o But SEC opposed the inclusion of the trust fund in the
SECURITIES AND EXCHANGE COMMISSION v LAIGO
GR. No. 188639 | September 2, 2015
Mendoza, J.
Protacio – Group 3
TOPIC: Pre-Need Plans / Pre-Need Code
Summary:
FACTS
 RA No. 8799 (Security Regulation Code), Section 16
o SEC is mandated to prescribe rules and regulations
governing the pre-need industry
 To which the SEC issued the “New rules on the Registration
and Sale of Pre-Need Plans” to govern prior to the passage of
the Pre-Need Code of the Philippines
o Requires pre-need providers to create trust funds as
a requirement for registration
o Trust Fund – fund set up from planholders’ payments,
different from the paid-up capital of the pre-need
company
 Legacy, a pre-need provider, complied with the trust fund
requirement and entered a trust agreement with Landbank
 The industry of pre-need providers collapsed in mid-2000
o Legacy was unable to pay its obligations to the
planholders
 Hence, Legacy became the subject of a petition for
involuntary insolvency filed by respondent planholders
o It was declared insolvent by RTC and was ordered to
submit an inventory of assets and liabilities, in
accordance with the Insolvency Law
 SEC was then ordered by RTC to submit documents about
assets and liabilities of Legacy
inventory of corporate assets
 Doing so would contravene the “New Rules”
creating the trust fund for the exclusive
purpose of guaranteeing the delivery of
benefits due to the planholders
 To include such in the insolvent’s estate will
contravene its purpose
 Because it will be open to claims of
non-planholders
 Nonetheless, Judge Laigo ordered the insolvency Assignee
Mendoza to take possession of the trust fund, hence including
it in Legacy’s corporate assets
o Trust fund could be withdrawn by the Assignee to be
used for expenses incurred in discharging his
functions
o Judge Laigo also enjoined SEC from validating the
claims of planholders against the trust properties
o So basically the trust fund was included in the estate
of the insolvent, which could be open to claims of
Legacy’s creditors with official claims
 Petition for certiorari assailing respondent Judge Laigo’s
order ordering the inclusion of the trust fund in the
corporate assets to the prejudice of the planholders
o SEC intends to secure the trust fund which was
supposedly for the planholders who “invested their
lifetime savings and hard-earned money in Legacy”
 The trust fund should redound exclusively to
the benefit of the planhoders because they’re
the ultimate beneficial owners
 Legacy’s interest over the trust properties
was only by virtue of it being the trustor, not
the owner
ISSUES
 1. W/N the trust funds of Legacy form part of its corporate
assets
2. W/N the respondent judge committed GAD in issuing the
order
3. W/N the claims of planholders are to be treated
differently from the claims of other creditors of Legacy
4. W/N Legacy retains ownership over the trust funds
despite the execution of trust agreements
5. W/N the insolvency court has authority to enjoin
petitioner SEC from further validating the claims of
Legacy’s planholders and treating them as if they are
ordinary creditors of Legacy
6. W/N the provisions of the Pre-Need Code regarding
liquidation is in the nature of a procedural law that can
be retroactively applied to the case at bar
Digester’s notes: tbh I don’t know how to connect this case to
insurance but I think it’s trying to explain what a pre-need plan in
order to differentiate it from an insurance plan
RULING
Court grants the petition filed by SEC – The trust fund is not to be
included in Legacy’s corporate assets. Judge Laigo gravely
abused his discretion in treating the fund as part of the
insolvent’s estate and enjoining SEC’s validation of planholders’
claims against the trust properties.
RATIO
- RA No. 8799 (Securities Regulation Code) defines pre-need
plans (Abrera, v Barza)
o Contracts which provide for the performance of
future services or the payment of future monetary
considerations at the time of actual need, for which
planholders pay in cash or installment at stated
prices, with or without interest or insurance coverage
o Includes life, pension, education, interment, and
other plans
- Overarching consideration of the Legislature in setting up
funds is to protect the interest of the planholders in the
investment plans
o Such interests are paramount above all else
o SEC was directed to come up with the rules and
regulations governing not only the trust funds, but
the industry as a whole
- (1) The trust fund is for the sole benefit of the planholders
and cannot be used to satisfy the claims of other creditors
o Section 30 of Pre-Need Code
 Trust funds are to redound solely to the
planholders
 In no case shall the trust fund assets be used
to satisfy the claims of other creditors of the
pre-need company
o Legacy is not a beneficiary (claimed interest is mere
apparent than real)
 A person is a beneficiary if there is a manifest
intention to give such person the beneficial
interest over the trust properties
 Terms of the trust agreement plainly
confer status of beneficiary to the
planholders, not Legacy
 Clear from even the SRC that the underlying
congressional intent is to make the
planholders the exclusive beneficiaries
o The will of the Legislature was fortified with the
enactment of the Pre-Need Code in 2009(RA No.
9829)
 Clarifying the authority of SEC
 Ensuring that the rights of the pre-need
planholders is categorically defined and
protected
  Also set up the need for establishing a trust o Primary protection of the Code to planholders can
fund and the responsibilities of the trustee apply retroactively
o To rule that Legacy has retained a beneficial interest o Provisions of said code confirm the right to
in the trust fund is to perpetuate the injustices exclusively claim against the trust funds
committed against the planholders o No new substantive right was created or bestowed
 Planholders must not be prejudiced as to be - Court upholds its duty to protect the ordinary Filipino
forced to share in the assets with other workers who are seeking a future for their children through
creditors pre-need contracts.
o Provisions only has the effect of Legacy agreeing to
facilitate the payment of benefits from the trust fund
to the intended beneficiaries
- (2) Enjoining the SEC from validating the claims against the
trust fund is grave abuse of discretion
o Insolvency court has no authority to order reversion
of properties that do not form part of Legacy’s
insolvent estate
o Claims against the trust fund must be distinguished
from claims against Legacy
 Claims against trust fund are directed against
LBP, the trustee
o Pre-Need Code clearly differentiates claims against
the pre-need company and those against the trust
fund
- (3) Jurisdiction over claims filed against the trust fund
o From effectivity of the Pre-Need Code, the Insurance
Commission has the primary and exclusive power to
adjudicate claims involving pre-need plans
 Lol I think this is the first time the word
insurance was mentioned in this case
o However, those pending claims and cases filed with
SEC continue in its full and final conclusion
o Prior to the transfer tot eh IC of matters pertaining to
pre-need plans and trust funds, the SEC had the
authority to regulate, manage, and hear claims
- (4) Pre-Need Code is curative and remedial in character, and
can be applied retroactively