Sunday, May 15, 2005

Reviewer 6 - Recusal

INQ7 Article - 2002

FIRM-SPOTTING - Hyperlinks

INQ7 Sept. 2002 Article on Villaraza and Angangco

Manila Times Online Oct. 2004 Article on Candidacy of Atty. Romeo Barza for Court of Appeals

(Other former partners in government establishments) University of the Philippines web site


RECUSAL definition – a recusal is where a judge disqualifies or withdraws from a case where his or her impartiality might be questioned.


excerpt below is taken from Commonwealth of Virginia Judicial Ethics Advisory Committee Opinion 01-8 issued 16 July 2001

"The judge must also consider

"the public's perception of his or her fairness, so that the public's confidence in the integrity of the judicial system is maintained."
Buchanan v. Buchanan, 14 Va. App. 53, 55 (1992)."


ed. It is for the lawyers reading this weblog
to confirm that the Philippine judicial system looks to the US judicial system as a model for best practices.


At Sunday, May 15, 2005 2:45:00 PM, Anonymous Anonymous said...

The Philippine Star is really pro-YGC. Read the Sunday Lifestyle section and you'll know why. All praises for the old man, i.e. what he has done in the past. Prominent figures like FVR, Bobby de Ocampo, etc. also came to the defense of the tycoon.

I don't think this writer, Wilson Lee Flores, do not really know the facts about what happened to PPI, how the YGC did all the maneuvering.

After reading the article, let us bombard him with comments at or

At Sunday, May 15, 2005 4:52:00 PM, Anonymous Anonymous said...

Time to Organize to Defend your Rights.

For everyone reading this -if you are a parent, time to contact others like yourself who are affected. This is for your children - it does not help sitting around and simply talking about it. Yuchengco is certainly doing a lot more than talking!

1. Text/email those affected in your school and/or in your office.

2. Get them (and yourself) to
join no2pep2010 at Yahoo Groups so you can get info on future activities

3. Choose a coordinator(s) to constantly monitor this blogspot

4. Ask the Registrar's office in your school for a list of those

5. If they wont give it to you for whatever reason, make a letter asking people to contact you via text/email etc. to join up and ask the Registrar to send it for you.

6. Ask the school for permission to set up a small registration table on Opening Day of classes to get people to register.

7. Once you have a email group started, put a message out on the no2pep2010 and let everyone know what school you represent so others can join or put you in touch with the Coalition team.

8. It may be tough to start but always ask yourself this question -Will you allow a stranger to enter your house and take your money?

At Sunday, May 15, 2005 6:31:00 PM, Anonymous Anonymous said...

I quickly checked out the Phil Star article mentioned above and it got my blood boiling. We are cancelling our Phil Star subscription tom.

The column's heading says it all, "Bull Market, Bull Shit".

At Sunday, May 15, 2005 8:11:00 PM, Anonymous Anonymous said...

I agree with the one who wrote that it is time to defend the rights of us, the parents, and our children.Doing nothing (except talk or complain)does NOT help. As a parent, please do something to help other parents so that Yuchengco does not succeed in depriving our kids of their right to a good education. It is not enough to just be angry. Be pro-active!

At Sunday, May 15, 2005 11:17:00 PM, Anonymous Anonymous said...

Watch Cito Beltran's "Straight Talk" at ANC tomorrow, 1p.m. He will be talking to PEP scholars and parents.

At Monday, May 16, 2005 7:33:00 AM, Anonymous Anonymous said...

Let's be fair. Though Mr. Flores did write lengthily about AMbassador Yuchengco, he did say he thought we PEP plan holders should be paid. He interjected that opinion twice. I didn't even bother to read the opinions of FVR and the rest. But Mr. FLores did side with us personally.

At Monday, May 16, 2005 8:23:00 AM, Anonymous Gerry said...

We cannot alienate newspapers and their columnists by our emotional outbursts, claiming this and that newspaper is favoring YGC. I think that is unfair because some columnists (philstar) have taken our cause and have wrote about them. Lets not be overly emotional. We shouldnt get mad, we SHOULD get even.

At Monday, May 16, 2005 9:09:00 AM, Anonymous Anonymous said...

.... having talked about getting even... means texting or/and emailing your friends affected to:

1. pull out business from Yuchengco

2. telling your suppliers not to have you deal thru RCBC

3. organizing your school and/or office to help the Coalition

At Monday, May 16, 2005 9:30:00 AM, Anonymous Anonymous said...

If you think thats bad, you should see all the publicity (paid) to get himself(Al Yuchengco) on the front page of the Malaya or Manila Times plus coverage in all the other newspapers when he donated that measly P250M.

It was more of a publicity stunt more than anything else. Plastic Man all around..

At Monday, May 16, 2005 9:42:00 AM, Anonymous Anonymous said...

... that measly P250M...
you really mean MEASLY!
That's a lot of money,
it will surely help a lot
to send our children to school.
By your standard, that is measly,
but for me- it means HELP...
coz my plan is non-ex, it means
we,re gaining ground little by little.

At Monday, May 16, 2005 9:56:00 AM, Anonymous Anonymous said...

boycott not only ygc group of companies. but shouldnot we also boycott media companies who do not present fairly both issues ? this should hurt them more if boycott is applied not only on subscription but also on ads placement. what do you think pep coalition leaders ? just give us the directive

At Monday, May 16, 2005 10:30:00 AM, Anonymous Anonymous said...

While it is true we are all fighting for our children's education, I for one, am looking at this fight from a much broader pespective. I am fighting for decency in business. I am fighting so that companies will honor their commitments. If big businesses are allowed to get away with reneging on their commitments, who will trust us? Who will want to do business in the Philippines or deal with Filipino companies? What legacy will we then leave our children? What message are we sending to them? ... that not honoring one's obligation in a contract is an acceptable business practice?

At Monday, May 16, 2005 10:37:00 AM, Anonymous slt said...

This story was taken from

In spin-off bid, PPI did not inform SEC of cash problems
Posted 04:30am (Mla time) May 15, 2005
By Alcuin Papa
Inquirer News Service

(First of three parts)

THE SECURITIES and Exchange Commission is set to intervene in the rehabilitation hearings of Pacific Plans Inc. at the Makati Regional Trial Court and has prepared an initial comment saying the pre-need firm did not disclose its liquidity problems when it went to the SEC last year for approval of the transfer of its assets to a subsidiary, the Inquirer has learned.

On June 9, 2004, the PPI board approved the creation of a subsidiary, Lifetime Plans Inc., to "spin off" the operations of the company's pension, memorial and a portion of its educational plans businesses.

Less than two months later, on Aug. 12, 2004, the SEC approved the spin-off, after which 70 percent of PPI's assets and liabilities were transferred to Lifetime Plans in exchange for one million shares of stock of Lifetime with a total par value of P100 million.

According to SEC records, the directors of PPI and Lifetime Plans were identical: Helen Yuchengco Dee (chair), Suzanne Yuchengco Santos, Rizalino S. Navarro, Margarito B. Teves and Armando M. Medina.

On Aug. 20, 2004, the PPI board authorized the sale of Lifetime Plans to a company called GPL (Great Pacific Life) Holdings.

On Sept. 9, 2004, Exemplar Holdings was organized as a wholly owned subsidiary of GPL Holdings with an initial paid-up capital of P100,000.

Later that month, PPI would enter into a service agreement with Lifetime Plans under which the latter would operate for PPI its education plans business.

On Jan. 25, 2005, Exemplar Holdings bought into Lifetime Plans.

On the same day, GPL Assurance, which owned PPI, transferred ownership of PPI to GPL Holdings.

All of these companies are under the Yuchengco Group.

Legalizing fraud?

In its initial comment, a copy of which was obtained by the Inquirer, the SEC said the "sequence of actions undertaken by PPI prior to the filing of its petition for rehabilitation with the Regional Trial Court may serve as bases for the commission to make a determination of possible 'bad faith' on the part of PPI in using their 'applications' with the Commission as a way to legalize an otherwise fraudulent scheme to evade its obligations under its existing plan contracts."

The SEC said that when PPI came to it in June 2004 for approval of its transfer of assets to Lifetime Plans Inc., it "did not disclose that the company was in serious liquidity condition."

Neither did it inform the commission of its intention to file the petition for rehabilitation now before the courts.

The Inquirer has also learned that as early as 2000, PPI had approached the Abello Concepcion Regala and Cruz (ACCRA) law office asking the firm to evaluate a plan for rehabilitation.

At the time, a group of plan holders were asking PPI to honor plans that they had bought from the secondary market and had in fact initiated a conciliation action before the SEC, documents of the firm showed.

In its comment, the SEC said a thorough study should be made of the transfer of PPI's assets to Lifetime Plans "to determine if the same were made to prejudice its plan holders."


It also said PPI's use of high tuition rates as the reason for its liquidity problems was "an exaggeration."

It noted that tuition rate increases, based on the presentations of PPI in its petition, "[had] tapered off from the previous years to the present."

Therefore, its effects on the company's present financial condition, as PPI has claimed, were an exaggeration, the SEC comment said.

It noted that before and after the spin-off, the financial statements of PPI "did not reflect any trust fund deficiency. Nor did PPI disclose any financial problem."

"The Commission was made to believe that PPI was financially stable and capable to meet its obligations under its contracts," the SEC said in its initial comment.

ACCRA's misgivings

In the evaluation it gave PPI, ACCRA expressed its misgivings about the firm's plan to petition for rehabilitation.

In a March 9, 2000, letter to Benigno Zialcita III, PPI executive vice president and chief operating officer at the time, ACCRA said it would be hard to cite the increase of tuition rates as a reason for asking to be placed under rehabilitation.

"Even assuming that the increases in education costs were beyond your control, the fact that your business is precisely the assumption of risks will preclude the availability of this defense. Moreover, such increases were foreseeable, even expected," said the ACCRA opinion written by lawyer Teresita Herbosa.

Herbosa said the rise in the inflation rate was also not sufficient justification.

"It has been held in one case that while there has been a decline in the purchasing power of the Philippine peso, this downward fall of the currency cannot be considered 'extraordinary' but simply a universal trend that has not spared the country," Herbosa said.

Herbosa also said that the kind of contract that PPI had with plan holders fell under the theory of "contract of adhesion," meaning the contract would be interpreted against PPI as it was the one that drafted it.

Back in 2000, Herbosa had told PPI that the arguments of the claimants tended to outweigh those of the company.

"It would be difficult to refute the claimants' anticipated arguments. Worse, between individual claimants whose only interest is the education of their children, and a company which is part of a big conglomerate like you, a judge will likely find in favor of the former due to the perception that they are the underdog," she said.

Villaraza law firm

In any event, PPI did not take the advice and apparently found a more compliant counsel, which press reports had identified as the influential Villaraza and Angangco law firm.

In the first week of April, PPI went to the Makati court asking it to order a suspension of payments and approve its plan for rehabilitation, saying the deregulation of tuition rates and the unfavorable business climate had caused liquidity problems for the firm.

PPI said it would not be able to meet its tuition obligations to plan holders estimated to reach P350 million for the May to June 2005 enrollment period alone, and it did not have enough funds to pay for future obligations, either.

This expected difficulty in meeting future obligations forced it to file the petition for rehabilitation, it said.

Judge from The Firm

On April 13, Makati Judge Romeo Barza issued a stay order that effectively froze all PPI payments to its creditors, suppliers and plan holders until the company was rehabilitated, that is, restored to good health.

Barza was a founding partner of the Villaraza law firm but left in the early 1980s to put up his own practice.

PPI plan holders, organized under the Parents Enabling Parents Coalition (PEP Coalition) last Friday filed with the court its opposition to the rehabilitation plan, saying the liquidity problem of the company, the ostensible reason for the rehab petition, had been "fraudulently self-engineered and artificially contrived."

They said the assets, which should have been used to pay their claims, had been "spirited out" of the company just before it filed for rehabilitation to hide them from the claims of creditors -- the plan holders.

As the government watchdog body that oversees pre-need companies, the SEC has come in for much criticism over the troubles besetting the pre-need industry.

Industry insiders say the commission tends to be liberal in its interpretation of the rules, "even if there was already suspicion they don't do anything."

But even if an SEC examiner has strong suspicions, for instance, of padding of assets or lapses in shareholders' management of a firm's affairs, he or she is not likely to do anything "if there was pressure and influence at work," an industry source said.
A SEC official, speaking on condition of anonymity, said the commission was actually taken by surprise by PPI's going to court for suspension of payments and rehabilitation.

SEC surprised

"We were surprised. We didn't expect this. The company's officials had been dealing with us almost on a daily basis. Little did we know they had these plans," the official said.

The official said they knew there was trouble brewing at PPI, "but we saw they were doing something about it ... (that's why) we approved the reorganization and the spin-off."

SEC secretary Gerard Lukban said that from PPI's presentation, "we saw that the spin-off [of assets] was for the protection of the plan holders and it did not violate any rules. We saw that it was a fair segregation based on the ratio of contributors."

As of December 2003, according to financial statements it submitted to the SEC, PPI was in reasonable financial health. It had trust fund assets of P11.2 billion, consisting mostly of dollar-denominated government bonds maturing in 2010.

Against this was an actuarial reserve liability (ARL) of P10.2 billion.

By December 2004, after the assets transfer, PPI's trust fund assets were P3.3 billion, and ARL stood at P2.6 billion.

A pre-need firm is required to maintain a trust fund, an asset account in which it makes deposits from the payments of plan holders and investments to provide sufficient funds to pay for future obligations.

The ARL is a liability account that approximates the value of all obligations of a pre-need company to its plan holders. It is computed using assumptions on interest, tuition and inflation rates, and the anticipated earnings of investments.

The SEC requires that the trust fund should not be less than the ARL.

(Part 2: PPI problems stem from pre-need industry's inherent weaknesses)

©2005 all rights reserved

This story was taken from

'Bankruptcy disguised as illiquidity'
Posted 04:58am (Mla time) May 16, 2005
By Alcuin Papa
Inquirer News Service

(Second of three parts)

THE MULTIPLE transfer of assets and companies that Pacific Plans Inc. set into motion in June 2004 was meant to shield the firm's assets from any claims by its creditors once the rehabilitation was approved, said plan holders who had organized themselves into the Parents Enabling Parents Coalition (PEP Coalition).

It was a "premeditated" move to "mutilate" the company to "escape from paying [its] obligations to plan holders," said PEP Coalition president Philip Piccio.

All fixed-value plans were transferred to Lifetime Plans, leaving the 34,000 problematic traditional or open-ended plans with PPI, according to Piccio.

By PEP's reckoning, Lifetime became the owner of 400,000 fixed-value plans and trust fund assets of P8.7 billion. Piccio described the sale as a simple "assets against liabilities" transfer, meaning the sale was not for real."

"They cut up the assets of PPI and distributed [them] to other companies so creditors and plan holders will not be able to claim [them] ... The objective was to get these assets which belonged to PPI as far away as possible from the company before they rehabilitate," he said.

An industry source wondered whether this was not, in fact, a "bankruptcy case masquerading as an illiquidity issue."

He said that according to actuarial estimates in the industry, PPI's undisclosed trust fund shortfall was between P6 billion and P8 billion in 2003.

He noted a mismatch in PPI assets and liabilities as the P2.6 billion in liabilities (against P3.3 billion in trust fund assets) as of December 2004 did not allow for the tuition costs that PPI will be paying when the rest of its traditional plans mature.

Quarantine the cancer

"If the transfer of the assets in the spin-off did not correct the imbalances, then there was no reason for the spin-off," he said.

But he observed that in a rehabilitation, all liabilities would be extinguished.

PPI spokesperson Jeanette Tecson, a lawyer, acknowledged that assets and other PPI pre-need products were indeed transferred to Lifetime Plans before PPI applied for rehabilitation.

But she said this was done to "quarantine the cancer" that was spreading in PPI.

"The point of the rehabilitation was to distribute equitably the existing assets of the company to be able to service plan holders who will avail [themselves] of their plans in the future," Tecson said.

The "bleeding" had to be stopped because there were 400,000 other plan holders under PPI's other insurance plan schemes, she said.

"This was a prudent business decision. This was not a devious scheme but more of a way to save the company. And it was not premeditated," Tecson said.

She blamed PPI's financial woes on the deregulation of tuition rates in 1990 and the Asian financial crisis of 1997.

PPI president Ernesto Garcia has sought to paint PPI's actions as being aimed at honoring the firm's commitments.

"We tried everything to help our plan holders although we could have easily hidden behind our contract, which shields us from exorbitant obligations arising from a change in government rules and policy," he said.

Garcia said PPI had foreseen what was happening now and stopped selling the open-ended plans in 1992, focusing solely on servicing them.

He said that for the past 14 years, PPI had paid a total of P1.5 billion for tuition claims and sent 56,000 scholars to school.

"But the company cannot do this indefinitely. There was no way Pacific Plans, or any company for that matter, could earn enough to cover those steady annual increases (in tuition rates). But we paid everybody, using our operating profits through those years," Garcia said.

Industry weaknesses

More than the lost dreams of 34,000 plan holders, the PPI saga has brought into focus the inherent weaknesses of an industry that came into being because of a loophole in the law and, using a combination of political influence and persuasive lobbying, has largely succeeded in resisting all attempts to properly regulate it.

Also coming under intense public scrutiny are the quality of government regulators, the lack of congressional will to pass the needed laws and the integrity of the stockholders and owners of the pre-need companies.

"The pre-need industry is ruled by greed. Its glory days are probably over. Even if it survives it will be faced with tougher regulation and a more vigilant and demanding public," commented one industry analyst.

Pioneer in pre-need

PPI is one of 45 pre-need firms -- reduced to less than half from the 100 or so in the industry's heyday in the 1970s and 1980s -- selling education, pension and life plans to mostly salaried employees, who pay a premium in return for which the company prepares for their financial needs in a specified period in the future.

PPI, which belongs to the Yuchengco group, can actually claim to being a pioneer in the education pre-need plan industry, which many have hailed as a uniquely Philippine invention.

Enrique Sobrepeña Sr., the founder of College Assurance Plan (CAP), was part of the group's Pacific Memorial Plans Inc., the precursor of PPI.

In 1976, Sobrepeña broke away from Pacific Memorial. He took the memorial plan concept, tacked an insurance component to it, and began selling the education pre-need plan.

Using a loophole in the Securities Act, and with the acquiescence of the Securities and Exchange Commission at the time, he was able to have his invention classified as securities -- instruments giving holders the right to money or property -- and not as an insurance product.

Crucial difference

The difference in classification was crucial because as sellers of securities, the education pre-need industry escaped supervision by the Insurance Commission. It was regulated by the SEC just like an ordinary manufacturing or marketing firm.

The nature of the product, however, makes it an endowment plan. A fund is bestowed on an individual, the income from which is used for the specified purpose for which the gift is intended.

The problem was that at the time the SEC had no capability to supervise the pre-need industry so that many practices, which would never pass the Insurance Code, were allowed to prevail, resulting in the problems besetting the industry now.

For instance, the most significant issue in the conflict between plan holders and the pre-need companies is the valuation formula that is used to make the yield assumptions when actuaries project the earnings of investments in the companies' reserve funds.

"The industry has been aggressive in assuming fairly high yield assumptions of from 12 to 15 percent. By contrast, insurance companies are never allowed to make assumptions of more than 6 percent," said one analyst.

This may have been true when times were good such as the days of the "Jobo bills" and the property boom years of the Fidel Ramos administration but not since then, the source said.

In 1984, then Central Bank Governor Jose "Jobo" Fernandez issued a special Treasury bill that carried interest rates of 35 to 45 percent.


Too optimistic yield assumptions coupled with understated assumptions of tuition rate increases would result in a low actual reserve liability, which determines how much the company should put into its trust fund to cover tuition payments when the plans mature. This is thought to be the reason pre-need companies' trust funds are deficit-prone.

The problem facing PPI largely concerns the traditional or open-ended education plans under which the company undertook to pay for the entire tuition of the beneficiaries when the plans mature, whatever the amount.

When tuition increases were kept at a minimum of 10 percent during the 1970s and 1980s, the education plan companies, particularly market leader CAP, really raked it in.

But after they were deregulated in 1990, the education pre-need industry began to unravel. Between 1990 and 1995 tuition rates jumped an unprecedented 275 percent. After 1996, rates went up by 26 percent and then 35 percent.

To compound the problem, the Asian financial crisis exploded in 1997, driving down the value of the stocks, real estate and other assets deposited in the trust funds.

Shortfalls, bankruptcy

Education pre-need companies were unable to meet the high cost of tuition as many of the plans that they had sold 10 or l5 years before reached maturity. Many began incurring shortfalls in their trust funds. Others went bankrupt or simply ran off with plan holders' funds.

Some of the industry players changed tack, stopping the sale of open-ended plans altogether, offering instead the so-called fixed-value plans, which have pre-determined value on maturity.

The most spectacular failure was that of CAP whose checks issued to more than 200 schools where its beneficiaries were enrolled in the 2004-2005 school year were rejected. On April 27, CAP was slapped with a class action suit by its estimated 780,000 plan holders.

The PPI management arguably wanted to avoid such a situation when it began the controversial moves that have driven its plan holders to despair. (Part 3: Where will we get the money?)

©2005 all rights reserved

This story was taken from

When Good Plans Go Bad
By Lala Rimando
NEWSBREAK Business Editor

TO LUZVIMINA HIPOLITO of Quezon City, the problem involving her and the company that sold her an educational plan is basic: she who makes a living running a carinderia never missed a single payment of her premiums, even during the times “that I had nothing left to pay for house rent.” If the company is in dire straits now, she asks, “Should I let my children stop schooling?” The answer, to her, is as clear as a summer day: “Raising the money should not be my problem; it should be the Yuchengcos.’”

The Yuchengco family, one of the country’s most venerable names, is embroiled in the latest scandal to hit the pre-need industry because it owns the Pacific Plans Inc. (PPI) that is in default in its payments to 34,000 planholders.

Pre-need companies like PPI had offered traditional educational plans that guaranteed to cover 100 percent of the tuition of the planholders’ child. (These were apart from the fixed-value educational plans, which had limited value coverage.) In 1990, the government lifted the 10-percent ceiling on tuition increases. With deregulation, tuition charged by schools soared. Because of the unlimited guarantee offered by the traditional educational plan, a holder may have paid only P40,000 in total premiums but could reap more than P300,000 in benefits.

PPI, a 38-year-old company, stopped selling the traditional plans in 1992 but continued to service existing ones until last school year. Last April 13, the company won a Makati court ruling that allowed it to suspend payment to planholders.

On the surface, this appeared to be PPI’s effort to stop the company from hemorrhaging. But questions have been raised about its motive.

In December last year, the company thought that its trust fund­the pool of premium payments from planholders that had been invested­was healthy. It had reached P3.2 billion, more than enough to cover the P2.7 billion Actuarial Reserve Liability (ARL), or the amount that PPI should target to ensure enough funds to cover current and future tuition payments.

But to service all tuition requirements of the planholders for the coming school year in June, the company had to raise about P600 million. The trust fund had P341 million worth of cashable assets, and PPI president Ernesto Garcia said they had hoped to augment the balance with the sale of US$51.8 million in zero-coupon Napocor bonds where part of the trust was invested.

The bonds had been bought at a discount. Their US$51.8-million face value and seven percent coupon rate will be realized when they mature in 2010, although they are traded in the bond market. However, the Napocor bonds were affected by the credit downgrades of international credit rating agencies in the first quarter, Garcia said. The company had two options: to cash in the Napocor bonds so it could fully pay planholders this year­which would mean absorbing losses of up to P550 million­or suspending payment to planholders.

PPI chose the latter, explaining that to cash in the Napocor bonds would further endanger the trust fund and might prevent the company from servicing tuition requirements of 19,000 planholders who would enroll in the future.

In the rehabilitation plan, which PPI submitted to the court and could still be contested by planholders, the proposed solution was to hold on to the bonds until maturity in 2010. PPI would disburse the P341 million to cover a portion of the planholders’ first-semester tuition requirements, but for the second semester and succeeding school years, planholders were being asked to wait for five years.

In essence, the planholders would shoulder the company’s liquidity problem. They were left holding the bag. In the past, Garcia said, the profits generated from the more than 400,000 fixed-value contracts­the safer and more viable pre-need product because the tuition and other benefits are predetermined­were used to meet the planholders’ tuition needs. But since the fixed-value contracts had been spun off to another company, the PPI was left only with the traditional planholders’ investments.

About 3,000 parents who had bought the plan have formed the Parents Enabling Parents (PEP) Coalition to protest this arrangement. They’re not buying the official line that the spin-off and the court plea were part of a corporate strategy to protect all the 34,000 planholders’ interest in the long term.

Philip Piccio, PEP spokesperson, told NEWSBREAK, “The move to shield themselves [the Yuchengcos] through the court was premeditated. Therefore, there is malice and probably fraud.”

The coalition questions the August 2004 spin-off of the assets and trust funds of the 400,000 fixed-value planholders to a new company, Lifetime Plans Inc. The stake of PPI in Lifetime was subsequently sold to GPL Holdings, another Yuchengco company. “The [corporate restructuring] was to ensure that our share in Lifetime’s profits would be out of reach,” said Picco.

The spin-off is a business approach that isolates the good assets from the bad. The bad assets are either sold to another investor at big discounts, or nursed back to profitability. This strategy has been implemented in the case of the United Coconut Planters Bank (UCPB) and the Philippine National Bank (PNB). Both banks created separate departments to isolate their soured loans from the rest of the earning assets. PNB turned in modest profits because of this, while UCPB is recuperating.

In PPI’s case, the “good assets” were spun off to Lifetime Plans while the “bad assets” were left with PPI. Garcia said they had equitably apportioned the assets, liabilities, and trust funds between PPI and Lifetime. “We asked ourselves if we wanted to wait until [another pre-need] would go belly up,” Garcia said. “We could just ride the tide and not to put too much focus on ourselves. But our decision was to immediately protect the interests of the greater good. And we thought it was the most prudent thing to do.”

But even the Securities and Exchange Commission (SEC), the pre-need industry’s regulator, was caught off-guard when PPI sought relief from the court. Fe Barin, the SEC chairperson for the past eight months, said, “They pulled one over us.” Filing for suspension of payment is a strategy that companies use to overtake their creditors, suppliers, and other stakeholders who might go after the companies’ assets once they smell financial trouble.

In hindsight, the SEC could have seen this situation coming, especially after it approved the spin-off in August 2004. But Barin explained that the circumstances then were different. The SEC allowed the Lifetime spin-off because the apparent game plan at that time was for the company to find an investor and not go to court.

Since 2002, PPI, the College Assurance Plan (CAP) and 10 other pre-need companies that offered traditional educational plans have been on the SEC watch list. Reforms followed more than 10 years of lax regulation of the pre-need industry, thus the belated order to stop the sale of traditional plans only in 2002.

A source said PPI was one of those with faulty computations of their ARL, or the present value of all current and future tuition availments. The ARL is based on inflation, interest rates, and expected tuition fee increases, among others. A measure of how healthy a pre-need company is whether its trust fund is equal to or exceeds the ARL. The company’s ARL in 2002 was only P8.9 billion. The correct figure, the source said, should be about P15 billion. In other words, PPI’s trust fund was short by almost P7 billion then because it only had P8.6 billion. The Yuchengcos reportedly sought a two-to-three-year leeway to address the deficiency. The SEC agreed because CAP and the other pre-need companies were also allowed to amortize their deficiencies.

Of all the pre-need companies on SEC’s watch list, CAP was the big bang; it had 780,000 planholders. Its trust fund deficiency was climbing every year and reached P17 billion in 2004. The public gauged the SEC’s capability as regulator by the way it handled CAP. Did SEC fail to anticipate PPI’s moves because it was lax with CAP and others? Or did PPI take advantage of the situation, hoping it would be treated with the same kid gloves as CAP?

Garcia said that PPI had made earnest efforts since 2003 to contain its exposure to traditional plans. Proposals to schools were made wherein PPI would advance the entire four- or five-year college tuition of planholders. The proposal included a cap of 10 percent on yearly tuition increases. None of the schools agreed. PPI said they tried to buy back the plans, but most of its planholders declined. The company also decided against negotiating directly with each planholder because it was time-consuming.

Obviously learning from CAP’s experience, PPI isolated the profits earned by its 400,000 fixed-value planholders to protect these profits from being used to subsidize the withdrawals of traditional planholders. CAP, meanwhile, continues to deplete its trust funds to meet current tuition requirements.

Sentiments are mixed. Parents say CAP’s strategy continues to give hope, while PPI doused it. Others say CAP is leaving them in the dark, while PPI is more forthcoming about what planholders should expect.

Damage Control
Last April, PPI planholders received individual letters detailing the amounts due them based on the proposed rehabilitation plan. They were told they could sell back their plans if they decide not to wait for the Napocor bonds to mature in July 2010. Or they could let their money remain in the trust fund, earning seven percent from the year they finished paying the premiums until the bond matures.

The planholders were not pleased. Piccio stressed that they bought PPI educational plans on the assurance that PPI was backed by the financial muscle of the Yuchengco Group of Companies. The group includes major players like Rizal Commercial Banking Corp., Malayan Group of Insurance and Great Pacific Life Assurance Corp., and House of Investments. Other sister companies include Bankard, Mapua Institute of Technology, Honda Cars Manila, Manila Memorial Park, and Nippon Life Philippines.

PEP is also getting inspiration from CAP, which recently filed a class suit. For their part, PEP members are preparing documentary evidence of fraud and pooling their financial resources for the cases they plan to file soon.

Garcia admitted they underestimated the intensity of the backlash from planholders, especially against the person of the patriarch, former Ambassador Alfonso Yuchengco. The initial plan was to dissociate the family and the conglomerate’s other companies from PPI, but, in the end, the Yuchengcos found themselves committing bulk of the P2 billion funds to meet the withdrawals before 2010­a decision that could have saved them all the brouhaha in the first place.

An insurance executive summed up the entire affair with this comment: “Financial services are fiduciary businesses. We should always remember that we are handling other people’s money.”­With reports from Dwight Agulan

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©2005 all rights reserved >

At Monday, May 16, 2005 10:54:00 AM, Anonymous Anonymous said...





At Monday, May 16, 2005 1:05:00 PM, Anonymous Anonymous said...

Watch Cito Beltran's "Straight Talk" at ANC today, May 16, 2005, 1p.m. He will be talking to PEP scholars and parents.

Replay at 6:pm tonight

At Monday, May 16, 2005 1:20:00 PM, Anonymous Anonymous said...

One of the more effective tactics is to distribute pamphlets in the exclusive schools. I think AY's granddaughter, Guia Santos (who by the way is on the board of Lifetime) studied in Assumption for high school and Ateneo for university level. (I hope she remembers the Ignatian ideals that the school taught her!)

I'm sure there are other younger Yuchengco family members in Philippine exclusive schools. Let's bring this fight closer to their homes.

At Monday, May 16, 2005 1:25:00 PM, Anonymous Anonymous said...

PPI is starting to release additional tuition fee support at Rm. 2, PICC from May 16-20, 2005. Call their hotline 816-0000 and give your Education Plan Aggreement No. (EPA #) to know if your check is ready for pick up.

For the planholders bring valid ID and the certificate of full payment. And for those planholders who will be asking someone to pick up the checks, give an authorization letter and 2 valid IDs of the planholder and the certificate of full payment.

Receive the check but put "RECEIVED CHECK UNDER" and don't sign any waiver or affidavit that PPI will ask you to sign.

At Monday, May 16, 2005 2:18:00 PM, Anonymous Anonymous said...

Thank you Cito Beltran!

He ended the ANC show Straight Talk with the ff words. Can't quote directly word per word but this is the gist:

We were taught in church (school?) to keep our promises. It is our word of honor. If you cannot keep your word, you have no place in society.

At Monday, May 16, 2005 3:07:00 PM, Anonymous Anonymous said...

Food for thought:

When a shoplifter / criminal is caught stealing, the person is booked as a criminal and made to pay for what was "almost stolen". In this case, the P250 M is simply the partial payment of what was "almost stolen" and what we are trying to recover. So we have to bear in mind, that the P250M is not even full payment.

Also, what is the logic for PPI supporters to harp on tuition fee increases and the "inability" of a pre-need company to earn enough to pay for the plans it committed itself too? When a credit card holder "borrows or puchases" through a credit card, the card company charges about 3.5% interest a month or in effect over 40% per annum. The credit card holder must "make his money earn" over 40% just to keep up payments. More often than not, the credit card holder must sell assets, cut down on other important monthly expenses, sacrifice, in order to pay for the obligation. What then is the difference between that and a company like the pre-need company that needs to earn so much to keep up with tuition that grew in past years at much lower rates? Same principle. Why is it that individuals are made to carry the burden and find ways to cover their credit card debt. But for a company such as PPI, all of a sudden, people run to its aid and say that it just cannot earn enough to cover its obligations?

What is obvious here is that it doesn't give PPI an excuse to say that investment yields are not enough or that tuition fees just rose too high. Just look at single individuals, struggling to pay about 3.5% interest per month.

At Monday, May 16, 2005 3:24:00 PM, Anonymous Anonymous said...

to the one who posted the comment re pickup of new checks at 2f

an you pls clarify what you mean by "Receive Check Under" (under what or what else should they write?)

At Monday, May 16, 2005 3:26:00 PM, Anonymous Anonymous said...

i would just like to let all planholders know that you can go to the PICC Room 2 from May 16-20, 8am-6pm to get your additional tuition support. according to their staff, they have been giving out checks since last week. we were wondering why not much people knew about this. good thing a friend of ours happened to read it at the philippine star business section and so we took the chance. the whole process only took like 10-15 minutes. the checks are ready and waiting to be claimed. there is no agreement or whatsoever that we need to sign under protest. our daughters are on their final availment for thier high school plan, the 2nd check given to us was 21,488.00 + the 1st 35T. medyo short pa din. when we asked shy weren't they giving the full amount, they said this was just an additional tuition help for this school year. mind you, they were so organized, aircon was really cold, chairs for the planholders, signs and streamers all over etc. (sana nagpacoffee and donuts na din). So please tell your friends and relatives to go and get thier checks, after all PERA NATIN ITO.
thank you. PS: please bring your certificate of full payment and a valid original picture ID. If you are not the planholder, you must have a letter of authority and also you must bring the ID of the planholder with you

At Monday, May 16, 2005 4:09:00 PM, Anonymous Anonymous said...

How will Al Yuchengco overcome the PPI crisis?
The Philippine STAR 05/15/2005

One of the wealthiest tycoons in the Philippines, the 82-year-old Asian Bankers Association (ABA) chairman Ambassador Alfonso T. Yuchengco of Rizal Commercial Banking Corp. (RCBC), Malayan Insurance, Grepalife, Nippon Life, Lifetime Plans, House of Investments and others is now in the center of a raging controversy. His camp said, "Ambassador Yuchengco is used to battling crises in his business career." His latest crisis is the ongoing Pacific Plans Inc. (PPI) controversy which pits him against a consumer mutiny by irate owners of 34,000 open-ended PPI educational plans who accuse his family of bad faith and of abandoning them by using sophisticated legal maneuvers. How will the tycoon strategize a victory out of this major crisis which, his camp told Philippine STAR, "is unfair to his over half-century life work and his meticulously-guarded business reputation"?

The Yuchengco Group of Companies’ (YGC) top executives told this writer that they did no wrong legally and ethically, and they wish to fight it out in the courts, the Securities and Exchange Commission (SEC) and through the mass media. They might be inspired by Yuchengco’s words: "Whenever you go into a fight, you must prepare yourself as if you are going to war. Defend all your flanks. Look ahead, look to your right, look to your left and do not forget your back. Never go into a legal battle half-heartedly or half-prepared. Once you go into a legal battle, you must be prepared to fight to the end and fight to win."

My unsolicited advice to the YGC, however, is to take the initiative and boldly find a mutually acceptable compromise to the PPI controversy. Do not let this unnecessary problem drag on. They should study the past sayings of Ambassador Yuchengco for guidelines. These sayings were published in a small red booklet on his 73rd birthday on February 6, 1996

Among the favorite mottos of the tycoon is "A bad compromise may be better than a good case in court." He also said, "Whenever there is a crisis, there is an opportunity as well as danger. Avoid the danger, grasp the opportunity." He also once said, "I would rather lose a million dollars than to have my reputation tainted." FVR, Bobby De Ocampo Defend Yuchengco
The Yuchengco camp said, "He practiced what he preached when he provided P250 million of his own personal funds to PPI to cover the tuition requirements of children availing of PPI’s open-ended educational plans during the coming June 2005 semestral enrollment." They point out that in recognition of the embattled tycoon’s track record as a respected philanthropist, Yuchengco shall be conferred an honorary doctorate by and be the commencement speaker at the Jesuit-run University of San Francisco’s McLaren College of Business on May 20.

They added, "He has a lifelong track record as a respected philanthropist who supports programs to promote the Filipino youth. An example is the annual search for outstanding students nationwide who are conferred the National Discipline Award for outstanding student work. Over 5,000 students have benefited from this program

"We hope the other side of Ambassador Yuchengco can be presented to the public – that he is a philanthropist and an honorable business leader, not what the personal attacks paint him to be. The anti-PPI opposition is retaliating unfairly against the Yuchengco family and other companies with negative text messages and other vicious attacks. Ambassador Yuchengco thought very deeply about this problem. He is hurt by this barrage of unfair accusations because he wants to leave a good name. His recent commitment of P250 million of personal funds to PPI is proof of his goodwill, because PPI is no longer a Yuchengco-controlled firm – it is 51 percent owned by the managers due to an earlier management buy-out, and Grepalife Holdings owns only 49 percent of PPI now. Despite the Yuchengco Group’s minority stake in Pacific Plans Inc., Ambassador Yuchengco is infusing his personal funds in the hope of helping solve this problem."

Alfonso Yuchengco is one of the strongest supporters of EDSA 1 and EDSA 2, and a close ally of former President Fidel Ramos and President Gloria Macapagal Arroyo. On the Pacific Plans imbroglio, ex-President Ramos came to the defense of Yuchengco, saying, "By personally pledging P250 million to help PPI beneficiaries, Ambassador Yuchengco swiftly responded to the problem beyond the call of duty. The financial trouble affecting PPI is not an isolated case because all other pre-need firms are faced with the same issue – skyrocketing tuition fees. Because education is a primordial necessity for people empowerment and national development, the government, schools, and the pre-need industry should get their act together to address this issue."

Asian Institute of Management (AIM) president Roberto "Bobby" de Ocampo, ex-finance secretary during the FVR presidency, also came to the defense of the tycoon. He said, "Pacific Plans Inc.’s financial problems reflect the present state of the entire pre-need industry. I believe the government should immediately take urgent steps to alleviate the problem for the benefit of our Filipino youth whose education, in this case, is largely at stake. I think Ambassador Yuchengco recognizes this. And this must be what prompted him to shell out P250 million from his own pocket to help PPI planholders support their children’s tuition requirements."

Bankers Association of the Philippines (BAP) executive director Leonilo Coronel said, "As chairman of RCBC who is a very active member of the BAP and outgoing chairman of the Asian Bankers Association, Ambassador Alfonso Yuchengco has always been in the forefront of banking reforms to enable Philippine banks to become world-class banking institutions. He is a man of vision whose hard work and dedication have enabled RCBC to become one of the premier banking institutions in the country." Who Is Al Yuchengco?
According to the new commissioned biography on Ambassador Alfonso Yuchengco entitled To Leave A Good Name by Krip Yuson and the late Nick Joaquin, the total resources of the Yuchengco Group of Companies (YGC) "as of the end of 1999 amount to $4.4 billion." The mainly insurance and insurance services empire of YGC include the Malayan Group of Insurance Companies, the Great Pacific Life Assurance Corporation (Grepalife), RCBC, the House of Investments, the AY Foundation Inc., among others.

Unlike rags-to-riches taipans John Gokongwei Jr., Henry Sy or Lucio Tan, Alfonso "Al" Yuchengco was born into a rich family in lumber, construction and trade in Gandara St. of downtown Manila and just an estero across from the pre-war Lee Tay & Lee Chay sawmill compound facing T. Alonzo St. He went to school in the pre-war years in a chauffered Packard and later inherited an insurance-based fortune from his father Enrique. The young Yuchengco grew up with a Spanish mestizo barkada in La Salle, and was not considered Chinese in culture or nor in Confucian values.

Instead of wasting his inheritance like other spoiled rich kids, Yuchengco worked hard and spent over half a century building his diverse business empire. He pioneered the introduction of credit cards and memorial plans in the Philippines. He competed aggressively against entrenched multinationals and big Philippine companies

Yuchengco Group top official Cesar Virata, former prime minister and finance secretary, said, "Al Yuchengco is unique among entrepreneurs in the Philippines for being open to entering into joint ventures." Many of these joint ventures were entered into with foreign companies. These unions allowed the Yuchengco Group of Companies to take advantage of extensive resources and advanced technical know-how of international associates." An example of this strategy of joint ventures with top foreign institutions was the 40 percent capital contribution of the Government Investment Corp. of Singapore to the construction of the 48-storey RCBC Plaza. There is also the over 30 years of association with the UFJ Bank of Japan

Although Yuchengco has his own share of corporate battles and was as shrewd as any businessman, allies point out that no major breach of obligation, corporate scandal or fraud ever tainted or undermined his reputation in his long career as tycoon and later as Philippine ambassador to Beijing, Tokyo and the United Nations.

Makati Business Club president Atty. Ricardo Romulo said, "Mr. Yuchengco has shown throughout his distinguished career a high degree of entrepreneurship and acumen. His accomplishments, philanthropy, foresight, and vision of the Philippines need no elaboration from me. They are well-known, and have earned for him an honorable place in the world of business and commerce."

In his quest for a good name for himself and his family, Yuchengco created the AY Foundation for his philanthropic endeavors. He said, "We decided on this idea of engaging in what we call SROI or a ‘social return on investment.’ To accomplish this, we founded the AY Foundation. Every company that belongs to our group is mandated to turn over between one to five percent of its profits to the AY Foundation. I personally donate the balance to make up for what may still be lacking."

Among the numerous charities of the AY Foundation include the annual search for the Blessed Mother Teresa of Calcutta Awardee for selfless humanitarian service, the donation of the P52.5 million Enrique Yuchengco Hall at De La Salle University, the 1,100-seat Teresa Yuchengco Auditorium inside the hall, the 100-bed Doña Maria Yuchengco Charity Wing for the poor at the Our Lady of Peace Hospital along Aguinaldo Highway in Cavite, and many others

Even his worst critics and most bitter corporate rivals acknowledge that Yuchengco is a financial genius and an astute business strategist. He is also a great judge of character and knows how to recruit the most brilliant minds to help him build up YGC like Carlos P. Romulo, Sen. Gaudencio Antonino, former Senate President Mariano Cuenco, ex-Prime Minister Cesar Virata and Harvard-trained ex-Trade Secretary and former SGV Group chairman Rizalino "Roy" Navarro. His allies said it would be unfair to ignore or diminish Yuchengco’s pioneering efforts in the Philippine insurance and finance industries, which are crucial to nation-building.

It would be a big tragedy if the Pacific Plans controversy, which is only a small part of his vast business empire, is mishandled and allowed to overshadow Yuchengco’s long and eventful business career

What are the secrets of his business success? Alfonso Yuchengco explained, "The elements of success are luck, hard work and discipline. As I have said, no matter how smart you are, how hardworking you are, if you are not lucky, you will not succeed. As for hard work, you cannot just depend on people to work for you. You have to show the way. Discipline is very important." Will Yuchengco be lucky again this time around, in overcoming the Pacific Plans problem and repairing whatever damage it has caused?

He said, "A million, a hundred million, even a billion can be lost in a day, but a good name is forever. And so, for me, a good name is much more important."

What daring moves or what personal sacrifices will the tycoon undertake to safeguard his family’s reputation, which has been badly shaken and severely challenged – whether fairly or unfairly – by the troubles with former subsidiary Pacific Plans Inc.?

We shall soon see. * * *
Thanks for all your messages. Comments are welcome at,, or PO Box 14277, Ortigas Center, Pasig City

At Monday, May 16, 2005 4:16:00 PM, Anonymous Anonymous said...

Good for the previous poster who got another check besides the first tranche of tuition support.

I just came from PICC this afternoon. I decided to go after hearing the good news from a co-parent (same level as one of our sons) that she got her check which when totalled with the first one, was equivalent to last year's availment.

Well, well, well. It was a trip in vain. Out of our 2 availing plans for our sons, we got ZERO checks. The guy who attended to me showed me the printout where some names had "Addl" (meaning may tseke ka). Ours only had the code "TS" (meaning tuition support and nothing else). So before you all go there with high hopes, temper your expectations. Some got their money. Others like me left emptyhanded.

I filed a complaint and was told to call after 5 days their trunkline, 816-0000. Didnt someone say that that no one picks up the phone at the other end of that line?

Oh well, let's see what happens after 5 days.....

At Monday, May 16, 2005 4:17:00 PM, Anonymous Anonymous said...

If we will judge this case based on viewpoints of journalists and respected people in society, it will be alcuin papa vs. dozens of journalists and respected people.

So, I believe the coalition will run out of articles soon. But I am sure they will just keep on recycling old ones.

I even talked to my parent friends in an exclusive high school in QC. A big majority is for the rehab plan. I really wonder how many are anti-rehab compared to the pro-rehab.

At Monday, May 16, 2005 4:47:00 PM, Anonymous Anonymous said...


This is the main reason why the anti-rehab planholders are divided. This is something that goes against my basic principles. The members of their families have nothing to do with this, so this plan of yours really offends me. I believe in our cause but bringing their families on board is a different matter.

At Monday, May 16, 2005 6:44:00 PM, Anonymous Anonymous said...

Re the phone's not being answered at 8160000 you just have to be super patient. It gets answered after a long wait. Pray though the system isn't down. It was around 11 a.m. today. Note too that the person who answered (code 223) did keep her promise to phone back with info on my plan after telling me the system was down. At least. . .

ANother thing, yes, please spare the wives and children of directors et al. particularly if the children are young (of school age). It's not fair to punish them for the sins of their father/mother.

At Monday, May 16, 2005 8:29:00 PM, Blogger soleil said...

I would like to congratulate the organizers and the brains behind the PEP Coalition. We, shy parents and those who are willing to be just behind the scene but are willing to go the extra mile to fight for our childrens future will always be there.
This may not be the right venue but being a "victim" of the other pre-need company who is in the gutter right now, yours truly made a small intro (to the parents of the other pre-need company located in Makati) of what the PEP Coalition is doing. This gave some of the anguished parents some light of hope and "prayed" that we (from the other pre-need company) would try to see how we can learn from the PEP Coalition.
I know it will never be the same as the PEP Coalition but it sure will try to put a good fight to a seemingly "hopeless dream" especially for parents like me who have a double-whammy!
Again my best best prayers and more power to PEP Coalition.

At Monday, May 16, 2005 10:39:00 PM, Anonymous Anonymous said...

To the poster who said: "I even talked to my parent friends in an exclusive high school in QC. A big majority is for the rehab plan. I really wonder how many are anti-rehab compared to the pro-rehab."

Sure, more people wanted Jesus crucified too, but that did not make them right. They just did not know what they were doing, or saying. just like those for the rehab plan.

At Monday, May 16, 2005 11:26:00 PM, Anonymous Anonymous said...

In our jurisdiction, a judge must even avoid "even the appearance of impropriety."

At Monday, May 16, 2005 11:34:00 PM, Anonymous Bitter and angry said...

To the one who posted:
"While it is true we are all fighting for our children's education, I for one, am looking at this fight from a much broader pespective. I am fighting for decency in business. I am fighting so that companies will honor their commitments. If big businesses are allowed to get away with reneging on their commitments, who will trust us? Who will want to do business in the Philippines or deal with Filipino companies? What legacy will we then leave our children? What message are we sending to them? ... that not honoring one's obligation in a contract is an acceptable business practice?"

You are SO RIGHT! It is part of the reason why I am fighting, as well. But never mind whether foreign investors will want to do business with Filipinos .... will FILIPINOS want to do business with Filipinos? I can see capital flight as Juan de la Cruz will either keep his money under his mattress or convert it into dollars and get it out of the country. And the children? The lesson they will learn is to eat, drink and be merry, spend your money NOW because saving for the future only means you will lose it all. No matter how reputable or full of "integrity" a Filipino company is, they will cheat you when they want, and will get away with it.

At Tuesday, May 17, 2005 12:20:00 AM, Anonymous Anonymous said...


We are inviting you to join our Prayer Rally on May 25, Wednesday starting with an 8:30am mass at St. Andrew Parish Church, Nicanor Garcia St., Bel Air Village, Makati City to be officiated by Fr. Robert Reyes, the running priest. After the mass we will then proceed to the vicinity of the Makati Regional Trial Court for a short program.


At Tuesday, May 17, 2005 12:26:00 AM, Anonymous Anonymous said...

to the one who posted:

... that measly P250M...
you really mean MEASLY!
That's a lot of money,
it will surely help a lot
to send our children to school.
By your standard, that is measly,
but for me- it means HELP...
coz my plan is non-ex, it means
we,re gaining ground little by little.

Well, it is MEASLY if you look at it in terms of just A HERE AND NOW approach to solving things...there's still next year...and the next...and the next... Lucky for you if this is your last availment but for us with both availing and non-availing plans still in our hands... that 250M really falls short...

At Tuesday, May 17, 2005 1:11:00 AM, Anonymous Anonymous said...

If additional checks are given to you, sign on the voucher but put "RECEIVED UNDER PROTEST".

At Tuesday, May 17, 2005 1:20:00 AM, Anonymous Anonymous said...

Cito Beltran's exact closing words after talking to the PEP scholars and parents...

"We are taught in our church - your word is your bond, regardless of who you are, what you are. If you cannot keep your word, you have no place in this society."

At Tuesday, May 17, 2005 4:41:00 AM, Anonymous Anonymous said...

I complained of eye strain, too, after reading our webpage... until my son taught me this:

to enlarge font simultaneously press control plus + sign.

to decrease font size, press at the sametime control plus - sign.

No for rehab.

At Tuesday, May 17, 2005 4:41:00 AM, Anonymous Anonymous said...

I complained of eye strain, too, after reading our webpage... until my son taught me this:

to enlarge font simultaneously press control plus + sign.

to decrease font size, press at the sametime control plus - sign.

No for rehab.

At Tuesday, May 17, 2005 7:25:00 AM, Anonymous Anonymous said...

Yuchengco lauded for forking over P250M

May 17, 2005
Inquirer News Service

SEVERAL prominent personalities in the business and public service sectors have expressed confidence that Pacific Plans Inc. (PPI), under the leadership of former Ambassador Alfonso Yuchengco, would be able to overcome the financial crisis that the pre-need firm is experiencing.

Former Senate President Jovito Salonga said Yuchengco had demonstrated the values of honesty, integrity and patriotism, which he is known for, by forking over P250 million from his own pocket to help resolve the PPI financial problem.

"I have known Ambassador Yuchengco for many years, particularly of his unselfish service to the nation in various capacities, and his patriotism during the crucial years of martial rule," Salonga said in a statement.

Meneleo Carlos, chair of the Federation of Philippine Industries (FPI), described Yuchengco as "a living testament to the ideals of FPI."

Carlos said Yuchengco had long pursued with FPI members his dream of promoting competitive and socially concerned Philippine business enterprises.

"We commend Ambassador Yuchengco for directing his personal business interests in line with what is good for the nation in the long term," he said.

Ambassador Jose Macario Laurel IV, whose family owns Lyceum of the Philippines, believed that Yuchengco was being true to himself when he raised P250 million from his own resources in support of PPI.

"The soft spot behind a decade of firm leadership has earned him (Yuchengco) the respect of his colleagues in the diplomatic world. He is known to be a fair and just man. I admire him also for his high regard for education and for instilling good values among the youth," Laurel said.

Former Education Secretary Andrew Gonzalez said that "in raising P250 million from his personal resources to alleviate the plight of PPI parents with tuition problems, Ambassador Yuchengco certainly proved his commitment to serve the public unselfishly."

Moreover, Gonzalez said that "while it is a corporate matter that PPI should resolve, he (Yuchengco) went beyond the call of obligation to help plan holders cope with their children's school requirements."

"We both share the same high regard for education and I believe this is his way of showing it," he said.

Manila Jaycees president Pablo Carlos III praised Yuchengco for his unselfish contributions as a major donor to the Blessed Teresa of Calcutta Humanitarian Awards Search since 1983.

At Tuesday, May 17, 2005 7:57:00 AM, Anonymous Anonymous said...

To the poster who wrote: ANother thing, yes, please spare the wives and children of directors et al. particularly if the children are young (of school age). It's not fair to punish them for the sins of their father/mother.

Monday, May 16, 2005 6:44:37 PM

Our kids were punished and we parents never had any sins against PPI, as a matter of fact, we had done our part of the bargain. Was it fair to our kids ? Was it fair to us? We have to let them know that we and our children are not mere statistics but people made of flesh and blood who were adversely affected by their stupid,selfish and greedy decisions.
We did not start this. They did. We are at a disadvantage because they have access to the media, government, the courts, aside from their very deep pockets. We should be free to choose any means at our disposal to redress the wrong that was done to us as long as it is done in a non-violent way.

At Tuesday, May 17, 2005 9:20:00 AM, Anonymous Anonymous said...

To the person who said “I even talked to my parent friends in an exclusive high school in QC. A big majority is for the rehab plan. I really wonder how many are anti-rehab compared to the pro-rehab.”

I have personally talk to no less than 30 parents who lives in different areas in Metro Manila with their children studying from exclusive to non-exclusive schools. Funny, I still have to meet one thats for pro-rehab. What are you talking about that anti-rehab are few in number? Why don’t you check their website to see how many they are?

At Tuesday, May 17, 2005 10:25:00 AM, Anonymous TLS said...

For everyone’s sake, we are here to know the truth / facts and to help others understand the truth / facts. That is why we argue against what seems to be uneducated analysis or wrong conclusions that result from erroneous assumptions. Why do we care at all if there are such uneducated analyses and wrong conclusions? Because everything comes down to one thing: getting our FULL legal, contractual rights / benefits and anything that detracts from efforts towards that end only weakens everyone’s position in the end.

It’s simple.

1) The premise is that PPI was financially healthy until the transfer of assets occurred. All documents and reports, until prior to the transfer, point to its capability to FULLY serve ALL current and future availments. It was solvent and it was liquid.
2) We know that if they had not transferred assets, we would continue to avail of our full benefits today and until the future. BUT PPI would have had to sacrifice profit (not the trust fund) margins on its fixed-value plans to pay out ALL availments, whether traditional or fixed, exclusive or non-exclusive.
3) So to stop the drain in profits, they transferred the earning assets out of PPI. That, in itself, already prejudiced the interests of the traditional planholders. That, in itself, already constituted fraud.
4) They could have stopped with the transfer of assets but that would only lead to a greater impasse later on.
5) So to pre-empt any moves questioning the transfer of assets and the later impasse as the remaining trust fund of PPI is drawn down, they immediately secured legal protection through the petition for suspension of payments and petition for rehab. This is already documented as a move done WITHOUT prior knowledge and approval of the SEC, much less the planholders.
6) But the transfer of assets was fraudulent as supported by documents and the resulting collapse of PPI after the transfer.
7) Because there was fraudulent transfer, both the suspension of payments and the rehab plan can be thrown out.
8) With these thrown out, the fraudulent asset transfer can be undone.
9) With PPI whole again, ALL availments should be fully serviced again.
10) In the meantime, caught flatfooted by the planholders’ reaction and moves to fight for full contractual rights, PPI/Yuchengco immediately offered a palliative – tuition support. This, of course, is only a calculated “quieting down” measure. They have to be creative and legally and financially call it “support” because they need to stick to their liquidity and rehab story.
11) After still being caught flatfooted by continued protest for FULL benefits as per contract, of course the board, management, legal/PR teams in all likelihood met with AYuchengco and advised that an additional P250M to cover the balance of tuition fees for this year, would be needed to further “quiet down” and quell protest. Of course, this with the simultaneous PR/Media blitz to focus on “tuition fee hike history” and testimonies from business and society heavyweights on the “integrity” of AYuchengco.
12) At the end of the day, of course, it is all legal and PR “firefighting” and “cover your tracks” moves, designed to make everything appear above-board.
13) At the end of the day, the truth of the matter still is that planholders were disenfranchised, children were robbed of their future that their parents had already paid for, an entire industry of pre-need was given a very bad image due to selfish and self-serving actions (this, the planted PPI/Yuchengco posters will not even be able to refute) and that industry is now distancing itself from PPI.

That is why the fight is to get what is legally ours by contract and that means getting the court to throw out the rehab plan and lift the suspension of payments due to fraud. The court can immediately throw out the rehab plan and suspension of payments if presented with facts of fraud. Several possible action plans have already been posted in the site towards the proper settlement of the benefits to all planholders. Let’s say this whole school year is lost towards that effort. But given the results of full servicing of contractual rights, that is certainly more to the benefit of our children.

There are certain extraneous factors which are now pointing further to this as the best course of action. Pressure is mounting is will further escalate in the next months, to again regulate, if not freeze tuition across all education levels. Actually, this was already a policy statement of PGMA in February last year. YESTERDAY, CHED ALREADY STATED THAT TUITION FEE HIKES WILL BE REGULATED TO GO NO HIGHER THAN INFLATION. In any case, Congress and Senate will also be asked by constituents to legislate law to repeal tuition fee deregulation as well as other measures to address accessibility of education. With this in place, it will definitely make financial sense to hold companies such as PPI to their legal contractual liabilities as they stand, rather than to go for a protracted rehab plan that will certainly reduce their obligations and reschedule these far into the future.

Going for less, such as supporting the rehab plan in order to receive a little money now, is the weakest position with the most number of unknown variables, contrary to what many think as being a sure option.

For one, there is no surety under a rehab plan that anyone will get anything, especially in the near-term. Insolvency, Rehabilitation and Bankruptcy proceedings in the country have already shown that creditors suffer most without getting anything in such cases for years on end. Why many planholders insist on this given this empirical data is puzzling, if not downright sad.

Second, supporting a rehab plan is supporting a rescheduling / restructuring of debt, in this case, the benefits to be availed. This means that for all, both availing and non-availing, the benefits will likely be rescheduled even further into the future and likely restructured to be much less than what is hoped for to cover future tuition fees. What is the point then of supporting a move that will NOT give you your benefits WHEN you need it and AT the amount you need it for? If your child is not even able to use the benefits having already stopped schooling or finished schooling, then you’d have lost all value of your plan/contract in the first place.

In addition, the assets that the Yuchengco’s have put forward are Napocor bonds, which regardless of their ROP guarantee, are definitely a loser investment which the government itself will have to raise funds for. Napocor has maturing bonds not only in 2010 but also in other years, 2011 and 2014. With the move towards privatization and Power Sector Assets and Liabilities Management Corp issue, this looks to be a real lovely arrangement for planholders who go for the rehab plan. In earlier issuances, such Napocor Bonds even had to be restructured as credit derivatives in order to get the right risk profile because no investors wanted to get them. It was also documented that this was a “prioritize RCBC Capital over PPI planholders” deal since RCBC Capital underwrote the bond issuance. Since it could not find any buyers/funders, what better buyer/funder than PPI traditional planholders. Given the illiquidity and unmarketability of the issue and the planned rehabilitation which would STOP planholders from availing, PPI traditional planholders were the PERFECT “sacrificial lambs for the slaughter”.

Third, the supposed liquidity window being dangled as a “sweetener” to those who go for the rehab plan, is a simple buy-out which is still part of the calculated loss designed to still leave the Yuchengco’s ahead. In other words, if you were a shrewd businessman with a pending P2B reduction in profits (due to full servicing of all planholder benefits) and you had an option that would result in much less reduction of profits (transfer of assets, rehab plan, buy-out of planholders willing to accept one-time tuition support plus sweetener) amounting to P600-P700 or even P1B, what would you do?

Question is, would the P50k, P60k, P80k one receives now (one-time tuition support plus sweetener) compensate for the full education of one’s child? Also, given that both options involve court action anyway, why fight for an unsure end (undetermined benefits which will be rescheduled farther into the future for lower restructured amounts) when you can fight for a sure end (full benefits of all planholders, at all levels, current and future as already determined by our nominated scholars)?

Again, question is, would the P50k, P60k, P80k one receives now (one-time tuition support plus sweetener) compensate for the full education of one’s child?

Let’s all discern what is best for our children now and in the long-run given the legal and financial truths above.


At Tuesday, May 17, 2005 11:08:00 AM, Anonymous Anonymous said...

to tls,

you always give a very thorough analysis of everything. I am convinced of why we should go against rehab. I think the pro-rehab group do not have a full grasp of the consequences. They just think it's better to get some money in 2010 than not get anything from a protracted court case which we will end up losing anyway bec of YGC's political clout.

We have to get your message across. Can you simplify and make it more in laymen's terms? I don't think a lot would understand your analysis of Napocor bonds and terms like credit derivatives.


At Tuesday, May 17, 2005 3:26:00 PM, Anonymous TLS said...

Postscript to NAPOCOR:

There already is a move in Senate to repeal all laws requiring government to guarantee debt incurred by GOCCs. Filed by Senate Finance Committe Chair Sen. Manny Villar in connection with the Fiscal Responsibility bill, Senate Bill 1968 will remove the so-called automatic government guarantee for GOCCs and GFIs.

Most notable among these is NAPOCOR. Out of total public sector debt, 40% is accounted for by GOCCs and GFIs. And of that 40%, half or 50% is from NAPOCOR!

From 2004 to 2014, NAPOCOR has over P600B (P611.7B to be exact) coming due for payment! I wouldn't be surprised if in the coming years, NAPOCOR will be undergoing significant restructuring and that government will find a market-based solution to this and not continued piling up of fiscal debt (that is, if the Senate Bill 1968 hasn't been passed already and implemented).

Now, see if that rehab plan has any grounding in reality AT ALL.


At Tuesday, May 17, 2005 3:30:00 PM, Anonymous michelle said...

hello. i'm a parent who purchased a pep plan in 1997. how do i get to join the no2pep2010 yahoo groups? tried to get in but i guess it's by invitation?
also, how can i include myself in the coalition, what documents need to be submitted, etc. would really appreciate your help!

At Wednesday, May 18, 2005 8:53:00 AM, Anonymous Anonymous said...

"hello. i'm a parent who purchased a pep plan in 1997. how do i get to join the no2pep2010 yahoo groups? tried to get in but i guess it's by invitation?"

If you are familiar with yahoogroups, just go to the site and click on "join group" link.

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