China Banking v. Cebu Printing
REITERATIONFacts
The Antecedents: Cebu Printing and Packaging Corporation (CEPRI) filed a Petition for Rehabilitation with the Regional Trial Court (RTC) of Cebu City, Branch 11. The RTC issued a Stay Order, appointing a rehabilitation receiver and setting an initial hearing. China Banking Corporation (Chinabank) was the only creditor to file a Comment/Opposition. Procedural History: The RTC, in an Order dated April 30, 2002, denied due course to CEPRI's petition for rehabilitation and lifted the stay order. CEPRI's motion for reconsideration was deemed a prohibited pleading. CEPRI then filed a Petition for Certiorari with the Court of Appeals (CA), which initially denied it. However, upon CEPRI's motion for reconsideration, the CA issued an Amended Decision on March 3, 2006, granting the petition, reversing its prior order, reinstating the stay order, and referring the case back to the RTC for evaluation of the rehabilitation plan. Chinabank's subsequent motion for reconsideration was denied by the CA. The Petition: Chinabank filed this petition for review on certiorari under Rule 45 of the Rules of Court, seeking to annul the CA's Amended Decision. Chinabank argues that the CA erred in treating CEPRI's Petition for Certiorari under Rule 65 as a petition for review under Rule 43, asserting that certiorari cannot substitute for a lost appeal. Chinabank also contends that the CA improperly disregarded the RTC's factual findings, which indicated CEPRI was in a state of insolvency, not just illiquidity, making it ineligible for rehabilitation. The petition further raises the issue of forum shopping by CEPRI.
Issue(s)
Whether the Court of Appeals committed a reversible error when it ruled that a petition for certiorari under Rule 65 is embraced under A.M. No. 04-9-07-SC governing appeals in corporate rehabilitation cases. Whether the Court of Appeals committed a reversible error when it disregarded the factual findings of the commercial court and substituted its own judgment. Whether the amended decision sanctioned forum shopping.
Ruling
The petition is granted. The Amended Decision of the Court of Appeals is annulled and set aside. The Order of the Regional Trial Court is affirmed.
Ratio Decidendi
On the proper mode of appeal: The Supreme Court ruled that the Court of Appeals erred in treating CEPRI's petition for certiorari under Rule 65 as a petition for review under Rule 43. The Court emphasized that Rule 65 is a special civil action and cannot be used as a substitute for a lost appeal, especially when the lapse is due to negligence or error in the choice of remedy. The Court reiterated that A.M. No. 04-9-07-SC, which clarified that appeals in corporate rehabilitation cases should be filed via a petition for review under Rule 43 within fifteen (15) days, does not include certiorari under Rule 65 as a mode of appeal to be treated as a Rule 43 petition. The Court cited New Frontier Sugar Corporation v. RTC, Branch 39, Iloilo City and Tagle v. Equitable PCI Bank to underscore that certiorari is an independent action and not a continuation of the original suit, and that it cannot cure the loss of the remedy of appeal. On the disregard of factual findings: The Supreme Court found that the Court of Appeals erred in disregarding the factual findings of the Regional Trial Court. The RTC, after careful scrutiny, found CEPRI to be in a state of insolvency, not mere illiquidity, based on its liabilities exceeding its assets, questionable revaluation of assets, and unrealistic financial projections. The RTC also noted CEPRI's failure to meet conditions necessary for rehabilitation, such as irrevocable stockholder approval for necessary actions. The Supreme Court held that the trial court, as a commercial court, possesses expertise in such matters and its findings of fact are generally accorded respect and finality, and the CA should not have disturbed these findings without sufficient justification. On forum shopping: The Supreme Court deemed the issue of forum shopping inconsequential in light of its resolution of the first two issues, which led to the dismissal of CEPRI's petition for rehabilitation.
Main Doctrine
A petition for certiorari under Rule 65 cannot be used as a substitute for a lost appeal under Rule 43, especially when the loss is due to negligence or error in the choice of remedy. The Court of Appeals erred in treating CEPRI's petition for certiorari as a petition for review, disregarding the proper mode of appeal and the factual findings of the Regional Trial Court regarding CEPRI's insolvency.