If President Arroyo would again allow Justice Secretary Raul Gonzalez to play naughty, he could feed Erap et al. to the hungry lions waiting in a US district court in New Jersey. They could face long stateside prison terms if extradited, indicted and found guilty.
Filipino-American intelligence agent Leandro Aragoncillo has admitted before investigators and in court that he went to Manila and met with his co-conspirators at Malacañang when Erap was still there and that later he passed classified documents to them.
Putting up a brave front, our Erap, of course, denied involvement in espionage. Lacson, his former national police chief, admitted receiving some materials from Aragoncillo, but said those were not sensitive documents.
Whatever, the unfolding drama is something to watch on both sides of the Pacific.
Aragoncillo has testified about his passing on to Filipino contacts sensitive materials relating to terrorist threats to US government interests in the Philippines and the joint military exercises involving American troops in the Philippines.
Some of the documents I have seen, and which I presume are among papers sent by Aragoncillo to his contacts, are copies of reports of the chief of the US embassy in Manila to the home office about the Arroyo administration and the Philippine situation.
The embassy reports were so critical of President Arroyo that, I think, many opposition strategists interpreted them to signal that the US government itself was – or at least was disposed to – working for Ms Arroyo’s ouster.
During his indictment, Aragoncillo described five years his passing top secret and secret information to Filipino opposition politicians plotting to unseat Ms Arroyo.
The PPI rehab plan, which is expected to be a model for similarly distressed pre-need companies, was approved April 27 and released this week by Presiding Judge Romeo F. Barza of Makati RTC Branch 61.
Rather than order PPI to pay all maturing obligations outright, Barza’s "solomonic" decision sought to save the company, protect its other pre-need businesses, and give stakeholders, especially its planholders, a chance to recover with profits their investments with PPI.
The decision on PPI will heighten interest in similar cases of other pre-need companies whose trust funds have been found insufficient to meet their obligations falling due.
(Footnote: This has nothing to do with the PPI case, but Barza, who is president of the Philippine Judges Association, has been appointed justice of the Court of Appeals.)
To be serviced under the rehab plan, crafted with the help of court-appointed rehab receiver Mamerto A. Marcelo Jr., are about 34,000 holders of traditional education pre-need plans (PEPTrads). Some 16,000 of them are availing and going to school while 18,000 are not yet availing themselves of any plan.
The court said PPI must be allowed to continue its business since to allow it to collapse under the weight of runaway tuition rates would prejudice its more than 400,000 planholders.
Under PEPTrads launched in February 1986, the planholder is guaranteed the payment of tuition and other school fees, irrespective of the cost at the time of availment. A trust fund was created by PPI to ensure payment of maturing plans.
Other plans are fixed-rate, meaning the maturing value of the plan is a pre-agreed amount not affected by the tuition level prevailing at the time of availment. This type is not a problem..
Since 1990, tuition in private schools has increased by an average of 16 percent every year and in some cases by as much as 28 percent. In contrast the return on investment on the trust funds created to pay obligations ranged only from 11 to 14 percent.
The situation was aggravated by the Asian financial crisis in the late 1990s. As a result, deficiencies in the trust fund began to be felt. The company stopped selling PEPTrads in 1992.
Recall that in 1987, only P30,000 was needed for an entire four-year college course. By 2003, this had climbed to P30,000 per semester, or a total of P240,000. If deregulation were not imposed and tuition rose only by the previously prescribed maximum of 10 percent, the total would be around P130,000 after 16 years.
In some exclusive schools, a plan bought for P15,000 before 1990 resulted in the pre-need company paying more than 20 times when the beneficiary filed for claims 12 years later.
There were other firms, however, where SEC found pre-need funds having been used for other projects without reasonable diligence, resulting in the dissipation of funds intended for paying maturing claims.
For instance, some PPI planholders who had paid a total of P13,800 each for premium have collected up to as much as P308,000 in benefits, or a whopping 2,200 percent return on investments!
All told, on the average, there were planholders who got an ROI of up to l,600 percent. This explains why, for a time, there was a brisk secondary market or the reselling or transferring of plans for a (hefty) profit.
Talking of those who have fully availed themselves of traditional plans, 12,063 planholders representing 31 percent have been paid a total of P2.17 billion as of last year – versus their contribution of P397 million, or an ROI of 549 percent. Not bad.
Actually, majority (56 percent) of some 21,825 planholders of PPI had been paid at least P1.6 billion. Their contribution of P327 million, taken together, earned them a 500 percent ROI.
The approved rehab plan will allow Pacific to pay cash to the planholders every enrolment period until school year 2009-2010 using National Power Corp. bonds, which are the bulk of the PEPTrad Trust Fund. These are US dollar-denominated zero-coupon bonds guaranteed by the government.
The court also ruled that the payments to or the servicing of the fixed-value plans (memorial, pension and fixed-value education plans) are payments made in the ordinary course of business of the corporation. The planholders should continue to be paid their benefits from their respective trust funds.
To ensure compliance, the court required the rehab receiver to submit a monthly report of all activities undertaken in the implementation of the approved rehab plan.
In his decision, Barza urged the Securities and Exchange Commission to grant PPI a dealer’s license and the registration of securities as well as salesmen and agents’ licenses.
The judge’s line is reinforced by House Resolution No. 1049 recognizing the importance of preserving and protecting the pre-need business which is uniquely Filipino.