G.R. No. 193108 , December 10, 2014
MARILYN VICTORIO-AQUINO, Petitioner, vs. PACIFIC PLANS, INC. and MAMERTO A. MARCELO, JR. (Court-Appointed Rehabilitation Receiver of Pacific Plans, Inc.), Respondents.

FACTS

Respondent Pacific Plans, Inc. (PPI) is engaged in selling pre-need educational plans, including traditional open-ended plans (PEPTrads) that guarantee payment of full tuition and fees. Petitioner Marilyn Victorio-Aquino is a holder of two PEPTrads. On April 7, 2005, foreseeing an inability to meet its obligations, PPI filed a Petition for Corporate Rehabilitation. The Rehabilitation Court issued a Stay Order and appointed a Rehabilitation Receiver. The Receiver submitted an Alternative Rehabilitation Plan (ARP), approved by the court on April 27, 2006, which translated PEPTrad benefits into a fixed “Base Year-end 2004 Entitlement” and provided for tuition support payments until SY 2009-2010, funded by U.S. Dollar-denominated NAPOCOR bonds. Due to the subsequent appreciation of the Philippine Peso, which adversely affected the value of the dollar-denominated trust fund assets, the Receiver filed a Modified Rehabilitation Plan (MRP) proposing: (a) suspension of tuition support; (b) conversion of Peso liabilities to U.S. Dollar liabilities by assigning planholders a proportional share of the remaining assets; and (c) payment of trust fund assets in U.S. Dollars at maturity. The Rehabilitation Court approved the MRP on July 28, 2008. Petitioner challenged this approval before the Court of Appeals (CA), which dismissed the petition on procedural and substantive grounds. The CA held that a Petition for Review under Rule 43 was an improper remedy, that petitioner did not pay the correct docket fees, and that the MRP did not impair contractual obligations. Petitioner’s motion for reconsideration was denied.

ISSUE

1. Whether the Court of Appeals erred in ruling that a Petition for Review under Rule 43 was an improper remedy to question the Rehabilitation Court’s order approving the Modified Rehabilitation Plan.
2. Whether the Court of Appeals erred in declaring that petitioner did not pay the proper amount of filing and docket fees.
3. Whether the Court of Appeals erred in sustaining the Rehabilitation Court’s approval of the Modified Rehabilitation Plan.

RULING

1. On the Propriety of the Remedy (Rule 43 Petition): The Supreme Court ruled that the Petition for Review under Rule 43 was the proper remedy. The Resolution approving the MRP was a final order regarding the modification of the rehabilitation plan. The governing rule at the time was the Interim Rules on Corporate Rehabilitation, which did not specify a mode of appeal. However, A.M. No. 04-9-07-SC, which took effect in 2004, provided that appeals from final orders or decisions of the Rehabilitation Court should be via a Petition for Review under Rule 43 of the Rules of Court. This rule was applicable when petitioner filed her petition with the CA. Thus, the CA erred in dismissing the petition on this ground.
2. On the Payment of Docket Fees: The Supreme Court found that petitioner paid the correct docket fees. The CA’s conclusion was based on a misinterpretation of the receipts presented. The receipts clearly indicated payment of the prescribed fees for a Petition for Review under Rule 43. Therefore, the CA erred on this procedural point.
3. On the Substantive Validity of the Modified Rehabilitation Plan: The Supreme Court ruled that the approval of the MRP was valid and did not constitute an impairment of contracts. The Court emphasized the “cram down” power of the rehabilitation court under Section 23 of the Interim Rules, which allows the court to approve a rehabilitation plan over the objection of creditors if the plan is feasible, fair, equitable, and necessary to achieve the objectives of rehabilitation. The conversion of Peso obligations to U.S. Dollar obligations was a necessary adjustment due to the extraordinary supervening event of the sharp peso appreciation, which severely eroded the trust fund’s value. This modification was consistent with the overarching goal of rehabilitation to preserve the enterprise and maximize asset recovery for all stakeholders. The Court held that the rehabilitation court did not gravely abuse its discretion in approving the MRP, as it was a reasonable exercise of its authority to ensure the successful rehabilitation of the corporation.