G.R. No. 206528, June 28, 2016
PHILIPPINE ASSET GROWTH TWO, INC. (Successor-In-Interest of Planters Development Bank) and PLANTERS DEVELOPMENT BANK, Petitioners, vs. FASTECH SYNERGY PHILIPPINES, INC., FASTECH MICROASSEMBLY & TEST, INC., FASTECH ELECTRONIQUE, INC., and FASTECH PROPERTIES, INC., Respondents.

FACTS

Respondents, four interrelated corporations, filed a joint petition for corporate rehabilitation before the Regional Trial Court (RTC) of Makati. They claimed to have common management, shared assets, and common creditors, including petitioner Planters Development Bank (PDB). PDB had already initiated and completed an extrajudicial foreclosure sale of two properties owned by respondent Fastech Properties, which were listed as common assets and used in the operations of other respondent corporations. The Rehabilitation Receiver appointed by the RTC opined that rehabilitation was viable, finding respondents’ assets sufficient to cover liabilities and the proposed Rehabilitation Plan’s assumptions and procedures attainable. The plan sought a grace period, extended payment terms, and reduced interest rates.
Despite the Receiver’s favorable recommendation, the RTC dismissed the rehabilitation petition. It found the financial data unreliable due to a disclaimer of opinion by independent auditors on the 2009 statements and deemed the unaudited 2010 statements and revised financial projections insufficient. Respondents appealed to the Court of Appeals (CA). The CA reversed the RTC, approved the Rehabilitation Plan, enjoined PDB from enforcing the foreclosure during implementation, and remanded the case to the RTC for supervision. PDB elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in approving the Rehabilitation Plan of the respondent corporations.

RULING

The Supreme Court denied the petition and affirmed the CA Decision. The Court emphasized that the core issue in rehabilitation proceedings is determining the feasibility and viability of rehabilitating the distressed corporation, which is a question of fact best left to the expertise of the rehabilitation receiver and the discretion of the trial court. The RTC gravely abused its discretion in disregarding the detailed and favorable findings of its own court-appointed Rehabilitation Receiver without substantial contrary evidence. The Receiver, a highly qualified professional, had thoroughly evaluated the financial condition and the Plan, concluding that the assets were sufficient and the goals attainable.
The RTC’s reliance on the auditor’s disclaimer of opinion was misplaced. A disclaimer indicates an inability to express an opinion due to insufficient audit evidence, not an adverse finding on the financial statements’ accuracy. Furthermore, the use of unaudited financial statements is expressly permitted under the Financial Rehabilitation Rules. The RTC also erred in rejecting the financial projections on grounds of confidentiality, as the underlying data had been provided to the Receiver for verification. The Supreme Court held that the overriding objective of rehabilitation, to preserve a going concern for the benefit of creditors, employees, and the economy, was served by the CA’s decision which gave due weight to the expert opinion of the Rehabilitation Receiver.