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Pal vs. Ca

The Court of Appeals denied Philippine Airlines' motion to suspend proceedings in a design infringement case filed against them by Sabine Koschinger. Philippine Airlines argued that as a distressed company under rehabilitation, the Securities and Exchange Commission ordered all claims against the company be suspended. The Court of Appeals ruled that the trial court proceedings had already terminated, so suspension was no longer possible. However, the Supreme Court found that the Court of Appeals failed to recognize that Koschinger's case included a prayer for damages, which constitutes a claim under the rules of corporate rehabilitation. The Supreme Court also noted that the SEC's suspension order applied to all legal proceedings, not just payment of claims. Thus, the Court of Appeals committed grave abuse of discretion in denying

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226 views1 page

Pal vs. Ca

The Court of Appeals denied Philippine Airlines' motion to suspend proceedings in a design infringement case filed against them by Sabine Koschinger. Philippine Airlines argued that as a distressed company under rehabilitation, the Securities and Exchange Commission ordered all claims against the company be suspended. The Court of Appeals ruled that the trial court proceedings had already terminated, so suspension was no longer possible. However, the Supreme Court found that the Court of Appeals failed to recognize that Koschinger's case included a prayer for damages, which constitutes a claim under the rules of corporate rehabilitation. The Supreme Court also noted that the SEC's suspension order applied to all legal proceedings, not just payment of claims. Thus, the Court of Appeals committed grave abuse of discretion in denying

Uploaded by

attymaryjoyordaneza
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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183. PHILIPPINE AIRLINES, INC., Petitioner, vs.

COURT OF APPEALS
and SABINE KOSCHINGER, Respondents.
G.R. No. 150592, January 20, 2009

FACTS:
Respondent Koschinger filed a complaint for design infringement and
damages against petitioner PAL. Koschinger claimed PAL used table linens
and placemats bearing designs substantially identical to her patented
designs in its commercial flights without her consent or authority. The trial
court rendered its Decision in favor of Koschinger. PAL appealed the same to
the CA.

Meanwhile, the Securities and Exchange Commission gave due course to


PAL’s petition for the appointment of a rehabilitation receiver due to its being
a distressed company, pursuant to Presidential Decree No. 902-A. The SEC
directed that in light of the Order of the Commission appointing an Interim
Receiver all claims for payment against PAL are deemed suspended.

PAL filed before the RTC a Motion for Suspension of Proceedings. However,
when the RTC failed to act upon the motion, PAL filed before the CA a
Reiteration of Motion to Suspend Proceedings. CA issued its assailed
Resolution stating that RTC rendered its decision and is now on the
completion stage, hence proceedings could no longer be stopped because it
had terminated.

ISSUE:
Whether the CA committed grave abuse of discretion in denying petitioners
Motion to Suspend Proceedings and ordering respondent to file her appellees
brief, despite SEC’s stay order.

HELD:
Yes. Of paramount importance to the resolution of this case is the effect of
the order for suspension of payments on the proceedings before the trial
court and on PALs appeal before the CA. The CA failed to consider the fact
that the case also carried a prayer for damages. It also incorrectly ruled that
the same is not a claim such that the proceedings shall be suspended in
accordance with the SEC’s directive.

Under the Interim Rules of Procedure on Corporate Rehabilitation, a claim


shall include all claims or demands of whatever nature or character against a
debtor or its property, whether for money or otherwise. The definition is all-
encompassing as it refers to all actions whether for money or otherwise.
There are no distinctions or exemptions. Further, this was taken to embrace
all phases of the suit, be it before the trial court or any tribunal or before this
Court such that no other action may be taken in, including the rendition of
judgment during the state of suspension what are automatically stayed or
suspended are the proceedings of an action or suit and not just the payment
of claims during the execution stage after the case had become final and
executory.
The continuation of the appeal proceedings would have unduly hindered the
management committees task of rehabilitating the ailing corporation, giving
rise precisely to the situation that the stay order sought to avoid.

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