Case Digest (G.R. No. 206150) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
The case reviewed is Land Bank of the Philippines v. Fastech Synergy Philippines, Inc. et al., decided by the Supreme Court of the Philippines on August 9, 2017 under G.R. No. 206150. The dispute arises from the Rehabilitation Petition filed by the Fastech Corporations, which includes Fastech Synergy Philippines, Inc., Fastech Microassembly & Test, Inc., Fastech Electronique, Inc., and Fastech Properties, Inc. These corporations were undergoing financial distress, unable to meet their obligations to several creditors, including Planters Development Bank, Union Bank of the Philippines, Bank of the Philippine Islands, and Land Bank of the Philippines. They collectively owed substantial debts amounting to approximately P73,968,606 in pesos and US$2,348,669.
The initial petition for rehabilitation was submitted on April 8, 2011, along with a joint Rehabilitation Plan proposing various financial arrangements. The Rehabilitation Court temporarily halted creditor actions through a
Case Digest (G.R. No. 206150) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Case Background and Initiation
- Land Bank of the Philippines (petitioner) brought the petition against Fastech Synergy Philippines, Inc. and its affiliated corporations (collectively, Fastech Corporations), which sought corporate rehabilitation.
- The petition for review on certiorari was filed under Rule 45 of the 1997 Rules of Civil Procedure, challenging the Court of Appeals’ decisions relating to the rehabilitation proceedings.
- Rehabilitation Petition and Submission
- The Fastech Corporations filed a joint Rehabilitation Petition on April 8, 2011, under Republic Act No. 10142 (the Financial Rehabilitation and Insolvency Act of 2010), claiming common management, assets, and creditors.
- Their Rehabilitation Plan included:
- A two-year grace period for payment of outstanding loans with a waiver of accumulated interests and penalties.
- A subsequent 12-year period for payment of interests accrued during the grace period.
- Differentiated interest rates – 4% per annum for real estate-secured creditors and 2% per annum for chattel mortgage-secured creditors.
- Proceedings at the Rehabilitation Court
- On April 19, 2011, the Rehabilitation Court issued a Commencement Order with a Stay Order and appointed Atty. Rosario Bernaldo as the Rehabilitation Receiver.
- The rehabilitation proceedings involved:
- The filing of Notices of Claims and Comments by major creditors (Planters Development Bank, Penta Capital, Union Bank of the Philippines, Bank of the Philippine Islands, and Land Bank).
- A hearing on May 18, 2011, where the court gave due course to the petition.
- Subsequent orders, including a June 22, 2011 directive for the submission of a revised rehabilitation plan and creditor oppositions.
- External auditors rendered qualified opinions on the 2008 financial statements of certain respondents and were unable to provide a conclusive opinion on some financial statements due to insufficient audit evidence.
- On December 9, 2011, the Rehabilitation Court dismissed the Rehabilitation Petition citing:
- Unexplained deletion of a petitioner from the Singapore Stock Exchange.
- Reliance on what it deemed unreliable financial statements and unsupported financial projections.
- Failure to demonstrate improvement in future business operations, thereby not meeting the statutory requirements.
- Proceedings on Appeal
- The Fastech Corporations elevated the case via a Petition for Review under Rule 43, seeking a Writ of Preliminary Injunction and/or a Temporary Restraining Order.
- The Court of Appeals:
- Granted a Temporary Restraining Order on January 24, 2012, and a Writ of Preliminary Injunction on March 22, 2012.
- On September 28, 2012, reversed the Rehabilitation Court’s dismissal, approved the Rehabilitation Plan, and reinstated the joint petition.
- Emphasized the Rehabilitation Receiver’s opinion that the rehabilitation was viable.
- Separate motions for reconsideration by Land Bank and Planters Bank were denied by the Court of Appeals on March 5, 2013.
- Developments and Final Proceedings
- Subsequent Petitions for Review were filed by Planters Bank (with its successor PAGTI) and Land Bank before the Supreme Court, questioning both the substance of the Rehabilitation Plan and the process of its approval.
- Both petitioner and respondents submitted comprehensive memoranda, manifestos, and updates, including details on payments made under the plan.
- The Supreme Court eventually addressed the case by focusing on:
- The issues of feasibility and the financial underpinnings of the Rehabilitation Plan.
- The doctrine that cases which have become moot and academic should not be resolved unless exceptional conditions exist.
- On June 28, 2016, in a prior decision, the Supreme Court reversed the CA’s approval based on the inadequacies of the Rehabilitation Plan.
- Finally, the Supreme Court ruled the petition for review as moot and academic, since the sole issue raised had been resolved in the previous decision and the underlying controversy no longer existed.
Issues:
- Whether the Rehabilitation Plan submitted by the Fastech Corporations complied with the statutory requirements under Republic Act No. 10142.
- Did it contain a material financial commitment and a proper liquidation analysis?
- Were the financial projections and assumptions adequately supported by reliable data?
- Whether the Rehabilitation Court erred by dismissing the petition on the ground that the financial statements and underlying assumptions were unreliable.
- Was there sufficient basis for dismissing the petition given the available evidence and auditor opinions?
- Whether the Court of Appeals erred in approving the Rehabilitation Plan and in overriding the Rehabilitation Court’s dismissal despite concerns over the financial feasibility of the plan.
- To what extent should the Rehabilitation Receiver’s opinion influence the ultimate decision on feasibility?
- Whether the overall rehabilitation of the respondents is economically feasible in light of their cash flow, asset composition, and liabilities.
- Could the Fastech Corporations realistically continue operations and satisfy creditor claims?
- Whether the issues raised by petitioner (Land Bank) concerning the terms and impact of the Rehabilitation Plan have been adequately addressed, and whether they warrant modification of the CA’s decisions.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)