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Aquino VS Pacific Plans

This case involves a rehabilitation plan proposed by Pacific Plans, Inc. (now APEC) for over 34,000 outstanding pre-need educational plans after it became unable to meet its obligations. The rehabilitation plan included a "swap" allowing planholders to exit their plans under more advantageous terms. The rehabilitation receiver later submitted a modified plan due to currency fluctuations. The court upheld the rehabilitation court's power to approve such a plan over creditor opposition, as given under the Financial Rehabilitation and Insolvency Act, if rehabilitation is feasible and opposition is unreasonable. The court may also confirm a plan without creditor approval if it meets certain requirements.

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Benedict Alvarez
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99 views2 pages

Aquino VS Pacific Plans

This case involves a rehabilitation plan proposed by Pacific Plans, Inc. (now APEC) for over 34,000 outstanding pre-need educational plans after it became unable to meet its obligations. The rehabilitation plan included a "swap" allowing planholders to exit their plans under more advantageous terms. The rehabilitation receiver later submitted a modified plan due to currency fluctuations. The court upheld the rehabilitation court's power to approve such a plan over creditor opposition, as given under the Financial Rehabilitation and Insolvency Act, if rehabilitation is feasible and opposition is unreasonable. The court may also confirm a plan without creditor approval if it meets certain requirements.

Uploaded by

Benedict Alvarez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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3. MARILYN VICTORIO-AQUINO vs. PACIFIC PLANS, INC.

2014 (FRIA)

FACTS:

Respondent Pacific Plans, Inc. (now “APEC”) is engaged in the business of selling pre-need
plans and educational plans, including traditional open-ended educational plans (PEPTrads).
PEPTrads are educational plans where respondent guarantees to pay the planholder, without
regard to the actual cost at the time of enrolment, the full amount of tuition and other school fees
of a designated beneficiary.

Petitioner is a holder of two (2) units of respondent’s PEPTrads.

On April 7, 2005, foreseeing the impossibility of meeting its obligations to the availing
planholders as they fall due, respondent filed a Petition for Corporate Rehabilitation with the
Regional Trial Court, praying that it be placed under rehabilitation and suspension of payments. At
the time of filing of the Petition for Corporate Rehabilitation, respondent had more or less 34,000
outstanding PEPTrads.

On April 12, 2005, the Rehabilitation Court issued a Stay Order, directing the suspension
of payments of the obligations of respondent and ordering all creditors and interested parties to
file their comments/oppositions, respectively, to the Petition for Corporate Rehabilitation. The
same Order also appointed respondent Marcelo as the rehabilitation receiver.

Pursuant to the prevailing rules on corporate rehabilitation, respondent submitted to the


Rehabilitation Court its proposed rehabilitation plan. Under the terms thereof, respondent
proposed the implementation of a “Swap,” which will essentially give the planholder a means to
exit from the PEPTrads at terms and conditions relative to a termination value that is more
advantageous than those provided under the educational plan in case of voluntary termination.

The rehabilitation receiver submitted an Alternative Rehabilitation Plan and was


approved by the Court. However due to the fact that the value of the Philippine Peso strengthened
and appreciated, the rehabilitation receiver submitted a Modified Rehabilitation Plan.

ISSUE:

Whether or not the Rehabilitation Court has the authority to sanction a rehabilitation
plan, or the modification thereof, even when the essential feature of the plan involves forcing
creditors to reduce their claims against respondent.

HELD:

YES. The Court upheld the “cram-down” power of the Rehabilitation Court pursuant to
Sec. 23 of FRIA which states that the court may approve a rehabilitation plan over the opposition
of creditors, holding a majority of the total liabilities of the debtor if, in its judgment, the
rehabilitation of the debtor is feasible and the opposition of the creditors is manifestly
unreasonable.

Moreover, notwithstanding the rejection of the Rehabilitation Plan by the creditors, the
court may confirm the Rehabilitation Plan if all of the following circumstances are present:

1. The Rehabilitation Plan complies with the requirements specified in this Act;
2. The rehabilitation receiver recommends the confirmation of the Rehabilitation Plan;
3. The shareholders, owners or partners of the juridical debtor lose at least their controlling
interest as a result of the Rehabilitation Plan; and
4. The Rehabilitation Plan would likely provide the objecting class of creditors with
compensation which has a net present value greater than that which they would have
received if the debtor were under liquidation.

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