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001. ROMBE vs ASIATRUST ROMBE EXIMTRADE (PHILS.), INC.

and SPOUSES ROMEO PERALTA and MARRIONETTE PERALTA, petitioners, vs. ASIATRUST DEVELOPMENT BANK, respondents. February 13, 2008 VELASCO, JR., J. Petition for Review on Certiorari of a Decision of the CA SHORT VERSION: Rombe was a corporation that filed a petition for suspension of payment and rehabilitation in one branch of Malolos RTC. The SEC, BPI and ADB opposed its petition and the RTC then dismissed the case and lifted a stay order that it previously issued. Instead of appealing, knowing that ADB was about to foreclose on its properties, Rombe filed a petition for annulment of documents (those of the mortgages it entered into) in another Branch of the Malolos RTC. A Writ of Preliminary Injunction was issued in this case, preventing ADB and the sheriff from foreclosing on Rombes properties. ADB gets a reversal of the WPI in the CA. Rombe appeals arguing that the two cases do not interfere with one another. The SC agrees with Rombe in that the petition for rehabilitation and the petition for annulment of documents are a special and a civil proceeding, respectively. A civil action is one by which a party sues another for the enforcement or protection of a right or the prevention or redress of a wrong. Strictly speaking, it is only in civil actions that one speaks of a cause of action. A special proceeding is summary and non-adversarial in nature. It need not state a cause of action. The two cases being distinct and dissimilar, they could not possibly interfere with each other (as the CA erroneously held). FACTS: Rombe Eximtrade Phils., Inc. is a corporation with main office located in Madaluyong represented by Sps. Peralta and owning Properties in Malolos, Bulacan. In 2002, Rombe filed a Petition for the Declaration of a State of Suspension of Payments with Approval of Proposed Rehabilitation Plan with the Malolos RTC. In accordance with Section 6, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation (IRPCR), the RTC issued a Stay Order suspending the enforcement of all claims whether for money or otherwise judicial or extrajudicial against Rombe. The SEC, BPI and ADB opposed the petition. On September 2002, the RTC dismissed the case and lifted the stay order. It ruled that: 1. Rombe misrepresented materially its true financial status a. Did not submit audited financial statement b. Made it appear that it had sufficient assets to pay its outstanding obligations, but when examined were registered with other persons and only 2 were unencumbered c. Mis-declared the value of its assets d. Gave only general references to the location of the properties without mention of the book values nor condition of the properties in its Inventory of Assets e. Did not attach evidence of title or ownership to the properties enumerated f. Did not attach nor provide a Schedule of Accounts Receivable, indicating amount of each, maturity dates, degree of collectivity, g. Had not complied with its reportorial duty to file Gen. Info Sheet and financial statement from 1992-1995 and 2002, which its F/S 1999-2000 were filed late h. Its balance sheet claimed it had receivables but did not indicate nature, basis and other information 2. Did not have a feasible Rehab Plan 3. Was Insolvent. Rombe did not appeal and ADB initiated foreclosure proceedings on its properties. Anticipating this, Rombe filed a Complaint for Annulment of Documents and Damages with Prayer for a Temporary Restraining Order (TRO) and Injunction in another branch of the Malolos RTC, asking to stop ADB and the sheriff from foreclosing on the mortgage of Rombes properties. A WPI was issued and ADB files an MR that was rejected. ADB appeals to the CA alleging GAD on the part of the RTC. The CA found in favor of ADB, finding that the Stay Order was lifted by the RTC because of Rombes insolvency, misrepresentations, and infeasible rehabilitation plan and its later issuance of a TRO interfered with the foreclosure of Rombes assets.

ISSUES: WON the rehabilitation case is distinct and dissimilar from the annulment of the foreclosure case (YES) WON the injunctive writ issued in the annulment of foreclosure interfered with the Order in the rehab case (NO) DISPOSITIVE: Petition GRANTED. CA Decision REVERSED and SET ASIDE. Bulacan RTC to conduct further proceedings. RATIO: Preliminarily, Rombe argues that ADBs petition should have been dismissed outright because its signatory (Esmael Ferrer, ADB Manager) was not authorized by ADBs board and that the petition was not verified. The first argument is ineffectual because Rombe relies on doctrine in a case where such doctrine of authorization is in issue two people and who among them is proper to bring suit for the corporation. The second argument fails because the verification requirement is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the petition signed the verification attached to it, and when matters alleged in the petition have been made in good faith or are true and correct. In this case, we find that the position, knowledge, and experience of Ferrer as Manager and Head of the Acquired Assets Unit of ADB, and his good faith, are sufficient compliance with the verification and certification requirements. As to distinction between cases A civil action is one by which a party sues another for the enforcement or protection of a right or the prevention or redress of a wrong. Strictly speaking, it is only in civil actions that one speaks of a cause of action. A cause of action is defined as the act or omission by which a party violates a right of another. Thus, in the annulment of foreclosure case, the cause of action of Rombe is the act of ADB in foreclosing the mortgage on Rombes properties by which the latters right to the properties was allegedly violated. Civil actions are governed mainly by the regular rules of procedure under 1997 Rules of Civil Procedure On the other hand, the rehabilitation case is treated as a special proceeding. A special proceeding is summary and nonadversarial in nature. It need not state a cause of action and, hence, Rombes contention that the two cases have distinct causes of action is incorrect. As to interference of one case in the other Indeed, the two cases are different with respect to their nature, purpose, and the reliefs sought such that the injunctive writ issued in the annulment of foreclosure case did not interfere with the order in the rehabilitation case. Being dissimilar as to nature, purpose, and reliefs sought, the order granting the WPI in the annulment of foreclosure case, therefore, did not interfere with the order dismissing the rehabilitation petition and lifting the Stay Order. More importantly, it cannot be argued that one RTC intervened with the rehabilitation case before the other branch of the RTC when the former issued the WPI since the rehabilitation petition was already dismissed and eventually attained finality. -Mike