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### Facts:
Rombe Eximtrade (Phils.), Inc. (Rombe), owned by spouses Romeo and Marrionette Peralta, filed a Petition for Suspension of Payments with Approval of a Proposed Rehabilitation Plan in 2002, docketed as Civil Case No. 325-M-2002 before the Malolos, Bulacan RTC, Branch 7. Consequently, the RTC issued a Stay Order on May 3, 2002. However, Rombe’s creditors including Asiatrust Development Bank opposed the petition.
On September 24, 2002, RTC Branch 7 dismissed Rombe’s petition, lifting the Stay Order due to Rombe’s misrepresentation of its financial status and insolvency. Rombe did not appeal this decision.
Anticipating foreclosure, Rombe filed another Complaint (Civil Case No. 906-M-2002) with prayer for Temporary Restraining Order (TRO) and Injunction on December 17, 2002, before RTC Branch 15 to prevent Asiatrust from foreclosing its properties. The court granted the preliminary injunction on January 8, 2003, and denied Asiatrust’s motion for reconsideration on April 3, 2003.
Asiatrust then filed a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 77471), which ruled in Asiatrust’s favor on March 29, 2004, setting aside the injunction order due to a perceived grave abuse of discretion by RTC Branch 15.
Rombe’s motion for reconsideration was denied by the CA, prompting Rombe to elevate the matter to the Supreme Court.
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### Issues:
– **Authority to Sign Petition:** Whether Asiatrust’s petition before the CA was valid despite the alleged lack of authority of Esmael C. Ferrer to sign for Asiatrust.
– **Separate Proceedings:** Whether the cases Civil Case No. 325-M-2002 and Civil Case No. 906-M-2002 involved separate and distinct causes of action.
– **Abuse of Discretion:** Whether RTC Branch 15 committed grave abuse of discretion in issuing the TRO and preliminary injunction.
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### Court’s Decision:
The Supreme Court ruled as follows:
1. **Authority to Sign Petition:**
The Court dismissed Rombe’s argument that Ferrer’s lack of explicit board authorization invalidated the petition. It emphasized that substantial compliance with verification and certification requirements suffices if the signatory, like Ferrer, had ample knowledge and acted in good faith. This aligned with precedent set in *Iglesia ni Cristo v. Ponferrada*.
2. **Separate Proceedings:**
The Court clarified that the rehabilitation petition and the foreclosure complaint were inherently different. The former was a special proceeding aimed at establishing the corporate debtor’s inability to meet obligations and proposing a rehabilitation plan, while the latter was a civil action dealing with legal rights violations arising from foreclosure actions. These distinctions rendered the TRO from RTC Branch 15 non-interfering with RTC Branch 7’s prior orders.
3. **Abuse of Discretion:**
RTC Branch 15 did not commit grave abuse of discretion as the injunction issued was in a separate civil action, distinct from the previously dismissed rehabilitation case. By the time RTC Branch 15 issued its order, no ongoing rehabilitation case remained, thus no jurisdictional conflict existed.
The Supreme Court ultimately granted Rombe’s petition, reversing the CA’s decision, and remanded Civil Case No. 906-M-2002 back to RTC Branch 15 for further proceedings.
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### Doctrine:
1. **Distinct Nature of Proceedings:** Rehabilitation proceedings are special and summary in nature, varying fundamentally from ordinary civil actions, which have defined causes of action.
2. **Verification Compliance:** Substantial compliance with verification requirements is acceptable if the signatory possesses adequate knowledge and signed in good faith, as supported by Iglesia ni Cristo v. Ponferrada.
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### Class Notes:
– **Special Proceedings vs. Civil Actions:** Special proceedings aim to establish a status or fact (e.g., corporate inability to pay debts) and are non-adversarial, while civil actions involve enforcing or protecting legal rights and are adversarial.
– **Verification Requirement:** Rule 7, Section 4 of the 1997 Rules of Civil Procedure, requires petitions to be verified, ensuring allegations are made in good faith.
– **Interim Rules on Corporate Rehabilitation:**
– Suspension of payments and rehabilitation plans are handled under special proceedings.
– Material misrepresentation can lead to dismissal of rehabilitation petitions.
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### Historical Background:
This case arose in the context of legal procedures related to corporate rehabilitation following the Asian financial crisis in the late 1990s and early 2000s. During this period, many Philippine corporations faced financial distress, prompting the enactment of rules to facilitate their rehabilitation to stabilize the economy.
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