668 Phil. 206

SECOND DIVISION

[ G.R. No. 188365, June 29, 2011 ]

BPI FAMILY SAVINGS BANK, INC., PETITIONER, VS. PRYCE GASES, INC., INTERNATIONAL FINANCE CORPORATION, AND NEDERLANDSE FINANCIERINGS-MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN N.V., RESPONDENTS.

D E C I S I O N

CARPIO, J.:

The Case

Before the Court is a petition for review[1] assailing the Decision[2] promulgated on 26 February 2008 and the Resolution[3] promulgated on 11 June 2009 of the Court of Appeals in CA-G.R. SP No. 98626.

The Antecedent Facts

Pryce Gases, Inc. (PGI) is a corporation engaged in the business of producing, selling and trading in all kinds of liquids, gases, and other chemicals, including but not limited to oxygen, acetylene, hydrogen, nitrogen, argon, carbon dioxide, carbonex, nitrous oxide, compressed air, helium, and other allied or related products. PGI is a debtor of the International Finance Corporation (IFC), an international organization and an affiliate of the International Bank of Reconstruction and Development (World Bank), and the Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. (FMO), a Dutch development bank engaged in promoting the expansion of private enterprise in emerging markets.

On 27 August 2002, IFC and FMO filed a Petition for Rehabilitation[4] with the Regional Trial Court of Makati due to the failure of PGI to service its debts as well as the refusal of PGI's parent company, the Pryce Corporation, to provide financial support to PGI. The case was raffled to Branch 142 and was docketed as SP Proc. No. 02-1016. The petition for rehabilitation was meant to preserve PGI's workforce and ensure that its cash flow would not be diverted to ill-advised ventures but would instead be channeled back to its operating capital to generate profits to pay off and retire debts. IFC and FMO proposed a financial restructuring that called for the conversion of dollar-denominated loans to peso and the splitting of the whole debt instrument into two categories: (1) the sustainable debt which would be rescheduled as a senior loan and secured by PGI's assets; and (2) the unsustainable portion to be transformed into redeemable preferred shares with voting rights. Under the proposal, senior loans shall be paid in five years while the shares are forecast to be redeemed in ten years. Based on the proposed financial restructuring, PGI's loan from BPI Family Savings Bank, Inc. (BFB) shall be paid in ten years as it was a non-MTI[5] creditor.

Presiding Judge Estela Perlas-Bernabe of RTC, Branch 142, inhibited herself from further hearing the case. The case was re-raffled to RTC, Branch 138.

The Ruling of the Trial Court

In an Order[6] dated 24 January 2003, the RTC, Branch 138, gave due course to the petition. The RTC, Branch 138, appointed Mr. Gener Mendoza (Mendoza) as Rehabilitation Receiver and directed him to submit his evaluation, study and recommendation on the proposed rehabilitation of PGI.

In a Manifestation[7] dated 29 May 2003, PGI informed RTC, Branch 138, that its parent company, Pryce Corporation, had offered to help through dacion en pago of its real estate assets to PGI's creditors, subject to certain terms and conditions.

In a Compliance[8] dated July 2003, Mendoza submitted his recommendation which, among others, states:

2. Creditors Secured with Non-Operating Assets. - Payment of principal and interest accrued as of August 31, 2002 by way of assets already mortgaged to them at dacion values pegged to the average of two appraisals to be undertaken by Bangko Sentral-accredited appraisal firms who are nominated by the creditors in a meeting called for that purpose.[9]

In its Comment[10] to Mendoza's Compliance, BFB objected to dacion en pago as a mode of payment. BFB's exposure to PGI was secured by assets that were considered non-operating and not critical to the rehabilitation plan recommended by Mendoza. PGI and Pryce Corporation submitted a Partial Opposition[11] to the provision on income sharing of receiver's recommended revised rehabilitation plan but manifested their conformity to the other provisions of the plan.

In an Order[12] dated 10 October 2003, the RTC, Branch 138, approved the rehabilitation plan.

On 3 November 2003, BFB filed a notice of appeal.[13] PGI filed a motion to dismiss the appeal on the ground that BFB failed to perfect the appeal because of failure to file the record on appeal within the required period.

On 20 April 2006, before the RTC, Branch 138, could resolve PGI's motion to dismiss, BFB filed its Opposition (Re: Additional Argument in Support of Motion to Dismiss Appeal dated 27 July 2004) and Motion With Leave to Withdraw Notice of Appeal Dated 3 November 2003 and Instead Be Allowed to File a Petition for Review.[14]

In an Order[15] dated 9 May 2006, the RTC, Branch 138, dismissed BFB's appeal. The RTC, Branch 138, ruled that the law clearly states that in special proceedings, record on appeal is required to perfect the appeal. The dispositive portion of the Order reads:

WHEREFORE, the Motion to Dismiss Appeal filed by respondent Pryce Gases, Inc. is granted and the appeal of BPI Family Savings Bank, Inc. is dismissed. Consequently, no action need to be taken by the Court on the Motion for Leave to Withdraw Notice of Appeal dated 3 November 2003 and Instead Be Allowed to File a Petition for Review filed by BPI Family Savings Bank, Inc.

SO ORDERED.[16]

BFB filed a motion for reconsideration of the 9 May 2006 Order. In its Order dated 16 February 2007,[17] the RTC, Branch 138, denied the motion on the ground that the Interim Rules of Procedure on Corporate Rehabilitation prohibit the filing of motions for reconsideration.

On 19 April 2007, BFB filed a petition for certiorari[18] before the Court of Appeals.

The Decision of the Court of Appeals

In its 26 February 2008 Decision, the Court of Appeals dismissed the petition. The Court of Appeals ruled that corporate rehabilitations are special proceedings and as such, appeals from the final order or decision therein should be by record on appeal in accordance with Section 2, Rule 41 of the 1997 Rules of Civil Procedure. The Court of Appeals ruled that when BFB filed the notice of appeal, the rule in force was the Interim Rules of Procedure on Corporate Rehabilitation which required the filing of a record on appeal. The Court of Appeals ruled that the mere filing of a notice of appeal would not suffice without the required record on appeal. The Court of Appeals further ruled that BFB's prayer that the petition be treated as filed under Rule 43 of the 1997 Rules of Civil Procedure lacked merit because it was filed out of time. The Court of Appeals ruled that due to the dismissal of BFB's appeal and the denial of its motion for reconsideration by the RTC, Branch 138, the 10 October 2003 Order had become final and executory. Finally, the Court of Appeals ruled that BFB's petition was grossly defective because the verification was signed by an employee of the Bank of the Philippine Islands, a completely different entity from BPI Family Savings Bank, Inc.

BFB filed a motion for reconsideration. In its 11 June 2009 Resolution, the Court of Appeals denied the motion for lack of merit.

Hence, the petition before this Court on the following grounds:

1. The Honorable Court of Appeals resolved an issue in a manner contrary to law and jurisprudence when it upheld the ruling of the lower court that dismissed the appeal of petitioner bank; and

2. The Honorable Court of Appeals resolved an issue in a manner contrary to law and jurisprudence when it upheld the ruling of the lower court which in effect forced and compelled petitioner bank to accept a dacion en pago arrangement against its consent.[19]

The Issue

The issue in this case is whether the Court of Appeals committed a reversible error in sustaining the RTC, Branch 138, in dismissing BFB's appeal.

The Ruling of this Court

The petition has no merit.

Section 5 of the Interim Rules on Corporate Rehabilitation provides that "(t)he review of any order or decision of the court or an appeal therefrom shall be in accordance with the Rules of Court x x x." Under A.M. No. 00-8-10-SC, a petition for corporate rehabilitation is considered a special proceeding.[20] Thus, the period of appeal provided in paragraph 19(b) of the Interim Rules Relative to the Implementation of Batas Pambansa Blg. 129 for special proceedings shall apply,[21] that is, the period of appeal shall be 30 days since a record of appeal is required.[22] Thus:

19. Period of Appeal. -

(a) x x x

(b) In appeals in special proceedings in accordance with Rule 109 of the Rules of Court and other cases wherein multiple appeals are allowed, the period of appeal shall be thirty (30) days, a record of appeal being required.

On 14 September 2004, this Court issued A.M. No. 04-9-07-SC providing that 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 appealed to the Court of Appeals through a petition for review under Rule 43 of the Rules of Court, to be filed within fifteen (15) days from notice of the decision or final order of the Regional Trial Court.[23] However, in this case, BFB filed a notice of appeal on 3 November 2003, before the effectivity of A.M. No. 04-9-07-SC. Hence, at the time of filing of BFB's appeal, the applicable mode of appeal is Section 2, Rule 41 of the 1997 Rules of Civil Procedure which provides:

Sec. 2. Modes of Appeal. -

(a) Ordinary appeal. - The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

Under Section 9, Rule 41 of the 1997 Rules of Civil Procedure, "(a) party's appeal by record on appeal is deemed perfected as to him with respect to the subject matter thereof upon approval of the record on appeal filed in due time."

In this case, BFB did not perfect the appeal when it failed to file the record on appeal. The filing of the notice of appeal on 3 November 2003 was not sufficient because at the time of its filing, the Rules required the filing of the record on appeal and not merely a notice of appeal. The issuance by the Court of A.M. No. 04-9-07-SC providing that 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 appealed to the Court of Appeals through a petition for review under Rule 43 of the Rules of Court, to be filed within 15 days from notice of the decision or final order of the Regional Trial Court, did not change the fact that BFB's appeal was not perfected. Further, BFB filed its Motion With Leave to Withdraw Notice of Appeal only on 20 April 2006 or almost two years after the issuance of A.M. No. 04-9-07-SC on 14 September 2004.

Appeal is not a matter of right but a mere statutory privilege.[24] The party who seeks to exercise the right to appeal must comply with the requirements of the rules, failing in which the right to appeal is lost.[25] While the Court, in certain cases, applies the policy of liberal construction, it may be invoked only in situations where there is some excusable formal deficiency or error in a pleading, but not where its application subverts the essence of the proceeding or results in the utter disregard of the Rules of Court.[26]

In addition, BFB filed a motion for reconsideration of the 9 May 2006 Order of the RTC, Branch 138. Under Section 1, Rule 3 of the Interim Rules of Procedure on Corporate Rehabilitation, the proceedings shall be summary and non-adversarial in nature and a motion for new trial or reconsideration is a prohibited pleading. Hence, in view of the failure of BFB to perfect its appeal and its subsequent filing of a motion for reconsideration which is a prohibited pleading, the 10 October 2003 Order of the RTC, Branch 138, approving the rehabilitation plan had become final and executory.

WHEREFORE, we DENY the petition. We AFFIRM the 26 February 2008 Decision and the 11 June 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 98626.

SO ORDERED.

Leonardo-De Castro,* Brion, Perez, and Sereno, JJ., concur.



* Designated acting member per Special Order No. 1006 dated 10 June 2011.

[1] Under Rule 45 of the 1997 Rules of Civil Procedure.

[2] Rollo, pp. 53-62. Penned by Associate Justice Agustin S. Dizon with Associate Justices Amelita G. Tolentino and Lucenito N. Tagle, concurring.

[3] Id. at 98-100. Penned by Associate Justice Amelita G. Tolentino with Associate Justices Pampio A. Abarintos and Antonio L. Villamor, concurring.

[4] Id. at 106-119.

[5] Mortgage Trust Indenture.

[6] Id. at 136-138. Signed by Judge Sixto Marella, Jr.

[7] Id. at 139-144.

[8] Id. at 145-148.

[9] Id. at 146.

[10] Id. at 153-158.

[11] Id. at 159-168.

[12] Id. at 177-191.

[13] Id. at 192-193.

[14] Id. at 225-229.

[15] Id. at 237-238.

[16] Id. at 238.

[17] Id. at 252. Penned by Pairing Judge Jenny Lind R. Aldecoa-Delorino.

[18] Denominated as a Petition for Review but filed under Rule 65 of the Revised Rules of Civil Procedure.

[19] Rollo, p. 39.

[20] New Frontier Sugar Corporation v. Regional Trial Court, Branch 39, Iloilo City, G.R. No. 165001, 31 January 2007, 513 SCRA 601.

[21] Id.

[22] Id.

[23] Id.

[24] Cu-unjieng v. Court of Appeals, 515 Phil. 568 (2006).

[25] Stolt-Nielsen Services, Inc. v. NLRC, 513 Phil. 642 (2005).

[26] Dadizon v. Court of Appeals, G.R. No. 159116, 30 September 2009, 601 SCRA 351.



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