Pacific Plans - Broken Dreams

Farewell to YGC

2005-08-24T17:03:00.000+08:00

It is with deep regret that we are informing the readership that the good faith negotiations that PPI requested a few weeks back (with much fanfare on their part) has broken down. The breakdown is due to PPI's failure to follow up on their representation that they would advance an offer which improved upon their discredited original rehabilitation ploy.

Therefore, the PEP Coalition negotiation team has withdrawn as of today, 24 August 2005, from the negotiations following the PPI's failure to deliver on its representations.

We are filled with a terrible sense of unease as well as deep disappointment as we are witnessing the shattering of a pillar of Philippine society. For reasons known only to themselves, YGC has decided on a walk-away strategy and risk the exposure of their entire franchise of trust and fiduciary businesses to troubling questions and doubts regarding the strength, quality, and integrity of contractual obligations they make with their customers.

It is back to the battle lines.

Suggested Guidelines for Evaluating a Deal

2005-08-06T08:27:00.000+08:00

Furnished below is a contribution of one of our readers which attempts to put forward a clear set of guidelines that all planholders (ie. non-educational plans included -- see pt. 1) can use for evaluating the deal that PPI and the Coalition are attempting to hammer out.

All eyes are on YGC as they asked for the negotiated settlement. The pressure is on for YGC to establish an honorable deal for all of their customers if they wish to regain their trust and win back their business.

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Plan-holder Manifesto-

On 22 July 2005, it was reported on all the major broadsheets that PPI and its plan-holders will attempt to reach a settlement and that the plan holders will be paid.

So the question is: Can we now relax our guard? Do we go back to the peaceful pre-default days of just 6 months ago – BUSINESS AS USUAL?

Perhaps, this is possible but we should take refuge in the old saying: “Hope for the Best, but Plan for the Worst.”

We are told that PPI and the PEP Coalition negotiating team have agreed to negotiate to arrive at a win-win settlement and payment plan. Thus far the coverage of such a settlement appears to be exclusively applicable only to the traditional or open-ended educational plans, for both the availing and non-availing plans.

In the event that the negotiation is successful and a plan is structured, we must assume out of conservatism, that the plan needs to be presented and approved by all plan-holders, all 440,000 or so plans currently booked by PPI and the company formerly known as Lifetime Plans. This is particularly the case if the plan will involve some manner of novation of the terms and conditions of any of the plans outstanding.

Clearly, this is an ambitious hope for the best.

In the spirit of good faith negotiations, let us assume that YGC is still interested in keeping PPI as a going concern and more importantly determined to regain the trust that was lost. On the plan-holders’ part, we believe we should set-out some basic requirements in a framework to regain lost or damaged trust.

The purpose of this Manifesto (whose synonyms by the way of trivia are: policy, program, and proposal), is to set out two fundamental expectations we shall be looking for in any proposed settlement plan.

1. Equal treatment for all Plan-holders, i.e. traditional, fixed, interment, etc.

For instance, if non-availing traditional plan-holders (i.e., those that are not yet entitled to file claims) are allowed to receive their entitlement based on current value, then the same principle should apply to other non-availing fixed plans et alii.

2. Concrete steps to strengthen the financial, operational condition and ownership structure of the surviving pre-need company in order to rebuilt lost or eroded trust between the company and its plan-holders.

Some of the basic concrete action steps we are proposing are:

i. Single Entity - Consolidate the assets and liabilities of PPI and Lifetime back into a single legal entity under the same management and ownership structure.

ii. Full Accounting and Disclosure – The company PPI or preferably an independent accounting firm must audit, restate and reaffirm its current financial condition. Particularly, we need to determine the market value and liquidity profile of the various PPI trust funds and we need to know the nominal and ARL values of PPI’s outstanding plans.

iii. Strong Shareholder Support and Commitment – The shareholding of the surviving pre-need company needs to have clear and direct links to financially strong operating companies or links to reputable, high net-worth individuals. In other words, we need to reverse engineer the shareholding away from the two tier holding company structure, companies of limited financial strength and operational track record.

Alternatively, PPI can obtain strong corporate or financial guarantees from YGC companies or perhaps a continuing personal guarantee from the beneficial shareholder himself.

iv. Independent and Professional Trust Management – RCBC as trust manager for PPI funds is too close for comfort. In order to avoid acrimonious confrontations regarding the origin and rationale of the NAPOCOR bonds in the investment portfolio, we suggest that RCBC buy back these bonds from its trust unit and the proceeds can be reinvested by PPI with third party, independent and professional trust units of financial institutions not affiliated with YGC.

The fundamental question here is: Are we asking for too much?

PERHAPS, but clearly, PPI and YGC is likewise asking a lot from its plan-holders to return to a normal “business as usual’ stance.

What is undeniable and what is beyond debate is that Trust needs to be reestablished, and steps need to be taken to earn back the Trust of the plan-holders and more importantly the general investing public.

Without such a program to rebuild and regain Trust, PPI is as good as Dead Man Walking, an entity with a terminal illness, wasting away whatever assets and goodwill left in this once proud and respected body.

Unclaimed Checks

2005-08-04T11:31:00.000+08:00

For all planholders,

There are over a thousand (1000) checks that are still unclaimed at Pacific Plans. Kindly pass this reminder to other planholders.

Thank you.

Stand Up and Be Counted!

2005-07-18T11:59:00.000+08:00

We've been hearing a lot of varied opinions from both sides of the debate. In order for us to get a better understanding of what the true wishes of the majority are, we have decided to organize a poll. So we encourage all of you to speak up and let your voice be heard!

You can only vote once in this poll so think your decision through before clicking to vote!

Picking Up the Pieces - Planholders Are All In the Same Boat

2005-07-13T14:22:00.000+08:00

Editor's Note:

For the general readership. As we've said on many occassions, this website is meant to engender well-reasoned debate and research. As you've seen in the previous comments, other planholders have asked how they should think about their situation relative to the trad planholders. The latest series of posts are well researched pieces as the editors are not given to frivolous and irresponsible analysis nor speculation.

Divergent views have never been feared by this weblog. However, it is our prerogative to delete comments that do not contain any hint at all of diligent research. We need to move on beyond emotional tirades and focus on cold and hard facts in order to arrive at the concrete set of actions.

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Other issues for other planholders to consider:

a) While the idea of putting up an escrow for planholders that have premium payments was emotionally appealing, it may likewise be nonworkable. This is due to the simple fact that we once again have to deal with contracts. In the planholders' existing contracts with PPI, there is no mention of conditions when escrow accounts can be activated. Given that fact, it is unlikely that PPI will accede to operations and initiatives that fall outside of the contract.

b) Let's assume that the trad planholders are paid off in full this year by PPI to shut down this debate on default. That is merely postponing the problem for next year because PPI will yet again have to pay out in full. If they continue to adhere to good business practice, they will preserve their credit standing since this is what PPI needs to continue to convince people to continue buying products for them.

Think hard about this one...who will buy insurance or insurance-like products from a firm that is defaulting? That will mean PPI will continue to pay off all current and maturing obligations IN FULL. In other words, the trad holders will still end up getting their full benefits.

So let us turn the problem on its head. If the trad holders keep their composure and continue to demand full payment, they will be eventually kept whole. It is the other planholders who now have to face the uncertainty of what PPI will have to resort to in order to stave off perennial default situations.

So again, we pose the question. Are not all planholders in the same boat? For the lawyers and finance people in the readership, the situation is totally binary. Do you believe that the planholders hold on to different classes of claims versus PPI or is it just one class?

From the previous posts, it is clear that we believe that it is only one class of claims.

We welcome any logical arguments to the contrary.

Picking Up the Pieces - All the Planholders Are In the Same Boat

2005-07-12T15:04:00.000+08:00

Judging by the comments to the last three posts, there seems to be a general feeling of unease as well as impatience on the next steps to be taken.

Prior to the SEC revocation, the battle lines were very clearly marked as well as the offensive moves to be taken. However, it can be said that the success the coalition scored with revocation has brought its own set of complex issues.

Much care and time has been spent in examining the new issues as well as the new concerns brought up by the commentators. At this point, we believe we can state the following since these can be supported with very tight analysis:

a) The selective default situation cannot be allowed to fester. Each day that passes that this situation is left unchallenged creates legal precedents that will make it easier for YGC to default on its obligations to other creditors;

b) The trust agreements are revocable in nature. It is an illusion for the other planholders to think that their particular plans have been "firewalled" by YGC. There is only a single trustor for all of these agreements. At any point in the future, YGC can revoke these agreements and rejuggle the holdings as they see fit. While this may sound inflammatory, it only does so because of the loss of trust that YGC has experienced. If YGC still enjoyed the confidence of the investing public, there would be no questions regarding this ability to rejuggle investments since this is not only the prerogative but the duty of YGC to make sure that the best possible returns are always being achieved by the investment pool(s).

c) As difficult as it is to swallow, it is the who are unavailed or have continuing payments that have the worst of all positions. They face unquantified risks and major uncertainties because default has not only happened but is the preferred strategy of YGC.

From the above points, there is actually commonality of interest FOR ALL PLANHOLDERS. We are all now dealing with a single company...one which is behaving badly and which is creating serious questions about its viability as a going concern.

It is now time for all PLANHOLDERS to step back, take stock, and if they find the above to be the case, to start taking concrete and concerted action.

Picking up the Pieces - Initial Round-up of Suggestions

2005-07-01T11:01:00.000+08:00

As stated in the previous post, there is a need to continue looking at solutions and suggestions since we cannot live in limbo:

From the posts, we have culled the following comments which could use further exposition:

a) An analysis was submitted which argued that the PPI customers who are worst off are those that still have subscription payments to make, regardless of the plan. And their dilemma is that of continuing to make payments in the face of a company that has already defaulted on its current obligations and may be setting up precedents on the issue of selective default with each passing day. The analysis concluded that the solution to dilemma was to liquidate the company. While it is a depressing prospect, it stops the uncertainty and unquantified risks that are accruing to those planholders.

b) One recommendation was to look into a management takeover of PPI, again as a result of the defaults. There are cautionary opinions regarding the feasibility of such a move if the takeover team will come from the coalition who, presumably, ave existing engagements;

c) Another recommendation was to use the power of aggregation to get better deals on investment products such as government securities. The concept of a cooperative has been put forward;

d) Another observation was to encourage / challenge financial institutions to offer "self-service" investment facilities so that customers can buy investments such as Treasury bills themselves in small amounts with small brokerage commissions rather than the hefty spreads as well as minimum lots that are the industry norm.

Let us see if we cannot continue to develop these and other ideas further. "If you want to get things right, you have to do it yourself" said one of our commentators. We wish that this did not have to be the case with respect to the management of our savings. However, the recurring sentiment is the loss of trust and the abovementioned items are evidence of that.

Have a good week-end.

Picking Up the Pieces

2005-06-24T15:58:00.001+08:00

Dear readers,

Some of you may be aware of the Law of Unintended Consequences. Very roughly, the law states that any initiative creates consequences that nobody could even imagine when the initiative was started.

That Law has been at work.

As this coalition gathered its strength and purpose, it has literally assembled an impressive array of talent and experience (e.g. expert lawyers, bankers, marketers, salespeople, media, etc.) as evidenced by the thoughtful comments in this blog over the summer just past.

As a virtual organism, these combined talents unearthed truly amazing amounts of information, secret memoranda as impressive as any other piece of investigative journalism. At the same time, we've been treated to detailed analysis and commentaries on the state of our government agencies, justice systems, banking practices, legal duties and responsibilities, and ethical concerns.

The unintended consequence is that the thoroughness of the work cannot help but leave an empty and sickening feeling at the pit of one's stomach...

Why? It's because we have come to the realization that we had a very close call. Had it not been for our militant and boisterous activism, we were actually being abused by:

a) guarantors of our children's education that were looking for slick ways to renege;
b) bank trust departments that couldn't be trusted;
c) supposedly crusading journalists who were only interested in spreading lies and aided and abetted by their publishers;
d) regulators who were routinely deceived;
e) lawyers and law firms who didn't believe that justice is blind;
f) justices who may not be just;
g) rich and educated business elite that behaved like the neighborhood thug.

And yet, we still have to deal with our pressing issues of planning our futures. Bank time deposits offer a depressing 2% return, inflation is running at 8%, and we still have to find out how to make our hard-earned savings work for us.

While we may all secretly wish we could go back to the way we were, there is, unfortunately, no magician out there that can wave a magic wand to make things right again.

We think we may have finally had enough of the sweet talking salespeople, their glossy brochures, and newspaper and TV ads that have ultimately betrayed us.

Lest this blog be accused of being negative and less than constructive, it may be a good time for the combined talents of the blog to put their thinking caps on and start coming up with concrete ideas and suggestions on how to start rebuilding the trust and confidence. We desperately need ideas so that truly reliable and trustworthy investments can be put in front of all the hard working Filipino families both here and abroad.

Have a good weekend and only concrete suggestions please!

Reviewer 11 - Court and Regulator Interaction

2005-06-23T08:21:00.000+08:00

Philstar 22 June 2005

The Lost Summer of 2005

2005-06-15T12:17:00.000+08:00

Dear Readers,

The summer of 2005 has passed and our children off to school, making do with their "tuition support". It is a good time to recap what we have seen and what we can expect.

a) A contract is a contract. We started off this campaign with this immutable, unchanging fact. Regardless of any excuse or justification proferred, this was always the ground issue that YGC could not escape. We all collectively wondered as to what was going on in the minds of the YGC owners and seniors as they attempted to pull off the great heist of 2005. At the very start, we believe that the majority of planholders were prepared to accept that the filing for rehabilitation was at worst a poorly thought out implementation with no malice aforethought. We felt that it would be voluntarily rescinded and life would go on.

b) As YGC hardened its position, we were forced to delve into issues and topics that would not otherwise be topics for conversation over dinner in many homes across this country. We also found that we were being made the enemy by their publicists. We were alternately accused of being elitists, or selfish and uncaring, or just plain dumb. What an ironic and unfortunate choice of strategy for communicating with your customers considering that we never invented preneed plans in the first place, nor did we coerce YGC into getting into the business. Before this summer, we were wooed and called dear and valued customers. We will all remember this the next time we are enticed to buy a product or a service from a YGC company.

c) We learned about what proper corporate governance should be and what constitutes bad faith and fraudulent behavior. The SEC made itself exceedingly clear on these issues when it issued the revocation order.

YGC should not flatter itself that the SEC was zeroing in on PPI with that report.

SEC had to worry about the broad implications of allowing and sanctioning companies to willfully renege on contracts. The Philippines would be a leper in the international community had they not affirmed this principle. And for all of the other PPI planholders who are resentful of the coalition's efforts, they are mindless of the fact that if PPI or any other company is allowed to renege on a single contract, then that serves as legal precedent and all other contracts be damned!

d) We learned about the workings of our mass media and how difficult it was to make our issues heard. Fortunately, we were able to devise other means and we now realize that concerned individuals can band together effectively to fight for a good cause.

e) We found about that companies always consult lawyers before taking drastic decisions. In our case, we found out that ACCRA had already given sufficient knowledge of the issues to YGC regarding the weakness of YGC's position. Unfortunately, we also learned that YGC ignored the good advice and decided to work with another law firm.

f) We found about judicial ethics and what we should properly expect from our judges in terms of how they should inhibit themselves in order to uphold the principle of preserving the public's expectation of unbiased court proceedings;

g) We found about the fiduciary responsibility and the proper behavior that we should expect from our financial institutions. We also found out that our trust manager has a very loose and seriously inadequate understanding of what constitutes cash or very liquid instruments as basis for the investment portfolio.

h) We found out about the cash dividends and the excessive sales commissions being granted (all during the period that PPI knew that it was headed for trouble).

i) We found out that it is not that difficult to create a decent portfolio to match the growth in tuition. However, if one insists on bloated expenses and questionnable investment decisions, then PPI can always claim it fell short of expectations. These are PPI's business decisions that it is solely accountable for.

j) We also found out that YGC has a murky understanding of liabilities and the division between equity holders and creditors. During the good times, generous bonuses and commissions were distributed to the senior managment and owners. Now that YGC has seen that the traditional educational plan product line is making PPI less profitable than it otherwise could be, they attempted to have the planholders rather than the owners absorb the losses brought about by bad business decisions.

h) We also found out that the minority shareholders are penalized as was evident in the maneuvers to create a corporate shell game. Values are stripped from profitable companies and cash dividends are declared out of supposedly troubled ventures.

Yes we have learned many things, the painful way but we hope that we are all better prepared and more vigilant going forward.

At the same time, we now know that YGC has also learned many things as well. They have learned that trust and integrity is the only true coin that they can use for conducting business. That coin is what allowed them to be part of the lives and aspirations of Filipino families over these many decades.

Unfortunately, in the lost summer of 2005, these same families learned many bitter lessons and insights into the values and ethics of YGC and in the process, YGC has lost their trust and debased their coin in the process.

Trust is an intangible asset that is a multiplier and has allowed YGC to enter into many businesses built on trust. The loss of trust over the summer of 2005 is now acting as the divisor and now penalizing these same businesses.

Welcome New Chapters

2005-06-09T16:08:00.000+08:00

Any group effort is certainly more meaningful compared to the work done by a handful. PEP Coalition knows that it cannot do it alone and thrives on the passion and commitment of a multitude of concerned parents.

The networking team has been busy in terms of coordination and we are welcoming the new members. While we are at it, we thought we'd link photographs depicting the tourist attractions of each chapter...

BACOLOD CHAPTER : CRISPIN CHUA

DAVAO CHAPTER : BEN BALDOZA

Important Housekeeping Matters

2005-06-09T15:27:00.000+08:00

CORRECTION....

"Membership Fee Php 200 and minimum voluntary
contribution Php 100 per plan Bank Account: c/o PEP
Coalition, Inc. BPI (Broadway Branch) C/A 0401-0084-03
Kindly fax deposit slip to 824-8144 or text the above
numbers for monitoring"

The bank account name should be Parents Enabling
Parents Coalition, Inc. (not PEP Coalition, Inc.) and
checks should be made payable to the complete name.

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membership form

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Special Power of Atty 1

Special Power of Atty 2

Judge Barza - Hello, we've not forgotten you!

2005-06-07T14:36:00.000+08:00

SC: PERC survey on judiciary does not show entire picture

By Jose Rodel Clapano
The Philippine Star 06/07/2005

A recent survey of expatriate businessmen who ranked the Philippines judicial system as among the worst in Asia did not reflect the actual situation in the country’s judiciary, the Supreme Court said yesterday.

In a statement, SC assistant Court Administrator and chief public information officer Ismael Khan Jr. said he was "surprised" by the findings of the survey conducted by the Singapore-based Political and Economic Risk Consultancy (PERC).

"I am surprised at the results of this survey which do not seem to reflect the actual situation on the ground. It is obvious that whoever evaluated the survey results does not have a clear understanding of how the Philippine legal system works and how independent the Philippine judiciary is," Khan said.

Khan said that PERC’s assessment "flies in the face of the latest Social Weather Stations survey which show a very high approval rating for the Supreme Court."

"The recognition extended by many countries of the First World which have more than a nodding acquaintance with the progress that the Supreme Court’s judicial reform program has received is a much more reliable indicator of their regard for our legal system which puts a premium on due process and the rule of law," he said.

Khan said that this fact has been acknowledged by the World Bank, the Canadian International Development Agency, the Asian Development Bank, USAID, the Japan International Cooperation Agency, the European Union, Asia Foundation and many others that have supported the Philippines in this effort.

"In fact, an international conference to be hosted by the Supreme Court in November this year, with the support of the World Bank, will showcase its successful judicial reform programs," Khan said.

The PERC earlier ranked the Philippine judicial system ninth in a survey of expatriate business executives who rated the judicial systems in the region.

"Few foreign investors feel very confident working within the legal system in the Philippines where laws are not built so much on precedents as on quicksand," the PERC concluded.

The Philippines’ rating fell sharply to 8.10 from 7.71 in 2004, ahead of only China, Vietnam and Indonesia among Asian countries.

The same survey ranked Hong Kong and Singapore as having the best judicial systems in Asia. Hong Kong overtook Singapore for the top post, toppling the rival city-state from its pole position in 2004. Japan came in third.

In ranking the countries and cities, the business executives gave weight to how legal systems are used to enforce contracts, resolve disputes, fight intellectual piracy and enforce securities and exchange regulations.

In the PERC rankings, countries and cities were graded on a scale from zero to 10, with zero being the best grade possible and 10 the worst. Respondents were asked to rate quality of the court system and the police force, and the results were averaged to obtain overall scores.

Khan said that the High Tribunal, which celebrated its 104th anniversary yesterday, planned to highlight its celebration by holding a mini-motorcade.

"A mini-motorcade highlighting the SC anniversary celebration, the Justice on Wheels project and other judicial reform activities will pass through the main thoroughfares of Metro Manila," Khan said.

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This article was in today's Philippine Star. Foreigners do not feel that their contracts will be protected as soon as they put their money in because of their lack of confidence in our court system.

What say you, members, friends and foes of the PEP Coalition, is this a malicious and unfounded attack on our country? Or are you aware of incidents where people choose to run away from their obligations and attempt to muscle their way through the courts of law and public opinion?

What say you, members of the FIRM and Judge Barza? Is it fair to say that this report of this meddlesome foreign group is an indictment of your profession?

As we said, l'affaire PPI is a microcosm of everything that is good and detestable in our fair and native land. How we all conduct ourselves in this crisis will have repercussions way into the future.

The Contagion of Creeping Loss of Confidence

2005-06-06T15:32:00.000+08:00

Excerpted from the Sun Star Cebu May 25 2005

Public told: Life insurance plans different from pre-need plans

LIFE insurance plans are different from pre-need plans.

This is the message life insurance companies want to get across to the public, as the problems of the pre-need industry begin to affect the campaign of life insurance companies to increase awareness on the importance of life insurance.

"Pre-need is different," said Generali Pilipinas executive vice president for sales and marketing Joe Ferreria. "We want the people to realize that investing in life insurance plans is an (alternative) to investing in pre-need plans,"

The Life Underwriters Association of the Philippines has been conducting an educational campaign to make the public realize the importance of insuring lives. But the liquidity problems of pre-need companies like the College Assurance Plan (CAP) and the Yuchengco-owned Pacific Plans are now affecting this campaign.

While CAP is still assuring its planholders that it can pay its liabilities, Pacific Plans has admitted that it can pay only in 2010. It has filed in court a petition for rehabilitation, with Pacific proposing to return the money of its planholders, plus a return of seven percent per annum from the date of full payment up to July 2010.

Pre-need company Cocoplans Inc. president Caesar Michelena earlier said the selling of open-ended contracts, especially for education plans, is one of the reasons why some pre-need companies are now in financial trouble.

In an open-ended contract, pre-need firms must pay the amount of the tuition, whatever it might be, regardless of the premium paid by the plan holder. But tuition has increased significantly for many years.

Pre-need plans include educational, memorial and pension plans.

Not open

Generali Pilipinas' Ferreria said life insurance companies do not sell open-ended contracts. "The open-ended contracts are products of the pre-need industry. Life insurance companies have defined benefits."

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This article above is one of many examples of the insurance industry reacting to the demoralization of the investing public with respect to preneed plans. With the benefit of 20:20 hindsight, we sympathize with these insurance companies' position.

The preneed companies not owned by insurance companies have had great success pouring buckets of money into lobbying for the supervision of the industry by the Securities and Exchange Commission rather than the Insurance Commission (who is responsible for safeguarding the insurance industry).

During the good times, the lobbyists argued aggressively that the preneed industry could be more creative and deliver value to prospective planholders. And of course, the insurance companies were painted as sour grapes in warning about speculative excesses that the preneed companies could get into simply because prudential guidelines were and still are being formulated by the SEC (who are much less experienced than their Central Bank or Insurance Commission counterparts).

And therefore in a frustrating case of "I told you so", we now have the CAPs and PPIs of the world pleading with their insurance company brethren to come out with a united stand in saying that tuition inflation was beyond anyone's control. On top of that, the insurance companies are being dragged down and stigmatized with the failings of these two companies as they are now finding it hard to sell their offerings.

Make no mistake, thanks to PPI, there is now a crisis of confidence that is shaking the entire industry due to the lack of transparency and integrity of these erring firms.

May we suggest that the more appropriate stand is the one that Mr. Cuisia has advocated stating that there must be "accountability for results". Rather than stay silent, the correct thing for the insurance companies to do is to call a spade a spade and come out with an industry position paper stating that they support the SEC's scathing evaluation of PPI's miscarriage of fiduciary responsibility at these erring firms.

Comments on Cat Danny's Investment Strategy

2005-06-04T09:13:00.000+08:00

Some commentators in the previous post had problems with Cat Danny's seemingly simple minded investment strategy. For example:

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Anonymous said:

It Seems that Danny the Cat(and Coalition) doesn't know his numbers:

Using your example:

Principle:$100
End Principle: $176

Increase before taxes: 76%

End Principle after Tax(20% tax on yield): 160.8
Effective percent increase in capital: 60.8%
(Coalition forgot TAXES!!!!!)

Begininng Tuition Fee: P17000 or $708.33 (@24PHP:1USD)
End Tuition Fee: P69,000 or $1254(@55PHP:1USD)
Increase: 77%

Increase in Money (60.8%) can't cope with Tuition Fee Increase (77%)

This doesn't include trust fees,administrative fees, and the like.

By your own example, you killed your own logic that you can find an investment that can match tuition fee hikes.

Coalition should try and try again until you can create something that seems logical.

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We thought it best to bring back Cat Danny and have him respond to the rebuttal of above commentator...

Cat Danny Explains

"Dear readers,

Oh dear, I probably should stick to opening real piles of garbage rather than the PPI garbage heap. But it's good for the kids who may be reading the blog to pick up a few lessons in discussing the comment above:

a) For those who have ever been members of a debating club, Ms. Reyes' article in Philstar is not debatable because people interested in coming up with a counter argument do not have the free access to information that she has had. At best, we can say that it is a paid notice since the claims are hard to verify independently.

b) For debate, I used publicly available information. As you can see from the commentator above, he or she can now look at information I've presented and try to draw different conclusions. Now, that is what I call fair and transparent;

c) Using the commentator's own counter-argument, he has calculated a gap of 16% (77% increase in tuition less 61% increase in portfolio). Let's stay with this for the moment.

Readers should recall the original claim of PPI. They said that due to the runaway inflation in tuition, they were constrained to cut back on their payments. When PPI issued its initial stop payment order, my masters only got 50% as tuition support instead of the PhP69,000 that they were expecting (which is what I used in my example by the way).

As I said, I'm a cat with the small brain of a cat. Not even my simple-minded investment strategy could manage to create a hole of 50%. I believe that is exactly the point of asking for a full and transparent audit of the activities of the trust management professionals.

d) If you want to use my simple-minded investment strategy, I work cheap. A can of tuna every other day is sufficient for me as investment management fees. Now, you have to considerthe fact that the experts in investment management, who get paid very well, now only need to play devise just something slightly smarter and they can already make up for the 16% gap.

As Mr. Jose Cuisia said in Dong Puno's show the other month, "there has to be accountability for results".

e) On the question of taxes, aren't there are many tax free alternatives that could have been used?
1. FCDU time deposits (taxed at 7.5% withholding only recently);
2. Foreign Currency Investment Management Accounts that could have been used to invest in these Tbills;
3. Special Series Treasury Bills and Notes;
4. 5 years + 1 day bank time deposits that paid out coupons without withholding, etc. etc.

The point here is that there are similar investments that can be substituted in my analysis that would not be subject to taxes either and are already readily available in the Philippines.

It is up to the investment manager now to figure out the best way to figure out the best legal vehicle to purchase these assets for the planholders. Again, they're well paid to do that...I'm just a cat with a small brain.

f) Finally, the correct term is principal not principle. Don't want the kids going around with bad spelling (sorry...I'm being catty, it's a bad hair day!!!)

g) I hope that my original strategy and this explanation are logical.

Thanks for listening,

Danny
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We trust that the above response will continue to fuel questions in all our minds regarding the competence and ethics of the trust management professionals who had the fiduciary responsibility over the planholders' assets.

Obviously, this week, we have pounded hard on the performance of the trust managers and will continue to do so because this is one of the keys to solving this deepening mystery. A mystery which can only be answered and have trust and confidence restored to this battered industry by way of a no holds barred audit of the trust operations.

We try to strike a balance in this blog in the interests of stoking debate such as the one mentioned here. This blog is still a research and information site. As the readers have noticed by now, the items posted do not have a uniform tone and this is done deliberately in order to get points across and to elicit comments such as the one above in order to have a further discussion.

2005-06-01T20:25:00.000+08:00

The PPI case
HIDDEN AGENDA By Mary Ann Ll. Reyes
The Philippine Star 06/01/2005

Pacific Plans Inc. (PPI), a member of the Yuchengco Group of Companies which is exclusively handling about 34,000 open-ended educational plans, is certainly facing funding problems with its open-ended planholders.

This is because the deregulation of tuition fees in 1994 has caused a tremendous rise in the cost of education which, in turn, put enormous pressure on open-ended plans and their corresponding trust funds considering that pre-need companies selling open-ended plans, such as PPI, could not pass on the additional cost to their planholders. It has to be emphasized that the problem is not peculiar to PPI but is, in fact, an industry-wide problem.

Since the 1990s, tuition fees of exclusive private education institutions have increased by an average of 16 percent every year to as much as 28 percent per year.

In contrast, the return on investment on the trust funds created specifically to discharge their obligations under the open-ended plans ranged only from 11 to 14 percent. In other words, PPI’s actuarial assumptions for its open-ended plans were compromised by deregulated increases in tuition and standard fees.

Consequently, pre-need companies began experiencing trust fund deficiencies, 80 percent of which were reported to have been caused by availments on the traditional educational plans.

Because of this, PPI mid-last year was forced to transfer its fixed value plans, pension, memorial and educational fixed plans to another Yuchengco company, Lifetime Plans Inc. (LPI). This was made to protect the more than 400,000 fixed planholders from the huge financial requirements of the open-ended plans or those plans without any cap on educational benefits.

This transaction was intended to improve the efficiency and enable PPI to focus on open-ended target market segments.

At the opening of classes this school year, out of the 34,000 open-ended planholders, there are exactly 15,954 planholders of PPI who are availing of the plan’s benefits or are sending students to school.

This availing group of planholders had paid or contributed a combined total of P557,136,180 in premiums from the time they acquired the plan, with some having started paying back in 1986. That was the year PPI introduced the open-ended plan to the market, which they closed in 1992.

What ails PPI now is the fact that 22.5 percent of those currently availing planholders or only 3,590 are eating up more than 36 percent of the total benefits. These are planholders who are sending their students to exclusive schools. This small group is supposed to get P753.5 million of the total benefit packages.

This group contributed only P132 million to the plan. With 570-percent return on their investment, these minority planholders are the privileged group compared to the non-exclusive school set of planholders.

On one hand, the bulk of the open-ended planholders who are using non-exclusive schools numbering 8,347 or 52 percent of the availing planholders and who had paid over P172 million are getting only 29 percent or a total of P605.8 million.

And consider this: Some of these individual planholders contributed a total of only P29,200 each from 1987 in premium payments and collected up to as much as P558,000 in benefits representing 1,900 percent in their return on investment.

Now, a further review of PPI records and statistics of planholders who had fully availed of the plan’s benefits would attest to the inequity of the distribution from among those whose students are sent to exclusive schools and non-exclusive institutions.

This, thanks to the unabated increases in tuition fees since its full deregulation in 1994 that saw private schools scampering to determine their respective levels of tuition adjustments every year. This government policy prompted PPI to stop selling the open-ended plan two years ahead of full deregulation.

A total of 38,730 planholders had fully availed of the plan’s benefits, meaning, the beneficiaries had gone to school up to graduation under the plan.

And, as in the case of those still availing the plan, those who benefited much constitute 12,063 planholders representing 31 percent whose students were sent to exclusive schools, with total benefits amounting to P2.17 billion or 48 percent of the P4.6 billion that accrued all those who had availed of the plan. While they contributed some P397 million to the plan, they had a 549-percent return on investment.

The majority 21,825 planholders or about 56 percent of those who had fully availed earned total benefits amounting to P1.6 billion, or only 36 percent of total accrued benefits. They had a 500-percent return from their P326.7 million total contribution.

Under the prevailing average rate of return, which on specific cases had reached to as much as 2,232 percent on a total premium of P13,800, and which is abetted by unparalleled yearly increases in tuition fees, the planholders who still have to avail of the plan – numbering 18,510 – will be left with no more benefits to enjoy.

The P557-million contributions of those availing planholders are not even enough to earn for them P2 billion in benefits until 2010 without a rehabilitation program. More so, those who still have to avail will be deprived of the benefits since their own contribution will be wiped out when the benefits of those currently availing are fully enjoyed.

Just the same, PPI has opened a tuition fee assistance window amounting to P591 million for this school year to planholders who are sending their children to school. Of this, P341 million came from PPI while P250 million came from the head of the Yuchengco group of companies, Alfonso T. Yuchengco.

However, this window has been closed after the Securities and Exchange Commission (SEC) last May 25 revoked the registration of LPI.

With the SEC decision, the fate of the 400,000-plus fixed planholders under LPI is in limbo, not to mention the 14,400 sales force and employees of the company.

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The editorial staff of this weblog is always under pressure to try and anticipate the various initiatives that YGC is attempting at any point. Fortunately, many doors have been closed to them:

a) The SEC has definitively called their entire scheme as fraudulent and steeped in bad faith;
b) Their attempt to spin off Lifetime and siphon away the profitable pieces has been aborted by the revocation.

The article above is now a belated attempt on their part to sway public opinion that the entire industry is the victim of runaway tuition inflation. YGC is also aware that Mrs. Helen Dee boastfully remarked to Boo Chanco that she could defend the investment decisions made at Plaza Miranda.

In what Ms. Reyes is passing off as her own research (tsk, tsk, another CM Recto job if we ever saw one...), PPIwould have us now accept that they have opened PPI's and the trust departments' records to her so that she herself can do her own exhaustive analysis. The implicit agenda in this article is to show that despite their valiant efforts to play catch up, they (ie. PPI) and the rest of the industry were simply overwhelmed by the tuition increases.

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We unfortunately have to shut down another YGC line of defense because it is devastatingly easy to disprove the abovementioned article. We will discuss a simple investment strategy that our pet cat, Danny, can do in his sleep.

Danny- The Investment Manager

The strategy calls for investing money in US one year treasury bills at the start of the year and rolling the money over (principal and interest). In that way, we can take advantage of compounding.

The strategy assumes a starting point of 1992 and an end point of 2005 with a starting investment of US$100. We also look at what the tuition payout for a so-called elite school in peso terms for 1992 and 2005. We then convert the tuition into the US $ equivalent to see if our investment strategy has kept up.

Unlike Ms. Reyes figures which concocts numbers based on data that none of us can verify, we simply had to retrieve data from the website of the Federal Reserve Board of St. Louis for the US 1 yr. treasury bill for constructing the table and simulation below:

No Brainer Investment Strategy

As one can easily verify from the table, our pet cat Danny's investment strategy has been able to keep up with the alleged runaway inflation in tuition.

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Therefore, we come back and pose the following comments:

a) We have noticed that whenever we post documents or facts, the apologists of YGC never join in on the exchange of comments. We challenge the apologists now to explain away our pet cat's investment strategy;

b) The investment managers were paid 1/2 of 1% per year for their so-called investment expertise. What they have managed to do is to create a tremendously underperforming portfolio with horrible assets. CALLING THE BSP ONCE AGAIN.... We want our money back, with investment managers like that, we were much better off doing the job ourselves.

c) Since PPI and the trust managers have decided to waive confidentiality and bank secrecy to Ms. Reyes for her research, then we have to CALL THE BSP ONCE AGAIN to give planholders equal access and transparency.

d) We are now beginning to think that there really is more than meets the eye with respect to those Napocor Bonds. We want everyone to come clean. Commentators on this blog have hinted that RCBC Capital made money underwriting it, sold it to Treasury, and then stuffed it into the PPI portfolio (ie. made money 3X)? CALLING THE BSP, PLEASE...

WE'RE AS MAD AS HELL AND WE WON'T TAKE IT ANYMORE.

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Now that we have shown the no-brainer investment strategy, Mrs. Helen Dee will have to really cram for Plaza Miranda and explain why she and the rest of the gang should not be hauled off to jail for gross negligence on top of the other transgression that the SEC has factually documented.

By the way, we could not help but notice how the apologists were arguing that it would be hard to prove gross negligence (shame on you, looking into the e-group emails...).

Now that you have seen what our pet cat Danny can do, you may want to sing a different tune (we still welcome stool pigeons to help us out)

Explanatory Note on the AIG article

2005-05-31T10:41:00.000+08:00

The AIG article was put up for each reader to reflect on. When this coalition was first organized, one of the questions put on the floor was "How far are we willing to go to prosecute this fight?"

If fraud and pyramid scams have become commonplace in our country, it is also because we are to blame by allowing these things to happen.

"It doesn't affect me, why should I get involved?", is a common refrain.

As a result of this nonchalance, if not apathy, swindlers go scot free. For example, when was the last time you saw a bank executive go to jail for the failure of his bank. We must have had fifteen closures over the last fifteen years and not a single conviction.

The SEC report stares us in the face because it is as factual as they come.

Fraud and bad faith are conclusions that now form part of that report and are now in the public record. We are certainly beyond the stage of pushing and shoving. YGC has pushed very hard (and will continue to pull every dirty trick out of its black bag) to deprive planholders of their entitlements and was caught red-handed. Question is, how hard do we shove back and what are we going to do now that the SEC report has spelled everything in black and white and all we need to do is to draw the right conclusions?

Will it ultimately be another case of "pusong mamon" and take pity at the last moment on the perpetrators? These perpetrators will most likely be people we know, we are friends with, or we are even related to.

If we are truly fighting for our children, then we should look to set an example. True justice and equity can only happen if there is also resolve and a strong measure of sternness to see and desire that the punishment meted out.

If we have impoverished our country it is because we, the people that can make a difference, have allowed our system of government and justice to be dysfunctional. That's why YGC had the guts to attempt this misadventure in the first place -- to take value away from us and to squirrel it away for themselves. That story is as old as the story of our moneyed elite.

This fight is as much a test and judgement on YGC, its individual and collective character and ethics, as it is on ourselves.

Comparing Notes

2005-05-30T12:10:00.000+08:00

The Associated Press
Updated: 3:18 p.m. ET May 26, 2005

ALBANY, N.Y. - New York Attorney General Eliot Spitzer on Thursday filed a civil suit against American International Group Inc., accusing the nation’s largest insurance company and two former top executives of using “deception and fraud” to boost the company’s stock price.

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The suit filed in state Supreme Court in Manhattan accused AIG’s former chief executive, Maurice “Hank” Greenberg, and former chief financial officer, Howard I. Smith, of orchestrating an accounting scheme that made AIG’s financial picture appear brighter than it was, misleading both investors and state regulators.

“The irony of this case is that AIG was a well-run and profitable company that didn’t need to cheat,” Spitzer said. “And yet, the former top management routinely and persistently resorted to deception and fraud in an apparent effort to improve the company’s financial results.”

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We thought we would clip this article from the Associated Press to illustrate an analogous situation in the U.S. We can see how the case is being handled by the government which is clearly moving to protect investors and maintain the integrity of the insurance industry.

The similarity with PPI case is the fact that neither of the companies were in financial difficulty (as the cash dividends of PPI solidly prove). However there are yet undisclosed reasons which motivated the senior management and owners of both institutions to commit fraud.

At least in the U.S., the judicial system has a proven record of putting white collar criminals behind bars. And that is not true just for developed countries. Our neighboring country, Indonesia, recently sentenced and jailed the bank president of the largest commercial banks.

And what outcome can we expect from this unfolding, misbegotten adventure called PPI?

Whom the Gods Wish to Destroy They First Make Mad

2005-05-26T15:21:00.000+08:00

By Zinnia B. Dela Peña
The Philippine Star 05/26/2005

The Securities and Exchange Commission (SEC) cancelled yesterday the registration certificate of Lifetime Plans Inc., the spin-off unit of the troubled Yuchengco-owned pre-need firm Pacific Plans Inc., for failure to comply with certain registration requirements.

In its order, the SEC said it has withdrawn its approval of Lifetime Plans’ certificate of incorporation due to the firm’s failure to submit documents to support its capitalization.

Among these requirements include the submission of proof of collection of receivables worth over P40 million and transfer of ownership of transportation equipment worth around P6 million.

Benito Cataran, head of the SEC’s Company Registration and Monitoring Department, said Lifetime Plans failed to submit the required documents despite sufficient time given by the SEC. The company was given until September last year to comply with the remaining requirements.

In the same order, the SEC has directed Lifetime Plans’ trustee banks Rizal Commercial Banking Corp., ING Bank N.V., and China Banking Corp. to preserve the trust fund of the pre-need firm until further orders of the commission.

With the order, it is expected that the assets of Lifetime Plans shall revert to Pacific Plans.

Meanwhile, the Yuchengco Group has decried the SEC decision, saying this has put in jeopardy the interests of over 400,000 Lifetime Plans planholders.

"This move by the SEC, which ironically is supposed to safeguard the interests of pre-need planholders, has effectively put in limbo the payment of benefits to the more than 400,000 planholders of Lifetime Plans," the Yuchengco group said in a statement.

Lifetime Plans said it would not take this matter sitting down and will, in fact, appeal the SEC decision.

SEC Commission secretary Gerard Lukban said the ball is now in the hands of the court as the SEC has already done its part in safeguarding the interest of the investing public and ensuring that its rules are complied with. "It is now up to the court to decide on the issue. As far as the SEC is concerned, we’ve already done our job."

The Yuchengco Group, however, said the SEC decision may cast doubts on the rehabilitation of Pacific Plans. As a result of the order, Pacific Plans said it is withholding payment to its planholders until all issues brought about by the SEC order are cleared and resolved.

Prior to the SEC order, Pacific Plans had distributed P591 million in cash to planholders, P250 million of which came from the personal resources of Ambassador Alfonso Yuchengco, the patriarch of the Yuchengco Group of Companies.

Pacific Plans said that if the court approves its rehabilitation plan, it will also initially provide a liquidity window of another P300 million to its traditional planholders.

Pacific Plans legal counsel Jeannette Tecson pointed out that the pre-need firm’s move to file for rehabilitation was not meant to defeat planholders’ claims but to ensure the expeditious and orderly payment of planholders" claims.

Tecson said Pacific Plans is ready to answer all charges levelled against it by the SEC.

The SEC has asked the Makati Regional Trial Court to dismiss Pacific Plans’ petition for rehabilitation for lack of merit. In its opposition, the SEC said" there is no necessity for Pacific Plans to undergo corporate rehabilitation and that the said petition was merely resorted to by the company to evade its contractual liability to planholders."

The SEC cited the financial statements submitted by Pacific Plans which showed that the pre-need firm is solvent and liquid. As of end-Dec. 2004, Pacific Plans even exceeded its trust fund liquidity reserve requirement by P3.77 billion.

According to the SEC, Pacific Plans had a total Net worth of P657.84 million and P119.08 million as of end-Dec. 2004 and March 31, 2005, respectively.

The SEC said it was because of Pacific Plans’ healthy financial condition that it agreed to the pre-need firm’s proposal for the spin-off of its pension, education and memorial businesses into a separate company called Lifetime Plans.

It also questioned Pacific Plans’ disbursement of P18.46 million in the last quarter of 2004 as management service fee to Lifetime. It also noted the pre-need firm’s allocation of commissions and bonuses to its agents and employees.

The SEC likewise pointed out that Pacific Plans deliberately failed to disclose any indication that it was indeed facing serious liquidity issue.

It also accused Pacific Plans of doctoring its books as it submitted a different set of figures in its audited financial statements as of May 31, 2004 to the Bureau of Internal Revenue.

Moreover, the SEC said the new fixed plan offered by Pacific Plans amounts to a novation of contract and therefore cannot be forced upon the planholders without their consent.

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Child psychologists will tell us that under stress, we all become what we were when we were three years old.

The SEC report has already confirmed what this weblog has been asserting... that there is enough money to go around within the old PPI. With the revocation, SEC has restored us to that state of affairs.

The three year old in us will insist on the logic that it was perfectly feasible for the much crippled PPI to be making tuition support payments but at the same time, find it impossible now that it has been re-endowed with its original resources.

The three year old in us will throw a tantrum and say that it's the fault of the SEC and not ours and that is the reason why we cannot make the payments we were happily doing last week.

And the three year old in us will call the SEC a liar when the SEC shows us the same documents we submitted and were caught cheating.

Clearly, YGC seniors have triggered another potentially destructive spiral by suspending payments (they're being cute when they use the word withhold). They have chosen to ignore the warning that ACCRA gave in their opinion should they choose to pursue this course of action. With revocation, PPI is once again a healthy, solvent, and liquid company and their misguided decision to suspend payments raises issues of opening themselves to creditor challenges not to mention gross negligence or willful misconduct.

Which leads us to think that the reason that YGC was so obsessive about this spin-off was that it wanted to stuff the trad plan holders with the consequences of their collective decision to put money into bad investments. It could also be the reason why they could not come up with the necessary explanations in time to meet the compliance requirements of the SEC.

Would anyone at PPI or RCBC care to step forward and comment on this hypothesis?

The Beginning of the End

2005-05-25T20:46:00.000+08:00

Or is it the end of the beginning. Furnished below is the SEC letter revoking Lifetime Plans' Certificate of Incorporation....a body blow to PPI's and their lawyers' best laid plans.

Atty. Tecson on TV today had to put on her best face to claim that the SEC's presentation of this document at the Makati RTC was a publicity stunt that they weren't aware of.

AWWWW, Come on....The Yuchengco family was burning the telephone lines till late last night imploring the SEC not to issue this revocation. But they were informed of the Commissioners' decision last night...

Some items to think about and subject for further investigation:

a) There must be a particular feature, transaction, or requirement for lifting the escrow that PPI found difficult to regularize. We can rule out oversight or forgetfullness because there was nothing more critical than the need to spirit away the treasure into Lifetime. What could that irregularity be?

b) The stipulation for compliance was 30 days from 12 August 2004. It is again now plainly obvious that YGC was calling in all sorts of favors in order for the deadline to be continuously postponed;

c) What rehab are we talking about? Lifetime has ceased to exist. Or more correctly put, never existed in the first place because the escrow period was a conditional state of existence;

d) The sales of Lifetime were executed during the escrow period. May be another case of fraud for selling something that one was not yet legally entitled to do???

e) It is for the SEC to comment but our recollection is that revocations like this are rare and are usually reserved for scams, pyramiding, or Ponzi schemes.

revocation - p.1

revocation - p.2

revocation - p.3

A Tarnished Reputation

2005-05-25T20:20:00.000+08:00

REMOVING THE TARNISH

A picture is worth a thousand words. We happened to catch this gentleman at work at the Grepalife headquarters on Sen. Gil Puyat. We swear on a stack of bibles that this photo is neither posed nor doctored (except for the obvious magnification of course).

If only fixing an utterly destroyed reputation were as easy as buying a small bottle of brass polish and putting in a little elbow grease.

At least, one thing that YGC can truthfully say is that they hire HONEST people.

prayer rally 25 may 2005

2005-05-24T15:17:00.000+08:00

REMINDER: PRAYER RALLY
VENUE: ST. ANDREWS PARISH, SAN MIGUEL VILLAGE MAKATI
TIME: 0830h 25 MAY 2005

In order not to cause traffic within the immediate vicinity of the church, participants are advised to give ample allowance so that they can park their vehicles elsewhere and proceed to the church on foot.

ACCRA OPINION OF 9 MARCH 2000

2005-05-24T08:44:00.000+08:00

There is validity in the carefully worded pseudo-denial that PPI issued. The opinion they sought from ACCRA was not on rehabilitation but rather on their initiative to cease honoring the secondary transfers of plans.

Having stated that, the issues and maneuvers that PPI was contemplating way back in 2000 eerily foreshadow the controversy surrounding them today. The issues are uncannily the same.
We now know with certainty that these legal issues are not new to them nor are they defensible...

accra opinion - p1

PPI was selling traditional plans up to 1995???? This is either an unfortunate typographical error or Atty. Tecson and Mr. Garcia are deliberately misrepresenting the facts regarding their cessation of activities in 1992.

accra opinion - p2

Actuarial assumptions (right or wrong) are the full responsibility of PPI. PPI has been claiming that their alleged 1992 deregulation destroyed all of their investment assumptions. Unfortunately their failure to correct them would still constitute negligence for which they can be held fully accountable for.

accra opinion - p3

From the above highlit passage, it is now clear to all why PPI chose to employ this lame excuse by stating the government chose to deregulate in 1992...only to be disproved as later on as an erroneous line of reasoning.

It also explains why they engineered the split into two companies. As a single company, PPI had the wherewithal to answer for any and all claims that came its way because of its profitability. By engineering the mutilation, then they can now attempt to argue that the deliberately weakened PPI does not have the resources to continue to meet its obligations.

accra opinion - p4

A highlit section above provides unfavorable opinion to say the least.

accra opinion - p5

ACCRA has invoked the "prudent man" test and informs PPI that their contemplated course is hardly defensible.

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Four years later, armed with another law firm (who apparently believe that ACCRA may have been less than knowledgeable) who were prepared to accept the challenge, PPI decides to force these issues anyway.

The intervening legal strategy has become more complex and more brazen. Rather than attempt to cease honoring their representations, they seek to redress the weakness of their legal position by "hollowing out" PPI and then argue that the weakened shell of a company is unable to carry on.

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These documents provide a critical historical basis for understanding the events as they currently unfold. What we are seeing for ourselves is the sickening revelation that all of these issues were well known and properly documented by PPI. It is also understandable now how and why the SEC was misled...PPI could certainly not have a frank and open discussion with SEC could they given all of this information that they had!? A true case of bad faith (as has been subsequently called out in the SEC report).

The fact that they proceeded with it anyway shows full knowledge and premeditation and betrays a cynical, sinister, and ruthless side of YGC that none of us knew could even exist.
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We welcome the YGC implementers, apologists, flatterers, and sycophants to put their most cheerful spin on the documents presented above. They should also ask themselves, "do they hate these defenseless schoolchildren so much that they would put their talents in the service of such a company?" ...

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"...for they have sown the wind, and they shall reap the whirlwind"

Vigilance is Critical at the Makati RTC

2005-05-24T08:39:00.000+08:00

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DEMAND AND SUPPLY By Boo Chanco
The Philippine Star 05/23/2005

" Now, everything is coming home to roost. As I told Helen Yuchengco Dee, their big problem is that they allowed their lawyers to call the shots in this crisis of their lifetime. I told her that it was pretty sneaky of them of try that gambit of creating another company and subjecting the original Pacific Plans company to court-ordered rehabilitation.

I read the letter they sent to Pacific Plans subscribers and if that letter was addressed to me, I would naturally be enraged. One of my friends showed me the letter he got and the letter said that unless my friend responds in so many days, it would be assumed that he has agreed to be paid many years down the road and only at seven percent interest. That’s extremely sneaky legal ruthlessness, for which the Yuchengco family will end up paying dearly..."

"...If this is the way the Yuchengcos are going to handle this case, Helen should take the advice I gave her: Quickly sell their holdings at RCBC, Grepalife and Malayan while they still have value. They cannot continue being in the business of providing financial services with this big blotch on their reputation"

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The coalition has to brace for the worst. Over the week-end, we have been thoroughly appalled by the fact that rather than admit its serious lapse of judgement and offer of rescinding its rehabilitation plan, YGC has continued to be confrontational, indignant, and unrepentant.

This can only tell us that neither moral suasion, such as the one which Mr. Chanco is attempting, nor a highly critical SEC report will succeed in restoring YGC's sense of amor propio and delicadeza. We can only assume that they are highly confident of winning their appeal and having their way, together with their legal henchmen, with the Makati RTC and have chosen to put all their eggs into the basket.

Unless we witness an 11th hour spiritual conversion, it already appears that between reputation and love of money, love of money has triumphed. As we speak, YGC is now prepared to defend in court, the value it spirited away from PPI.

YGC and their legal cohorts would do well to re-read Dante Alighieri's "The Divine Comedy" and read closely those souls who descend to the eight ring of hell.

A Curious Denial

2005-05-23T20:03:00.000+08:00

May 18 Phil. Daily Inquirer PPI Denial

These paragraphs were quoted by a commentator to one of our previous posts. We thought that it was worth reproducing the original section as it appeared in section A6 of the Phil. Daily Inquirer dated 18 May 2005.

We thought it was curious that PPI should have taken it upon itself to deny the existence of an opinion that Accra was supposed to have issued regarding the rehabilitation that PPI was contemplating. We looked for a letter to editor of PDI on the mentioned date but were not able to find any. Anyway, even if it were there, ACCRA probably does not need any lawyering on its behalf (pun intended).

Is it a case of "where there's smoke, there's fire?"... Worse, what if such an opinion were actually there and ACCRA was just too gracious not to put YGC in a worse position than it already it is in. Meaning, YGC can do the denial but not ACCRA itself...

Focussing on Judge Romeo Barza

2005-05-23T19:29:00.000+08:00

Motion to Inhibit

The integrity of the judicial system now suddenly falls on the shoulders of RTC Judge Romeo Barza. Several thousand planholders are now painfully aware of the hard and fast ethical rules that the judicial imposes on its members. Impartiality and objectivity above all.

The question now before Judge Barza is: follow the canons of judicial ethics and instill much needed confidence in the country's judicial system. Or turn a blind eye and plunge his profession and the judiciary into further turmoil and controversy.

For better or for worse, history will be written on the 25th of May.

Let's all be together on Wednesday and make our presence and prayers felt.

Additional Tuition Support Checks at PICC

2005-05-23T15:40:00.000+08:00

We are posting this comment that was sent in today:

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Attention: All Availing Planholders
If you were able to get your 1st and 2nd check, have the two checks totalled, the sum of which should be the amount of the availment you got last year, IF NOT, call 816-0000 and complain, you can still have your THIRD CHECK.

FYI, PPI is now issuing check starting today till May 31, 2005 at Rm.11 3RD flr., PICC, Roxas Blvd.

Monday, May 23, 2005 12:47:46 PM
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We've had a chance to talk this afternoon with some planholders who have gotten their 3rd installment check for "tuition support" . The information is accurate. PPI's fulfillment level seems to be running at 91% of their obligations for SY 2005-2006.

Based on the comments given, the tuition support is only equivalent to last year's payout. In addition, we understand that the Lifetime staff at PICC were requesting that the planholders who got their 3rd installment if they were agreeable to indicating that PPI had already "PAID IN FULL". The planholders we talked to did not agree to the request.

Biznews - May 23 - 29, 2005

2005-05-23T13:56:00.000+08:00

What If? Ambassador AY and Biznews

This headline article on Biznews was the first thing that caught motorists' eyes on their way to work this morning. This particular copy was purchased at the cor. of Ayala Ave. and Makati Ave. -- right in the heart of the country's financial district.

Oh dear, the PR team of YGC have been asleep again. We'd like to think that this cartoon is what the scene may have looked like at their offices this morning.

Based on other comments that we've seen where the posters asserted that the truth was in the printed media, this example must not count ( or at least an exception to their rule).

No further comments necessary.

Reviewer 10 - The Corporate Veil (using legal maneuvers to escape responsibility)

2005-05-22T20:34:00.000+08:00

In all of the commotion of the last five weeks, it was a major challenge to try and understand the motivation behind the legal shenanigans that YGC and its legal henchmen were up to. Now that the SEC report is out, we can see the following timeline.

Pre Aug 2004 - PPI is a subsidiary of Grepalife Assurance;

12 Aug 2004 - PPI creates Lifetime under the pretext that PPI will be the holding company; non-trad businesses are sold by PPI to Lifetime on a "with recourse basis"

20 Aug 2004 - GPL purchases Lifetime

9 Sep 2004 - GPL creates Exemplar

25 Jan 2005 - Exemplar buys PPI

If we were then to diagram all of these actuations, we come up with the diagram below:

Firewalling Grepalife

By all accounts and using YGC's own promotional material, PPI was a 30+ year pioneer of the preneed industry and a much admired jewel within the YGC's collection of financial services companies. One could almost analogize the diagram above as no different from rich parents dishinheriting their child and having them classified as "illegitimate" to boot.

How else does one understand the carefully chosen statements of Amb. Yuchengco that he has no outright corporate obligations to PPI?

Is it because the legal team wanted to make sure that rowdy but otherwise insignificant planholders could not demand that the rich parent meet up with its obligations once the rehabilitation plan was sprung on them?

As noted in the previous posting, in doing so, the minority sharholders of Grepalife must have had to take a beating so that the series of separations could be executed. The "good businesses" are now in the hands of GPL Holdings and Exemplar and have likewise spirited away from Grepalife.

Is the diagram an unfortunate coincidence or a true reflection of what really went on behind closed doors at YGC seniors' meetings? It is the government's duty to find out.

Reviewer 9 - YGC Financial Alchemy - Turning Gold into Lead

2005-05-22T20:02:00.000+08:00

There has been great coverage of the scathing and damning report issued by the Securities and Exchange Commission last week. With the report out, we thought it might be useful to provide illustrations so that the readers can appreciate the mutilation that PPI has undergone. To paraphrase the SEC report, there really is no need for rehabilitation as PPI.

From One Fund Into Two

At the risk of being repetitive...CALLING the CENTRAL BANK... What were the trust managers thinking when they agreed with PPI and stuffed the traditional plans pool with Napocor Bonds? They had already declared to the SEC that they were going to put liquid instruments and / or cash to backstop traditional plans. (RECALL THE APRIL 22 DONG PUNO show where Mr. Jose Cuisia stated that his company's policy was to ensure that the majority of their assets were government securities and cash -- sorry NAPOCOR bonds don't cut it).

GPL Black Hole

GPL Holdings is the big black hole and has sucked up all the value created by the original PPI. We also need to point out that the original PPI was a crown jewel subsidiary of Grepalife. In turn Grepalife is owned by House of Investments, a publicly listed company.

CALLING INSURANCE COMMISSION:

Are Grepalife minority shareholders aware of the mutilation and measly monetary consideration that they got in exchange for the engineered series of sales involving PPI and the subsequent evolution into Lifetime, GPL Holdings, and Exemplar.

CALLING PHILIPPINE STOCK EXCHANGE:

Mr. Peter Favila should mount a major investigation. The SEC report is extremely troubling and raises serious corporate integrity and governance. The trust activities of a listed bank (one of the PSE's clearing banks, we believe) raises questions as well as the potential lack of proper valuation regarding related party dealings between or among the investee companies of HI.

We know it is ticklish to ask good friends or relatives at YGC all of these tough questions. However, to quote High Noon, "a man's got do what a man's got to do".

REGAINING ONE'S HONOR

2005-05-19T18:59:00.000+08:00

MEIYO - The Japanese Kanji Character for Honor


By virtue of his educated upbringing as well as being our nation's ambassador to Japan, Ambassador Alfonso Yuchengco is highly versed in the ways and behavior of the Japanese people. Like himself, the Japanese people pride themselves with their high sense of honor and integrity.

Given the judgment rendered by the Securities and Exchange Commission this week, a classic corporate Japanese reaction would be to bow deeply and apologize for the mistake, redress the wrongdoing (in this case, rescind the filing at the RTC and reverse the breakup of PPI), and have the head of PPI resign.

If that means his daughter accepting the consequences of the debacle, then so be it.

Ambassador Yuchengco is in the twilight of his years with a lifetime of stellar achievements. YGC officers (as admonished by Mr. Wilson Lee Flores in the Sunday Inquirer) do a disservice to the ambassador by allowing this "unneccessary problem to drag on".

The Japanese do not go to court to clean up their name and reputation.  The same will be true for the Ambassador.

Reviewer 8 - Trust Responsibilities

2005-05-18T15:36:00.000+08:00

Attached below are a series of official memoranda exchanged between PPI (which then becomes Lifetime), the Securities and Exchange Commission, and RCBC as the trustee bank. Also included is Sec X403 of the Manual of Regulations for Banks that outlines the guiding principles of the trust management business.

August 24 Letter from PPI to SEC

Oct. 14 letter from SEC to Lifetime

The readers will see from the abovementioned memorandum that the SEC is concerned about prudence and fairness of the proposed segregation of the assets which are to be given to the respective plans. Notice that the SEC wants to hear about the principles and methods of segregation from the trustee banks and not from Lifetime.

Oct. 21 Letter from RCBC Trust to SEC

This is the letter response of RCBC to the request of the SEC. Several things stand out in the reply:

a) Although RCBC is the trustee, PPI still appears to be the entity responsible for determining the segregation policy and execution.

b) There is no misunderstanding at all between the SEC and RCBC that the traditional plans were to be benefitted by having liquid assets in the trust and which could easily be converted into cash (as one should reasonably expect since the product is already mature and already has periodic cash obligations).

c) The marginal notes are equally revealing in questionning the presence of Napocor bonds in the portfolio which are thinly traded (i.e. difficult to locate purchasers or buyers and suffer from wide swings in prices).

At this point, it is important to understand the guidelines which the BSP requires banks to follow in their trust activities. Sec X403 is reproduced below:

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FROM BOOK 4 OF THE BSP MANUAL OF REGULATIONS FOR BANKS
*************************************************************************************
Sec. X403 Definitions. For purposes of regulating the operations of trust and other fiduciary business and investment management activities, unless the context clearly connotes otherwise, the following shall have the meaning indicated.
a. Trust business shall refer to any activity resulting from a trustor-trustee relationship
(trusteeship) involving the appointment of a trustee by a trustor for the administration, holding, management of funds and/or properties of the trustor by the trustee for the use, benefit or advantage of the trustor or of others called beneficiaries.
b. Other fiduciary business shall refer to any activity of a trust-licensed bank resulting from a contract or agreement whereby the bank binds itself to render services or to act in a representative capacity such as in an agency, guardianship, administratorship of wills, properties and estates, executorship, receivership, and other similar services which do not create or result in a trusteeship. It shall exclude collecting or paying agency arrangements and similar fiduciary services which are inherent in the use of the facilities of the other operating departments of said
bank. Investment management activities, which are considered as among other fiduciary business, shall be separately defined in the succeeding item to highlight its being a major source of fiduciary business.
c. Investment management activity shall refer to any activity resulting from a contract or agreement primarily for financial return whereby the bank (the investment manager) binds itself to handle or manage investible funds or any investment portfolio in a representative capacity as financial or managing agent, adviser, consultant or administrator of financial or investment management, advisory, consultancy or any similar arrangement which does not create or result in a trusteeship.
d.Trust is a relationship or an arrangement whereby a person called a trustee is appointed by a person called a trustor to administer, hold and manage funds and/or property of the trustor for the benefit of a beneficiary.
e. Trust Agreement is an instrument in writing covering the terms and conditions of
the trust.
f. Trustee is any person who holds legal title to the funds and/or property of a trust.
g. Trustor is any person who creates a trust.
h. Beneficiary is any person for whose benefit a trust is created.
i. Fiduciary shall refer to any person or entity engaged in any of the other fiduciary
business as herein defined where no trust or trustee relation exists.
j. Agency shall refer to a contract whereby a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.
k. Principal shall refer to the person who grants authority to another person called an
agent, under a contract to enter into transactions in his behalf.
l. Agent shall refer to a person who acts in representation or on behalf of another with the latter’s authority.
m. Trust Department shall refer to the department, office, unit, group, division or
any aggrupation which carries out the trust and other fiduciary business of a bank.
n. Trust Officer shall refer to the designated head or officer-in-charge of the trust department.
o. Trust account shall refer to an account where transactions arising from a trusteeship are kept and recorded.
p. Common Trust Fund (CTF) shall refer to a fund maintained by a bank authorized to perform trust functions under a written and formally established plan, exclusivelyfor the collective investment and reinvestment of certain money representing participation in the plan received by it in its capacity as the trustee.
************************************************************************************************

In this instance, the trustor is PPI, the trustee is RCBC and / or ING, and the beneficiary(ies) are the planholders. As can be surmised from the above guidelines, the trustee's loyalties should always be with the beneficiaries.

Based on the foregoing, we would again likewise request the help of the Bangko Sentral ng Pilipinas to uphold investor protection due to the asserted shortfalls in the trust assets of PPI that have led to the PPI's initiative for revising the payouts for the traditional plans.

Specifically, we look to the BSP to conduct a comprehensive and transparent audit of the activities of the trust operations in order to validate compliance with X403 for the benefit of the beneficiaries.

The SEC Moves to Protect PPI Planholders

2005-05-18T14:18:00.000+08:00

Phil. Daily Inquirer - May 18, 2005

Reviewer 7 - PPI's Numbers Are Getting Clearer

2005-05-17T16:46:00.000+08:00

Yesterday, some planholders trooped over to PICC and were able to get additional "tuition support" from PPI courtesy of the PhP 250 million convertible loan that Mr. Yuchengco gave to PPI last week amidst much PR.

Several new facts were surfaced following interviews conducted at PICC:

a) the customer support staff were not PPI but rather Lifetime employees;

b) PPI management adopted a policy to "ration" out the Php 250 million to all availing planholders with the knowledge that even with Mr. Yuchengco's loan, PPI's payables for SY 2005-2006 were still not going to be fully extinguished.

WE COULD BE WRONG, BUT best guess estimates using available facts:

a) PPI can only meet 81% of its contractual payables to availing planholders for SY 2005-2006. This percentage is arrived at by totaling all of the tuition support payouts received by planholders inclusive of yesterday's payments;

b) There are 15,000 availing planholders (per PDI article dated 11 May 2005). Dividing that number into PhP 250 mm, we arrive at a number of PhP 16,667 in terms of the second tranche of Tuition Support;

c) That means, that on average, the total payable of PPI per planholder for FY 2005-2006 is PhP 54,762. Since PPI can only meet 81% of its actual obligations, that means it still owes PhP 10,317.46 per planholder or a total of approximately PhP155 million.

d) Assuming that they will pay this balance on 2010 with 7% interest, then that would be equal to PhP 217 million that they will need to have available.

e) We need to add now the 19,000 planholders who are still on non-availing status, we can now estimate the total payout on 2010 using 4 years as the average number of school years and Php 54,762 as the average tuition support that PPI wishes to use. That number comes out as PhP 4.162 billion as the payout for 2010.

f) We can now add the PhP 217 million with the PhP4.162 billion to come out with an all-in payables total for 2010 as 4.379 billion.

g) To support this payout, PPI has the much touted Napocor bonds that have a face amount totalling USD$ 52 million. Using current exchange rates, we only come up with PhP 2.830 billion to meet up with the 2010 obligations! PPI would still be short PhP 1.549 billion

h) It would seem that the only reasonable explanation for this interesting investment strategy is that the trust managers are expecting a 35% or more devaluation in the peso / dollar exchange rate. And that is assuming that money losing Napocor does not restructure come 2010.

i) Even for the sake of argument, that the rehab plan were to be entertained, the game that PPI has established still seems to be set up to fall short and fail. (So anyway you look at it, the planholders lose)

CALLING BANGKO SENTRAL NG PILIPINAS AND THE MONETARY BOARD!!!

We need HELP!!!! in understanding how PPI has ended up with this set-up. As we understand it, the investment manager is duty bound to look after our interests. As the beneficial owners, we are entitled to and expect the BSP to act with deliberate haste and agree to an request from the planholders to do A COMPREHENSIVE AUDIT of the trust management policies and procedures.

What the PEP Coalition has done so far

2005-05-17T16:00:00.000+08:00

With the whirlwind of events that have come and gone over the past couple of weeks, we in the PEP Coalition feel it is a good time to reflect on all the accomplishments and milestones we have achieved since our first informal organization meeting.

1. Congressional Lobbying:

Lobbied with members of the Congress that resulted in a resolution being filed by Sen. Pangilinan calling for a Senate inquiry on PacificPlans, Inc. This matter has since been referred to the Committee on Banking and Finance chaired by Sen. Angara. Fist hearing I scheduled for May 31.
Cong. Zialcita filed a resolution calling for a Congressional inquiry on Pacific Plans, Inc. in aid of legislation on the pre-need code under the Banking and Finance Committee headed by Cong. Lopez

2. Meetings with concerned national government agencies:

Meeting with Department of Finance Sec. Purisima
Meeting with SEC Chairman Fe Barin where she assured the Coalition representatives that the SEC will look ensure that the sanctity of the contractual obligation between planholders and PPI, Inc. is upheld

3. Media campaign

TV appearances (Dong Puno, Debate, Cito Beltran, Reporters Book, etc., radio interviews, print articles)
Not to mention our very effective use of the new media - the Internet campaign =)

4. Incorporation of PEP Coalition with SEC and setting-up of headquarters at Unit

6-A, Sayoc Bldg 100, Sen Gil Puyat Avenue, Makati

5. Organization of school (Xavier-ICA, Ateneo, Metro Manila South schools and

provincial chapters (Davao, Batangas, etc.)

6. Gained support of Fr. Robert Reyes, the running priest

7. Held 2 general assemblies (April 25 and May 14)

8. Last May 13, filed opposition to the PPI petition for rehabilitation

WHAT CAN YOU DO: BE PRO-ACTIVE

1. Continue massive information dissemination (text brigade, fliers in churches, schools, e-mail/fax, coalition position paper, etc.)

2. Organize by schools, offices, provinces. Get in touch with Coalition for assistance.

3. Volunteer in Coalition working committees (see list and contact persons)

4. Send in your stories so we can document PPI rehab plan effect in our lives.

5. Join coalition activities…the next upcoming event is on May 25, we are holding a Prayer Rally at St. Andrew’s Parish, Bel-Air Makati at 8:30 am. We encourage all of you to wear a white T-shirt with black arm bands. Bring placards.

We would thank all of you fellow parents, grandparents, aunts and uncles who have banded together to help all fellow planholders. Let us hope that our joint cries for justice will resonate and that our endeavors bear fruit for all of our children.

Big Time Al and the Small Time Check

2005-05-17T14:07:00.000+08:00

It's good to understand what the Php 250 million check is all about...

*************************************************************************************

NOT BUSINESS AS USUAL By Margaret Jao-Grey
The Philippine Star 05/17/2005

Did you know 1: Three International School Manila seniors, including the grandson of a banker, have been caught cheating. It seems they hacked into the computer of a teacher and downloaded the contents of a scheduled test.

Now, the $64 question is not whether ISM will allow them to walk up the stage in early June but whether ISM will disseminate that information to all schools, including the American universities which have already accepted the three seniors for the school year that starts in September.

* * *

Did you know 2: The recent two-day bank run of a large commercial bank was quickly cauterized after a couple of foreign banks, which do a lot of business with the local bank, quietly agreed to support it at the interbank level, with the corresponding interest, of course.

The local bank did not turn to the Bangko Sentral for an emergency loan for two reasons. One was sheer pride. The other was, well, everybody and his mother would have known about it.

* * *

There’s talk that HSBC Phils. is scouting around for a senior vice-president in charge of corporate banking, now that Isidro Alcantara has accelerated his decision to move his family to Canada.

As a bonus, the new SVP might end up as HSBC Philippines’ first Filipino chief executive officer, something that current CEO Warner Manning has been quietly pushing for.

* * *

There’s talk that plan holders of Pacific Plans Inc. will soon file a class suit against the pre-need company affiliated with the Yuchengco group. Basically, the plan holders aren’t too excited about the P250-million personal contribution of Alfonso Yuchengco to help resolve PPI’s current inability to meet the tuition requirements of its open-ended plan holders. Here are two reasons why.

One, Al Yuchengco isn’t giving away the P250 million but just lending it to PPI. That means plan holders will end up paying the loan anyway, after being appropriately grateful to Mr. Yuchencgo.

Two, the money may help planholders pay their children’s tuition for the 2005-2006 school year or for the first semester of 2005 but more money will have to be raised if PPI intends to pay the tuition paid for in advanced by planholders for the succeeding years.

* * *

Here are indications that incoming Bangko Sentral Governor Amando Tetangco Jr. is open to the needs of the banking sector even if he’s never been a member of the Bankers Association of the Philippines.

Last week, the Monetary Board, which was chaired by Say Tetangco as Bangko Sentral officer-in-charge (since Governor Rafael Buenaventura is still in the United States), has agreed to allow banks to sell linked products or derivatives.

There’s also talk that the Bangko Sentral will soon drop the moratorium on the opening of bank branches now that its objective to encourage mergers and acquisitions among banks has been achieved.

While there are still banks out there that are mismanaged and may, therefore, face closure, these are too small to affect the industry on the whole.

*************************************************************************************

2005-05-16T16:54:00.000+08:00

Exhibited below is the 12 July 2005 letter from Pacific Plans indicating a fundamental change in intention in the proposed reorganization of Pacific Plans.

This memorandum generates several interesting insights:

a) The marginal notes of former SEC Chmn Bautista are already noteworthy. There is a note to Commissioner (Fe) Gloria to check on the qualified financial statements (i.e. Punongbayan's qualified statement that was already discuss elsewhere in this weblog).

Revision of Rehab Plans - PPI Letter to SEC

Revision of Rehab Plans - PPI Letter to SEC p.2

b) The memorandum is now signed by a mere employee of Pacific Plans rather than by the owner (who initiated the original request for reorganization);

c) The trust fund for the fixed value and traditional plans was consolidated as a single trust account. Note that PPI is asking the SEC to confirm its mode of consolidation. In the marginal note, however, SEC Chmn Bautista correctly asks why the SEC should be asked to confirm said mode.

As subsequent events have shown, it is this MODE OF SEGREGATION that has created the firestorm of controversy. Obviously, there is no discussion at this point of the tortured twists and turns that would befall PPI, such as the management buyout nor the future role of GPL Holdings and Exemplar in the sordid affair.

In Literature, we believe that we can look at this memorandum as a FORESHADOWING of events yet to come.

**********************************************************************************

foreshadowing

adj : indistinctly prophetic [syn: adumbrative, prefigurative] n : the act of providing vague advance indications; representing beforehand [syn: prefiguration, adumbration]

Reviewer 6 - Recusal

2005-05-15T08:11:00.000+08:00

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.

Too Close for Comfort (or Delicadeza???) - repost

2005-05-14T18:16:00.000+08:00

Text Excerpted from Victor Agustin, Inq7, 13 May 2005

"THE REINA Emperatriz of the Yuchengco empire, Helen Y. Dee herself, will personally meet and answer any and all questions from the Pacific Plans holders in a no-holds-barred open forum -- this we gathered from the pro-Yuchengco grapevine.

There is but one fine print: The lawyers from the firm of Villaraza and Angangco have advised her to wait, so as not to jeopardize the rehabilitation petition now pending with the Makati Regional Trial Court.

According to the pro-Yuchengco grapevine, Dee believes that the law and the equities of the case are on their side and that, after all the kicking and screaming in this difficult denial stage, the Pacific Plans holders would come around and agree that the return-the-payments-plus-seven percent tax-free, compounded-interest-earnings proposal represents a fair solution, given the ticking time bomb that the open-ended plans now threaten not only the country's first pre-need company but the multibillion-peso industry as well.

In the meantime, anyone who wishes to comment or object to the rehabilitation proposal may file his comment or opposition with Makati Judge Romeo Barza..."

Excerpt from Boo Chanco's Interview of Helen Y.Dee - repost

2005-05-14T11:25:00.000+08:00

Text excerpted from Boo Chanco's Column in Philstar May 13, 2005 online edition


Helen Y. Dee

"...But Helen emphasized that contrary to what many people may think, they did not mismanage Pacific Plans. She didn’t compare what is happening to Pacific Plans with the other pre-need plan companies in trouble today. But she didn’t have to. A week or two ago, the bank managing the trust fund of that other pre-need plan came out with the revelation that they lost over a billion pesos by investing in a related real estate company. In contrast, Helen assured me that their investment portfolio at Pacific Plans can be defended at Plaza Miranda...."

SPECIAL POWER OF ATTORNEY FOR OPPOSING REHAB

2005-05-13T19:11:00.000+08:00

VERY IMPORTANT INSTRUCTIONS TO ACCOMPLISH YOUR

SPECIAL POWER OF ATTORNEY (SPA):

1. Make at least three (3) copies of the SPA form below. Click on the pictures attached below (there are 2 pages) and zoom in to actual size by clicking on the picture after it has loaded. Click FILE>PRINT on your Internet Browser.

2. Fill up all applicable blanks accurately, including the Acknowledgement on the second page (i.e. your name, CTC no. and its date).

3. Sign both pages of all copies. Have your two (2) witnesses do the same. For the first page, all sign on the left margin.

4. Make at least three (3) clear photocopies of all documents you enumerated in the SPA Form (your Educational Plan Agreements (EPAs) for non-availing and Certificate of Full Payment (CFP) for availing). These will be the annexes attached to your SPA, to substantiate your position. Attach one set of these photocopies to each copy of your SPA.

5. You then have your SPA notarized. The notary public will keep one copy and give the rest back to you. Then please bring, send or mail one notarized copy, complete with annexes, to the PEP Coalition office at:

Unit 6A, 6^th floor, Sayoc Building 100,

93 Sen. Gil J. Puyat Avenue, Makati City, Metro Manila.

6. OR, if you have no access to a notary public, please bring or send all three copies of the completed SPA form and the photocopies of your EPAs to the PEP Coalition office. We shall have your SPA notarized for you. Please bring P50.00 for the notarial fee and a Xerox copy of any government issued ID (driver’s license, SSS/GSIS, Passport, Senior Citizen, Philhealth etc.)

Special Power of Attorney - 1

Special Power of Attorney - 2

explanatory notes

1) SPA is not mandatory for coalition members. However, if the arguments in this weblog have made sense to you, then use the SPA to oppose the rehab.
2) SPA will not be used for filing of criminal charges

CONGRATULATIONS WE ARE FAMOUS!

2005-05-13T17:27:00.000+08:00

You have to feel awfully bad for the spin doctors of the YGC who have spent a lot of money and time trying to suppress the truth. As is painfully obvious to all of us now, conventional media isn't our friend. Who cares anymore...they will soon join the dinosaurs.

Type the words "Yuchengco" and "Blog" in Google and our website is on the first page!

THE TRUTH IS ON THE INTERNET!

Welcome to the new and REAL media of the 21st century!

Reviewer 5.a - SEC Reply to Request for Spin-off

2005-05-12T08:45:00.000+08:00

31 Mar 04 Reply by SEC Chmn Bautista

Two days after the letter of PPI Chairman (see Reviewer 5), SEC Chairman Lilia Bautista was already able to tender a swift reply. It is clear from Chmn Bautista's letter that there is no misunderstanding of intent between PPI and the SEC.

One company to handle ALL of educational plan products, the other company to handle pension and memorial products.

From this, the readers can see why YGC would choose a name such as "Lifetime" to handle pension and memorial products as Lifetime.

Based on this crucial representation of PPI and this letter confirming the SEC's understanding, SEC gave its approval in PRINCIPLE. PPI cannot use this same "approval in principle" to justify the transfer of the fixed-value educational products to Lifetime.

We also hope that this document puts to rest the supposedly divisive issue between the trad and non-trad holders that we've seen in this blog.

Reviewer 5 - Let's Start at the Very Beginning...

2005-05-11T13:25:00.000+08:00

Pacific Plans Representation to SEC Chairman Lilia Bautista

A very good place to start... The road to hell is paved with good intentions.

The letter above is part of the SEC's official records and shows that the request for the spin-off looked innocent enough. Note how it makes the unmistakable impression on the reader that Pacific Plans was going to remain in control and in charge of managing the situation.

Revisiting Reviewer 1

2005-05-10T20:20:00.000+08:00

Being Makulit But YGC Wants to Keep Forgetting its Representations

Although this topic has been over-discussed, it may jog the memories of YGC to actually show that we do retain copies of their sales kit.

On the Saturday walkout

2005-05-09T19:42:00.000+08:00

Before anything else, our apologies for not having posted anything over the last 24 hours. So many things have been happening and we have had to process a lot of new information coming in. But we thought we'd comment on the mischievous attempts to discredit Atty. Piccio.

We are sure that by now, most of you have gone through the comments of Reviewer 4. You are also aware of the massive backfire that YGC brought upon itself with its PPI Planholders meeting last Saturday.

And, oh my, Atty. Piccio has really caught the ire of the YGC spindoctors! It was such a neat set-up with the media in attendance and having the event stage managed with pre-managed questions to be entertained by the PPI folks. It would have really been a major public relations coup for YGC to show smiling planholders on TV and print. All that money spent only to see the headlines the following day talking about the walkout.

As you can see, conscience stricken people have forwarded their guarded views at 2:29:32 am on Sunday to dish the dirt on Atty. Piccio. You really have to wonder about how condescending the view of YGC and its spindoctors have on the supporters of the coalition could possibly be.

They probably are convinced that we don't even know how to tell the time nor immediately see that it is a half-crazed reaction to the way their carefully managed event blew up in front of their faces.

By the way, we had already encouraged Amb. Yuchengco on his PhP250 mm gesture, but even then, that may have sadly been a cynical gimmick as it seems to be tied into the rehab plan they are trying to force down on everyone.

Tsk, tsk, tsk. YGC should really think of getting professional help for their communications campaign. So far it has been amateur hour...

Candor, honesty, and an inclusive approach is the professional way to do it. Juvenile postings in this blog are really sad...First Erap, now Macoy, probably it will be MILF next...

Reviewer 4 - Fiduciary Responsibilities of the Trustee

2005-05-07T18:46:00.000+08:00

In Sec. Purisima's press comments on the PPI fiasco, he said that he wanted to make sure that the fiduciary responsibilities were fully carried out. Excerpted below are descriptions of the responsibilities of the trustee taken from the law firm Holland and Knight which gives all of us a better grounding of the issues that Sec. Purisima was referring to.

"...A person acting as a fiduciary must keep the fiduciary assets in accounts separate from his own personal assets and cannot use the fiduciary assets for his personal gain. A person acting as a fiduciary must maintain careful and accurate records of all transactions involving the fiduciary assets and may need to account to a court for all actions taken with respect to those assets. A person acting as a fiduciary is entitled to reasonable compensation for time spent as a fiduciary, but cannot collect excessive sums. Investments of fiduciary assets must be prudent; they should not be speculative. A fiduciary should communicate with those who have a beneficial interest in the fiduciary assets. Failure to fulfill these duties may result in civil or criminal penalties for the fiduciary, and a person should only accept the role of fiduciary after a careful consideration of the serious responsibilities..."

"...A trustee is a fiduciary entrusted with assets to be managed for the benefit of individuals known as beneficiaries, pursuant to authority provided in a contract, known as a trust. It is the duty of the trustee to carry out the terms of the trust.A trustee may be one or more individuals and/or institutions, such as a bank or trust company. A trustee has a range of duties, including investment and management of trust assets, overseeing distributions from the trust to the trust beneficiaries, and general administrative duties.

The trustee must manage and invest the trust assets.This requires careful oversight of the trust property and a balance of the needs of current trust beneficiaries for income from the trust assets with the needs of future trust beneficiaries for a reasonable amount of appreciation in value of the underlying trust assets. In addition, the trustee should have a good understanding of the income and estate tax attributes of the particular trust, for the trust, and for the beneficiaries..."

a) In the case of PPI, the trustor was PPI and the trustees were RCBC and China Bank, with the bulk of the assets under management assigned to RCBC;

b) The various plans offered by PPI (eg. memorial, cremation, pension, trad. educ'l, fixed payout educ'l) were not broken as separate legal vehicles but were offered as differentiated products. This is directly analogous to the various types and flavors of time deposit accounts offered by banks where there is only a single issuer of the products. This deals with the LIABILITY SIDE OF PPI. With this arrangements, the planholder has the same legal rights of creditors to PPI.

c) The monies collected by PPI from the planholders' payments were then entrusted to the abovementioned banks for trust management. Again, separate legal vehicles for housing the investments were not made and the funds were commingled for the benefit of ALL PLANHOLDERS.

d) The beneficiaries, and indeed, the owners of the trust account is not PPI but rather the planholders themselves (as can be surmised from the excerpts above). In other words, the banks are fully responsible and accountable to the planholders and all their actions should have been guided for the welfare and benefit of the planholders.

e) It is incorrect therefore for PPI and YGC to continue offering this laughable fiction that PPI's affairs and Lifetime's affairs are separate and distinct from one another. Every company has a mix of assets and liabilities. PPI was fully responsible and knowledgeable of the risks and rewards of the plans they created and marketed. In turn, the RCBC and Chinabank were entrusted to create a mix of high, medium, and low yielding mix of investments consistent with the risk spectrum of obligations that PPI was incurring.

Readers can now integrate Reviewer 3 with Reviewer 4 to now understand the very deep legal trouble that YGC entities have created for themselves. As we have said, the acuations and decisions of YGC entities are inexplicably self-destructive...especially in light of the fact that it is so easy to ferret out these details.

Reviewer 3 - Conveyances and Transfers

2005-05-06T20:25:00.000+08:00

We quote TLS in full. This is another legal point that all our readers should be familiar with. YGC can keep spending on full page ads and other PR gimmicks but they have to face up to the fact that all their efforts are backfiring because it is making us look and think harder. Regrttably, the word FRAUD is joining the word DISHONOR in terms of what items that may come to mind when we are asked to think about YGC.

TLS said...

To All:

I wanted to wait for the moderator to put in a new topic because I don't want my post to go to waste since in the latest posts, everyone has become distracted by what I see is a non-issue/possibly detractor-supplied info. We should focus energies on moving forward.

Anyway, I couldn't wait to post this because we need all the inputs and analysis we can get, especially in propping up our opposition paper whose deadline is a week away. If the moderators see it as useful, I'll just post it again when another topic comes up so that the right/concerned parties can read it again.

I believe that because PPI/Yuchengco established Lifetime to be able to continue on with its money-making in spite of its anticipated or manufactured problem with PPI, we should seriously look into the servicing of our contractual obligations by Lifetime Plans. There are two legal doctrines by which Lifetime Plans may be proven to be liable: the fraudulent transfer doctrine and the successor liability doctrine.

Under U.S. laws, a Fraudulent Transfer or Fraudulent Conveyance" is a transfer which a debtor makes for the purpose of defeating a creditor's collection efforts against the debtor. In a Fraudulent Transfer, a corporate action which impairs the rights of unsecured creditors, the courts must ignore what was done (the Fraudulent Transfer). This is whether the creditor's claim arose before or after the transfer was made. Transferring assets is a fraudulent act if you transfer them with actual intent to hinder, delay, or defraud any creditor or especially if it is done prior to filing bankruptcy. Such transfers should be considered fraudulent and voided by the courts.

Factors determining actual intent (of Fraud), if Original Owner / Entity:
1. Retained possession or control of the asset / property transferred after the transfer (may not be direct ownership; normally parties that commit fraudulent transfer will restructure to show no current ownership)
2. Disclosed or concealed the transfer;
3. Was sued or threatened with suit before the transfer;
4. Transferred all of its substantial assets;
5. Absconded (departed secretly);
6. Removed or concealed assets;
7. Did not receive value reasonably equivalent to the value of the asset transferred;
8. Was insolvent or became insolvent shortly after the transfer was made;
9. Transferred the asset shortly before or shortly after a substantial debt was incurred; and
10. Transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

From the above, I believe the actions taken by PPI/Yuchengco constitute a fraudulent transfer which would leave Lifetime Plans as liable for the contractual obligations of PPI as well.

By taking over the earnings assets or fixed-value contracts, Lifetime Plans became entitled to future installment payments on these plans – installment payments which would provide profit margins from which PPI could have possibly satisfied its contractual obligations or ensured adequacy of its ARL / Trust Funds had PPI continued with these fixed-value contracts. Indeed, as a result of Lifetime’s taking over the fixed-value contracts, PPI lost the right to share in the profit margins of the future installment payments and potential future profits deriving from the sale of additional fixed-value contracts. In addition, Lifetime Plans benefited and continues to benefit from PPI's Goodwill, most likely also without fully paying for this. The transfer eventually left PPI with a questionable asset, the Napocor Bonds.

So, where the transfer of assets strips a debtor corporation (PPI) of all its assets, and disables the corporation from earning money to pay its debts, thus leaving creditors and holders of claims no resources to which they may look for the payment of their due, the net result is in legal effect a fraud; and the courts must subject the transferee (Lifetime Plans) to liability for the satisfaction of claims against the corporation (PPI) whose assets it has absorbed.

Based on the second doctrine, I believe we can assert our basis to collect legal contractual benefits from Lifetime as a successor corporation to PPI. We assert that Lifetime is liable and is a successor because of two reasons: (1) there was insufficiency of consideration and, (2) it is merely a continuation of PPI.

We assume that the transfer of the earning assets of PPI into Lifetime was done through an “acquisition”, meaning Lifetime Plans purchased the earning assets of PPI, although liability may be imposed regardless of the exact form of transfer of assets between the corporations. But let’s assume a sale/purchase transaction between PPI and Lifetime Plans. We assert that PPI's sale/purchase or transfer of earning assets to Lifetime Plans lacked sufficient consideration and was designed to avoid the reach of creditors.

Adequate consideration for a transfer of assets between a buying (Lifetime) and selling (PPI) corporation is an important element when determining whether to impose successor liability. If the buying (Lifetime) corporation pays sufficient consideration for the seller's (PPI) assets, the selling (PPI) corporation's creditors can then seek to satisfy their Judgements from the sale proceeds. If the sale proceeds are equivalent in value to the transferred assets, then, assumedly, but not necessarily, no harm has been done to the creditors of the selling corporation. But from the financial statements available, it seems that PPI received no value for the earning assets it transferred into Lifetime Plans, therefore making the transaction questionable and a probable basis for the successor liability theory.

The other basis for the successor liability doctrine is that Lifetime is a mere continuation of PPI. Normally, when a corporation sells its assets to another corporation, the purchasing corporation does not become liable for the debts of the selling corporation. The rationale for this rule is that a "bona fide purchaser who gives adequate consideration and who lacks notice of prior claims against the property acquires no liability for those claims." However, four exceptions to this rule of non-liability exist. Successor liability is imposed if: (1) the purchaser expressly or impliedly agrees to assume liability; (2) the purchase is a de facto merger or consolidation; (3) the purchaser is a mere continuation of the seller; or (4) the transfer of assets is for the fraudulent purpose of escaping liability.

Now, Lifetime is practically PPI. Lifetime, despite being the new corporation established only in 2004, has or had substantially identical ownership (prior to its immediate transfer to Exemplar to enhance the layering), is operating the identical business (sales of pre-need plans) with identical employees (all of whom resigned en masse and transferred) at an identical location to PPI (prior to PPI’s transfer to Kamagong and its now floating address status). It received practically all of PPI's assets, at least the good ones, including PPI’s intangible goodwill. If that is not mere continuation, I don’t know how it can NOT be defined as such.

Lastly, I believe we should take a serious look at going after the perpetrators as well. Although individual shareholders of a corporation can never avoid liability for their own wrongful or tortuous acts, or for their own contractual defaults, doing business in the corporate form will, in many cases, limit the liability of shareholders to the amount of their investment in the corporation. For example, if a corporation is held liable for a wrong committed by one of its agents, or for a breach of contract, the corporate form will act as a shield to protect the individual shareholders from personal liability (unless the individual shareholder(s) personally guaranteed a corporate obligation or is(are) in some manner responsible for the damages to the injured party). But protection from personal liability is lost if there is a basis for invoking the "Alter Ego" doctrine. Under this doctrine, the law will disregard the legal fiction of a corporation's separate existence and "pierce the corporate veil", thus exposing shareholders to personal liability for corporate debts and obligations arising from tortuous or other acts if the court finds that it would be inequitable not to pierce the corporate veil.

There are two basic requirements for application of the alter ego doctrine: ..."(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow." Other patterns that determine whether the alter ego doctrine might be applicable:
[1] Commingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses;
[2] The treatment by an individual of the assets of the corporation as his own;
[3] The failure to obtain authority to issue stock or to subscribe or to issue the same;
[4] The holding out by an individual that he is personally liable for the debts of the corporation;
[5] The failure to maintain minutes or adequate corporate records, and the confusion of the records of separate entities;
[6] The identical equitable ownership in two or more entities; the identification of the equitable owners of multiple entities with the domination and control of the entities; identification of the directors and officers of multiple entities in the responsible supervision and management of all; sole ownership of all of the stock in a corporation by one individual or the members of a family;
[7] The use of the same office or business location by multiple entities; the employment of the same employees;
[8] The failure to adequately capitalize a corporation; the absence of sufficient corporate assets;
[9] The use of a corporation as a mere shell, instrumentality, or conduit for a single venture or for the business of an individual or another corporation;
[10] The concealment or misrepresentation of the identity of the responsible ownership, management and financial interests; concealment of personal business activities;
[11] The disregard of legal formalities and the failure to maintain arm's length relationships among related entities or individuals;
[12] The diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another;
[13] The contracting with another with intent to avoid performance by use of a corporate entity as a shield against personal liability, or the use of a corporation as subterfuge of illegal transactions; and
[14] The formation and use of a corporation to transfer to it the existing liability of another person or entity.

I believe several of the reasons above apply in PPI/Yuchengco/Lifetime's case.

Calling all legal beagles on our side and the legal team of the Coalition! I don’t know if RP laws are as robust as this but I believe we should and can use this as a basis. (Also our financial wizards - since this involves evaluation of the financials of PPI and Lifetime). Thanks to the posters who are moving our cause forward. Mabuhay kayo!

What we can add to this well written piece is the fact that the Philippines follows US legal juris prudens. In our previous posting, we had already talked about related party transactions and the fact that one has to be "whiter than white" when executing deals between companies owned by the same entity because of the problems of possibly defrauding creditors and minority shareholders.

If our information is current, the United States courts allows a clawback of all illegal transfers of assets of up to two years of the date of a company's filing for rehabilitation in the event of fraudulent transfers.

We will need to tie up TLS's article with the fact that thePPI assets under management were of a commingled nature. This has created very nasty conflicts of interest as well as non arms-length transactions among and between YGC entities entrusted to manage these assets on behalf of the planholder / creditor of PPI.

We wish to call on Commission Fe Barin to ensure that the SEC also follows US juris prudens on thsi issue. Comm. Barin had also better worry about the antics of large and listed Philippine companies with respect to misleading statements to regulators and to the investing public alike. Enron and Worldcom anyone?

A Step in the Right Direction

2005-05-05T14:35:00.000+08:00

News Article from From inq7.net

TYCOON Alfonso Yuchengco issued a statement Wednesday pledging to raise P250 million from his personal resources to assist the beleaguered Pacific Plans Inc.

Yuchengco said he was doing this in his desire to help parents pay their children's tuition requirements for this year's school opening although, he added, Pacific Plans' problem was a corporate matter. He said the funds he would raise would be used to provide additional tuition support to Pacific Plans' disgruntled customers.

Pacific Plans said the details of Yuchengco's fund-raising pledge were being finalized and would be announced shortly.

Pacific Plans, a unit of the Yuchengco group of companies, has sought court assistance in suspending debt payments related mainly to its traditional education plans that have matured.

It issued a statement early this week saying it had to spin off its 34,000 open-ended or traditional plans to make sure its more than 400,000 fixed-value plans would remain healthy. It said open-ended plans had been bleeding it since the deregulation of tuition increases in 1990, before which tuition increases were limited to 10 percent a year. Pacific Plans said it stopped selling open-ended plans in 1992.

The company said that when it transferred the fixed-value plans to Lifetime Plans last August, its objective was to put Pacific Plans back on its feet. "We thought we could make it work. We even have a product that other pre-need companies think is excellent. We wanted to outsource everything to keep expenses down," it said.

************************************************************************************

This press release may already be a small step in the right direction as it appears to indicate that YGC now appreciates that their unilateral, take-it-or-leave-it approach was the path towards self-destruction and that starting a constructive dialogue is a smarter and better business strategy.

What we would recommend to Amb. Yuchengco is that your goodself could engage a third party financial expert (perhaps PICPA or the CFA association) that is mutually acceptable to the coalition to objectively analyze the financial status and the business decisions undertaken by PPI's board and senior management as well as other YGC controlled companies.

What you may find is that you may not have to dig out from your personal resources and that Pacific Plans has the economic resources to make all planholders whole. The coalition considers itself most fortunate in having a lot of helpers in the financial community in having already gathered highly detailed information regarding the evolution of Pacific Plans over the last five years inclusive of memoranda, cash movements, dates, plus related party transactions. We can already conclude that the PPI was very viable prior to the breakup.

Please seriously consider our suggestion Ambassador Yuchengco and discuss it with your trusted staff who have your interests at heart rather than those who may be putting up a cordon sanitaire (over the last 2 weeks, they've been spreading information that you were suffering from a variety of health impairments ranging from a quintuple bypass and even Alzheimer's) around you in a misguided attempt to insulate you and to cover for their errors.

Much in the same way, your PPI lieutenants were attempting to unilaterally walk away from the obligations, you can likewise unilaterally reverse that situation.

Reviewer 2 - Fiduciary Responsbility - Portfolio Management

2005-05-04T10:12:00.000+08:00

The past 2 weeks have been spent getting the awareness and information levels up regarding the questionnable transfer of policies from Pacific Plans into other YGC spin-off entities. Those discussions can all be categorized as the propriety of PPI's management of its liabilities.

We need to spend time as well on the asset side since there are huge questions of propriety that need to be properly understood. Much discussion has already been spent on the fact that 70% of the assets supporting PPI's 34,000 policies are Napocor Bonds maturing in 2010.

There are several things to note about the Napocor Bonds:

a) Napocor is a Government Owned and Controlled Corp (GOCC). These are not government securities and cannot be directly compared to treasury bills and notes which are direct government obligations. The notion that the National Government will come in an answer for Napocor's debts in the event Napocor cannot pay is entertained because of the underlying guarantee comes with these bonds. These guarantees are not failsafe as has been proven in the past.

b) Napocor is a money losing entity whose financial troubles have long been chronicled publicly.

c) The bond is a zero coupon instrument. Normally bonds pay off interest periodically (i.e. coupon bearing bonds). Zero coupon bonds pay off principal plus accumulated interest on the maturity date of the bond, in this case 2010.

d) Forecasting the cash payments for a preneed firm is much easier than those of an insurance firm for the very simple fact that the firm can tell exactly when the availments will occur. Pacific Plans knows exactly the number of availing plans (e.g. 16,000 out of 34,000). Common sense would dictate that one needs investments that would generate cash flows to meet these tuition obligation. (47% of your planholders are already availing and yet more than 70% of the portfolion is not throwing off cash till 2010).

e) Asset managers are dutybound to look at investment grade assets for the portfolio. Investment grade securities have 2 characteristics: i. liquidity: you can always get a ready buyer and seller for the security ii. good credit rating. Liquidity is important because in the even t of an unforeseen cash payment, the portfolio can sell the security immediately at a reasonable price in order to meet the obligation.

Napocor is an extremely illiquid asset (ie. buyers or sellers are hard to find) with huge disparities in terms of prices.

We need for both the SEC and the BSP to look at what appears to be incompetent if not negligent asset management practices of PPI and their 3rd party asset managers.

LEAKAGE...We May Have a Chance of Winning

2005-05-03T13:28:00.000+08:00

We just got this leak this morning from one of our YGC informants. It would appear that the YGC operators are not as slick as they should be and may have been relying more on arrogance, calling political favors and insider connections in order to ram through their intentions. We have only had time to verbally verify this with officers at the SEC and the information appears to check out..

"...1.Sometime in August or September 2004, the SEC approved the application of Lifetime Plans, Inc., based on the evaluation and recommendation of the supervising department, the Non-traditional Securities & Instruments Dep't, (NSID) headed by a certain Dir. Emilio Aquino.

2. As in most approvals, certain documentation requirements have to be submitted prior to the actual registration or implementation of the approval. The review of the various submissions is a function of the Company Registration & Monitoring Dep't (CRMD) headed by Dir. Benito Cataran.

3.Under normal circumstances, once the application has been approved, the registration process itself could be purely ministerial especially if simple submissions are involved. However, considering that the Lifetime application involves substantial asset trasfer from one company to another, it took quite sometime for Lifetime to comply with all the requirements of the Registration Dep't.

4. By the time Lifetime has complied with all the requirements, the Pacific fiasco as we know it is already out in the open. The Registration Dep't, instead of simply doing its ministerial function, decided to be prudent and elevated the matter to the Commission en banc. However, the department failed to include any recommendation. (I think the dep't did not want to be blamed and decided to pass on the burden to the commission.) This prompted Chairman Fe Barin to create the ad hoc committee, headed by Atty. Guevarra of the Compliance and Enforcement Dep't, to investigate the whole matter.

Conclusion: While the application of Lifetime has been approved as early as 2004, it appears that the whole process of registration including the transfer of assets HAS NOT BEEN PERFECTED NOR CONSUMMATED YET!!!"

We hope to get written confirmation from the SEC that this is indeed the situation. It would appear that our vigilance and swift organizational response has created this critical break in the case.

We need to storm heaven with our prayers that our SEC officials are not pressured to do something against their conscience. The SEC should do the right thing and not act on any approval.

We may need to organize a rally of support for SEC Chairman Fe Barin for realizing the imminent danger and the adhoc committee that is now tasked to deliberate on the PPI petition.

Assuming that the transfer of assets is disapproved by SEC, then we can probably hope for the reconstitution of PPI to its pre-Augst 2004 state. If the assets revert to PPI due to the SEC's disapproval of the transfer, then we should be able to be made whole again.

Great Homework and Transparency

2005-05-02T14:17:00.000+08:00

The posters of comments to our previous article "Compare and contrast..." have delivered a brilliant and insightful discussion on how bankruptcy procedures work in the Philippines. All readers of this blog owe it to themselves to go through the contributions.

TLS's thoughtful analysis of the YGC dark intentions behind the rehab plan is indeed very good. At the risk of doing injustice to TLS's piece, he or she makes the point that a rehab plan is

a) for the benefit of the planholders and not for PPI's shareholder;
b) any rehab plan requires prior discussion and consent from the planholders;
c) the company to be rehabilitated has to show viable proof that it can work towards making the planholders whole again;
b) as it stands today, the rehab plan works against the planholder.

Since the rehab plan violates all of the above prerequisites, TLS argues that the RTC should not have even entertained the PPI petition in the first place.

TLS argues that the entire gameplan for YGC seems to be to have us fall for the trap of arguing about the rehab's merits (and have the issue tied up in court for years) rather than demanding that the RTC do his proper duty and throw it out for lack of merit in the first place.

This is troubling as the spotlight now falls on how the RTC judge in question and we now have to concern ourselves on how he will choose to conduct himself...It may be worthwhile for the readers to contribute information on the judge's background so that we may better understand his judicial actuations are guided...

What is truly remarkable is how the options and tactics available to the coalition can be discussed with such candor and transparency. On the part of the coalition, there is no need for subterfuge, deception, or backdoor dealings. We only need to tell the facts. The discovery process is under way and every passing day gives all of us a better picture of the truth.

What is also surprising is how the conventional media are now regular visitors to this website to get updates on the Pacific Plans fiasco. Could there be a lingering suspicion and fear on their part that the sun may have already begun to set on the unfortunate practice of envelopmental journalism as small voices such as ours now have an undefeatable means for getting the truth out?

By all accounts, this controversy should have already been dead since SOP for moneyed entities mired in controversy is to "bury the story" by pulling out all the stops with broadsheets, TV, and radio.

We are just about to start week 3 (has it only been that short?) with this weblog and the coalition gains strength with each passing day. It definitely is a confusing and uncomfortable time for disinformation specialists who are steeped in the ways of conventional media but are now being overwhelmed by the network of several thousand planholders thinking and acting as one. (The YGC spinmeisters are even trying to suggest that we are entertaining politicians with an axe to grind...sorry but that is really lame, we're not biting into that one. Politics be hanged, we only work for our own agenda that agenda is simple...all we want this searing summer of 2005 is for our benefits to be paid out in full!)

AND SO, FOR FRIENDS AND FOES ALIKE, WELCOME TO THE POWER OF THE INTERNET.

Go PEP Coalition, Beat YGC!!!

Compare and contrast Pacific Plans with Prudentialife

2005-05-01T10:51:00.000+08:00

This article was clipped by one of our "helpers" (thanks DV!...) for us to comment on...

Prudentialife Plans sees big net profit

By Mary Ann Ll. Reyes

The Philippine Star 04/29/2005

Prudentialife Plans expects to generate a net income of between P300 to P500 million for the fiscal year ending March 31, 2005 compared to P302 million last fiscal year, even as its trust fund as of end-March this year reached P12.5 billion, the biggest in the pre-need industry.

This as Prudentialife president Jose Alberto Alba told The STAR that the company has no problem meeting its financial obligations to its planholders, including those holding the traditional or open-ended educational plans. "We have sufficient assets," he stressed.

Prudentialife has a trust fund of over P12.5 billion compared to College Assurance Plan’s P4.7 billion. Pacific Plans Inc. reportedly has less than P10 billion. Both CAP and Pacific posted losses during their last fiscal year. And while CAP has a trust fund deficiency, Prudentialife’s latest actuarial valuation showed an excess of P1 billion.

"Clearly, we are not in the same situation as that of CAP and Pacific Plans. I assure you that all obligations of Prudentialife will be honored," Alba said.

Meanwhile, he revealed that as of end-2004, Prudentialife’s sales grew 46 percent compared to the previous year while the industry growth was only 13 percent.

Alba attributed the sales growth to a migration of planholders from other companies (flight to quality) as well as the increase in Prudentialife’s sales organization, the introduction of new products, and the fact that CAP was no longer allowed to sell as of September last year. Just last December Prudentiallife ventured into mutual funds while its health maintenance (HMO)service will be offered starting this May.

According to Securities and Exchange data for January this year, Prudentialife is second in terms of sales volume next to Philam. But while Prudentialife’s sales volume grew 18.28 percent, that of Philam went down 22 percent. Number three is Loyola, followed by Lifetime Plans, Berkley, Manulife, St. Peter, Pet Plans, Sun Life, and TPG Plans.

The company has around 50,000 traditional college education plans to service(as against its over a million planholders) compared to CAP which has over 700,000 open-ended plans (those that pay the actual value of the tuition fee at the time the plan matures).

It was learned that the Yuchengco-owned Pacific Plans, which is seeking court approval for suspension of payments, sold grade school and high school traditional education plans, the early maturities of which strained Pacific’s trust fund. Pacific has around 34,000 open-ended plans.

Alba revealed that while the problem of CAP was more or less anticipated by the public, the industry and the public were caught offguard by Pacific Plan’s action. "We have to stress though that the problem of some pre-need companies is not the problem of all,"Alba, who is currently vice-president of the Philippine Federation of Pre-need Plan Companies, told The STAR.

While the industry as a whole is experiencing a 20-percent reduction in sales following the aftermath of Pacific’s action, Alba said he expects the situation to normalize once the public is able to realize that the pre-need industry is still a safe place to invest in general, provided they choose the company well. "We expect lower sales and higher termination in the next few months‚ but we believe that the general public’s reaction to Pacific is a temporary thing," he said.

THE QUESTIONS THAT SEC AND THE MAKATI RTC SHOULD ASK THEMSELVES:

a) Assuming that this the claims of Mr. Alba are accurate regarding his company's performance are accurate, how can Pacific Plan's performance be so different and miserable? Open-ended vs. fixed payout plans cannot be the difference since both Pacific Plans and Prudentialife offer both.

b) Or, isn't the real issue corporate mismanagement (we will start posting reviewers over this long weekend on the basics as trust fund management and fiduciary responsibility) as well as a clever shell game of moving healthy assets and corporate entities around as the reasons for Pacific Plans' demise?

In which case, we fully expect that RTC MUST RULE that the owners have an inescapable obligation to dig into their wallets and return profits they have made over the previous years. To close one's eyes and to look at Pacific Plans with its crummy Napocor bonds and claim that the Yuchengco group does not have the financial capability to meet its contractual and moral obligations would be an injustice of the greatest magnitude.

c) CAP and Pacific Plans are not regulated by the Insurance Commission. The healthy ones appear to be under the supervision of the Insurance Commission. Since the SEC is the regulator of Pacific, it has a lot of questions to answer regarding its oversight of the investments of the pre-need firms it regulates. As Congressman Joey Salceda said in the DEBATE show this week, his conversation with a senior SEC official revealed an admission that the SEC was misled regarding Pacific Plans representations!!!

Clearly, using the 1992 deregulation of tuition increases for being caught flat footed is a lame reason that Pacific Plans should already stop using. BISTADO NA!

Pacific Plans Spin Doctors -- Please Go to the Principal's Office

2005-04-28T21:32:00.000+08:00

Dear Readers,

As an FYI to all of you, it is important that you know the three primary objectives that the PEP Coalition had when we established this site:

a) Research and Information gathering in order to develop an opposition strategy for the rehab model
b) Planholder orientation of their rights and entitlements
c) Enlightenment of planholders and regulators as to the questionable practices undertaken by Pacific Plans shareholders and management.

For everyone's benefit, spin doctors have been engaged to nullify our efforts and create the following illusions:

a) the PEP coalition is a rag-tag group of planholders that do not enjoy the support of Pacific Planholders;
b) there is a silent majority of planholders that are pro-rehab and have even go so far as to mimic this weblog.

Friends within YGC had given inside info about the spin doctors and we delibertely sat back to observe their efforts in this weblog. We do not know if they are professionals or not but we can only surmise that they are unfamiliar with the Internet. Telltale signs of intrusion and disinformation include:

a) steady traffic of visitors but;
b) inconsistent increase in number of comments;
c) repetitive and belabored comments unlike other posters who make their comment once and leave it at that;
d) assumption of other people's identities.

Pacific Plans spin doctors, we can see your IP addresses even as you post your comments! The IP addresses are the same even if the poster's identities are made to look different. Do your homework. Please get better IT and Internet advice.

Case in point is mr. or ms. media_elf@******.com with IP address 66.249.66.166 (you know who you are...and so do we). Suffice it to say that our east coast team knows their network administration quite well. =) It is deplorable that moles such as you would stoop this low.

Also please do an examination of conscience if you are getting paid to do this -- that same money could have been used to pay for our children's tuition!

Anyway, you spin doctors were allowed to have three days of fun. We'll set the rules:

a) This website is used primarily for research and information gathering;
b) All posters should speak for themselves. It is really amateurish to start speaking for other people with the hope of deception. Comments that attempt to speak for other people shall be deleted;
c) Character assassination, the use of profanity and pointless commentaries or lectures will also be deleted. We need good ideas, recommendations, and concrete action plans.
d) Plugs and and other advertisements will also be deleted

We will be cleaning up the comments in the next few days and only leave those which stir thoughtful discussion and debate. In the spirit of the Internet, we will encourage free speech and allow views that are pro-Pacific Plans/YGC group provided that these views are presented in an intellectual manner.

For those of you who read this site but are not IT savvy, here is how to spot FAKE profiles and MOLES:

a) The posters do not have Blogger profiles. The moderating team has Blogger profiles. Just click on our names and you will be led to the Blogger Profile we created.
b) The moderating team is comprised of three people - PEP349, corporate_conscience, and pacificnoplan. All our profiles can be viewed at the top right section of the Blog.
c) The moderating team does not comment on our own postings (with the exception of warnings and one other occassion). We will post a full article. This is something that these posters cannot do.
c) Their comments are repetitive and similar to points raised by the YGC group. (this in and off itself is fine with us, but we don't like people pretending to be part of the mod team)

For all posters, please check if your contribution has been deleted. Please clean up the language as per the above mentioned editorial guidelines and you can once again repost. In that way, we cannot be accused of discouraging an honest debate or information sharing.

Congratulations to the sincere and concerted efforts of the coalition.

Reviewer 1 - Representations and Warranties

2005-04-28T16:18:00.000+08:00

From the website of Pacific Plans before it was taken down.

With all of the sound and fury being generated by those who favor the rehab plan and complain about the selfishness of those fighting the rehab, it may be good to step back and look once again at basic principles underpinning this fiasco.

Preneed plans are financial instruments which are regulated by the Securities and Exchange Commission. As part of the regulatory process of the SEC, all methods and manner of selling to the public are scrutinized and pre-approved by them. This forms part of the "Truth in Advertising" doctrine so that investors are not misled or make incorrect assumptions when parting with their money as they make their investment decisions.

Brochures, advertisements, sales presentations of agents are representations made by the the issuer of the financial instrument. Many of the posters of comments in this blog have consistently recalled how some of their sales agents (who Pacific Plans is fully accountable for) used to talk about the financial integrity of the Yuchengco Group as well as the guaranteed features of their preneed plans. Apologists for YGC will naturally call this hearsay and unfortunate interpretations.

But we only need to look at the webpage above to see that the word "assurance" is used. For the lawyers, the words "assurance", "guarantee", "insurance", or "rely" have very specific meaning and obligations . This webpage forms part the SALES REPRESENTATIONS made by Pacific Plans and therefore Pacific Plans and SEC are fully aware of the what they were selling and the contractual obligations they were binding themselves to..

As many of you know, the Pacific Plans website was taken down almost immediately after the TRO was granted. Fortunately, through benefactors, we have been able to preserve key evidence such as this which shows that the planholders could not have misunderstood the guarantees being made by the sales agents.

Jarius Bondoc and the Uphill Battle

2005-04-27T15:15:00.000+08:00

One of the posters today thanked Mr. Jarius Bondoc for devoting precious column inches in his article today at the Philippine Star to the controversy enveloping Pacific Plans.

He starts his column with the key question, "...Should customers be punished for a company’s wrong business plan? That is the core of a tiff between Pacific Plans Inc. and thousands of holders of its pre-need education plan. "

He ends that section by saying, "...The legal tussle will boil down to interpretation and jurisprudence on contracts. But prolonged legal battle will hurt the entire pre-need trade. Customers will begin to suspect that all sales pitches will stop at nothing to get their money, then stop at nothing again to get out of promises. The issue can turn to the most basic element of business: trust..."

************************

He then goes on to fill his column with a seemingly unrelated essay on a pre-eminent establishment...

"It’s usual for fresh grads of UP-Law to partner together with dreams to become a legal institution. But few endure. One such is Carpio Villaraza Cruz, today called Villaraza Angangco, though better known to admirers and hecklers simply as The Firm, which celebrates its 25th year this week.

The title of "The Firm" is a tribute to its success in conventional and non-traditional law practice. It holds a standing for being tops in litigation. Aside from corporate and trade law, it has advised two presidents: Fidel Ramos in 1992-1998, and Gloria Arroyo from 2001 to the present. It has helped fracture monopolies in telecommunication, banking and insurance.

What sets it apart is The Firm’s contribution to government service. Antonio Carpio was appointed Supreme Court justice in 2001 after serving the Ramos administration in various capacities, including presidential chief legal counsel. The sixth-placer in the 1975 bar exams, he obtained his UP-Law degree in the same year as valedictorian and cum laude. Avelino Cruz Jr. was Arroyo’s chief legal counsel before his appointment to Secretary of Defense. He too was cum laude and salutatorian of UP-Law in 1977, had placed seventh in the bar exam, is a member of the New York Bar, and was president of the Philippine Bar Association.

Ombudsman Simeon Marcelo, a former partner, was handpicked by Arroyo for the anti-graft body after a stint as Solicitor General. He ranked fifth in the 1979 bar test, after seminary and then law schooling. Joe Nathan Tenefrancia also served as Arroyo’s chief legal counsel before becoming senior deputy executive secretary. He was UP-Law’s salutatorian in 1991.

At the helms of The Firm since its rapid growth in the early ’90s is managing partner F. Arthur Villaraza. Nicknamed Pancho Villa(raza), he has mentored dozens of partners, some of whom have moved on to form their own firms in the country or abroad, or branched out to other fields. He graduated third in UP-Law 1975. Assisting him is Reggie Angangco, one-time president of the Integrated Bar of the Philippines, and UP-Law 1980 valedictorian. Together they lead The Firm of 60 lawyers. No matter what detractors say, industry leaders, decision makers and top politicians seek their counsel."

A happy coincidence and juxtaposition or is Mr. Bondoc trying to communicate something that he cannot explicitly discuss? Who knows? But as some of the posters have insightfully pointed out, the intersection of the battle between us and Pacific Plan's owners is the rehabilitation plan. The hearing date is fast approaching.

While we are steadfast in reiterating that blind hate never achieves anything, it is nevertheless incumbent upon us to vent righteous anger and to understand who and what we are up against. The readers of this blog may also wish to contribute useful background information on the Makati RTC judge who granted the TRO and will hear the rehabilitation case.

God works in mysterious ways, as the invocation goes. We may even be able to prevail on these lawyers to remember their burning ideals and their foresworn duty to use their talents to protect the weak and disenfranchised.

Presenting Mr. Integrity!!!

2005-04-26T17:13:00.000+08:00

If you place your pointer over PGMA's image, you will be linked to the Office of the Press Secretary and to her speech given at the Univ. of San Francisco last year.

In retrospect, it is a bizarre speech but which further illustrates the linkages between this Administration and YGC. In the speech, she thanks Amb. Yuchengco for her receipt of a PhD Honoris Causa from this fine Jesuit university. (Isn't he from La Salle??? Who knows, he may like to follow Mr. Gokongwei and give a building also to the Ateneo or something).

PGMA makes much of "God-centered governance" in her speech. You might wish to give an ethics lesson or two to Uncle Al and why ethics makes good sense even for an economist such as yourself.

We have taken Pacific Plans to task over the selfsame issue of governance.

PGMA, please do remember that the 34,000 planholders are the middle class. Lest you forget EDSA 2 and the nameless, silent, and God-fearing people that got you there.

We will expect your involvement.

The Media Machine and Ces Drilon

2005-04-26T11:02:00.000+08:00

We should forgive Ces Drilon for being rude to our spokesperson. We should also try to understand why she may want to be an apologist or do lawyering for the YGC group. Who gives Drilon her paycheck?

Last time we looked, none of the 34,000 planholders has an advertising budget that the media moguls lust for.

Even in our hour of anguish, we must try to smile and look at some of her antics:

a) She was trying to probe the strategy of PEP Coalition. That's pretty bad when it would appear that our opponents have to ask their friends in media to do their homework (forgive the pun);

b) She may have betrayed her inner fear when she admitted her surprise about how quickly the coalition was able to organize so quickly -- who wants to know Ces and you had to make that remark????. Usually, rich folks like to feel that they have the game under their control. Yuchengco family members have been texting to their friends that there is a rich and powerful group behind the effort -- that is a bitter joke. (too bad, we are already on to this media spin that they are trying to concoct)

c) She is also mouthing the YGC party line that they may have not done anything illegal nor mismanaged the finances. She was saying that a 7% return was fair. That was not in our contract. How would she feel if ABS-CBN management reduced her salary by 50%. Would that be fair. Obviously, she makes far too much money to share our pain nor even remotely identify with the serious legal and moral issues at stake. Finally, she should show her research before she makes any conclusive or leading statements.

In the US or Europe, with 34,000 planholders being waylaid, a full blown media frenzy would have already been underway. In the US, Martha Stewart went to jail for concealing information and to think she was found guilty of gaining an advantage over fellow speculators. That is sure different from running away from your contractual obligations to simple, modest, and hardworking heads of households saving up for their children's future.

Our children are asking why no coverage in the media has occurred.

It is not a pleasant task to try to explain to 10 year olds on how things work in the real world and how media works. We in the middle class may be simple, and although we are not as wealthy, we are not STUPID! Rest assured we can read (between the lines) and we understand the media game as well as the media moguls do.

Let's hope we get a better shake from Atty. Dong Puno this week!!!

A Test for Mr. Purisima and the SEC

2005-04-25T17:49:00.000+08:00

from ABS-CBN Interactive 22 April 2005

Purisima orders SEC to probe Pacific Plans
(highlights made by author)

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It took more than 5 business days to get any kind of decisive pronouncement from a ranking government official. 5 days of turmoil, 5 days of anguish. Secretary Purisima, show us your leadership and demonstrate your effectiveness in enforcing regulations in place that companies need to comply with first before any petition for a TRO can be contemplated. Since there the plans are SEC-registered securities, put your foot down in terms of investor protection, fiduciary responsibilities and truth in advertising provisions with respect to the way securities can be sold.
**********************************************************************************

Finance Secretary Cesar Purisima on Saturday ordered the Securities and Exchange Commission (SEC) to investigate pre-need firm Pacific Plans Inc. after the company suspended payments to its planholders.

"I am calling the SEC to investigate the Pacific Plans case immediately with a view to protect the interest of the planholders," Purisima said.

He added: "The SEC should look beyond the rehabilitation plan [of the company] and review all the filings to check if they have lived to their fiduciary responsibilities."

Purisima also said SEC, acting as the government's corporate watchdog, must ensure that Pacific Plans did not violate the Securities Act and other laws.

He said the SEC's investigation will likewise include a check on the pre-need firm's parent company and its officers. Pacific Plans is majority owned by tycoon Alfonso Yuchengco.

He also ordered the SEC to check inter-company transactions and representations to ensure that all channels are reviewed for the benefit of the planholders.

Purisima's directive stemmed from the petition filed by Pacific Plans with a Makati City court recently.

The petition calls for a suspension of payments to planholders and rehabilitation.

The company said it might not be able to pay future claims because school tuition had been increasing at a tremendous rate ever since the government removed a 10-percent cap on tuition increases in 1990.

"The deregulation of tuition has caused a tremendous rise in the cost of education, which in turn put an enormous pressure on traditional (open-ended) plans and their respective trust funds considering that pre-need companies dealing in such securities could not pass on the additional cost to their planholders," the company said.

However, the company said that it is offering planholders an annual interest of seven percent on open-ended educational plans redeemable only by 2010.

"This will be a compounded interest that will start from the time that the planholder completed payment of the plan until 2010," Jeanette Tecson, company spokesman, said in an earlier interview.

She added: "This means that if a educational planholder was fully paid by 1997, then the interest will be from 1997 to 2010."

Tecson said the 2010 encashment will coincide with the maturity of dollar-denominated National Power Corporation (NAPOCOR) bonds that will bring in an estimated $51.8 million to the company.

Tecson said the firm will pay roughly half of 16,000 planholders filing educational claims for school year 2005-2006.

She said the company will pay most of the educational claims for non-exclusive or less expensive schools but will only shoulder less than half the claims of those enrolled in schools with high tuition.

Under the payment scheme, the company will disburse P28,000 for semestral planholders, P29,000 for annual planholders and P22,000 for trimester planholders. The payments started April 18.

Other schedules for payment to planholders are: April 19- May 25, April 20-22, April 25-29 and May 9 onwards. Those who or those who missed their schedules can go to the company office in Makati from May 2-7.

Setting up Reviewers for Planholders

2005-04-25T14:51:00.000+08:00

There is a bitter irony in our situation that we feel that there is a need to set up a "review class" for all planholders so that we all have a firm grasp of the legal, regulatory, and ethical issues that surround the rehabilitation of Pacific Plans. We also will try to condense the numerous helpful comments and insights into simpler language because not everyone is a corporate lawyer nor a sophisticated money manager.

We want to make sure that all planholders are aware of their full rights and entitlements under the law as well as the having everyone understand why the actions taken by Pacific Plans are deplorable and ill-advised.

Pacific Plans and YGC do everyone a disservice by offering to "better their offer" or to entice planholders into a compromise agreement without offering to discuss their legal obligations and the true entitlements of planholders. They prefer to talk about the intricacies of Actual Reserve Liabilities and why they did not foresee the tuition increases in order to defuse the attention...all irrelevant.

LET US BE VERY CLEAR ABOUT THIS.

The bedrock principle here is honoring contractual obligations that have been freely entered into by the parties. Write-offs due to bad investment decisions are for the account of the owners of the company. Pacific Plans wants the planholders absorb the mistakes of the owners. Planholders are not equity investors (SEC take note please!) nor did they buy these instruments for speculation. These instruments were peddled and purchased as insurance / assurance by heads of families for a secure future for their children.

Before Lifetime Plans was created, Pacific Plans was profitable. In addition, the parent company of Pacific Plans is equally profitable and in no danger of bankruptcy. In short, the financial means to absorb the write-offs are well within the means of the owners to honor their contractual obligations.

Why YGC chooses not to do so is the matter that the PEP Coalition legal team will investigate and challenge.

Let Us Organize Ourselves More

2005-04-23T21:17:00.000+08:00

It was wonderful to see all of you at St. Paul Pasig this morning. Within the span of just six days, we were able to pull together various groups and we counted about 2000+ availing planholders.

We will soon post the schools that were part of the PPI program. The PEP Coalition, being MetroManila based, is better positioned to interact directly with PPI and the rest of the YGC entities. But we should try to establish links already with non-Metro Manila aggrieved planholders and encourage them to start establishing different chapters that can coordinate with us.

Other groups can always identify themselves through the email pacificnoplan@yahoo.com and we will get in touch. While it is still a tough battle ahead of us, at least we feel less confused and lost today as compared to last week.

POWER TO THE PEOPLE AND LET US BE VIGILANT UNTIL VICTORY IS OURS!!!

2005-04-23T20:59:00.000+08:00

Open Letter to Ambassador A.Yuchengco

Please help the cause. Save this image and print it out and fax it your friends, companies, embassies, newspapers, magazines, international media.

Anger Management

2005-04-22T15:58:00.000+08:00

For those of you that caught Dong Puno Live last night, it was immediately apparent that emotions are very raw regarding the deplorable and regrettable actions taken by the owners of Pacific Plans, Inc. It is indeed a wake-up call for us to resist these actions which seek to victimize us and to voice our determination to prevail.

But at the same time, we need to make sure our anger is properly channeled and does not impose collateral hurts along the way. Please abstain from stereotyping people or their ethnicity. Nobody has a monopoly on virtue nor vice. All of us planholders are victims.

I believe it was Mr. Cuisia, in last night's show, who said that people must be held FULLY ACCOUNTABLE. That should be our sole objective.

PILLARS OF SOCIETY

2005-04-21T13:44:00.000+08:00

This is from the website of Pacific Plans that was taken down yesterday.

Management must not have wanted us to see that the prior logo of Pacific Plans has the Blue Hexagon device that is used to create a uniform corporate identity for all companies within the fold of the Yuchengco Group of Companies.

According to the article written by Mr. Victor Agustin, in his column at INQ7, stated that

"...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...."

All Hail the Yuchengcos and the fine board of Pacific Plans!!!

For all of the 34,000 plus Planholders, we now know who they are.

Let us Please take time to greet the owners, directors and officers of Pacific Plans when we see them at church, the swanky malls, the fine hotels and restaurants that the directors frequent.

Tell them how much we enjoyed waiting for 4 hours or more under the noon day sun at Kamagong St. where they relocated Pacific Plans...all the while being barked at by the security guard with a bull horn to line up (where welooked like so much docile cattle).

Thank them for their generosity and thoughtfulness as they have left us scrambling and trying to figure out how we could possibly enroll our children with only days left before enrollment.

Wave at them to acknowledge the brilliance and cleverness of their legal engineering that is designed to distance themselves from our shrill and petty complaints (shame on us for not understanding that they wanted to keep their profits). After all Some Are Smarter Than Others.

For all of this we thank them and bless them.

QUESTION OF THE DAY: Who was the first Taipan to support PGMA in EDSA2?

2005-04-20T20:37:00.000+08:00

Ate Glo & Amb. Al...too close for comfort?

Taken from: URL

PRESIDENT GLORIA MACAPAGAL-ARROYO'S SPEECH
DURING THE INAUGURATION OF THE RCBC PLAZA
Ayala Avenue, Makati City
February 5, 2001

THANK YOU VERY MUCH.

THANK YOU VERY MUCH AMBASSADOR YUCHENGCO AND CONGRATULATIONS TO YOU AND THE REST OF THE RCBC FAMILY.

PRESIDENT RAMOS WHO STARTED EDSA 1 AND CONTRIBUTED GREATLY IMMENSELY TO THE DENOUEMENT OF EDSA 2; CARDINAL SIN WHOSE VOICE LAUNCHED A MILLION WARM BODIES BOTH IN EDSA 1 AND EDSA 2; MY COLLEAGUES IN THE GOVERNMENT LED BY SECRETARY ROMULO HERE TODAY AND CENTRAL BANK GOVERNOR PAENG BUENAVENTURA; EXCELLENCIES OF THE DIPLOMATIC CORPS; OTHER OFFICIALS; LADIES AND GENTLEMEN:

I AM HAPPY TO BE WITH YOU AND IN THIS INAUGURATION OF THE RCBC PLAZA -- THE INAUGURATION OF THIS MAGNIFICENT BUILDING. IT IS MOST WELCOME AS IT REASSURES US THAT INVESTOR CONFIDENCE HAS INDEED BEEN RESTORED IN THE COUNTRY, AS STATED BY OUR TWO AMBASSADORS WHO SPOKE THIS AFTERNOON.

AS THE POLITICAL CRISIS HAS BEEN PEACEFULLY RESOLVED, WE FEEL THE REFRESHING BREEZES OF DEMOCRACY AND HEAR THE CRY OF OUR PEOPLE FOR GOOD GOVERNANCE IN THE PHILIPPINES.

AT EDSA 2, I SAID THAT NOW IS A TIME TO HEAL AND A TIME TO BUILD. TODAY THE RCBC AND ITS PARTNERS SHOW THEIR WILLINGNESS TO HEED THIS CALL BY HELPING BUILD NOT JUST A BUILDING, BUT MORE IMPORTANT TO HELP BUILD OUR NATION. THIS MAGNIFICENT RCBC PLAZA IS A STRONG STATEMENT OF CONFIDENCE IN THE BANKING, FINANCIAL AND COMMERCIAL SECTOR-- IT IS A MANIFESTATION OF THAT WILLINGNESS TO BUILD.

YOUR SUPPORT FOR OUR INSTITUTIONS IS ALSO EMBODIED IN THE SPIRIT OF EDSA MEMORIAL THAT WE ARE UNVEILING HERE A FINE TRIBUTE TO THE IDEALISM AND ASPIRATION OF THE FILIPINO PEOPLE EXPRESSED IN BOTH EDSA 1 AND EDSA 2.

LET ME THEREFORE CONGRATULATE AMBASSADOR YUCHENGCO, WHOM I'VE ALWAYS CALLED UNCLE AL BECAUSE HIS DAUGHTERS ARE MY DEAR FRIENDS, FOR GIVING OUR PEOPLE THIS LEGACY OF EXCELLENCE. INDEED, THIS WILL CONSTANTLY REMIND US -- AND THE FUTURE GENERATIONS OF FILIPINOS - OF OUR PEOPLE'S INDOMITABLE DRIVE TO ATTAIN GREATNESS. AND LET US NOT FORGET THAT AMBASSADOR YUCHENGCO HAS BEEN ONE OF THE DRIVING SUPPORTING FORCES IN THIS INDOMITABLE CRY. CONGRATULATIONS UNCLE AL. (APPLAUSE)

I'M ALSO VERY HAPPY TO HAVE AMBASSADOR YUCHENGCO AS OUR SPECIAL ENVOY TO CHINA, JAPAN AND KOREA. HE HAD EARLIER SERVED AS OUR AMBASSADOR TO CHINA DURING THE ADMINISTRATION OF PRESIDENT CORY AQUINO AND TO JAPAN DURING THE ADMINISTRATION OF PRESIDENT FIDEL RAMOS. IN FACT HE HOSTED MY MOTHER'S LAST BIRTHDAY PARTY IN JAPAN.

I HAVE FULL FAITH THAT HIS EXPERTISE AND PATRIOTISM WILL PAVE THE WAY FOR MORE DYNAMIC AND ROBUST ECONOMIC TIES AND COOPERATION BETWEEN THE PHILIPPINES AND OUR EAST ASIAN NEIGHBORS.

AS I COMMEND AMBASSADOR YUCHENGCO FOR THIS DEEDS AND CONTRIBUTIONS. I AM PLEASED TO EXTEND TO HIM MY WARM GREETINGS ON HIS NATAL DAY TOMORROW. HAPPY BIRTHDAY, UNCLE AL, AND MAY YOU HAVE MANY, MANY MORE HAPPY AND FRUITFUL BIRTHDAYS TO COME. (APPLAUSE)

AS WE ENTER A NEW PHASE OF BUILDING THE ECONOMY AND UPLIFTING THE LIVES OF ALL FILIPINOS, I ASK THE BANKING AND FINANCIAL SECTOR TO HELP US SUSTAIN OUR GAINS FOR THE BENEFIT OF OUR COUNTRY AND OUR PEOPLE.

OUR ADMINISTRATION IS COMMITTED TO ENHANCING THE HEALTH OF THE BANKING AND FINANCIAL SYSTEM WHICH HAS HELPED US WITHSTAND THE SHOCKS OF THE ASIAN CURRENCY CRISIS IN 1997. AND CONGRATULATIONS TO GABBY SINGSON FOR HAVING BEEN PART OF STEERING THAT RESILIENCE. AT PRESENT WE NEED TO PERSEVERE IN OUR FISCAL REFORMS, RESTORE BUSINESS CONFIDENCE AND GO BACK TO THE GROWTH PATH.

UNDER THE LEADERSHIP OF SECRETARY ROMULO - BECAUSE I DARE NOT SPEAK IN BEHALF OF THE CENTRAL BANK BECAUSE WE RESPECT THEIR INDEPENDENCE -- WE ARE DETERMINED TO PROMOTE A LOW INTEREST REGIME. (APPLAUSE) WE SHOULD PREVENT SHARP FLUCTUATION IN THE COST OF MONEY AS THIS IS HARMFUL TO BUSINESS AND A DISINCENTIVE TO SERIOUS INVESTORS.

LOW INTEREST RATES, I BELIEVE ARE THE BEST PUMP PRIMING MECHANISM TO STIMULATE BUSINESS AND ECONOMIC ACTIVITIES.

TO DO THIS, WE SHALL DEVISE THE MOST EFFECTIVE WAYS AND MEANS TO TRIM DOWN THE EXPECTED BUDGET DEFICIT OF P225 BILLION TO P146 BILLION. THIS FISCAL TARGET NECESSARILY ENTAILS HARD WORK AND SACRIFICE TO REDUCE EXPENDITURES THROUGH AUSTERITY MEASURES AND INCREASING INCOME BY INTENSIFIED EFFORTS IN TAX COLLECTION.

A SMALLER DEFICIT WILL REDUCE INTEREST RATES IN TURN MAKING MORE FUNDS AVAILABLE FOR BUSINESS. THIS WAY GOVERNMENT BECOMES AN ENABLER RATHER THAN A BIG COMPETITORS OF BUSINESS IN BORROWING FROM THE CAPITAL MARKET.

PROMOTING A LOW INTEREST REGIME ALSO BUILDS UP THE FOUNDATION OF A STRONGER ECONOMY RATHER THAN EARNING HANDSOME PROFITS FROM HIGH-YIELDING TREASURY BILLS, BUSINESSMEN ARE INDUCED TO INVEST IN MORE PRODUCTIVE, JOB-CREATING AND LONGER-TERM ENTERPRISES.

THE PESO HAS YET TO SETTLE AT MORE STABLE LEVELS. HOWEVER, AS OUR AMBASSADORS HAVE SAID WE HAVE SEEN SOME IMPROVEMENTS OVER THE PAST TWO WEEKS. THE PESO IS NOW STRONGER AND THANK GOODNESS TRADING BELOW P50. AS A POLICY, WE SHALL LET THE NATURAL FORCES OF THE MARKET SET THE PRICE OF THE PESO.

THE ROLE OF GOVERNMENT SHALL BE TO ENSURE THAT THE MARKET IS OPEN, FAIR AND ORDERLY. WE SHALL FREE IT FROM UNFAIR PRACTICES TO MAKE IT ATTRACTIVE AS A COMPETITIVE MARKET.

WE MUST LEARN THE HARD LESSONS FROM THE BW SCANDAL BY PUTTING IN MEASURES THAT PREVENT SUCH HARMFUL ACTIVITIES FROM HAPPENING AGAIN. THERE WILL BE CLEAR AND TRANSPARENT RULES TO ENSURE DISCIPLINE IN THE MARKET.

THERE SHALL BE FAIR OPPORTUNITIES TO ALL WHO WISH TO PARTICIPATE. MOST OF ALL, WE SHALL MOVE AS A GOVERNMENT WITH A CLEAR PURPOSE AND DIRECTION.

THIS IS IMPORTANT TO MAKE THE PHILIPPINES A CONVINCING IF NOT A SMART CHOICE FOR ALL INVESTORS.

THE RECENT IMPEACHMENT TRIALS HAVE REVEALED SOME INDISCRETIONS IN TRANSACTIONS OF A FEW BANKS. THESE HAVE IN TURN GIVEN CREDENCE TO REPORTS OF THE PHILIPPINES AS AMONG THE TOP 15 COUNTRIES IN THE WORLD SUSPECTED AS HAVEN FOR MONEY LAUNDERING.

WE CAN ONLY LET THIS NEGATIVE IMAGE AT THE EXPENSE OF OUR ECONOMY. WE NEED TO ACT WITH DISPATCH TO REPAIR THIS IMAGE OF OUR BANKING SYSTEM.

FOR THIS PURPOSE, I AM GIVING MY FULL SUPPORT TO THE SPEEDY IMPLEMENTATION OF THE BANGKO SENTRAL OF THE PHILIPPINES OF THE RECOMMENDATIONS OF THE FINANCIAL ACTION TASK FORCE ON MONEY LAUNDERING. THESE MEASURES INCLUDE STRICTER COMPLIANCE AND CRITERIA IN CUSTOMER IDENTIFICATION, RECORD KEEPING, REPORTING OF SUSPICIOUS TRANSACTIONS AND INTERNAL CONTROL OF BANKS.

I AM CONVENING LEGISLATIVE EXECUTIVE DEVELOPMENT ADVISORY COUNCIL. ONE OF ITS MAIN AGENDA IS HOUSE BILL 878 OR THE NEW CENTRAL BANK ACT. THIS INITIATIVE IS WORTHY OF SUPPORT AS IT STRENGTHENS SUPERVISORY CAPABILITY OF BANKO SENTRAL NG PILIPINAS AND PROMOTES GREATER STABILITY IN THE BANKING SYSTEM. IT GIVES BSP EXAMINERS ACCESS TO DEPOSITS OF MORE THAN P50 MILLION BELIEVED TO BE USED IN RELATION TO FRAUD OR IRREGULARITY.

IN OUR SERIOUS EFFORTS TO COMBAT MONEY LAUNDERING, LET ME ASSURE THAT WE ARE WARY OF POSSIBLE EXCESSES AND ABUSES AGAINST THE RIGHTS OF DEPOSITORS. THUS, WE WILL MAKE SURE THAT ADEQUATE SAFEGUARDS AGAINST ARBITRARINESS ARE IN PLACE IN THESE LEGISLATIVE INITIATIVES BEFORE THEY ARE FINALIZED AND PASSED INTO LAW.

I SEE THE RCBC AT THE FOREFRONT OF THE BUSINESS SECTOR IN FACING THE CHALLENGES OF GLOBALIZATION AS A KEY PLAYER IN OUR BANKING INDUSTRY IN THIS MILLENNIUM OF GLOBALIZATION.

WITH THE CHALLENGES PRESENTED TO US, WE NEED TO MAXIMIZE OUR COMPETITIVE EDGE IN THE FIELD OF INFORMATION TECHNOLOGY. WE NEED TRANSPARENCY AND A LEVEL PLAYING FIELD TO FREELY COMPETE IN TODAY'S GLOBALIZED ECONOMY. WE NEED A ROBUST BANKING SECTOR TO HASTEN OUR ECONOMIC RECOVERY AND SUSTAIN OUR GROWTH MOMENTUM.

WHEN I WAS SENATOR, I AUTHORIZED SOME IMPORTANT ECONOMIC LAWS OF THE RAMOS ADMINISTRATION THAT HELPED THE COUNTRY RESIST THE WORST EFFECT OF THE CURRENCY CRISIS THAT HIT THE ASEAN REGION. ONE OF THE LAWS WAS THE LIBERALIZATION OF THE ENTRY AND SCOPE OF OPERATIONS OF FOREIGN BANKS IN THE PHILIPPINES. ANOTHER LAW I AUTHORIZED WAS THE SPECIAL ECONOMIC ZONE ACT. PAVED THE WAY FOR THE DESIGNATION OF RCBC PLAZA AS AN INFORMATION TECHNOLOGY ZONE -- THE FIRST IN THE COUNTRY. AND I CONGRATULATE RCBC FOR THAT AS WELL. (APPLAUSE) IN EFFECT, CERTAIN I.T. RELATED BUSINESSES LOCATED HERE AMY AVAIL OF INCENTIVES OUR GOVERNMENT OFFERS.

MECHANISM SUCH AS THESE HELP SPUR DEVELOPMENT ESPECIALLY I N THE NEW ECONOMY NOW SWEEPING THE GLOBE. WE CANNOT BE LEFT BEHIND OR OUR PEOPLE WILL LOSE OUT IN THE STRUGGLE FOR A BETTER LIFE.

I THEREFORE CALL UPON THE LEADERS OF THE BUSINESS COMMUNITY, THE LEADERS OF THE FINANCIAL COMMUNITY TO PROVIDE A BUSINESS CLIMATE THAT WILL BE CONDUCTIVE TI OUR NATIONAL DEVELOPMENT GOALS. WE NEED INVESTMENTS, WE NEED SAVINGS MOBILIZATIONS, WE NEED TRANSPARENCY IN THE BANKING AND FINANCIAL SECTOR, AND WE NEED GOOD CORPORATE CITIZENSHIP AND SOCIAL RESPONSIBILITY.

WE LOOK TO OUR STRONG BANKING SECTOR TO HELP PHILIPPINE BUSINESS RISE ABOVE OUR CURRENT ECONOMIC DIFFICULTIES AND WIN FOR OUR PEOPLE THE REWARDS OF GLOBALIZATION. MAY OUR PARTNERSHIP AND COOPERATION BECOME STRONGER IN THE COMING YEARS SO THAT WE CAN BRING ABOUT THE PEACE AND PROSPERITY THAT OUR PEOPLE HAVE LONG ASPIRED FOR.

THANK YOU AND CONGRATULATIONS RBCB. (APPLAUSE)

Is government for us or against us?

2005-04-20T17:19:00.000+08:00

Read on...it 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?

2005-04-20T17:12:00.000+08:00

Vic Agustin has got it right! At least he is one journalist who is fulfilling his duty to serve the public good! Where are the other fine and learned, not to mention well paid journalists and commentators? Nabayaran na ba sila? Baka pera natin yung ginamit na pambayad!!!! grrrr

Victor Agustin
nquirer News Service

Pacific cut

THE FLOUNDERING Pacific Plans Inc. is offering plan holders who are willing to wait for five years -- or up to 2010 -- interest of 7.0 percent on their educational plans.

On Tuesday there was a small ad in the Inquirer, from Philippine Savings Bank, offering a five-year "Prime Time Deposit" account at 8.5 percent earnings, guaranteed.

In other words, after all the hours spent receiving investment counseling from pushy pre-need agents, Pacific Plans shareholders would have made more money on their money by simply parking their cash in a bank or, even better, by buying the Treasury bills or other government debt notes themselves.

As part of a rehabilitation plan, Pacific Plans is asking its plan holders to wait for 2010 encashment since that is when the underlying securities, dollar-denominated bonds of National Power Corp. (Napocor) shall mature.

What Pacific Plans has not been telling its remaining 34,000-shareholder base is, that when the debt papers were issued in July 2002, the Napocor bonds offered a whopping 11.1-percent yield.

According to the grapevine, Pacific Plans came to acquire the Napocor 2010 only later in the game, when the yield was down to 9.19 percent. Still, between 7.00 and 9.19 percent represents a 2.19-percentage-point spread, which presumably went and will still go to pay for salaries plus bonuses, administrative / operating / marketing expenses, and, of course, sales commissions.

Malayan Insurance gets strong rating from A.M. Best Co.

2005-04-19T15:09:00.000+08:00

In a Philippine Star article dated 17 April 2005, Malayan Insurance, part of the Yuchengco Group of Companies, assures the public that they have got lots of cash. Enough cash, in fact, to merit a strong "B++ (very good), and a stable outlook by A. M. Best Co". If this is so, then why are we PEP Planholders the poor relation in the YGC universe?

Lugi naman tayo...

Organizational Meeting for Pacific Planholders

2005-04-19T14:10:00.000+08:00

General Meeting of interested Pacific Plan Holders on Saturday, April 23 at 8:00-12:00, St. Paul College Gym, Meralco Avenue corner St. Paul Drive, Pasig City. Registration starts at 7:00 am.

Pacific Planholders Unite !!!

2005-04-18T15:20:00.000+08:00

A Message from our adhoc leader, WMB

We will have a General Assembly meeting on Saturday morning 23 April 2005. We have invited a panel of lawyers to answer all our queries re legal options open to us. We shall send out details re time and venue by Wednesday at the latest.

Please pass this message on, by text, by phone and whatever means available to other Planholders. It is also important that we are able to link up with other groups who are looking for help.

SEC - Caught by Surprise (Again!#?%*)

2005-04-18T13:13:00.000+08:00

April 15 press release in the Philippine Star

By her own admission, SEC Chairman Fe Barin stated that Pacific Plan's filing for rehabilitation caught the Securities and Exchange Commission by surprise. We find her other pronouncements to be troubling:

a) based on the financial statements submitted to the SEC, there was no indication of a liquidity problem with Pacific Plans;
b) Pacific Plan's decision to file for rehabilitation was a step in the right direction and that Pacific Plan was candid enough to admit its problems???

This is a very sorry state of affairs. The correct measure of candidness is the submission of financial statements that can intelligently anticipate and discuss problems as well as corrective measures ahead of time. Submitting a request for a TRO in the proverbial dead of the night does not qualify for candidness nor transparency by any means.

Opposite to the apparently welcoming attitude of Chmn. Barin, we, the planholders, feel a sense of dread at what seems to be a premeditated and cold-blooded execution transgressions to hand both the planholders and the regulators a fait accompli. When times were good and the business profitable, we can safely assume that senior management and the shareholders paid themselves handsomely. Now that we are in bad times, the major shareholders and management expect the planholder to be left holding the bag.

We will have much to take up with the auditors of Pacific Plans. As the Enron case has shown, full accountability will be expected of the external auditors. The prudence of the investment policy and actions as approved by the seniors of Pacific Plans should have been part of proper disclosure as well as audit.

Prudently managed portfolios do not rot overnight!!! After all, that is how you define prudent management -- the ability to weather ups and downs of the marketplace gracefully. It is too fantastic a stretch of the imagination that Pacific Plans is asking of its planholders that its vaunted reputation for prudence blew up due to "unforeseen market conditions", all within the space of a year (i.e. the period from last fiscal year's filed financial statements to the present).

So we are left with many avenues for investigation:

a) Was the SEC remiss in its oversight duties and responsibilities?
b) Were erroneous, if not misleading, financial statements submitted to the regulator?
c) Did the external auditors exercise due care in reviewing the Pacific Plan's operations as well as the condition of their portfolio?
d) What is the quality of investment management policies at Pacific Plan?
e) What are the investment decisions that were undertaken over the past three years?
f) Competency and prudence of senior management given their failure to address "unforeseen market conditions".

The SEC has an obligation under law to deliver swift and comprehensive answers to these questions.

Media Push of Yuchengco Group of Companies

2005-04-18T10:52:00.000+08:00

Source : www.inq7.net April 15, 2005

THE CENTRAL bank said Rizal Commercial Banking Corp, the Philippines' sixth largest lender, is financially sound despite the problems faced by its affiliate, pre-need firm Pacific Plans Inc.

"The problem of Pacific Plans has not spilled over to the bank," central bank deputy governor Alberto Reyes said, adding that RCBC itself does not have any investment in the pre-need firm.

"RCBC is a very big bank. They only have common shareholders," Reyes said.

Pacific Plans, whose major shareholders are the Yuchengco family, who also controls RCBC, has filed for rehabilitation with a Makati City court.

The court has ordered the company to suspend payments to creditors, suppliers and planholders until it has been rehabilitated.

The company said that while it can still pay the tuition fees of planholders now, it may not be able to pay future claims due to a sustained sharp rise in tuition since a 10-percent cap on tuition increases was lifted in 1990.

Pacific Plans has more than 34,000 planholders, of which 16,000 have been claiming their entitlements.

************************************************************************

Based on the abovementioned press release. it would seem that there will be every attempt to create distance between the Yuchengco Group of Companies and Pacific Plans. Assuming that the good governor Reyes was quoted properly, his choice of words to describe the corporate relationships as that they "only have common shareholders" would have you gain the impression that the Pacific Plans has an arms-length relationship with the other YGC entities.

The following days and weeks will tell if the term "interlocking ownership and directorships" is not the more precise and accurate characterization. If so, probably, we could even get the BSP to agree that there are moral, managerial, and financial responsibilities that YGC has to own up to.

Check issued by Pacific Plans and drawn on RCBC after the TRO was granted

2005-04-17T23:24:00.000+08:00

This is what planholders woke up to after the TRO was granted by the Makati RTC was granted. Notice that the amount paid out is now described as "Tuition Support". Planholders were also "informed" that the only amounts that they could expect from their plans is substantially less than the amount originally promised by Pacific Plans.

Corporate Governance and Responsibility

2005-04-17T18:38:00.000+08:00

Last week marked a sad day for corporate governance. Last week, Pacific Plans sought the protection of the courts. Ostensibly, the convenient enough reason given for the Temporary Restraining Order was to allow the rehabilitation of Pacific Plans.

In one, swift blow, our dreams were taken away. Contractual obligations as guaranteed by the plans we had purchased have been unilaterally altered without our knowledge nor consent.

FIGHT BACK!

We enjoin readers and visitors to this website to contribute their thoughts, knowledge, and whatever information they might have so that we can get to the truth behind this so-called rehabilitation.

Now that we've read all issues surrounding Pacific Plans, what course of action do we take?
	I want to see wrongdoers punished and am willing to put my plan at risk, in whole or in part, to see justice meted out.
	I have lost my faith in the company and it is in my best interest to listen to any suggestion that allows me to get my money back now.
	I have lost faith but willing to work with the company so that I can get my principal back with some interest.
	I am disappointed but i wish to continue my plan and business relationship with the PPI.