438

SUPREMECOURTREPORTSANNOTATED
Panliliovs.RegionalTrialCourt,Branch51,CityofManila

G.R.No.173846.February2,2011.*
JOSEMARCELPANLILIO,ERLINDAPANLILIO,NICOLEMORRIS
and MARIO T. CRISTOBAL, petitioners, vs.REGIONAL TRIAL
COURT, BRANCH 51, CITY OF MANILA, represented by HON.
PRESIDING JUDGE ANTONIO M. ROSALES; PEOPLE OF THE
PHILIPPINES;andtheSOCIALSECURITYSYSTEM,respondents.
CorporationLaw;CorporateRehabilitation;Corporaterehabilitationconnotes
therestorationofthedebtortoapositionofsuccessfuloperationandsolvency.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
operationiseconomicallyfeasibleanditscreditorscanrecovermore,bywayofthe
present value of payments projected in the rehabilitation plan, if the corporation
continuesasagoingconcernthanifitisimmediatelyliquidated.
Same; Same; Criminal Law; There is no reason why criminal proceedings
should be suspended during corporate rehabilitation.There is no reason why
criminalproceedingsshouldbesuspendedduringcorporaterehabilitation,moreso,
sincetheprimepurposeofthecriminalactionistopunishtheoffenderinorderto
deterhimandothersfromcommittingthesameorsimilaroffense,toisolatehim
fromsociety,reformandrehabilitatehimor,ingeneral,tomaintainsocialorder.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
rehabilitationbythecorporationofwhichheisanofficer.
Same;Same;Same;Theprosecutionoftheofficersofthecorporationhasno
bearingonthependingrehabilitationofthecorporation,especiallysincetheyare
charged in their individual capacities.The prosecution of the officers of the
corporationhasnobearingonthependingrehabilitationofthecorporation,especially
sincetheyarechargedintheirindividualcapacities.Suchbeingthecase,thepurpose
ofthelawfortheissuanceofthestayorderisnotcom
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*SECONDDIVISION.
 439
VOL.641,FEBRUARY2,2011
439
Panliliovs.RegionalTrialCourt,Branch51,CityofManila
promised,sincetheappointedrehabilitationreceivercanstillfullydischargehis
functionsasmandatedbylaw.Itbearstostressthattherehabilitationreceiverisnot
chargedtodefendtheofficersofthecorporation.
PETITIONforreviewoncertiorariofthedecisionandresolutionofthe
CourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
Manicad,DelaCruz&FallarmeLawOfficesforpetitionersexcept
M.Cristobal.
Saguisag,Carao&AssociatesforpetitionerM.Cristobal.
EdmondMarinoforSSS.
PERALTA,J.:
BeforethisCourtisapetitionforreviewoncertiorari1underRule45
oftheRulesofCourt,seekingtosetasidetheApril27,2006Decision2and
August2,2006Resolution3oftheCourtoftheAppeals(CA)inCAG.R.
SPNo.90947.
Thefactsofthecaseareasfollows:
OnOctober15,2004,JoseMarcelPanlilio,ErlindaPanlilio,Nicole
MorrisandMarloCristobal(petitioners),ascorporateofficersofSilahis
InternationalHotel,Inc.(SIHI),filedwiththeRegionalTrialCourt(RTC)
of Manila, Branch 24, a petition for Suspension of Payments and
Rehabilitation4inSECCorp.CaseNo.04111180.
_______________

1Rollo,pp.923.
2PennedbyAssociateJusticeAndresB.Reyes,Jr.,withAssociateJusticesRosmariD.
CarandangandJaparB.Dimaampao,concurring,id.,atpp.3137.
3Id.,atp.28.
4Id.,atpp.102110.
440
OnOctober18,2004,theRTCofManila,Branch24,issuedanOrder 5
stayingallclaimsagainstSIHIuponfindingthepetitionsufficientinform
andsubstance.ThepertinentportionsoftheOrderread:
 Findingthepetition,togetherwithitsannexes,sufficientinformandsubstance
andpursuanttoSection6,Rule4oftheInterimRulesonCorporateRehabilitation,
theCourthereby:
xxxx
2)Staystheenforcement of allclaims,whether for moneyor otherwiseand
whether such enforcement isbycourtactionor otherwise, againstthedebtor,its
guarantorsandsuretiesnotsolidarilyliablewiththedebtor.6
Atthetime,however,ofthefilingofthepetitionforrehabilitation,
therewereanumberofcriminalcharges7 pendingagainstpetitionersin
Branch51oftheRTCofManila.Thesecriminalchargeswereinitiatedby
respondent Social Security System (SSS) and involved charges of
violationsofSection28(h)8ofRepublicAct8282,ortheSocialSecurity
Actof1997(SSSlaw),inrelationtoArticle315(1)(b)9oftheRevised
_______________

5Id.,atpp.111113.
6Id.,atp.112.
7Crim. Cases Nos. 00184890, 00183031 to 71, 03213284 to 88, 03206273, 03
207141, 03214539, 03214667, 03215273, 03215650, 03215651, 03216015 and 03
216187.
8(h) Any employer who, after deducting the monthly contributions or loan
amortizationsfromhisemployeescompensation,failstoremitthesaiddeductiontothe
SSSwithinthirty(30)daysfromthedatetheybecamedue,shallbepresumedtohave
misappropriated such contributions or loan amortizations and shall suffer the penalties
providedinArticleThreehundredfifteenoftheRevisedPenalCode.
9(b)Bymisappropriatingorconverting,totheprejudiceofanother,money,goods,or
any other personalproperty receivedby the offender intrust or oncommission, or for
administration,orunderanyotherobligationinvolvingthedutytomakedeliveryoforto
returnthesame,eventhoughsuchobligationbetotallyorpar
441
PenalCode,orEstafa.Consequently,petitionersfiledwiththeRTCof
Manila,Branch51,aManifestationandMotiontoSuspendProceedings. 10
Petitioners argued that the stay order issued by Branch24 should also
apply to the criminal charges pending in Branch 51. Petitioners, thus,
prayed that Branch 51 suspend its proceedings until the petition for
rehabilitationwasfinallyresolved.
 On December 13, 2004, Branch 51 issued an Order11 denying
petitionersmotiontosuspendtheproceedings.Itruledthatthestayorder
issuedbyBranch24didnotcovercriminalproceedings,towit:
xxxx
Clearlythen,theissueis,whetherthestayorderissuedbytheRTCcommercial
court,Branch24includestheabovecaptionedcriminalcases.
TheCourtsharestheviewoftheprivatecomplainantsandtheSSSthatthesaid
stayorderdoesnotincludetheprosecutionofcriminaloffenses.Precisely,thelaw
criminalizesthenonremittanceofSSScontributionsbyanemployertoprotectthe
employees from unscrupulous employers. Clearly, in these cases, public interest
requiresthatthesaidcriminalactsbeimmediatelyinvestigatedandprosecutedforthe
protectionofsociety.
Fromtheforegoing,theinescapableconclusionisthatthestayorderissuedby
RTCBranch24doesnotincludetheabovecaptionedcaseswhicharecriminalin
nature.12
Branch51deniedthemotionforreconsiderationfiledbypetitioners.
OnAugust19,2005,petitionersfiledapetitionforcertiorari13withthe
CAassailingtheOrderofBranch51.
_______________

tiallyguaranteedbyabond;orbydenyinghavingreceivedsuchmoney,goods,orother
property.

10Rollo,pp.114120.
11Records,pp.375376.
12Id.,atp.376.
442
OnApril27,2006,theCAissuedaDecisiondenyingthepetition,the
dispositiveportionofwhichreads:
WHEREFORE, premises considered, the Petition is hereby DENIED and is
accordinglyDISMISSED.Nocosts.14
TheCAdiscussedthatviolationoftheprovisionsoftheSSSlawwasa
criminalliabilityandwas,thus,personaltotheoffender.Assuch,theCA
heldthatthecriminalproceedingsagainstthepetitionersshouldnotbe
consideredaclaimagainstthecorporationand,consequently,notcovered
bythestayorderissuedbyBranch24.
 PetitionersfiledaMotionforReconsideration,15 whichwas,however,
deniedbytheCAinaResolutiondatedAugust2,2006.
Hence, herein petition, with petitioners raising a lone issue for this
Courtsresolution,towit:
xxx WHETHER OR NOT THE STAYORDER ISSUED BY BRANCH 24,
REGIONALTRIALCOURTOFMANILA,INSECCORP.CASENO.04111180
COVERS ALSO VIOLATION OF SSS LAW FOR NONREMITTANCE OF
PREMIUMS AND VIOLATION OF [ARTICLE] [3] 515 OF THE REVISED
PENALCODE.16
Thepetitionisnotmeritorious.
Tobeginwith,corporaterehabilitationconnotestherestorationofthe
debtortoapositionofsuccessfuloperationandsolvency,ifitisshown
thatitscontinuedoperationiseconomicallyfeasibleanditscreditorscan
recovermore,bywayofthepresentvalueofpaymentsprojectedinthe
rehabilitationplan,ifthecorporationcontinuesasagoingconcernthan
_______________

13Rollo,pp.150168.
14Id.,atp.37.
15Id.,atpp.169174.
16Id.,atp.14.
443
ifitisimmediatelyliquidated.17Itcontemplatesacontinuanceofcorporate
lifeandactivitiesinanefforttorestoreandreinstatethecorporationtoits
formerpositionofsuccessfuloperationandsolvency,thepurposebeingto
enablethecompanytogainanewleaseonlifeandallowitscreditorstobe
paidtheirclaimsoutofitsearnings.18
A principal feature of corporate rehabilitation is the suspension of
claims against the distressed corporation. Section 6 (c) of Presidential
DecreeNo.902A,asamended,providesforsuspensionofclaimsagainst
corporationsundergoingrehabilitation,towit:
Section6(c).xxx
xxx Provided, finally, that upon appointment of a management committee,
rehabilitationreceiver,boardorbody,pursuanttothisDecree,allactionsforclaims
againstcorporations,partnershipsorassociationsundermanagementorreceivership
pending before any court, tribunal, board or body, shall be suspended
accordingly.19
InNovember21,2000,thisCourt EnBanc promulgatedtheInterim
RulesofProcedureonCorporateRehabilitation,20 Section6,Rule4of
whichprovidesastayorderonallclaimsagainstthecorporation,thus:
Stay Order.If the court finds the petition to be sufficient in form and
substance,itshall,notlaterthanfive(5)daysfromthefilingofthepetition,issuean
Orderxxx;(b)stayingenforcementofallclaims,whetherformoneyorotherwise
andwhethersuch
_______________

17Rule2,Section1oftheRulesofProcedureonCorporateRehabilitation,effectiveJanuary19,
2009,supplantingtheInterimRulesofProcedureonCorporateRehabilitation(A.M.No.00810
SC).
18NegrosNavigationCo.,Inc.v.CourtofAppeals,G.R.Nos.163156and166845,December
10,2008,573SCRA434,450.
19Emphasissupplied.
20A.M.No.00810SC,[November21,2000].
444
enforcementisbycourtactionorotherwise,againstthedebtor,itsguarantorsand
suretiesnotsolidarilyliablewiththedebtor;xxx21
InFinasiaInvestmentsandFinanceCorporationv.CourtofAppeals,22
thetermclaimhasbeenconstruedtorefertodebtsordemandsofa
pecuniarynature,ortheassertiontohavemoneypaid.Thepurposefor
suspendingactionsforclaimsagainstthecorporationinarehabilitation
proceeding is to enable the management committee or rehabilitation
receiverto effectively exercise its/hispowersfree from anyjudicial or
extrajudicialinterferencethatmightundulyhinderorpreventtherescueof
thedebtorcompany.23
Theissuetoberesolvedthenis:doesthesuspensionofallclaimsas
anincidenttoacorporaterehabilitationalsocontemplatethesuspensionof
criminal charges filed against the corporate officers of the distressed
corporation?
ThisCourtrulesinthenegative.
In Rosario v. Co24 (Rosario), a case of recent vintage, the issue
resolved by this Court was whether or not during the pendency of
rehabilitation proceedings, criminal charges for violation of Batas
PambansaBilang22shouldbesuspended,wasdisposedofasfollows:
xxxthegravamenoftheoffensepunishedbyB.P.Blg.22istheactofmakingand
issuingaworthlesscheck;thatis,acheckthatisdishonoreduponitspresentationfor
payment.Itisdesignedtopreventdamagetotrade,commerce,andbankingcaused
byworthlesschecks.In Lozanov.Martinez,thisCourtdeclaredthatitisnotthe
nonpaymentofanobligationwhichthelawpunishes.Thelawisnotintendedor
designedtocoerceadebtortopayhisdebt.Thethrustofthelawistoprohibit,under
painofpenalsanctions,themakingandcirculationofworthlesschecks.Becauseof
itsdeleteri
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21Emphasissupplied.
22G.R.No.107002,October7,1994,237SCRA446,450.
23BFHomes,Incorporatedv.CourtofAppeals,G.R.Nos.76879and77143,October3,1990,
190SCRA262,269.
24G.R.No.133608,August26,2008,563SCRA239.
445
ouseffectsonthepublicinterest,thepracticeisproscribedbythelaw.Thelaw
punishestheactnotasanoffenseagainstproperty,butanoffenseagainstpublic
order.Theprimepurposeofthecriminalactionistopunishtheoffenderinorderto
deterhimandothersfromcommittingthesameorsimilaroffense,toisolatehim
fromsociety,toreformandrehabilitatehimor,ingeneral,tomaintainsocialorder.
Hence, the criminal prosecution is designed to promote the public welfare by
punishingoffendersanddeterringothers.
Consequently, the filing of the case for violation of B.P. Blg. 22 is not a
claim that can be enjoined within the purview of P.D. No. 902A. True,
although conviction of the accused for the alleged crime could result in the
restitution,reparationorindemnificationoftheprivateoffendedpartyforthe
damageorinjuryhesustainedbyreasonofthefeloniousactoftheaccused,
nevertheless,prosecutionforviolationofB.P.Blg.22isacriminalaction.
Acriminalactionhasadualpurpose,namely,thepunishmentoftheoffenderand
indemnity to the offended party. The dominant and primordial objective of the
criminal action is the punishment of the offender. The civil action is merely
incidentaltoandconsequenttotheconvictionoftheaccused.Thereasonforthisis
that criminal actions are primarily intended to vindicate an outrage against the
sovereigntyofthestateandtoimposetheappropriatepenaltyforthevindicationof
thedisturbancetothesocialordercausedbytheoffender.Ontheotherhand,the
action between the private complainant and the accused is intended solely to
indemnifytheformer.25
Rosario isatfourswiththecaseatbar.Petitionersarechargedwith
violationsofSection28(h)oftheSSSlaw,inrelationtoArticle315(1)
(b) of the Revised Penal Code, or Estafa. The SSS law clearly
criminalizesthenonremittanceofSSScontributionsbyanemployerto
protect the employees from unscrupulous employers. Therefore, public
interestrequiresthatthesaidcriminalactsbeimmediatelyinvestigatedand
prosecutedfortheprotectionofsociety.
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25Id.,atpp.250251.(Emphasissupplied.)(Citationsomitted.)
446
The rehabilitation of SIHI and the settlement of claims against the
corporationisnotalegalgroundfortheextinctionofpetitionerscriminal
liabilities. There is no reason why criminal proceedings should be
suspended during corporate rehabilitation, more so, since the prime
purposeofthecriminalactionistopunishtheoffenderinordertodeter
himandothersfromcommittingthesameorsimilaroffense,toisolatehim
fromsociety,reformandrehabilitatehimor,ingeneral,tomaintainsocial
order.26AscorrectlyobservedinRosario,27itwouldbeabsurdforonewho
hasengagedincriminalconductcouldescapepunishmentbythemere
filingofapetitionforrehabilitationbythecorporationofwhichheisan
officer.
Theprosecutionoftheofficersofthecorporationhasnobearingonthe
pendingrehabilitationofthecorporation,especiallysincetheyarecharged
intheirindividualcapacities.Suchbeingthecase,thepurposeofthelaw
fortheissuanceofthestayorderisnotcompromised,sincetheappointed
rehabilitationreceivercanstillfullydischargehisfunctionsasmandated
bylaw.Itbearstostressthattherehabilitationreceiverisnotchargedto
defend the officers of the corporation. If there is anything that the
rehabilitationreceivermightberemotelyinterestediniswhetherthecourt
alsorulesthatpetitionersarecivillyliable.Suchascenario,however,is
not a reason to suspend the criminal proceedings, because as aptly
discussed in Rosario, should the court prosecuting the officers of the
corporationfindthatanawardorindemnificationiswarranted,suchaward
wouldfallunderthecategoryofclaims,theexecutionofwhichwouldbe
subjecttothestayorderissuedbytherehabilitationcourt. 28 Thepenal
sanctionsasaconsequenceofviolationoftheSSSlaw,inrelationtothe
revisedpenalcodecanthereforebeimplementedifpetitionersarefound
guiltyaftertrial.However,
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26Ramiscalv.Sandiganbayan,487Phil.384,405;446SCRA166,185(2004).
27Supranote24,atp.252.
28Id.,atpp.252253.
447
any civil indemnity awarded as a result of their conviction would be
subjecttothestayorderissuedbytherehabilitationcourt.Onlytothis
extent can the order of suspension be considered obligatory upon any
court,tribunal,branchorbodywheretherearependingactionsforclaims
againstthedistressedcorporation.29
Onafinalnote,thisCourtwouldliketopointoutthatCongresshas
recentlyenactedRepublicActNo.10142,ortheFinancialRehabilitation
andInsolvencyActof2010.30Section18thereofexplicitlyprovidesthat
criminal actions against the individual officer of a corporation are not
subjecttotheStayorSuspensionOrderinrehabilitationproceedings,to
wit:
TheStayorSuspensionOrdershallnotapply:
xxxx
(g)any criminal action against individual debtor or owner, partner, director or
officerofadebtorshallnotbeaffectedbyanyproceedingcommencedunderthis
Act.
Withal,basedontheforegoingdiscussion,thisCourtrulesthatthereis
nolegalimpedimentforBranch51toproceedwiththecasesfiledagainst
petitioners.
WHEREFORE, premises considered, the petition is DENIED. The
April27,2006DecisionandAugust2,2006ResolutionoftheCourtof
AppealsinCAG.R.SPNo.90947areAFFIRMED.TheRegionalTrial
CourtofManila,Branch51,isORDEREDtoproceedwiththecriminal
casesfiledagainstpetitioners.
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29Id.,atp.253.
30AnActProvidingForTheRehabilitationOrLiquidationOfFinanciallyDistressed
EnterprisesAndIndividuals.
448
SOORDERED.
Corona** (C.J.),Carpio(Chairperson),Perez*** and Mendoza,JJ.,
concur.
Petitiondenied,judgmentandresolutionaffirmed.
Note.A.M. No. 04907SC provided that all decisions and final
ordersincasesfallingundertheInterimRulesofCorporateRehabilitation
and the Interim Rules of Procedure Governing IntraCorporate
ControversiesunderRepublicActNo.8799shallbeappealedtotheCA
throughapetitionforreviewunderRule43oftheRulesofCourttobe
filedwithinfifteen(15)daysfromnoticeofthedecisionorfinalorderof
the RTC. (New Frontier Sugar Corporation vs. Regional Trial Court,
Branch39,IloiloCity,513SCRA601[2007])
o0o
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**DesignatedasanadditionalmemberinlieuofAssociateJusticeAntonioEduardoB.
Nachura,perraffledatedJune22,2009.
***DesignatedasanadditionalmemberinlieuofAssociateJusticeRobertoA.Abad,
perraffledatedJuly12,2010.
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