G.R. No. 75414. June 04, 1990 (Case Brief / Digest)

**Title:** Alemar’s Sibal & Sons, Inc. vs. Hon. Jesus M. Elbinias and G.A. Yupangco & Co., Inc.: A Glimpse into Rehabilitation Receivership and Execution of Judgments


This case involves Alemar’s Sibal & Sons, Inc. (Petitioner), which owned Alemar’s Bookstore, and G.A. Yupangco & Co., Inc. (Private Respondent), in a dispute over an unpaid sum of money. The Private Respondent initiated a collection action against the Petitioner with the Regional Trial Court (RTC) of Makati, Branch 141, seeking damages and preliminary attachment. On August 30, 1985, the RTC rendered a decision by default, ordering the Petitioner to pay a specific amount with interest, attorney’s fees, and cost of suit.

Subsequently, Ledesma, Saludo and Associates, as an intervenor-movant under the Securities and Exchange Commission (SEC) appointed rehabilitation receiver for the Petitioner, filed an omnibus motion for intervention, setting aside the RTC’s decision, and suspension of further proceedings based on the petitioner’s placement under rehabilitation receivership. Despite this, the motion for intervention and to set aside the judgment was denied by the RTC, though it granted the suspension of proceedings.

On January 7, 1986, the Private Respondent moved for a writ of execution to enforce the default judgment, which the court issued. The Petitioner then moved to discharge the writ based on the suspension of proceedings, but this was held in abeyance by the RTC. After various financial transactions to satisfy the judgment, the Petitioner, asserting the impugned payment breached the purpose of the receivership, sought to discharge the writ of execution, which was denied by the RTC on May 15, 1986.


1. Can an RTC proceed with the execution of a final decision for the payment of a sum of money despite the judgment debtor being placed under rehabilitation receivership?
2. Is the enforcement of a final and executory judgment mandatory, or are there exceptions to this rule in the interest of justice?
3. Does the placement of a corporation under rehabilitation receivership allow for suspension of all pending claims against it?

**Court’s Decision:**

The Supreme Court granted the writ of certiorari, reversing and setting aside the RTC’s order and suspending all proceedings related to the case. The Court highlighted the principle that, while the enforcement of a final and executory judgment is typically a ministerial duty of the court, exceptions exist, notably when it serves the higher interest of justice to stay the execution. Specifically, the Court underscored the consequences of rehabilitation receivership, notably the SEC’s directive that all actions for claims against the corporation are suspended. The Court found that allowing the execution would unjustly prioritize G.A. Yupangco’s claim over other creditors, thus undermining the receivership’s objective to equitably manage the petitioner’s assets among its creditors. The Private Respondent was ordered to return the payment it had received.


The principle established in this case is that the rehabilitation receivership of a corporation invokes the suspension of all pending claims against it, to ensure an equitable distribution among all creditors, preventing any from gaining an unjust preference. Execution of a judgment against a corporation under receivership, without regard for this equitable distribution, exceeds judicial jurisdiction.

**Class Notes:**

– **Elements of Rehabilitation Receivership:** The appointment under Presidential Decree No. 902-A suspends all claims against the corporation and limits disbursement of funds to normal business operations, ensuring equitable claim settlement.

– **Exceptions to Enforcement of Final Judgments:** Enforcement is generally mandatory, but exceptions exist in the interest of justice, such as staying execution during rehabilitation receivership to ensure equitable creditor treatment.

– **Principle of Equitable Creditor Treatment:** In receivership scenarios, no creditor should gain an advantage over others. All creditors must file claims with the receiver, preventing prejudiced claim satisfaction.

**Historical Background:**

This case sheds light on the Philippine legal system’s handling of corporate financial distress, specifically through the mechanism of rehabilitation receivership instituted under Presidential Decree No. 902-A. The decision reinforces the judiciary’s recognition of corporate rehabilitation as a process aimed at equitable creditor treatment, balancing the enforcement of judicial judgments with the preservation of corporate assets for the benefit of all stakeholders. This case illustrates the legal complexities surrounding receivership and the enforcement of judgments against distressed corporations, underlining the importance of judicious court discretion in ensuring fair and equitable resolutions in corporate insolvency situations.


Leave a Reply

Your email address will not be published. Required fields are marked *

Apply Filters