Panlilio V RTC BR 51

PANLILIO vs.
RTC BRANCH 51 MANILA

GR 173846 | Peralta, J. | Commencement Order
Facts:
On October 15, 2004, Jose Marcel Panlilio, Erlinda Panlilio, Nicole Morris and Mario Cristobal
(petitioners), as corporate officers of Silahis International Hotel, Inc. (SIHI), filed with the
Regional Trial Court (RTC) of Manila, Branch 24, a petition for Suspension of Payments and
Rehabilitation in SEC Corp. Case No. 04-111180. On October 18, 2004, the RTC of Manila,
Branch 24, issued an Order staying all claims against SIHI upon finding the petition sufficient in
form and substance.
At the time, however, of the filing of the petition for rehabilitation, there were a number of
criminal charges pending against petitioners in Branch 51 of the RTC of Manila. These criminal
charges were initiated by respondent Social Security System (SSS) and involved charges of
violations of Section 28 (h) of Republic Act 8282, or the Social Security Act of 1997 (SSS law), in
relation to Article 315 (1) (b) of the Revised Penal Code, or Estafa. Consequently, petitioners
filed with the RTC of Manila, Branch 51, a Manifestation and Motion to Suspend Proceedings.
Petitioners argued that the stay order issued by Branch 24 should also apply to the criminal
charges pending in Branch 51. Petitioners, thus, prayed that Branch 51 suspend its proceedings
until the petition for rehabilitation was finally resolved.
ISSUE:
Whether or not suspension of claims during corporate rehabilitation include suspension of the
criminal action against it.
RULING:
No. 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. 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.
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.
The rehabilitation of SIHI and the settlement of claims against the corporation is not a legal
ground for the extinction of petitioners’ criminal liabilities. There is no reason why criminal
proceedings should be suspended during corporate rehabilitation, more so, since the prime
purpose of the criminal action is to punish the offender in order to deter him and others from
committing the same or similar offense, to isolate him from society, reform and rehabilitate him
or, in general, to maintain social order. As correctly observed in Rosario, it would be absurd for
one who has engaged in criminal conduct could escape punishment by the mere filing of a
petition for rehabilitation by the corporation of which he is an officer.
The prosecution of the officers of the corporation has no bearing on the pending rehabilitation
of the corporation, especially since they are charged in their individual capacities. Such being
the case, the purpose of the law for the issuance of the stay order is not compromised, since
the appointed rehabilitation receiver can still fully discharge his functions as mandated by law.
It bears to stress that the rehabilitation receiver is not charged to defend the officers of the
corporation. If there is anything that the rehabilitation receiver might be remotely interested in
is whether the court also rules that petitioners are civilly liable. Such a scenario, however, is not
a reason to suspend the criminal proceedings, because as aptly discussed in Rosario, should the
court prosecuting the officers of the corporation find that an award or indemnification is
warranted, such award would fall under the category of claims, the execution of which would
be subject to the stay order issued by the rehabilitation court. The penal sanctions as a
consequence of violation of the SSS law, in relation to the revised penal code can therefore be
implemented if petitioners are found guilty after trial. However, any civil indemnity awarded as
a result of their conviction would be subject to the stay order issued by the rehabilitation court.
Only to this extent can the order of suspension be considered obligatory upon any court,
tribunal, branch or body where there are pending actions for claims against the distressed
corporation.

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PANLILIO vs.

RTC BRANCH 51 MANILA

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