SECURITIES AND EXCHANGE COMMISSION, Petitioner,

HELD:
vs.
FIRST ISSUE: None.
THE HONORABLE COURT OF APPEALS, OMICO CORPORATION, EMILIO S. TENG AND
TOMMY KIN HING TIA, Respondents. The Court held that when proxies are solicited in relation to the election of
corporate directors, the resulting controversy, even if it ostensibly raised the
G.R. No. 187702 October 22, 2014 violation of the SEC rules on proxy solicitation, should be properly seen as an
election controversy within the original and exclusive jurisdiction of the trial courts
PONENTE: Sereno by virtue of Section 5.2 of the SRC. Hence, the jurisdiction is still with the Special
Commercial Courts.
TOPIC: SRC, proxy, jurisdiction of SEC
An election contest covers any controversy or dispute involving the
FACTS: validation of proxies, in general. Thus, it can only refer to all the beneficial purposes
that validation of proxies can bring about when made in connection with a
Omico Corporation (Omico) is a company whose shares of stock are listed forthcoming election of directors. Thus, there is no point in making distinctions
and traded in the Philippine Stock Exchange, Inc. Astra Securities Corporation (Astra) between who has jurisdiction before and who has jurisdiction after the election of
is one of the stockholders of Omico owning about 18% of the latter’s outstanding directors, as all controversies related thereto – whether before, during or after –
capital stock. shall be passed upon by regular courts as provided by law.

Omico scheduled its annual stockholders’ meeting on 3 November 2008. It
set the deadline for submission of proxies on 23 October 2008 and the validation of
proxies on 25 October 2008.
Astra objected to the validation of the proxies issued in favor of Tia,
representing about 38% of the outstanding capital stock of Omico. Astra also
objected to the inclusion of the proxies issued in favor of Tia and/or Martin Buncio,
representing about 2% of the outstanding capital stock of Omico.
SECOND ISSUE: No.
The Court held that quasi-judicial agencies do not have the right to seek the
review of an appellate court decision reversing any of their rulings. This is because
they are not real parties-in-interest. Thus, the Court expunged the petition filed by
the SEC for the latter’s lack of capacity to file the suit.

Astra maintained that the proxy issuers, who were brokers, did not obtain
the required express written authorization of their clients when they issued the
proxies in favor of Tia. In so doing, the issuers were allegedly in violation of SRC
Rules. Furthermore, the proxies issued in favor of Tia exceeded, thereby giving rise
to the presumption of solicitation thereof under said rules. Tia did not also comply
with the rules on proxy solicitation, in violation of the SRC.

Despite the objections of Astra, Omico’s Board of Inspectors declared that

the proxies issued in favor of Tia were valid.

ISSUE:

Whether or not SEC has jurisdiction over controversies arising from the validation of
proxies for the election of the directors of a corporation.
Whether or not SEC may appeal a reversal of its ruling.
BPI vs. St. Michael Medical Center,
G.R. No. 205469, March 25, 2015
FACTS: Spouses Virgilio and Yolanda Rodil (Sps. Rodil) are the owners and sole
proprietors of St. Michael Diagnostic and Skin Care Laboratory Services and Hospital
(St. Michael Hospital), a 5-storey secondary level hospital built on their property
located in Molino 2, Bacoor, Cavite. With a vision to upgrade St. Michael Hospital
into a modern, well-equipped and full service tertiary 11-storey hospital, Sps. Rodil
purchased two (2) parcels of land adjoining their existing property and, on May 22,
2003, incorporated SMMCI, with which entity they planned to eventually consolidate
St. Michael Hospital’s operations. SMMCI had an initial capital of P2,000,000.00
which was later increased to P53,500,000.00, 94.49% of which outstanding capital
stock, or P50,553,000.00, was subscribed and paid by Sps. Rodil.5
To finance the costs of building construction, SMMCI applied for a loan with
petitioner BPI Family Savings Bank, Inc. (BPI Family) which gave a credit line of up to
P35,000,000.00,7secured by a Real Estate Mortgage8 (mortgage) over three (3)
parcels of land9 belonging to Sps. Rodil, on a portion of which stands the hospital
building being constructed.
They agreed to be co-borrowers on the loan and executed and signed a Promissory
Note.
After suffering financial losses due to problems with the first building
contractor,12Sps. Rodil temporarily deferred the original construction plans for the
11-storey hospital building and, instead, engaged the services of another contractor
for the completion of the remaining structural works of the unfinished building up to
the 5th floor. In this regard, they spent an additional P25,000,000.00, or a total of
P55,000,000.00 for the construction. The lack of funds for the finishing works of the
3rd, 4th and 5th floors, however, kept the new building from becoming completely
functional and, in turn, hampered the plans for the physical transfer of St. Michael
Hospital’s operations to SMMCI. Nevertheless, using hospital-generated revenues,
Sps. Rodil were still able to purchase new equipment and machinery for St. Michael
Hospital.
BPI Family demanded immediate payment of the entire loan obligation15and, soon
after, filed a petition for extrajudicial foreclosure16 of the real properties covered by
the mortgage. The auction sale was scheduled on December 11, 2009, which was
postponed to February 15, 2010 with the conformity of BPI Family.
SMMCI filed a Petition for Corporate Rehabilitation. SMMCI claimed that it had to
defer the construction of the projected 11-storey hospital building due to the
problems it had with its first contractor as well as the rise of the cost of construction
materials. As of date, only two (2) floors of the new building are functional, in which
some of the operations of St. Michael had already been transferred.
RTC approved the Rehabilitation Plan with the modifications recommended by the
Rehabilitation Receiver. CA affirmed the RTC’s approval of the Rehabilitation Plan.
ISSUE: WON the CA correctly affirmed SMMCI’s Rehabilitation Plan as approved by
the RTC.
HELD: YES.
Restoration is the central idea behind the remedy of corporate rehabilitation. In
common parlance, to “restore” means “to bring back to or put back into a former or
original state.”42 Case law explains that corporate 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, 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.43 Consistent therewith is the term’s statutory
definition under Republic Act No. 10142,44 otherwise known as the “Financial
Rehabilitation and Insolvency Act of 2010” (FRIA).
In other words, rehabilitation assumes that the corporation has been operational but
for some reasons like economic crisis or mismanagement had become distressed or
insolvent, i.e., that it is generally unable to pay its debts as they fall due in the
ordinary course of business or has liability that are greater than its assets. 45 Thus, the
basic issues in rehabilitation proceedings concern the viability and desirability of
continuing the business operations of the distressed corporation,46 all with a view of
effectively restoring it to a state of solvency or to its former healthy financial
condition through the adoption of a rehabilitation plan.
In this case, it cannot be said that the petitioning corporation, SMMCI, had been in a
position of successful operation and solvency at the time the Rehabilitation Petition
was filed on August 11, 2010. While it had indeed “commenced business” through
the preparatory act of opening a credit line with BPI Family to finance the
construction of a new hospital building for its future operations, SMMCI itself admits
that it has not formally operated nor earned any income since its incorporation. This
simply means that there exists no viable business concern to be restored. Perforce,
the remedy of corporate rehabilitation is improper, thus rendering the dispositions
of the courts a quo infirm.
A material financial commitment becomes significant in gauging the resolve,
determination, earnestness and good faith of the distressed corporation in financing
the proposed rehabilitation plan. This commitment may include the voluntary
undertakings of the stockholders or the would-be investors of the debtor-
corporation indicating their readiness, willingness and ability to contribute funds or
property to guarantee the continued successful operation of the debtor corporation
during the period of rehabilitation.50cralawred

In this case, aside from the harped on merger of St. Michael Hospital with SMMCI,
the only proposed source of revenue the Rehabilitation Plan suggests is the capital
which would come from SMMCI’s potential investors, which negotiations are merely
pending. Evidently, both propositions commonly border on the speculative and,
hence, hardly fit the description of a material financial commitment which would
inspire confidence that the rehabilitation would turn out to be successful.
 Bank of the Philippine Islands Vs. Sps. Johnson & Evelyn Co & Jupiter Real Estate Thus, as the new registered owner, BPI is even more entitled to the
Ventures, Inc./Sps. Johnson & Evelyn Co Vs. Bank of the Philippine Islands possession of the properties and has the unmistakable right to file an ex parte motion
G.R. No. 171172/G.R. No. 200061. November 9, 2015 for the issuance of a writ of possession.
FACTS:

Jupiter Real Estate Ventures, Inc. (“Jupiter”) and Spouses Co obtained a loan
from Far East Bank and Trust Company (“FEBTC”). Jupiter and Spouses Co mortgaged
in favor of FEBTC parcels of land including their improvements covered by Transfer
Certificates of Title. Meanwhile, BPI and FEBTC merged, with BPI as the surviving
corporation. Jupiter and Spouses Co defaulted on the payment of the loan. BPI, as
successor-in-interest of FEBTC, foreclosed the real estate mortgage pursuant to Act
No. 3135, as amended. An auction sale was held where the mortgaged properties
were sold to BPI as the highest bidder. The Certificate of Sale was registered and
annotated at the back of the certificates of title on. After the expiration of the period
of redemption, BPI consolidated its ownership over the real properties, and new titles
were issued in its name. Spouses Co and Jupiter filed a complaint for the nullification
of foreclosure proceedings and damages and BPI also filed a petition for the issuance
of a writ of possession. Jupiter filed a petition for corporate rehabilitation and moved
for the suspension of the proceedings since among the properties covered were those
subject of the real estate mortgage. BPI opposed alleging that as registered owner of
the properties subject of the foreclosure, it has the right to the immediate possession
of the property and its right to immediate possession is impaired by the grant of the
appeal.

ISSUE:

Whether or not a purchaser in a foreclosure sale may apply for a writ of

possession even during the redemption period.

RULING:

In the affirmative.

Under Section 752 of Act No. 3135, as amended by Act No. 4118, the
purchaser in a foreclosure sale may apply for a writ of possession during the
redemption period. and well settled is the rule that a writ of possession will issue as a
matter of course, even without the filing and approval of a bond, after consolidation
of ownership and the issuance of a new TCT in the name of the purchaser. Upon
expiration of the redemption period, the right of the purchaser to the possession of
the foreclosed property becomes absolute. This right to possession is based on the
purchaser’s ownership of the property. In like manner, the mere filing of an ex parte
motion for the issuance of the writ of possession would suffice and the filing of a bond
is no longer necessary. This is because possession has become the absolute right of
the purchaser as the confirmed owner.