Automatic Stay: An Analysis of the Conflicting Jurisprudence Regarding Suspension of Claims against a Distressed Corporation under Corporate Rehabilitation

The case of BPI vs CA (229 SCRA 223) is contrary to the case of RCBC vs IAC (320 SCRA 279). It caused a conflicting jurisprudence as to when suspension of claims commenced. The application of automatic stay, which suspends all claims against distressed corporation upon the filing the petition, offers a workable solution for the preservation of an enterprise while allowing its ownership to be restructured and its creditors treated fairly. The study employed the method of data gathering procedure and data analysis to illustrate the conflicting jurisprudence decided by the Supreme Court. The study aims to clear and mend the laws with respect to corporate rehabilitation. The case of BPI vs CA (229 SCRA 223) prohibits the foreclosure proceedings upon the filing of the petition for corporate rehabilitation; whereas in the case of RCBC vs IAC (320 SCRA 274), the Supreme Court held that suspension of claims (foreclosure) is suspended only upon appointment of management committee. The automatic stay provides a feasible and viable corporate rehabilitation. The automatic stay provides an adequate protection on the distressed corporation and prevents unwarranted claims or actions of other creditors.