002 Order of he SEC and
declared he n lli of he ac of majori ockholder in
implemen ing capi al inf ion hro gh i ance of
R b ; he ame affecting only the issue of how, as to h
addi ional hare in Oc ober 1991, he board re ol ion
will be its creditors.
appro ing he e en ion of RUBY corpora e erm for
S ch con en ion i n enable and con rar o o r
ano her 25 ear , and an illegal a ignmen of credi
pre io r ling in G.R. No . 124185-87. Wi h he
e ec ed b RUBY credi or in fa or of hird par ie
n llifica ion of he deed of a ignmen of credi e ec ed
and/or cond i of he con rolling ockholder . The CA
b ome of R b ec red credi or in fa or of BENHAR, i
like i e correc l ordered he deli er of all doc men
logicall follo ha he a ignor or he original bank
rela i e o he aid a ignmen of credi o he MANCOM
credi or remain a he credi or on record of RUBY. We
or he Liq ida or, he n inding of he e oid deed of
ha e no ed ha BENHAR, hich i con rolled b he
a ignmen , and heir f ll acco n ing b he majori
famil of Henr Y ho i al o a direc or and ockholder
ockholder .
of RUBY, a no li ed a one of RUBY credi or a he
The pe i ioner majori ockholder and China Bank
ime RUBY filed he pe i ion for pen ion of pa men .
canno be permi ed o rai e an i e again regarding he
Pe i ioner majori ockholder in in a ion ha RUBY
alidi of any a ignmen of credi made d ring he
credi ma ha e been a igned o hird par ie , if no
effec i i of he pen ion order and before he finali of
 he Sep ember 18, 2002 Order lif ing he ame. While In he ca e of Union Bank of the Philippines v.
China Bank i no precl ded from q e ioning he alidi Concepcion, he Co r i pre en ed i h he i e of
of he December 20, 1983 pen ion order on he ba i of he her he SEC had j ri dic ion o proceed ih
res judicata, i i , ho e er, barred from doing o b he in ol enc proceeding af er i a ho n ha he deb or
principle of law of the case. We ha e held ha hen he corpora ion can no longer be rehabili a ed. We held ha
alidi of an in erloc or order ha alread been pa ed al ho gh j ri dic ion o er a pe i ion o declare a
pon on appeal, he Deci ion of he Co r on appeal corpora ion in a a e of in ol enc ric l lie i h reg lar
become he la of he ca e be een he ame par ie . Law co r , he SEC po e ed ample po er nder P.D. No.
of the case ha been defined a he opinion deli ered on a 902-A, a amended, o declare a corpora ion in ol en a an
former appeal. More pecificall , i mean ha ha e er i inciden of and in con in a ion of i alread acq ired
once irre ocabl e abli hed a he con rolling legal r le of j ri dic ion o er he pe i ion o be declared in a a e of
deci ion be een he ame par ie in he ame ca e pen ion of pa men in he o in ance pro ided in
con in e o be he la of he ca e, he her correc on Sec. 5 (d) hereof.
general principle or no , o long a he fac on hich ch
deci ion a predica ed con in e o be he fac of he ca e _______________
before he co r . 5
76 R (G.R. No. 165887), p. 62.
77 G.R. No. 160727, June 26, 2007, 525 SCRA 672, 682-683.
_______________
78 SEC. 5. In addition to the regulatory and adjudicative functions of
75 U Ba f he Ph e . ASB De e e C a , the [SEC] over corporations under existing laws
G.R. No. 172895, July 30, 2008, 560 SCRA 578, 600, citing Pe e .
520
P a, e a ., 103 Phil. 992, 999 (1958).

51
520 C A A D
Ma i S c h de fR b I d ia C ai .
. 650, 6, 2011 519 Li
Ma i S c h de fR b I d ia C ai .
Li S b eq en l , in Consuelo Metal Corporation v. Planters
Development Bank he Co r a again confron ed i h
The n inding proce of all ch illegal a ignmen of he ame i e. The original pe i ion filed b he deb or
RUBY credi i cri ical and nece ar , in keeping i h corpora ion a for pen ion of pa men , rehabili a ion
good fai h and a a ma er of fairne and j ice o all and appoin men of a rehabili a ion recei er or
par ie affec ed, par ic larl he n ec red credi or ho managemen commi ee. Finding he pe i ion fficien in
and o ffer mo if lef i h no hing of he a e of form and b ance, he SEC i ed an order pending
RUBY, and he minori ockholder ho aged legal immedia el all ac ion for claim again he pe i ioner
ba le o defend he in ere of RUBY and pro ec he pending before an co r , rib nal or bod n il f r her
righ of he minori from he ab e of he con rolling order from he co r . I al o crea ed a managemen
ockholder . A correc l a ed b he CA: commi ee o nder ake pe i ioner rehabili a ion. Fo r
ear la er, pon he managemen commi ee
Li ida i n i im e a i e beca e he n ec ed c edi m recommenda ion, he SEC i ed an omnib order
neg ia e he am n f he im able in e e a e n i l ng direc ing he di ol ion and liq ida ion of he pe i ioner,
n aid c edi , he deci i n n hich a e a e be ld and ha he proceeding on and implemen a ion of he
li ida e he illegall a igned c edi m be made, he he order of liq ida ion be commenced a he Regional Trial
ec ed c edi and he ade c edi m be de e mined, and Co r o hich he ca e a ran ferred. Ho e er, he rial
m im an l , he e a i n f he 40.172% min i co r ref ed o ac on he mo ion filed b he pe i ioner
e cen age f ne hi m be d ne. 76 ho req e ed for he i ance of a TRO again he
e raj dicial foreclo re ini ia ed b one of i credi or .
Ho e er, e do no agree ha i i he SEC hich ha
The rial co r r led ha ince he SEC had alread
he a hori o per i e RUBY liq ida ion.
 ermina ed and decided on he meri he pe i ion for nde Sec i n 5(d) f P e iden ial Dec ee N . 902-A. Sec i n 5.2 f
pen ion of pa men , he rial co r no longer had legal RA 8799 ide :
ba i o ac on pe i ioner mo ion. I like i e denied he The C mmi i n j i dic i n e all ca e en me a ed
mo ion for recon idera ion a ing ha pe i ion for nde Sec. 5 f P e iden ial Dec ee N . 902-A i he eb
pen ion of pa men co ld no be con er ed in o a an fe ed he C f gene al j i dic i n he
pe i ion for di ol ion and liq ida ion beca e he a ia e Regi nal T ial C : Provided, Tha he
co ered differen bjec ma er and ere go erned b S eme C in he e e ci e f i a h i ma
differen de igna e he Regi nal T ial C b anche ha hall
e e ci e j i dic i n e he e ca e . The C mmi i n hall
_______________ e ain j i dic i n e ending ca e in l ing in a-
c a e di e bmi ed f final e l i n hich
decrees, it shall have original and exclusive jurisdiction to hear and h ld be e l ed i hin ne (1) ea f m he enac men
decide cases involving: f hi C de. The C ha e a dc
e e d g e f a e / ehab a
xxxx
ca e f ed a f 30 J e 2000 f a d ed.
d) Petitions of corporations, partnerships or associations to be
(Em ha i lied)
declared in the state of suspension of payments in cases where [it]
The SEC a med j i dic i n e CMC eii n f
possesses sufficient property to cover all its debts but foresees the
en i n f a men and i ed a en i n de n 2 A il
impossibility of meeting them when they respectively fall due or in cases
1996 af e i f nd CMC eii n be fficien in f m and
where [it] has no sufficient assets to cover its liabilities, but is under
b ance. While CMC eii n a ill ending i h he SEC
the management of a Rehabilitation Receiver or Management Committee
a f 30 J ne 2000, i a finall di ed f n 29 N embe
created pursuant to this Decree.
2000 hen he SEC i ed
79 G.R. No. 152580, June 26, 2008, 555 SCRA 465.
522
521

522 E EC E A A ED
. 650, 6, 2011 521 Ma i S c h de fR b I d ia C ai . Li
Ma i S c h de fR b I d ia C ai .
Li i Omnib O de di ec ing he di l i n f CMC and he
an fe f he li ida i n ceeding bef e he a ia e ial
r le . Pe i ioner remed h a o file a ne pe i ion c . The SEC finall di ed f CMC eii nf en i n
for di ol ion and liq ida ion ei her i h he SEC or he f a men hen i de e mined ha CMC c ld n l nge be
rial co r . cce f ll ehabili a ed.
When he ca e a ele a ed o he CA, he pe i ion a H e e , he SEC j i dic i n d e n e end he
di mi ed affirming ha nder Sec. 121 of he Corpora ion li ida i n f a c a i n. Wh e he SEC ha dc
Code, he SEC had j ri dic ion o hear he pe i ion for de he d f a c a , dc e
di ol ion and liq ida ion. On mo ion for recon idera ion, he da f he c a e a he
he CA remanded he ca e o he SEC for proceeding a a e eg a a c . Thi i he ea n h he
nder Sec. 121 of he Corpora ion Code. The CA denied he SEC, in i 29 N embe 2000 Omnib O de , di ec ed ha he
mo ion for recon idera ion filed b he re ponden credi or, ceeding n and im lemen a i n f he de f li ida i n be
ho hen filed a pe i ion for re ie i h hi Co r . c mmenced a he Regi nal T ial C hich hi ca e hall be
We r led ha he SEC ob er ed he correc proced re an fe ed. Th he c ec ced e beca e he
nder he pre en la , in ca e here i merel re ained da f a c a e e he e e e f
j ri dic ion o er pending ca e for pen ion of pa men / ca f a d aga he c a , h ch c ea fa
rehabili a ion, h : de he dc f he eg a c . The a
c he be c e e a he c ed f
Re blic Ac N . 8799 (RA 8799) an fe ed he he c a , a ce a he ca , a d de e e
a ia e egi nal ial c he SEC j i dic i n defined he efe e ce . 80 (Addi i nal em ha i lied.)
 In ie of he foregoing, he SEC ho ld no be direc ed WHEREFORE, he pe i ion for re ie on certiorari are
o ran fer hi ca e o he proper RTC hich hall DENIED. The Deci ion da ed Ma 26, 2004 and Re ol ion
per i e he liq ida ion proceeding nder Sec. 122 of he da ed No ember 4, 2004 of he Co r of Appeal in CA-G.R.
Corpora ion Code. Under Sec. 6 (d) of P.D. 902-A, he SEC SP No. 73195 are hereb AFFIRMED ih
i empo ered, on he ba i of he finding and MODIFICATION in ha he Sec ri ie and E change
recommenda ion of he managemen commi ee or Commi ion i hereb ordered o TRANSFER SEC Ca e
rehabili a ion recei er, or on i o n finding , o de ermine No. 2556 o he appropria e Regional Trial Co r hich i
ha he con in ance in b ine of a deb or corpora ion hereb DIRECTED o per i e he liq ida ion of R b
nder pen ion of pa men or rehabili a ion o ld no be Ind rial Corpora ion nder he pro i ion of R.A. No.
fea ible or profi able nor ork o he be in ere of he 10142.
ockholder , par ie -li igan , credi or , or he general Wi h co again he pe i ioner .
p blic, order he di ol ion of ch corpora ion and i
remaining a e liq ida ed accordingl . A men ioned _______________
earlier, he proced re i go erned b R le VI of he SEC
R le of Proced re on Corpora e Reco er . 81 Lapsed into law on July 18, 2010 without the signature of the
President, in accordance with Article VI, Section 27 (1) of the
Constitution.
_______________
524
80 Id., at pp. 473-474.

523
524 C A A D
Ma i S c h de fR b I d ia C ai .
. 650, 6, 2011 523 Li
Ma i S c h de fR b I d ia C ai .
Li SO ORDERED.

Ho e er, R.A. No. 10142 1 o her i e kno n a he Carpio-Morales (Chairperson), Brion, Bersamin and
Financial Rehabili a ion and In ol enc Ac (FRIA) of Abad,** JJ., conc r.
2010, no pro ide for co r proceeding in he
rehabili a ion or liq ida ion of deb or , bo h j ridical and Petitions denied, judgment and resolution affirmed with
na ral per on , in a manner ha ill en re or main ain modification.
cer ain and predic abili in commercial affair , pre er e
No e . A deri a i e i i f ndamen all di inc and
and ma imi e he al e of he a e of he e deb or ,
independen from liq ida ion proceeding he are
recogni e credi or righ and re pec priori of claim , and
nei her par of each o her nor he nece ar con eq ence of
en re eq i able rea men of credi or ho are imilarl
he o her. (Yu vs. Yukayguan, 589 SCRA 588 [2009])
i a ed. Con idering ha hi ca e a ill pending
A ockholder ma e on behalf of he corpora ion o
hen he ne la ook effec la ear, he RTC o hich
a ail a compromi e agreemen en ered in o b he
hi ca e ill be ran ferred hall be g ided b Sec. 146 of
corpora ion. (Strategic Alliance Development Corporation
aid la , hich a e :
vs. Radstock Securities Limited, 607 SCRA 413 [2009])
SEC. 146. Application to Pending Insolvency, Suspension of
o0o
Payments and Rehabilitation Cases. Thi Ac hall g e n all
e i i n filed af e i ha aken effec . All f he ceeding in
in l enc , en i n f a men and ehabili a i n ca e hen
ending, e ce he e en ha in ini n f he c hei
a lica i n ld n be fea ible ld k inj ice, in
hich e en he ced e e f h in i la and eg la i n
hall a l .
C g 2021 Ce a B S , I c. A g e e ed.