MANILA, Philippines?Three of 22 pre-need firms currently licensed to sell plans have been found to have deficient trust funds, raising the question whether it is safe for the public to continue to buy plans from the pre-need firms just because they have dealers? licenses.

At the resumption Wednesday of the Senate inquiry into the operations of the troubled pre-need industry, officials of the Securities and Exchange Commission revealed that three pre-need firms?Coco Plans, AMA Plans and Danvil Plans?had been asked to submit proposals on how they plan to build up their capital after their trust funds were found to be deficient.

Merle Joy Pascual, the assistant director of the SEC?s non-traditional securities and instruments department, said that Coco Plans and Danvil Plans have already submitted their proposals while AMA has yet to do so.

Pascual said some of the remaining 19 pre-need firms have submitted their audited financial statements and have until May 14 to comply with the SEC requirement.

Sen. Manuel Roxas II asked whether the companies? having permits to sell meant it was safe to patronize them. He said he was asking the question given that the pre-need units of the bankrupt Legacy group were still selling plans in November 2008 but then applied for dissolution the very next month.

Pascual initially said it was ?okay? for the public to buy from all 22 pre-need firms with dealers? licenses.

But after repeated questioning by Roxas, she said that with regard to the three trust-deficient firms, ?if you have a firm whose trust funds are deficient, personally I might have second thoughts to buy from them.?

SEC Chair Fe Barin, who came late, said she could ?not absolutely? say that plans purchased from the three firms were ?safe? because the SEC has yet to evaluate their latest financial statements.

Barin said that the SEC was reviewing the financial statements of the pre-need firms as well as coordinating with trustee banks ?to make sure these trust funds are there.?

Remedial measure

?We are closely scrutinizing each one of them and we will not hesitate to take action and make public such action if there is indication of some danger,? Barin said.

Roxas dismissed as merely a ?remedial measure? the SEC move to look at the capital build-up plans of the three trust-deficient firms.

He later told reporters he could not understand why SEC officials were still allowing the three firms with trust fund deficiencies to continue selling plans.

?It would be better if the SEC would require the pre-need firms to fill up the deficiencies in their trust funds before allowing them to continue selling plans,? the senator said.

A Coco Plans official who was at the hearing said the firm?s trust fund was sufficient to cover plans maturing in the next nine years.

Caesar Michelena, who is also the newly elected president of the Philippine Federation of Pre-need Plan Companies, said Coco Plans had a trust fund amounting to P1.4 billion in its trustee banks.

He said the reason the SEC found Coco Plans trust-deficient was because it will have to pay out in the next 10 years a total of P1.6 billion in maturing plans. That?s why its trust fund was found short of P190 million, he said.

?What we have now in the trust account is actually sufficient to cover up to nine years of actual maturity pay-outs,? he told reporters.

Transferred

Michelena said the pre-need firm was ?already recognizing this as a deficiency and this is what we are responding to in the next three years.?

He said Coco Plans has submitted for the approval of the SEC a five-year capital buildup program.

Roxas also took SEC officials to task for merely transferring Jose Aquino, the OIC of the SEC department in charge of the pre-need industry, to another department without the benefit of a performance review.