(File photo)
MANILA – The Supreme Court on Thursday announced technical procedural guidelines eyed at simplifying and consolidating legal actions involving cash-strapped firms that initiate financial rehabilitation proceedings before the courts.
The court said the guidelines laid down in the case, Pacific Cement Company vs. Oil and Natural Gas Commission, are necessary to avoid separate multiple suits or appeals questioning a commencement or stay order issued by rehabilitation courts.
A stay order suspends all actions for claims against a corporation undergoing rehabilitation only for a temporary period to "prevent the irreversible collapse of the corporation and give the management committee or the receiver the absolute tranquility to study the viability of the corporation," the court said.
It said separate suits or appeals questioning orders or judgments rendered in violation of a commencement/stay order only delay the consolidation of all legal proceedings in rehabilitation courts.
The SC guidelines mandate the following procedures to be observed in the conduct of financial rehabilitation proceedings, under the Financial Rehabilitation and Insolvency Act of 2010 (FRIA) and the Financial Rehabilitation Rules of Procedure (FR Rules) Rules:
• Upon the appointment of a rehabilitation receiver, the rehabilitation court shall instruct the former to notify all courts or tribunals before which the debtor has pending actions, by way of manifestation, of the existence of the petition for rehabilitation; the court where the petition was filed; the date of filing; and the fact of the issuance of commencement and stay orders.
• In cases where the petitioner is the debtor, the courts to be notified shall be those indicated in the verified petition and affidavit of general financial condition, as required by the FR Rules.
• In cases where the petitioner is the creditor, the rehabilitation court shall, together with the appointment of a rehabilitation receiver, instruct the latter to ascertain the existence of any pending actions or proceedings by or against the debtor.
• The rehabilitation court shall further require the rehabilitation receiver, should the latter learn of any other pending actions by or against the debtor, to notify such other court/tribunal of the existence of the petition for rehabilitation, the court where the petition was filed; the date of its filing; and the fact of the issuance of commencement and stay orders, by way of manifestation within five calendar days from the rehabilitation receiver’s knowledge of such other actions. The rehabilitation receiver shall also report to the rehabilitation court the former’s compliance within five calendar days.
The high tribunal directed the Office of the Court Administrator to disseminate copies of the decision to all trial courts. (PNA)
