G.R. No. 187316
July 16, 2012
WONDER BOOK CORPORATION, CORPORATION, Petitioner, Petitioner, vs. PHILIPPINE BANK O O CO!!"NICATION#, Respondent. CO!!"NICATION#, Respondent.
Facts:
Wonder Book Corporation (Wonder Book) is a corporation duly organized and existing under Philippine laws engaged in the usiness o! retailing ooks, school and o!!ice supplies, greeting cards and other related ite"s. #t operates the chain o! stores known as the $iplo"at Book Center. Wonder Book and eight (%) other corporations, collectively known as the &i"tong 'roup o! Co"panies (&'C), !iled a oint petition !or rehailitation with the RC, which the court suse*uently approved. +!ter &'Cs Rehailitation Plan was approved, Wonder Book !iled its own Petition !or Rehailitation e!ore the RC and cited the !ollowing as causes !or its inaility to pay its dets as they !all dued ue(a) high interest rates, penalties and charges i"posed y its creditors () low de"and !or gi!t ite"s and greeting cards due to the widespread use o! cellular phones and econo"ic recession (c) co"petition posed y other stores and (d) the !ire on /uly 01, 2332 that destroyed its inventories worth P245 6ill ion, which are insured !or P257 6illion ut yet to e collected.
PBC86 !iled an opposition asserting pri"arily that it is clear !ro" Wonder Books !inancial state"ents that it is insolvent and can no longer e rehailitated. he ank also raised that there is no guaranty g uaranty that the insurance clai" o! Wonder Book on its destroyed inventories will e paid. #t also stressed that Wonder Books sales and "arketing plan does not speci!ically discuss how sales and "arketing will e carried out alleging that the strategies "ight not really produce pro!its. RC sided with Wonder Book and approved its Rehailitation Plan. PBC86 !iled a Petition !or Review, which the C+ granted. C+ noted that the total assets o! Wonder Book is only P055,122,20%.33 whereas its liailities totaled to P934,050,911.33. #n e!!ect, the det ratio o! Wonder Book is 2.00 to 0. his "eans that Wonder Book has P2.00 pesos in det !or every peso o! asset. 8viously, Wonder Book is in terrile !inancial condition as it does not have enough assets to pay its oligations. Wonder Book instituted the present petition clai"ing that the C+ erred in dis"issing its petition !or rehailitation. #ssueWhether or :ot the C+ was correct in dis"issing Wonder Books petition !or rehailitation. RulingC+ was correct in ruling against Wonder Book. ;C explained that rehailitation is not the proper re"edy !or Wonder Books dire !inancial condition. ' iven that it is actually insolvent and not ust su!!ering !ro" te"porary li*uidity prole"s, rehailitation is not a viale option.
Rehailitation conte"plates a continuance o! corporate li!e and activities in an e!!ort to restore and reinstate the corporation to its !or"er position o! success!ul operation and solvency. he purpose o! rehailitation proceedings is to enale the co"pany to gain a new lease on li!e and therey allow creditors to e paid their clai"s !ro" its earnings. he rehailitation o! a !inancially distressed corporation ene!its its e"ployees, creditors, stockholders and, in a larger sense, the general pulic. Rehailitation proceedings have e*uitale and rehailitative purposes. 8n one hand, they atte"pt to provide !or the e!!icient and e*uitale distriution o! an insolvent detors re"aining assets to its creditors and on the other, to provide detors with a
+s o! +ugust 2334, Wonder Books total assets are worth P055,122,20%.33 and its total liailities a"ount to P934,050,911.33 and this is a clear evidence o! its actual insolvency, not "ere illi*uidity, and dispossession o! !inancial leverage. he ulk or approxi"ately seventy=two percent (>2?) o! its current assets consists o! inventories and the average turn=over rate is seventy=three (>9) days, h ence, cannot e relied on !or a *uick cash !low. + "aority or seventy=seven percent (>>?) o! its non=current assets is co"prised o! de!erred tax assets or taxes that have een paid on inco"e that have not yet e en reported, hence, "ay only e used to decrease !uture tax liaility ut not !or the increase o! capital, the !inance o! operations or the purchase o! an asset. #ts property and e*uip"ent co"prise only two percent (2?) o! its non=current assets. +part !ro" the !act that these consist largely o! personal properties @ co"puters and store e*uip"ent @ that are certain to depreciate over ti"e, there is no evidence that the valuation assigned to the" y Wonder Book is attriutale to an independent third=party appraiser. here is likewise no "ention o! their actual "arket values as, "ore o!ten than not, they will e sold !or less than their ook value.
