Title
Supreme Court
Securities and Exchange Commission vs. College Assurance Plan Philippines, Inc.
Case
G.R. No. 213130
Decision Date
Sep 9, 2020
CAPPI's corporate rehabilitation case involved jurisdiction disputes over subsidiary CAP Pension and extension of rehabilitation period, with SC ruling CAP Pension's assets excluded from CAPPI's plan.

Case Digest (G.R. No. 213130)
Expanded Legal Reasoning Model

Facts:

  • Consolidation of Cases and Background
    • Two consolidated petitions are at issue:
      • G.R. No. 218193 – Involving the challenge on the rehabilitation court’s jurisdiction over CAP Pension, the subsidiary of College Assurance Plan Philippines, Inc. (CAPPI).
      • G.R. No. 213130 – Concerning the propriety of extending and modifying CAPPI’s approved rehabilitation plan.
    • Both cases originate from CAPPI’s Petition for Corporate Rehabilitation filed before the Regional Trial Court (RTC) of Makati City.
  • Initiation of Corporate Rehabilitation and Early Proceedings
    • CAPPI, a domestic corporation engaged in selling pre-need educational plans, owns 86% of its subsidiary, Comprehensive Annuity Plans and Pension (CAP Pension).
    • On August 26, 2005, CAPPI filed its petition for rehabilitation before the RTC of Makati City.
    • The rehabilitation court, finding the petition sufficient in form and substance, issued a Stay Order on September 13, 2005.
    • The Securities and Exchange Commission (SEC) opposed the rehabilitation by filing a comment on October 17, 2005.
    • The court gave due course to the petition and subsequently referred the case to a receiver.
  • Approval of the Revised Rehabilitation Plan
    • On November 8, 2006, the rehabilitation court approved CAPPI’s revised rehabilitation plan through a Resolution.
    • A key directive in the Resolution ordered the Board of Directors, stockholders, and officers of CAPPI to dispose of and sell all its subsidiaries and affiliates (including CAP Pension) by December 31, 2008.
    • Notably, the SEC did not move for reconsideration of the rehabilitation court’s resolution at that time.
  • Development of Conservatorship and Regulatory Intervention
    • Republic Act No. 9829 (the Pre-Need Code of the Philippines) took effect on December 4, 2009, transferring the primary supervision of pre-need companies to the Insurance Commission.
    • Under Sections 5 and 49 of the Act, the Insurance Commission directed CAP Pension on June 28, 2010, to “show cause” why it should not be placed under conservatorship.
    • Failing to respond, CAP Pension was placed under conservatorship when the Insurance Commission designated a conservator on September 13, 2010.
  • Subsequent Motions, Orders, and Lower Court Proceedings
    • CAPPI filed an Urgent Motion to enforce the RTC’s Stay Order on April 12, 2011, leading to an order on April 15, 2011 reaffirming the court’s jurisdiction over all assets including CAP Pension.
    • Various parties, including the Rehabilitation Receiver and the Philippine Veterans Bank (acting as trustee for CAPPI), submitted motions regarding the allocation of proceeds from asset sales.
    • A series of motions, comments, and orders followed thereafter—from motions for reconsideration by the Insurance Commission to the filing of petitions for certiorari before the Court of Appeals.
    • The Court of Appeals, in decisions rendered in April 2015 and June 2014, dismissed the SEC/Insurance Commission petitions while affirming lower court orders regarding both the jurisdiction over CAP Pension and the extension of the rehabilitation plan.
  • Motion for Extension and Modification of the Rehabilitation Plan
    • On September 21, 2012, CAPPI filed a Motion for Extension and Modification of its rehabilitation plan, seeking an extension until 2021.
    • Discussions in conferences and submitted projections indicated a proposed redevelopment project.
    • The SEC and the Insurance Commission opposed the motion, arguing that the revised rehabilitation plan was speculative, incomplete, and prejudicial to the interests of CAP Pension’s planholders.
    • On September 5, 2013, the RTC granted CAPPI’s motion by approving a three-year extension (subject to annual review) of the rehabilitation plan.
  • Issues Surrounding the Separate Corporate Personalities
    • A major factual dispute centered on whether the directive of the rehabilitation court in the 2006 Resolution effectively placed CAP Pension under “custodia legis” (i.e., complete court-supervised control) or merely required the sale of CAPPI’s equity interest in CAP Pension.
    • The distinct and separate personalities of CAPPI and its subsidiary were repeatedly emphasized, noting that each corporation may own assets and incur liabilities independently.
  • Filing of the Supreme Court Petitions
    • Petitioners (the SEC and the Insurance Commission) filed petitions for review on certiorari before the Supreme Court challenging:
      • The rehabilitation court’s jurisdiction over CAP Pension and its assets.
      • The approval of the extension and modification of the rehabilitation plan.
    • Central to the dispute was whether the lower courts rightly applied the rules on finality, the doctrine of immutability of judgment, and the impact of subsequent legislative enactments (Republic Act No. 9829) on the jurisdiction of the rehabilitation proceedings.
  • Financial and Regulatory Concerns
    • Detailed findings of CAP Pension’s financial condition indicated significant impairments in its capital stock, deficiencies in its trust fund, and issues with its insurance premium fund accounts.
    • Petitioners argued that the rehabilitation plan’s inclusion of CAP Pension’s assets, whether explicit or implicit, adversely affected the protection of the planholders and exceeded the rehabilitation court’s proper jurisdiction.
  • Final Resolution of the Supreme Court
    • The Supreme Court granted the petition challenging the jurisdictional issue (G.R. No. 218193) while reversing the Court of Appeals’ decision regarding CAP Pension’s purported “custodia legis” status.
    • Conversely, the petition regarding the extension and modification of the rehabilitation plan (G.R. No. 213130) was denied, with the Court affirming – with modifications – the RTC’s order that excluded CAP Pension’s properties from the rehabilitation proceedings.

Issues:

  • Jurisdictional Issue:
    • Whether the rehabilitation court validly acquired jurisdiction over CAP Pension and its assets, particularly regarding the interpretation of the November 8, 2006 Resolution.
    • Whether placing CAP Pension under “custodia legis” was correct, or if the court merely intended to order the sale of the equity in CAP Pension while respecting its separate corporate personality.
  • Validity and Scope of the Rehabilitation Plan Extension:
    • Whether the rehabilitation court erred in extending and modifying CAPPI’s rehabilitation plan by approving the 2012 Revised Rehabilitation Plan.
    • Whether the revised rehabilitation plan was speculative or incomplete, especially with regard to the inclusion (or potential inclusion) of CAP Pension’s properties, and whether such inclusion preempted other judicial determinations on jurisdiction.
  • Application of the Doctrine of Immutability of Judgment:
    • Whether the doctrine of finality (immutability of judgment) barred any modification of the 2006 Resolution.
    • Whether subsequent circumstances—such as the enactment of Republic Act No. 9829 and the financial impairments of CAP Pension—constituted an exception justifying a review or modification of the final judgment.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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