Commercial Law, 2019 Bar — Question B.12-a

ESSAY

EFG, Inc. is indebted to Bank Y in the amount of P50,000,000.00. The loan was secured by a suretyship agreement issued by Z Insurance Co. Due to EFG, Inc.'s default, Bank Y filed a case against Z Insurance Co. as surety. There is also a pending criminal case for violation of the Bouncing Checks Law against the President of EFG, Inc., Mr. P, who signed the check as signatory for the company. Unable to meet its obligations as they fell due, EFG, Inc. filed a petition for rehabilitation. Finding the petition sufficient in form and substance, the court issued a Commencement Order, which was thereafter published. (a) Should the case filed against Z Insurance Co. be suspended in light of the Commencement Order? Explain.

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