Metropolitan Bank & Trust Company vs Asb Holdings, Inc.
Content
METROPOLITAN BANK & TRUST COMPANY vs ASB HOLDINGS, INC.
G.R. NO. 166197, February 27, 2007
FACTS:
Metropolitan Bank and Trust company is a creditor bank of respondents corporation
collectively known as the ASB Group of Companies. ASB group of companies is
owner and developer of condominium and real estate projects which contracted
loans to the petitioner which were secured by real estate mortgages.
Later, ASB group of companies filed with the Securities and Exchange Commission a
petition for rehabilitation with prayer for suspension of actions and proceedings
against petitioners. However, despite the objection of Metropolitan bank and trust
company for the rehabilitation plan, SEC granted the same.
Meanwhile, the contention of the petitioner in their objection was that, the approval
on the rehabilitation plan will impair the contract entered into by the ASB group of
companies with the petitioner.
ISSUE:
Whether or not the approval of rehabilitation plan impairs contract entered into and
prejudiced creditors.
HELD:
The Supreme Court were not convinced that the approval of the rehabilitation plan
impair petitioner bank's lien over the mortgaged properties. Section 6 (c) of P.D. no.
902-A provides that "upon appointment of a management committee, rehabilitation
receiver, board or body, pursuant to this Decree, all actions for claims against
corporations, partnership or associations under management or receivership
pending before any curt, tribunal, board or body shall be suspended." By that
statutory provision, it is clear that the approval of the rehabilitation plan and the
appointment of a rehabilitation reciever merely suspend the action for claims
against respondent corporations. Petitioners banks preferred status over the
unsecured creditors relative to the mortgage liens is retained, but the enforcement
of such preference is suspended. the loan agreement between the parties have not
been set aside and petitioner bank may still enforce its preference when the assets
of ASB Group of companies will be liquidated. considering that the provisions of the
loan agreements and merely suspends, there is no impairment of contracts,
specifically its lien on the mortgaged properties.
The court also emphasized that the purpose of rehabilitating proceedings is to
enable the company to gain new lease on life thereby allows creditors to be paid
their claims from its earnings. rehabilitation contemplates a continuance of
corporate life and activities in an effort to restore ad reinstate the financially
distressed corporation to its former position of successful operation and solvency.
this is in consonance with the state's equitable distribution of wealth to protect
investments and the public. The approval of the rehabilitation plan by the SEC
hearing panel, affirmed by both the SEC en banc and the court of appeals, is
precisely in furtherance if the rationale behind P.D. No. 902-A, as amended which is
"to effect a feasible and viable rehabilitation" of ailing corporations which affect the
public welfare.
G.R. NO. 166197, February 27, 2007
FACTS:
Metropolitan Bank and Trust company is a creditor bank of respondents corporation
collectively known as the ASB Group of Companies. ASB group of companies is
owner and developer of condominium and real estate projects which contracted
loans to the petitioner which were secured by real estate mortgages.
Later, ASB group of companies filed with the Securities and Exchange Commission a
petition for rehabilitation with prayer for suspension of actions and proceedings
against petitioners. However, despite the objection of Metropolitan bank and trust
company for the rehabilitation plan, SEC granted the same.
Meanwhile, the contention of the petitioner in their objection was that, the approval
on the rehabilitation plan will impair the contract entered into by the ASB group of
companies with the petitioner.
ISSUE:
Whether or not the approval of rehabilitation plan impairs contract entered into and
prejudiced creditors.
HELD:
The Supreme Court were not convinced that the approval of the rehabilitation plan
impair petitioner bank's lien over the mortgaged properties. Section 6 (c) of P.D. no.
902-A provides that "upon appointment of a management committee, rehabilitation
receiver, board or body, pursuant to this Decree, all actions for claims against
corporations, partnership or associations under management or receivership
pending before any curt, tribunal, board or body shall be suspended." By that
statutory provision, it is clear that the approval of the rehabilitation plan and the
appointment of a rehabilitation reciever merely suspend the action for claims
against respondent corporations. Petitioners banks preferred status over the
unsecured creditors relative to the mortgage liens is retained, but the enforcement
of such preference is suspended. the loan agreement between the parties have not
been set aside and petitioner bank may still enforce its preference when the assets
of ASB Group of companies will be liquidated. considering that the provisions of the
loan agreements and merely suspends, there is no impairment of contracts,
specifically its lien on the mortgaged properties.
The court also emphasized that the purpose of rehabilitating proceedings is to
enable the company to gain new lease on life thereby allows creditors to be paid
their claims from its earnings. rehabilitation contemplates a continuance of
corporate life and activities in an effort to restore ad reinstate the financially
distressed corporation to its former position of successful operation and solvency.
this is in consonance with the state's equitable distribution of wealth to protect
investments and the public. The approval of the rehabilitation plan by the SEC
hearing panel, affirmed by both the SEC en banc and the court of appeals, is
precisely in furtherance if the rationale behind P.D. No. 902-A, as amended which is
"to effect a feasible and viable rehabilitation" of ailing corporations which affect the
public welfare.
