8/31/25, 11:30 AM State Investment House, Inc. vs.
Court of Appeals
Title
State Investment House, Inc. vs. Court of Appeals
Case Decision Date
G.R. No. 89767 Feb 19, 1992
Dispute over PBM properties: SEC's Break-Open Order invalid, auction sale void due to
prior government transfer, and Asibar's claim moot.
Jur.ph - Case Digest (G.R. No. 89767, 96056, 96437)
Expanded Legal Reasoning Model
Facts:
Background of Philippine Blooming Mills, Inc. (PBM)
PBM ceased operations in 1981 due to business losses and financial reversals.
In 1982, PBM petitioned the Securities and Exchange Commission (SEC) for
suspension of payments; the SEC assumed jurisdiction and placed PBM under
rehabilitation receivership.
PBM’s financial crisis led to multiple legal proceedings involving its properties and
labor claims, including criminal and civil actions.
Two distinct groups of creditors emerged: the banks/mortgagees (such as the
Philippine National Bank) and the laborers, whose claims included separation pay,
unpaid benefits, and other monetary awards.
Consolidated Petitions and Related Cases
Three petitions are consolidated, identified by G.R. Nos. 89767, 96056, and 96437,
involving various parties:
G.R. No. 89767: Initiated by State Investment House, Inc. challenging the SEC’s
issuance of a “break-open order” in connection with a Certificate of Sale, arguing
that certain PBM properties already belonged to the petitioner before the public
auction.
G.R. No. 96056: Involving the Government through the Asset Privatization Trust
(APT) contesting the auction sale of some PBM properties, where the petitioner
argued that the properties were owned by the government prior to the auction.
G.R. No. 96437: Brought by Phoenix Iron and Steel Corporation and Wilfredo
Labayen, questioning whether a complaint for enforcing a deed of sale against
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8/31/25, 11:30 AM State Investment House, Inc. vs. Court of Appeals
respondent Alfredo Asibar properly states a cause of action, with issues related
to the deferred payment schedule tied to the dismissal of Civil Case No. 18426.
The Cascade of Legal Proceedings and Orders
Foreclosure and auction proceedings:
In a foreclosure case (C.C. No. 49997), the Regional Trial Court (RTC) granted
partial summary judgment, ordering PBM and other defendants to pay a
specified amount.
An order allowed for the sale of mortgaged PBM properties, resulting in a public
auction in November 1987 with separate certificates of sale issued to both the
petitioner (in foreclosure) and to respondent Asibar.
Labor claims and the role of the National Labor Relations Commission (NLRC):
Multiple complaints for illegal dismissal and monetary claims were filed by
PBM’s laborers, leading to decisions that included the award of separation pay.
The NLRC issued a writ of execution for certain PBM properties, which in turn
prompted public auction sales by Deputy Sheriff Silvino Santos.
SEC’s intervention and clarificatory orders:
The SEC issued an Order (February 9, 1989) clarifying that its injunction against
selling PBM properties did not include properties already sold before May 2,
1988 – particularly the certificate of sale dated November 23, 1987.
A subsequent SEC Order on May 26, 1989 granted a motion for a “break-open
order” intended to implement the aforementioned certificate of sale.
Conflict in the judicial proceedings:
Petitioner arguments asserted that the auction and subsequent certificate of sale
were void since the properties were subject to earlier valid transactions.
Respondents countered with evidence indicating that not all properties affected
by the auction fell under the SEC’s clarified injunction, emphasizing differences
in the properties' identities and their respective locations.
The controversy was further complicated by conflicting addresses (PBM
Compound located in Rosario versus Manggahan, Pasig) and the differentiation
between properties sold by foreclosure to the Philippine National Bank and
those disposed of via auction to Asibar.
Subsequent motions and clarifications:
Petitions questioned both the actions of the SEC and the subsequent auction
sale, alleging due process violations and improper handling of property rights.
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8/31/25, 11:30 AM State Investment House, Inc. vs. Court of Appeals
Motions for reconsideration and clarification arose in connection with both the
execution of the auction sale and the interpretation of the deed of sale
conditions in Civil Case No. 18426.
Contentions of the Parties
Petitioner (State Investment House, Inc. and APT)
Contended that by upholding the SEC’s Order, the Court of Appeals reversed
prior Supreme Court decisions.
Argued that the auction sale conducted by Sheriff Santos was null and void since
the properties in question were not part of PBM’s liquidation.
Asserted that an improper seizure of properties violated their due process
rights.
Private Respondents and Laborers
Asserted that the properties sold at auction were properly identified and that the
SEC had limited jurisdiction over assets not belonging to PBM.
Emphasized that any claims of laborers should be resolved in the context of
bankruptcy, liquidation, or rehabilitation proceedings.
Additional Issues
Disagreements over the identity and location of the properties: whether
properties sold to the Philippine National Bank (foreclosed in 1983) were
identical to those auctioned to Asibar.
Contentions over whether the deed of sale’s conditional payment scheme
granted Asibar a demandable right given the pending dismissal of Civil Case No.
18426.
Issues:
Jurisdictional and Ownership Issues
Whether the properties sold by Deputy Sheriff Santos at the public auction
(certificate of sale dated November 23, 1987) are subject to the SEC’s clarificatory
order excluding sales completed before May 2, 1988.
Whether these properties were previously owned by the petitioner or by third
parties (specifically, those foreclosed and acquired by the Philippine National Bank
and transferred to the national government through APT).
Whether there is an identity of the properties sold in different proceedings – that is,
if the properties sold to PNB are the same as those auctioned to Asibar.
Procedural and Substantive Questions on the Cause of Action
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8/31/25, 11:30 AM State Investment House, Inc. vs. Court of Appeals
Whether the complaint filed by respondent Asibar under G.R. No. 96437 states a
valid cause of action considering that the deed of sale provided for payment only
after the dismissal of Civil Case No. 18426.
Whether the dismissal of Civil Case No. 18426 renders Asibar’s claim (and the
subsequent petition for certiorari) moot and academic.
Whether the Court of Appeals erred, in effect, by transforming the contested issues
and thereby effectively granting undue preference to the laborers’ claims and
altering prior resolutions of this Court.
Clarification on the Role of Different Agencies
Whether the SEC is authorized to implement a “break-open order” over properties
already sold in an auction sale where the execution of the NLRC decision is in
contention.
Determination of the proper forum for adjudicating claims over PBM properties –
specifically, the separation of jurisdiction between the civil courts and
administrative boards like the NLRC and SEC.
Ruling:
(Subscriber-Only)
Ratio:
(Subscriber-Only)
...
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