Assurance of a Bright Future: The College Assurance Plan (CAP) College Assurance Plan Philippines, Inc. (CAP) is a domestic corporation engaged in the business of selling pre-need educational plans. It was incorporated in 1980 with an initial capital of P 10,000,000.00. Within its two years of operation, it has become one of the country’s top 2000 corporations. By 2004, it has climbed its ranking to 146th place with a 21% share of the pre-need market. CAP has had 110,000 scholars enrolled; 84,490 scholars graduated; 780,000 plan holders; 174,720 plan holders being served; and has paid over P11.3 billion in tuition fees.1 But this pre-need giant encountered financial difficulties by reason of the policy of deregulation adopted by the Department of Education which resulted in unreasonable increase in tuition fees; the effect of the Asian financial crisis on CAP’s trust fund investments; the onerous application by the Securities and Exchange Commission (SEC) of the Pre-Need Uniform Chart Accounts (PNUCA) beginning in 2002; and the refusal of the SEC to renew CAP’s dealership license after its expiration in September 2004 and the cancellation of its permit to sell in August 2004. It is unable to service its debts as they fall due and its assets are insufficient to cover its liabilities, owing in great part to a bloated yet theoretical trust fund deficit and capital deficiency reflected in its financial statements under the SEC’s Pre-Need Rules, which it has asked the SEC to re-audit in light of the essential nature of pre-need plans as investment contracts rather than insurance contracts.1 What went wrong to the promises made by CAP to its plan holders of a bright future for their children? What happen to its pledge that it will guarantee its beneficiaries of educational support upon maturity of their premiums? The answer – mismanagement of funds resulting to income losses...
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