G.R. No. 205469 - BPI Family Savings Bank, Inc. vs. St. Michael Medical Center, Inc.

Spouses Virgilio and Yolanda Rodil owned and operated St. Michael Diagnostic and Skin Care Laboratory Services and Hospital (a 5-storey secondary hospital in Molino 2, Bacoor, Cavite).
To upgrade to an 11-storey tertiary hospital, they purchased two adjoining lots and on May 22, 2003 incorporated St. Michael Medical Center, Inc. (SMMCI) with initial capital of ₱2,000,000 (later increased to ₱53,500,000), of which ₱50,553,000 (94.49%) was subscribed and paid by the Rodils.

In May 2004, construction commenced, financed by a credit line of up to ₱35,000,000 from BPI Family Savings Bank, secured by a real estate mortgage on three parcels of the Rodils’ land; SMMCI drew ₱23,700,000 at 10.25% p.a. interest plus 3% monthly late charge under a promissory note co-signed by the Rodils.
Due to problems with the first contractor, the original 11-storey plan was deferred. A second contractor completed structural works only up to the 5th floor at a total cost of ₱55,000,000 (including an additional ₱25,000,000 from Rodil funds). Finishing works stalled, keeping SMMCI non-operational. Meanwhile, hospital-generated revenues funded ₱20,000,000 of new equipment for the old hospital. SMMCI paid only ₱3,000,000 in interest over two years from the hospital’s revenues.

On September 25, 2009, BPI Family demanded full payment; it filed an extrajudicial foreclosure petition on October 8, 2009, scheduling auction initially on December 11, 2009, then postponed to February 15, 2010.
As of November 16, 2009, SMMCI’s total obligation stood at ₱52,784,589.34 (₱23,700,000 principal; ₱7,048,152.74 interest; ₱23,510,400 late charges).

On August 11, 2010, SMMCI filed a Rehabilitation Petition before the RTC of Imus, Cavite, alleging (a) sole creditor status of BPI Family, (b) construction delays and rising costs, (c) ₱66,000,000 spent on structure and ₱20,000,000 on equipment, and (d) inability to service obligations.
The proposed Rehabilitation Plan sought (a) a two-year moratorium on foreclosure, (b) eventual restructuring of the Bank loan, (c) use of pending investment by medical professionals to finish floors and renovate existing facilities, and (d) partial repayment of the loan before resuming regular amortizations.

RTC issued a Stay Order on August 16, 2010; appointed Dr. Uriel Halum as Rehabilitation Receiver, who endorsed feasibility based on a 2008 study by CPA Nenita Alibangbang but recommended (a) extending moratorium to five years, (b) restructuring secured and unsecured obligations, (c) phased facility improvements, and (d) binding investment commitments.
On August 4, 2011, RTC approved the modified Plan; BPI Family appealed to the CA.
On August 30, 2012, the CA affirmed; its reconsideration denial on January 18, 2013 led to the present Supreme Court petition.

Whether the CA correctly affirmed the RTC’s approval of SMMCI’s Rehabilitation Plan.
Whether SMMCI qualified for rehabilitation as a going concern given it had never formally operated nor earned income.
Whether SMMCI’s Rehabilitation Plan complied with Rule 3, Section 18 of the 2008 Rules of Procedure on Corporate Rehabilitation, particularly on (a) material financial commitments and (b) liquidation analysis.