China Banking Corporation vs. St. Francis Square Realty Corporation

An approved rehabilitation plan's terms are binding on secured creditors under the cram-down principle, including provisions that waive interest, penalties, and charges accruing after the initial suspension order and that direct the release of over-collateralized mortgaged properties, provided the plan has been judicially confirmed with finality; however, court sheriffs may not be designated to enforce writs of execution issued by quasi-judicial bodies such as the SEC.

St. Francis Square Realty Corporation (SFSRC), formerly ASB Realty Corporation, and St. Francis Square Development Corporation (SFSDC), formerly ASB Development Corporation (and earlier Tiffany Tower Realty Corporation), are members of the ASB Group of Companies, which sustained severe financial distress from the Asian financial crisis in the late 1990s. SFSRC carried outstanding loans with China Banking Corporation (Chinabank) totaling P300,000,000.00, secured by three properties: the Legaspi Place condominium project in Makati City, a house and lot in Bel-Air 2 Village, Makati City, and a building and lot in Caloocan City. The ASB Group initiated corporate rehabilitation proceedings before the Securities and Exchange Commission (SEC) on May 2, 2000, resulting in Stay Orders and the appointment of a rehabilitation receiver on April 26, 2001. The rehabilitation plan was eventually approved and had been upheld by the Supreme Court with finality in prior cases, including MBTC vs. ASB Holdings, Inc. and BPI vs. SEC.

St. Francis Square Realty Corporation (SFSRC), formerly ASB Realty Corporation, carried outstanding loans with China Banking Corporation (Chinabank) totaling P300,000,000.00, secured by three properties: a condominium project known as The Legaspi Place at Salcedo St., Legaspi Village, Makati City; a house and lot at No. 34 Constellation St., Bel-Air 2 Village, Makati City; and a building and lot on 7th Avenue, Caloocan City. SFSRC and St. Francis Square Development Corporation (SFSDC), formerly ASB Development Corporation (and earlier Tiffany Tower Realty Corporation), were members of the ASB Group of Companies, which was severely affected by the Asian financial crisis in the late 1990s. On May 2, 2000, the ASB Group initiated rehabilitation proceedings before the Securities and Exchange Commission (SEC), resulting in the issuance of Stay Orders, including one dated May 4, 2000, and the appointment of a rehabilitation receiver on April 26, 2001. A rehabilitation plan was eventually approved and had been upheld by the Supreme Court with finality in prior cases.

Pursuant to the Stay Order dated May 4, 2000, SFSRC filed motions before the SEC's Special Hearing Panel 2 (SHP 2) to enjoin Chinabank from charging, accruing, and collecting interest, penalties, and other charges on its loans. Chinabank asserted that SFSRC and SFSDC had not paid interest on their loans beginning May 2000 and that it had earlier signified willingness to accept P200,000,000.00 as compromise interest on both loans. SFSRC countered that under P.D. No. 902-A, all claims against the company were deemed suspended upon appointment of a rehabilitation receiver, and the Stay Order enjoined it from making payments on its loans except for regular day-to-day business, necessarily prohibiting payment of interest as well. By Order dated February 28, 2013, SHP 2 held that SFSRC should not be charged interest other than as indicated in Appendix J of the rehabilitation plan and enjoined Chinabank from charging interest, penalties, and other charges after the Stay Order of May 4, 2000. The SEC En Banc affirmed this by Decision dated February 23, 2016.

On September 13, 2013, SFSRC and SFSDC filed an Omnibus Motion with SHP 2 alleging that the valuations of the mortgaged properties had increased based on the appraisal report of Cuervo Appraisers, Inc. (CAI): the Legaspi property at P1,086,102,000.00, the Bel-Air property at P46,462,000.00, and the Caloocan property at P82,031,000.00. Respondents claimed their loans were over-collateralized and sought the release and sale of the Bel-Air and Caloocan properties, the release of the mortgage on the Legaspi property to allow completion of construction, and the allocation of units at the Legaspi Place as settlement for the remaining loan balance. The rehabilitation receiver opined that Chinabank's secured status would not be diminished because the cash from the sale of the Bel-Air and Caloocan properties would be applied to the Chinabank loans, and completion of the Legaspi property would fully settle the unpaid balance. By Order dated March 25, 2014, SHP 2 granted the Omnibus Motion, declaring the loans over-collateralized, directing Chinabank to release titles and cancel mortgages on the Bel-Air and Caloocan properties, authorizing sale via public bidding within 180 days, directing Chinabank to accept proceeds as partial payment without interest or charges, and directing cancellation of the mortgage on the Legaspi Place with resumption of construction and allocation of units as security.

The SEC En Banc partially reversed by Decision dated April 27, 2016 (SEC Case No. 04-14-325), affirming the release and sale of the Caloocan and Bel-Air properties but reversing the release of the Legaspi Place property, which should instead have been transferred to the assets pool for the benefit of other creditors. Meanwhile, while this petition was pending, respondents sought a writ of execution of SHP 2's March 25, 2014 Order, which SHP 2 issued on October 28, 2014. After Chinabank appeared to delay compliance, respondents moved to cite Chinabank in indirect contempt. By Order dated December 22, 2014, SHP 2 designated Sheriff Rommel Ignacio of the RTC of Makati City to execute deeds of cancellation of mortgage and directed the Register of Deeds to cancel Chinabank's titles and issue new ones to respondents. The SEC En Banc modified this by Decision dated April 27, 2016 (SEC Case No. 01-15-352), reversing the designation of Sheriff Ignacio and designating Special Sheriff Anthony Glenn Paggao instead. Chinabank then filed Rule 65 petitions before the Court of Appeals, while respondents filed Rule 43 petitions. The Court of Appeals, by consolidated Decision dated April 7, 2017, affirmed the prohibition on interest charges, reinstated SHP 2's March 25, 2014 Order in full, and reinstated SHP 2's December 22, 2014 Order designating Sheriff Ignacio. Chinabank's motion for reconsideration was denied on July 6, 2017, prompting the present Rule 45 petition.

• Wrong Mode of Appeal: Petitioner argued that the Court of Appeals erred in giving due course to respondents' Rule 43 petitions for review in violation of Administrative Circular No. 2-90, which provides that wrong or inappropriate modes of appeal will immediately warrant dismissal, and that absent exceptional or transcendental circumstances, respondents' petitions should have been dismissed outright.
• No Compulsory Waiver of Interest: Petitioner maintained that the rehabilitation plan does not compel a secured creditor to waive interests, penalties, and other charges on respondents' loans, and that there is no law or judicial pronouncement compelling absolute condonation of interest and penalty charges. Since it had not consented to the waiver, the Court of Appeals should not have allowed the release of the mortgaged properties on the ground of over-collateralization.
• Indivisibility of Mortgages: Petitioner argued that the issue of over-collateralization is not merely mathematical but goes into the nature of the mortgage itself, invoking the settled concept of indivisibility of mortgages whereby each parcel under mortgage answers for the totality of the debt, and that mortgages can be released only when all loans have been fully paid.
• Due Process and Impairment of Secured Status: Petitioner contended that the Court of Appeals' directive to release the Bel-Air, Caloocan, and Legaspi properties from mortgage violated its right to due process by unduly depriving it of these properties and relegating it to the status of an unsecured creditor, citing Article 2126 of the Civil Code providing that so long as the obligation secured by mortgage has not been fully paid, the mortgage remains attached to and follows the property.
• Non-Finality of SHP 2 Orders: Petitioner asserted that the SHP 2's Order dated March 25, 2014 may not be deemed final and executory considering that challenges against it and the December 22, 2014 Order had not been settled with finality.
• Sheriff Authority: Petitioner argued that the Court of Appeals erred in reinstating the designation of Sheriff Ignacio, citing the Court's pronouncement that court sheriffs cannot enforce writs of execution issued by quasi-judicial bodies, reiterated in OCA Circular No. 161-2016, and noting that the SEC had already designated a special sheriff under Resolution No. 586, Series of 2015.
• Entitlement to TRO: Petitioner claimed entitlement to a temporary restraining order, arguing that enforcement of the assailed Court of Appeals issuances before resolution of the petitions would cause grave injustice.

• Liberal Application of Rules: Respondents countered that the Court of Appeals could validly treat their Rule 43 petitions as special civil actions for certiorari since they were filed within the 15-day reglementary period and a liberal application of the Rules would enhance fair trials and expedite justice.
• Prior Jurisprudence on Interest Waiver: Respondents argued that in China Banking Corporation vs. ASB Holdings, Inc. and MBTC vs. ASB Holdings, Inc., the Court had already ruled that interest, penalties, and other related charges accruing after the date of the initial suspension order shall not be payable, and that the rehabilitation plan itself contemplated settlement of obligations without interest, penalties, and other related charges accruing after the initial suspension order, as reiterated in BPI vs. SEC.
• Cram-Down Power and Over-Collateralization: Respondents maintained that in rehabilitation proceedings, laws and rules are applied in the context of the spirit and purpose of corporate rehabilitation, and the cram-down power means the court may approve a rehabilitation plan over creditor objection if rehabilitation is feasible and opposition is manifestly unreasonable. The directive to release the Bel-Air and Caloocan properties emanated from the court's power to determine what could help an ailing company recover, and Chinabank remained a secured creditor since it still had the Legaspi Place as security and its priority in the payment ladder subsisted.
• Immediate Executory Nature: Respondents asserted that the SHP 2's Order dated March 25, 2014 is immediately executory per Section 2-5, Rule II of the Rules of Procedure on Corporate Recovery and Section 5, Rule III of A.M. No. 00-8-10-SC.
• Validity of Sheriff Designation: Respondents argued that the Court of Appeals properly upheld the designation of Sheriff Ignacio, contending that A.M. No. 14-7-224-RTC and A.M. No. 15-07-12-SC are inapplicable because those cases involved writs of possession issued by another government agency, whereas here the issuances were those of the SEC itself, and that the SEC has always utilized the services of court sheriffs and relied on Rule 39 of the Rules of Court for execution.
• No Grave Injustice: Respondents contended that Chinabank is not entitled to a TRO since it does not stand to suffer grave injustice or irreparable injury and will still be paid what is due it.

• Proper Mode of Appeal: Whether the Court of Appeals erred when it treated respondents' petitions for review under Rule 43 as petitions for certiorari under Rule 65.
• Suspension of Interest and Penalties: Whether the Court of Appeals erred when it ordered the suspension or condonation of interests, penalties, and other charges on respondents' loans in accordance with the Rehabilitation Plan.
• Over-Collateralization and Release of Properties: Whether there was over-collateralization of respondents' loans and whether the release of the subject properties from mortgage was proper.
• Immediate Executory Nature: Whether the SHP 2 Order dated March 25, 2014 is immediately executory.
• Sheriff Designation: Whether the Court of Appeals correctly reinstated the SHP 2's Order dated December 22, 2014 designating Sheriff Ignacio to execute the deeds of cancellation of mortgage on respondents' properties.

• Proper Mode of Appeal: No. The Court of Appeals did not err in treating respondents' Rule 43 petitions as Rule 65 petitions, having relaxed the strict application of procedural rules in the interest of substantial justice, the petitions having been filed within the reglementary period and containing all matters required by Rule 65.
• Suspension of Interest and Penalties: No. The Court of Appeals did not err. The rehabilitation plan, already confirmed with finality by the Supreme Court, provides two options for secured creditors: dacion en pago with waiver of penalties, or—if dacion en pago is rejected—disposition of mortgaged properties without interest, penalties, and charges accruing after the initial suspension order. Chinabank rejected dacion en pago and is in estoppel.
• Over-Collateralization and Release of Properties: No. The release was proper. The cram-down principle makes the approved rehabilitation plan's terms binding on creditors, including modification of mortgage contracts. Secured creditor preference does not equate to retention of lien on specific properties, and non-impairment of contracts does not apply to judicial decisions in rehabilitation proceedings.
• Immediate Executory Nature: Yes. The SHP 2's Order dated March 25, 2014 is immediately executory pursuant to Section 2-5, Rule II of the Rules of Procedure on Corporate Recovery and Section 5, Rule III of A.M. No. 00-8-10-SC, absent any restraining order from the SEC En Banc or the Court of Appeals.
• Sheriff Designation: No. The Court of Appeals erred. Court sheriffs cannot enforce writs of execution issued by quasi-judicial bodies such as the SEC, per OCA Circular No. 161-2016. The designation of Sheriff Ignacio was revoked, and Special Sheriff Paggao, already designated under SEC Resolution No. 586 (Series of 2015), was directed to implement the writ instead.

• Proper Mode of Appeal: The applicable rule was Rule 6 of the 2013 Financial Rehabilitation Rules of Procedure (FRIA), which provides that an order issued after the approval of the Rehabilitation Plan can be reviewed only through a special civil action for certiorari under Rule 65. Chinabank properly availed of Rule 65. Respondents erroneously used Rule 43, but the Court of Appeals relaxed the rules because the issues raised by the parties were closely intertwined and substantial justice dictated resolution on the merits. Respondents' petitions were filed within the 15-day period for Rule 65, contained all matters required by Rule 65, and were filed in good faith based on a reasonable belief that A.M. No. 04-9-07-SC governed. The Court adopted the principle that if stringent application of procedural rules would hinder rather than serve substantial justice, the former must yield to the latter.

• Suspension of Interest and Penalties: The rehabilitation plan's terms, already confirmed with finality in MBTC vs. ASB Holdings, Inc. and BPI vs. SEC, provide secured creditors two options: (1) dacion en pago wherein all penalties shall be waived, or (2) if secured creditors do not consent to dacion en pago, disposition or sale of mortgaged properties at selling prices but without interest, penalties, and other related charges accruing after the date of the initial suspension order (May 4, 2000). Chinabank rejected the dacion en pago option by its Manifestation dated November 13, 2009, and is therefore in estoppel. The terms of the rehabilitation plan are clear and explicit and must be understood literally. The cram-down principle, as articulated in BPI vs. Sarabia Manor Hotel Corp., forces creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery. The principle of present value recovery discussed in Viva Shipping Lines, Inc. vs. Keppel Philippines Mining, Inc. applies to determining feasibility prior to approval; here, the plan was already approved and upheld with finality, so its provisions must be observed and complied with under the cram-down principle.

• Over-Collateralization and Release of Properties: Rehabilitation has equitable and rehabilitative purposes: efficient and equitable distribution of an insolvent debtor's assets to creditors and provision of a fresh start for the debtor. Since the Court had already confirmed the validity of the rehabilitation plan, its terms must be strictly complied with as a consequence of the cram-down principle. One consequence of cram-down power is impairment of contracts, as elucidated in Victorio-Aquino vs. Pacific Plans, Inc.: modification of contractual terms is foreseeable and reasonable in corporate rehabilitation, and mere impairment of contracts is not justification to question a rehabilitation plan. The non-impairment clause does not apply to judicial decisions examining whether contracts are unconscionable or contrary to public policy. The directive to release the properties from mortgage cannot be considered an infringement of due process, as modification of the mortgage contracts is part and parcel of the rehabilitation plan itself. While a secured creditor does not lose its preference of credit in rehabilitation, as held in MBTC vs. ASB Holdings, Inc., preference of credit does not equate to retention of lien on particular properties. Per DBP vs. Secretary of Labor, preferential right of credit attains significance only after properties have been liquidated and claims established. Chinabank's secured creditor status comes into play only if respondents become unviable and must be liquidated; apart from that scenario, retaining a lien on the specific properties cannot be insisted upon.

• Immediate Executory Nature: Section 2-5, Rule II of the Rules of Procedure on Corporate Recovery categorically states that every order issued by the Commission is immediately executory, and a petition for review or appeal shall not stay execution unless restrained or enjoined. A.M. No. 00-8-10-SC likewise affirms the immediately executory nature of orders issued under the Rules of Procedure on Corporate Rehabilitation. Records showed that neither the SEC En Banc nor the Court of Appeals had issued any restraining order against implementation of the March 25, 2014 Order, so it should be immediately executed.

• Sheriff Designation: OCA Circular No. 161-2016, issued July 22, 2016, directed all concerned to refrain from designating court sheriffs to implement writs issued by quasi-judicial bodies, re-affirming the Court's Resolution in A.M. No. 15-07-12-SC that court sheriffs cannot enforce writs of execution issued by quasi-judicial bodies. The SEC is a quasi-judicial agency, and its orders are therefore not within the authority of court sheriffs to execute. The Court of Appeals erred in reinstating the SHP 2's December 22, 2014 Order designating Sheriff Ignacio. Per SEC Resolution No. 586 (Series of 2015), Special Sheriff Paggao had already been designated to implement the orders of the SEC, its operating departments, and special offices. Where Sheriff Ignacio had left off, Special Sheriff Paggao should take over in enforcing the Writ of Execution dated October 28, 2014.

• Cram-Down Principle — The cram-down clause, incorporated in the FRIA and the Interim Rules of Procedure on Corporate Rehabilitation, allows a rehabilitation court to approve a rehabilitation plan even over the opposition of creditors holding a majority of the corporation's total liabilities if rehabilitation is feasible and the opposition is manifestly unreasonable. It forces creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery. In this case, the cram-down principle bound Chinabank to the ASB Rehabilitation Plan's provisions waiving post-suspension interest and directing the release of over-collateralized properties, since the plan had been confirmed with finality by the Supreme Court.

• Two Options for Secured Creditors Under the ASB Rehabilitation Plan — The rehabilitation plan gave secured creditors two options for settling loans: (1) dacion en pago wherein all penalties shall be waived; or (2) if the secured creditor does not consent to dacion en pago, disposition or sale of the mortgaged properties at selling prices but without interest, penalties, and other related charges accruing after the date of the initial suspension order. Once a secured creditor rejects dacion en pago, it is in estoppel and cannot insist on charging interest and other charges. The second option was validated by the Supreme Court in MBTC vs. ASB Holdings, Inc. and BPI vs. SEC.

• Preference of Credit vs. Retention of Lien — A secured creditor's preference of credit is retained in rehabilitation proceedings, but preference of credit does not equate to retention of a lien over a particular set of properties. The preferential right of credit attains significance only after the debtor's properties have been inventoried and liquidated and claims established. The secured creditor's status comes into play only in the event of liquidation; apart from that scenario, retaining a lien on specific mortgaged properties cannot be insisted upon during rehabilitation.

• Impairment of Contracts in Rehabilitation — The non-impairment of contracts clause does not apply to judicial decisions which examine whether contracts are unconscionable or contrary to public policy, public order, or morals. In rehabilitation proceedings, modification of contractual terms—including mortgage contracts—is foreseeable, reasonable, and part and parcel of the approved rehabilitation plan. Mere impairment of contracts is not a justification to question the modification of a rehabilitation plan.

• Immediate Executory Nature of SEC Orders — Under Section 2-5, Rule II of the Rules of Procedure on Corporate Recovery and Section 5, Rule III of A.M. No. 00-8-10-SC, every order issued by the SEC under the Rules is immediately executory, and a petition for review or appeal shall not stay execution unless restrained or enjoined by the appellate court.

• Court Sheriffs Cannot Enforce Quasi-Judicial Writs — Court sheriffs cannot enforce writs of execution issued by quasi-judicial bodies. All concerned are directed to refrain from designating court sheriffs to implement writs issued by quasi-judicial agencies, per OCA Circular No. 161-2016 and A.M. No. 15-07-12-SC. The SEC, as a quasi-judicial agency, must utilize its own designated special sheriffs for execution of its orders.

• "If the dacion en pago herein contemplated does not materialize for failure of the secured creditors to agree thereto, this rehabilitation plan contemplates to settle the obligations (without interest, penalties, and other related charges accruing after the date of the initial suspension order) to secured creditors with mortgaged properties at ASB selling prices for the general interest of the employees, creditors, unit buyers, government, general public[,] and economy." — This is the pivotal provision of the ASB Rehabilitation Plan defining the two options available to secured creditors, which the Court held binding under the cram-down principle once dacion en pago is rejected.

• "The 'cram-down' clause, this provision, which is currently incorporated in the FRIA, is necessary to curb the majority creditors' natural tendency to dictate their own terms and conditions to the rehabilitation, absent due regard to the greater long-term benefit of all stakeholders. Otherwise stated, it forces the creditors to accept the terms and conditions of the rehabilitation plan, preferring long-term viability over immediate but incomplete recovery." — This passage, quoted from BPI vs. Sarabia Manor Hotel Corp., articulates the canonical formulation of the cram-down doctrine as applied to bind Chinabank to the rehabilitation plan's terms.

• "A fortiori, the mere impairment of contracts is not a justification to question the modification of a rehabilitation plan because the very nature of rehabilitation proceedings sometimes necessitates such a course of action." — Quoted from Victorio-Aquino vs. Pacific Plans, Inc., this passage establishes that impairment of contracts is an expected and accepted consequence of rehabilitation proceedings, negating Chinabank's due process objection to the modification of its mortgage contracts.

• "Preference of credit does not equate to retention of a lien over a particular set of properties." — This formulation distinguishes the concept of secured creditor preference from the right to retain a lien on specific mortgaged properties during rehabilitation, a distinction central to upholding the release of the Bel-Air, Caloocan, and Legaspi properties.

• Victorio-Aquino vs. Pacific Plans, Inc., 749 Phil. 790 (2014) — Clarified that the appropriate procedure for assailing orders issued following approval of rehabilitation plans depends on which rule was in effect when the orders were elevated to the Court of Appeals; also elucidated that impairment of contracts is not justification to question modification of a rehabilitation plan. Followed on both points.

• MBTC vs. ASB Holdings, Inc., 545 Phil. 604 (2007) — Upheld the ASB Rehabilitation Plan with finality, confirming that secured creditors' preference is retained but enforcement is suspended, and that the plan's provisions on interest waiver and property disposition are valid. Followed as controlling precedent on the binding effect of the approved rehabilitation plan.

• BPI vs. SEC, 565 Phil. 588 (2007) — Reiterated the rehabilitation plan's requirement that respondents settle obligations without interest, penalties, and other related charges accruing after the initial suspension order. Followed as controlling precedent confirming the second option for secured creditors.

• BPI vs. Sarabia Manor Hotel Corp., 715 Phil. 420 (2013) — Articulated the cram-down clause as necessary to curb creditors' tendency to dictate their own terms, forcing acceptance of rehabilitation plan terms. Followed to establish that the plan's terms are binding on Chinabank.

• Viva Shipping Lines, Inc. vs. Keppel Philippines Mining, Inc., 781 Phil. 95 (2016) — Expounded on the concept of present value recovery in determining feasibility of rehabilitation plans prior to approval. Distinguished: the principle applies before approval, whereas here the plan was already approved and upheld with finality.

• DBP vs. Secretary of Labor, 259 Phil. 254 (1989) — Explained the concept of preference of credit, holding that it attains significance only after the debtor's properties have been inventoried and liquidated and claims established. Followed to establish that Chinabank's secured creditor preference does not equate to retention of lien on specific properties.

• City of Manila vs. Grecio-Cuerdo — Cited by the Court of Appeals and adopted by the Supreme Court as basis for relaxing procedural rules when a party files under the wrong mode of appeal in good faith and within the reglementary period. Followed.

• Castillo vs. Uniwide Warehouse Club, Inc., 634 Phil. 41 (2010) — Defined corporate rehabilitation as the restoration of the debtor to successful operation and solvency if continued operation is economically feasible. Cited for the legal principle underlying rehabilitation proceedings.

• Asiatrust Development Bank vs. First Aikka Development, Inc., 665 Phil. 313 (2011) — Articulated the equitable and rehabilitative purposes of rehabilitation proceedings. Cited for the dual purpose framework.

• Section 6(c), Presidential Decree No. 902-A — Provides that upon appointment of a management committee, rehabilitation receiver, board, or body, all actions for claims against corporations under management or receivership pending before any court, tribunal, board, or body shall be suspended. Applied to establish that the approval of the rehabilitation plan and appointment of a rehabilitation receiver merely suspend actions for claims, retaining the secured creditor's preferred status while suspending enforcement.

• Rule 6, Section 1, 2013 Financial Rehabilitation Rules of Procedure (FRIA) — Provides that an order issued after approval of the Rehabilitation Plan can be reviewed only through a special civil action for certiorari under Rule 65 of the Rules of Court. Applied to determine the proper mode of appeal from SEC orders issued after rehabilitation plan approval.

• Section 2-5, Rule II, Rules of Procedure on Corporate Recovery — States that every order issued by the Commission is immediately executory, and a petition for review or appeal shall not stay execution unless restrained or enjoined. Applied to hold that the SHP 2's March 25, 2014 Order is immediately executory.

• Section 5, Rule III, A.M. No. 00-8-10-SC (Rules of Procedure on Corporate Rehabilitation) — Affirms the immediately executory nature of orders issued under the Rules. Applied alongside Section 2-5, Rule II to establish immediate executory status.

• Article 2126, Civil Code — Provides that so long as the obligation for whose security a mortgage was constituted has not been fully paid, the mortgage should remain attached to and follow the property. Cited by petitioner but effectively distinguished, as the Court held that the cram-down principle and the approved rehabilitation plan override the strict application of this provision in the context of rehabilitation proceedings.

• OCA Circular No. 161-2016 — Directs all concerned to refrain from designating court sheriffs to implement writs issued by quasi-judicial bodies, re-affirming A.M. No. 15-07-12-SC. Applied to revoke the designation of Sheriff Ignacio and direct Special Sheriff Paggao to implement the writ instead.

• SEC Resolution No. 586 (Series of 2015) — Designated Special Sheriff Anthony Glenn Paggao to implement orders of the SEC, its operating departments, and special offices. Applied to designate the proper sheriff to enforce the Writ of Execution dated October 28, 2014.

Leonen, SAJ. (Chairperson), M. Lopez, J. Lopez, and Kho, Jr., JJ., concurred.