Golden Cane Furniture Manufacturing Corporation vs. Steelpro Philippines, Inc.

The correct remedy to challenge the outright dismissal of a petition for corporate rehabilitation governed by the Interim Rules of Procedure on Corporate Rehabilitation is a petition for review under Rule 43 of the Rules of Court, not a petition for certiorari under Rule 65, pursuant to A.M. No. 04-9-07-SC, which expressly made all decisions and final orders of rehabilitation courts appealable to the Court of Appeals through Rule 43.

Golden Cane Furniture Manufacturing Corporation was a corporate debtor that sought rehabilitation before the RTC of San Fernando, Pampanga. The respondents included various creditors and government agencies such as Steelpro Philippines, Inc., the Social Security System, Air Liquide Philippines, Inc., Clark Development Corporation, Philippine National Bank, the Bureau of Internal Revenue, and UP-Town Industries Sales, Inc. Jurisdiction over corporate rehabilitation cases was originally vested in the Securities and Exchange Commission under Presidential Decree No. 902-A, but was transferred to the Regional Trial Courts upon enactment of the Securities Regulation Code (Republic Act No. 8799) in 2000. This transfer prompted the Supreme Court to promulgate the Interim Rules of Procedure on Corporate Rehabilitation (A.M. No. 00-8-10-SC), which took effect on December 15, 2000, and later A.M. No. 04-9-07-SC to clarify the proper mode of appeal from rehabilitation court orders. The 2008 Rules of Procedure on Corporate Rehabilitation subsequently took effect on January 16, 2009, followed by the Financial Rehabilitation and Insolvency Act (R.A. No. 10142) in 2010 and the 2013 Financial Rehabilitation Rules of Procedure (A.M. No. 12-12-11-SC) in 2013, each altering the available procedural remedies in rehabilitation proceedings.

Golden Cane Furniture Manufacturing Corporation filed a Petition for Corporate Rehabilitation with the RTC of San Fernando, Pampanga on November 3, 2008. The petition was raffled to Branch 42 and docketed as Comm. Case No. 058. On November 11, 2008, the RTC issued a Stay Order and set the initial hearing for January 7, 2009. The initial hearing was held on that date, before the 2008 Rules of Procedure on Corporate Rehabilitation took effect on January 16, 2009.

On May 11, 2009, the RTC denied due course to the petition on four grounds: first, litis pendentia and forum shopping arising from the pendency of a separate Petition for Suspension of Payments involving the same parties that Golden Cane had filed in 2007; second, the consistent failure of the rehabilitation receiver to fulfill her duties; third, the receiver's failure to file her bond on time; and fourth, the receiver's failure to submit Golden Cane's interim financial statements. The RTC dismissed the petition and lifted the Stay Order.

Golden Cane moved for reconsideration on June 25, 2009, but the RTC denied the motion on August 27, 2009. Golden Cane received a copy of the denial on October 2, 2009. On November 23, 2009, Golden Cane elevated the case to the CA via a petition for certiorari under Rule 65, docketed as CA-G.R. SP No. 111530. The CA dismissed the petition outright on November 27, 2009, holding that the correct remedy was a petition for review under Rule 43 pursuant to A.M. No. 04-9-07-SC. Golden Cane's motion for reconsideration was denied by the CA on August 16, 2011, prompting the present petition for review on certiorari filed on September 28, 2011.

• Applicability of the 2008 Rules: Petitioner argued that A.M. No. 08-10-SC, or the 2008 Rules of Procedure on Corporate Rehabilitation, took effect on January 16, 2009, and superseded A.M. No. 04-9-07-SC, thereby governing the proceedings.
• Non-Appealability Under the 2008 Rules: Petitioner maintained that under Rule 8 of the 2008 Rules, an order denying due course to the petition for rehabilitation rendered before the approval or disapproval of the rehabilitation plan is not appealable to the CA under Rule 43.
• Certiorari as the Proper Remedy: Petitioner contended that the remedy against such an order is a petition for certiorari under Rule 65 of the Rules of Court.

• Proper Mode of Appeal: Whether the correct remedy to challenge the outright dismissal of Golden Cane's petition for rehabilitation is a petition for review under Rule 43 or a petition for certiorari under Rule 65, both of the Rules of Court.

• Proper Mode of Appeal: Yes, the CA correctly dismissed the petition. The correct remedy to challenge the outright dismissal of Golden Cane's petition for rehabilitation was a petition for review under Rule 43, not a petition for certiorari under Rule 65, because the case fell under the Interim Rules regime and A.M. No. 04-9-07-SC expressly prescribed Rule 43 as the mode of appeal for all decisions and final orders of rehabilitation courts.

• Proper Mode of Appeal: The determination of the correct mode of appeal hinged on which set of rules governed Golden Cane's petition. Golden Cane filed its petition on November 3, 2008, and the initial hearing was held on January 7, 2009 — both before the 2008 Rules took effect on January 16, 2009. The transitory provision of the 2008 Rules (Rule 9, Section 2) stated that pending petitions that had not undergone the initial hearing prescribed under the Interim Rules at the time of the 2008 Rules' effectivity would be governed by the 2008 Rules. Because Golden Cane's petition had already undergone the initial hearing on January 7, 2009, before the 2008 Rules' effectivity, the Interim Rules — not the 2008 Rules — applied. Under A.M. No. 04-9-07-SC, the Supreme Court expressly resolved that all decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation were appealable to the CA through a petition for review under Rule 43. The RTC's dismissal of the petition for rehabilitation, even if due to technical grounds or insufficiency, amounted to a failure of rehabilitation and constituted a final order because it finally disposed of the case, leaving nothing else to be done. A petition for certiorari under Rule 65 was therefore the wrong mode of appeal. Even assuming arguendo that the 2008 Rules applied, the result would be the same: the outright dismissal of the petition could be seen as equivalent to the disapproval of the rehabilitation plan, and under Rule 8, Section 2 of the 2008 Rules, an order approving or disapproving a rehabilitation plan could only be reviewed through a petition for review to the CA under Rule 43. The Court noted that the result would have been different under the 2013 Rules, which eliminated appeals from the dismissal of the petition or the approval/disapproval of the rehabilitation plan and specifically indicated certiorari under Rule 65 as the correct remedy. However, the 2013 Rules did not apply to Golden Cane's case.

• Nature of Corporate Rehabilitation — Corporate rehabilitation is a special proceeding in rem wherein the petitioner seeks to establish the inability of the corporate debtor to pay its debts when they fall due. It is summary and non-adversarial in nature, and its end goal is to secure the approval of a rehabilitation plan to facilitate the successful recovery of the corporate debtor. It does not seek relief from an injury caused by another party. The Court relied on this characterization to distinguish rehabilitation proceedings from ordinary civil actions and to justify the special rules governing appeals therefrom.

• Finality of Dismissal of Rehabilitation Petition — The dismissal of a petition for rehabilitation, even if due to technical grounds or insufficiency, amounts to a failure of rehabilitation and constitutes a final order because it finally disposes of the case, leaving nothing else to be done. This principle, drawn from Section 74 of the FRIA, was applied to characterize the RTC's dismissal order as a final order subject to the mode of appeal prescribed by the governing rules.

• Transitory Provision of the 2008 Rules — Under Rule 9, Section 2 of the 2008 Rules, unless the court orders otherwise to prevent manifest injustice, any pending petition for rehabilitation that had not undergone the initial hearing prescribed under the Interim Rules at the time of the 2008 Rules' effectivity shall be governed by the 2008 Rules. The Court applied this provision to determine that Golden Cane's petition, having already undergone the initial hearing before January 16, 2009, remained governed by the Interim Rules.

• "All decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealable to the Court of Appeals through a petition for review under Rule 43 of the Rules of Court." — This is the dispositive portion of A.M. No. 04-9-07-SC, quoted in full by the Court, and constitutes the controlling rule that determined the correct mode of appeal in this case.

• "The dismissal of the petition for rehabilitation, even if due to technical grounds or due to its insufficiency, amounts to a failure of rehabilitation. It is a final order because it finally disposes of the case, leaving nothing else to be done." — This passage articulates the ratio decidendi by characterizing the RTC's dismissal as a final order equivalent to a failure of rehabilitation, thereby triggering the appeal mechanism under A.M. No. 04-9-07-SC.

• "No relief can be extended to the party aggrieved by the court's order on the motion through a special civil action for certiorari under Rule 65 of the rules of Court. Such order can only be elevated to the Court of Appeals as an assigned error in the petition for review of the decision or order approving or disapproving the rehabilitation plan." — This is the text of Rule 8, Section 1 of the 2008 Rules, quoted by the Court to demonstrate that even under the 2008 Rules, certiorari under Rule 65 was not available against interlocutory orders issued prior to the approval of the rehabilitation plan.

• A.M. No. 00-8-10-SC (Interim Rules of Procedure on Corporate Rehabilitation) — The governing rules under which Golden Cane's petition for corporate rehabilitation was filed and processed. The Court applied these rules, rather than the 2008 Rules, to determine the correct mode of appeal.

• A.M. No. 04-9-07-SC (Re: Mode of Appeal in Cases Formerly Cognizable by the Securities and Exchange Commission) — The controlling administrative issuance that clarified the proper mode of appeal from decisions and final orders of rehabilitation courts under the Interim Rules. The Court applied its express directive that all such decisions and final orders are appealable to the CA via Rule 43.

• A.M. No. 08-10-SC (2008 Rules of Procedure on Corporate Rehabilitation) — Cited by petitioner as the governing rules. The Court distinguished and held these inapplicable due to the transitory provision, but noted that even under the 2008 Rules, the result would have been the same.

• A.M. No. 12-12-11-SC (2013 Financial Rehabilitation Rules of Procedure) — Discussed to contrast the remedies available under the later rules, under which certiorari under Rule 65 — not appeal under Rule 43 — would have been the correct remedy for challenging the dismissal of a rehabilitation petition.

• Rule 43, Rules of Court — Governs petitions for review of judgments or final orders of quasi-judicial agencies, including rehabilitation courts under the Interim Rules as clarified by A.M. No. 04-9-07-SC. Applied as the correct mode of appeal from the RTC's dismissal of Golden Cane's rehabilitation petition.

• Rule 65, Rules of Court — Governs special civil actions for certiorari. Held to be the wrong mode of appeal under the Interim Rules and the 2008 Rules for challenging the dismissal of a rehabilitation petition, though it would have been the correct remedy under the 2013 Rules.

• Rule 8, Section 1, 2008 Rules of Procedure on Corporate Rehabilitation — Provides that a motion for reconsideration may be filed against any order prior to the approval of the rehabilitation plan, but no certiorari under Rule 65 lies from the order on the motion; such order can only be elevated as an assigned error in the petition for review of the decision or order approving or disapproving the rehabilitation plan.

• Rule 8, Section 2, 2008 Rules of Procedure on Corporate Rehabilitation — Provides that an order approving or disapproving a rehabilitation plan can only be reviewed through a petition for review to the CA under Rule 43 within fifteen days from notice.

• Rule 9, Section 2, 2008 Rules of Procedure on Corporate Rehabilitation (Transitory Provision) — Provides that pending petitions that had not undergone the initial hearing under the Interim Rules at the time of the 2008 Rules' effectivity shall be governed by the 2008 Rules. Applied to determine that the Interim Rules, not the 2008 Rules, governed Golden Cane's petition.

• Rule 6, Sections 1 and 2, 2013 Financial Rehabilitation Rules of Procedure — Eliminated appeals from the rehabilitation court's approval or disapproval of the rehabilitation plan, substituting certiorari under Rule 65 as the sole remedy. Discussed for contrast but held inapplicable.

• Section 74, Financial Rehabilitation and Insolvency Act (R.A. No. 10142) — Provides that the dismissal of a petition for rehabilitation amounts to a failure of rehabilitation. Cited to support the characterization of the RTC's dismissal as a final order.

• Section 5.2, Republic Act No. 8799 (Securities Regulation Code) — Transferred jurisdiction over corporate rehabilitation cases from the SEC to the Regional Trial Courts. Cited as the statutory basis for the shift in jurisdiction.

• Sections 3 and 5(b), Presidential Decree No. 902-A — Vested the SEC with absolute jurisdiction, control, and supervision over all Philippine corporations, including corporate rehabilitation. Cited as the original source of jurisdiction before the Securities Regulation Code.

Carpio (Chairperson), Del Castillo, Mendoza, and Leonen, JJ., concurred. No separate concurring opinions were written.