SECOND DIVISION
February 3, 2016
G.R. No. 193748
MERVIC REALTY, INC. and VICCY REALTY, INC., Petitioners,
vs.
CHINA BANKING CORPORATION, Respondent.
D E C I S I O N
BRION, J.:
Before the Court is an appeal by certiorari1assailing the June 10, 2010 decision2 and the September 14, 2010 resolution3 of the Court of Appeals in CA-G.R. SP No. 103557.
Antecedents
On October 16, 2006, Mervic Realty, Inc. and Viccy Realty, Inc. (the petitioners) jointly filed a petition for the declaration of state of suspension of payments with a proposed rehabilitation plan4 (rehabilitation petition) before the Regional Trial Court of Malabon City, Branch 74 (rehabilitation court) for approval.5 The rehabilitation petition was filed under A.M. No. 00-8-10-SC dated November 21, 2000, or the 2000 Interim Rules of Procedure on Corporate Rehabilitation (the Interim Rules).6
The petitioners alleged that they are duly organized domestic real estate corporations with principal place of business in Malabon City. They disclosed that their common president is Mario Siochi and that a majority of their stockholders and officers are members of the Siochi family.7 The petitioners averred that they were financially stable until they were hit by the Asian financial crisis in 1997. As a result of the financial crisis, they foresaw the impossibility of meeting their obligations when they fall due.8
The petitioners thus prayed that the rehabilitation court issue a stay order to suspend the enforcement of claims against them.9 They alleged that as of September 30, 2006, their combined total obligations inclusive of interests, penalties, and other charges had reached P193,156,559.00.10
Finding the petition sufficient in form and substance, the rehabilitation court issued a stay order that suspended the enforcement of all claims against the petitioners.11 The rehabilitation court likewise appointed a rehabilitation receiver.12
The respondent China Banking Corporation (China Bank), a creditor of the petitioners, opposed the rehabilitation petition.13 It alleged that it had acquired title to and initiated extrajudicial foreclosure proceedings over some of Mervic Realty, Inc.’s real properties.14 It argued that the petitioners are separate entities and should have filed separate petitions even if the majority of their common stockholders and officers belong to the Siochi family; that the assets of one corporation cannot be considered the assets of the other; that their financial conditions are not the same; that they have different creditors; that their obligations vary; and that the feasibility of rehabilitation for one corporation may not necessarily be true for the other.15
China Bank also questioned the venue of the rehabilitation petition.16 Under Section 2, Rule 3 of the Interim Rules, petitions for corporate rehabilitation shall be filed with the Regional Trial Court having jurisdiction over the territory where the debtor's principal office is located. According to China Bank, the Articles of Incorporation (AOI) of the petitioners show that their principal place of business is located in Quezon City, not in Malabon City.17
The RTC Ruling
The rehabilitation court approved the rehabilitation plan and denied China Bank’s opposition. It held that there is no misjoinder of causes of action since the petitioners’ cause of action is solely for their corporate rehabilitation; and that to require them to separately file their respective rehabilitation petitions will lead to multiplicity of suits. The rehabilitation court did not rule on the issue of venue.
The dispositive portion of the decision reads:
WHEREFORE, the Rehabilitation Plan filed with this Court and made as an Annex and integral part of this order is hereby APPROVED. Petitioners are strictly enjoined to abide by its terms and conditions and they shall, unless directed otherwise, submit a quarterly report on the progress of the implementation of the Rehabilitation Plan. x x x.
SO ORDERED.18
China Bank filed a petition for review with the Court of Appeals to challenge the approved rehabilitation plan.19
The Court of Appeals Ruling
The Court of Appeals granted China Bank’s petition for review and dismissed the petition for rehabilitation on the ground of improper venue, citing Section 2, Rule 3 of the Interim Rules, viz:
Section 2 – Petitions for rehabilitation pursuant to these Rules shall be filed in the Regional Trial Court having jurisdiction over the territory where the debtor’s principal office is located.
The Court of Appeals found that the petitioners’ respective AOIs show that their principal office is located in Quezon City.20
The Court of Appeals held that residence is vital when dealing with venue. A corporation is, in a metaphysical sense, a resident of the place where its principal office is located as stated in the AOI.21 It is true that venue may be changed by consent of the parties, and even an improper venue may be waived by the defendant’s failure to raise it at the proper time. The Court of Appeals, however, found that China Bank timely and vigorously asserted that Quezon City, not Malabon City, is the proper venue.22
The Court of Appeals reversed the rehabilitation court’s decision, thus,
the petition is GRANTED. The order dated April 15, 2008 is SET ASIDE and a new one rendered DISMISSING the petition a quo for improper venue.23ACCORDINGLY,