SEC vs.

Laigo
FACTS:
This is a Petition for Certiorari filed by the Securities and Exchange Commission (SEC)
assailing the decision of respondent Judge Laigo in a petition for involuntary insolvency
of Legacy Consolidated Plans, Inc. (LEGACY), ordering the inclusion of the trust fund
in its corporate assets to the prejudice of the plan holders.
Due to its inability to pay its obligations to its client plan holders, LEGACY was
subjected to a Petition for Involuntary Insolvency filed by private respondents who
are among the affected plan holders. LEGACY did not object to the petition and was
therefore declared Insolvent by the RTC applying the Insolvency Law, the applicable
bankruptcy law at the time.
The RTC further ordered the SEC submission of documents pertaining to the assets
and liabilities of LEGACY including its Trust Fund for inventory purposes to satisfy its
obligations, first to the creditors, then to the plan holders.
SEC opposed the inclusion of the Trust Fund arguing that its main purpose is to
guarantee the delivery of benefits to the planholders and not for payment of creditors
of LEGACY.
Despite the opposition, the RTC ordered the Assignee to take possession of the Trust
Fund declaring it as a corporate asset and furthere ordered its distribution to the
creditors of LEGACY.
Hence, this petition.

Issue:
W/N the RTC is correct in ruling that Trust Fund of pre-need providers such as LEGACY
is a part of corporate asset and therefore may be used to satisfy its obligations to its
creditors.

Ruling:
NO, the RTC is incorrect.
The Supreme Court ruled that examining the legislative intent behind the setting up
of a Trust Fund will clearly show that underlying congressional intent is to make the
plan holders the exclusive beneficiaries.
This legislative intent is first established in the provision of the Securities Regulations
Code (SRC) which mandates that establishing trust funds is the protection of the
interest of the plan holders in the investment plans. The SRC expressly stated the
State’s intent to make such interests paramount above all else.
This will by the legislature was fortified with the enactment of R.A. No. 9829 or the
Pre-Need Code in 2009. The Congress, because of the many challenges faced by the
industry at the time, considered it necessary to provide a stronger legal framework to
resolve any vagueness in the mandate and delegated authority of the SEC under the
SRC. The Pre-Need Code cemented the regulatory framework governing the pre-need
industry with precise specifics to ensure that the rights of the pre-need plan holders
would be categorically defined and protected.
The SC stated: “The Court cannot go against that legislative intent for it is the duty of
this institution to read what the law intends. It is a cardinal rule that, in seeking the
meaning of the law, the first concern of the judge should be to discover in its provisions
the intent of the lawmaker. Unquestionably, the law should never be interpreted in
such a way as to cause injustice as this is never within the legislative intent. An
indispensable part of that intent, in fact, for we presume the good motives of the
legislature, is to render justice.”
Hence, the SC granted the Petition of the SEC and declaring the RTC Decision treating
the Trust Fund as corporate asset NULL AND VOID. The SC further directed the SEC
to process the claims of legitimate plan holders as soon as possible.