RSBS to Lose P500M with Closure of PAL

Philippine Daily Inquirer
Saturday, September 19, 1998
By Lynda T. Jumilla

READY floundering due to bum investments and huge debts, the Armed Forces Retirement and Separation Benefits System stands to lose P500 million with the impending closure of Philippine Airlines.

Defense Secretary Orlando Mercado yesterday said RSBS placed P500 million of the soldiers' pension funds into the flag carrier in 1992, after LucioTan became majority shareholder of that airline.

But he said RSBS would be lucky if it would get back a part of its investment, much less the entire P500 million, if PAL’s closure on Sept. 23 pushes through.

“The P500 million investment will go kaput because it's unlikely that the system can recover the entire amount," Mercado told a Senate finance subcommittee chaired by Sen. Rodolfo Biazon.

Blazon, who also chairs the Senate defense committee, said the RSBS investment had already depreciated to P165 million long before PAL announced its closure.

"PAL will have to give priority to its creditors and other claimants to its remaining assets before it can return the investments of RSBS and other investors," he pointed out.

By then, Mercado said, there might be nothing left to return to the soldier’s pension system.

RSBS investment  was placed in the Tan-controlled PR Holdings which owns 500 million shares of stocks In PAL.

Some months back, at the onset of PAL’s financial difficulties. RSBS reportedly discussed ways with which the flag carrier could return a portion of  the former’s investment of P4500 million.

Mercado said the possibility of RSBS acquiring one of PAL’s planes for the use of the military was raised.

However, he said, PAL management informed RSBS that this was not possible because the airline company was merely leasing all its aircraft.

Biazon said the hearings of the Senate blue ribbon committee on alleged mismanagement of RSBS funds showed that the P500 million investment had depreciated to P165 million.

Still, Biazon expressed the hope that RSBS could recover most of its investment for the sake of the soldiers who have yet to receive their pensions

RSBS had been steadily losing the past year because most of its money had been placed in real estate and other sectors that were hit hard by the regional economic crisis.

On Thursday, it suffered yet another blow when PAL announced its closure on Sept. 23 after management and one of its unions failed to agree on an ownership sharing scheme for the heavily indebted airline company.

Management had offered 20 percent of the company to the PAL Employees’ Association, the union of the airlines ground workers, in exchange for a 10-year suspension of their collective bargaining agreement. Palea rejected the scheme.

Meanwhile, Antipolo Properties Inc., a partner of RSBS in many of its real estate
development projects, denied allegations of fraudulent land purchases.

In a statement issued by lawyer Paterno Pajares, API dismissed as "baseless" questions on the ownership of a 400-hectare property in Binangonan, Rizal, which RSBS developed for almost P500 million.

The disputed property includes East Ridge Golf Course and Village East 3 Subdivision.

In the previous hearing of the Senate blue ribbon committee. Lydia Guido of Guido Reality, said her family holds the "real title" to the Binangonan property.

The title that RSBS holds actually describes a piece of real estate in Benguet, according to Guido.

API, however, said the titles comprising East Ridge and Village East 3 had been
checked by the Bureau of Lands and the Housing and Land Use Regulatory Board.

“The titles have also been confirmed by us surveys and verified with the Register of Deeds," it said.

“Moreover, the properties were acquired from parties to whom the Supreme Court awarded portions of the 3,000 hectares earlier claimed by the Guido Estate,” API
added. With a report from Cynthia D. Balana.