LEXBER, INC. VS. CAESAR M. AND CONCHITA B. DALMAN, G.R. No. 183587, April 20, 2015.
“x x x.
The lapse of the 180-day period for the approval of the rehabilitation plan should not automatically result to the dismissal of the rehabilitation petition.
In ruling for the outright dismissal of Lexber’s rehabilitation petition, the CA noted that the trial court failed to approve Lexber’s rehabilitation plan within 180 days from the date of the initial hearing, thus prompting the application of Rule 4, Section 11 of the Interim Rules, to wit:
Section 11. Period of the Stay Order – The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings.
The petition shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of one hundred eighty (180) days from the date of the initial hearing. The court may grant an extension beyond this period only if it appears by convincing and compelling evidence that the debtor may successfully be rehabilitated. In no instance, however, shall the period for approving or disapproving a rehabilitation plan exceed eighteen (18) months from the date of filing of the petition. [Emphasis supplied.]
The CA explained that the word “shall” is a word of command. Thus, the essential effect of the non-approval of the rehabilitation plan after 180 days from the initial hearing is the dismissal of the rehabilitation petition.
However, while the general rule in statutory construction is that the words “shall,” “must,” “ought,” or “should” are of mandatory character in common parlance, it is also well-recognized in law and equity that this is not an absolute rule or inflexible criterion.15
The records of the present case show that on May 4, 2007, Lexber filed a motion for the extension of the period for the approval of the rehabilitation plan. However, the trial court never issued a resolution on this motion. Instead, on June 12, 2007, it issued an order giving due course to the petition. The records also reveal that after the initial hearing, the trial court had to conduct additional hearings even after the lapse of the 180-day period.
Under these circumstances, the Court concludes that Lexber could not be faulted for the non-approval of the rehabilitation plan within the 180-day period. A petitioner-corporation should not be penalized if the trial court needed more time to evaluate the rehabilitation plan. Notably, in the present case, Lexber filed a motion for the extension of the 180-day period. However, the trial court did not issue a resolution on this motion. Instead, it issued an order giving due course to the petition, which also fell within the 18-month limit prescribed under the law.
Rule 2, Section 2 of the Interim Rules dictates the courts to liberally construe the rehabilitation rules in order to carry out the objectives of Sections 6(c) of PD 902-A, as amended, and to assist the parties in obtaining a just, expeditious, and inexpensive determination of rehabilitation cases.
The trial court’s decision to approve or disapprove a rehabilitation plan is not a ministerial function and would require its extensive study and analysis. As it turned out, after careful scrutiny of the rehabilitation petition, and its annexes, the trial court eventually disapproved Lexber’s rehabilitation plan and dismissed the rehabilitation petition.
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