CAP brands SEC criminal case a harassment suit

College Assurance Plans Phils. Inc. (CAP) has branded the criminal case filed by the Securities and Exchange Commission (SEC) against it as a harassment suit as the company insists it has been in faithful compliance with the rules governing the sale of pre-need plans.

The SEC filed Monday before the Department of Justice a criminal complaint against the directors and officers of CAP for unauthorized sale of pre-need plans in violation of the Securities Regulation Code (SRC).

"We believe that what is crucial at this point is for CAP and the Commission to work together for the good of CAP planholders. Suits like this only harass the company that has so far continued to honor its commitments to its planholders," CAP said in a statement.

"Before the proper forum, CAP will more fully respond to these charges and expose them for the harassment tactics that they are," the pre-need firm further said.

CAP also pointed out that it has been transparent to the SEC to the fact that it even admitted it had oversold unregistered plans. "CAP has not nor does it intend, to ignore or run away from these transactions," the company said.

"CAP complied with the orders as timely as it could. Upon receipt of the subject orders, CAP immediately disseminated these to all its 33,000 sales agents nationwide who are mostly based in the rural areas — CAP’s marketing strength is in these areas. Sales made after could only be attributed to the lag-time in disseminating information and not on any willful defiance of the Commission’s orders," CAP said.

"All collections subsequent to the suspense payments were treated by CAP as deposits from prospective planholders, and hence refundable. Prospective planholders who requested for refunds have all been entertained by CAP. To date, CAP has refunded a total amount of around P10 million. CAP cannot be faulted if the other prospective planholders want to hold on to their plans," CAP said.

"CAP didn’t expect the high confidence level of the market on CAP educational products so that its P5 billion worth of securities earmarked for three years or 36 months were sold out in only 20 months. In the single month of June 2004 alone, sales went over P300 million," the company said.

Recommended for criminal prosecution by the SEC were CAP chairman Alejandro Roces, president and chief executive officer Enrique Sobrepeña Jr., treasurer James Marsh Tomson and directors Coronado Munasque, Sen. Juan Flavier, Ernesto Espaldon, Robert John Sobrepeña Jr., William Russell Sobrepeña, Romulo Espaldon, Gillian Akiko Thomson, Eusebio Tanco, Rafael Evangelista and Ma. Romela Bengzon. The SEC also sought the issuance of a hold-departure order against the respondents to prevent them from fleeing the country and evading criminal liabilities.

In its complaint, the SEC said CAP sold pre-need educational plans despite the fact that it knew it had no more registered plans to sell in violation of Sec. 16 of the SRC. CAP had used up all its registered plans as early as June 2004.

"Under the law, directors of corporations occupy a reasonable and important business relation to the general public and in accepting such position of trust and responsibility, it is not only presumed but expected of them, that they deal with the corporate property and conduct the business of the corporation with prudence and good faith. Being responsible for the management of the corporation, the directors had the obligation and the legal duty therefore to ensure that the corporation was operating within the bounds of the law," the SEC further said.

The SEC said the members of the board, along with the responsible officers, are liable under Sec. 73 of the SRC which states: "If the offender is a corporation, the penalty may in the discretion of the court be imposed upon such juridical entity and upon the officer or officers of the corporation. "