G.R. No. 188639 September 2, 2015
SECURITIES AND EXCHANGE COMMISSION, Petitioner, vs. HON. REYNALDO M. LAIGO, in his capacity as Presiding Judge of the Regional Trial Court, National Capital Judicial Region, Makati City, Branch 56, GLICERIA AYAD, SAHLEE DELOS REYES and ANTONIO P. HUETE, JR., Respondents.

FACTS

Pursuant to the Securities Regulation Code ( R.A. No. 8799 ), the Securities and Exchange Commission (SEC) issued the New Rules on the Registration and Sale of Pre-Need Plans, which required pre-need providers to establish a trust fund, defined as a fund set up from plan holders’ payments, separate and distinct from the company’s paid-up capital, to pay for plan benefits. Legacy Consolidated Plans, Incorporated (Legacy), a pre-need provider, complied by entering into a trust agreement with the Land Bank of the Philippines. After Legacy became unable to pay its obligations, private respondents, as plan holders, filed a petition for involuntary insolvency. The Regional Trial Court (RTC), presided by Judge Reynaldo M. Laigo, declared Legacy insolvent. The SEC opposed the RTC’s order for the insolvency Assignee to take possession of the trust fund and include it in Legacy’s insolvent estate, arguing the fund was for the exclusive benefit of plan holders. On June 26, 2009, the RTC ordered the Assignee to take possession of the trust fund, treating it as part of Legacy’s corporate assets to be distributed among all creditors who filed valid claims, and stopped the SEC from further validating plan holders’ claims. The SEC filed this petition, asserting the trust fund should be exclusively for plan holders.

ISSUE

Whether the respondent Judge committed grave abuse of discretion in (1) including the trust fund in Legacy’s insolvency estate, and (2) prohibiting the SEC from validating the claims filed by plan holders against the trust fund.

RULING

Yes, the respondent Judge committed grave abuse of discretion. The trust fund, established under the SEC’s New Rules, is for the sole and exclusive benefit of the plan holders and does not form part of the corporate assets of the pre-need company. The legislative mandate and regulatory framework aim to protect plan holders, making their interests paramount. The trust fund is held by the trustee for the benefit of the plan holders, and the pre-need company, as trustor, does not retain ownership over it. Therefore, it should not be included in the insolvency estate for distribution to other creditors. Consequently, the SEC, as the regulator, has the authority to validate the claims of plan holders against the trust fund, and the insolvency court cannot enjoin this function. The assailed June 26, 2009 Order was set aside.