Is an order approving a rehabilitation plan appealable?
POINT OF LAW - Francis Lim () - May 4, 2004 - 12:00am
What is the appellate remedy of a party if a special commercial court approves a rehabilitation plan?

The question arises because the approval by the court does not terminate the rehabilitation proceedings. Under the Interim Rules of Procedure on Corporate Rehabilitation (Rehab Rules), the implementation of the plan follows. As a matter of fact, the Rehab Rules authorize the court to issue orders or processes necessary for the immediate and successful implementation of the plan (Sec. 24, Rule 4). The rehabilitation receiver, who is considered an officer of the court, is mandated to implement the plan (Sec. 14, Rule 4). And, an approved rehabilitation plan may, on motion, be altered or modified if, in the judgment of the court, such alteration or modification is necessary to achieve the desired business targets or goals set forth therein (Sec. 22, Rule 4).

Quite obviously, there is room to argue that an order approving a rehabilitation plan is not a final order, which can be appealed. Only final judgments or orders are appealable. An order or judgment is deemed final only when it finally disposes of the pending action so that nothing more is left to be done in the trial court. In other words, a final order puts an end to the litigation. When the order or judgment does not dispose of the case completely but leaves something to be done upon the merits, it is merely interlocutory. For instance, an order denying a motion to dismiss based on lack of jurisdiction is merely interlocutory and is not appealable. (PLDT Employees Union vs. PLDT Co. Free Tel. Workers Union, 97 Phil. 424 [1955]; see also, Antonio vs. Samonte, 1 SCRA 1072 [1961]; Marcelo vs. De Guzman, 114 SCRA 657 [1982]; People vs. Bans, 239 SCRA 48 [1992]).

Not known to everybody is that there is a special resolution promulgated by the Supreme Court clarifying the nature of rehabilitation proceedings. In a Resolution promulgated on Sept. 4, 2001 in A.M. No. 00-8-10-SC, the Supreme Court characterized a rehabilitation case as a special proceeding. According to the High Court, a petition for rehabilitation seeks to establish the status of a party or a particular fact. The status or fact sought to be established is the inability of the corporate debtor to pay its debts when they fall due so that a rehabilitation plan, containing the formula for the successful recovery of the corporation, may be approved in the end.

But this legal characterization does not necessarily provide the answer to the question. It may mean that while a rehabilitation case is a special proceeding, an order approving a rehabilitation plan is still an interlocutory order and is not appealable as something is left to be done after the court approves the plan.

Fortunately, Supreme Court Resolution dated Sept. 4, 2001 provides the answer to the question at hand. It expressly provides that "the period of appeal provided for in paragraph 19(b) of the Interim Rules Relative to the Implementation of B.P. Blg. 129 for special proceedings shall apply to petitions for rehabilitation. Paragraph 19(b), in turn, states that ì[i] n 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."

Quite obviously, therefore, there is no question that an order approving a rehabilitation plan is appealable to the Court of Appeals in the same manner that any other order rendered in a special proceeding is appealable.

Note, however, that Supreme Court Resolution dated Sept. 4, 2001 merely refers to the period of appeal, without expressly stating that multiple appeals are allowed in rehabilitation cases. Thus, while it may be conceded that an order approving or disapproving a rehabilitation plan may be appealed via record on appeal, it is unclear whether an order giving due course to a petition for rehabilitation (which is a condition sine qua non before the rehabilitation court can even consider whether or not to approve a rehabilitation plan) is appealable. It is also unclear whether an order amending an approved rehabilitation plan is appealable. Or, is a petition for certiorari under Rule 65 the appropriate remedy applicable for these orders? These questions are important because the standard for review under Rule 65 is far higher than that prescribed for ordinary appeals under Rule 41. Under Rule 65, the fundamental requisite of the court acting without or in excess of jurisdiction or with grave abuse of discretion, amounting to lack or excess of jurisdiction, must be present, which is not required for ordinary appeals under Rule 41 in relation to 109 of the Rules of Court. Well, these are interesting questions that may be discussed in the future in this column.

(The author is the Co-Managing Partner and a Senior Partner of the Angara Abello Concepcion Regala & Cruz Law Offices or ACCRALAW. He can be contacted through felim@accralaw.com)

APPEALABLE CO-MANAGING PARTNER COURT ORDER PLAN REHAB RULES REHABILITATION RULE RULES OF COURT SUPREME COURT SUPREME COURT RESOLUTION
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