G.R. Nos. 232600-04 CHINA BANKING CORPORATION, PETITIONER, VS. ST. FRANCIS SQUARE REALTY CORPORATION, ST. FRANCIS SQUARE DEVELOPMENT CORPORATION AND SECURITIES AND EXCHANGE COMMISSION, RESPONDENTS. July 27, 2022

This Petition for Review onCertiorariassails the following dispositions of the Court of Appeals in CA-G.R. SP Nos. 145290, 145586, 145610, 146157 & 146331:

1)	Decision[1]  dated April 7, 2017, which prohibited petitioner from charging interest and penalties on outstanding loans beginning May 4, 2000, and reversed the Decision dated April 27, 2016 in SECEn BancCase No. 04-14-325 and Decision dated April 27, 2016 in SECEn BancCase No. 01-15-352 of the Securities and Exchange Commission (SEC); and
2)	Resolution[2]  dated July 6, 2017, which denied petitioner's motion for reconsideration.

Antecedents
RespondentSt. Francis Square Realty Corporation (SFSRC) –formerly ASB Realty Corporation – has outstanding loans with petitionerChina Banking Corporation (Chinabank)totaling P300,000,000.00, with the following properties as security:

	(a)	Condominium project known as The Legaspi Place located at Salcedo St., Legaspi Village, Makati City;
	(b)	House and lot at No. 34 Constellation St., Bel-Air 2 Village, Makati City; and
	(c)	Building and lot on 7thAvenue, Caloocan City.[3]

Having been badly affected by the Asian financial crisis in the late 90s, the ASB Group of Companies, which included respondent SFSRC, initiated rehabilitation proceedings before theSecurities and Exchange Commission (SEC)onMay 2, 2000. Consequently,Stay Orderswere issued until the rehabilitation plan was eventually approved. On April 26, 2001, SEC appointed a rehabilitation receiver.^[4]

CA-G.R. SP No. 145290

Proceedings Before the Special Hearing Panel 2 (SHP 2)
By reason of theStay Order dated May 4, 2000, SFSRC filed with Special Hearing Panel 2 (SHP 2) motionsto enjoin Chinabank from"charging, accruing and/or collectinginterests, penalties and other charges"on its loans.^[5]

On October 2, 2012, SHP 2 directed Chinabank to submit the following information:

1. Particulars of the Three Hundred Million Pesos (P300,000,000.00) Current Outstanding Balance of China Bank as indicated in the ASB Group of Companies Rehabilitation Plan; and
   
   
2. Particulars (including the covered period) of and legal basis for theTwo Hundred Million Pesos (P200,000,000.00) to Three Hundred Million Pesos (P300,000,000.00) interestbeing charged by (Chinabank) as indicated by SFSRC in the Motion and Amended Motion.^[6](Emphasis supplied)

Chinabank asserted that SFSRC and ASB Development Corporation, now respondentSt. Francis Square Development Corporation (SFSDC), did not pay interests on their loansbeginning May 2000. It added that it had earlier signified its willingness to accept P200,000,000.00 as compromise interest on both loans.^[7]

Respondent SFSRC argued that under Presidential Decree (P.D.) No. 902-A,^[8]all claims against the company were deemed suspendedas soon as a rehabilitation receiver got appointed. Also, by virtue of theStay Order, SFSRC wasenjoined from making payments on its loansexcept in connection with its regular day-to-day business. Necessarily, it wasalso prohibited from paying interest on its loans.^[9]

Chinabank, however, insisted that its continued imposition of interest was in accord with the ASB Rehabilitation Plan and beyond theStay Ordercoverage.^[10]

By Order^[11]dated February 28, 2013(SEC Case No. 05-00-6609), SHP 2 held that SFSRCshould not be charged interest on its loans other than those indicated in Appendix Jof the rehabilitation plan, thus:

While it is true that the Supreme Court mentions that the creditors will have an option, the Supreme Court was referring to (a)dacion en pagotransactions; or (b) settling the obligations (without interest, penalties, and other related charges accruing after the date of the initial suspension order) to secured creditors with mortgaged properties at ASB selling prices x x x

x x x x
We hold that SFSRC should not be charged interest in relation to the subject loan other than as indicated in Appendix J of the Rehabilitation Plan.^[12](Emphasis supplied)

SHP 2 further explained that Chinabank's claim went against the purpose of a rehabilitation proceeding,viz.:

As previously mentioned the Rehabilitation Plan refers to therelease of the Legaspi Place, which is currently mortgaged to China Bank. Itsrelease and eventual completionisessential for a successful rehabilitationof the ASB Group of Companies. The ASB Group of Companies is mandatedto complete unfinished condominium projects.As earlier mentioned, thenet realizable value of Legaspi Place is P1,059,638,783.00 (as of 2000). To date, the ASB Group of Companies has an unsecured debt amounting to around Three Billion Pesos (P3,000,000,000.00). It isreasonable to assume that with the increase in property values(particularly in the Makati Central Business District area), thecurrent value of Legaspi Place could very well service to a substantial extent, the settlement of debtsof the ASB Group of Companies.

In consonance with the purpose and objective of rehabilitation proceedings, we deem it equitable toenjoinChina Bankfrom charging, accruing, and/or collecting interests, penalties and other charges on the loans of SFSRC after the issuance of the Stay Order on 4 May 2000.

WHEREFORE, the Amended Manifestation & Motion dated 5 September 2012 filed by St. Francis Square Realty Corporation (formerly known as ASB Realty Corporation) is herebyGRANTED.

The Rehabilitation Receiver is directed to provide copies of this Order to the parties concerned and file a compliance with the Panel within five (5) days from receipt hereof.

SO ORDERED.^[13](Emphasis supplied)

Proceedings before the SECEn Banc
On Chinabank's Petition for Review onCertiorariin SECEn BancCase No. 03-13-286, SECEn BancaffirmedbyDecision^[14]dated February 23, 2016.

Chinabank's Motion for Reconsideration dated March 15, 2016 was denied under Resolution dated April 5, 2016 for being a prohibited pleading.^[15]

CA-G.R. SP Nos. 146157 and 145586

Proceedings Before the SHP 2
On September 13, 2013, SFSRC and SFSDC filed an Omnibus Motion which essentially alleged that thevaluations of the mortgaged properties had increasedbased on the appraisal report of Cuervo Appraisers, Inc. (CAI),viz.:

(a)	Legaspi property	– P1,086,102,000.00;
(b)	Bel-Air property	– P46,462,000.00; and
(c)	Caloocan property	– P82,031,000.00.[16]

Considering theincrease in the valuations of the mortgaged properties, respondents claim that their loans to Chinabank werealready "over-collateralized," thus, theBel-AirandCaloocan properties should be immediately released. TheBel-AirandCaloocan properties should be sold to pay off their loans. Chinabank should alsorelease the mortgage on the Legaspi propertyandallow respondents to complete its construction.Once the construction of the Legaspi property is completed, they willset aside units, on the basis of prevailing market value, assettlement for the remaining balance of their loans to Chinabank.^[17]

On October 3, 2013, the rehabilitation receiver opined thatChinabank's secured status will not be diminishedconsidering that thecash generated from the sale of both the Bel-Air and Caloocan properties,with the combined value of P128,491,000.00, will beapplied to the Chinabank loans. Further, thecompletion of the Legaspi property will fully settle the unpaid balanceupon allocation of the units based on market valuation.^[18]

ByOrderdated March 25, 2014(SEC Case No. 05-00-6609), SHP 2 granted the Omnibus Motion, thus:

WHEREFORE, premises considered, the hearing panel hereby resolves as follows:

1. Declaring the petitioners' loans with Chinabank to be over-collateralized. Hence,Chinabank is hereby directed to release to petitioners the titles over the mortgaged Bel-Air and Caloocan propertiesandto cancel/release the corresponding mortgageon said properties. Petitioners are herebyauthorized to sell the same via public biddingwithin 180 days from date hereof. Accordingly, the Rehabilitation Receiver is directed to promulgate appropriate bidding rules and procedure, seeing to it that the value of the properties are maximized and thesale awarded to the highest bidder.
   
   
2. DirectingChinabank to accept the proceeds of such sale, net of taxes and expenses, and to credit the same as partial payment for the Php300,000,000.00 Million loan(with no interest and charges whatsoever)of the Petitioners.
   
   
3. Chinabank is furtherdirected to cancel/release the mortgage on The Legaspi Place, as well asto release the title/s thereon to petitioners. Petitioners aredirected to resume construction thereat within one (1) year from release of mortgage and turn-over of said title/s to Petitioners. Thereafter,Petitioners shall allocate for Chinabank as a security, such number of units at The Legaspi Place as are sufficient to pay-off such loan balancebased on current market value of the units. Furthermore, Petitioners are directedto pay the remaining unpaid balance to Chinabank on cash basis, (with no interest or charges whatsoever)from the proceeds of the sale of units at The Legaspi Place within one (1) year from completion of said project.

SO ORDERED.^[19]

Ruling of the SECEn Banc
On Chinabank's Petition for Review on Certiorari in SECEn BancCase No. 04-14-325, SECEn Bancpartially reversedunder itsDecision^[20]dated April 27, 2016.

First, the Financial Rehabilitation and Insolvency Act (FRIA) of 2010 is not applicable to the case for it is neither advantageous nor feasible insofar as respondents' rehabilitation is concerned;^[21]

Second, the 1999 SEC Rules of Procedure on Corporate Recovery, therefore, is inapplicable, considering the rehabilitation proceedings started in 2000;^[22]

Third, respondents merely followed theASB Rehabilitation Planproviding that "if the 1^stoption (Dacion en Pagooffer) is rejected by a secured creditor, thenext alternativefor said creditor is the2^ndoption (settlement of obligation/claims)";^[23]

Fourth, the SHP 2correctly reliedon CAI's valuations of the Bel-Air and Caloocan properties and, thus, hadsubstantial basis to declare respondents' loans to be "over-collateralized."As a result, thereleaseandeventual salewithin 180 days of the Caloocan property, valued at P82,031,000.00, wasvalidsince it was more than enough to cover respondent SFSDC's loan of P35,000,000.00 to petitioner Chinabank;^[24]

Fifth, as for theBel-Air property, valued at P46,462,000.00, it served as partial security for respondent SFSRC's loan of P265,000,000.00 with Chinabank, and as such, can be validlyreleased and then soldwithin 180 days to partly pay for the said loan;^[25]

Sixth, theLegaspi Place property, valued at P1,086,102,000.00, also served as partial security for the same loan, thus, this property should not have been released by SHP 2 butshould have been transferred to the assets pool, for thebenefit of other creditors, per rehabilitation plan;^[26]

Seventh, the release of the Legaspi Place propertywill diminishChinabank's status as a secured creditor.^[27]

Thus:

WHEREFORE, premises considered, the instant petition isPARTIALLY GRANTED. The paragraphs 1 and 2 of Special Hearing Panel 2's Order dated 25 March 2014:

1. Declaring the petitioner's loans with Chinabank to be over-collateralized. Hence, Chinabank is herebydirected to release to petitioners the titles over the mortgaged Bel-AirandCaloocan properties and to cancel/release the corresponding mortgage on said properties. Petitioners are hereby authorizedto sell the same via public biddingwithin 180 days from the date hereof. Accordingly, the Rehabilitation Receiver is directed to promulgate appropriate bidding rules and procedure, seeing to it that the value of the properties are maximized and the sale awarded to the highest bidder.

2. DirectingChinabank to accept the proceeds of such sale, net of taxes and expenses, and to credit the same as partial payment for the Php300,000,000.00 Million loan(with no interest and charges whatsoever)of the Petitioners.

are hereby AFFIRMED with MODIFICATIONS, to wit:

1. That the Chinabank isdirected to release the titles of the Bel-Air and Caloocan propertiesto the Rehabilitation Receiver;
   
   
2. That thepublic biddingshall be conducted by the Rehabilitation Receiver;
   
   
3. That thecancellation of the mortgage over the Bel-Air and Caloocan properties shall only be done after a successful sale and payment by a buyerof the said properties;
   
   
4. ThatSFSRC and SFSDC shall execute an undertakingthat in case the 180-day period expireswith no successful public bidding, that the Rehabilitation Receiver shall return/turnover the titles of the mortgage properties to Chinabank, without need of demand.
   
   Paragraph 3 wherein –
   

   3. Chinabank isfurther directed to cancel/release the mortgage on The Legaspi Place, as well as to release the title/s thereonto petitioners. Petitioners are directedto resume construction thereatwithin one (1) year from release of mortgage and turn­over of said title/s to Petitioners. Thereafter, Petitioners shallallocate for Chinabank as a security, such number of units at The Legaspi Place as are sufficient to pay-off such loan balancebased on current market value of the units. Furthermore, Petitioners aredirected to pay the remaining unpaid balance to Chinabank on cash basis, (with no interest or charges whatsoever) from the proceeds of the sale of units at The Legaspi Placewithin one (1) year from completion of the said project.

   is herebyREVERSED and SET ASIDE.
   
   The settlement of SFSRC's outstanding obligation with Chinabank is hereby REMANDED to the SHP2. The SHP2 and the parties are further directed toadhere to the provisions of the ASB Rehabilitation Plan in the disposition of the Legaspi property.
   
   SO ORDERED (Emphasis supplied).^[28]

Chinabank sought a partial reconsideration which the SEC denied under Resolution dated May 17, 2016 for being a prohibited pleading.^[29]

CA G.R. SP Nos. 145610 and 146331

Proceedings Before the SHP 2
On April 25, 2014, while Chinabank's Petition for Review in SECEn BancCase No. 04-14-325 was pending, respondents filed with the SHP 2 a motion for theissuance of a writ of executionof the SHP 2'sOrderdated March 25, 2014. Consequently, byOrderdated October 28, 2014, SHP issued the writ of execution prayed for. Although Sheriff Rommel Ignacio (Sheriff Ignacio) had personally served the writ on Chinabank through its president Ricardo Chua, the bank asked for time to comply.^[30]

On November 18, 2014, respondents filed with the SHP 2 a motion to cite Chinabank in indirect contempt as it later on allegedly turned out that the Bank did not really intend to comply with the SHP 2Orderdated March 25, 2014as shown by the fact that it had elevated the matter to the Court of Appeals for injunctive relief.^[31]

ByOrder^[32]dated December 22, 2014in SEC Case No. 05-00-6609, SHP 2 did not cite petitioner Chinabank in indirect contempt but issued the following directive:

WHEREFORE, premises considered, the Hearing Panel hereby resolves the Motion dated 18 November 2014 as follows:

1. Taking note of the Sheriffs Return dated 11 December 2014 prepared and submitted by Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court of Makati City;
   
   
2. Designating said Sheriff Ignacio, as he is hereby designated pursuant to Section 10, Rule 39 of the Revised Rules of Court,to execute the necessary Deeds of Cancellation of Mortgage in accordance with the Writ of Execution dated October 28, 2014issued in relation to the Order dated 25 March 2014;
   
   
3. Ordering the Register of Deeds of Makati City and the Register of Deeds of Caloocan City, as the case may be, as follows:
   
   

   3.1	To register the aforesaid Deeds of Cancellation of Mortgageon TCT Nos. 206189, 201933, 205136, 298110 and 298109;
   3.2	To cancel or revoke, or to consider as cancelled or revoked the Owner's Duplicate Copiesof TCT Nos. 206189, 201933, 205136, 298110, and 298109 which are in the possession or custody of China Banking Corporation;
   3.3	To issue new Owner's Duplicate Copiesof TCT Nos. 206189, 201933, and 205136to and in the name of St. Francis Square Realty Corporation (formerly ASB Realty Corporation)all free from any liens and encumbrances.
   3.4	To issue Owner's Duplicate Copies of TCT Nos. 298110 and 298109 to and in the name of St. Francis Square Development Corporation (formerly Tiffany Tower realty Corporation), all free from any liens and encumbrances.

SO ORDERED (Emphasis supplied).^[33]

Ruling of the SECEn Banc
On Chinabank's Petition for Review onCertiorariin SECEn BancCase No. 01-15-352), SEC modified perDecision^[34]dated April 27, 2016. It ruled that theSHP 2 did not commit grave abuse of discretion when it caused the execution of itsOrderdated March 25, 2014since there was no injunctive writ issued by the SEC against such execution. Even then, since this Order was not a judicial command, SHP 2 erred in designating Sheriff Ignacio to cause its implementation. For under Resolution No. 586, Series of 2015, the SEC had already designated Anthony Glenn Paggao as special sheriff to implement the orders of the SEC, its operating departments and special offices. Lastly, SHP 2 should have modified its disposition in accordance with the ruling in SECEn BancCase No. 04-14-325,^[35]thus:

WHEREFORE, premises considered, the instant petition is herebyMODIFIED. Paragraph 1 of the Special Hearing Panel 2's Order dated 22 December 2014:

'1. Taking note of the Sheriffs Return dated 11 December 2014 prepared and submitted by Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court of Makati City;'

is herebyAFFIRMED.

Paragraph 2 wherein –

'2. Designating said Sheriff Ignacio, as he is hereby designated pursuant to Section 10, Rule 39 of the Revised Rules of Court, to execute the necessary Deeds of Cancellation of Mortgage in accordance with the Writ of Execution dated October 28, 2014 issued in relation to the Order dated 25 March 2014;'

is herebyREVERSED and SET ASIDE. The Commission hereby designates Mr. Anthony Glenn C. Paggao as a Special Sheriff to implement SHP2's orders relating to the instant case.

Paragraph 3 wherein -

'3. Ordering the Register of Deeds of Makati City and the Register of Deeds of Caloocan City, as the case may be, as follows:

1.1 To register the aforesaid Deeds of Cancellation of Mortgage on TCT No. 206189, 201933, 205136, 298110 and 298109;

1.2 To cancel or revoke, or to consider as cancelled or revoked, the Owner's Duplicate Copies of TCT Nos. 206189, 201933, 205136, 298110 and 298109 which are in the possession or custody of China Banking Corporation;

1.3 To issue new Owner's Duplicate Copies of TCT Nos. 206189, 201933 and 205136 to and in the name of St. Francis Square Realty Corporation (formerly ASB Realty Corporation) all free from any liens and encumbrances; and

1.4 To issue Owner's Duplicate Copies of TCT Nos. 298110 and 298109 to and in the name of St. Francis Square Development Corporation (formerly Tiffany Tower realty Corporation), all free from any liens and encumbrances.'

is herebyREVERSED and SET ASIDE. This is hereby REMANDED to SHP2 to issue an Order that conforms with the Commission En Banc's Decision in SEC En Banc Case No. 04-14-325.

SO ORDERED.^[36]

Proceedings before the Court of Appeals
Aggrieved,Chinabankinitiated the followingPetitions forCertiorariunder Rule 65:

1. CA-G.R. SP No. 145290, which sought to nullify theDecisiondated February 23, 2016in SECEn BancCase No. 03-13-286enjoining the imposition of interest, penalties, and other chargeson respondents' loans.^[37]
   
   
2. CA-G.R. SP No. 146157, which sought to nullify theDecisiondated April 27, 2016in SECEn BancCase No. 04-14-325 holding that respondents' loans were"over-collateralized"and directing therelease and eventual sale of the mortgaged properties, in effect, relegating it to the status of an unsecured creditor under the rehabilitation plan and the law and denying it the opportunity to even agree to the terms of settlement of respondents' loans.^[38]
   
   
3. CA-G.R. SP No. 146331which sought to nullify theDecisiondated April 27, 2016in SECEn BancCase No. 01-15-352, directing the SHP 2 to issue an order to conform to its Decision dated April 27, 2016 in SECEn BancCase No. 01-15-352 despite the fact that the aforesaid decision has yet to become final and executory.^[39]

On the other hand,respondentsinitiated theirown petitions for reviewunder Rule 43:

1. CA-G.R. SP No. 145586, which assailed theDecisiondated April 27, 2016in SECEn BancCase No. 04-14-325 withholding the cancellation of the mortgages on the Caloocan and Bel-Air properties until the same shall have been sold and fully paid.^[40]
   
   
2. CA-G.R. SP No. 145610, which assailed theDecisiondated April 27, 2016in SECEn BancCase No. 01-15-352 revoking the designation of Sheriff Ignacio to implement the Order dated March 25, 2014 of the SHP2 in SEC Case No. 05-00-6609.^[41]

Ruling of the Court of Appeals
By its consolidated Decision^[42]dated April 7, 2017, the Court of Appealsaffirmedthe Decisiondated February 23, 2016in SECEn BancCase No. 03-13-286,prohibiting petitioner from charging interest and penalties on outstanding loans beginning May 4, 2000, butreversedthe following SECEn Bancdispositions: (a)Decisiondated April 27, 2016in SECEn BancCase No. 04-14-325 on the grounds that the SEC thereinerroneously failed to order the cancellation of the mortgageson respondents' Bel Air and Caloocan properties prior to their auction sale, anderroneously ordered the releaseandtransfer of the Legaspi Place propertyto the assets pool; and (b)Decisiondated April 27, 2016in SECEn BancCase No. 01-15-352 which designated a special sheriff to implement its issuances, including its Decision dated April 27, 2016. Thus:

All told, We hold and so rule that SEC En Banc committedno reversible error in its February 23, 2016Decision(First Assailed Decision) in SEC En Banc Case No. 03-13-286,proscribing Chinabank from charging interest, penalties and other fees on SFSRC's and SFSDC's outstanding loans from the issuance of the Stay Order on May 04, 2000.

Anent the second assailedDecisiondated April 27, 2016in SEC En Banc Case No. 04-14-325, We conclude thatSEC En Banc erred: (1) when, despite declaring the loans of SFSRC and SFSDC asover-collateralized, itdid not order the immediate cancellationof the mortgages on the Bel-Air and Caloocan properties prior to the sale thereof in a public bidding; and (2) when itordered the release of the Legaspi Place propertyso that it may betransferred to an Asset Pool.

Accordingly, the questionedMarch 25, 2014 Orderof the Special Hearing Panel 2, the dispositive portion of which reads:

"WHEREFORE, premises considered, the hearing panel hereby resolves as follows:

1. Declaring thepetitioners' loans with Chinabank to be over-collateralized. Hence, Chinabank is herebydirected to release the corresponding mortgage on said properties. Petitioners are herebyauthorized to sell the same via public biddingwithin 180 days from date hereof. Accordingly, the Rehabilitation Receiver is directed to promulgate appropriate bidding rules and procedure, seeing to it that the value of the properties are maximized and the sale awarded to the highest bidder.
   
   
2. DirectingChinabank to accept the proceeds of such sale, net of taxes and expenses, and to credit the same as partial paymentfor the Php300,000,000.00 Million loan(with no interest and charges whatsoever)of the Petitioners.
   
   
3. Chinabank is furtherdirected to cancel/release the mortgage on The Legaspi Place, as well as to release the title/sthereon to petitioners. Petitioners are directedto resume construction thereat within one (1) year from release of mortgage and turn-over of said-title/s to Petitioners. Thereafter, Petitioners shallallocate for Chinabank as security, such number of units at the Legaspi Place as are sufficient to pay-off such loan balance based on current market value of the units. Furthermore, Petitioners are directedto pay the remaining unpaid balance to Chinabank on cash basis, (with no interest or charges whatsoever) from the proceeds of the sale of unitsat The Legaspi Place within one (1) year from completion of the said project.
   
        SO ORDERED."

should bereinstated.

Finally, We find reversible error on the part of SEC En Banc in its April 27, 2016 Decision (Third Assailed Decision) in SEC En Banc Case No. 01-15-352, when it disregarded and set aside the acts of Sheriff Ignacio and designated a new special sheriff to implement its March 25, 2014 Order. We also find SEC En Banc's order to implement the Second Assailed Decision, (third paragraph of the Decision) erroneous, since We have already ruled that the latter (Second Assailed Decision) is bereft of merit.

Thus, the dispositive portion of the Third Assailed Decision:

"1. Taking note of the Sheriffs Return dated 11 December 2014 prepared and submitted by Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court of Makati City;

is herebyAFFIRMED.

Paragraph 2 wherein -

2. Designating said Sheriff Ignacio, as he is hereby designated pursuant to Section 10, Rule 39 of the Revised Rules of Court, to execute the necessary Deeds of Cancellation of Mortgage in accordance with the Writ of Execution dated October 28, 2014 issued in relation to the Order dated 25 March 2014;'

is herebyREVERSED and SET ASIDE. The Commission hereby designates Mr. Anthony Glenn C. Paggao as a Special Sheriff to implement SHP2's orders relating to the instant case."

Paragraph 3 wherein –

3. Ordering the Register of Deeds of Makati City and the Register of Deeds of Caloocan City, as the case may be, as follows:

1.1 To register the aforesaid Deeds of Cancellation of Mortgage on TCT Nos. 206189, 201933, 205136, 298110 and 298109;

1.2 To cancel or revoke, or to consider as cancelled or revoked, the Owner's Duplicate Copies of TCT Nos. 206189, 201933, 205136, 298110 and 298109 which are in the possession or custody of China Banking Corporation;

1.3 To issue new Owner's Duplicate Copies of TCT Nos. 206189, 201933 and 205136 to and in the name of St. Francis Square Realty Corporation (formerly ASB Realty Corporation) all free from any liens and encumbrances; and

1.4 To issue Owner's Duplicate Copies of TCT Nos. 298110 and 298109 to and in the name of St. Francis Square Development Corporation (formerly Tiffany Tower Realty Corporation), all free from any liens and encumbrances.

is hereby REVERSED and SET ASIDE. This is hereby REMANDED to SHP2 to issue an Order that conforms with the Commission En Banc's Decision in SEC En Banc Case no. 04-14­325."

isset aside. The Special Hearing Panel 2's December 22, 2014 Decision, which states that:

"WHEREFORE, premises considered, this Hearing Panel hereby resolves the Motion dated 18 November 2014 as follows:

1. Taking note of the Sheriffs Return dated 11 December 2014 prepared and submitted by Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court of Makati City;

2. Designating said Sheriff Ignacio, as he is hereby designated pursuant to Section 10, Rule 39 of the Revised Rules of Court, to execute the necessary Deeds of Cancellation of Mortgage in accordance with the Writ of Execution dated October 28, 2014 issued in relation to the Order dated 25 March 2014;

3. Ordering the Register of Deeds of Makati City and the Register of Deeds of Caloocan City, as the case may be, as follows:

3.1 To register the aforesaid Deeds of Cancellation of Mortgage on TCT Nos. 206189, 201933, 205136, 298110 and 298109;

3.2 To cancel or revoke, or to consider as cancelled or revoked, the Owner's Duplicate Copies of TCT Nos. 206189, 201933, 205136, 298110 and 298109 which are in the possession or custody of China Banking Corporation;

3.3 To issue new Owner's Duplicate Copies of TCT Nos. 206189, 201933 and 205136 to and in the name of St. Francis Square Realty Corporation (formerly ASB Realty Corporation) all free from any liens and encumbrances; and

3.4 To issue Owner's Duplicate Copies of TCT Nos. 298110 and 298109 to and in the name of St. Francis Square Development Corporation (formerly Tiffany [T]ower [R]ealty Corporation), all free from any liens and encumbrances."

should bereinstated.

WHEREFORE, in view of the foregoing premises, the Courtresolves to DISMISS Chinabank's Petitions for Certiorarifiled in CA-G.R. SP No. 145290 and CA-G.R. SP No. 146157, and PetitionAd Abudantiorem Cautelamin C.A. GR-SP No. 146331.

With regard to CA-G.R. SP Nos. 145586 and 145610 filed by SFSRC and SFSDC,the Court GRANTS said petitions and REINSTATES theOrdersof the SEC Special Hearing Panel 2,dated March 25, 2014, andDecember 22, 2014 without modification.

SO ORDERED. (Emphasis supplied).^[43]

Chinabank's motion for reconsideration wasdeniedunderResolution^[44]dated July 6, 2017.

The Present Petition
Chinabanknow seeks reliefviaRule 45.

For clarity, the Court of AppealsreinstatedandaffirmedSHP 2'sOrderdated March 25, 2014andOrderdated December 22, 2014:

- Orderdated March 25, 2014

WHEREFORE, premises considered, the hearing panel hereby resolves as follows:

1. Declaring the petitioners' loans with Chinabank to be over-collateralized. Hence,Chinabank is hereby directed to release to petitioners the titles over the mortgaged Bel-Air and Caloocan propertiesandto cancel/release the corresponding mortgageon said properties. Petitioners are herebyauthorized to sell the same via public biddingwithin 180 days from date hereof. Accordingly, the Rehabilitation Receiver is directed to promulgate appropriate bidding rules and procedure, seeing to it that the value of the properties are maximized and thesale awarded to the highest bidder.
   
   
2. DirectingChinabank to accept the proceeds of such sale, net of taxes and expenses, and to credit the same as partial payment for the Php300,000,000.00 Million loan(with no interest and charges whatsoever)of the Petitioners.
   
   
3. Chinabank is furtherdirected to cancel/release the mortgage on The Legaspi Place, as well asto release the title/s thereon to petitioners. Petitioners aredirected to resume construction thereat within one (1) year from release of mortgage and turn-over of said title/s to Petitioners. Thereafter,Petitioners shall allocate for Chinabank as a security, such number of units as The Legaspi Place as are sufficient to pay-off such loan balancebased on current market value of the units. Furthermore, Petitioners are directedto pay the remaining unpaid balance to Chinabank on cash basis, (with no interest or charges whatsoever)from the proceeds of the sale of units at The Legaspi Place within one (1) year from completion of said project.

SO ORDERED (Emphasis supplied).^[45]

- Orderdated December 22, 2014

WHEREFORE, premises considered, the Hearing Panel hereby resolves the Motion dated 18 November 2014 as follows:

1. Taking note of the Sheriffs Return dated 11 December 2014 prepared and submitted by Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court of Makati City;
   
   
2. Designating said Sheriff Ignacio, as he is hereby designated pursuant to Section 10, Rule 39 of the Revised Rules of Court,to execute the necessary Deeds of Cancellation of Mortgage in accordance with the Writ of Execution dated October 28, 2014issued in relation to the Order dated March 25, 2014;
   
   
3. Ordering the Register of Deeds of Makati City and the Register of Deed of Caloocan City, as the case may be, as follows:
   
   

   3.1	To register the aforesaid Deeds of Cancellation of Mortgageon TCT Nos. 206189, 201933, 205136, 298110 and 298109;
   3.2	To cancel or revoke, or to consider as cancelled or revoked the Owner's Duplicate Copiesof TCT Nos. 206189, 201933, 205136, 298110, and 298109 which are in the possession or custody of China Banking Corporation;
   3.3	To issue new Owner's Duplicate Copiesof TCT Nos. 206189, 201933, and 205136to and in the name of St. Francis Square Realty Corporation (formerly ASB Realty Corporation)all free from any liens and encumbrances.
   3.4	To issue new Owner's Duplicate Copiesof TCT Nos. 298110 and 298109to and in the name of St. Francis Square Realty Corporation (formerly Tiffany Tower [R]ealty Corporation), all free from any liens and encumbrances.

SO ORDERED (Emphasis supplied).^[46]

Chinabankassails the foregoing SHP 2Ordersand argues:

1)	The Court of Appeals erred in giving due course to respondents' erroneous Rule 43 petitions for review in violation of the Court's Administrative Circular No. 2-90 or "Guidelines to be Observed in Appeals to the Court of Appeals and to the Supreme Court,"providing thatwrong or inappropriate modes of appeal will immediately warrant their dismissal. In the absence of any exceptional or transcendental circumstance, respondents' petitions should have been dismissed outright.[47]
2)	Therehabilitation plan does not compel a secured creditor to waive interests, penalties, and other charges on respondents' loans. There is no law or judicial pronouncement compelling the absolute condonation of interest and penalty charges. Since it had not consented to the waiver of interests, penalties, and other charges, the Court of Appealsshould not have allowed the release of the mortgaged properties on ground of over-collateralization.[48]
3)	The issue ofover-collateralizationis not just a matter of mathematics but goes into the very nature of the mortgage itself. Jurisprudence has settled theconcept of indivisibility of mortgagesin the sense thateach and every parcel under mortgage answers for the totality of the debt. Theonly timethat themortgages can be released is when all of respondents' loans have been paid.[49]
4)	The Court of Appeals'directive to release the Bel-Air, Caloocan, and Legaspi properties from mortgage violated its right to due process for it was unduly deprived of these properties. In so doing, the Court of Appealsrelegated the bank to the status of an unsecured creditor. Article 2126 of the Civil Code provides that so long asthe obligation for whose security a mortgage was constituted has not been fully paid, themortgage should remain attached to and follow the property. Since the loans here have not been fully extinguished, the mortgages on the Bel-Air, Caloocan, and Legaspi properties are not deemed to have been released. Besides, the mortgage contract cannot be cancelled or modified without its consent.[50]
5)	The SHP 2's Order dated March 25, 2014 maynotbedeemed final and executoryconsidering the fact that challenges against it, as well as the SHP 2's Order dated December 22, 2014 has not been settled yet with finality.[51]
6)	The Court of Appeals erred in reinstating the SHP 2's Order dated December 22, 2014 designating Sheriff Rommel Ignacio (Sheriff Ignacio), Sheriff IV of RTC-Makati, to execute the deeds of cancellation or mortgage over the Bel-Air, Caloocan, and Legaspi properties. The Court has already pronounced thatcourt sheriffs cannot enforce writs of execution issued by quasi-judicial bodies. Since the SEC is a quasi-judicial agency, its orders are not within the authority of sheriffs to execute. This policy is even reiterated in the OCA Circular No. 161-2016. Besides, the SEC already issued Resolution No. 586, Series of 2015, wherein a special sheriff had already been designated to implement SEC orders as well as its operating departments and special offices.[52]
7)	It is entitled to a temporary restraining order (TRO) since the enforcement of the assailed Court of Appeals issuances before the present petitions are resolved would cause it grave injustice.[53]

In their Comment^[54]dated December 19, 2017,respondents SFSRCandSFSDCcounter:

1)	The Court of Appeals can validly treat the petitions for review as special civil actions for certiorari since the same were filed within the 15-day reglementary period and a liberal application of the Rules would enhance fair trials and expedite justice;
2)	InChina Banking Corporationv.ASB Holdings, Inc.[55]andMBTCv.ASB Holdings, Inc.[56]the Court ruled thatinterest, penalties, and other related charges accruing after the date of the initial suspension order shall not be payable by respondents. The Court also sustained the portion of the rehabilitation plan,viz.:  "If the dacion en pago herein contemplated does not materialize for failure of the secured creditors to agree thereto,this rehabilitation plan contemplates to settle the obligations (without interest, penalties, and other related charges accruing after the date of the initial suspension order)to secured creditors with mortgaged properties at ASB selling prices for the general interest on the employees, creditors, unit buyers, government, general public, and the economy." InBPI v. SEC,the Court reiterated the rehabilitation planrequiringrespondents to"settle the obligations" (without interest, penalties and other related charges accruing after the date of the initial suspension order). Thus, it is erroneous for Chinabank to insist to claim interest, penalties, and other related charges.[58]
3)	In rehabilitation proceedings, the laws and rules are applied in the context of the very spirit and purpose of corporate rehabilitation. It is for the good not only of the creditors, but a gamut of stakeholders. The"cram-down" power of the rehabilitation courtmeans thatthe court may approve a rehabilitation plan over the objection of the creditors if, in its judgment, the rehabilitation of the debtors is feasible and the opposition of the creditors is manifestly unreasonable. Additionally, the Court of Appeals'directive to release the Bel-Air and Caloocan propertiesemanated from thepower of any court in rehabilitation cases to determine what could possibly help an ailing company to recoverfrom its situation. In any event,Chinabank remains to be a secured creditorsince itstill has the Legaspi Place property as securityand itspriority in the payment ladder subsists.Further, there is no undue deprivation of property to speak of since the mortgaged properties are still owned by respondents.[59]
4)	The SHP 2'sOrderdated March 25, 2014isimmediately executoryper Section 2-5, Rule II of theRules of Procedure on Corporate Recoveryand Section 5, Rule III ofA.M. No. 00-8-10-SC.[60]
5)	The Court of Appeals properly upheld the SHP 2's designation of Sheriff Ignacioto execute the deeds of cancellation of mortgage on the Bel-Air, Caloocan, and Legaspi Place properties. TheCourt of Appeals correctly held that A.M. No. 14-7-224-RTC and A.M. No. 15-07-12-SC are inapplicable here because there, what was sought to be executed was a writ of possession issued by another government agency, while here, it is the issuances of the SEC itself. The SEC hasalways utilized the services of court sheriffsin the execution of its decisions, orders, and awards, as there is no relevant provision on this in the 2006 SEC Rules of Procedure. Besides, the SEC has always relied on Rule 39 of the Rules of Court when it comes to the execution of its decisions, orders, and processes.[61]
6)	Chinabank is not entitled to a temporary restraining order (TRO) against the execution of the assailed dispositions since Chinabank does not stand to suffer any grave injustice or irreparable injury. In fact, it will still be paid what is due it.[62]

By Comment^[63]dated September 17, 2018, the Office of the Solicitor General (OSG),^[64]representing the SEC, echoes respondents' arguments.

Under its Reply^[65]dated July 10, 2019, Chinabank merely refers back to its arguments in its present Petition.

Chinabank filed its Very Urgent and Most Respectful Reiteration of the Application for the Issuance of a Temporary Restraining Order^[66]dated December 21, 2020 while respondents^[67]and the OSG^[68]filed their respective comments thereon.

Issues

1)	whether the Court of Appeals erred when it treated respondents' petitions for review as petitions for certiorari;
2)	whether the Court of Appeals erred when it ordered the suspension or condonation of interests, penalties, and other charges on respondents' loans, in accordance with the Rehabilitation Plan;
3)	whether there was over-collateralization of respondents' loans, and whether the release of the subject properties from mortgage was proper;
4)	whether the SHP 2Orderdated March 25, 2014is immediately executory;
5)	whether the Court of Appeals correctly reinstated the SHP 2'sOrderdated December 22, 2014designating Sheriff Ignacio to execute the deeds of cancellation of mortgage on respondents' properties.

Our Ruling
We affirm in the main.

First.InVictorio-Aquino v. Pacific Plans, Inc.,^[69]the Court clarified that theappropriate procedurefor assailing orders issued by tribunals (i.e., Regional Trial Court or Securities and Exchange Commission) following theapproval of rehabilitation planswill depend on which rule was in effect when these orders were elevated to the Court of Appeals, thus:

While We agree with respondent that thelater rulestates thatorders issued after the approval of the rehabilitation plancan be reviewed only through a special civil action forcertiorari under Rule 65of the Rules of Court, such rule does not apply to the instant case as the same was not yet in effect at the time petitioner filed her Petition for Review with the CA. Stated otherwise, theprevailing lawat the time petitioner filed said petition with the CA is theInterim Rulesas well asA.M. No. 04-9-07-SC. As such, the proper remedy of appeal from all decisions and final orders of the RTC wasRule 43of the Rules of Court, andnot Rule 65thereof.^[70]

Here, the applicable rule wasRule 6of the2013Financial Rehabilitation Rules of Procedure(FRIA),viz.:

Rule 6
Procedural Remedies

Section 1. Motion for Reconsideration. — A party may file a motion for reconsideration of any order issued by the court prior to the approval of the Rehabilitation Plan. No relief can be extended to the party aggrieved by the court's order on the motion through a special civil action for certiorari under Rule 65 of the Rules of Court.

An order issued after the approval of the Rehabilitation Plan can be reviewed only through a special civil action for certiorari under Rule 65 of the Rules of Court.(Emphasis supplied)

Thus, Chinabankproperly initiatedits petitions for certiorari under Rule 65 in CA-G.R. SP Nos. 145290, 146157, and 146331. Meanwhile, respondentserroneously availedof a Petition for Review under Rule 43 in CA-G.R. SP Nos. 145586 and 145610.

The Court of Appeals, nonetheless,opted to relax the strict applicationof procedural rules and admitted respondents' twinRule 43 Petitionsin CA-G.R. SP Nos. 145586 and 145610. Andthis was for good reason. Theissues raisedby the parties areclosely intertwinedand thehigher interest of substantial justicedictate that the cases beresolved on the merits once and for all.

True, theimportance of complying with procedural rules cannot be over emphasizedfor these are tools designed to facilitate the adjudication of cases. They are set in place to obviate arbitrariness, caprice, or whimsicality in the administration of justice.

But if astringent applicationof the rules wouldhinder rather than servethe demands of substantial justice, the former must yield to the latter."Litigations should, as much as possible, be decided on the merits and not on technicalities."^[71]The Court of Appeals aptly reasoned:

Using the same yardstick as the Grecio-Cuerdo Case, We find no reason not to apply the above-cited case herein, although what We have now are petitions for review under Rule 43 which will be treated as petitions for certiorari under Rule 65.First, SFSRC's and SFSDC's petitions werefiled within the reglementary periodfor filing a petition for certiorari under Rule 65.In fact, the petitions for review werefiled within fifteen (15) daysfrom receipt of the assailed SEC Decisions, that is, way before the expiration of the 60-day period for filing a Rule 65 petition for certiorari.Second, SFSRC's and SFSDC's petitions for reviewcontain all the matters requiredby Rule 65 of the Rules of Court. Finally, We hold and so rule that sufficient reason exists to justify the relaxation of the rules with the end-in-view of substantially settling issues raised in the present appeals.

SFSRC and SFSDC resorted to a Rule 43 petition for reviewin good faith. Records show that,after a careful perusal of the pertinent law and jurisprudence, they believed in good faith that A.M. No. 00-8-10-SC, FRIA and A.M. No. 12-12-11-SC are inapplicableto the instant cases re: proper mode of appeal to the Court of Appeals. They,thus, applied A.M. No. 04-9-07-SCwhich, to reiterate, provides that all decisions and final orders shall be appealed to the Court of Appeals through a petition for review under Rule 43 of the Rules of Court, to be filed within fifteen (15) days from notice of the decision or final order of the Regional Trial Court. Otherwise stated,SFSRC and SFSDC have adequately explained why they chose to avail Rule 43, albeit, it proved to be the wrong mode of appeal. Applying City of Manila v. Grecio-Cuerdo, this, for Us, is a sufficient reason to justify the relaxation of the rules.

Assuming arguendo that SFSRC's and SFSDC's petitions for review cannot be treated as petitions for certiorari, We are still not inclined to dismiss the same, for it has already been settled that rules of procedures shall be liberally interpreted.^[72](Emphasis supplied)

Additionally, it is a matter of record that respondents, throughASB Holdings, Inc., have beento this Courton issues revolving around its Rehabilitation Plan several times.^[73]The Court of Appeals correctly gave due course to the Rule 43 Petitions because by doing so it was able to access and assessallthe relevant adjudicative facts and argumentsthrough respondents' allegations in resolving the issues between respondents and Chinabank.

In fine, the Court of Appeals cannot be faulted when it allowed substantial justice to prevail over the strict application of technical rules of procedure in this case.

Second.A rehabilitation plan aims to restore the financial well-being and viability of an insolvent debtor using various means including, but not limited to, debt forgiveness, debt rescheduling, reorganization or quasi-reorganization,dacion en pago, debt-equity conversion, and sale of the business (or parts of it) as a going concern, or setting-up of new business entity or other similar arrangements as may be approved by the court or creditors.^[74]Thislegal principlehas been enunciated during those times respondents' Rehabilitation Plan, and similar rehabilitation plans, were before this Court for review.

To stress:

"... corporate rehabilitation connotes therestoration of the debtorto aposition of successful operation and solvency, if it is shown thatits continued operation is economically feasibleandits creditors can recover by way of the present value of payments projected in the rehabilitation plan,more if the corporation continues as a going concern than if it is immediately liquidated."^[75]

Rehabilitation proceedings in our jurisdiction haveequitable and rehabilitative purposes. Thus:

On the one hand, "they attempt to provide for theefficient and equitable distribution of an insolvent debtor's remaining assets to its creditors;and on the other, toprovide debtors with a fresh startby relieving them of the weight of their outstanding debts andpermitting them to reorganize their affairs."^[76]

The purpose of rehabilitation proceedings is to enable the companyto gain a new lease on lifeand therebyallow creditors to be paidtheir claimsfrom its earnings.^[77]

Here, relevant portions of the rehabilitation plan read:

IV. THE REVISED REHABILITATION PLAN

A. The Total Approach

It is apparent that ASB's corporate indebtedness needs to be reduced as quickly as possible in order to prevent rapid deterioration in equity. Based on calculations of the net realizable value of real estate assets and other assets determined on a combined basis, there appears to be sufficient assets to meet liabilities provided a significant portion of assets are quickly converted to a reduction of debt. Based on the current status of the Philippine real estate sector, assets will not be converted quickly enough through normal sales method, interest accumulating over the period of sales will cause unsecured creditors to incur substantial losses. In order to reduce debt quickly, we must do the following:

1. Complete or sell on-going projects;
   
   
2. Invite secured creditors to completedacion en pagotransactions, waiving all penalties; and
   
   
3. Invite unsecured creditors to purchase real estate parcels and other assets and set-off the amount of their outstanding claim against the purchase price.

The assets included in the above program include all real assets.

In order to determine the feasibility of the above, representatives of our financial advisors met with or had discussions with most of the secured creditors. Preliminary discussions indicate support from the secured creditors towards the concepts of the program associated with them.The majority of these secured creditors appear to want to completedacion en pagotransactions based on mutually agreed upon terms.We attach as Appendix A, a listing of properties expected to be subject todacion en pagotransactions. We also attach as Appendices B to O, term sheets setting out ASB's expectations of the outcome of thedacion en pagotransactions with the secured creditors. We continue to pursue discussions with secured creditors. Based on the program, secured creditors' claims amounting to PhP5.192 billion will be paid in full including interest up to April 30, 2000.Secured creditors have been asked to waive all penalties and other charges. Thisdacion en pagoprogram is essential to eventually pay all creditors and rehabilitate the ASB Group of Companies. If thedacion en pagoherein contemplated does not materialize for failure of the secured creditors to agree thereto, this rehabilitation plan contemplates to settle the obligations (without interest, penalties, and other related charges accruing after the date of the initial suspension order) to secured creditors with mortgaged properties at ASB selling prices for the general interest of the employees, creditors, unit buyers, government, general public and economy.^[78](Emphasis supplied)

Based thereon,secured creditors have two (2) optionsby which the loans owing them can be settled:1) throughdacion en pagowherein all penalties shall be waived;or2) if the secured creditors do not consent todacion en pago,through the disposition or sale of the mortgaged properties at selling pricesbutwithout interest, penalties, and other related charges accruing after the date of the initial suspension order, which here wasMay 4, 2000.

Contrary to Chinabank's assertion, these two (2) options are found in the Rehabilitation Plan itself which the Courthas confirmed with finalityway back in 2007via MBTC v. ASB Holdings, Inc.^[79]andBPI v. SEC.^[80]

We, therefore, quote with concurrence, the relevant disquisition of the Court of Appeals,viz.:

Furthermore, it is clear that only in thedacion en pagotransactions, where the waiver of interests, penalties and related charges are not compulsory in nature. Simply put, waiver of interests is merely a proposal for creditors to accept,but this is true only indacion en pagotransactions, not in the second option. The second option, whichwas validated by the Supreme Court, specifically statesthatthe creditor cannot impose interests and other charges after the issuance of the stay order.

In the instant case,Chinabank had refused thedacion en pagotransaction option. This isevident in its Manifestation filed on November 13, 2009, wherein it informed the SHP and SFSRC and SFSDC ofits intent to decline thedacion en pagooffer. For doing so,Chinabank cannot now insistthatit cannot be compelled to waive interests and other charges. Simply put,Chinabank is already in estoppel.^[81](Emphasis supplied)

Verily, followingChinabank's refusal to avail ofdacion en pago, theonly remaining option to pay off the loanswas through thedisposition or sale of the mortgaged properties, without accrual of interest, penalties, and other related charges following the issuance of the stay order on May 4, 2000. This exactly is what happened here.

Third.Werespectfully disagreewith the observations that the two options available to Chinabank, as a secured creditor, for settling of loans under the ASB Rehabilitation Plan,i.e., 1) throughdacion en pagowherein all penalties shall be waived; or 2) if the secured creditors do not consent todacion en pago, through the disposition or sale of the mortgaged properties at selling pricesbutwithout interest, penalties, and other related charges accruing after the date of the initial suspension order, arenot coercivebut subject to negotiation and consent.

The terms and conditions of an approved rehabilitation plan arebinding on creditors. As emphasized inBPI v. Sarabia Manor Hotel Corp.:^[82]

[t]he"cram-down" clause, this provision, which is currently incorporated in the FRIA, is necessaryto curb the majority creditors' natural tendency to dictate their own termsand conditions to the rehabilitation, absent due regard to the greater long-term benefit of all stakeholders. Otherwise stated,it forces the creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery.^[83](Emphasis supplied, citation omitted)

True, our esteemed then Justice (now Senior Associate Justice) Marvic M.V.F. Leonen, through hisponenciainViva Shipping Lines, Inc. v. Keppel Philippines Mining, Inc.,^[84]expounded on the concept ofpresent value recoveryin this wise:

Present value recoveryacknowledges that, in order to pave way for rehabilitation, the creditor will not be paid by the debtor when the credit falls due. The court may order a suspension of payments to set a rehabilitation plan in motion; in the meantime, the creditor remains unpaid. By the time the creditor is paid, the financial and economic conditions will have been changed. Money paid in the past has a different value in the future. It is unfair if the creditor merely receives the face value of the debt. Present value of the credit takes into account the interest that the amount of money would have earned if the creditor were paid on time.

Trial courts must ensure thatthe projected cash flow from a business' rehabilitation planallows for theclosestpresent value recoveryfor its creditors. If the projected cash flow is realistic and allows the corporation to meet all its obligations, then courts should favor rehabilitation over liquidation. However, if the projected cash flow is unrealistic, then courts should consider converting the proceedings into that for liquidation to protect the creditors.^[85](Emphasis supplied, citations omitted)

Yet, a close reading of theponenciaof Senior Associate Justice Leonen reveals that the principle of present value recovery is applied in determining the feasibility of a rehabilitation planprior to its approval. And, it is not thepreciseorexactamount equal to thepresent value recovery, but somethingclosestto it.

As outlined in theponenciaof Senior Associate Justice Leonen, the specific characteristics of an economically feasible rehabilitation plan are: 1) the debtor has assets that can generate more cash if used in its daily operations than if sold; 2) liquidity issues can be addressed by a practicable business plan that will generate enough cash to sustain daily operations; and 3) the debtor has a definite source of financing for the proper and full implementation of a rehabilitation plan that is anchored on realistic assumptions and goals.

In the cases at bar, these principles and guidelines arepresumed to existsince the ASB Rehabilitation Planhad already been approved and upheld by this Court with finalityinMBTC v. ASB Holdings, Inc.,^[86]andBPI v. SEC.^[87]Consequently, the provisions in the rehabilitation plan must be duly observed and complied withvis-à-vis and in accordance withthe"cram down" principle.

Necessarily, therefore, the following provisions of the rehabilitation plan arebinding on the creditorsasit has been stipulated,viz.:

In order to determine the feasibility of the above, representatives of our financial advisors met with or had discussions with most of the secured creditors. Preliminary discussions indicate support from the secured creditors towards the concepts of the program associated with them.The majority of these secured creditors appear to want to completedacion en pagotransactions based on mutually agreed upon terms.We attach as Appendix A, a listing of properties expected to be subject todacion en pagotransactions. We also attach as Appendices B to O, term sheets setting out ASB's expectations of the outcome of thedacion en pagotransactions with the secured creditors. We continue to pursue discussions with secured creditors. Based on the program, secured creditors' claims amounting to PhP5.192 billion will be paid in full including interest up to April 30, 2000.Secured creditors have been asked to waive all penalties and other charges. Thisdacion en pagoprogram is essential to eventually pay all creditors and rehabilitate the ASB Group of Companies. If thedacion en pagoherein contemplated does not materialize for failure of the secured creditors to agree thereto, this rehabilitation plan contemplates to settle the obligations (without interest, penalties, and other related charges accruing after the date of the initial suspension order) to secured creditors with mortgaged properties at ASB selling prices for the general interest of the employees, creditors, unit buyers, government, general public[,] and economy.^[88](Emphasis supplied)

The provision is clear:"If the dacion en pago herein contemplated does not materialize for failure of the secured creditors to agree thereto, this rehabilitation plan contemplates to settle the obligations (without interest, penalties, and other related charges accruing after the date of the initial suspension order) to secured creditors with mortgaged properties at ASB selling prices for the general interest of the employees, creditors, unit buyers, government, general public[,] and economy."^[89]

This statement may be broken down to mean that the secured creditors have two (2) options by which the loans owing them can be settled: 1) throughdacion en pagowherein all penalties shall be waived; or 2) if the secured creditors do not consent todacion en pago, through the disposition or sale of the mortgaged properties at selling prices,butwithout interest, penalties, and other related charges accruing after the date of the initial suspension order.

Indeed, when theterms of the document are so clear and explicitthat they do not justify an attempt to read into it any alleged intention of the parties, the terms areto be understood literally just as they appearon the face of the document.^[90]If the Court believedotherwise, itwould have said soin the several times that this ASB Rehabilitation Plan was before this Court for clarification.

Fourth.Rehabilitation has two purposes: (a) to distribute the assets of the insolvent debtor to its creditors in an efficient and equitable manner; and (b) to provide the debtor with a fresh start. Thus:

"Rehabilitation proceedings in our jurisdiction haveboth equitableandrehabilitative purposes. On the one hand, they attempt to provide for the efficient and equitable distribution of an insolvent debtor's remaining assets to its creditors; and on the other, to provide debtors with a "fresh start" by relieving them of the weight of their outstanding debts and permitting them to reorganize their affairs."^[91]

Since the Courthad already long confirmed the validity of the subject Rehabilitation Plan, its terms must be strictly complied with as a consequence of the "cram-down" principle.BPI v. Sarabia Manor Hotel Corp.^[92]is apropos:

Among other rules that foster the foregoing policies, Section 23, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation (Interim Rules) states that a rehabilitation plan may be approved even over the opposition of the creditors holding a majority of the corporation's total liabilities if there is a showing that rehabilitation is feasible and the opposition of the creditors is manifestly unreasonable.Also known as the "cram-down" clause, this provision, which is currently incorporated in the FRIA,is necessary to curb the majority creditors' natural tendency to dictate their own terms and conditions to the rehabilitation, absent due regard to the greater long-term benefit of all stakeholders. Otherwise stated,it forces the creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery.^[93](Emphasis supplied)

In fact,one of the consequencesof the exercise of the "cram-down" power is theimpairment of contracts.Victorio-Aquino v. Pacific Plans, Inc.^[94]elucidates further:

It is undisputable that the corporation is in the process of corporate rehabilitation precisely because it is undergoing financial distress.Petitioner cannot expect to receive the contracted amount owed by respondent because a modification of the terms and conditions of the contract is certainly foreseeable and reasonable in a corporate rehabilitation case, as correctly held by the Rehabilitation Court, to wit:

x x x It is an established principle in rehabilitation proceedings that rehabilitation courts have the cram down power to approve rehabilitation plans even over the objections of creditors, which cram down power shall nonetheless bind the latter. In fact, the CARR is given the authority to "notify counterparties and the court as to contracts that the debtor has decided to continue to perform or breach." Afortiori, the mere impairment of contracts is not a justification to question the modification of a rehabilitation plan because the very nature of rehabilitation proceedings sometimes necessitates such a course of action.^[95](Emphases supplied)

To emphasize, the legal principle of non-impairment of contracts does not apply to judicial decisions which examine whether contracts are unconscionable or contrary to public policy, public order or morals. Necessarily, with this judicial power, contracts would have to be impaired for the greater good by judicial decisions.

On this score, there isnothing unlawfulwith the directive of the Court of Appeals torelease the Bel-Air, Caloocan, and Legaspi properties from mortgage. Itcannot be considered as an infringementof Chinabank's alleged right to due process. For themodification of the mortgage contractsin fact ispart and parcel of the Rehabilitation Planitself.

Fifth.It is true that a secured creditor, like Chinabank,does not loseitspreference of creditin rehabilitation proceedings. In fact, the Court, inMBTC v. ASB Holdings, Inc.,^[96]emphasized this when it upheld the ASB Rehabilitation Plan:

We are not convinced that the approval of the Rehabilitation Plan impairs petitioner bank's lien over the mortgaged properties. Section 6 [c] of P.D. No. 902-A provides 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."

By that statutory provision, it is clear that the approval of the Rehabilitation Plan and the appointment of a rehabilitation receiver merely suspend the actions for claims against respondent corporations. Petitioner bank's preferred status over the unsecured creditors relative to the mortgage liens is retained, but the enforcement of such preference is suspended. The loan agreements between the parties have not been set aside and petitioner bank may still enforce its preference when the assets of ASB Group of Companies will be liquidated. Considering that the provisions of the loan agreements are merely suspended, there is no impairment of contracts, specifically its lien in the mortgaged properties.

As we stressed inRizal Commercial Banking Corporation v. Intermediate Appellate Court, such suspension "shall not prejudice or render ineffective the status of a secured creditor as compared to a totally unsecured creditor," for what P.D. No. 902-A merely provides is that all actions for claims against the distressed corporation, partnership or association shall be suspended. This arrangement provided by law is intended to give the receiver a chance to rehabilitate the corporation if there should still be a possibility for doing so, without being unnecessarily disturbed by the creditors' actions against the distressed corporation. However, in the event that rehabilitation is no longer feasible and the claims against the distressed corporation would eventually have to be settled, the secured creditors, like petitioner bank, shall enjoy preference over the unsecured creditors.

Yet,preference of credit does not equate to retention of a lien over a particular set of properties, as insisted by Chinabank.DBP v. Secretary of Labor^[97]explains theconcept of preference of credit, thus:

The rationale for making the application of Article 110 of the Labor Code contingent upon the institution of bankruptcy or judicial liquidation proceedings against the employer is premised upon the very nature of a preferential right of credit.A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtor are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale of the debtor's specific property?Indubitably, the preferential right of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established [Kuenzle & Streiff (Ltd.) v. Villanueva, 41 Phil. 611 (1916);Barretto v. Villanueva, G.R. No. L-14938, December 29, 1962, 6 SCRA 928;Philippine Savings Bank v. Lantin, G.R. No. L- 33929, September 2, 1983, 124 SCRA 476.]^[98](Emphasis supplied)

Verily,Chinabank's status as a secured creditorcomes into playonly in the eventthat respondents become unviable and must be liquidated. Apart from that scenario, retaining a lien on the Bel-Air, Caloocan, and Legaspi propertiescannot be insisted upon.

Sixth.The SHP 2's Order dated March 25, 2014 is immediately executory. We adopt in full the following disquisition of the Court of Appeals:

Section 2-5, Rule II of the Rules of Procedure on Corporate Recovery categorically states:

"Section 2-5. Orders immediately executory. - Every order issued by the Commission under these Rules is immediately executory. A petition for review or an appeal therefrom shall not stay the execution of the order unless restrained or enjoined. The review of any order or decision or an appeal therefrom shall be in accordance with the provisions of P.D. 902-A and the Rules of Procedure of the Commission."

Pending the resolution of the case, or on December 02, 2008, the Supreme Court came up with A.M. No. 00-8-10-SC, otherwise known as "Rules of Procedure on Corporate Rehabilitation," which, in effect, amended the previous Rules of Procedure on Corporate Recovery. Despite the amendment, the Supreme Court affirmed the immediately executory nature of SEC orders and decisions, to wit:

"RULE 3 General Provisions

x x x x
Section 5. Executory Nature of Orders. - Any order issued by the court under these Rules is immediately executory. A petition to review the order shall not stay the execution of the order unless restrained or enjoined by the appellate court. Unless otherwise provided in these Rules, the review of any order or decision of the court or an appeal therefrom shall be in accordance with the Rules of Court; provided, however, that the reliefs ordered by the trial or appellate courts shall take into account the need for resolution of proceedings in a just, equitable and speedy manner."

As things are, it is undoubtedly clear that SEC's orders, as well as that of SHP2, are immediately executory, absent any restraining order upon review.

In the instant case, records show that, up to date, neither had the SEC En Banc, nor this Court issued any order restraining the implementation of the March 25, 2014 Order. Accordingly, the same should be immediately executed and implemented.^[99]

So must it be.

Going now to the designation of Sheriff Ignacio of the Regional Trial Court of Makati City to implement the SHP 2'sOrderdated December 22, 2014, we modify.

OCA Circular No. 161-2016 dated July 22, 2016comes to the fore:

In a subsequent case, in A.M. No. 15-07-12-SC (Re: Enforcement by Court Sheriffs of the Writs of Execution Issued by Quasi-Judicial Bodies, e.g., Construction Industry Arbitration Commission, Housing and Land Use Regulatory Board, and PAG-IBIG), dated 2 February 2016, the Courten bancre-affirmed its Resolution dated 26 August 2014 and "[r]esolved to clarify that court sheriffs cannot enforce writs of execution issued by quasi-judicial bodies pursuant to the Resolution dated August 26, 2014 in A.M. No. 14-7-224-RTC."

In view of the Court's categorical declaration that court sheriffs cannot enforce writs issued by quasi-judicial bodies, all concerned are hereby DIRECTED to REFRAIN from DESIGNATING their respective sheriffs to implement all writs issued by the said agencies.

Clearly, the Court of Appealserredwhen it reinstated the SHP 2'sOrderdated December 22, 2014, designating Sheriff Ignacio"to execute the necessary Deeds of Cancellation of Mortgage in accordance with the Writ of Execution dated October 28, 2014 issued in relation to the Order dated 25 March 2014."^[100]

Notably, perSEC Resolution No. 586 (Series of 2015), Special Sheriff Paggao had already been designated to implement the orders of the SEC, its operating departments and special offices. Consequently,where Sheriff Ignacio had left off, Special Sheriff Paggao should take overinsofar as enforcing theWrit of Executiondated October 28, 2014issued in relation to theOrderdated March 25, 2014is concerned.

ACCORDINGLY, the Petition isDENIED. The Decision dated April 7, 2017 and Resolution dated July 6, 2017 of the Court of Appeals in CA-G.R. SP Nos. 145290, 145586, 145610, 146157, and 146331 areAFFIRMEDwithMODIFICATION. The designation of Mr. Rommel M. Ignacio, Sheriff IV of the Regional Trial Court of Makati City, isREVOKED. In his stead, Special Sheriff Anthony Glenn Paggao isDIRECTED TO IMPLEMENTtheWrit of Executiondated October 28, 2014issued in relation to theOrderdated March 25, 2014in accordance withSEC Resolution No. 586 (Series of 2015).

SO ORDERED.

Leonen, SAJ. (Chairperson), M. Lopez, J. Lopez,andKho, Jr., JJ.,concur.

---

^[1]Penned by Associate Justice Stephen C. Cruz and concurred in by Associate Justices Florito S. Macalino and Maria Elisa Sempio-Diy,rollo, Vol, I, pp. 9-46.

^[2]Id. at 48-52.

^[3]Id. at 281.

^[4]Id.

^[5]Id.

^[6]Id. at 282.

^[7]Id. at 282-283.

^[8]Reorganization of the Securities and Exchange Commission with Additional Powers and Placing the Said Agency under the Administrative Supervision of the Office of the President, Presidential Decree No. 902-A, March 11, 1976.

^[9]Rollo, Vol. I, p. 283.

^[10]Id.

^[11]Id. at 281-290.

^[12]Id. at 284-285.

^[13]Id. at 289.

^[14]Id. at 291-297.

^[15]Id. at 20.

^[16]Id. at 376.

^[17]Id. at 376-377.

^[18]Id. at 377.

^[19]Id. at 17-18.

^[20]Id. at 375-388.

^[21]Id. at 383.

^[22]Id. at 382.

^[23]Id. at 383.

^[24]Id. 384.

^[25]Id. at 385.

^[26]Id. at 385.

^[27]Id. at 381-387.

^[28]Id. at 387-388.

^[29]Id. at 21.

^[30]Id. at 508.

^[31]Id. at 509.

^[32]Id. at 502-505.

^[33]Id. at 505.

^[34]Id. at 506-513.

^[35]Id. at 511.

^[36]Id. at 512.

^[37]Id. at 22.

^[38]Id. at 23.

^[39]Id.

^[40]Id. at 23-24.

^[41]Id. at 24.

^[42]Id. at 8-46.

^[43]Id. at 42-46.

^[44]Id. at 48-52.

^[45]Id. at 67.

^[46]Id. at 71-72.

^[47]Id. at 79-84.

^[48]Id. at 84-92.

^[49]Id. at 92-95.

^[50]Id. at 95-104.

^[51]Id. at 105-106.

^[52]Id. at 106-112.

^[53]Id. at 112-113.

^[54]Id., Vol. II at 639-678.

^[55]595 Phil. 845, 855 (2008).

^[56]545 Phil. 604, 616 (2007).

^[57]565 Phil. 588, 597 (2007).

^[58]Rollo, Vol. II, pp. 653-663.

^[59]Id. at 664-672.

^[60]Id. at 672-673.

^[61]Id. at 673-677.

^[62]Id. at 677-678.

^[63]Id. at 763-796.

^[64]Through Solicitor General Jose C. Calida, Assistant Solicitor General Raymund I. Rigodon, and Associate Solicitor Dianne Margarette T. De Los Reyes.

^[65]Rollo, Vol. II, pp. 812-825.

^[66]Id. at 837-851.

^[67]Id. at 1099-1108.

^[68]Id. at 1216-1236.

^[69]749 Phil. 790-822 (2014).

^[70]Id. at 803.

^[71]Mitra v. Sablan-Guevarra, 830 Phil. 277, 283 (2018).

^[72]Rollo, Vol. I, p. 27.

^[73]See e.g.,Situs Development Corporation v. Asia Trust Bank, 691 Phil. 707 (2013);PNB v. SEC, 596 Phil. 586 (2009);China Banking Corporation v. ASB Holdings,supra;Union Bank v. ASB Development Corporation, 582 Phil. 559 (2008);BPI v. SEC,supra;Metropolitan Bank and Trust Company v. ASB Holdings, Inc.,supra.

^[74]Section 4 (ii), Financial Rehabilitation and Insolvency Act (FRIA) of 2010.

^[75]Castillo v. Uniwide Warehouse Club, Inc., 634 Phil. 41, 48-49 (2010).

^[76]China Banking Corporation v. ASB Holdings, Inc.,supranote 55, at 857 (2008), citingBPI v. SEC,supranote 57, at 595.

^[77]PNB v. Court of Appeals, 596 Phil. 586, 611 (2009);Metropolitan Bank and Trust Company v. ASB Holdings, Inc.,supranote 56, at 618.

^[78]Rollo, Vol. I, pp. 29-30.

^[79]Supranote 56.

^[80]Supranote 57.

^[81]Rollo, Vol. I, p. 32.

^[82]715 Phil. 420 (2013).

^[83]Id. at 436.

^[84]781 Phil. 95 (2016).

^[85]Id. at 130.

^[86]Supranote 56.

^[87]Supranote 57.

^[88]Rollo, Vol. I, pp. 29-30.

^[89]Id. at 30.

^[90]Cathay Land, Inc. v. Ayala Land, Inc., 816 Phil. 499, 516 (2017).

^[91]Asiatrust Development Bank v. First Aikka Development, Inc., 665 Phil. 313, 330-331 (2011).

^[92]Supranote 82.

^[93]Id. at 436.

^[94]Supranote 69.

^[95]Id. at 819.

^[96]Supranote 56.

^[97]259 Phil. 254 (1989).

^[98]Id. at 259.

^[99]Rollo, Vol. I, pp. 39-40.

^[100]Id. at 505.