Pacific Plans planholders buck rehab, seek government intervention

Pacific Plans Inc. planholders have sought government intervention in going after their claims against the Yuchengco-owned pre-need firm as they opposed the company’s petition for rehabilitation filed with the court.

In a press briefing, the newly-formed group Parents Enabling Parents (PEP) has asked the government to step in and help them recover their investments.

PEP president Philip Piccio said the coalition filed yesterday with the Makati Regional Court its opposition to Pacific Plans’ petition, pointing out that the pre-need firm’s liquidity problem was "fraudulently self-engineered and artificially contrived and also the result of its own negligence."

Piccio alleged that the filing of the petition was done to evade contractual obligations to the company’s thousands of planholders.

"Pacific Plans deliberately committed corporate suicide by cannibalizing itself when it maneuvered to separate its revenue-generating products from the traditional, open-ended educational plans which it had stopped selling in 1992.

They transferred all good assets to another company which is also owned by the Yuchengcos," Piccio said.

Piccio said this case would be "a litmus test to determine whether or not this government will protect its citizens from defrauders who had bandied the Yuchengco name and had beguiled and cajoled them with lofty promises so they will part with their hard-earned money."

Piccio said the coalition has asked the Securities and Exchange Commission (SEC) to file appropriate charges against erring officials and directors of Pacific Plans should it be proven that they were remiss in their duties under the Securities Regulation Code.

"This would indicate to both local and foreign business groups, as well as the country as a whole, that the SEC as a regulatory agency of government remains faithful to its mandate and will not compromise its integrity even in the face of strong political pressure coming from some well-endowed and favored sectors," Piccio said.

"We are here to ask for a redress of the wrong committed by the Yuchengco Group.

We’re not here to shake the industry.

We’re even asking help of other pre-need companies to join us in our fight," Piccio said.

Piccio said the court’s approval of the rehabilitation plan would give its imprimatur to Pacific Plans’ contractual breach and reward the Yuchengcos for their "bad faith".

"By doing so, the court would be allowing Pacific Plans to swindle 34,000 innocent planholders, making itself not just an accomplice but a principal to this defraudation," Piccio said.

He added the approval of the plan would also set a bad precedent for the pre-need industry which has been posting a decline in sales due to the financial problems besetting a number of pre-need firms.

As this developed, former ambassador Alfonso Yuchengco handed over a check yesterday amounting to P250 million to Pacific Plans president Ernesto Garcia to be used for payment of tuition requirements of planholders for this year’s school opening.

With the new funds, planholders can pick up the check for the additional tuition support starting Monday at the PICC meeting rooms 2 and 3 from 8 a.m to 6 p.m.

Planholders would just need to bring a copy of the certificate of full payment and original valid ID.

Pacific Plans lawyer Jeanette Tecson said the mere fact that Yuchengco has shelled out funds from his own pocket should prove that the pre-need firm, particularly the Yuchengcos, will not evade obligations to planholders.

Yuchengco, for his part, appealed to planholders’ "utmost understanding on the difficult situation Pacific Plans is facing now."

He also reassured planholders that Pacific Plans will do everything in its capacity to help ease the problem.

But PEP legal counsel Mario Ongkiko alleged that the money donated by Yuchengco was nothing compared with what the pre-need firm’s officers and directors got from Pacific Plans planholders.

He claimed that for the period 1996 to 2003, directors of Pacific Plans received over P4 billion in commissions and bonuses.

Pacific Plans needs at least P300 million in fresh capital infusion to allow planholders the option to encash their entitlements under an exit mechanism that will convert their open-ended plans into a fixed-value plan contract.

The fixed value plans are secured by $51.8 million worth of National Power Corp. (Napocor) bonds which are guaranteed by the government and will mature in July 2010.

For a fully-paid non-availing plan, the entitlement is computed on the basis of seven percent net per annum yield on the planholders contributions from the date of full payment on record.

Upon surrender by the planholders of the plans in exchange for the new plans, Pacific Plans will be considered discharged from all obligations under the plans.

As part of the rehabilitation process, Pacific Plans shall apply with the SEC for renewal of its dealers license and approval of another education plan which is configured to provide adequate, though not complete, protection from cost escalation on tuition fees and realistic allowances for standard fees, without unduly risking the viability of the company.

Tecson said the new education plan shall pay the cost of tuition and other school fees at the time of need, subject to a pre-determined maximum education benefit per year.

The plan is payable in five years and will mature on the start of school year following the beneficiary’s stated birthday.