Negros Navigation v.

CA



The Facts


NNC engaged the services of THI(TSUNEISHI HEAVY INDUSTRIES)
for the repair of its vessels.

THI filed a case for sum of money and damages with prayer for issuance of
writ of attachment against NNC The action is based on the unpaid services
for the repair of NNCs vessels, otherwise known as repairmans lien.
the Cebu RTC granted the issuance of a writ of preliminary
attachment against the properties of NNC.
NNC filed a Petition for Corporate Rehabilitation with Prayer for
Suspension of Payments
[11]
with the RTC of Manila (Manila RTC), The
Manila RTC granted the NNCs petition and issued a Stay Order.

Upon the issuance of the stay order by the Manila RTC, NNC filed a
Manifestation and Motion to Suspend Proceedings and to Lift Preliminary
Attachment with the Cebu RTC.
[14]


THI filed an Amended Complaint
[15]
in the Cebu RTC. In the amended
complaint, THI impleaded certain vessels of NNC as co-defendants in the
suit. The Cebu RTC issued an Order
[19]
for the arrest of the vessels of NNC
in the in rem aspect of the case.


NNCs Rehabilitation Receiver filed with the Manila RTC a Motion
[20]
for
the clarification of the stay order. It sought to confirm whether the claim
sought to be enforced by THI against the vessels of NNC is covered by the
stay order. The Manila RTC clarified that the stay order applies to all
claims.

NNC filed a Motion to Suspend Proceedings and to Lift the Writ of
Attachment and Arrest Orders
[23]
before the Cebu RTC.
However, the CA issued the Resolution
[24]
assailed in what is before this
Court as G.R. No. 163156, wherein the appellate court temporarily
restrained the implementation of the Orders of the Manila RTC.

the CA issued the Decision
[27]
assailed in what is now G.R. No. 166845,
denying the petition of THI that sought to annul and enjoin the enforcement
and implementation of the Orders of the Manila RTC


The I ssues

THI, G.R. No. 166845, assigned the following errors in the decision and
resolution of the CA:

WON the stay order applies to all claims.

In G.R. No. 166845

On the first issue, THI maintains that its maritime liens against the
vessels of NNC were impaired by the issuance of the stay order. THI argues
that the issuance of the stay order by the Manila RTC, acting as
rehabilitation court, was erroneous considering that maritime liens cannot
be affected or dealt with except by an admiralty court in an admiralty
proceeding in rem. It further averred that the mere suspension of the in
rem proceedings in the admiralty case prejudiced its substantive rights
under Presidential Decree (PD) 1521.
[34]


The Court agrees that PD 1521 is the governing law concerning its
maritime lien for the services it rendered to NNC. However, when NNC
filed a petition for corporate rehabilitation and suspension of payments, and
the Manila RTC found that the petition was sufficient in form and in
substance and appointed the rehabilitation receiver, the admiralty
proceeding was appropriately suspended in accordance with Section 6 of
the Interim Rules on Corporate Rehabilitation.
[35]


Rehabilitation contemplates continuance of corporate life and
activities in an effort to restore and reinstate the corporation to its former
position of successful operation and solvency.
[36]
The purpose of
rehabilitation proceedings is precisely to enable the company to gain a new
lease on life and thereby allow creditors to be paid their claims from its
earnings.

The governing law concerning rehabilitation and suspension of
actions for claims against corporations is PD 902-A, as amended. The
Interim Rules of Procedure on Corporate Rehabilitation apply to petitions
for rehabilitation filed by corporations, partnerships, and associations
pursuant to PD 902-A.

PD 902-A
[38]
mandates that upon appointment of a management
committee, rehabilitation receiver, board or body, all actions for claims
against corporations, partnerships or associations under management or
receivership pending before any court, etc. shall be suspended. PD 902-A
does not make any distinction as to what claims are covered by the
suspension of actions for claims against corporations under rehabilitation.
No exception is made therein in favor of maritime claims. Thus, since the
law does not make any exemptions or distinctions, neither should we.

The justification for the suspension of actions or claims, without
distinction, is to enable the management committee or rehabilitation
receiver to effectively exercise its/his powers free from any judicial or
extra-judicial interference that might unduly hinder or prevent the "rescue"
of the debtor company.

It is undisputed that THI holds a preferred maritime lien over NNCs
assets by virtue of THIs unpaid services. The issuance of the stay order by
the rehabilitation court does not impair THIs preferred status as a creditor
of NNC. The enforcement of its claim through court action was merely
suspended to give way to the speedy and effective rehabilitation of the
distressed shipping company. Upon termination of the rehabilitation
proceedings or in the event of the bankruptcy and consequent dissolution of
the company, THI can still enforce its preferred claim upon NNC.

PD 902-A was designed not only to salvage an ailing corporation but
also to protect the interest of investors, creditors and the general public.

When a distressed company is placed under rehabilitation, the
appointment of a management committee follows to avoid collusion
between the previous management and creditors it might favor, to the
prejudice of the other creditors. The stay order is effective on all creditors of
the corporation without distinction, whether secured or unsecured. Once the
corporation threatened by bankruptcy is taken over by a receiver, all the
creditors ought to stand on equal footing. Not any one of them should be
paid ahead of the others. This is precisely the reason for suspending all
pending claims against the corporation under receivership.
[40]




On the second issue, THI argues that the Manila RTC, in granting the
stay order, divested the Cebu RTC, which is acting as an admiralty court, of
its jurisdiction over the maritime case of THI. It insists that its maritime
liens over the vessels of NNC must be upheld, notwithstanding NNCs
rehabilitation proceedings. It stresses that in in rem proceedings to enforce
maritime liens, the vessels alone may be impleaded as defendants. The
vessels themselves answer for the liens, and lienholders like THI have the
substantive statutory right under PD 1521 to insist on the vessels
responsibility because an action in rem is a proceeding against the ship
itself. Furthermore, it emphasizes that a maritime lien is not affected by
bankruptcy or reorganization, citing Gilmore and Black as reference.
[43]




True enough, a maritime lien is not affected by bankruptcy or
reorganization. However, in the instant case, we are not dealing with
bankruptcy or reorganization; rather, we are confronted with NNCs
rehabilitation. If we follow the argument of THI and allow the continued
enforcement of its claims against NNC, we would, in effect, violate
provisions of PD 902-A. To reiterate, the rationale behind PD 902-A is to
effect a feasible and viable rehabilitation of an ailing corporation.

There is no conflict between PD 1521 and PD 902-A. The Manila
RTC acting as a rehabilitation court merely suspended the proceedings in
the admiralty case in the Cebu RTC. It did not divest the Cebu RTC of its
jurisdiction over the maritime claims. The preferred maritime lien of THI
can still be enforced upon the termination of the rehabilitation proceedings,
or upon the dissolution of the corporation.