Philippine Asset Growth Two v. Fastech Synergy
REITERATIONFacts
The Antecedents: Respondents, a group of affiliated companies operating under common management and sharing common assets and creditors, sought corporate rehabilitation. Among their common creditors was Planters Development Bank (PDB), which had initiated the extrajudicial foreclosure of mortgage over two parcels of land owned by Fastech Properties, Inc., a common asset. These properties were crucial for the business operations of Fastech Microassembly and Fastech Electronique. The foreclosure sale proceeded with PDB as the highest bidder, prompting the respondents to file for rehabilitation to prevent the loss of these vital assets and to pursue a recovery plan. Procedural History: Respondents filed a joint petition for corporate rehabilitation with the Regional Trial Court (RTC) of Makati City, seeking a stay order. The RTC issued a Commencement Order and appointed a Rehabilitation Receiver. Despite the Receiver's preliminary and subsequent favorable reports indicating the possibility of rehabilitation, the RTC dismissed the petition, citing unreliable financial statements and a disclaimer of opinion from independent auditors. Aggrieved, respondents appealed to the Court of Appeals (CA), which issued a Temporary Restraining Order and later a Writ of Preliminary Injunction. The CA reversed the RTC's decision, approved the rehabilitation plan, and remanded the case for supervision, permanently enjoining PDB from foreclosing the properties. PDB moved for reconsideration, which was denied. The Petition: Philippine Asset Growth Two, Inc. (PAGTI), as successor-in-interest to PDB, and PDB filed a petition for review on certiorari under Rule 45 of the Rules of Court. Respondents moved to dismiss the petition, arguing it was filed out of time. Petitioners contended that the reckoning date for the 15-day period to file the petition should be the date their lead counsel received the CA resolution, not the date their collaborating counsel received it. They also argued that the CA erred in approving the rehabilitation plan, asserting it lacked material financial commitments and a liquidation analysis, and was based on unreliable financial data and speculative projections, rendering it infeasible.
Issue(s)
Whether the petition for review on certiorari was timely filed. Whether the Rehabilitation Plan is feasible.
Ruling
The Supreme Court granted the petition, reversed and set aside the CA Decision and Resolution, and dismissed the Joint Petition for corporate rehabilitation. The Court found the petition to be filed out of time but relaxed the procedural rule in the interest of substantial justice. It held that the Rehabilitation Plan failed to comply with the minimum requirements of material financial commitments and a liquidation analysis, rendering the CA's approval unsubstantiated and insufficient.
Ratio Decidendi
On the timeliness of the petition: The Court ruled that the petition was filed out of time, reiterating that notice to one of several counsels is sufficient. Since PDB's collaborating counsel received the CA Resolution on March 12, 2013, the deadline was March 27, 2013. The petition filed on April 18, 2013, was tardy. However, the Court invoked its power to relax procedural rules in the interest of substantial justice. On the feasibility of the Rehabilitation Plan: The Court found the Rehabilitation Plan infeasible, lacking compliance with Section 18, Rule 3 of the 2008 Rules of Procedure on Corporate Rehabilitation. There was a lack of material financial commitment, relying solely on reprieves rather than investments. The plan lacked a liquidation analysis. The Court reviewed financial statements, finding insufficient cash operating position and a disclaimer of opinion from auditors, indicating no reasonable probability of reviving the business.
Main Doctrine
A corporate rehabilitation plan must demonstrate material financial commitments and a liquidation analysis to be deemed feasible. The failure to meet these requirements renders the plan unsubstantiated and warrants denial of rehabilitation, even if the petition was filed out of time, in the interest of substantial justice.