IC places CAP Pension under conservatorship

MANILA, Philippines — The Insurance Commission (IC) will now proceed with the conservatorship of Comprehensive Annuity Plans and Pension (CAP Pension) after the Supreme Court (SC) ruled against its sale by its troubled parent firm seeking funds for rehabilitation.

In a 30-page decision of the SC Third Division dated Sept. 9, 2020 which the IC said it received only in the last week of May the High Court affirmed the regulator’s move to stop College Assurance Plans Philippines Inc. (CAPPI) from including CAP Pension in its court-supervised corporate rehabilitation proceedings.

The decision, penned by Associate Justice Marvic Leonen, said that while CAPPI owns 86 percent of CAP Pension’s stock, the latter remains to be a firm with “separate and distinct personality” and is “not a mere asset of the parent corporation.”

The SC also maintained that CAP Pension may own properties and incur liabilities independently and, as a subsidiary, “is not liable for the obligations of respondent parent corporation.”

“With this ruling of the Honorable Supreme Court, the IC can proudly state that it was able to protect the rights and interests of the planholders of CAP Pension, consistent with our mandate under the Pre-Need Code of the Philippines,” said Insurance Commissioner Dennis Funa in a statement yesterday.

“The Insurance Commission will now proceed with the conservatorship of the company.”

Funa said IC will first examine the financial condition of CAP Pension to see what assets of the company remain. Afterwards, a conservator who will recommend the direction for the company will be appointed.

In the same decision, the SC overturned the 2006 resolution of the Rehabilitation Court ordering the sale and disposition of CAPPI’s “subsidiaries and affiliates.”

It clarified that the resolution should be interpreted to mean that CAPPI is directed to dispose of its equities or stockholdings in CAP Pension.

The High Court also distinguished CAP Pension’s conservatorship proceedings from CAPPI’s rehabilitation proceedings. As such, it affirmed IC’s authority over CAP Pension under the Pre-Need Code of the Philippines.

“IC, as the primary agency governing pre-need companies, should not be restrained from fulfilling its mandate.”

IC said CAPPI’s downfall in the beginning in early 2000 emanated from “questionable real estate investments” that exceeded the limitations then set by the Securities and Exchange Commission (SEC).

In the 1980s and 1990s CAPPI was considered a pioneer in the pre-need industry and was known for its educational plan that guaranteed payment of college tuition fees.

CAP Pension, on the other hand, was known for its pension plans that provided benefits upon plan maturity.