UPHOLDING the rights of preneed subscribers, the Supreme Court has allowed the Securities and Exchange Commission (SEC) to immediately process the claims of legitimate plan holders of the defunct Legacy Consolidated Plans Inc. from the firm’s P300-million trust fund.
In a 24-page ruling, the high court’s Second Division nullified the June 26, 2009, order of Makati Regional Trial Court Branch 56 Judge Reynaldo Laigo for the inclusion of the trust fund in Legacy’s corporate assets when the firm was declared bankrupt in the same year.
Other creditors
The lower court’s order opened the trust fund to claims from the firm’s other creditors and not just plan holders aggrieved in the wake of the preneed industry collapse in the middle of 2000.
The firm, part of the Legacy Group of Companies that went bankrupt at the end of 2009, has P1.06 billion in liabilities to its plan holders.
Its late owner, Celso de los Angeles, faced several cases of syndicated estafa over the alleged insurance and pension scam until his death in March 2012 while undergoing treatment for throat cancer.
The high court decision, penned by Associate Justice Jose Mendoza, found that the Makati judge had committed grave abuse of discretion in declaring the trust fund as part of Legacy’s corporate assets.
For plan holders’ sole benefit
“This court rules to grant the petition filed by the SEC. The court finds that Judge Laigo gravely abused his discretion in treating the trust fund as assets that formed part of Legacy’s insolvency estate and in enjoining the SEC’s validation of the plan holders’ claims against the trust properties,” the court said in resolving the SEC’s petition against the Makati judge’s ruling.
“The trust fund is for the sole benefit of the plan holders and cannot be used to satisfy the claims of other creditors of Legacy,” read the ruling promulgated on Sept. 2 but released only recently.
In granting the insolvency petition that plan holders Gliceria Ayad, Sahlee de los Reyes and Antonio Huete Jr. filed with Legacy’s concurrence in 2009, the Makati court ordered the trust fund included in the firm’s total inventory.
In the order, the court also directed the insolvency assignee, Gener Mendoza, “to take possession of the fund.”
The lower court said that only Mendoza could make withdrawals from the fund, and “only upon order of the court “for distribution among the creditors who had officially filed their valid claims with this court, and for all the expenses to be incurred by the assignee in the course of the discharge of his duties and responsibilities as such assignee.”
The assailed lower court order also stopped the SEC, the agency tasked to regulate the preneed industry, “from further validating the claims of plan holders pertaining to their preneed plans.”
Failure to consider provisions
But the court said Laigo violated the Securities Regulation Code and the Pre-Need Code of 2009 in its order, betraying the legislature’s intent to protect plan holders when it drew up such measures.
“In the end, the failure of Judge Laigo to consider the provisions of the SRC, the New Rules and the law on trusts, that should have warranted the exclusion of the trust fund from the insolvency estate of Legacy, constituted grave abuse of discretion,” the high court said.
It said Laigo “turned a blind eye” to the will of Congress in passing the two laws.