GR 165001; (January, 2007) (Digest)
G.R. No. 165001 ; January 31, 2007
New Frontier Sugar Corporation, Petitioner, vs. Regional Trial Court, Branch 39, Iloilo City and Equitable PCI Bank, Respondents.
FACTS
New Frontier Sugar Corporation, foreseeing its inability to meet obligations, filed a Petition for Declaration of State of Suspension of Payments with a Proposed Rehabilitation Plan. The Regional Trial Court (RTC), acting as a special commercial court, found the petition sufficient and issued a Stay Order, appointing a rehabilitation receiver and suspending claims. Respondent Equitable PCI Bank, a creditor, filed an Opposition, arguing petitioner was ineligible for rehabilitation as it allegedly had no substantial assets left, its properties having been foreclosed and transferred to the bank prior to the petition’s filing.
The RTC issued an Omnibus Order dismissing the rehabilitation case, finding petitioner lacked sufficient assets to continue operations and answer liabilities. Petitioner’s Omnibus Motion was denied. Petitioner then filed a special civil action for certiorari under Rule 65 with the Court of Appeals (CA), assailing the RTC’s orders. The CA dismissed the petition, affirming the RTC’s finding of ineligibility for rehabilitation. The CA also ruled certiorari was improper, as an ordinary appeal was the available remedy.
ISSUE
Whether the CA erred in: (1) upholding the RTC’s dismissal of the rehabilitation petition based on the exclusion of foreclosed properties; and (2) dismissing the petition for certiorari as an improper remedy.
RULING
The Supreme Court denied the petition, affirming the CA. On the substantive issue, the Court upheld the dismissal of the rehabilitation petition. Rehabilitation presupposes an existing, viable enterprise that can be restored. The RTC correctly found petitioner lacked sufficient assets to make rehabilitation feasible, as its core properties had been foreclosed prior to the petition. The pendency of a separate action for annulment of foreclosure did not alter this factual basis for dismissal. The Stay Order’s protection commences only from the receiver’s appointment and cannot retroactively invalidate perfected foreclosure sales consummated beforehand.
On the procedural issue, the Court affirmed that certiorari was an incorrect remedy. The RTC’s Omnibus Order was a final order dismissing the case. The proper remedy was an appeal, not a petition for certiorari under Rule 65. An appeal was available and adequate to correct any error in the RTC’s factual or legal conclusions. Certiorari is not a substitute for a lost appeal and lies only where there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. Since petitioner availed of the wrong remedy, the CA correctly dismissed the petition.