(petitioner) from paying interests and
penalties.
PRYCE CORPORATION v. CA and CHINA
BANKING CORPORATION, GR No. 172302, 2008-
02-04
PRYCE CORPORATION - LPG TANK
The Asian Financial Crisis is a crisis caused
by the collapse of the currency exchange
rate and hot money bubble
- The rehabilitation receiver shall be
deemed an officer of the court with
the principal duty of preserving and
maximizing the value of the assets
of the debtor during the rehabilitation
proceedings. (regulate and check
the operations of the pryce
corporation, debtor).
FACTS:
Its primary purpose was to develop real
estate in Mindanao.
 petitioner filed with the Regional Trial Court
(RTC), Branch 138, Makati City, acting as
Commercial Court, a petition for
rehabilitation receiver
Rehabilitation Receiver from among the
nominees named therein and the staying of
the enforcement of all claims, monetary or
otherwise against it. Petitioner also prayed
that after due hearing, its proposed
Rehabilitation Plan be approved.
The RTC issued a "Stay Order"... the RTC
then appointed Gener T. Mendoza as
Rehabilitation Receiver.
The Bank of the Philippines Islands
claimed that the petition and the proposed
Rehabilitation Plan are coercive and violate
the contract.
The respondent alleged in its opposition that
petitioner is solvent and that it filed the
petition to force its creditors to accept
dacion payments. In effect, petitioner
passed on to the creditors the burden of
marketing and financing... unwanted
memorial lots, while exempting it
Payment in cash over a three-year period,
without interest, of all non-bank, trade and
other payables amounting to less than
P500,000 each
he Rehabilitation Receiver further proposed
the following amendments with respect to
the dacion payments 
 the RTC issued an Order approving the
Amended Rehabilitation Plan and finding
petitioner eligible to be placed in a state of
corporate rehabilitation
Respondent alleged that in approving the
Amended Rehabilitation Plan, the RTC
impaired the obligations of contracts,
voided contractual... stipulation and
contravened the "avowed policy of the
State" to maintain a competitive financial
system.
the Court of Appeals rendered its Decision
granting respondent's petition and reversing
the assailed Orders of the RTC
Issues:
whether the Court of Appeals erred in
denying the petition for rehabilitation of
petitioner Pryce Corporation.
Ruling
Section 6 provides that the petition must be
"sufficient in form and substance”.
We agree with the Court of Appeals that the
petition for rehabilitation does not allege
that there is a clear and imminent danger
that petitioner will lose its corporate assets if
a receiver is not appointed. In other words,
the "serious situation test" laid down by
Rizal
Commercial Banking Corporation has not
been met or at least substantially complied
with.
Significantly, the Stay Order dated July 13,
2004 issued by the RTC does not state any
serious situation affecting petitioner's
corporate assets.
he court may approve a rehabilitation plan
even over the opposition of creditors holding
a majority of the total liabilities of the debtor
if, in its judgment, the rehabilitation of the
debtor is feasible and the opposition of the
creditors is manifestly unreasonable. The
rehabilitation plan, once approved, is binding
upon the debtor and all persons who may be
affected by it, including creditors, whether or
not such persons have participated in the
proceedings or have opposed the plan or
whether or not their claims have been
scheduled
which would deplete them from the use of
LPG as it becomes a deletion of common
pool resources. ,
it merely provides that receivers may be
appointed whenever: (1) necessary in order
to preserve the rights of the parties-litigants;
and/or (2) protect the interest of the
investing public and creditors. 

There must exist a clear and imminent

danger of losing the corporate assets if a
receiver is not appointed. 
DISCUSSION

SUMMARY

Pryce Corporation v China Banking Corporation

February 18, 2014|Leonen, J.| Rehabilitation
Rather than let struggling corporations Plan; Cram Down
slip and vanish, the better option is to Effect
Digester: Anna Mickaella Lingat
allow commercial courts to come in and
SUMMARY: Pryce filed a petition for
apply the process for corporate
rehabilitation, which was
rehabilitation. found to be sufficient in form and substance.
The rehabilitation
This option is preferred so as to avoid receiver submitted an amended rehabilitation
what Garrett Hardin called the Tragedy plan, which included
of Commons. Here, Hardin submits that the payment of the indebtedness to China
“coercive government regulation is Banking Corp. and BPI
necessary to prevent the degradation of through a dacion en pago. The rehabilitation
plan was approved,
common–pool resources [since]
finding Pryce eligible to be placed in a state of
individual resource appropriators receive
corporate
the full benefit of their use and bear
rehabilitation. China Bank appealed the order,
only a share of their cost.” 83 By analogy and argued that the
to the game theory, this is the approval impaired the obligation of contracts,
prisoner’s dilemma: “Since no individual while BPI filed a
has the right to control or exclude separate petition raising the same issues. The
others, each appropriator has a very CA granted the
high discount rate [with] little incentive petitions. Pryce appealed the CA’s decision, but
this was denied,
to efficiently manage the resource in
along with subsequent MRs. The Court en banc
order to guarantee future use.”
reversed its First
Division decision and held that the rehabilitation
When Pryce Corporation wanted to
plan may be
develop real estate in Mindanao. They find it
approved.
hard to do due to the The Asian Financial
Crisis-is a crisis caused by the collapse of DOCTRINE: The court may approve a
the currency exchange rate and hot money rehabilitation plan even
bubble. What they did was petitioned for a over the opposition of creditors holding a
corporate rehabilitation( pertains to the majority of the total
process of recovery and reorganization, liabilities of the debtor if, in its judgment, the
rehabilitation of the
and is especially applicable to a juridical
debtor is feasible and the opposition of the
entity, such as a corporation.). This falls
creditors is manifestly
perfectly as an example of the tragedy of unreasonable. The rehabilitation plan, once
commons , considering that LPG is a approved, is binding
common resource on which is to be used for upon the debtor and all persons who may be
cooking, if this resource is to be taken down affected by it,
due to the fact that they were not able to including creditors, whether or not such persons
afford for the establishment in a certain have participated
area. Not only does it affect the corporation in the proceedings or have opposed the plan or
but it also greatly affects the society on
whether or not
their claims have been scheduled.