We were able to have an hour's chat with a PDIC lawyer and relayed to him a recent case of denial of an acquaintance of a DEADBOL member. The woman, a San Miguel retiree, had deposited in Dynamic bank (the one legacy bank where PDIC had admitted that its verification process had stalled due to the magnitude of missing documents). She had recently received a letter from PDIC stating that one of her claims for a 250k time deposit was denied because it was not listed in the bank's master list. The PDIC denial letter referenced Sec. 4 (g) which provided that "no owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights provided in this Act unless his name is registered as owner/holder thereof in the books of the issuing bank. (As amended by R.A. 9302, 12 August 2004)."
We told him in no uncertain terms that certificates of time deposits issued by the defunct Legacy banks were not negotiable instruments. We provided him the legal references including excerpts from Supreme Court cases and specifically cited a passage by the esteemed Professor of Law, Atty Timoteo Aquino, who in his book stated that ‘The rule has always been that the instrument in order to be considered negotiable must contain the so called “words of negotiability” – i.e., must be payable to “order” or “bearer.” These words serve as an expression of consent that the instrument may be transferred by negotiation. This consent is indispensable since the maker assumes greater risk under a negotiable instrument than under a non-negotiable one.’ Section 1 Act No. 2031, otherwise known as the Negotiable Instruments Law, enumerates the requisites for an instrument to become negotiable and it is clearly spelled out in requirement d) Must be payable to order or to bearer.
In the absence of the actual denial letter, the PDIC lawyer surmised that it may have been a promissory note or another paper, but not a CTD. And that PDIC uses different templates for different cases. However, the deadbol member clarified the matter with the claimant, and affirmed that the denial letter was in a general format: it stated CTD and PDIC (office of Atty Elaine Deticio) and the CTD number was handwritten on the blank portion in the letter.
If true, then PDIC will surely lose any legal case that based its denial on the negotiability of a Legacy bank CTD. However, the good news is that a denied claimant can seek reconsideration with the PDIC claims settlement office, and that PDIC is willing to consider other evidences of funds inflow, provided by the claimant. It is best to remind everybody concerned that in 2000, there was a precedent wherein PDIC accepted and paid out CTD claims of deposits made to the Rural Bank of San Miguel, even those without supporting bank records. If a bank depositor is sure that his or her money was actually deposited in the banks, then he or she is practically in almost-solid ground. We say almost, because this is the Philippines, and one can never be sure.
Showing posts with label CTD. Show all posts
Showing posts with label CTD. Show all posts
Sunday, July 12, 2009
Saturday, June 13, 2009
Goodfellas of the Philippines
Remember the movie Goodfellas (1990) starring Robert de Niro, Ray Llota, Joe Pesci. It was a true mobster story about three mafia gangsters. In one segment of the movie, restaurant owner Sonny tries to collect 7,000 dollars of unpaid bills from Tommie, a dangerous, disruptive and volatile criminal, who gets so angry that he breaks a glass bottle on Sonny’s forehead. In the next scene, a scared Sonny complains to Paulie, the local Mafia boss overlord. Although unaware of how to run a restaurant, Paulie promises to offer protection by becoming a partner. “Sonny is now committed and beholden to Paulie. Now Sonny’s got Paulie as a partner. Any problems, he goes to Paulie. Trouble with a bill, he can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy's got to come up with Paulie's money every week. No matter what. Business bad? F--k you, pay me. Oh, you had a fire? F--k you, pay me. The place got hit by lightning, huh? F--k you, pay me. Also, Paulie could do anything. Especially run up bills on the joint's credit. And why not? Nobody's gonna pay for it anyway. And as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and you sell it for a hundred. It doesn't matter. It's all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.” And the restaurant is set on fire by Paulie’s hoodlums and burns down.
Sounds familiar? You bet it does. If we go by LAV’s June 12 comment in Ricky Carandang’s blog and KBP Cebu Chairman Leo Lastimosa's statement, they both say that Speaker Nograles, Butch Pichay, and other powerful people were partners of Celso de los Angeles. Here is a possible scenario: Celso runs to Prospero Nograles and company when BSP in 2003, according to Celso, starts harassing and extorting from him (remember his accusation against ex-BSP Deputy Governor Alberto Reyes and his brother, Efren Reyes). In the next scene, a scared Celso complains to Noggie, who probably gets the go-signal from his big boss. Although unaware of how to run banks, Noggie and company promises to offer protection by becoming partners. Celso is now committed and beholden to Noggie and company. Now Celso has got Noggie as a partner. Any problem, he goes to Noggie and his boss. Trouble with PDIC? Big boss says back off to Ricardo Tan, PDIC president who initiated a PDIC investigation in 2005. Tan doesn’t back off, and he gets replaced by another (who dies while holding office). Trouble with BSP? Big boss says back off and BSP backs off (according to Alberto Reyes, BSP had started its investigation of legacy banks as early as 2003 but takes five years to act on its findings). But now Celso’s got to pay his new partners. Noggie is now more powerful: not only is his brother-in-law working for the BSP, but his younger brother is PDIC president. Business bad because of financial crisis? F--k you, pay me. Launder money for them, pay their campaign expenses using legacy funds, use legacy offices and staff for their election campaigns, etc. Create so many fictitious loans using bloated collateral to siphon off money deposited by trusting and unsuspecting depositors. Come up with ghost applicants for motorcycle loans and receive hundreds of motorcycles. Print out so many CTDs assigned to the new partner’s dummies. It doesn’t matter. It’s all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or get more legitimate deposits, you bust the banks out. Declare bank holidays. Is this a true story, too?
That one possible scenario. Here in another possible rundown: Celso himself gets tired of the payouts to and extortions from his new partners, and he himself gives up and closes all his business in one go. Celso is an AIM MBA graduate- he knows the value of banks. He would let go of his other businesses like the preneed, real estate, and credit card companies but given a choice, keep the banks. Only if he was cornered and desperate would he give up his banks, all 13 of them. He must have said, “What the f—ck!” and without giving notice to his partners, closed the whole shebang. And that explains how Noggie ended up holding P18 million of investments and CTDs (unfunded?).
Sounds familiar? You bet it does. If we go by LAV’s June 12 comment in Ricky Carandang’s blog and KBP Cebu Chairman Leo Lastimosa's statement, they both say that Speaker Nograles, Butch Pichay, and other powerful people were partners of Celso de los Angeles. Here is a possible scenario: Celso runs to Prospero Nograles and company when BSP in 2003, according to Celso, starts harassing and extorting from him (remember his accusation against ex-BSP Deputy Governor Alberto Reyes and his brother, Efren Reyes). In the next scene, a scared Celso complains to Noggie, who probably gets the go-signal from his big boss. Although unaware of how to run banks, Noggie and company promises to offer protection by becoming partners. Celso is now committed and beholden to Noggie and company. Now Celso has got Noggie as a partner. Any problem, he goes to Noggie and his boss. Trouble with PDIC? Big boss says back off to Ricardo Tan, PDIC president who initiated a PDIC investigation in 2005. Tan doesn’t back off, and he gets replaced by another (who dies while holding office). Trouble with BSP? Big boss says back off and BSP backs off (according to Alberto Reyes, BSP had started its investigation of legacy banks as early as 2003 but takes five years to act on its findings). But now Celso’s got to pay his new partners. Noggie is now more powerful: not only is his brother-in-law working for the BSP, but his younger brother is PDIC president. Business bad because of financial crisis? F--k you, pay me. Launder money for them, pay their campaign expenses using legacy funds, use legacy offices and staff for their election campaigns, etc. Create so many fictitious loans using bloated collateral to siphon off money deposited by trusting and unsuspecting depositors. Come up with ghost applicants for motorcycle loans and receive hundreds of motorcycles. Print out so many CTDs assigned to the new partner’s dummies. It doesn’t matter. It’s all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or get more legitimate deposits, you bust the banks out. Declare bank holidays. Is this a true story, too?
That one possible scenario. Here in another possible rundown: Celso himself gets tired of the payouts to and extortions from his new partners, and he himself gives up and closes all his business in one go. Celso is an AIM MBA graduate- he knows the value of banks. He would let go of his other businesses like the preneed, real estate, and credit card companies but given a choice, keep the banks. Only if he was cornered and desperate would he give up his banks, all 13 of them. He must have said, “What the f—ck!” and without giving notice to his partners, closed the whole shebang. And that explains how Noggie ended up holding P18 million of investments and CTDs (unfunded?).
Thursday, June 11, 2009
Rallying Inside a Makati Office
We were excited to hear Mrs. A. Lego's (she agreed to the use of her family name) account of her scheduled visit to PDIC SSS bldg. so I called her up today. She told us that she, again with her daughter, arrived inside the PDIC office at around 3.30 pm. She noted that the Makati rally (against ConAss) was building up all around, and here she was ready to conduct her own rally inside the PDIC premises.
As usual, she ended up in front of the information counter. She forgot to ask about Atty Elaine and talked with a customer assistance officer who told her to wait for a letter. She countered that she would not leave the office until she got her check, while waiving her ultrasound findings and her husband's senior's medicine booklet. The officer got her yellow slips, and told her to wait while he checked the status of her claims. He returned with the news that a check would soon be mailed to her, but for only one claim, the P100,000 time deposit that had matured last January, 2009. She requested that the claim of her husband be included, but was told that they could only settle one claim. She asked why they could not give her the check over-the-counter; she was told that checks are mailed. So Mrs. Lego is giving the PDIC until Tuesday next week to make good its promise.
Mrs. Lego's experience with PDIC provides us with two learning points:
a. If you are willing to create a scene in the PDIC office, and do it frequently, you may get a check mailed to you;
b. PDIC cannot pay all claims at the same time- Mrs. Lego and her children had a total of six CTDs but only one could be settled. This just confirms our contention that PDIC is insolvent despite its P61.5 billion DIF, and is settling claims based on its monthly collections from the banks. Using the verification process as an excuse is just that, a subterfuge to stall and delay paying legitimate claims.
Wouldn't it be interesting to know if or when Mrs. Lego actually receives her first check? Subaybayan...
As usual, she ended up in front of the information counter. She forgot to ask about Atty Elaine and talked with a customer assistance officer who told her to wait for a letter. She countered that she would not leave the office until she got her check, while waiving her ultrasound findings and her husband's senior's medicine booklet. The officer got her yellow slips, and told her to wait while he checked the status of her claims. He returned with the news that a check would soon be mailed to her, but for only one claim, the P100,000 time deposit that had matured last January, 2009. She requested that the claim of her husband be included, but was told that they could only settle one claim. She asked why they could not give her the check over-the-counter; she was told that checks are mailed. So Mrs. Lego is giving the PDIC until Tuesday next week to make good its promise.
Mrs. Lego's experience with PDIC provides us with two learning points:
a. If you are willing to create a scene in the PDIC office, and do it frequently, you may get a check mailed to you;
b. PDIC cannot pay all claims at the same time- Mrs. Lego and her children had a total of six CTDs but only one could be settled. This just confirms our contention that PDIC is insolvent despite its P61.5 billion DIF, and is settling claims based on its monthly collections from the banks. Using the verification process as an excuse is just that, a subterfuge to stall and delay paying legitimate claims.
Wouldn't it be interesting to know if or when Mrs. Lego actually receives her first check? Subaybayan...
Thursday, June 4, 2009
Figures don't Lie, but Liars Figure.
Remember Mrs. AL, the 64-year-old seamstress who went to PDIC SSS building on May 15 to beg for the release of a check to pay for a breast biopsy? She filed claims for six time deposits last March 24, 2009.
Well, she went back to the same PDIC office on Friday, May 30 to plead her case. Once again, she brought her ultrasound findings, and only got as far as the information counter. Once again, the poor woman was told to wait for a letter that would inform her of the status of her claims; the clerk told her that's the way it is. It has been almost ten long weeks since she filed her claims.
Mrs. AL is very desperate. Aside from her required biopsy, her 67-year-old husband Mr. RL suffered his third stroke last Sunday. When before he could talk though garbled, now he is mute. He needs to see a doctor, but his wife worries that the doctor would prescribe treatment that they can scarcely afford. It is a daily struggle for her to put food on the table and buy their maintenance medicines. She cannot understand why PDIC is taking so long to give her back her hard-earned money: they cannot even give her P50,000 which is the value of one of her CTDs.
It is therefore hilarious to read Mr. Nograles press release urging 34,000 account holders to file claims to speed up the processing of their claims. It is impossible to imagine that six months have already passed, but there are still a large 25% of the total accounts that remain unclaimed. And he wants more claims to be filed when PDIC has a hard time processing claims that were earlier filed. What game is he playing? The age-old game of Charade.
What is puzzling is his announcement that 51,847 accounts were already verified and are eligible for claims: of this number, 17,359 filed for claims, and 13,970 were already paid. Well, all these statistics mean nothing to Mr. and Mrs. RL who are in dire need of money- their money. Borrowing again the words of Disraeli and popularized by Mark Twain when statistics were used to bolster an argument: "There are three kinds of lies: lies,damned lies, and statistics."
And all that Mr. Nograles is trumpeting is this sad fact: that only those accounts below P15,000 have been paid out. Ask Mrs. AL and we are sure that she will agree to this Mark Twain quotation: figures don't lie, but liars figure!
Well, she went back to the same PDIC office on Friday, May 30 to plead her case. Once again, she brought her ultrasound findings, and only got as far as the information counter. Once again, the poor woman was told to wait for a letter that would inform her of the status of her claims; the clerk told her that's the way it is. It has been almost ten long weeks since she filed her claims.
Mrs. AL is very desperate. Aside from her required biopsy, her 67-year-old husband Mr. RL suffered his third stroke last Sunday. When before he could talk though garbled, now he is mute. He needs to see a doctor, but his wife worries that the doctor would prescribe treatment that they can scarcely afford. It is a daily struggle for her to put food on the table and buy their maintenance medicines. She cannot understand why PDIC is taking so long to give her back her hard-earned money: they cannot even give her P50,000 which is the value of one of her CTDs.
It is therefore hilarious to read Mr. Nograles press release urging 34,000 account holders to file claims to speed up the processing of their claims. It is impossible to imagine that six months have already passed, but there are still a large 25% of the total accounts that remain unclaimed. And he wants more claims to be filed when PDIC has a hard time processing claims that were earlier filed. What game is he playing? The age-old game of Charade.
What is puzzling is his announcement that 51,847 accounts were already verified and are eligible for claims: of this number, 17,359 filed for claims, and 13,970 were already paid. Well, all these statistics mean nothing to Mr. and Mrs. RL who are in dire need of money- their money. Borrowing again the words of Disraeli and popularized by Mark Twain when statistics were used to bolster an argument: "There are three kinds of lies: lies,damned lies, and statistics."
And all that Mr. Nograles is trumpeting is this sad fact: that only those accounts below P15,000 have been paid out. Ask Mrs. AL and we are sure that she will agree to this Mark Twain quotation: figures don't lie, but liars figure!
Wednesday, May 27, 2009
PDIC and BSP allowed Legacy to Swindle Depositors
The second DEADBOL meeting was attended by a prospective member, who aside from having time deposits in legacy banks, was a VP-Marketing for legacy bank products. Gi had worked for legacy since 2002 and had more information regarding Celso and the legacy operations.
She confirmed that Celso or CGA paid CTDs to his employees as separation pay, but unlike her subordinate who was led to believe that the banks would be kept open, she was called in the early afternoon of December 4,2009 by the cashier of Dynamic Bank that the banks would be declaring holidays. That during Sat, Dec. 6 and Sun, Dec. 7, bank employees were working overtime inside Rural Bank of Paranaque (RBOP) offices doing cleanup operations (she didn't know what that meant). Bank clerks were also typing the CTDs for separated legacy employees, including themselves.
We were puzzled when Gi said that a lot of time deposits in RBOP were owned by depositors located in Cebu, Gen. Santos, and especially Davao. She explained to us that there wasn't any legacy bank in Davao- constraining so many Davaoenos to course their deposits mainly through legacy offices in Davao. There were also depositors who did not want to travel long distances to open new accounts, so they placed their money through the nearest legacy offices. These "remote" depositors were issued legacy ORs, aside from CTDs which were delivered by the respective banks several days later. We then asked ourselves the obvious question: is it possible that these banks actually received the funds or did they issue the CTDs even if unfunded? It turned out that the answer to these questions did not matter. Gi recounted that she had a client who had been a depositor of the defunct CGA-owned Center bank (closed in 2006). He had personally opened his first P100,000 account but when the PDIC maximum was increased to P250,000, he deposited another P100,000, but through the legacy Makati office. PDIC honored the first account but denied his claim for the second, for the reason that the legacy office remitted the day's collections as an aggregate amount, without a breakdown of the names of the depositors. These transactions were done daily by the legacy offices, making it difficult for PDIC to ascertain who owns what, especially if legacy offices did not deposit collections daily or if the deposited funds did not match office collections.
What hit us is that CGA knew that these remote deposits would not be acceptable to PDIC, but still continued on with this scheme, but on a grander scale: from a one-unit bank to 12 banks with more than 109 branches. His greed knew no bounds, creating hundred, perhaps thousands of despairing depositors with probably no chance of getting back their hard-earned money. After this mind-boggling insight, we were hit by another lightning bolt of an idea: the PDIC allowed legacy offices to continue collecting remote deposits. It is quite impossible that PDIC or the BSP had not heard that legacy offices continued to receive money meant as bank deposits, but had obviously tolerated its practice. PDIC had not issued any circular or memo warning depositors to avoid this kind of remote banking which would not be covered by PDIC insurance, and we are sure that the BSP or PDIC had not issued any cease-and-desist order to the legacy banks and offices.
These insights lead to one inescapable conclusion- that Celso could not have pulled off his "business model" without collusion from these so-called regulatory bodies. Was this the organized syndicate that BSP Deputy Gov. Nestor Espenilla, Jr. was alluding to "that from day one was created to exploit human nature and weak links in the legal, regulatory, and enforcement framework of our banking and financial system.”
The irony of it all is that Davao is the bulwark of Speaker Prospero Nograles. Did he imagine that his kababayans would be the biggest victims of this innovative scheme to swindle depositors? Has his younger brother, PDIC President Jose Nograles, come to realize that most of the claimants of these remote deposits are Davaoenos?
She confirmed that Celso or CGA paid CTDs to his employees as separation pay, but unlike her subordinate who was led to believe that the banks would be kept open, she was called in the early afternoon of December 4,2009 by the cashier of Dynamic Bank that the banks would be declaring holidays. That during Sat, Dec. 6 and Sun, Dec. 7, bank employees were working overtime inside Rural Bank of Paranaque (RBOP) offices doing cleanup operations (she didn't know what that meant). Bank clerks were also typing the CTDs for separated legacy employees, including themselves.
We were puzzled when Gi said that a lot of time deposits in RBOP were owned by depositors located in Cebu, Gen. Santos, and especially Davao. She explained to us that there wasn't any legacy bank in Davao- constraining so many Davaoenos to course their deposits mainly through legacy offices in Davao. There were also depositors who did not want to travel long distances to open new accounts, so they placed their money through the nearest legacy offices. These "remote" depositors were issued legacy ORs, aside from CTDs which were delivered by the respective banks several days later. We then asked ourselves the obvious question: is it possible that these banks actually received the funds or did they issue the CTDs even if unfunded? It turned out that the answer to these questions did not matter. Gi recounted that she had a client who had been a depositor of the defunct CGA-owned Center bank (closed in 2006). He had personally opened his first P100,000 account but when the PDIC maximum was increased to P250,000, he deposited another P100,000, but through the legacy Makati office. PDIC honored the first account but denied his claim for the second, for the reason that the legacy office remitted the day's collections as an aggregate amount, without a breakdown of the names of the depositors. These transactions were done daily by the legacy offices, making it difficult for PDIC to ascertain who owns what, especially if legacy offices did not deposit collections daily or if the deposited funds did not match office collections.
What hit us is that CGA knew that these remote deposits would not be acceptable to PDIC, but still continued on with this scheme, but on a grander scale: from a one-unit bank to 12 banks with more than 109 branches. His greed knew no bounds, creating hundred, perhaps thousands of despairing depositors with probably no chance of getting back their hard-earned money. After this mind-boggling insight, we were hit by another lightning bolt of an idea: the PDIC allowed legacy offices to continue collecting remote deposits. It is quite impossible that PDIC or the BSP had not heard that legacy offices continued to receive money meant as bank deposits, but had obviously tolerated its practice. PDIC had not issued any circular or memo warning depositors to avoid this kind of remote banking which would not be covered by PDIC insurance, and we are sure that the BSP or PDIC had not issued any cease-and-desist order to the legacy banks and offices.
These insights lead to one inescapable conclusion- that Celso could not have pulled off his "business model" without collusion from these so-called regulatory bodies. Was this the organized syndicate that BSP Deputy Gov. Nestor Espenilla, Jr. was alluding to "that from day one was created to exploit human nature and weak links in the legal, regulatory, and enforcement framework of our banking and financial system.”
The irony of it all is that Davao is the bulwark of Speaker Prospero Nograles. Did he imagine that his kababayans would be the biggest victims of this innovative scheme to swindle depositors? Has his younger brother, PDIC President Jose Nograles, come to realize that most of the claimants of these remote deposits are Davaoenos?
Sunday, May 24, 2009
New CTD variations
We always thought that there was only one kind of certificate of time deposit (CTD); the one issued by a bank when you deposit your money for a fixed period and the same one that you would present to the bank on or after the termination date. With the closure of the legacy banks, and the PDIC reasons for the delay in its settlement of claims, we realized that there are two kinds of CTDs, with various configurations, when it comes to claiming with the PDIC:
First is the CTD where actual money was deposited into the bank, but classified by PDIC as:
a. Verified CTD: supported by all six documents that the closed bank should have in its files;
b. Incomplete CTD: supported by at least one of the six documentary requirements of the PDIC; and
c. Fraudulent CTD (according to PDIC) with no single supporting bank document. However it is a valid CTD, except the bank has no record at all of the transaction.
Second kind is the CTD where no money was deposited into the bank, but the bank still issued a certificate upon orders of Celso so as to placate irate and anxious creditors:
a. In exchange for a bounced check/s issued for promised returns on legacy buyback investment schemes;
b. As separation pay for legacy employees;
c. As payment of all kinds of overdue (current included?) accounts due suppliers, partners, etc.
There is no question that the second kind of CTDs has no chance of being paid by PDIC. However, there is a big possibility that Prosperous Nograles is (was because PDIC has already paid) holding his uncollected P18 million in CTDs (issued so as to pacify and appease the angry Speaker). And if the older Nograles had those CTDs, do you think his younger brother wouldn't ensure that he gets paid by PDIC? Your guess would be as good as ours.
Obviously, funded CTD type a has no problem, but we guess this would be the exception since most legacy banks, according to the younger Nograles, had missing documentation. Most deposits would then fall into funded types b and c. If PDIC fails to pay these funded deposits, DEADBOL is ready to go to court and show the world, not only that these deposits are valid and legitimate, but PDIC failed in its avowed mandate and mission to protect bank depositors who entrusted their hard-earned money and assets into the banks.
USA's FDIC proudly states in all its sites and articles that "Since the FDIC was founded in the 1930s, no one has ever lost a penny of FDIC-insured funds." PDIC will never ever be able to boast of this accomplishment.
First is the CTD where actual money was deposited into the bank, but classified by PDIC as:
a. Verified CTD: supported by all six documents that the closed bank should have in its files;
b. Incomplete CTD: supported by at least one of the six documentary requirements of the PDIC; and
c. Fraudulent CTD (according to PDIC) with no single supporting bank document. However it is a valid CTD, except the bank has no record at all of the transaction.
Second kind is the CTD where no money was deposited into the bank, but the bank still issued a certificate upon orders of Celso so as to placate irate and anxious creditors:
a. In exchange for a bounced check/s issued for promised returns on legacy buyback investment schemes;
b. As separation pay for legacy employees;
c. As payment of all kinds of overdue (current included?) accounts due suppliers, partners, etc.
There is no question that the second kind of CTDs has no chance of being paid by PDIC. However, there is a big possibility that Prosperous Nograles is (was because PDIC has already paid) holding his uncollected P18 million in CTDs (issued so as to pacify and appease the angry Speaker). And if the older Nograles had those CTDs, do you think his younger brother wouldn't ensure that he gets paid by PDIC? Your guess would be as good as ours.
Obviously, funded CTD type a has no problem, but we guess this would be the exception since most legacy banks, according to the younger Nograles, had missing documentation. Most deposits would then fall into funded types b and c. If PDIC fails to pay these funded deposits, DEADBOL is ready to go to court and show the world, not only that these deposits are valid and legitimate, but PDIC failed in its avowed mandate and mission to protect bank depositors who entrusted their hard-earned money and assets into the banks.
USA's FDIC proudly states in all its sites and articles that "Since the FDIC was founded in the 1930s, no one has ever lost a penny of FDIC-insured funds." PDIC will never ever be able to boast of this accomplishment.
Friday, May 22, 2009
DEADBOL (Depositors Enabling All Depositors of Banks of Legacy vs PDIC) had its first organizational meeting two days ago. Though only a handful of members showed up, it was expected since organizing a new group may seem simple, but is definitely difficult. Furthermore, many members live outside of Metro Manila. However, it was all worth it because we learned so many new things from one member.
She was a former marketing staff assigned in the legacy preneed office located along Quezon Ave. During the course of our discussion, she divulged the following:
a. Even up to December 8, 2009, all of the staff assigned in her office were advised that though other legacy companies would close, the rural banks would remain open. That CGA (pronounced siga), the company code of Celso G. de los Angeles, would fight to keep the banks open;
b. They were given separation pay, but in the form of CTDs from RBOP. It was Edwin of RBOP Ortigas who personally delivered those worthless CTDs late in the evening to their office where everybody was waiting. Even separation pays in the amount of P10,000 were given as bank certificates, which our member acknowledges as practically uncollectible from PDIC;
c. That many marketing officers and agents, like her, had invested a lot of money in the pnbb buyback plans;
d. That their office was raided by a joint team of NBI/SEC, as were the offices in Scout Borromeo, QC and World Center Bldg, Makati. However, she said that the Vernida 1V Condominium at 128 LP Leviste St., Salcedo Village, Makati City offices was not raided: she found this lapse very mysterious and illogical since all of the files and documents were moved there to the 6th floor. She said that truckloads of files were brought to the building which she knows is owned by CGA.
She also mentioned that in the first week of December, she was assigned to encode the engine nos. of motorcycles, the products of Legacy Motors. She asked her boss where the motorcycles were, since she had not seen them, and she was told that the motorcycles, more than a hundred in number, had already been delivered to Prospero Nograles, the Speaker.
Prosperous Nograles admitted that he still had a collectible investment of about P18 million in legacy. So did this amount include the value of the motorcycles in his possession? Was he just an investor or was he more than that?
And to top it off, she mentioned that every month, in the legacy office, she regularly saw a sealed envelope from Ponce Enrile Reyes & Manalastas Law Offices. We checked the office of this law firm, also known as PECABAR, and viola! its address is the 3rd floor, Vernida IV Bldg, the same office of Legacy where all the files are stored. And guess who is the senior partner of PECABAR? Of course, Senate President Juan Ponce Enrile. So many questions have been answered in this meeting.
She was a former marketing staff assigned in the legacy preneed office located along Quezon Ave. During the course of our discussion, she divulged the following:
a. Even up to December 8, 2009, all of the staff assigned in her office were advised that though other legacy companies would close, the rural banks would remain open. That CGA (pronounced siga), the company code of Celso G. de los Angeles, would fight to keep the banks open;
b. They were given separation pay, but in the form of CTDs from RBOP. It was Edwin of RBOP Ortigas who personally delivered those worthless CTDs late in the evening to their office where everybody was waiting. Even separation pays in the amount of P10,000 were given as bank certificates, which our member acknowledges as practically uncollectible from PDIC;
c. That many marketing officers and agents, like her, had invested a lot of money in the pnbb buyback plans;
d. That their office was raided by a joint team of NBI/SEC, as were the offices in Scout Borromeo, QC and World Center Bldg, Makati. However, she said that the Vernida 1V Condominium at 128 LP Leviste St., Salcedo Village, Makati City offices was not raided: she found this lapse very mysterious and illogical since all of the files and documents were moved there to the 6th floor. She said that truckloads of files were brought to the building which she knows is owned by CGA.
She also mentioned that in the first week of December, she was assigned to encode the engine nos. of motorcycles, the products of Legacy Motors. She asked her boss where the motorcycles were, since she had not seen them, and she was told that the motorcycles, more than a hundred in number, had already been delivered to Prospero Nograles, the Speaker.
Prosperous Nograles admitted that he still had a collectible investment of about P18 million in legacy. So did this amount include the value of the motorcycles in his possession? Was he just an investor or was he more than that?
And to top it off, she mentioned that every month, in the legacy office, she regularly saw a sealed envelope from Ponce Enrile Reyes & Manalastas Law Offices. We checked the office of this law firm, also known as PECABAR, and viola! its address is the 3rd floor, Vernida IV Bldg, the same office of Legacy where all the files are stored. And guess who is the senior partner of PECABAR? Of course, Senate President Juan Ponce Enrile. So many questions have been answered in this meeting.
Tuesday, May 19, 2009
The Legacy Bank Mess: Tragedies and Broken Lives (Part 7)
Mrs. AL, a 64-year-old woman, tearfully narrated how on Friday, May 15 she went to the PDIC Makati office begging and crying for the release of her checks. She got the standard reply: wait for our letter or call advising you of the status of your claims. She had six time deposits ranging from P50,000 to P100,000 per CTD, in her name, her husband’s name, and four of her children’s. They were depositors of the Rural Bank of Paranaque (RBOP) since 2002. Her 67-year-old husband is stroke-incapacitated, and the interest payments from their time deposits were their major source of income. She worked as a seamstress, working up to midnight. They had filed claims last March 24, 2009. She is scheduled for a breast biopsy: she is not only frightened that she may have cancer, but scared that she would not have money to pay the medical and surgical costs. Her husband needs his medicines. After almost two months of waiting, they are desperate.
Distraught would be a good way to describe two ladies, Mrs. P and Mrs. M. Both retired, they too were RBOP depositors. ”Nagkakasakit na nga kami sa kakaisip, (we're getting sick just thinking about this),” they said. Family members, including Mrs. P’s daughter who lives abroad, had placed their savings in the bank. These ladies don't belong to the “small depositors” category (below P100,000) whose claims the PDIC said it would service first. After all, both were successful professionals during their active years: one was an IT executive for a universal bank and the other a top marketing director of a distribution firm. They decided to invest their money in the rural bank because aside from having been around for decades, it offered double-your-money-in-six-years schemes. They figured it was prudent- there were no risks because the bank, as all banks are, was under the regulation and supervision of the BSP and PDIC and in a worse scenario case, their deposits were insured with the PDIC.
Vicky and Irene, long-time family friends, were also officemates in Angola, an insurgency war-torn country that is 7,000 air miles from the Philippines. They had deposited most of their hard-earned savings in Dynamic bank and RBOP. Irene wrote, “I have been working in Angola since 2003. Now that my work is in jeopardy due to global crisis, I'll be left with empty pocket after all those blood and sweat of hard work abroad!” Vicky, a single mother, has been working in Angola for 15 years running and was looking forward to retirement in a year or two, and finally spend all her time with her children. With the loss of income from those high paying deposits, she is resigned to working in Angola for several more years. However, she is now worried and angry that PDIC, based on Nograles’ press releases, may not pay her time deposits, money that she had slaved and saved for 15 years.
My husband is in US as an immigrant with a low profile job. He went there last year just to renew his greencard, but when RBOP closed down, he was forced to stay there to support me and our two children who are only 5- and 2-year-old girls. We don’t want to leave our country but because of what happened, we lost hope not only in PDIC, but in the government and so we decided to go after US citizenship in the future. CS said, “Our country is hopeless with all the corrupt officials everywhere. I don’t want our children to grow seeing this kind of [moral] environment . Our ROBP CTD was everything we had. And now, all i can do is pray that we can still recover it.”
Joe L. is a naturalized American citizen from California who mortgaged his home and put his entire 401K retirement funds to invest with legacy CTDs. He counted on PDIC’s protection. If PDIC renege on their responsibility he is thinking of bringing the matter to U.S. EMBASSY so they can issue a warning to all Americans to refrain from doing business with all Phillipine banks because Philippine government insurer is corrupt. To him this is not just a domestic issue but economic sabotage.
SB is a Briton who retired in the Philippines, and this is what he wrote: “I borrowed money against my house to pursue 'good' interest rates in what was 'sold' to me as safe deposit instruments. I was never a rich man by UK standards. I used to be secure, but now I am back where i was 20 years ago, struggling… I now face losing the house if I cannot recover a high percentage of the money.” DW, a Briton living in the Visayas who had deposited most of his savings in legacy banks, had lost a substantial part of his passive income with the closure of the banks last December. He has accumulated a huge debt with monthly interest for the hospital and funeral expenses due to the long hospitalization and eventual death of his Filipina mother-in-law. Now he has to postpone heart surgery that he urgently needs. He lamented that “finding money to pay bills and for food and water to live off, let alone pay the hospital, the doctors, the funeral” bills are his priority.
J. Basco encapsulates what most, if not all, of the 60,000 legacy bank depositors with an estimated 135,000 accounts are now thinking and feeling, and we quote him: “Today I asked my sister for a loan to leave this country, legacy has (sic) all I have ever saved, I now leave this country and my wife as a broken man, too old to find work and no trust in anyone, an old fool who trusted the PDIC." There are no categories- sophisticated and unsophisticated, small and big depositors, locals and foreigners- only trusting depositors who had faith and confidence in the banking sytem, who entrusted their hard-earned money into rural banks, regulated by the BSP and PDIC, who guaranteed that their deposits were insured.
A total of 13 legacy banks closed last December, 2008. PDIC could not raise the funds to pay the P14 billion or less (if we eliminate the fictitious and fraudulent accounts) of these rural banks’ insured deposits. Another 2 rural banks in Pampanga and one in Mandaue city closed in January, 2009. This May, two more rural banks were placed under PDIC receivership; its two affiliated rural banks have been redflagged by the BSP. There are another two rural banks in Cebu that have not paid the interests due on time deposits, and may be candidates for receivership. Its depositors would soon join the swelling ranks of the great unpaid, which will inexorably lead to the erosion and possible collapse of public confidence in the rural banking system.
Why are the banks failing? Because BSP and PDIC were remiss in regulating and supervising these banks. Why cannot PDIC pay up? Because it is insolvent. Why is it illiquid? Because most of its funds are tied up in long-terms loans to, non-performing assets from and equity in the commercial banks. Why cannot it borrow? Because BSP refused to lend it more money. Why? That is a question that is simple yet difficult to answer. Perhaps BSP Deputy Gov. Nestor Espenilla, Jr. wanted us to read between the lines when he said in a congressional hearing that “we are dealing here with an organized syndicate that from day one was created to exploit human nature and weak links in the legal, regulatory, and enforcement framework of our banking and financial system.”
Last month, we were passing by a newly constructed mansion sitting in a big corner lot in Molave St, Ayala Alabang; we just could not help but ask its neighbor’s security guard who owned this compound made up of two beautiful houses. The guard said that all he knows is that “a Central Bank official owns it.” There may be no story here, or is there?
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