MANILA, Philippines - The Court of Appeals (CA) ruled that planholders of troubled pre-need company Permanent Plans Inc. (PPI) have the right to a share in the distribution of its remaining corporate assets.
In its 16-page ruling, the CA Sixth Division granted the petition filed by the Securities and Exchange Commission (SEC) and Insurance Commission (IC) that sought to remove a provision in PPI's approved liquidation program which prevents planholders from making claims on its corporate assets.
The CA agreed with the SEC and IC that the liquidation program's provision that limits to "non-plan holders" the remaining corporate assets of PPI is "unjust" and contrary to the provisions of the Financial Rehabilitation and Insolvency Act.
"In this case, petitioners contend that the planholders should be able to claim against the other corporate assets of the corporation in view of the fact that the trust fund assets of PPI are insufficient. We agree," the CA said.
"We see no reason why the planholders cannot interpose their unsettled claims in the trust fund as ordinary credits. In fact, petitioners are not asking that the planholders should be treated as preferred creditors but rather, only as ordinary creditors who shall be able to claim pro-rata, after the respective preferred credits of the corporation have already been satisfied."
Makati Regional Trial Court branch 66 Judge Joselito Villarosa approved PPI's proposed liquidation program last March 11, 2011.
The CA said the Makati RTC erred when it approved the plan, which prevented its thousands of planholders from claiming against the pre-need firm's corporate assets to the extent of the value of their claims, which were not fully paid from the liquidation of PPI's trust fund.
PPI had argued that there is nothing unjust with dividing the entire trust fund among the planholders only. It said it would be unfair to allow the planholders to claim its remaining corporate assets and bar the other creditors from claiming against the trust fund for the settlement of their credits.
The CA noted the Pre-Need Code's Section 30 states that the trust fund assets of a corporation are exclusively devoted to the planholders only. Section 52 of the same law also allows only policy holders to claim against the trust fund of the insolvent corporation.
"Hence the contention of private respondent (PPI) that they are amenable to allow the planholders toclaim against the corporate assets of the corporation provided that the other creditors would also be allowed to claim against the trust fund, cannot be given any merit. Such condition is without basis, and is in fact contrary to law," the CA said.
Associate Justices Hakim Abdulwahid and Edwin Sorongon concurred with the ruling.