RESEARCH ON REHABILITATION

Scope
Rehabilitation contemplates a continuance of corporate life and activities in an
effort to restore and reinstate the corporation to its former position of successful
operation and solvency. 10 Presently, the applicable law on rehabilitation petitions
filed by corporations, partnerships or associations, 11 including rehabilitation
cases transferred from the Securities and Exchange Commission to the RTCs
pursuant to Republic Act No. 8799 or the Securities Regulation Code, 12 is
the Interim Rules of Procedure on Corporate Rehabilitation (2000). SAEHaC

Under the Interim Rules, the RTC, within five (5) days from the filing of the
petition for rehabilitation and after finding that the petition is sufficient in form and
substance, shall issue a Stay Order appointing a Rehabilitation
Receiver, suspending enforcement of all claims, prohibiting transfers or
encumbrances of the debtor's properties, prohibiting payment of outstanding
liabilities, and prohibiting the withholding of supply of goods and services from
the debtor. 13 Any transfer of property or any other conveyance, sale, payment, or
agreement made in violation of the Stay Order or in violation of the Rules may be
declared void by the court upon motion ormotu proprio. 14
Further, the Stay Order is effective both against secure and unsecured creditors.
This is in harmony with the principle of "equality is equity" first enunciated
in Alemar's Sibal & Sons, Inc. v. Elbinias, 15 thus:
During rehabilitation receivership, the assets are held in trust for the
equal benefit of all creditors to preclude one from obtaining an
advantage or preference over another by the expediency of an
attachment, execution or otherwise. For what would prevent an alert
creditor, upon learning of the receivership, from rushing posthaste to the
courts to secure judgments for the satisfaction of its claims to the
prejudice of the less alert creditors.
As between creditors, the key phrase is "equality is equity." When a
corporation threatened by bankruptcy is taken over by a receiver, all the
creditors should stand on an equal footing. Not anyone of them should
be given any preference by paying one or some of them ahead of the
others. This is precisely the reason for the suspension of all pending
claims against the corporation under receivership. Instead of creditors
vexing the courts with suits against the distressed firm, they are directed
to file their claims with the receiver who is a duly appointed officer of the
SEC. (Emphasis supplied)
Nevertheless, the suspension of the enforcement of all claims against the
corporation is subject to the rule that it shall commence only from the time the
Rehabilitation Receiver is appointed.
 (New Frontier Sugar Corporation v. Regional Trial Court, Br. 39, Iloilo City, G.R.
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No. 165001, [January 31, 2007], 542 PHIL 587-598)

To begin with, corporate rehabilitation connotes the restoration of the

debtor to a position of successful operation and solvency, if it is shown that its
continued operation is economically feasible and its creditors can recover
more, by way of the present value of payments projected in the rehabilitation
plan, if the corporation continues as a going concern than if it is immediately
liquidated. 17 It contemplates a continuance of corporate life and activities in
an effort to restore and reinstate the corporation to its former position of
successful operation and solvency, the purpose being to enable the company
to gain a new lease on life and allow its creditors to be paid their claims out of
its earnings. 18
A principal feature of corporate rehabilitation is the suspension of
claims against the distressed corporation. Section 6 (c) of Presidential Decree
No. 902-A, as amended, provides for suspension of claims against
corporations undergoing rehabilitation, to wit:
Section 6 (c). . . .
. . . Provided, finally, that upon appointment of a management
committee, rehabilitation receiver, board or body, pursuant to this
Decree, all actions for claims against corporations, partnerships or
associations under management or receivership pending before any
court, tribunal, board or body, shall be suspended accordingly. 19
In November 21, 2000, this Court En Banc promulgated the Interim
Rules of Procedure on Corporate Rehabilitation, 20 Section 6, Rule 4 of which
provides a stay order on all claims against the corporation, thus:
Stay Order. — If the court finds the petition to be sufficient in form and
substance, it shall, not later than five (5) days from the filing of the
petition, issue an Order . . .; (b) staying enforcement of all claims,
whether for money or otherwise and whether such enforcement is by
court action or otherwise, against the debtor, its guarantors and sureties
not solidarily liable with the debtor; . . . 21
In Finasia Investments and Finance Corporation v. Court of
Appeals, 22 the term "claim" has been construed to refer to debts or demands
of a pecuniary nature, or the assertion to have money paid. The purpose for
suspending actions for claims against the corporation in a rehabilitation
proceeding is to enable the management committee or rehabilitation receiver
to effectively exercise its/his powers free from any judicial or extrajudicial
interference that might unduly hinder or prevent the rescue of the debtor
company. 23 IATHaS
 (Panlilio v. Regional Trial Court, Manila, G.R. No. 173846, [February 2, 2011],
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656 PHIL 453-463)

BIR Liabilities (By virtue of Commencement Order but not Stay Order)
Sec. 9 (F)

F) exempt the debtor from liability for taxes and fees, including
penalties, interests and charges thereof due to the national
government or the LGU as provided in Section 19 of the Act.