RSBS Stands to Lose P500-M Stake in PAL

Manila Standard
Saturday, September 19, 1998

Bad news for retired soldiers.

Their pension fund, the Retirement and Separation Benefits System (RSBS), may lose all of its P500-million investment in Philippine Airlines which is scheduled to shut down on Sept. 23.

Appearing before the Senate finance committee, Defense Secretary Orlando Mercado said it was highly unlikely that the system can get back a centavo of its huge investment in the system.

It was learned that RSBS invested in PAL in 1992 after businessman Lucio Tan became the company's majority stockholder.

Mercado said that after its closure, PAL will naturally have to deal with its creditors and pay its debts out of its assets.

RSBS can only demand a return of its investment when the other principal claimants have been paid back. "By then, baka wala ng natitira (There will be no more left),” Mercado said.

Mercado disclosed that RSBS had wanted to get out of PAL when the financial crisis erupted and PAL started experiencing severe difficulties, Mercado said.   

The recovery plan was in the form of acquiring one of the carrier's planes which, Mercado said, could have been used by the Armed Forces.

Not possible

"But the PAL management told us that it was not possible because all of their planes were leased and, therefore, cannot be turned over to the RSBS," he said.

Sen. Rodolfo Biazon said hearings conducted by the blue ribbon committee on alleged RSBS anomalous investments have shown that the P500-million investment had contracted in value to only P165 million.

“The decrease was mainly due to the depreciation of the shares," he said.   

Biazon, a former chief of staff of the Armed Forces of the Philippines, expressed hopes the RSBS can recover as much as possible of its PAL investments for the interest of retired soldiers.

Unsound policies

The blue ribbon committee is looking into the RSBS books to determine if the fund went into policies that were detrimental to its interests.

Among other transactions, RSBS has reportedly bought of real estate property with spurious titles under fraudulent terms.

The property, included the system's General Santos property, its Eastridge golf course and the Village East 3 in Rizal and the Presidio Royale golf course and sports club complex in Iloilo. Rey E. Requejo