a. Commencement Order and Stay Order

Commencement Order and Stay Order in Corporate Rehabilitation

Rehabilitation proceedings formally commence upon the court's issuance of a Commencement Order, which declares the debtor under rehabilitation, appoints a rehabilitation receiver, directs required publication and personal service, and outlines its legal effects¹. In addition to staying or suspending claims, the Commencement Order vests the receiver with statutory powers to access records and accounts, consolidates the resolution of all legal proceedings by and against the debtor in the rehabilitation court, and renders null and void any extrajudicial collection efforts, setoffs, or perfection of liens against the debtor's property after the commencement date².

The Stay or Suspension Order does not apply to cases already pending appeal before the Supreme Court as of the commencement date, enforcement actions against sureties and solidary obligors, certain claims before specialized courts or quasi-judicial agencies, and actions by clients to recover assets from securities market participants³. Moreover, pursuant to the doctrine of judicial stability or non-interference, a rehabilitation court lacks the authority to enjoin the regular orders or judgments of a co-equal Regional Trial Court⁴. As held in La Savoie Development Corporation v. Buenavista Properties, Inc., G.R. Nos. 200934-35, 28 September 2020, only the Court of Appeals or the Supreme Court has the authority to halt the execution of a judgment rendered by a Regional Trial Court⁴.

A Commencement Order likewise cannot invalidate a prior extrajudicial foreclosure where the purchaser had already acquired absolute ownership before the filing of the petition or the commencement date⁵. Under Land Bank of the Philippines v. Polillo Paradise Island Corporation, G.R. No. 211537, 29 March 2021, absolute ownership in an extrajudicial foreclosure vests in the purchaser upon the lapse of the redemption period without redemption, rendering the sale valid and removing the purchaser from the status of a creditor subject to the rehabilitation proceedings⁵.