Case Digest (G.R. No. 202052)
Facts:
Securities and Exchange Commission (SEC) and Insurance Commission (IC) v. College Assurance Plan Philippines, Inc., G.R. No. 202052, March 07, 2018, Supreme Court Third Division, Bersamin, J., writing for the Court.College Assurance Plan Philippines, Inc. (CAP) was a pre-need company that established a trust fund to guarantee payment of benefits to planholders; the trust fund was administered by trustee banks and invested in marketable assets. CAP incurred a trust-fund deficiency after valuation and accounting rule changes, and, to correct the deficiency, purchased MRT III Bonds on August 6, 2002 from Smart Share Investment, Ltd. (Smart) and Fil-Estate Management, Inc. (FEMI) and assigned those bonds to the trust fund. The bond purchase was on installment; CAP paid part of the purchase price but an unpaid seller’s lien and remaining vendor claims to Smart and FEMI remained.
On August 23, 2005 CAP filed a Petition for Corporate Rehabilitation in the Regional Trial Court (RTC), Makati City, Branch 149 (SP No. M-6144). A stay order was issued and a Receiver appointed; the court approved a Revised Business Plan in November 2006. While negotiations proceeded to sell the MRT III Bonds, Smart demanded payment and threatened to enforce remedies; the Receiver sought court approval to sell the bonds and to pay Smart and FEMI from the sale proceeds. The RTC initially approved the sale but then withdrew its approval and after pleadings issued orders on April 29, 2009, September 18, 2009 and January 18, 2010 denying authorization to settle CAP’s obligations to Smart and FEMI from trust proceeds, the last order expressly denying CAP’s December 21, 2009 motion to authorize payment.
CAP petitioned the Court of Appeals (CA) by certiorari, arguing the RTC abused its discretion in altering the sale terms and denying payment. The CA, in a decision promulgated June 14, 2011 (CA-G.R. SP No. 113576), found grave abuse and nullified the RTC orders, holding that payment to Smart and FEMI could validly be withdrawn from the trust fund as “benefits” or “cost of services rendered or property delivered” under Rule 16.4 of the New Rules on Pre-Need Plans and Section 30 of R.A. No. 9829 (Pre-Need Code), and treating the unpaid seller’s lien as making Smart and FEMI contributors to the trust source rather than ordinary creditors. The CA directed Philippine Veterans Bank and the Receiver to set aside US$6 million from the sale proceeds pending resolution. The CA denied reconsideration on ...(Subscriber-Only)
Issues:
- Whether the payment of CAP’s outstanding obligation to Smart and FEMI, representing the balance of the purchase price of the MRT III Bonds, can be validly withdrawn from CAP’s trust fund.
- Whether payment of CAP’s outstanding obligation to Smart and FEMI can be considered an administrative expense and thus an allowable withdrawal from the trust fund.
- Whether the trial court acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, in denying payment of CAP’s obligation to Smart and FEMI...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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