"This is the basic premise for the filing by PPI for rehabilitation before the Makati Regional Trial Court (RTC), not as a tool to avoid liability, but as a means to nurse the corporation back to health to service its liabilities," PPI president Alfredo J. Non said yesterday.

Non noted that even with these negative events, PPI has refrained from invoking the "Fortuitous Event/Impossibility" provision under the plan holders’ policy contract which would have provided it some exit from its contract with the plan holders. It has maintained this position and continued to service these traditional or open-ended educational plans for as long as the subsidy does not affect or prejudice the other plan holders," he stressed.

However, he added, over the years, the subsidy significantly depleted the trust fund assets of the open-ended educational plans. Obviously, this could not continue without risking PPIs 400,000 fixed value plan holders as well as the non-availing open-ended educational plan holders and ultimately, PPI itself, he said.

He explained that between 1986-1992, the company issued about 91,000 open-ended educational plans of which, 54 percent have fully availed of their benefits and 21 percent are still under availment. The balance of 25 percent are still awaiting availment. PPI therefore has serviced or continue to service 75 percent of all open-ended educational plans issued. PPI is currently also servicing over 400,000 fixed value plan holders.

PPI identified the business risks attributed to open-ended educational plans under a deregulated scenario. As a result, PPI voluntarily stopped the sale of the product in 1992, 10 years before the SEC ordered a stop to the sale of open-ended educational plans, Non said.

He added that the increase of tuition and fees in 1990s alone was a low of 16 percent and a high of 28 percent. On the other hand, ROI during the same period was a low of 11 percent and a high of 14 percent. This gap between tuition increase and ROI (representing subsidy) is an industry-wide problem with respect to the open-ended educational plans. This situation persisted between 2000 to 2005. Furthermore, return on investment was further constricted by the Asian crisis in 1997.

He said, "it must be stressed that PPI is not the only company faced with this problem brought about by the skyrocketing tuition and fees compounded by low return on investments (ROI), not mismanagement as alleged by some quarters. The problem is real and not something imagined or brought upon itself by PPI."