SEC bars Prudentialife from selling new pre-need plans

abs-cbnNEWS.com/Newsbreak
by Lala Rimando
Apr. 20, 2009

As a showcase of the Securities and Exchange Commission’s resolve to regulate the troubled pre-need industry well, SEC chair Fe Barin told the senate hearing Monday that it had prohibited Prudentialife Plans Inc. from selling new pre-need plans since April 16.

Barin told the Senate Committee on Trade, which is conducting the hearings on the controversial retail financial industry, that Prudentialife failed to present an acceptable proposal to address its capital and trust fund deficiencies.

In September 2008, SEC records showed that Prudentialife has P14.16 billion in “trust funds,” or the current market value of its investments. This amount, however, was more than P5 billion short of the SEC-required P19.5 billion “reserve funds,” or the amount that pre-need companies should be aiming for after they have invested their clients’ money over a period of time.

On February 2, Prudentialife submitted a Multi-year Capital and Trust Fund Build-up plan, which the SEC rejected. The regulator stood its ground even after the company appealed.

In an en banc decision last April 17, the SEC commissioners revoked the company’s 2009 dealers’ license, or its permit to sell new plans.

The company, however, said they would continue to service and honor their obligations to current clients.

Acceptable

Barin said they rejected Prudentialife’s proposal because it did not meet SEC’s requirement.

The acceptable assets to plug the gap between the company’s trust fund and the reserve fund should be, among others, (a) income-generating real estate, and (b) unlisted shares that are not in any way related to the pre-need company.

In a statement, Prudentialife said, “The assets we offered are real estate properties that have good values but are not yet income-generating. Aside from this, we offered unlisted shares of profitable companies but are affiliates of our pre-need company.”

It confirmed that, “The SEC did not accept these assets for contribution to our trust fund and capital.”

Previous lessons from the fall of industry giants, like College Assurance Plan (CAP) and Pacific Plans, in 2005 have led SEC to require that pre-need companies park their clients’ amortization payments only in safe investments.

CAP’s thunderous fall was mainly due to the decisions of the owners, the Sobrepenas, to invest the pre-need plan holders’ money in potentially high-yielding but very risky ventures. These included posh residential condominiums, high-end golf courses, the concession to operate Camp John Hay in Baguio, and the rights to operate the MRT rail company. When the beneficiaries of CAP’s educational plan holders were all set to enrol in school, the company could not come up with the cash to pay the tuition fees since the funds were still trapped in the non-earning ventures.

In the case of the Yuchengco-led Pacific Plans, a good part of the trust funds were invested in bonds issued by the investment arm of Rizal Commercial Banking Corp, which is part of the Yuchengco Group of Companies.

Prudentialife also has investments in real estate, including First Asia Realty Corporation, a part owner of SM Megamall. Its unit, Globe Asiatique, Inc. is a developer of various office, residential, and memorial properties.

The SEC and Prudentialife, however, did not specify which assets were included in the plan.

Culprits

Prudentialife blamed the global economic crisis and the impact of the controversy surrounding the Legacy Group as culprits behind the pre-need sector’s dilemma.

“The global economic crisis has affected a number of industries worldwide including the Philippine pre-need industry. The trust funds of the industry have not been earning their projected returns,” Prudentialife said in the statement.

According to its website, the company used to realize returns that averaged 16.8 percent in 2006 for the assets it parked in its trust fund. As of June 2008, the yields have plummeted to just 4.87 percent.

“Compounding the problem of the industry is the ongoing investigation of the Legacy fraud case. This has dragged down the confidence in our industry whose image has already been tarnished when major pre-need firms went down years ago,” Prudentialife added.

The Legacy Group has three pre-need companies, which all closed in January. The syndicated estafa cases filed by bank regulator Bangko Sentral ng Pilipinas and state insurer Philippine Deposit Insurance Corporation have traced how the money of its 12 rural bank depositors and the pre-need clients ended up in companies controlled by businessman-turned-politician, Celso de los Angeles, Legacy’s founder.

Options

The pre-need industry was already in the doldrums before Legacy hugged the headlines.

The Philippine Federation of Pre-Need Plan Companies admitted in January that, as of June 30, 2008, the gap between how much its 24 members have and should have set aside to cover future obligations to clients reached a staggering P46.83 billion.

They said this deficit continued to grow in the second half of 2008 as the US-led financial crisis shrank the market values of their investments.

The Federation, which had lobbied hard against stricter regulations and accounting standards in the past, said their members had three options: (a) raise new capital based on the SEC’s multi-year funding scheme, (b) take an “orderly exit” from the industry and paying plan benefits as warranted, or (c) seek corporate rehabilitation.

Prudentialife was one of the two who chose the first option. The other was Cocoplans, Inc. SEC approved the plan forwarded by Cocoplans.

Some of the other 22 existing pre-need companies with trust fund and capital deficiencies have yet to reveal their choice. The deadline for the first option was extended to and eventually expired last April 15.

In the past, the SEC, upon the prodding of the Federation, gave pre-need companies considerable leeway in making up for their trust fund deficiencies.

Under the scrutiny of the media and legislators, the SEC cannot afford to be as lenient as before.

Whipping boy?

Barin and the other SEC officials disclosed their decision on Prudentialife’s proposal before an audience of lawmakers and pre-need plan holders who have previously castigated the commission for being too soft on Legacy.

It did not help that Legacy owner Celso de los Angeles was a no-show at the senate hearing. The senators had ample time to grill SEC in the hope that the regulator turns out to be as guilty as the fraudsters in Legacy.

In earlier hearings, former SEC commissioner Jesus Martinez was alleged to have facilitated the approval of Legacy Consolidated’s dealers’ license at the time Martinez received “gifts”— a property and a vehicle—from Legacy.

Barin herself was dragged into the picture after it was reported that her husband obtained a sports utility vehicle from a Legacy executive. Senators called for her resignation, but she denied any wrongdoing.

This time, the SEC did not come empty-handed at the senate hearing. For naming Prudentialife and citing their recent decision, SEC seemed bent to show off that it is doing its job and has no sacred cows.

Prudentialife might as well be the sacrifice on the altar. It is one of the industry pioneers and has been around for 31 years. Its founder, Ambassador Francisco A. Alba, was the Philippine envoy to the Vatican from 2001 to 2003. What more, Alba was active in the Federation and has been vocal in issues hounding the industry.

Test

As far as the pre-need industry is concerned, SEC tends to highlight the good rather than humiliate the bad. In February, it made public a list of pre-need companies that have voluntarily increased the portion of clients’ funds they are setting aside for future obligations. Prudentialife was not in that list.

SEC’s current boldness is almost unprecedented. In the past, SEC commissioners tried an iron hand as they started to introduce reforms, but later backed off when they were prevailed upon by industry players.

One commissioner told abs-cbnnews.com/Newsbreak before that they feared that being too rigorous with the reforms might financially choke the pre-need companies, leading to their closures. The commissioners were concerned that more plan holders would end up holding the bag if and when the pre-need companies close shop.

SEC’s decision to tell the world of Prudentialife’s plight is a test of that long-held worry. — with reports from Zen Hernandez, ABS-CBN News

P6-billion Legacy accounts ‘dubious’

The Philippine Star
By Des Ferriols
Updated March 13, 2009 12:00 AM

MANILA, Philippines – The Philippine Deposit Insurance Corp. said over P6 billion worth of Legacy deposit accounts that it has examined so far are of dubious nature and may not be covered by insurance.

The doubtful accounts, according to the PDIC, include P621.36 million made through questionable transactions like conversion of pre-need plans as well as fictitious loans and deposits related to anomalous promotion programs of the banks.

The PDIC also said it has filed a third case of syndicated estafa against Legacy owner Celso de los Angeles, his son Martin Nicolo, and 19 others.

The PDIC said it has examined about 55 percent of about 135,000 accounts in the 12 Legacy rural banks ordered closed by the Bangko Sentral ng Pilipinas.

PDIC president Jose Nograles said the P6.43-billion worth of deposits had been examined and verified by the PDIC with the help of an external audit firm, KPMG-Manabat.

Nograles said the PDIC still needs to examine the remaining 45 percent of these bank accounts or 60,664 separate accounts with an estimated combined insured amount of P7.57 billion.

After the verification process, Nograles said only P381 million worth of the examined deposits have turned out to be eligible for insurance payment.

Nograles said deposits with incomplete documents make up the bulk of these doubtful accounts, or P5.42 billion. In time, he said the PDIC might actually be able to sort out some of these doubtful accounts.

But Nograles said this depended on the cooperation of officials of the concerned banks, many of which have not yet turned over pertinent documents for examination.

“We appeal to the former officers and employees of the Legacy group and affiliated banks to turn over the documents in their possession to the Senate Committee on Trade and Industry,” Nograles said.

“This (verification) will take time but we have to do this to separate the victims from the perpetrators,” Nograles said. “We want to protect the victims and bring the perpetrators to justice.”

As of March 10, Nograles said the PDIC has paid P138.5 million in validated insurance claims for regular savings accounts with balances of P100,000 and below.

Nograles said the settled claims represent 70 percent of regular savings accounts of P100,000 and below.

When questioned by reporters, De los Angeles said the alleged dubious accounts “do not reflect” in BSP audits “over the years.” He said he himself did not have “operational exposure” to the accounts.

“It’s already in the courts,” De los Angeles said, referring to the allegations. “The legislature should now recognize where the judiciary begins… the senators should respect that.”

In a text message to The STAR, De los Angeles said, “I am yet to see a copy of the affidavits of the so-called witnesses and I will answer them as soon as I get a copy. Senator (Mar) Roxas clamed he has gathered enough evidence… he should turn over that evidence to the court which is the proper forum. They should now respect my rights as I face the allegations they have thrown against me in court.”

Nograles, meanwhile, said neither De los Angeles nor his cohorts could be arrested or their assets frozen until the DOJ completes its preliminary investigation and decides that criminal charges could be filed against them.

In the third syndicated estafa case, the PDIC accused De los Angeles and the others of soliciting deposits through “fraudulent, anomalous and irregular” means.

Palace tough on Martinez

At Malacañang, Deputy Presidential Spokesman Anthony Golez said former Securities and Exchange commissioner Jesus Martinez is not yet off the hook despite his retirement yesterday.

“The President is determined in her fight against bandits in the bureaucracy,” he said.

He said Martinez’s retirement benefits would not be released until he is cleared.

Former Legacy chief operating officer Carolina Hinola told the Senate Committee on Trade and Commerce on Monday that Martinez received expensive gifts – including a house and lot – from De los Angeles in exchange for his silence on the firm’s financial woes.

Where’s bank waiver?

Senate committee on trade and commerce chairman Sen. Manuel Roxas II said De los Angeles has failed to make good on his promise to issue a bank waiver to allow the Senate to scrutinize his bank accounts.

Roxas also noted that De los Angeles, who is also mayor of Sto. Domingo in Albay, has yet to make good on his promise to submit an official copy of his Statement of Assets and Liabilities.

“Is this another empty promise? Where is the waiver that you promised?” Roxas asked.

“He was even bragging when he promised to give us a waiver of his bank secrecy rights during the last hearing,” he said.

“Has he changed his mind? Or perhaps he is buying time to again try to falsify bank documents?”

Roxas said the Senate can begin to examine De los Angeles’ bank records only after a waiver has been made.

“It’s important for us to review the movement of money in and out of his accounts, because what’s involved here is the money that his plan holders and depositors entrusted to him,” he said.

Roxas is set to meet with more victims of the Legacy Group today in Dumaguete City in a forum at Silliman University organized by Parents Enabling Parents Coalition or PEP.

“I will help plan holders in filing cases in court against Legacy. I and the lawyers are gathering and studying all of the complaints so we can compile them into a class action suit,” he said.

“We will put pressure on the Department of Justice to act swiftly on the complaints against Legacy and De los Angeles,” he added.

Roxas has offered to provide free legal assistance to Legacy victims. The senator may be reached at 0917-6276927.

Maximum penalty

De los Angeles faces a maximum of 40 years in prison or almost a lifetime behind bars if convicted of syndicated estafa, according to Albay Rep. Edcel Lagman.

“The crime of syndicated estafa of the magnitude attributed to De los Angeles carries the maximum penalty of reclusion perpetua and is non-bailable,” he told the Serye Café news forum in Quezon City.

“The cases against them are strong. It’s only a matter of time before they get convicted,” he said.

“There is a crime, there are numerous victims and the modus operandi has been established,” he said. “What remains to be done is to prosecute the culprits and secure their conviction,” he said.

He said the BSP and the PDIC as well as private complainant-victims “have painstakingly documented the paper trail on De los Angeles’ liability.”

“The onus of finding probable cause is now with the special panel of investigating prosecutors of the Department of Justice,” he added.

Lagman urged the panel to “act with reasonable dispatch for it is not a Herculean task to verily appreciate the criminal greed and culpable deception that attended the collapse of the Legacy group of rural banks, pre-need companies and conduit firms.”

He said the prosecutors are “too slow” in evaluating the cases, considering that the BSP has already filed the first set of charges weeks ago.

He said the testimonies of two former Legacy officers – Hinola and chief finance officer Namnama Pasetes-Santos – should strengthen the cases filed by the BSP and the PDIC.

The two former officers have been included in the charges pending in the DOJ, but several lawmakers have suggested that they be made state witnesses against De los Angeles.

BSP Deputy Gov. Nestor Espenilla has described De los Angeles and his Legacy group as an “organized syndicate,” created to “exploit human nature and weak links in the legal, regulatory and enforcement framework of our banking and financial system.” With Christina Mendez, Jess Diaz, Sandy Araneta, Paolo Romero

Legacy head showered SEC official with gifts

The Philippine Star
March 10, 2009
by Christina Mendez

Legacy Group of Companies owner Celso de los Angeles shows checks while responding to allegations of bribery by former company executives Carolina Hinola (below left) and Namnama Pasetes-Santos at the Senate yesterday. MANNY MARCELO
| Zoom

MANILA, Philippines – Legacy Group owner Celso de los Angeles showered a commissioner of the Securities and Exchange Commission (SEC) with lavish gifts, including a house and lot in a village in Parañaque allegedly to buy his silence on the dismal state of the pre-need firms owned by the controversial businessman.

Former Legacy chief operating officer Carolina Hinola and chief finance officer Namnama Pasetes-Santos revealed the questionable relationship between De los Angeles and SEC Commissioner Jesus Enrique Martinez at a hearing of the Senate committee on trade and commerce chaired by Sen. Manuel Roxas II.

The two former Legacy executives spoke of how De los Angeles misappropriated P95 million of Legacy funds for his own personal use, including some P38 million for his mayoralty campaign in Albay in 2007.

Hinola and Pasetes-Santos also said Parañaque Rep. Eduardo Zialcita had served as consultant to Legacy, a claim the latter quickly dismissed as an “insidious attempt to besmirch my name and good reputation.”

Hinola showed the committee checks and vouchers relating to the P1.475-million payment to Martinez for a Ford Expedition sold through his son’s company to De los Angeles.

The P1.475 million was sourced from the Rural Bank of San Jose, one of the 12 closed rural banks of the Legacy Group.

Hinola said the “payoff’ was made at the Linden Suites in Ortigas Center on Nov. 9, 2007. Hinola said she personally handed the P1.475-million to Martinez on De los Angeles’ instructions.

Martinez denied having received the cash during the hearing only to admit later that it was his son’s company – Spin Management Corp. – that supposedly sold the SUV to De los Angeles.

De los Angeles himself retracted an earlier claim that he had never bought an Expedition from Martinez.

“I have many Expeditions but none came from Martinez,” he had boasted. Later, however, he admitted owning an Expedition that is still registered under Martinez’s son’s company.

Assured of SEC help

Hinola narrated that Martinez had asked her and Santos-Pasetes during lunch on Feb. 14, 2006 at a Japanese restaurant at the Shangri-La hotel in Makati if Legacy had any problem with the SEC and that he could help. Zialcita was also at the same lunch meeting.

Hinola also testified that sometime in March last year, De los Angeles used some P5 million of Legacy funds for the purchase of a house and lot for Martinez’s son, Jesus III. The property is at Quendover street, Classic Homes, Parañaque.

Hinola presented three checks worth P1 million each payable to one Michael Lirio, supposedly the original owner of the house. An additional P2 million was paid by Santos also for the Parañaque property. They also presented expenses incurred by Legacy for the transfer of the house from Lirio to Martin Nicolo de los Angeles and then to Martinez’s son.

“I know for a fact that Mr. De los Angeles is well connected with the Securities and Exchange Commission, a regulatory agency in charge of pre-need companies, as he is a close friend of Commissioner Jesus G. Martinez of the SEC,” Hinola said in a five-page affidavit which she read before the committee.

“From my interactions with both Mr. De los Angeles and Commissioner Martinez, I can say with reasonable certainty that Comm. Martinez is a close friend of Mr. De los Angeles and he helped Legacy when the company had problems renewing its dealership license in 2008 due to some deficiencies,” Hinola said.

She said De los Angeles personally used funds from Legacy Consolidated Plans Inc. (LCPI) to pay for his personal expenses including medical and electricity bills, and birthday parties including talent fees for guest artists.

When De los Angeles was already mayor, Santos said he had P19 million transferred to his account from LCPI.

De los Angeles denied all allegations made by his former executives.

“This gentleman (De los Angeles) has been receiving money from these corporations,” Senate President Juan Ponce Enrile said. He also lashed out at SEC officials for failing to freeze De los Angeles’ assets.

“If you cannot be taken for swindling people, you can at least be taken for tax evasion,” Enrile told De los Angeles.

‘Donation’ not consultation fees

Santos also testified that she prepared vouchers and checks of P100,000 a month “for and in the name” of Rep. Zialcita as consultancy fees.

“I have never been a consultant to them, and have never been consulted by them. I must also state that I have never been the recipient, personally, of checks or funds from the companies that make up the Legacy,” Zialcita said in reaction to the accusations. But he admitted receiving assistance from De los Angeles “by way of donations voluntarily offered and freely given and which he agreed to, on behalf of the underprivileged families.”

“The brazenness of this scam is hair-raising. I pity those who were used by these scoundrels to enrich themselves,” Roxas said.

On Zialcita’s possible involvement, Roxas said he expects Speaker Prospero Nograles to act on the issue. “It’s up to the House to act on it. What I can say is that if this happened at the Senate, the Senate will convene the Ethics Committee. That’s for sure,” Roxas said.

SEC execs told to resign

Enrile demanded the resignation of Martinez for his anomalous liaison with De los Angeles.

“I think it’s about time that we call a spade a spade. If I were Commissioner Martinez, I will tender my resignation this afternoon. Honor dictates that you must at least tender that and leave it to the chief executive of the land whether to accept or not accept your resignation,” Enrile said.

“It’s about time we have to be harsh to people in the government… I don’t think anyone will disagree here that there is a semblance of unfitness on your part to exercise your power as commissioner of the Securities and Exchange Commission,” an indignant Senate president said, adding that he would file a resolution to compel the official’s resignation.

Roxas and Sen. Rodolfo Biazon vowed to support Enrile’s planned resolution.

Other SEC officials led by SEC chairperson Fe Barin and Jose Aquino, officer in charge of non-traditional securities and instruments department, also got a dressing down from Enrile.

Contemplating

Martinez, in an ambush interview, said he would consider resigning but only after deep contemplation.

“Well, I’m considering it because if that is what the Senate feels is appropriate at this time I might consider that,” Martinez, who has been with the SEC for seven years, said. His term ends on March 12.

Martinez also distanced himself from the business transactions between his son and De los Angeles’ son on the sale of the house and lot in Parañaque. He said his son Jesus III is acquainted with De los Angeles’ son through the former’s wife. Both Martin Nicolo de los Angeles and Jesus III’s wife are commercial models, Martinez said.

Palace on Martinez

Malacañang said it would wait first for the Senate and the SEC to conclude their respective inquiries into the Legacy mess and into Martinez’s questionable dealings with De los Angeles before deciding on what to do with the SEC official.

“If any evidence is found then the Palace will look into the possibility of taking action against Commissioner Martinez,” Palace deputy spokesperson Lorelei Fajardo said.

“We are as eager as the public because we sympathize with the planholders, so we are also awaiting the results of the investigation,” she said.

Meanwhile, the Philippine Deposit Insurance Corp. said it will start distributing numbered claim forms to depositors of the 12 Legacy rural banks on March 18.

In an advisory, PDIC said the filing of the claim does not necessarily mean automatic payment, saying the “filing of claims and presentation of the general requirements are part of the validation process on the deposit accounts.” – With Delon Porcalla, Marvin Sy

Ex-Legacy execs: Celso active in schemes

By Butch Fernandez & Fernan Marasigan, Business Mirror | 03/03/2009 8:04 AM

 

SENATE probers confirmed on Monday the direct role of businessman Celso de los Angeles in designing the fraudulent investment schemes that lured thousands of investors to place billions of pesos of their savings in the now-bankrupt Legacy Group.

Sen. Mar Roxas II, chairman of the trade committee spearheading the inquiry, cited the testimony of a former Legacy Group marketing manager who narrated how de los Angeles “deliberately engineered his companies’ double-your-money programs to defraud investors of their hard-earned savings.”

“We have heard testimony [of former Legacy Plans vice president for marketing Myrna Axalan] that it was de los Angeles himself who cooked up the scheming programs, that deliberately planned to fool his investors, that he deliberately planned to steal the savings of parents who bought his preneed plans and the depositors who placed their monies in his banks,” Roxas said.

Roxas also referred to separate testimonies by other former officers of Legacy’s various companies, including Rural Bank of Bais Inc. president and chairman Paul Stephen Montenegro; Rural Bank of DARBCI Inc. member of the board Cynthia Belarma; and Bank of East Asia acting chairman Rolando Labrador.

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Montenegro of the closed Rural Bank of Bais Inc.: dubious practices bared. NONIE REYES

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“De los Angeles’s promos were so attractive that anyone would really be lured into investing their monies [in] Legacy. But all these turned out to be nothing. I pity the thousands of parents and depositors who were fooled by de los Angeles. It is important that we help them get their savings back,” the senator said.

Axalan, in her sworn affidavit submitted to Roxas’s committee, testified that
Legacy’s double- your-money schemes were “personally designed and created” by de los Angeles himself.

She admitted being lured into investing her own money into Legacy because of the promise of high returns for her investment. But, she complained that she eventually found out that these were “just mere devious ploys to defraud investors, including myself, and plan holders of our hard-earned money and savings, much to our great damage and prejudice.”

Roxas noted that Montenegro supported Axalan’s testimony in recalling one instance when his rural bank’s Cebu branch was supposedly directed by Legacy Manila to issue certificates of time deposits to an unspecified number of preneed plan holders. “But while there were entries of deposits, there was no money that came into the bank. This was for a mere three-day audit but this already involved P50 million.”  

Montenegro testified that de los Angeles also placed his own minions to oversee RBBI-Cebu’s transactions, explaining that “the three bank branches in Negros Oriental only had legitimate transactions but the one in Cebu, that was the hao-shiao (fake).”

At the same time, Labrador and Belarma confirmed their respective banks also got instructions to issue certificates of time deposits to depositors, whose names were allegedly dictated by Legacy Manila or Davao, but no monies were ever deposited to their companies. Belarma said Rural Bank of DARBCI’s deposit liabilities have ballooned close to P1 billion “but we have no actual deposits.”

“With these testimonies that we have just heard, it is very clear now that this was a scam. De Los Angeles has to be held liable for stealing the savings of his victims,” Roxas told reporters after the hearing, adding that “with the noose tightening on de los Angeles, the Securities and Exchange Commission should act fast to stop the businessman from disposing his personal assets or from fleeing the country.”

Roxas warned that the filing of charges against de los Angeles would not likely deter the Legacy owner from selling off his assets, as there is still no court order barring the businessman from disposing of the assets that should be used to settle claims of Legacy investors.

An earlier story by BusinessMirror’s Bicol correspondents said luxury cars and hundreds of motorcycles that used to be seen in the grounds of de los Angeles’s sprawling mansion were moved out within just a matter of days last month, after Roxas started publicly encouraging investors of Legacy to picket the properties of delos Angeles and force him to use his assets to return their money.

PDIC guarantee bill OK’d

Meanwhile, the House of Representatives approved on third and final reading on Monday night a bill doubling the Philippine Deposit Insurance Corp. (PDIC) maximum insurance coverage from P250,000 to P500,000.

Voting 172 with no objection and no abstention, the House in plenary session passed House Bill 5911 which seeks to strengthen the financial capability of PDIC by way of government guarantee to share in the payment of the increased maximum deposit-insurance coverage for the first three years.

Lakas Rep. Jaime Lopez of Manila, sponsor of the bill, said it will build up public confidence in the strength of the banking system.

“It is a proactive measure to avert the impact of the worsening global financial crisis now steadily creeping into our region,” said Lopez, following approval of the bill that had been mired in allegations that it was unfairly increasing the taxpayers’ burden simply to allow PDIC to service allegedly dubious claims of depositors. The allegation arose from reports that the de los Angeles banks encouraged depositors to split their funds into several accounts, and that some of the accounts were really contrived ones.

In the same Senate hearing on Monday, PDIC president Jose Nograles confirmed that the PDIC began paying Legacy depositors with claims amounting to P100,000 and below starting February 13 after it verified some 39,000 claimants.

Nograles informed the Roxas committee that PDIC is still in the process of validating Legacy claims amounting to P100,000 and above.

But Roxas raised concerns that PDIC should strictly scrutinize such claims as it is taxpayers’ money that is being disbursed in settling claims of duped Legacy depositors.

Under the sharing scheme approved in the new bill, payment of insured deposits in a closed bank shall be undertaken by the PDIC such that the first P250,000 shall be for the account of PDIC and in excess of P250,000 but not more than P500,000 per insured deposit shall be advanced by the PDIC but for the account of the national government, Lopez said.

In addition, the bill provides for tax subsidy for PDIC, such that all PDIC tax obligations shall be chargeable to the tax expenditure fund for five years from the effectivity date of the law pursuant to Executive Order 93.

“Provided that on the sixth year and thereafter, the PDIC shall be exempt from income tax, final withholding tax and value added tax on assessments [premiums] collected from bank members,” said Lopez.

On January 19, the Senate, via a roll call vote of 13-0, approved the counterpart measure on third and final reading.

Lopez said that despite the recent collapse of 15 rural banks—13 of which belongs to the Legacy group de los Angeles, the country’s banking system remains strong.

“But the current global financial crisis is getting worse and has even turn into recession. If this global economic meltdown deteriorates further and intrudes into our banking system, the stability of our financial system might be shaken. Hence, the need for a preemptive, proactive measure such as the action being taken by Congress,” Lopez said.

Celso, Legacy victims face off at Senate

By Butch Fernandez, BusinessMirror | 03/02/2009 12:18 AM

Beleaguered businessman Celso de los Angeles and the alleged victims of his Legacy company’s double-your-money schemes face off today at the resumption of Senate hearings on the state of the preneed industry.

Sen. Mar Roxas, chairman of the Committee on Trade and Commerce, invited Legacy’s plan holders to attend and narrate how de los Angeles and his managers “sweet-talked” them into investing their hard-earned funds on Legacy Consolidated Inc. and its affiliate businesses, all of which have filed for dissolution.

“We will find out how de los Angeles and his officers were able to convince parents and retired workers to invest their monies to Legacy. What sweet words did they use that resulted in the bitter plight of these plan holders?” said Roxas over the weekend.

He met earlier with some 200 Legacy victims in Davao City and heard their complaints about “how de los Angeles and his managers tricked them into investing their savings and retirement pensions in Legacy.”

Roxas recalled that one had agreed to testify at tomorrow’s hearing. He hinted the witness was a former ranking officer of Legacy, who will recount in detail how de los Angeles and his cohorts “planned scheming offers to generate money for the company, with the clear intent of misleading their investors and getting their hard-earned savings.”

“The education of our children is important and we must make sure that the savings of parents to send their children to school can still be recovered,” he said after noting that Legacy sold more than 50,000 educational plans worth P1.4 billion but the trust fund held by trustee banks only has P350,000, according to De los Angeles himself.

Aside from de los Angeles and Legacy preneed victims, other witnesses and resource persons invited to testify are ranking officials of the Securities and Exchange Commission, the Bangko Sentral ng Pilipinas, the Philippine Deposit Insurance Inc, players in the preneed industry, as well as plan holders victimized by other preneed firms.

as of 03/02/2009 12:18 AM

Legacy landgrab? Town loses island

By Ferliza Contratista, Freeman News Service
Updated February 27, 2009 12:00 AM

CEBU , Philippines  – A town in Leyte has become the latest entity to go after Celso de los Angeles and his failed Legacy Group of 12 rural banks and three pre-need companies, and this time the complaint is not about questionable financial dealings but alleged land-grabbing.

Officials and residents of the 3rd class municipality of Palompon denounced on Wednesday the alleged illegal transfer of ownership of Kalanggaman Island from that of the town to the Rural Bank of Carmen, one of the banks owned by De los Angeles.

Palompon municipal legal consultant Donna Villa Gapasan said town residents, accompanied by members of the media, braved guards and armed men detailed by De los Angeles at the so-called “Boracay of Leyte” and held a protest rally on the 10-hectare strip of land located 12 kilometers off the municipal shoreline.

According to Gapasan, De los Angeles started claiming the island in 2003 and by 2004 reportedly had a Deed of Sale to show ownership of the island, which the people of Palompon said had been part of the town since “time immemorial.”

During the rally, the protesting residents managed to erect a sign proclaiming the town’s ownership of the disputed island. The guards and armed men did not intervene.

“CA 141 and PD 705 assert that Kalanggaman Island is not private property; it is unclassified, inalienable and a public forest,” the sign said.

Gapasan said that in 2006, De los Angeles transferred “ownership” of Kalanggaman Island to the Rural Bank of Carmen and then late last year, just two months before the bank and others in the Legacy Group declared bank holidays, the “ownership” again moved from the bank to a private realty firm based in Manila.

Not surprisingly, the private firm, Edifice Realty and Development Corp., is also an affiliate of the Legacy Group of De los Angeles. Edifice appears in the latest tax declaration for Kalanggaman Island as the owner.

Gapasan said that according to records, all of Palompon’s legal, legislative and administrative initiatives to maintain territorial jurisdiction over Kalangggaman fell through when De los Angeles succeeded in acquiring ownership by producing a Deed of Absolute Sale from heirs of a certain Andres Toring in 2003.

The document declared that a total of 2,696 square meters of coconut land situated in Kalanggaman was sold by the Toring heirs to De los Angeles and a certain Joel Retuya for P200,000.

A case background provided by Palompon municipal information officer Rezza Boy Omega showed that the town, assuming all the while to be the rightful owner of the island, found out only 10 years prior to the sale that a private person (Toring) from Bogo, Cebu has been claiming ownership of Kalanggaman on the strength of Tax Declaration 12819.

The town further learned that prior to Toring, the name of a certain Pablo Sitoy appeared in a 1950 tax declaration as owner. By 1974, the ownership transferred to a certain Agripino Ensoy, although no record could now be found to validate that transfer.

In 1979, a Deed of Absolute Sale was executed, this time conveying the land from Ensoy to Toring.

Since 1993, the Municipality passed several legislative measures asserting its firm claim over the island. These resolutions include repeated requests to the Department of Environment and Natural Resources not to declare Kalanggaman as alienable and disposable, being part of public domain under territorial jurisdiction; and requesting the Environmental Management and Protected Areas Services to evaluate and declare Kalanggaman as a Marine Protected Area; and yet another resolution requesting the Department of Tourism to evaluate Kalanggaman Island for tourism purposes.

After the transfer to De los Angeles, the municipality again asserted its claim of jurisdiction and ownership by approving resolutions expressing opposition to survey plans and application for land titling filed by De los Angeles and authorizing then Palompon Mayor Marcelo Oñate to initiate measures to further the claim and other efforts.

De los Angeles, agitated by the moves of the town, sued officials before the Office of the Ombudsman but the complaints were all dismissed.

He also sought declaratory relief and injunction from the Regional Trial Court in Palompon but these petitions were also denied.

In 2006, De los Angeles and his lawyer, Pinky Noel, appeared before the Palompon municipal council and apologized for his actions. He then proposed to develop the island into a resort and got himself a memorandum of agreement to proceed with the development.

Legacy lawyer Inocencio de la Cerna, who represents the company in the close to P14.4-billion claims made by depositors, refused to speak on the issue, saying he is not the lawyer assigned to handle the case.

BSP files new case

The Bangko Sentral ng Pilipinas (BSP) filed with the Department of Justice charges of syndicated estafa against Delos Angeles Jr. and other Legacy officers. The charges filed yesterday represented the third wave of cases lodged by the BSP against the Legacy Group.

The BSP also asked the Justice department to include the respondents in the hold departure list of the Bureau of Immigration.

Named respondents in the latest set of cases aside from Delos Angeles are his consultant Alexis Petralba; Namnama Pasetes, chief finance officer of Legacy Consolidated Plan Inc.; and Carolina Hinola, chief executive officer of LCPI.

Also named respondents were Roy Hilario, president of Fusion Capital Corp., his assistant Bruce Rafanan and Virgilio Odejar, president of the Rural Bank of Parañaque.

The BSP said Legacy’s Rural Bank of DARBCI, with offices in General Santos City and Cebu, raised P830 million in deposits but its cash position shrank to less than P1 million as of Sept. 30, 2008, based on records.

Cease-and-desist order

Meanwhile, the SEC issued an order preventing six companies under the Legacy Group Inc. from selling any of their properties and assets without the corporate watchdog’s consent, and from further selling investment contracts to the public.

The cease and desist order dated Feb. 26 covered Legacy Consolidated Plans, Legacy Card Inc., Galaxy Realty & Holdings Inc., Shining Armor Property Inc., One Realty Corp. and One Card Co.

“There is an urgent need to preserve the properties and other assets of these corporations and their affiliates to prevent them from being dissipated and ensure the settlement of corporate obligations and of planholders’ and investors’ claims,” SEC said.

The SEC also filed more cases against Legacy for violation of the Securities Regulation Code and the Corporation Code of the Philippines.

“The act of Legacy Card (formerly Legacy Group Inc.) in issuing post dated checks to secure the payment or return of the investments solicited by Legacy Consolidated Plans Inc. was in excess of the primary purpose for which it was incorporated,” the SEC said in its 22-page complaint filed with the Department of Justice. “As such, the said act is ultra vires and amounts to misrepresentation as to what the corporation can or cannot do,” it added.

One Realty, on the other hand, was accused by SEC of acting as the business conduit of Legacy Consolidated Plans inc. in its grand scheme to defraud the investing public.

Lost trust funds

At least 200 recruitment agencies face suspension from the Philippine Overseas Employment Agency for losing some P200 million of their trust funds invested in Legacy Groupís double-your-money scheme.

Ramon Dino, head of the Legacy Group Citizens Watch Center, said at a press conference that the “fund amounting to P200 million was transferred from the Asia Trust Bank to the Rural bank of Parañaque (RBOP) without POEA approval and now the RBOP is bankrupt and closed.”

“These recruitment agencies may have again to raise another P1 million each for cash bonds deposit as required by law,” he said.

Dino said thousands of foreign job recruits may not be able to leave because the licenses of their recruitment agencies may be suspended or cancelled by the POEA.

Dino also belittled the cases filed against the Legacy Group and its officials, saying they are bailable offenses.

“If no cases of syndicated swindling will be initiated by the central bank, Philippine Deposit Insurance Corp. and SEC in the next few weeks against Angeles and his cohorts, then clearly there is a cover up,” he said. — With Iris Gonzales Zinnia dela Peña, Edu Punay, and Perseus Echeminada

(Note: in order to make the article more readable, the article was edited ONLY for proper punctuation marks)