G.R. No. 171681 - Abrera vs. Barza

CAP (College Assurance Plan Philippines, Inc.) was incorporated on February 14, 1980 to engage in the sale of pre-need educational plans.
Initially offered open-ended plans guaranteeing tuition and standard school fees regardless of actual cost; later introduced fixed value plans promising a predetermined payout.
In its early years, CAP achieved prominence among the country’s top corporations and even initiated educational scholarships (first scholars sent in 1984, first graduates in 1988).
Over time, financial difficulties emerged due to several factors:

Deregulation policies adopted by the Department of Education causing tuition fee surges.
Adverse effects of the Asian financial crisis on its trust fund investments.
The Securities and Exchange Commission’s (SEC) implementation of the Pre-Need Uniform Chart Accounts (PNUCA) in 2002.
Non-renewal of its dealership license and cancellation of its permit to sell in 2004.

On April 28, 2005, six petitioners (among other CAP planholders) filed an action for Specific Performance and/or Annulment of Contract due to allegations of fraud, illegal profits, and damages against CAP, its directors/officers, and the Fil-Estate Group of Companies.
The case for specific performance, identified as Securities and Exchange Commission (SEC) Case No. 05-365, was filed before the RTC of Makati City and assigned to Judge Romeo F. Barza, Branch 61.

On September 8, 2005, CAP filed a Petition for Corporate Rehabilitation (Sp. Proc. No. M-6144) with the same RTC, asserting its inability to service debts as they fell due and insufficiency of assets to cover liabilities.
Judge Barza, on September 13, 2005, issued an Order:

Finding the petition sufficient in form and substance.
Staying the enforcement of all claims against CAP, its guarantors, and sureties.
Prohibiting CAP from selling, encumbering, transferring, or disposing of its properties outside ordinary course transactions.
Appointing an Interim Rehabilitation Receiver, who was to post a bond of P100,000.00.
Directing all creditors and interested parties to file comments or oppositions.

On October 17, 2005, ten planholders (also petitioners in a separate matter) filed an Opposition to the Rehabilitation and a Motion to exclude planholders from the Stay Order, arguing that planholders were bound by a trust relationship and thus their interests should not be affected by the rehabilitation process.
On December 16, 2005, Judge Barza issued a further Order:

Giving due course to CAP’s petition for rehabilitation.
Noting that despite substantial questions regarding CAP’s solvency, the overriding interest of the planholder/investing public required a thorough evaluation.
Directing that the petition (along with its annexes and pertinent comments) be referred to the Rehabilitation Receiver for further study and evaluation within 30 days.

Petitioners in the certiorari case contended that the orders (the Stay Order and the Order granting due course to the petition for rehabilitation) had adverse effects on their rights as trust beneficiaries, asserting that the funds from which tuition fees were to be paid belonged to a trust fund rather than CAP’s assets.

Whether the Stay Order issued on September 13, 2005, and the Order giving due course to the petition for rehabilitation on December 16, 2005, were issued without or in excess of the court’s jurisdiction.
Whether these orders, which affected claims based on pre-need contracts and allegations of trust relationships, fell within the scope of the court’s authority under the Interim Rules on Corporate Rehabilitation and the governing law.

Whether the relationship between CAP and its planholders should be regarded as a trust relationship instead of a debtor-creditor relationship.
If such a trust relationship exists, whether claims against CAP arising from pre-need contracts should be exempt from the effects of the Stay Order.

Whether the appointment of a Rehabilitation Receiver in light of a previously filed intra-corporate dispute (SEC Case No. 05-365) alleging the need for an immediate receiver amounted to an excess in judicial discretion.
Whether the existence of the previous case should preclude or affect the orders issued in the rehabilitation proceedings.

Whether the stay of all claims under Section 6, Rule 4 of the Interim Rules (or its 2009 counterpart) is applicable even to claims arising from pre-need contracts, including those involving trust fund assets.