Pre-need firms’ ills add to OFWs’ worries
by ISAGANI DE LA PAZ
OFW Journalism Consortium, Inc.

BATAAN – AFTER shelling out money to College Assurance Plans (Philippines) Inc. (CAP) for more than a decade of working in Saudi Arabia, Francisco Aguilar Jr. is biting his fingernails over the shaky outlook for CAP as implied in recent media reports.

CAP, majority owned by the Sobrepena family, has been charged by the Bureau of Internal Revenue (BIR) in court for tax evasion. This is on top of the suspension of its license to sell pre-need education plans by the Securities and Exchange Commission (SEC) since last year.

"We labor in other country to be sure of our kids' future and so we invest our heart and money for educational plans," Aguilar, now chief executive of a firm recruiting Filipinos abroad, told the OFW Journalism Consortium. "It is painful for those who toil in other countries to pay for these plans and [learn they may] get nothing at the end of the day."
The president of Filipino Migrant Workers Group Holdings Inc. shared the worries overseas Filipino workers (OFWs) have over the difficulties in paying for their children's tuition due to the apparent financial difficulties that CAP and another pre-need firm, Pacific Plans Inc. (PPI), are in.

Unlike CAP, who said it will pay obligations, PPI filed for corporate rehabilitation at the Makati Regional Trial Court after admitting it cannot pay for planholders' tuition due to liquidity problems.

"I thought that spending would stop when my kids reach college," a PPI planholder said. "With PPI's problem, I have to halve my pension money."

A journalism student of the University of Santo Tomas is soliciting money for his P15,000 tuition this semester because CAP's payments have been delayed. Likewise, another reporter in Bataan, some 180 kilometers north of Manila, has a sister who is one of more than 700,000 CAP "scholars." She said her mother had to pay first UST from the money sent by her father working in Oman since the check given by CAP was only transformed to cash after six months.

Nenito Reyes, an OFW in Oman vacationing in the Philippines, said he too had to spend for his daughter's tuition fee in spite of her being a beneficiary of a CAP plan he had bought for her education.

"CAP's payment is very much delayed, so I have to spend for my daughter's tuition fee. Up to now, she has not received the payment of her tuition fee for her second semester last year and enrollment for the next semester is near, I will have to [shell out my own] money again," Reyes told the Consortium.

Aguilar, who formerly worked as an OFW in Saudi Arabia for 13 years, said he has fully paid almost P200,000 for his two children's educational plans.

He bought a plan during the early 90s while he was still working as an engineer in Riyadh. His children, he said, would start studying that June, one as a high-school freshman and the other as a sixth-grader. The plan he bought guarantees tuition for his children's college education by 2010 and by 2015, whatever the costs.

That promise of these companies selling pre-need education plans became fragile when the cost of tuition shot up by more than 200 percent until last year after the deregulation of the education sector in 1991, according to PPI spokesperson Jeanette Tecson.

Pre-need blues
BOBBY Café, CAP's first vice president for operations, told the OFW Journalism Consortium the company guarantees it can support the open-ended plans CAP sold prior to 1993.
There are two types of pre-need education plans being sold by some 31 companies in the Philippines: the open-ended type and the fixed type. Under the former, the company guarantees to pay for the tuition of the plan buyer's child whatever amount it would cost when the child enters college. The latter is fixed on a certain amount, say P30,000 for a semester, and the plan buyer would shell out from his or her own pocket the remaining cost of tuition.

Hence, on an open-ended plan, the P15,000 tuition for a semester in UST would be paid for by CAP via sending a post-dated check to the college. A fixed plan of P10,000 would be paid for by CAP but the planholder has to pay the balance.

"Tuition fees are getting higher every year. We have been taking it on our chin, regardless of the resulting strain on its profitability to the firm," an executive of CAP's branch here in Bataan told the Consortium.

The official who requested anonymity said the company could have told planholders "we can pay no more than the 15-percent annual increase on tuition and other school fees."
But, she added, CAP's decision to stick to its commitment to pay whatever the tuition fees would cost is a "gesture of goodwill and demonstrates sincerity."

Unlike CAP, PPI immediately announced it cannot assure it can pay for claims in the future by its 34,000 planholders. Hence, the company filed last April at a local court for rehabilitation proceedings. Tecson said "PPI needs to rehabilitate itself so that a new investor can come in."

CAP hasn't filed for rehabilitation, saying it already has potential investors, as well as numerous assets it can sell to shore up its trust fund, which is what a pre-need firm uses to pay its obligations to planholders.

Aguilar said CAP was more popular among OFWs than PPI, and that CAP had OFWs as agents in Saudi Arabia selling plans aside from working full-time.

In the company's two decades of operation, some 84,490 CAP scholars have graduated from college. Documents that CAP furnished the Consortium cited 90,230 are presently enrolled in various colleges and universities and a total of 174,720 planholders are still paying CAP.

Worries, waiting
OFWs interviewed by the OFW Journalism Consortium here expressed worries. One of them is Francisco Canlas Jr., a former OFW in Oman.

"My wife and I were both in our forties when we had our two children so I took the initiative of getting an educational plan from CAP," Canlas told the Consortium here.

Canlas said he paid for the plan in one installment while working in Oman, paying P200,000 in 2001. Both his children are still in grade school: one in grade 5 and the other in grade 3.
"My contract had expired last year and, at my age of 55," CAP's situation make me fear for my children's education since I doubt I can still get a decent job in our country. "Will my children be able to claim their benefits in due time?"

When asked of his plans, Mr. Canlas heaved a sigh, stood up, and walked towards the window and looked out. "I really don't know," he said, after a long silence.

A former OFW, 48-year-old Priscilla Sangcal, said she shares Canlas's worries.

"CAP's problem is distressing since this educational plan for my two kids is the only way for them to finish college," Sangcal said. She explained that while working as a nurse in Libya, she bought her children educational plans "so that I would not worry where to get their tuition fees if ever my contract would be terminated at the time they are into college."
"A year from now, my kids are turning college freshmen and I retired from working abroad three years ago," Sangcal said. "Now I am very much worried where to get [money to pay] my children's tuition fees in case CAP's plan will not work."

However, like Reyes, Canlas, and Sangcal, OFWs are still monitoring CAP's situation, according to Aguilar.

"We have to wait and see. OFWs do not want to rock the boat," he said, adding that CAP officials told him the firm could still be "revived".

"They have to do everything they can to rehabilitate [the company]," Aguilar added.
The CAP official in Bataan said she believes the company "is doing everything it can to meet its obligations to our valued planholders." She said CAP has paid out a total of 11.3 billion pesos in benefits (tuition fees, cash values, etc.) to beneficiaries of its plans. With reports from RHEA GLAIZA REYES (Contributor) in Bataan. end