PEP Coalition threatens to file estafa cases
by Chino S. Leyco & Darwin G. Amojelar
Jan. 27, 2009
Some disgruntled clients of Pacific Plans Inc. (PPI) have apparently made amends with the new buyer of the preneed firm—but not with the Yuchengco group.
The Parents Enabling Parents (PEP) Coalition officials said they plan on Thursday to file syndicated estafa cases against the Yuchengco group, which sold the preneed company to Abundance Providers and Investments Corp. (APIC), led by businessman Noel Oñate.
Philip Piccio, coalition president, said they would no longer pursue a temporary restraining order to halt the company’s sale to Oñate—who on Sunday questioned the legitimacy of the coalition. Instead, Piccio said they are coordinating with coalition members to file estafa charges before the Department of Justice—plus individual cases in local courts nationwide— stemming from the sale of Pacific Plans.
The cases are to target Pacific Plan’s former directors and officials, including Alfonso Yuchengco, Yuchengco Group of Companies chairman, and Helen Yuchengco-Dee, Rizal Commercial Banking Corp. (RCBC) chairman. The coalition would also file charges against officials and directors of the Security and Exchange Commission (SEC) for “not fulfilling its regulatory functions” for the preneed industry, Piccio said.
He explained that the coalition members feel cheated, since the Yuchengcos have not paid their obligations to the planholders, even after they made money from the sale of the company.
The coalition would also seek help from the Bangko Sentral ng Pilipinas (BSP), Piccio said. But he would not disclose what complaint they intend to file against RCBC Trust, because there are “some legal regulations that they should follow.”
Truce with buyer
“We’ve met with Oñate’s camp for two to three times, and we’re scheduled to meet again this week,” Piccio told reporters. “We will give them a chance, maybe the new owner can provide solutions despite the current situation of the industry.”
Despite the talks, Piccio said the coalition would continue to question the rehabilitation proceedings of Pacific Plans, including the approval of the Modified Rehabilitation Plan, which is supposedly prejudicial to open-ended traditional education planholders.
“Oñate respected our stand, and they set aside for now the issue on rehabilitation proceedings,” he added.
In a statement released also on Monday, the Yunchengo-owned Grepalife Holdings said it respects PEP Coalition’s plan to file complaints with the central bank and the estafa cases.
“We are confident that once the facts are presented, we will be vindicated,” the company said.
“It is common knowledge that the present financial meltdown has battered trust funds here and abroad,” the statement added. “An accusation of mismanagement of PPI’s [Pacific Plan’s] trust funds, therefore, has no basis whatsoever, especially because the funds are intact but are earning less than before the present global crisis.”
The Yuchengcos were also confident that the estafa charges would not prosper, “because the requisite elements of fraud and damage are absent when PPI was sold.”
The statement explained, “The accusation that the sale was equivalent to the former owner running away from its obligations is empty, since PPI and its new owner are committed to pay the planholders.”
“It is also incorrect to allege that PPI was sold at a profit,” the statement added. Plus, it argued that the corporate or trust assets of Pacific Plans are intact at P12.5 billion.
Over the weekend, the Philippine Federation of Preneed Companies said it was willing to accept a bailout package from the government to save the dying industry.
But PEP Coalition slammed the proposal. Piccio said taxpayers should not save an industry that collapsed because of the irresponsible and wrong decisions of its owners.
After the collapsed of College Assurance Plans (CAP), Pacific Plans and Pacific Consolidated Inc., Piccio said there would be five more preneeds companies that are likely to fold soon.
Meanwhile, the National Economic and Development Authority (NEDA) wants to transfer the function of the SEC to the Insurance Commission in regulating the preneed industry, as well as the Government Service Insurance System (GSIS).
“The industry should be regulated by the Insurance Commission, because the SEC has failed miserably in regulating the preneed firms,” Socioeconomic Planning Secretary Ralph Recto told reporters also on Monday.
The industry started to collapse in 2005, when pre-need companies failed to cope with rising tuitions that were higher than the amount paid by the planholders. As a result of the industry shakedown, the number of pre-need companies licensed to operate went down to 32.
Over the last 25 years, the industry has had more than 92 firms actively engaged in the sale of pre-need plan securities.
Preneed companies that filed corporate rehabilitation or bankruptcy were College Assurance Plan, Professional Financial Plans (formerly TPG Corp.), Pacific Plans Inc. and Platinum Plans. Recently, Legacy Consolidated and Scholarship Plans, along with eight other preneed firms, rendered petitions for voluntary dissolution before the SEC.
At present, the proposed Preneed Industry Code is pending both in the Senate and House of Representatives. Under the bill, a pre-need company is prohibited to sell plans without registering in the commission, which shall determine the number of plans to be sold.
Recto said there should be a capital requirement for pre-need companies before they engage in this kind of activity.
He junked the proposal of some group to give the industry a bailout. “Definitely no. Taxpayers should not pay for the mistake of these companies.”
Recto added that the Insurance Commission should also regulate GSIS. “It appears that the SSS [Social Security System] is doing well compared with the GSIS.”
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