Philippine Bank of Communications v. Basic Polyprinters
Philippine Bank of Communications v. Basic Polyprinters
Philippine Bank of Communications v. Basic Polyprinters
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* FIRST DIVISION.
562
BERSAMIN, J.:
This appeal is taken from the decision promulgated on
December 16, 2008 in C.A.-G.R. CV No. 102484 entitled
Philippine Bank of Communications v. Basic Polyprinters
and Packaging Corporation,1 whereby the Court of Appeals
(CA) affirmed the order issued on January 11, 2008 by the
Regional Trial Court (RTC), Branch 21, in Imus, Cavite,
viz.:
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Antecedents
Respondent Basic Polyprinters and Packaging
Corporation (Basic Polyprinters) was a domestic
corporation engaged in the business of printing greeting
cards, gift wrappers, gift bags, calendars, posters, labels
and other novelty items.3
On February 27, 2004, Basic Polyprinters, along with
the eight other corporations belonging to the Limtong
Group of Companies (namely: Cuisine Connection, Inc.,
Fine Arts International, Gibson HP Corporation, Gibson
Mega Corporation, Harry U. Limtong Corporation, Main
Pacific Features, Inc., T.O.L. Realty & Development Corp.,
and Wonder Book Corporation), filed a joint petition for
suspension of payments with approval of the proposed
rehabilitation in the RTC (docketed as SEC Case No. 031-
04).4 The RTC issued a stay order, and eventually approved
the rehabilitation plan, but the CA reversed the RTC on
October 25, 2005,5 and directed the petitioning corporations
to file their individual petitions for suspension of payments
and rehabilitation in the appropriate courts.
Accordingly, Basic Polyprinters brought its individual
petition,6 averring therein that: (a) its business since
incorporation had been very viable and financially
profitable; (b) it had obtained loans from various banks,
and had owed accounts payable to various creditors; (c) the
Asian currency crisis,
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2 Id., at p. 70.
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3 Id., at p. 227.
4 Id., at pp. 75-84.
5 Id., at pp. 86-98.
6 Id., at pp. 99-109.
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Ruling of the CA
In the assailed decision promulgated on December 16,
2008,12 the CA affirmed the questioned order of the RTC,
agreeing with the finding of the rehabilitation receiver that
there were sufficient evidence, factors and actual
opportunities in the rehabilitation plan indicating that
Basic Polyprinters could be successfully rehabilitated in
due time.13
Emphasizing the equitable and rehabilitative purposes
of rehabilitation proceedings, the CA stated that
Presidential Decree No. 902-A, as amended, sought to
“effect a feasible and
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PBCOM moved for reconsideration,16 but its motion was
denied.
Issues
Hence, this appeal by PBCOM upon the following issues,
namely:
I
THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING
PETITIONER’S PETITION FOR REVIEW AND AFFIRMING
THE ORDER DATED JANUARY 11, 2008, CONSIDERING
THAT:
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A
A PETITION FILED PURSUANT TO THE INTERIM RULES OF
PROCEDURE ON CORPORATE REHABILITATION
PRESUPPOSES THAT THE PETITIONING CORPORATION
HAS SUFFICIENT PROPERTY TO COVER ALL ITS
INDEBTEDNESS. RESPONDENT IS INSOLVENT AS ITS
ASSETS ARE LESS THAN ITS OBLIGATIONS;
B
THE “DETAILED REHABILITATION PLAN” DOES NOT
PROVIDE MATERIAL FINANCIAL COMMITMENTS FROM
RESPONDENT ITSELF OR WOULD-BE INVESTORS; and
C
THE TERMS AND CONDITIONS OF THE “APPROVED
REHABILITATION PLAN” ARE TOO ONEROUS
PARTICULARLY THE REHABILITATION TERM OF FIFTEEN
(15) YEARS AS WELL AS THE “WAIVER” OF ALL INTEREST
AND PENALTIES BEGINNING FEBRUARY 2004 UP TO THE
TIME OF ITS APPROVAL.17
The petitioner claims that the CA did not pass upon the
issues presented in its petition, particularly Basic
Polyprinters’ liquidity that was material in proceedings for
corporate rehabilitation; that a petition for rehabilitation
presupposed that the petitioning corporation had sufficient
property to cover all its indebtedness, but Basic
Polyprinters did not show so because its assets were much
less than its outstanding obligations; that Basic
Polyprinters had under-declared its outstanding loans, i.e.,
its total loan obligations with the petitioner was at
P118,411,702.70 as of June 30, 2006, and not just
P71,315,086.00 as it claimed; that the independent
appraisal by the Professional Asset Valuers, Inc. (PAVI) on
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17 Id., at p. 22.
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570
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Consequently, the basic issues in rehabilitation
proceedings concern the viability and desirability of
continuing the business operations of the petitioning
corporation. The determination of such issues was to be
carried out by the court-appointed rehabilitation receiver,25
who was Cacho in this case.
Moreover, Republic Act No. 10142 (Financial
Rehabilitation and Insolvency Act [FRIA] of 2010), a law
that is applicable hereto,26 has defined a corporate debtor
as a corporation duly organized and existing under
Philippine laws that has
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The petitioner next argues that Basic Polyprinters did
not present any material financial commitment in the
rehabilitation plan, thereby violating Section 5, Rule 4 of
the Interim Rules, the rule applicable at the time of the
filing of the petition for rehabilitation. In that regard, Basic
Polyprinters made no commitment in relation to the
infusion of fresh capital by its stakeholders,29 and
presented only a “lopsided” protracted repayment schedule
that included the dacion en pago involving an asset
mortgaged to the petitioner itself in favor of another
creditor.
A material financial commitment becomes significant in
gauging the resolve, determination, earnestness and good
faith of the distressed corporation in financing the proposed
rehabilitation plan.30 This commitment may include the
vol-
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However, these financial commitments were insufficient
for the purpose. We explain.
The commitment to add P10,000,000.00 working capital
appeared to be doubtful considering that the insurance
claim from which said working capital would be sourced
had already been written off by Basic Polyprinters’s
affiliate, Wonder Book Corporation.34 A claim that has
been written off is considered a bad debt or a worthless
asset,35 and cannot be deemed a material financial
commitment for purposes of rehabilitation. At any rate, the
proposed additional P10,000,000.00
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37 Id.
38 Siochi Fishery Enterprises, Inc. v. Bank of the Philippine Islands,
G.R. No. 193872, October 19, 2011, 659 SCRA 817, 831.
576
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