PH BANK OF COMMUNICATIONS v. BASIC POLYPRINTERS and PACKAGING CORPORATION
GR No. 187581 20 October 2014 By Kylie Dado SUMMARY: Respondent Respondent fled pet!t!on "or s#spens!on o" p$%ents &' ppro(l o" t)e proposed re)b!l!tt!on. re)b!l!tt!on. R*+ R*+ "o#nd, &)!c) &s -r% -r%ed ed b$ t)e +A, +A, ppr ppro(e o(ed d t)e re)b re)b!l! !l!tt tt!on !on pln. pln. o&e(e o&e(er, r, one o" !ts cred! cred!tor tors, s, /+OM /+OM fled fled %ot!on %ot!on "or recons!dert!on on t)e ro#nd t)t: 1. t)e sole !ss#e !ss#e !n corpo corport rte e re) re)b!l b!l!t !tt!o t!on n !s one one o" l!# l!#!d! !d!t$3 t$3 )enc )ence, e, t)e t)e pet!t! pet!t!on on!n !n corpor corport! t!on on s)o#l s)o#ld d )(e )(e s#-c!ent ssets to co(er ll !ts !ndebtedness bec#se !t onl$ "oresees t)e !%poss!b!l!t$ o" p$!n t)e !ndebtedness "ll!n d#e. Re)b!l!tt!on bec%e !nppropr!te bec#se s!c /ol$pr!nters &s !nsol(ent d#e to !ts ssets be!n !nde#te to co(er t)e o#tstnd!n obl!t!ons. 2. s!c /ol$pr!nters /ol$pr!nters d!d not present present n$ %ter!l %ter!l fnnc!l fnnc!l co%%!t%ent co%%!t%ent !n t)e re)b!l!tt!o re)b!l!tt!on n pln, t)ereb$ t)ereb$ (!olt!n (!olt!n Sect!on 5, R#le 4 o" t)e nter!% R#les, R#les, t)e r#le ppl!cble t t)e t!%e o" t)e fl!n o" t)e pet!t!on "or re)b!l!tt!on. re)b!l!tt!on. n t)t t)t rer rerd, d, s!c s!c /ol$p /ol$pr! r!nte nters rs %de %de no co%%!t co%%!t%en %entt !n relt relt!on !on to t)e !n"#s !n"#s!on !on o" "res) "res) cp! cp!tl tl b$ !ts ste)olders,nd presented onl$ 6lops!ded protrcted rep$%ent sc)ed#le t)t !ncl#ded t)e dc!on en po !n(ol(!n n sset %orted to t)e pet!t!oner !tsel" !n "(or o" not)er cred!tor. S+ s!d, %ter!l fnnc!l co%%!t%ent beco%es s!n!fcnt !n #!n t)e resol(e, deter%!nt!on, ernestness nd ood "!t) o" t)e d!stressed corport!on !n fnnc!n t)e proposed re)b!l!tt!on pln. *)!s co%%!t%ent %$ !ncl#de t)e (ol#ntr$ (ol#ntr$ #ndert!ns o" t)e stoc)olders or t)e &o#ldbe !n(estors o" t)e debtorcorport!on debtorcorport!on !nd!ct!n t)e!r red!ness, &!ll!nness nd b!l!t$ to contr!b#te "#nds or propert$ to #rntee t)e cont!n#ed s#ccess"#l opert!on o" t)e debtor corport!on d#r!n t)e per!od o" re)b!l!tt!on. n t)!s cse, t)e fnnc!l co%%!t%ents o" t)e respondent &ere !ns#-c!ent "or t)e p#rpose. 9#e to t)e re)b!l!tt!on pln be!n n !nd!spensble re#!re%ent !n corporte re)b!l!tt!on proceed!ns, s!c /ol$pr!nters &s epected to eert consc!o#s e;ort !n "or%#lt!n t)e s%e, "or s#c) pln &o#ld spell t)e "#t#re not not onl$ onl$ "or !tsel" !tsel" b#t b#t lso lso "or "or !ts cred!to cred!tors rs nd t)e p#bl! p#bl!c c !n ener enerl. l. *)e conte contents nts nd eec eec#t! #t!on on o" t)e re)b!l!tt!on pln co#ld not be ten l!)tl$. S+, )o&e(er, noted t)t t)e bs!c !ss#es !n re)b!l!tt!on proceed!ns concern t)e (!b!l!t$ nd des!rb!l!t$ o" cont!n#!n t)e b#s!ness b#s!ness opert!on opert!ons s o" t)e pet!t!on pet!t!on!n !n corport!o corport!on. n. ? to e-c!entl$ nd e#!tbl$ e#!tbl$ d!str!b#te d!str!b#te t)e ssets o" t)e !nsol(ent !nsol(ent debtor to !ts cred!tors3 cred!tors3 nd >b? to pro(!de pro(!de t)e t)e debtor &!t) "res) strt • •
=A+*S: Respondent Respondent fled pet!t!on "or s#spens!on o" p$%ents &' ppro(l o" t)e proposed re)b!l!tt!on re)b!l!tt!on !n t)e R*+, R*+, (err!n t)t: >? !ts b#s!ness s!nce !ncorport!on !ncorport!on )d been (er$ (!ble (!ble nd fnnc!ll$ proftble3 proftble3 >b? !t )d obt!ned lons "ro% (r!o#s (r!o#s bns, nd )d o&ed cco#nts p$ble p$ble to (r!o#s cred!tors3 cred!tors3 >c? t)e As!n c#rren c#rrenc$ c$ cr!s!s, cr!s!s, de(l#t!on de(l#t!on o" t)e /)!l!pp! /)!l!pp!ne ne peso, nd t)e c#rren c#rrentt stte stte o" ;!rs ;!rs o" t)e /)!l!pp!ne econo%$, co#pled &!t): >!? >!? )!) )!) !nt !nter eres estt rt rtes es,, pen penl lt! t!es es nd nd c) c)r res es b$ b$ !ts !ts cred cred!t !tor ors3 s3 >!!? >!!? lo& de% de%nd nd "or "or !"t !"t !te%s !te%s nd nd crd crds s d#e d#e to t)e t)e econo% econo%!c !c rece recess! ss!on on nd nd t)e #se #se o" cell cell#l #lrr p)ones p)ones33 >!!!? >!!!? d!rect d!rect co%pet!t!o co%pet!t!on n "ro% "ro% stor stores es l!e l!e SM, SM, G!s G!sno, no, Rob!nson ob!nson nd nd ot)er ot)er %lls3 %lls3 nd nd >!(? >!(? t)e t)e fre fre o" @#l$ @#l$ 1 1,, 20 2002 02 t)t t)t )d )d dest destrro$ed o$ed !ts !ts &r &re)o# e)o#se se cont cont! !n! n!n n !n(e !n(ent ntor or!e !es s &ort &ort) ) /2B4,000,000.00, res#lt!n res#lt!n !n d!-c#lt$ o" %eet!n !ts obl!t!ons3 >d? !ts opert!ons &o#ld be )%pered nd &o#ld render re)b!l!tt!on re)b!l!tt!on d!-c#lt d!-c#lt s)o#ld !ts cred!tors en"orce t)e!r cl!%s t)ro#) lel ct!ons, !ncl#d!n "oreclos#re proceed!ns3 >e? !ncl#ded !n !ts o(erll Re)b!l!tt!on Re)b!l!tt!on /ror% /ror% &s t)e "#ll p$%ent p$%ent o" !ts o#tstnd!n lons !n "(or o" pet!t!one pet!t!onerr /)!l!pp! /)!l!pp!ne ne n o" +o%%#n!c +o%%#n!ct!ons t!ons >/+OM?, >/+OM?, R++, ++, <nd n, C/+n C/+n nd AU (! rep$%ent rep$%ent o(er 15 $ers &!t) %ortor!#% o" t&o$ers "or t)e !nterest nd f(e $ers "or t)e pr!nc!pl t 5D !nterest per nn#% nd dc!on en po o" !ts -l!te propert$ !n "(or o" C/+n3 nd >"? !ts ssets ssets &ort) /15,E74,B54.00 &!t) net l!b!l!t!es l!b!l!t!es %o#nt!n to /1E,0E1,4E8.00. /1E,0E1,4E8.00. R*+: >!n!t!l? >!n!t !l? =o#nd t)e pet!t!on s#-c!ent !n "or% nd s#bstnce ss#ed st$ order Appo!nted Mn#el +c)o s re)b rece!(er Re#!red ll t)e cred!tors F !nterested prt!es !ncl#d!n SC+ to fle t)e!r co%%ents A"ter )er!n, R*+ (e d#e co#rse to t)e pet!t!on nd re"erred !t to t)e re)b rece!(er "or e(l#t!on nd reco%%endt!ons • • • •
R*+: >proper? >p roper? Appro(ed t)e re)b pln •
•
•
sed on !ts #pdted fnnc!l report, t)e fnnc!l cond!t!on )s retl$ !%pro(ed. o&e(er, bec#se o" t)e !ndebtedness nd t)e slo&do&n !n sles bro#)t bo#t b$ depressed econo%$, t)e present !nco%e "ro% t)e opert!ons &!ll be !ns#-c!ent to p$ o; !ts %t#r!n obl!t!ons. *)#s, t)e s#ccess o" t)e re)b!l!tt!on pln lrel$ depends on !ts b!l!t$ to red#ce !ts debt obl!t!on to %neble le(el b$ t)e s#spens!on o" p$%ents o" obl!t!ons nd t)e proposed 6dc!on en po. *)e proected cs) Ho& ttc)ed to t)e report nd t)e rep$%ent pror% de%onstrtes t)e b!l!t$ o" t)e co%pn$ to settle !ts debt l!b!l!t$.
+A: A-r%ed Aree!n &!t) t)e fnd!n o" t)e re)b!l!tt!on rece!(er t)t t)ere &ere s#-c!ent e(!dence, "ctors nd ct#l opport#n!t!es !n t)e re)b!l!tt!on pln !nd!ct!n t)t s!c /ol$pr!nters co#ld be s#ccess"#ll$ re)b!l!tted !n d#e t!%e. •
/+OM %o(ed "or recons!dert!on. SSUC: I)et)er t)e ppro(l o" t)e re)b!l!tt!on pln &s proper desp!te: >? t)e lleed !nsol(enc$ o" s!c /ol$pr!nters3 nd >b? bsence o" %ter!l fnnc!l co%%!t%ent p#rs#nt to Sect!on 5, R#le 4 o" t)e nter!% R#les. S+: NO Liquidity was not an issue in a petition for rehabilitation /et!t!oner: t)e sole !ss#e !n corporte re)b!l!tt!on !s one o" l!#!d!t$3 )ence, t)e pet!t!on!n corport!on s)o#ld )(e s#-c!ent ssets to co(er ll !ts !ndebtedness bec#se !t onl$ "oresees t)e !%poss!b!l!t$ o" p$!n t)e !ndebtedness "ll!n d#e. Re)b!l!tt!on bec%e !nppropr!te bec#se s!c /ol$pr!nters &s !nsol(ent d#e to !ts ssets be!n !nde#te to co(er t)e o#tstnd!n obl!t!ons. S+ d!sreed. Under t)e nter!% R#les, re)b!l!tt!on !s t)e process o" restor!n 6t)e debtor to pos!t!on o" s#ccess"#l opert!on nd sol(enc$, !" !t !s s)o&n t)t !ts cont!n#nce o" opert!on !s econo%!cll$ "es!ble nd !ts cred!tors cn reco(er b$ &$ o" t)e present (l#e o" p$%ents proected !n t)e pln %ore !" t)e corport!on cont!n#es s o!n concern t)t !" !t !s !%%ed!tel$ l!#!dted. t conte%pltes cont!n#nce o" corporte l!"e nd ct!(!t!es !n n e;ort to restore nd re!nstte t)e corport!on to !ts "or%er pos!t!on o" s#ccess"#l opert!on nd sol(enc$. n As!tr#st 9e(elop%ent n (. =!rst A! 9e(elop%ent, nc. re)b!l!tt!on proceed!ns )(e t&oproned p#rpose, n%el$: >c? to e-c!entl$ nd e#!tbl$ d!str!b#te t)e ssets o" t)e !nsol(ent debtor to !ts cred!tors3 nd >d? to pro(!de t)e debtor &!t) "res) strt +onse#entl$, t)e bs!c !ss#es !n re)b!l!tt!on proceed!ns concern t)e (!b!l!t$ nd des!rb!l!t$ o" cont!n#!n t)e b#s!ness opert!ons o" t)e pet!t!on!n corport!on. *)e deter%!nt!on o" s#c) !ss#es &s to be crr!ed o#t b$ t)e co#rtppo!nted re)b!l!tt!on rece!(er. Moreo(er, RA 10142 >=RA? l& t)t !s ppl!cble )ereto, )s defned corporte debtor s corport!on d#l$ orn!Jed nd e!st!n #nder /)!l!pp!ne l&s t)t )s beco%e !nsol(ent. *)e ter% !nsol(ent !s defned !n t)e s%e l& s 6t)e fnnc!l cond!t!on o" debtor t)t !s enerll$ #nble to p$ !ts or )!s l!b!l!t!es s t)e$ "ll d#e !n t)e ord!nr$ co#rse o" b#s!ness or )s l!b!l!t!es t)t re reter t)n !ts or )!s ssets. As s#c), t)e content!on t)t re)b!l!tt!on beco%es !nppropr!te bec#se o" t)e perce!(ed !nsol(enc$ o" s!c /ol$pr!nters &s !ncorrect. A material nancial commitment is signicant in a rehabilitation plan /et!t!oner: s!c /ol$pr!nters d!d not present n$ %ter!l fnnc!l co%%!t%ent !n t)e re)b!l!tt!on pln, t)ereb$ (!olt!n Sect!on 5, R#le 4 o" t)e nter!% R#les, t)e r#le ppl!cble t t)e t!%e o" t)e fl!n o" t)e pet!t!on "or re)b!l!tt!on. n t)t rerd, s!c /ol$pr!nters %de no co%%!t%ent !n relt!on to t)e !n"#s!on o" "res) cp!tl b$ !ts ste)olders,nd presented onl$ 6lops!ded protrcted rep$%ent sc)ed#le t)t !ncl#ded t)e dacion en pago !n(ol(!n n sset %orted to t)e pet!t!oner !tsel" !n "(or o" not)er cred!tor. S+: A %ter!l fnnc!l co%%!t%ent beco%es s!n!fcnt !n #!n t)e resol(e, deter%!nt!on, ernestness nd ood "!t) o" t)e d!stressed corport!on !n fnnc!n t)e proposed re)b!l!tt!on pln. *)!s co%%!t%ent
%$ !ncl#de t)e (ol#ntr$ #ndert!ns o" t)e stoc)olders or t)e &o#ldbe !n(estors o" t)e debtor corport!on !nd!ct!n t)e!r red!ness, &!ll!nness nd b!l!t$ to contr!b#te "#nds or propert$ to #rntee t)e cont!n#ed s#ccess"#l opert!on o" t)e debtor corport!on d#r!n t)e per!od o" re)b!l!tt!on. *)e fnnc!l co%%!t%ents o" t)e respondent &ere !ns#-c!ent "or t)e p#rpose bec#se: 1. *)e co%%!t%ent to dd /10M &or!n cp!tl ppered to be do#bt"#l cons!der!n t)t t)e !ns#rnce cl!% "ro% &)!c) s!d &or!n cp!tl &o#ld be so#rced )d lred$ been &r!tteno; b$ s!c /ol$pr!ntersKs -l!te, Ionder oo +orport!on. 2. *)e con(ers!on o" ll depos!ts "or "#t#re s#bscr!pt!ons to co%%on stoc nd t)e tret%ent o" ll p$bles to o-cers nd stoc)olders s trde p$bles &s )rdl$ const!t#t!n %ter!l fnnc!l co%%!t%ents. S#c) 6con(ers!on o" cs) d(nces to trde p$bles &s, !n "ct, %ere re clss!fct!on o" t)e l!b!l!t$ entr$ nd )d no e;ect on t)e s)re)oldersK defc!t. E. *)e re)b pln "!led to o;er n$ proposl on )o& !t !ntended to ddress t)e lo& de%nds "or t)e!r prod#cts nd t)e e;ect o" d!rect co%pet!t!on "ro% stores l!e SM, G!sno, Rob!nsons, nd ot)er %lls. C(en t)e /245 %!ll!on !ns#rnce cl!% t)t &s s#pposed to co(er t)e destro$ed !n(entor!es &ort) /2B4 %!ll!on ppers to )(e been &r!tteno; &!t) no probb!l!t$ o" be!n rel!Jed lter on. 4. *)e proposl o enter !nto t)e dc!on en po to crete so#rce o" 6"res) cp!tl &s not "es!ble bec#se t)e obect t)ereo" &o#ld not be !ts o&n propert$ b#t one belon!n to !ts -l!te, *O< Relt$ nd 9e(elop%ent +orport!on, corport!on lso #ndero!n re)b!l!tt!on. Moreo(er, t)e neot!t!ons >"or t)e ret#rn o" boos nd %J!nes "ro% s!c /ol$pr!ntersKs trde cred!tors? d!d not prte o" (ol#ntr$ #ndert!n bec#se no ct#l fnnc!l co%%!t%ents )d been %de t)ereon. 9#e to t)e re)b!l!tt!on pln be!n n !nd!spensble re#!re%ent !n corporte re)b!l!tt!on proceed!ns, s!c /ol$pr!nters &s epected to eert consc!o#s e;ort !n "or%#lt!n t)e s%e, "or s#c) pln &o#ld spell t)e "#t#re not onl$ "or !tsel" b#t lso "or !ts cred!tors nd t)e p#bl!c !n enerl. *)e contents nd eec#t!on o" t)e re)b!l!tt!on pln co#ld not be ten l!)tl$.
