Rosario v. Co

Corporate Dissolution - Rehabilitation (Financial Rehabilitation and Insolvency Act of 2010, RA !o 101"2# $ Rosario v Co %R !o 1&&'0 Au)ust 2', 200 Facts* Petitioner Tiong Rosario is the proprietor of TR Mercantile (TRM), a single proprietorship engaged in the business of selling and trading paper products and supplies of various kinds; while respondent Alfonso Co is the Chairan and President of Modern Paper Products, !nc" (MPP!)" !n the course of its business, MPP! purchased fro TRM a variet# of paper products on credit" As pa#ent for his purchases, respondent issued the three ($) China %anking Corporation checks in favor of TRM which, upon presentent for pa#ent, were dishonored b# the drawee bank on Ma# &&, &'', April , &'', and April *+, &'', respectivel#, for the reason that the pa#ent was either stopped or that the checks were drawn against insufficient funds" TRM, through a deand letter, deanded that respondent ake good the checks and pa# MPP!s outstanding obligations within five () banking da#s fro receipt of the letter, otherwise, it would be constrained to file both criinal and civil actions to protect its interest" Respondent, however, failed to heed the deand" -o petitioner filed a coplaint against respondent for violation of %atas Pabansa Pabansa (%"P") (%"P") %lg" ** with the .ffice .ffice of the Cit# Prosecutor Prosecutor,, Pasig Pasig Cit#; upon finding finding probable probable cause against respondent, the investigating prosecutor filed three separate inforations against hi for violation of %"P" %lg" ** before the Metropolitan Trial Court (MeTC), Pasig Cit#" Prior thereto, MPP! and its principal stockholders, the -pouses Alfredo and /li0abeth Co filed before the -ecurities and /1change Coission (-/C), under P"2" 3o" '4*5A, a Petition for -uspension of Pa#ents for Rehabilitation Purposes with pra#er for the creation of a anageent coittee coittee and for a teporar# restraining order and6or preliinar# in7unction" The -/C issued an .nibus .rder creating a Manageent Coittee and conse8uentl# suspending all actions for clais against MPP! pending before an# court, tribunal, branch or bod#" Meanwhile, in the criinal cases pending before the MeTC, respondent was arraigned, and the cases were set for trial" Prior to initial trial, respondent filed a Motion to -uspend Proceedings which petitioner opposed" The -/C, through an order, gran grante tedd resp respon onde dent ntss Moti Motion on to Cop Copel el Cop Coplilian ance ce and and 9or 9or !ssu !ssuan ance ce of .rde .rders rs of -usp -uspen ensi sion on in the the Cri Criin inal al Cases" .n -epteber $, &'', the MeTC issued an .rder den#ing respondents otion to suspend proceedings" !t held that the eleents eleents of a pre7udicial pre7udicial 8uestion do not e1ist" Respondent Respondent filed a Motion Motion for Reconsideration Reconsideration but it was denied" Aggrieved, Aggrieved, respondent filed a petition for certiorari before certiorari before the RTC 8uestioning the above orders" The RTC en7oined the MeTC fro further proceeding proceeding with Criinal Cases during the pendenc# of the action action before before it" Then, Then, petitioner petitioner filed a Motion Motion for Partial Reconsideration" :owever, upon agreeent of the parties, resolution on the otion was held in abe#ance awaiting the RTC resolution in the ain case, the issues raised being identical" The RTC issued the assailed Resolution granting respondents petition stating that the respondent Court is directed to suspend the proceedings in Criinal Cases during the pendenc# of the petition in -/C Case" :ence, this petition"

Issue* hether a criinal case against a corporate officer for violation of %"P" ** could be suspended on account of the pendenc# pendenc# of a petition petition for suspension suspension of pa#ents pa#ents filed b# that officers officers corporation corporation with the -ecurities -ecurities and /1change /1change Coission<

Rulin)* 3o" A criinal case against a corporate officer for violation of %P ** could not be suspended on account of the pendenc# pendenc# of a petition petition for suspension suspension of pa#ents pa#ents filed b# that officers officers corporation corporation with the -ecurities -ecurities and /1change /1change Coission" As earl# as Finasia Investment and Finance Corp. v. Court of Appeals , this Court clarified that the word claim used in -ec"  (c) of P"2" 3o" '4*5A, as aended, refers to debts or deands of a pecuniar# nature and the assertion of a right to have one# paid" !t is used in special proceedings like those before an adinistrative court on insolvenc#" !n Arranza !n Arranza v. B.F. B.F. Homes, Inc., clai was defined as an action involving onetar# considerations" Clearl#, the suspension conteplated under -ec"  (c) of P"2" 3o" '4*5A refers onl# to clais involving actions which are pecuniar# in nature"

The purpose of suspending the proceedings under P"2" 3o" '4*5A is to prevent a creditor fro obtaining an advantage or preference over another and to protect and preserve the rights of part# litigants as well as the interest of the investing public or creditors" !t is intended to give enough breathing space for the anageent coittee or rehabilitation receiver to ake the business viable again, without having to divert attention and resources to litigations in various fora" hereas, the gravamen of the offense punished b# B.P. Blg. 22 is the act of aking and issuing a worthless check; that is, a check that is dishonored upon its presentation for pa#ent" !t is designed to prevent daage to trade, coerce, and banking caused b# worthless checks" !n Lozano v. Martinez, the -C declared that it is not the nonpa#ent of an obligation which the law punishes" The thrust of the law is to prohibit, under pain of penal sanctions, the aking and circulation of worthless checks" %ecause of its deleterious effects on the public interest, the practice is proscribed b# the law" The law punishes the act not as an offense against propert#, but an offense against public order" The prie purpose of the criinal action is to punish the offender in order to deter hi and others fro coitting the sae or siilar offense, to isolate hi fro societ#, to refor and rehabilitate hi or, in general, to aintain social order" :ence, the cri inal prosecution is designed to proote the public welfare b# punishing offenders and deterring others" Conse8uentl#, the filing of the case for violation of %"P" %lg" ** is not a clai that can be en7oined within the purview of P"2" 3o" '4*5A" True, although conviction of the accused for the alleged crie could result in the restitution, reparation or indenification of the private offended part# for the daage or in7ur# he sustained b# reason of the felonious act of the accused, nevertheless, prosecution for violation of %"P" %lg" ** is a criinal action" A criinal action has a dual purpose, nael#, the punishent of the offender and indenit# to the offended part#" The doinant and priordial ob7ective of the criinal action is the punishent of the offender" The civil action is erel# incidental to and conse8uent to the conviction of the accused" The reason for this is that criinal actions are priaril# intended to vindicate an outrage against the sovereignt# of the state and to ipose the appropriate penalt# for the vindication of the disturbance to the social order caused b# the offender" .n the other hand, the action between the private coplainant and the accused is intended solel# to indenif# the forer" As far as the criinal aspect of the cases is concerned, the provisions of -ec"  (c) of P"2" 3o" '4*5A should not interfere with the prosecution of a case for violation of %"P" %lg" **, even if restitution, reparation or indenification could be ordered, because an absurdit# would result, i.e", one who has engaged in criinal conduct could escape punishent b# the ere filing of a petition for rehabilitation b# the corporation of which he is an officer" At an# rate, should the court dee it fit to award indenification, such award would now fall under the categor# of a clai under -ec"  (c) of P"2" 3o" '4*5A, considering that it is alread# one for onetar# or pecuniar# consideration" .nl# to this e1tent can the order of suspension be considered obligator# upon an# court, tribunal, branch or bod# where there are pending actions for clais against the distressed corporation"