LAND BANK OF THE PHILIPPINES, PETITIONER, VS.

FASTECH SYNERGY
PHILIPPINES, INC. (FORMERLY FIRST ASIA SYSTEM TECHNOLOGY, INC.), FASTECH
MICROASSEMBLY & TEST, INC., FASTECH ELECTRONIQUE, INC., AND FASTECH
PROPERTIES, INC., RESPONDENTS.

DECISION
LEONEN, J.:
Courts will not render judgment on a moot and academic case unless any of the following
circumstances exists: "(1) [g]rave constitutional violations; (2) [e]xceptional character of the
case; (3) [p]aramount public interest; (4) [t]he case presents an opportunity to guide the
bench, the bar, and the public; or (5) [t]he case is capable of repetition yet evading review."[1]

This is a Petition for Review on Certiorari[2] under Rule 45 of the 1997 Rules of Civil
Procedure, praying that the Court of Appegrfkighals September 28, 2012 Decision[3] and
March 5, 2013 Resolution[4] be modified to consider the concerns raised by Land Bank of the
Philippines (petitioner).[5] These concerns pertain to the rehabilitation of respondents Fastech
Synergy Philippines, Inc. (Fastech Synergy),[6] Fastech Microassembly & Test, Inc. (Fastech
Microassembly), Fastech Electronique, Inc. (Fastech Electronique), and Fastech Properties,
Inc, (Fastech Properties) (collectively, Fastech Corporations). In its September 28, 2012
Decision, the Court of Appeals set aside the December 9, 2011 Resolution[7] of Branch 149,
Regional Trial Court, Makati City (Rehabilitation Court), which dismissed respondents' Joint
Petition for corporate rehabilitation (Rehabilitation Petition).[8] In this Decision, the Court of
Appeals approved respondents' Rehabilitation Plan, which was attached to their
Rehabilitation Petition filed under Republic Act No. 10142,[9] on April 8, 2011,[10] and
remanded the case back to the Rehabilitation Court.[11]

The Fastech Corporations claimed that they filed a joint petition since they have common
managers, assets, and creditors.[12] Due to financial losses, their assets would not be
enough to pay their peso and dollar debts from the following creditors:

 
Creditors Peso debts Dollar debts
1. Planters Development Bank P55,175.00  N/A
(Planters Bank)
2. Penta Capita], Investment P10,260,00.00 US$1,638,669.00
Corporation (Penta Capital)
3. Union Bank of the Philippines P9,000,000.00 US$370,000.00
(UnionBank)
4. Bank of the Philippine Islands P54,653,431.00  N/A
(BPI)
5. Land Bank of the Philippines N/A US$340,000.00
(Landbank)
TOTAL: P73,968,606.00 US$2,348,669,00[13]
They prayed for the approval of their Rehabilitation Plan, which they submitted together with
their Rehabilitation Petition. The terms and conditions of the Rehabilitation Plan provided for a
two (2)-year grace period for the payment of the Fastech Corporations' outstanding loans and
a waiver of accumulated interests and penalties. Likewise, they indicated a 12-year period
from the end of the grace period for the payment of interests accrued during the grace period.
Finally, they stipulated an interest of four percent (4%) per annum for real estate-secured
creditors and two percent (2%) per annum for chattel mortgage-secured creditors.[14]

On April 19, 2011, the Rehabilitation Court acted on the Rehabilitation Petition by issuing a
Commencement Order with Stay Order. It appointed Atty. Rosario Bernaldo (Atty. Bernaldo)
as Rehabilitation Receiver.[15]

On May 18, 2011, the Rehabilitation Petition was heard and the Rehabilitation Court
eventually gave it due course to it. The creditors—Planters Bank, UnionBank, BPI, and
Landbank—later filed their respective Notices of Claims and Comments.[16]

After the Fastech Corporations' presentation of their Rehabilitation Plan to Atty. Bernaldo and
their creditors, the Rehabilitation Court issued its June 22, 2011 Order requiring them to
submit a revised rehabilitation plan. The Fastech Corporations submitted their Revised
Rehabilitation Plan and their creditors filed their respective comments and oppositions to it.
[17]

In the meantime, Atty. Bernaldo submitted her Preliminary Report and opined that the Fastech
Corporations' original Rehabilitation Plan was viable.[18] She stated that the Fastech
Corporations "may be successfully rehabilitated, considering the sufficiency of their assets to
cover their liabilities and the underlying assumptions, financial projections and procedures to
accomplish said goals in their Rehabilitation Plan."[19]

External auditors of the Fastech Corporations gave comments on the financial statements.
[20] They issued qualified audit opinions on the 2008 financial statements of Fastech
Microassembly and Fastech Electronique but noted that these companies were unable to
prove financial support from their respective major stockholders.[21] However, the auditors
were unable to provide opinions on Fastech Synergy's and Fastech Properties' 2008 financial
statements due to insufficient audit evidence.[22] Finally, they were also unable to give audit
opinions on the 2009 financial statements of the Fastech Corporations for lack of appropriate
audit evidence.[23]

The Rehabilitation Court directed the Fastech Corporations to submit their Reply on the
comments and oppositions presented by their creditors, to which they complied with on
September 30, 2011.[24]
On December 9, 2011, the Rehabilitation Court issued a Resolution[25] dismissing the
Rehabilitation Petition based on the following:
1. The Singapore Stock Exchange has already deleted one of the petitioners. Yet,
petitioners did not even bother to explain and/or inform this court the status of
such deletion; or the steps being taken by the petitioners to resolve the incident.

It must be noted here, then and now, that listed corporations in the stock
exchange has an easy access to the public for their contributions to the capital
built up to finance corporate business transactions including CAPEX and working
capital. Thus, the public is always a very good source of money for business
ventures of corporations. Petitioners had lost such good source of cheap money.
2. Petitioners miserably failed to overcome the unqualified adverse opinions of their
external auditors. Petitioners did not explain what had happened to those
adverse observations of the auditors. Thus, petitioners submitted before this
court unreliable financial statements amounting to non-compliance of the basic
requirements of the Law and the Rules for rehabilitation purposes.
3. Petitioners denied this court of its fair determination of the feasibility of the
submitted rehabilitation plan by withholding from this court its basic assumptions
of its rehabilitation plan.
4. Petitioners miserably failed to demonstrate before this court that they will have a
better future business financial results [sic] of operation after their failures to
meet the various restructuring plans they have secured from these creditors'
banks.
5. The new way of doing business, i.e. niche manner of manufacturing its products
or customers built design and needs, will be experimental, hence it will be
completely and entirely dependent upon the number of customers petitioners
may have. There is a great deal of competition in the petitioners' field of
business, hence such new business venture becomes unreliable and uncertain.
Thus, the possibility of success is quite uncertain, hence it is not feasible. There
is [sic] no historical reliable facts and figures for this court to begin with for
evaluation and study![26]

The Rehabilitation Court noted that there were no credible bases to determine if the Fastech
Corporations could be rehabilitated since they failed to submit the bases for their positive
financial projections due to confidentiality.[27] The dispositive portion of its December 9, 2011
Resolution read:
WHEREFORE, premises considered, the petition is hereby DISMISSED for
unreliable facts and figures submitted for evaluation and study by this court, hence
this court could not arrive at the feasibility that petitioners could be rehabilitated.
Thus, the petition is being DISMISSED for reason that its attachments, i.e. the
financial statements and balance sheets of the petitioners contained materially
false and misleading facts and figures. (Section 25, (b), (3) of R.A. No. 10142).

Moreover, considering that the facts and figures submitted by petitioners are
unreliable and not credible, this court could not also declare that petitioners be
 placed under liquidation.

SO ORDERED.[28]

The Fastech Corporations elevated the case before the Court of Appeals by filing a Petition
for Review[29] under Rule 43 of the 1997 Rules of Civil Procedure. The case was docketed
as CA-G.R. SP No. 122836. The Fastech Corporations prayed that a Writ of Preliminary
Injunction and/or a Temporary Restraining Order be issued.[30] They argued that their
rehabilitation was feasible and that the Rehabilitation Court erred in ruling that they "[would]
not have a better future due to their failures to meet various restructuring plans."[31]

On January 24, 2012, the Court of Appeals issued a Temporary Restraining Order to prevent
the case from being moot and academic considering the Ex Parte Petition for Issuance of a
Writ of Possession filed by Planters Bank over the properties of the Fastech Corporations.
[32] A Writ of Preliminary Injunction was issued by the Court of Appeals on March 22, 2012.
[33]

On April 30, 2012, Atty. Bernaldo filed her Manifestation before the Court of Appeals.[34] She
maintained that the Fastech Corporations' rehabilitation was viable as "the financial
projections and procedures set forth to accomplish the goals in their Rehabilitation Plan
[were] attainable."[35]

On September 28, 2012, the Court of Appeals issued a Decision,[36] granting the Fastech
Corporations' Petition for Review, which it found to have "serve[d] the purpose of corporate
rehabilitation."[37] The rehabilitation would allow the continued employment of its more than
100 employees and would assure payment to creditors, which would all equally participate in
the Fastech Corporations' rehabilitation. Further, stockholders would benefit in the long run if
the Rehabilitation Plan was successful. Finally, the general public would likewise gain
considering that the Fastech Corporations would open the Philippine market to new
opportunities.[38]

The Court of Appeals ruled that the Rehabilitation Court erred in disregarding the opinion of
Atty. Bernaldo that the Fastech Corporations "may be successfully rehabilitated."[39] The
Rehabilitation Court "failed to distinguish the difference between an adverse or negative
opinion and a disclaimer or when an auditor [could not] formulate an opinion with exactitude
for lack of sufficient data."[40]

The dispositive portion of the Court of Appeals September 28, 2012 Decision read:
WHEREFORE, the instant petition is GRANTED. The assailed issuance
is REVERSED and SET ASIDE. The Joint Petition in SP Case No. M-7130
is REINSTATED and the Rehabilitation Plan attached thereto
is APPROVED. Respondent Planters Development Bank is
 permanently ENJOINED from effecting the foreclosure of [the Fastech
Corporations'] property during the pendency of the implementation of the
Rehabilitation Plan.

The petition is REMANDED to the Regional Trial Court, National Capital Judicial
Region, Br. 149, Makati City, for its supervision in the implementation of the
Rehabilitation Plan.

SO ORDERED.[41] (Emphasis in the original)

Landbank and Planters Bank separately moved for reconsideration. Landbank argued that the
Rehabilitation Plan should not have been approved since it would not benefit the Fastech
Corporations' creditors, while Planters Bank averred that the rehabilitation of the Fastech
Corporations could no longer be obtained.[42]

On March 5, 2013, the Court of Appeals issued a Resolution[43] denying both motions. It

added that Atty. Bernaldo's Manifestation bolstered its finding that the rehabilitation was
possible if "implemented in accordance with the Rehabilitation Plan."[44]

On April 18, 2013, Planters Bank and its successor-in-interest, Philippine Asset Growth Two,
Inc. (PAGTI), filed a Petition for Review before this Court. This Petition assailed the
September 28, 2012 Decision and March 5, 2013 Resolution of the Court of Appeals. The
case, docketed as G.R. No. 206528, was entitled Philippine Asset Growth Two, Inc.
(Successor-In-Interest of Planters Development Bank) and Planters Development Bank v.
Fastech Synergy Philippines, Inc. (Formerly First Asia System Technology, Inc.), Fastech
Microassembly & Test, Inc., Fastech Electronique, Inc., and Fastech Properties, Inc.[45]

On April 25, 2013, Landbank also filed a Petition for Review before this Court against the
Fastech Corporations. Petitioner likewise assails the September 28, 2012 Decision and
March 5, 2013 Resolution of the Court of Appeals.[46] It questions the correctness of the
Court of Appeals' application of Republic Act No. 10142 without considering the issues put
forward by the creditors, petitioner included.[47]

Petitioner argues that respondents' creditors raised valid issues that should be addressed
before declaring that rehabilitation was viable.[48] It maintains that it does not agree with the
period of the repayment plan, which could take almost 20 years, or with the waiver of interest
and penalties incurred prior to the filing of rehabilitation.[49]

Petitioner points out that the Rehabilitation Receiver's opinion is subjective and possibly
partial in favor of rehabilitation.[50] There are also some concerns which are beyond the
Rehabilitation Receiver's competence and must be directly addressed by respondents to
show petitioner that they are sincere in gaining the benefits of rehabilitation and are "not
simply hiding behind its protective mantle to evade [their] obligations."[51]
Petitioner prays that the assailed Decision and Resolution of the Court of Appeals be modified
to take its concerns into account.[52]

On October 7, 2013, respondents filed their Comment.[53] They counter that petitioner raised
questions of fact, which could not be entertained by this Court. The resolution of petitioner's
concerns would involve an examination of the records and evidence of the case.[54]  Further,
petitioner did not object to respondents' rehabilitation. Its opposition is merely on the
stipulations in the Rehabilitation Plan.[55]

On February 3, 2014, petitioner filed its Reply.[56] It reiterates that the approval of the
Rehabilitation Plan, without resolving the issues it has raised, "violates the very essence and
policy behind the enactment of the [Financial Rehabilitation Plan and Insolvency Act]." Thus,
the question on the correctness of the rehabilitation's approval is not a question of fact but of
law.

On March 12, 2014, this Court issued a Resolution,[57] giving due course to the petition and
requiring the parties to file their respective memoranda.

Petitioner submitted its Memorandum[58] on May 19, 2014, while respondents submitted their
Memorandum[59] on May 29, 2014. Both Memoranda contained a rehash of their arguments
in their previous pleadings.

On January 4, 2016, respondents filed their Manifestation and Update[60] regarding their

compliance with the September 28, 2012 Decision of the Court of Appeals. They report that
"[i]n accordance with the Rehabilitation Plan, [respondents] had made four (4) quarterly
payments with a total amount of Thirty Five Million Four Hundred Eighty Four Thousand
Three Hundred Eighteen and Thirty Two Centavos (Php 35,484,318.32)."[61] The payment
consisted of both principal and interest payments. They also paid their non-bank creditors.
These show that the approved Rehabilitation Plan is viable.[62]

On April 1, 2016, respondents filed another Manifestation and Update,[63] attaching in it the

Compliance[64] submitted by Atty. Bernaldo. Respondents emphasize the conclusion of Atty.
Bernaldo that respondents "generally performed better than the projections in the approved
rehabilitation plan."[65]

On November 25, 2016, PAGTI and Planters Bank filed their Manifestation,[66] stating that
this Court already issued a Decision on June 28, 2016 in G.R. No. 206528. This Court
granted PAGTI and Planters Bank's petition and reversed the September 28, 2012 Decision
and March 5, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 122836.[67]

On June 16, 2017, PAGTI and Planters Bank filed another Manifestation,[68] stating that this
Court's June 28, 2016 Decision in G.R. No. 206528 became final and executory on March 17,
2017.[69]

Thus, this Court resolves the issue of whether the Court of Appeals erred in approving the
Rehabilitation Plan of respondents.

The sole issue raised by petitioner has already been ruled upon by this Court. m

....
II.

Rehabilitation is statutorily defined under Republic Act No. 10142, otherwise known
as the "Financial Rehabilitation and Insolvency Act of 2010" (FRIA), as follows:
Section 4. Definition of Terms. — As used in this Act, the term:

....
(gg) Rehabilitation shall refer to the restoration of the debtor to a condition of successful
operation and solvency, if it is shown that its continuance of operation is economically
feasible and its creditors can recover by way of the present value of payments projected
in the plan, more if the debtor continues as a going concern than if it is immediately
liquidated. (Emphasis supplied)

Case law explains that corporate rehabilitation contemplates a continuance of

corporate life and activities in an effort to restore and reinstate the corporation
to its former position of successful operation and solvency, the purpose
being to enable the company to gain a new lease on life and allow its
creditors to be paid their claims out of its earnings. Thus, the basic issues in
rehabilitation proceedings concern the viability and desirability of continuing the
business operations of the distressed corporation, all with a view of effectively
restoring it to a state of solvency or to its former healthy financial condition through
the adoption of a rehabilitation plan.
III.

In the present case, however, the Rehabilitation Plan failed to comply with the
minimum requirements, i.e.: (a) material financial commitments to support the
rehabilitation plan; and (b) a proper liquidation analysis, under Section 18, Rule 3
of the 2008 Rules of Procedure on Corporate Rehabilitation 80 (Rules), which
Rules were in force at the time respondents' rehabilitation petition was filed on April
8, 2011:
Section 18. Rehabilitation Plan. — The rehabilitation plan shall include
(a) the desired business targets or goals and the duration and coverage
of the rehabilitation; (b) the terms and conditions of such rehabilitation
which shall include the manner of its implementation, giving due regard
to the interests of secured creditors such as, but not limited, to the non-
impairment of their security liens or interests; (c) the material financial
 commitments to support the rehabilitation plan; (d) thfvjbe means
for the execution of the rehabilitation plan, which may include debt to
equity conversion, restructuring of the debts, dacion en pago or sale or
exchange or any disposition of assets or of the interest of shareholders,
partners or members; (e) a liquidation analysis setting out for each
creditor that the present value of payments it would receive under
the plan is more than that which it would receive if the assets of
the debtor were sold by a liquidator within a six-month period from
the estimated date of filing of the petition; and (f) such other relevant
information to enable a reasonable investor to make an informed
decision on the feasibility of the rehabilitation plan. (Emphases supplied)

The Court expounds.

A. Lack of Material Financial Commitment
to Support the Rehabilitation Plan.

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. This commitment may include
the voluntary undertakings of the stockholders or the would-be investors of the
debtor-corporation indicating their readiness, willingness, and ability to contribute
funds or property to guarantee the continued successful operation of the
debtor-corporation during the period of rehabilitation.

In this case, respondents' Chief Operating Officer, Primo D. Mateo, Jr., in his
executed Affidavit of General Financial Condition dated April 8, 2011, averred that
respondents will not require the infusion of additional capital as he, instead,
proposed to have all accrued penalties, charges, and interests waived, and a
reduced interest rate prospectively applied to all respondents' obligations, in
addition to the implementation of a two (2)-year grace period. Thus, there appears
to be no concrete plan to build on respondents' beleaguered financial position
through substantial investments as the plan for rehabilitation appears to be pegged
merely on financial reprieves. Anathema to the true purpose of rehabilitation, a
distressed corporation cannot be restored to its former position of successful
operation and regain solvency by the sole strategy of delaying payments/waiving
accrued interests and penalties at the expense of the creditors.

The Court also notes that while respondents have substantial total assets, a large
portion of the assets of Fastech Synergy and Fastech Properties is comprised of
noncurrent assets, such as advances to affiliates which include Fastech
Microassembly, and investment properties which form part of the common assets
of Fastech Properties, Fastech Electronique, and Fastech Microassembly.
Moreover, while there is a claim that unnamed customers have made investments
by way of consigning production equipment, and advancing money to fund
procurement of various equipment intended to increase production capacity, this
can hardly be construed as a material financial commitment which would inspire
confidence that the rehabilitation would turn out to be successful. Case law holds
that nothing short of legally binding investment commitment/s from third parties is
required to qualify as a material financial commitment. Here, no such binding
investment was presented.
B. Lack of Liquidation Analysis.

Respondents likewise failed to include any liquidation analysis in their

Rehabilitation Plan. The total liquidation assets and the estimated liquidation return
to the creditors, as well as the fair market value vis-a-vis the forced liquidation
value of the fixed assets were not shown. As such, the Court could not ascertain if
the petitioning debtor's creditors can recover by way of the present value of
payments projected in the plan, more if the debtor continues as a going concern
than if it is immediately liquidated. This is a crucial factor in a corporate
rehabilitation case, which the CA, unfortunately, failed to address.
C. Effect of Non-Compliance.

The failure of the Rehabilitation Plan to state any material financial commitment to
support rehabilitation, as well as to include a liquidation analysis, renders the CA's
considerations for approving the same, i.e., that: (a) respondents would be able to
meet their obligations to their creditors within their operating cash profits and other
assets without disrupting their business operations; (b) the Rehabilitation
Receiver's opinion carries great weight; and (c) rehabilitation will be beneficial for
respondents' creditors, employees, stockholders, and the economy, as
actually unsubstantiated, and hence, insufficient to decree the feasibility of
respondents' rehabilitation. It is well to emphasize that the remedy of rehabilitation
should be denied to corporations that do not qualify under the Rules. Neither
should it be allowed to corporations whose sole purpose is to delay the
enforcement of any of the rights of the creditors.

Even if the Court were to set aside the failure of the Rehabilitation Plan to comply
with the fundamental requisites of material financial commitment to support the
rehabilitation and an accompanying liquidation analysis, a review of the financial
documents presented by respondents fails to convince the Court of the feasibility of
the proposed plan.
IV.

The test in evaluating the economic feasibility of the plan was laid down in Bank of
the Philippine Islands v. Sarabia Manor Hotel Corporation (Bank of the Philippine
Islands), to wit;
In order to determine the feasibility of a proposed rehabilitation plan, it is
imperative that a thorough examination and analysis of the distressed
corporation's financial data must be conducted. If the results of such
examination and analysis show that there is a real opportunity to
rehabilitate the corporation in view of the assumptions made and
financial goals stated in the proposed rehabilitation plan, then it may be
said that a rehabilitation is feasible. In this accord, the rehabilitation
court should not hesitate to allow the corporation to operate as an on-
going concern, albeit under the terms and conditions stated in the
approved rehabilitation plan. On the other hand, if the results of the
financial examination and analysis clearly indicate that there lies no
 reasonable probability that the distressed corporation could be revived
and that liquidation would, in fact, better subserve the interests of its
stakeholders, then it may be said that a rehabilitation would not be
feasible. In such case, the rehabilitation court may convert the
proceedings into one for liquidation.

In the recent case of Viva Shipping Lines, Inc. v. Keppel Philippines Mining, Inc.,
the Court took note of the characteristics of an economically feasible rehabilitation
plan as opposed to an infeasible rehabilitation plan:
Professor Stephanie V. Gomez of the University of the Philippines
College of Law suggests specific characteristics of an economically
feasible rehabilitation plan:
a. The debtor has assets that can generate more cash if used
in its daily operations than if sold.

b. Liquidity issues can be addressed by a practicable

business plan that will generate enough cash to sustain daily
operations.

c. The debtor has a definite source of financing for the proper

and full implementation of a Rehabilitation Plan that is
anchored on realistic assumptions and goals.

These requirements put emphasis on liquidity: the cash flow that the
distressed corporation will obtain from rehabilitating its assets and
operations. A corporation's assets may be more than its current
liabilities, but some assets may be in the form of land or capital
equipment, such as machinery or vessels. Rehabilitation sees to it that
these assets generate more value if used efficiently rather than if
liquidated.

On the other hand, this court enumerated the characteristics of a

rehabilitation plan that is infeasible:
(a) the absence of a sound and workable business plan;

(b) baseless and unexplained assumptions, targets and goals;

(c) speculative capital infusion or complete lack thereof for the execution of the busi
plan;

(d) cash flow cannot sustain daily operations; and

(e) negative net worth and the assets are near full depreciation or fully depreciated.
 In addition to the tests of economic feasibility, Professor Stephanie V.
Gomez also suggests that the Financial and Rehabilitation and
Insolvency Act of 2010 emphasizes on rehabilitation that provides for
better present value recovery for its creditors.

Present value recovery acknowledges that, in order to pave way for

rehabilitation, the creditor will not be paid by the debtor when the credit
falls due. The court may order a suspension of payments to set a
rehabilitation plan in motion; in the meantime, the creditor remains
unpaid. By the time the creditor is paid, the financial and economic
conditions will have been changed. Money paid in the past has a
different value in the future. It is unfair if the creditor merely receives the
face value of the debt. Present value of the credit takes into account the
interest that the amount of money would have earned if the creditor
were paid on time.

Trial courts must ensure that the projected cash flow from a business'
rehabilitation plan allows for the closest present value recovery for its
creditors. If the projected cash flow is realistic and allows the corporation
to meet all its obligations, then courts should favor rehabilitation over
liquidation. However, if the projected cash flow is unrealistic, then courts
should consider converting the proceedings into that for liquidation to
protect the creditors.

A perusal of the 2009 audited financial statements shows that respondents' cash
operating position was not even enough to meet their maturing obligations.
Notably, their current assets were materially lower than their current liabilities, and
consisted mostly of advances to related parties in the case of Fastech
Microassembly, Fastech Electronique, and Fastech Properties. Moreover, the
independent auditors recognized the absence of available historical or reliable
market information to support the assumptions made by the management to
determine the recoverable amount (value in use) of respondents' properties and
equipment.

On the other hand, respondents' unaudited financial statements for the year 2010,
and the months of February and March 2011 were unaccompanied by any notes or
explanation on how the figures were arrived at. Besides, respondents' cash
operating position remained insufficient to meet their maturing obligations as their
current assets are still substantially lower than their current liabilities. The Court
also notes the RTC-Makati's observation that respondents added new accounts
and/or deleted/omitted certain accounts, but failed to explain or justify the same.

Verily, respondents' Rehabilitation Plan should have shown that they have enough
serviceable assets to be able to continue its business operation. In fact, as
opposed to this objective, the revised Rehabilitation Plan still requires "front load
Capex spending" to replace common equipment and facility equipment to ensure
sustainability of capacity and capacity robustness, thus, further sacrificing
respondents' cash flow. In addition, the Court is hard-pressed to see the effects of
the outcome of the streamlining of respondents' manufacturing operations on the
carrying value of their existing properties and equipment.

In fine, the Rehabilitation Plan and the financial documents submitted in support
thereof fail to show the feasibility of rehabilitating respondents' business.
V.

The CA's reliance on the expertise of the court-appointed Rehabilitation Receiver,

who opined that respondents' rehabilitation is viable, in order to justify its finding
that the financial statements submitted were reliable, overlooks the fact that the
determination of the validity and the approval of the rehabilitation plan is not the
responsibility of the rehabilitation receiver, but remains the function of the court.
The rehabilitation receiver's duty prior to the court's approval of the plan is to study
the best way to rehabilitate the debtor, and to ensure that the value of the debtor's
properties is reasonably maintained; and after approval, to implement the
rehabilitation plan. Notwithstanding the credentials of the court-appointed
rehabilitation receiver, the duty to determine the feasibility of the rehabilitation of
the debtor rests with the court. While the court may consider the receiver's report
favorably recommending the debtor's rehabilitation, it is not bound thereby if, in its
judgment, the debtor's rehabilitation is not feasible.

The purpose of rehabilitation proceedings is not only to enable the company to

gain a new lease on life, but also to allow creditors to be paid their claims from its
earnings when so rehabilitated. Hence, the remedy must be accorded only after a
judicious regard of all stakeholders' interests; it is not a one-sided tool that may be
graciously invoked to escape every position of distress. Thus, the remedy of
rehabilitation should be denied to corporations whose insolvency appears to be
irreversible and whose sole purpose is to delay the enforcement of any of the rights
of the creditors, which is rendered obvious by: (a) the absence of a sound and
workable business plan; (b) baseless and unexplained assumptions, targets, and
goals; and (c) speculative capital infusion or complete lack thereof for the
execution of the business plan, as in this case.
VI.

In view of all the foregoing, the Court is therefore constrained to grant the instant
petition, notwithstanding the preliminary technical error as above-discussed. A
distressed corporation should not be rehabilitated when the results of the financial
examination and analysis clearly indicate that there lies no reasonable probability
that it may be revived, to the detriment of its numerous stakeholders which include
not only the corporation's creditors but also the public at large. In Bank of the
Philippine Islands;
Recognizing the volatile nature of every business, the rules on corporate
rehabilitation have been crafted in order to give companies sufficient
leeway to deal with debilitating financial predicaments in the hope of
restoring or reaching a sustainable operating form if only to best
 accommodate the various interests of all its stakeholders, may it be the
corporation's stockholders, its creditors, and even the general public.

Thus, the higher interest of substantial justice will be better subserved by the
reversal of the CA Decision. Since the rehabilitation petition should not have been
granted in the first place, it is of no moment that the Rehabilitation Plan is currently
under implementation. While payments in accordance with the Rehabilitation Plan
were already made, the same were only possible because of the financial
reprieves and protracted payment schedule accorded to respondents, which, as
above-intimated, only works at the expense of the creditors and ultimately, do not
meet the true purpose of rehabilitation.[70] (Emphasis in the original, citations
omitted)

The dispositive portion of the June 28, 2016 Decision in G.R. No. 206528 read:
WHEREFORE, the petition is GRANTED. The Decision dated September 28, 2012
and the Resolution dated March 5, 2013 of the Court of Appeals in CA-G.R. SP No.
122836 are hereby REVERSED and SET ASIDE. Accordingly, the Joint Petition for
corporate rehabilitation filed by respondents Fastech Synergy Philippines, Inc.
(formerly First Asia System Technology, Inc.), Fastech Microassembly & Test, Inc.,
Fastech Electronique, Inc., and Fastech Properties, Inc., before the Regional Trial
Court of Makati City, Branch 149 in SP Case No. M-7130 is DISMISSED.

SO ORDERED.[71]

This Court arrived at the above conclusion after a careful scrutiny of the case records. The
decision is comprehensive enough that to rule on the issue raised by petitioner will be futile
and is a waste of this Court's time and resources. Moreover, petitioner did not advance any
other issue that could have been resolved by this Court. Therefore, with the promulgation of
the June 28, 2016 Decision in G.R. No. 206528, the present case has been rendered moot
and academic.

In Timbol v. Commission on Elections:[72]

A case is moot and academic if it "ceases to present a justiciable controversy because of
supervening events so that a declaration thereon would be of no practical use or value."
When a case is moot and academic, this court generally declines jurisdiction over it.

There are recognized exceptions to this rule. This court has taken cognizance of moot and
academic cases when:
(1) there was a grave violation of the Constitution; (2) the case involved
a situation of exceptional character and was of paramount public
interest; (3) the issues raised required the formulation of controlling
principles to guide the Bench, the Bar and the public; and (4) the case
was capable of repetition yet evading review.[73] (Citations omitted)
In Republic v. Moldex Realty, Inc.:[74]
A case becomes moot and academic when, by virtue of supervening events, the
conflicting issue that may be resolved by the court ceases to exist. There is no
longer any justiciable controversy that may be resolved by the court. This court
refuses to render advisory opinions and resolve issues that would provide no
practical use or value. Thus, courts generally "decline jurisdiction over such case or
dismiss it on ground of mootness."[75]

This Court is generally constrained to rule upon moot and academic cases since "[our] power
of judicial review is limited to actual cases and controversies"[76] under Article VIII, Section 1
of the Constitution; thus:
ARTICLE VIII
Judicial Department

SECTION 1. The judicial power shall be vested in one Supreme Court and in such
lower courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable, and
to determine whether or not there has been a grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.

An actual case or controversy exists "when the case presents conflicting or opposite legal
rights that may be resolved by the court in a judicial proceeding."[77] Courts will not decide a
case unless there is "a real and substantial controversy admitting of specific relief."[78]

WHEREFORE, the Petition for Review is DENIED for being moot and academic.

SO ORDERED.

Carpio, (Chairperson), Peralta, Mendoza, and Martires, JJ., concur.