Wednesday, April 20, 2005

Is government for us or against us?

Read appears as though the odds are against us in our case against Pacific Plans.

Horses for Pacific courses
by Victor Agustin

THE SECURITIES and Exchange Commission has feigned surprise at the rehabilitation case filed by Pacific Plans Inc., the country's first pre-need company.

Strange stance, since the SEC in August approved Pacific Plans' corporate restructuring application that effectively transformed it into a special purpose vehicle left holding all the problematic pre-need investments.

Parallel to the divestment, the Yuchengcos, led by chairperson and president Helen Y. Dee, resigned en masse from the Pacific Plans board, but not before transferring the safe pre-need products, those offering fixed benefits, into a new company, Lifetime Plans.

The Yuchengcos brought along with them about 400,000 pre-need plans into Lifetime Plans, leaving Pacific Plans with 34,000 open-ended, traditional education plans (those that promise to pay school fees in whatever amount come plan maturity), a ticking time bomb.

Left to clean up the mess and hopefully resuscitate the 38-year-old company is the new president, Ernesto Garcia, who used to be the chief operating officer of the Cojuangco-era, billion-dollar-loser Pilipino Telephone Corp.

After the transfer, Pacific Plans issued a press release saying it had established a subsidiary, Lifetime Plans, but the new Lifetime Plans website does not even mention what arguably is its parent company among the listed affiliates.

The Yuchengcos apparently saw the handwriting on the wall as early as 1992, when Pacific Plans stopped selling the traditional plans amid the newly deregulated tuition regime.

Thirteen years later, and despite the combined brainpowers of Yuchengco board nominees Cesar Virata, Roberto de Ocampo, Rizalino Navarro, Gabriel Singson, Carlos Dominguez, Corazon de la Paz, and Gloria Tan Climaco, the Yuchengcos finally threw in the towel.

In its petition for rehabilitation filed before Makati Regional Trial Court Judge Romeo Barza, Pacific Plans blamed the massive devaluation of the peso that "resulted in a poor business climate, further compromising a pre-need company's ability to meet its obligations."

A few paragraphs later, Pacific Plans, whose main liquid assets are the US dollar-denominated National Power Corp. (Napocor) bonds, pointed to the now resurgent peso in asking the plan holders to all take involuntary haircuts.

By way of consolation, Pacific Plans says it can provide, depending on which school, P7,000 to P35,000 in tuition support up to the just-concluded semester. But starting next school year, the parents and plan holders are on their own.

If the court approves the rehabilitation plan, each plan holder will receive a certificate entitling him to a payment refund, plus 7-percent interest, come 2010, when the Napocor bonds shall mature.

To save the company, Pacific Plans is looking for investors that would pump in P300 million in working capital. The Yuchengcos, on the other hand, jumpstarted Lifetime Plans with only P200 million to acquire Pacific Plans' good assets.

To prevent dissipation of assets, the Makati RTC in the meantime prohibited Pacific Plans from "selling, encumbering, transferring, or disposing" any properties while the rehabilitation case is being heard.

Hmmm. What is that English idiom again, shutting the stable door after the horse has bolted?


At Wednesday, April 20, 2005 10:10:00 PM, Anonymous Anonymous said...

We can only create an impact if we hold hands and work closely to face the enemy: Yuchengco.

Unlike CAP, that was transparent in what happened, with key officers facing the media, Yuchengco acts like a thief in the night surprising planholders with the shocking news that it's all over. Authorizing only a spokesperson to face the media. Where does it put us planholders in the scheme of things when no one except their "best" PR people ( as their customer service put it) are tasked to face us.

Are the Yuchencos fearful of facing our wrathful presence?

Where are the senior officers who are paid so well from the sales of plans? Why are they not talking to us?

They should have the decency to talk to us. No one among their key officers takes the initiative to meet with us. WHY?

WE should work together. Stand together.

For our children.

At Wednesday, April 20, 2005 10:40:00 PM, Anonymous Anonymous said...

This comment has been removed by a blog administrator.

At Wednesday, April 20, 2005 10:48:00 PM, Anonymous Anonymous said...

The Yuchengcos are of course trying to get away with murder, with the blessing of the surprised SEC. We should not condone what is wrong. For many Chinese who used to say about the Yuchengcos "bwe toh lang" (loose translation: will not run away with your money) don't you feel stupid now?

I did too and feeling stupid aside, we now know the true colors of the Yuchengcos. Hit them where it counts: Do not patronize or start lessening your business's exposure to other Yuchengco companies specially RCBC, Malayan, Lifetime, Tokio Marine, etc.

This isn't just anger talking, it's prudent business as the conventional wisdom in Chinatown is the Yuchengcos empire will be a fraction of what they were in 5-6 years because of their incompetency (e.g. RCBC Plaza). Furthermore, if they were so walanghiya in this instance and they were not willing to save their once pristine reputation, what can we expect in the future now that they have no reputation to uphold anymore?

At Wednesday, April 20, 2005 11:40:00 PM, Anonymous marc said...

1) My beef is that there seems to be some clever machinations on the part of Pacific Plans to impose their solution on us, without consulting us at all, without wanting us to be a part of the solution. I suppose that is a tall order, to expect that we would have been consulted at all, but anyway, that would have been the fair thing to do.
a. I don’t know if there’s actually a Lifetime Plans which absorbed all of the fixed-benefit plans of Pacific Plans, leaving all the traditional plans with the original company. If this is true, this is truly despicable and is completely in bad faith! If true, we have to check how the assets and liabilities have been allocated between the two companies before we can accept statements that there is only so much money for traditional plan tuition payments. Personally, I would tend to believe that the liabilities are under-funded and that therefore, the statement that there’s not much actual assets to pay for claims is likely true. My question here is this: how long has this been true? How much of the “splitting of accounts” between Lifetime Plans and Pacific plans contribute, if ever, to this problem?
b. The timing of the rehabilitation announcement is truly suspect, coming at a time when we need cash desperately to pay for our children’s tuition, making us vulnerable to accepting potentially substandard and unilaterally decided remedial plans that are being imposed on us. We have to note that Pacific Plans bound themselves freely to these traditional plans when they initially sold them, so they can’t just walk away from their commitments so easily by putting us on the spot and jamming palliatives down our throats. Nor can they simply say we have to accept their forced offer because there are not enough assets anymore to pay for the liabilities, when the issue of what happened to the assets, of whether some have been squirreled or tunneled away for the fixed-benefit plans, is still to be determined.
2) The problem of Pacific Plans does not have anything to do with RCBC, which is a separate juridical entity. It might have something to do with common owners, which will have to be proven, if ever, but clearly RCBC as a corporation is a separate issue. Let’s not create new problems in an attempt to “punish” owners by trying to induce a bank run in RCBC… it does not serve any useful purpose and in the end, it creates only further systemic risk and instability to the banking sector and therefore, to the Philippine economy.
a. Legally, we have to take a look at the Board of Directors & Management of Pacific Plans for direct accountability in this problem. If would be fair to run after the owners and the upstream companies only if the corporate veil is pierced, and a lawyer would have to be consulted as to when this sort of thing does happen.
b. If it can be proven that funds have been diverted away from Pacific Plans, that it’s just a shell company, this might constitute enough grounds to pierce the corporate veil and we can run after particular owners, directors, and officers of Pacific Plans and the companies to which funds were diverted to, if ever.
c. The message is clear: consumers like us will have to evaluate corporations both individually and in aggregate from within a conglomerate. It is certainly no assurance that a company will be saved by its upstream companies simply because it is part of the group. The lesson is crystal clear: companies will be allowed to fail and consumers will be allowed to have their stakes impaired. This has repercussions for us who patronize these companies, and we have to devise ways to weed out the good companies from the poor.
3) The more problematic issue for me is to come up with a workable optimal solution. Regardless, let’s not accept the premise being imposed on us! They cannot cherry pick which assets will be left to pay for the traditional educational plans, that suddenly all that’s left are bonds that mature in 2010. We have to take a look at all assets that were acquired ever since their liabilities were incurred, so we have to go back to 1990 and up. What happened to these assets and where did they go?
a. The trust fund should also be securitized or something, so that people who wish to liquidate their positions now can get some cash, albeit at a discount, or will be able to borrow money on the strength of their equity in the trust fund. This should mitigate the cash problems without having to liquidate the entire underlying assets, at a loss, as claimed by some quarters.
b. We have to look at how the conversion is being done, how the computations were arrived at, and what assumptions were used to convert all the educational plans to fixed-value benefits. Of course, the fact remains that they have reneged on their contractual obligations, and the burden is on them to satisfy our rightful claim; let’s not get carried away by this conversion exercise. Thus, if Pacific Plans resorted to fraudulent means to avoid paying our rightful claims, then we may have a right go after personal property of the owners to satisfy our claims.
4) Finally, I hope we can steer away from making ad hominem remarks. Let's not call people names and unduly besmirch reputations... people, let's not get mad, let's get even... let's get what was promised us; let's stay focused, get all the help we can get, enlist the support of our senators and congressmen, and our media friends, whoever can help us.
God help us all in this sorry mess!

At Thursday, April 21, 2005 12:09:00 AM, Anonymous WMB said...

Thank you Marc for your sober, perceptive, well written and rational thoughts on the issue.
I fully agree with you. There is no point in dragging other entities that will exacerbate the situation. Let us not have any more innocent victims.

Sobrierity leads to clear thinking and judicious action.

At Thursday, April 21, 2005 1:04:00 AM, Blogger Laong Laan said...

Welcome to the Lifetime Plans Website

LIFETIME PLANS, INC. is a new key player in the pre-need industry. Incorporated on August 12, 2004, with equity of P200 million, assets of P17 billion, a base of over 400,000 education, pension, and memorial plans, Lifetime Plans is already a major force in the industry. And with the full backing of the Yuchengco Group of Companies (YGC), Lifetime Plans is in the best position to service the needs of the Filipino.

Now isn't this the highest form of hypocrisy? Check out the Lifetime Plans website

At Thursday, April 21, 2005 1:05:00 AM, Blogger Laong Laan said...

Corporate Governance

Lifetime Plans, Inc. recognizes its role as a corporate citizen and subscribes to the principles and guided practices as prescribed by the Securities and Exchange Commission. The Company commits to institutionalize the principles of good corporate governance. Therefore, such principles provide the backbone for all of Lifetime Plans' processes that are focused on attaining its own corporate goals.

More hypocrisy!

At Thursday, April 21, 2005 3:16:00 AM, Anonymous Anonymous said...

This is the worst of all hypocrisies!

From the Pacific Plan Inc. website ---


We consistently provide excellent products and services that are benchmarked in the industry.

We constantly develop and enhance our professional and empowered people who are among the best in their respective fields.

We continously strive towards optimum returns for all our stakeholders.


We see Pacific Plans as the premier pre-need company in the Philippines with sustained leadership in:

Product Innovation and affordability

Quality service and customer satisfaction
Market share and profitability

Core Values

In our belief and actions, as part of the Grepalife Group of Companies, we hold in high regard:

Service Vocation

- We are bound to our customers by our commitment to serve
- We find satisfaction in serving
others through selfless caring
- This enables us to serve beyond customer expectations.

- We take pride in being a Pacifican. We act fairly, objectively and to the best interest of everyone
- We do our best at all times and in all places

- We adhere to the highest standards of ethics in our work and in our relationships

- We believe in the power to create new ideas that leads us to quality, efficiency and poductivity

- This spurs in us the passion for growth and achievement

- We always strive to be better
than the best we can be

- The pillar of our success is mutual respect, trust in our relationships and synergy as we work towards a common goal

At Thursday, April 21, 2005 11:34:00 AM, Anonymous Anonymous said...

What is our guarantee that by 2010 the bonds are still owned by Pacific Plans'?

What is our guarantee that the bonds will be worth anything by 2010?

What if the bonds, if at all it will be worth anything by then, will be subjected to another kind of manipulation and machination as what they did with their other assets having been transferred to Lifetime Plans?

Where will it leave us?

The Yuchengco family is blessed with so much financial graces for even beyond the most luxurious lifestyle possible for any hmuan being on earth. Compare such resources to ours planholders who have to save up for the education of our children- for even the premiums we have to pay Pacific, otherwise the plan is forfeited. We always had to be on our toes to ensure that the premiums are paid on time so that the plan doesn't lapse.

Haven't the owners/ officers of Pacific Plans think of that.


At Thursday, April 21, 2005 11:45:00 AM, Anonymous Tickle said...

It seems that Lifetime Plans is a subsidiary of PPI.

If PPI is under receivership, then the creditors of PPI should get first claim over its assets, which include Lifetime. I would look to the SEC records and pull out a General Information Sheet (GIS) for Lifetime and see how much of Lifetime is owned by PPI. If it is wholly owned, the planholders can clearly make a claim against the assets of PPI, including the Lifetime Plan shares.

If on the other hand, PPI is not listed as a shareholder, or as a minority shareholder, I would question the deal in which the fixed value plans were transferred. They have to be transparent about how much PPI got for giving up those fixed value plans.

At Thursday, April 21, 2005 2:43:00 PM, Anonymous Anonymous said...

Marc or anyone else, maybe you can help answer this. I've been hearing that they did their work so well there are no legal loopholes. My question is, how could it have been so easy for a firm to divert its good assets and liabilities and leave the bad ones? That leaves the field open for their insurance companies like Grepalife and Malayan to move their good (read: e.g. planholders 40 yrs and below) life, memorial, or pension plans and leave the bad (read: 70yrs and above who will be dying and claiming soon) plans in a shell company with no assets. What would stop RCBC from moving their good loans and low interest liabilities into another bank and leave the non-performing loans and high-yielding products? I believe there is a sound, rational reason to stay away from any Yuchengco company, as they have shown the ability to forsake family name, reputation, ethics, and common human decency in the name of profits.

At Thursday, April 21, 2005 5:17:00 PM, Anonymous Anonymous said...

dear honorable ambassador yuchengco :

i humbly submit our proposal for a win-win situation wherein you will can also end up a hero for all pacific loyal planholders :

1. pay all availing planholders the balance of the tuition support due us for this year and the succeeding years based on today's tuition fee
2. pay all non-availing plan holders the full tuition support based on the amount that is due them as if they will be availing them this year
3. if you say there is not sufficient money, give us the full payment dated year 2010. for example, for exclusive A, high school, total will be around P400K
4. allow us to now go to rcbc and have the checks discounted

this way, plan holders can use this money to both pay for this year tuition and invest the balance in whatever means they want for the future of their children's education. maybe they will even use this money to buy lifetime. maybe they can use this money to invest back to pep to ensure its survival. maybe with this, they and their children and their children's children will honor your good name.

this is your last chance !

At Friday, April 22, 2005 8:53:00 AM, Anonymous FEDUP said...


At Friday, April 22, 2005 10:17:00 AM, Anonymous Anonymous said...

Dear hononorable amb yuchengco:

Thank you considering the proposal to pay ALL pep availing and nonavailing traditional planholders with checks dated 2010 which can be rediscounted at rcbc.

Thank you also for acting immediately by calling a meeting on april 23, Saturday at the same time as the meeting of planholders at st pauls pasig. has the details of the win-win proposal if you want to hear it.

At Friday, April 22, 2005 11:52:00 AM, Anonymous May said...

To the writer above,

The meeting on Saturday was not called by mr. yuchengco. The meeting is organized by the PEP (Planholders Eager for Payment) Coalition. It is a meeting called by us ( that includes you and me) for us to band together to achieve a peaceful resolution to this problem.

Why are you thanking them for paying you in 2010? Oh, maybe you are not yet availing now or your availment will still be sometime in 2010. You, maybe have no high school or college availing scholars. Maybe your kids are just in nursery now or maybe just toddlers. Or, maybe you don't understand what the situation is.

Whatever you reasons are, I respect them. I'm just wondering at the wisdom of your thanking him for the release of your benefits in 2010.? You were robbed and you thank the thief? By that time many children, who are pacific plan scholars, would be way past the age to get a college degree.

Please get your information right, and, maybe, thank the right people, like WMB. She's the one to thank for her selfless effort in putting these together and bringing us together.

At Friday, April 22, 2005 2:16:00 PM, Anonymous Anonymous said...

to may - my info came from a pep agent albeit unconfirmed. but i wonder why a meeting on the same day and time as the original meeting ? in anycase, do accept my apologies if i am wrong. but if i am wrong, why dont we have the 2 meetings combined instead ?

At Friday, April 22, 2005 3:15:00 PM, Anonymous Anonymous said...

May, I think the writer above you was being sarcastic when he/she "thanked" the yuchengcos. Note that he thanked them for calling another meeting at the same time as the meeting at st. paul's. I read that Pacific is holding a planholder orientation at the same time to pull people away from St. Paul's. By saying that you also organized that second meeting, I believe you confused the writer after you who suggested putting the 2 meetings together. Please let everyone know that the bonafide meeting is the one in St. Paul's. The other one is a ruse of Pacific to reduce our numbers.

At Friday, April 22, 2005 3:24:00 PM, Anonymous marc said...

Hi, Anonymous! Let me copy-paste your comment for my reply... (Marc or anyone else, maybe you can help answer this. I've been hearing that they did their work so well there are no legal loopholes. My question is, how could it have been so easy for a firm to divert its good assets and liabilities and leave the bad ones? )

I'm sorry, I'm not a lawyer, so I can't answer your question on legal terms. But your fear is my fear too, that they schemed so well with nary a legal loophole, and their strategy was simply brilliant... In fact, nobody got alerted when they moved everything to Lifetime Plans and left only the liabilities too toxic for them to handle in PPI. Now, they can and will say that they had full disclosure at that time so they should not be blamed.

My sense is that splitting the liabilities between Lifetime Plans and PPI is a non-issue and it is well within their rights to do so. Morally though, it is highly unethical for them to cherry pick the assets between Lifetime Plans and PPI. This is the weak spot we have to exploit... The local actuaries (fellows) have high ethical standards, and if the Actuarial Reserve Liabilities (ARL)are signed by an actuary and fellow of good standing within the ASP, I will accept the division of ARLs. So it's the assets side which we we should concentrate on... how these assets have been divided, the quality of the assets, and the risk/return profiles. Here, I'm not sure who decided the division, but whoever they were, I hope they uphold high professional standards in the practice of finance, investments and asset management.

I'll post some more of my thought in a while, let me just read through some of the other posts and collect my thoughts.

At Friday, April 22, 2005 11:12:00 PM, Anonymous TLS said...

I'd like to comment on the statement here that no one got alarmed over the restructuring done by the Yuchengcos last year when they established Lifetime Plans. I beg to disagree. People were alarmed, not just in the numbers that would merit enough media exposure. It was obvious early on that they chose to separate their traditional plans and leave them in Pacific as they wanted to isolate that "business" just in case things went bust. People in the know were already alarmed that this restructuring had only two paths, one good, one bad. But the reason why people did not make a fuss about it is because people were banking (pun intended) on the YGC group NOT to abandon Pacific if in fact it would meet any difficulties. What people saw was the "Marketing move" to ensure continuing sales at Lifetime even if Pacific were to meet any difficulties. What people did NOT expect was for the Yuchengcos to make this "pre-emptive strike" and "kill" Pacific Plans even while it had NO financial difficulties. Note that it is, of course, a fact that with unregulated tuition fees and a limit to the cost model of pre-need plans, it is really a losing proposition. BUT THE POINT IS, THAT DOES NOT GIVE THE YUCHENGCOS A LEGAL RIGHT TO BREAK CONTRACTUAL OBLIGATIONS. THEY WOULD HAVE NEEDED TO CONTINUOUSLY SUPPORT THE SERVICING OF TRADITIONAL PLANS WITH THEIR OTHER PRE-NEED PRODUCTS OR POSSIBLY EVEN CONTINUOUSLY INFUSE NEW CAPITAL INTO PPI TO FUND IT. AND ISN'T THAT SUPPOSED TO BE A REALITY THAT THEY HAVE TO LIVE WITH AND ACCEPT, IF THEY TRULY HAD THE PLANHOLDERS' INTERESTS IN MIND? BUT OBVIOUSLY, THEY MADE A BUSINESS DECISION IN FAVOR OF SELFISH INTERESTS AND CHOSE TO "KILL IT NOW".
Now, what I want to know is why the SEC allowed them to put up Lifetime when, in fact, the direction is not to create more pre-need companies but to consolidate them to strengthen the industry. If what you're after is a stronger entity, why allow the split-up (if at all that is legal or in line with principles of the Trust business) of the assets and liabilities when this automatically reduces margins needed to cover operating expenses. That's not even speaking of the utter lunacy of allowing a pre-need company to practically strip off all of its profitable products and transfer these to another company, knowing fullwell that it has contractual obligations to meet. TLS

At Sunday, April 24, 2005 9:27:00 PM, Anonymous Anonymous said...

sec caught by surprise? hindi na ito bago? lagi naman ganyan. ang mahihirap na masa ay lagi at the mercy of those in power and ang government natin ay ala naman ginagawa. ang govt natin talaga ang dapat sisihin kasi nga hindi nila pinangangalagaan ang mga karapatan ng bawat pilipino mahihirap.kelan kya tayo magkaron ng oficcial na talagang my malasakit sa kanyang mamamayan? Naghirap na nga tayo na mabayaran ng buo ang ating mga commitments sa pacific plans tapos bigla nalang na ganyang ang gagawin? ung iyong hangarin na makatapos ng college ang anak mo ay bigla nalang nila wawasakin tapos ala naman din ginagawa ang ating gobyerno? ngayon na tayo na mga magulang ang mawawalan ng pangarap may action na ba tayo na narinig na ginawa ang gobyerno? Walang protection ang mga mahihirap. Wala na ba talagang pagasa ang mahihirap?

At Tuesday, April 26, 2005 12:35:00 PM, Blogger curly said...

I watched the segment of Dong Puno Live with the pre need industry as topic (Planholders were really emotional against Pacific & Cap). I am a Pacific Educational Plan holder myself, with my eldest son being the beneficiary. As I was watching the show, all I could hear from people in government (SEC, Senators & previous government officials) were all rhethorics about what went wrong and why this two pre need companies were at fault, but the more important subjects as what can the planholders do to ensure that the companies fulfill their obligations to the planholders. This is a contract that is binding and no one is above the law and is allowed to change the conditions of a legal contract when this is still in effect and unconsumated, except when the other contracting party is given due notice and agrees to the amendments. The advise of the SEC representative is like rubbing salt into an open wound, when she advised the planholders to file a case in court. The reason these people became planholders is that they have limited cash to spend that is why they made plans to secure their children's education. This is a case of estafa. What I am driving at is that Senators and Congressmen(especially those denouncing the acts of CAP & Pacific Plans) also have a moral obligation to protect the rights of the people and act on behalf of their constituents. They have the means and the resources to go after these people who are no different from robbers but who are rich and use their influence and resources to influence industry and government policies. I hope the legislators read this comment, You all know that if the planholders are left to fight this fight we will have a very slim chance of gaining a favorable outcome. We don't have enough resources and influence to go up against the Yuchengcos, people who are greedy, callous and whose souls are without conscience. The plan holders need your support not only through words of encouragement and supoport but by taking an active part on the side of the victims, us your constituents, people who voted for you and placed you in your current position of influence. I hope and pray that this time, righteousness will prevail.

At Wednesday, April 27, 2005 10:12:00 AM, Anonymous Anonymous said...

asa ka pa sa mga congressmen and senators eh parepareho naman ang mga yan. sumasakay lang sa isyu tapos iiwanan pa rin tayo pagkatapos magamit. e si chiz escudero kelan ba naman naging pro-people yan. it's not enough na may radio program ka on legal advise. ibang laban ito at dito mo dapat masubukan ang galing nila. Yung di umaalis hanggang may laban.


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