G.R. No. 162291 ; August 11, 2010
BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs. SHEMBERG BIOTECH CORPORATION and BENSON DAKAY, Respondents.

FACTS

Respondent Shemberg Biotech Corporation (SBC) filed a petition for corporate rehabilitation before the Regional Trial Court (RTC). The RTC issued an October 12, 2001 Order giving due course to the petition, appointing a new rehabilitation receiver, and directing the receiver to evaluate and recommend on the proposed rehabilitation plan. Petitioner Bank of the Philippine Islands (BPI), a creditor, opposed the petition and filed a motion for reconsideration, which the RTC denied. BPI then filed a petition for certiorari with the Court of Appeals (CA), challenging the RTC’s interlocutory orders.
The CA dismissed BPI’s petition. It ruled that the RTC’s subsequent April 22, 2002 Decision, which already approved SBC’s rehabilitation plan with modifications, rendered the challenge to the earlier procedural orders moot. The CA also held that the RTC did not commit grave abuse of discretion in issuing the assailed orders. BPI’s motion for reconsideration was denied, prompting this petition.

ISSUE

Whether the Court of Appeals erred in dismissing BPI’s petition for certiorari and in upholding the RTC’s interlocutory orders in the corporate rehabilitation proceedings.

RULING

The Supreme Court denied the petition and affirmed the CA’s dismissal. The Court’s legal logic proceeded on three key points. First, the CA correctly found no grave abuse of discretion by the RTC. The challenged October 12, 2001 Order was merely a preliminary step that gave due course to the petition and referred the plan for evaluation; it did not constitute a final approval of the rehabilitation plan’s substantive terms. BPI’s objections regarding the plan’s viability, debt-to-equity conversion, and interest reductions were premature at that stage, as the RTC explicitly stated it would reflect on these issues after receiving the receiver’s recommendation.
Second, the case before the CA had become moot. An issue becomes moot when a ruling would no longer provide any practical relief or value. The RTC had already rendered its final Decision approving the modified rehabilitation plan by the time the CA reviewed the case. Therefore, a review of the propriety of the earlier procedural orders directing an evaluation of the plan served no practical purpose, as that evaluation had already been completed and acted upon.
Third, BPI’s constitutional challenges against the Interim Rules on Corporate Rehabilitation and against the alleged “taking” of property were improperly raised. The RTC’s interlocutory orders did not approve any debt-to-equity conversion or interest reduction. Constitutional questions must be raised at the earliest opportunity and are not proper for a petition under Rule 45, which is limited to reviewing errors of law. BPI’s substantive grievances regarding the approved rehabilitation plan should have been pursued in a timely appeal from the RTC’s final Decision, not through a challenge to preliminary orders.