Our Latest Victory in the Courts

Tuesday, September 04, 2007

Pacific Plan holders chalk up win in CA

by Jomar Canlas, manilatimes.net, Sept. 4, 2007THE Court of Appeals has overturned a lower court ruling that denied a group of Pacific Plan policy holders a say in rehabilitating the company. In a decision penned by Associate Justice Japar Dimaampao and promulgated on August 28, the Court of Appeals’ 5th Division ordered the Makati Regional Trial Court to let the plan holders led by the PEP (Parents Enabling Parents) Coalition present evidence in the case involving the rehabilitation of Pacific Plan Inc. The judge hearing the case, Romeo Barza, had said the PEP Coalition could not oppose the rehabilitation of Pacific Plans. The CA rebuked the judge, saying he should consider the hard-earned money the plan holders had raised for their children’s education. The appellate court dismissed the accusation of Pacific Plans that PEP and the Piezas Group (Celine Piezas, Pura Angela Manalo, Mercedes Guerrero and Jose Mari Gamboa) went forum shopping with other tribunals. In an October 10, 2006 decision, Justice Dimaampao had already said the Makati court erred in not receiving evidence, which would deprive the plan holders of their rights. With the new CA ruling, the Makati court is compelled to accept evidence. Dimaampao said the Makati court should have considered the findings of the Securities and Exchange Commission (SEC) which has the expertise to tell whether Pacific Plans was liquid or not. The SEC said the corporation was liquid enough and did not need rehabilitation. The court ruled that Pacific Plans was liquid and would be able to pay its plan holders until 2014. It said its trust fund exceeds its projected benefits by P1,209,062,409.26 which does not even include interest. In a related development, the Bangko Sentral ng Pilipinas said it would penalize the Yuchengco-controlled Rizal Commercial Banking Corp. (RCBC) for “lack of prudence” in managing the Pacific Plans trust funds. In Resolution No. 574 dated May 17, 2007, the Monetary Board—the policy-making body of the central bank also warned RCBC and the RCBC-Trust and Investment Division and said that committing “similar acts on lack of prudence” in managing trust funds required under Section X401 of the manual of regulations for banks would mean stiffer sanctions. Under Part 4 of the manual of regulations for banks, violation committed by banks on any provision of the section pertaining to trust, other fiduciary business and investment management activities, would entail a fine of up to P10,000 a day from the day the violation was committed. The PEP Coalition said its members felt vindicated by the Monetary Board resolution. “The BSP findings and resulting Monetary Board resolution confirmed our charges on the collusion among RCBC, PPI and the Yuchengcos,” PEP said in a statement. On Aug. 26, 2005, PEP filed with the BSP a complaint against RCBC on the grounds that the bank violated Section 80 of the General Banking Act of 2000 and claimed that RCBC did not have adequate safeguard or compliance with interlocking relationship between trustee and trustor. The group also complained about the “dismal performance” of RCBC Trust as a fiduciary and allegedly the trust funds were “heavily invested in losing stocks.” The group accused RCBC of investing in corporations because these were wholly or partly owned by the Yuchengco Group of Companies. Included in the complaint are allegations that RCBC lent the trust funds to “unnamed borrowers” like Uniwide and purchase zero-coupon US dollar-denominated bonds issued by the National Power Corp. (Napocor). RCBC said it “welcomed” the BSP resolution. However, it maintains that the central bank did not say that the trust fund was not mismanaged. “While we differ with the findings of the BSP, we emphasize that the BSP has not made any findings of “mismanagement” by RCBC Trust. In particular, there were no findings of mismanagement with respect to any allegations in the complaint of PEPCI,” the bank said in a statement. --with Likha Cuevas-Miel