Sunday, January 09, 2005


Of course, the current problem of College Assurance Plan (CAP) meeting tuition fee obligations of its planholders is largely the fault of its managers. They were too aggressive on property investments, and the MRT investment is still a losing proposition. People say CAP's actuarials failed to realize the tremendous increase in tuition fees across time, which unfortunately could not be matched by returns on sour placements.

But that's the risk every planholder should have known. I knew that from the beginning. That's why I ran away as fast as I could every time those persistent pre-need salesmen knocked on my door. And I managed to keep my money away from these people, in spite of their tactics, which at times were similar to boiler room operatins. Those who managed to land an appointment with me got an hour's doze of lawyerly cross-examination, and walked away vowing to sell nothing to me ever again.

Yet, at the end of the day, if CAP eventually shuts down (look at what happened to industry pioneer PAMANA), CAP shareholders and managers can walk away, and say, "Sorry guys, it didn't work," while their insolvency lawyers take charge. And the poor planholders will have nothing but the proverbial empty bag. Whoever said that you should save money for your child's future education and put it on pre-need plans should be shot.

Is that all there is to it? I think the accusing finger should also point to the Securities and Exchange Commission (SEC). The SEC is the single government agency tasked to monitor and supervise CAP's operations. Why did they fail to check CAP's over exposure on the property sector? Why did they allow CAP to move its money to the MRT project? When CAP's investments didn't return with the projected numbers, why didn't the SEC do something about it?

A few years back, I noticed CAP suddenly becoming very aggressive in advertising its products. They were all over the radio, tv and print media. They even had a full page ad with the names and pictures of their directors and officers who were prominent businessmen. Some were even esteemed lawyers. Sun Tzu guy that I was, I knew CAP was in trouble. (Take a tip: when financial institutions are suddenly all over you, on the radio, tv, and newspaper with big promises, it's often a last grasp of breathe. That's the Sun Tzu principle of deception. "When you are strong, pretend to be weak. When you are weak, pretend to be strong"). Unfortunately, blogging wasn't popular then, and I could not warn any one about the possible dangers. Alas, I was right. Last year, CAP check payments for planholder tutition fees bounced. Why did the SEC allow this to happen?If it had known that CAP's investments were not kicking in, why did it allow CAP to indulge in that expensive campaign, which I surmised was initiated to generate new revenues from new planholders to allow CAP to meet maturing obligations?

CAP is run by businessmen with revenue targets to meet. They are expected to take risks. If they just got the money and put it in the bank, the whole thing would have crumbled easily. And as in all business endeavors, the bigger the risks the higher the returns. They took the risks, big and small, but they didn't pay-off. That's why the CAP managers could simply say, we did our jobs, but it didn't work. Pasensya na.

Next to CAP's Board of Directors, the only other people who could have known CAP's situation (and who had the power to prevent the fall-out) are the people in the SEC. When CAP's managers pushed, the SEC regulators were expected to pull. The SEC is the last bastion of protection for planholders. That was how the system was designed to protect the investing public from the businessmen, and the businessmen from themselves.

So who did not do their job?

People in the SEC -- YOU, yes, you, you deserve every curse from the parents of the kids whose tuition fee check payments have bounced.

Please hand in your resignations before the next pre-need company "bites the dust", as Freddie Mercury would put it.

(revised post)


Sassy Lawyer said...

We bought educational plans for our kids when they were babies. But when it became clear as the years wore on that the plans weren't exactly what we thought they were, we sold them one by one. For a profit. Idinagdag na lang namin sa principal ng house and lot. That was a better deal.

rolly said...

Alam mo, it's a very good thing that I am in education. I stayed on for a long time simply because one of my benefits was free education for my children. Had it not been for that, i would have thought that CAP was a good investment and would have probably bought plans for my children.

People from SEC resigning for their boo boo? That's wishful thinking.

bayibhyap said...

If the SEC does not do a proper job of protecting the interest of the investors, a problem of confidence will arise, both for the SEC and the industry. It will spell the gradual and eventual death of the industry. But until then, how many more people will be duped into such dubious schemes?

Anonymous said...

Your comments are your opinions, nothing more, nothing less.

You are a lawyer, and as such, you must deal with facts, not opinions. So get your facts straightened out.

So you have read Sun Tzu's "The Art of War" on deception. Good for you. So stop deceiving the public.

The problems of the Philippines are real -- poverty, unemployment, graft and corruption (some senators, congressmen, judges and lawyers are not exempt), criminality, trade deficit, budget deficit, wrong government priorities, etc. Ask Senators and Congressmen to focus on the real issues of the Philippines.

Do tell us how you were able to beat inflation and currency devaluation risks with your savvy investment know-how? And convince us that your solution would eliminate investment risk and guarantee profits for investors like us? You are smart, aren't you?

marvin said...


This is my blog site. This carries my opinions. I do not represent them to be facts. If you want sites which carry facts, or represent to do so, go to a news site like the

What do you mean I read Sun Tzu? I studied it. And if all you know about Sun Tzu is deception, then I suggest you read it a hundred times, forward, backward and sidewards. You will know that deception is but speck of dust in the universe of sun tzu's art of war.

The Philippines has many problems, and I can't discuss all of them here. But I think the principal problem is that people don't have the balls to do the right thing. Politicians don't have the balls to push the right policies. Judges don't have the balls to make the right decisions. Media men don't have the balls to right the truth. And blogger commenters don't even have the balls to write their names, or aliases so at least we have a certain level of commitment for the truth. You can't even commit an alias here. You must be part of the problem.

I do not give investment advice. And I tell you, I don't appreciate foreign investors in my country who come here and think that just because they have the money, they have the right to treat every Filipino like we owe them the world.

Next time you post a nasty comment here without provocation, I'm going to delete it without a word. Go and put up your own blog with your name on it. Leave me with my own. You are not welcome here.

marvin said...

Mediamen do not have the balls to write the truth. Sorry proofreading error.

Anonymous said...


marvin said...


If you cannot take the risk of putting your name in such a simple discussion as this, then you too are part of the problem. The problem with this counstry, and I guess with the world, is that few people are committed to do the right thing. Few people take risks. Few people are committed to put their name on the line. Such a coward world we live in.

Writing opinions is not all that I do. I teach law. I practice it. And then I have this blog, where I chronicle bits and pieces about what I do and other things. Some things I do are meant to solve social problems, like corrupt members of the judiciary. But for the most part, I deal with individual legal problems which are mostly private (but which may have their own crazy social relevance.)

I am not onion-skinned. But I appreciate politeness in my turf.

Anonymous said...

i thank my parents for buiyng an educational plan from CAP. I finished college with no financial worries. Sad to say, SEC have not done their task to protect the pre-need industry which now may planholders suffer the uncertainties.I may say people who SAVE for their childrens future through pre-need company investments, was a a POSITIVE OUTLOOK IN LIFE. The best opinion and action on what had happened to CAP is PRAYER!

vtgloria said...

who will be responsible for those poor childeren who failed to go to college because CAP failed.... Can the directors of this company imagine the future if they dont face their obligations....


vtgloria said...

Is there any group working to make CAP officials be responsible for their misdeeds? I would be willing to join...

marou said...

hello vtgloria...

yes, there is a group who is armed with sheer guts to do the impossible - bring justice to the victims of the unscrupulous owners of pre-need companies. pep coalition (parents enabling parents)was borne out of the desire of the victims to get back what is really theirs - the payment for their educational plans which these companies are denying them. originally, they have set up the coalition for the victims of pacific plans inc. now, they have extended their assistance to the victims of cap, platinum plans, and even pamana and capitol. try visiting their site: