Home Guaranty Corporation v. La Savoie Development Corporation

Summary

This corporate rehabilitation case involved La Savoie Development Corporation's 2003 petition for rehabilitation due to financial distress from the Asian financial crisis. The central issue was whether properties comprising the La Savoie Asset Pool should be excluded from rehabilitation proceedings after Home Guaranty Corporation paid P128.5 million in guaranty claims for La Savoie Development Certificates and received conveyance of the properties from trustee Planters Development Bank. The Supreme Court denied HGC's petition, holding that the automatic conveyance without foreclosure proceedings violated the prohibition against pactum commissorium under Civil Code Articles 2088 and 2137, rendering the transfer void and creating only a constructive trust. The Court also found HGC engaged in forum shopping by filing concurrent litigation. The decision affirmed that Asset Pool properties remained under La Savoie's dominion and subject to rehabilitation proceedings, emphasizing the rule against creditor preference and the requirement for equitable treatment of all creditors in corporate rehabilitation.