First of Two Parts
THE OPULENT names of tycoons and captains of industry, as well as of firms ranked among the country’s top 500 by sales and revenue, used to populate the list of donors to candidates during elections. Yet during the May 2013 elections, it seemed like big money went underground or receded in the shadows.
Documents show that about 2,000 individuals but only 73 corporate entities bankrolled the May 2013 election campaign of most of the 33 candidates for senator and their political parties. In all, the corporate donors racked up P265,051,028.82 in donations. This is just slightly more than 10 percent of the P2.03-billion that was splurged on political advertising on television alone in the 90-day official campaign period.
But the Commission on Elections (Comelec), the Bureau of Internal Revenue (BIR), and the Securities and Exchange Commission (SEC), may still find that the list of corporate donors in the last polls has its peculiar, if unseemly, charm.
It enrolls corporations with small to moderate capital — many of them with little or no cash assets or even operating at a loss — donating tens of millions of pesos in cold cash or in kind to the candidates from both the administration and opposition coalitions.
Most of the 73 companies in fact donated piles of money to the candidates, even as their latest available financial statements show them to be operating at a loss, or charting only a few thousand pesos in profit.
The list features as well firms engaged in mining, real estate and construction, and securities brokerage that have snared contracts with government or are regulated entities barred by election laws from donating to the candidates.
It also includes three non-stock, not-for-profit foundations primarily organized for charity or religious purposes that turned into vessels of donations to at least three senatorial candidates and one political party. That they switched to partisan political activities is a clear digression from the primary purpose of their corporate existence.
Finally, a third of the 73 corporate donors do not seem to be exemplars of good corporate citizenship. They are either not registered with the SEC or have not kept their financial reports current, as the law requires them to.
For most of the corporate donors, though, one immediate post-election problem could be this: What seemed like an act of corporate hara-kiri for and on behalf of their candidates could render them dead twice over when the taxman cometh. This is because their donations hint at possibly less than truthful income tax returns that they had filed with the BIR.
Just as bad, if their donations were made without the express approval of shareholders and officers, they may have also violated their fiduciary duties under the Corporation Code of the Philippines to seek and secure a vote by governing boards on the sale and disposition of their companies’ assets.
An SEC litigation lawyer says corporate entities that do not behave according to their duties under the Corporation Code, including making donations without the approval of their governing boards, or without capacity to donate, may face suspension or revocation of corporate license.
Election laws meanwhile say as well that candidates and donors who fail to file truthful reports may be charged for perjury or for violation of election laws. Perjury is a criminal offense, while violations of election laws may open offenders to administrative fines or suspension and other penalties.
“The law requires you to be truthful,” a Comelec lawyer says. “If they’ve made fraudulent representation in their reports, have negative income or no assets to cover the big donations they made, then they might have submitted fraudulent filings.”
Yet beyond Comelec’s purview, the mismatch between the big donations and the puny cash assets of some donors is a clear invitation for a BIR assessment. It’s a simple enough equation, according to BIR Commissioner Kim Jacinto-Henares: “You have a donation, you donated, but you are reporting negative income tax. The question is, where did you get money to donate?”
“The presumption we have is that the declaration is correct,” Henares said. But, she adds, “From tax point of view, if you have assets and you did not declare these in your tax return, that is a criminal case.”
The irony is that trouble looms even as only 15 of the 73 companies and foundations that donated to the candidates for senator and their political parties, gave P5 million or bigger amounts.
Twenty-nine others gave from P1 million to less than P5 million. Twenty-five more donated less than P1 million each, and the rest, tens of thousand pesos only.
Topping the list are:
- Bagong Pilipinas Bagong Pilipino Movement, which donated P55.09 million (posters, printed material, sample ballot, furnishing of office or place of meetings, TV Advertisements) to Bangon Pilipinas Party of Eduardo ‘Brother Eddie’ Villanueva;
- JV Para sa Bayan Movement, Inc., which donated P43.69 million in cash to elected senator Joseph Victor ‘JV’ G. Ejercito; and
- FPJ Productions, Inc., which donated P18.25 million (P10 million in cash and the rest “in kind”) to the election topnotcher, by total votes received, Mary Grace Poe-Llamanzares.
Another foundation, the Friends of Grace Poe Foundation, Inc., registered with the SEC only in February 2013 for the primary purpose of promoting the advocacies of Grace Poe and undertaking medical missions, among others. Teodoro Misael Daniel ‘Neil’ Vera Llamanzares, the senator’s husband, contributed nearly all or P1.99 million of the P2-million capital of the foundation.
The foundation placed TV ads for Poe-Llamanzares worth an estimate of over P80 million, according to advertising contracts, but it does not appear as a donor in the SOCE that she filed with the Comelec. (See sidebar)
There are also at least six corporate donors that are contractors of government and thus should not have donated at all.
One, Sea and Sierra Vista, Inc., donated P11.07 million to newly minted senator Juan Edgardo ‘Sonny’ M. Angara, although its cash assets was just a third of the amount or P3.72 million, according to its 2011 latest filing with the SEC.
In fact, the books of Sea and Sierra are in the reddest of red. In 2011, it reported retained earnings of negative P20.9 million, and loss of P7.6 million.
Engaged in the construction, development, and operations of recreational facilities, Sea and Sierra has Pia Angara Suaverdez Bustamante, a relative of Sonny Angara, as president and major stockholder, with P8.99 million worth of shares; and Alexandra Leia M. Angara, Sonny Angara’s sister, as treasurer.
Its other incorporators are Ma. Perlinaluz Ylagan, finance and budget head at the office of Sonny Angara’s father, former senator Edgardo ‘Ed’Angara; Reynaldo J. Concepcion, a partner at Angara Abello Concepcion Regala Cruz law offices (ACCRA Law); and Teresa Ira Maris P. Guanzon, former consultant at the office of Senator Ed Angara and currently a law clerk of Supreme Court Chief Justice Ma. Lourdes Sereno.
Bustamante also owns Bay’s Inn, a resort in Baler, Aurora, where Sea and Sierra is a contractor of at least two projects of the government entity, Aurora Pacific Economic Zone (APECO).
The first of these contracts is the “Sabang Hotel Development Project,” which, according to Sea and Sierra’s associate entity, Design Coordinates, Inc., will rise on “a 3 hectare lot (sic) with 165-m wide beachfront on Baler Bay.” The hotel will feature “88 guestrooms… a lobby/reception, executive office, all-day restaurant and main kitchen, and the function areas on the second floor overlooking the sea.”
“The whole development will have 2 swimming pools, man-made waterfalls, and a lily pond having an array of indigenous plants and trees as a background,” it added. Design Coordinates, Inc. said the “owner/developer” of the hotel project is Sea and Sierra Vista, Inc., and its architect, Lor Calma and Associates.
Curiously, the hotel is located in Barangay Sabang in Baler, Aurora, which also hosts the “Angara Beach House,” or “Baler Guesthouse” that is being managed by Karen Angara, Sonny Angara’s cousin, according to Baler’s tourism operators’ information.
A second APECO project that Sea and Sierra has shown interest in as a contractor is the planned construction of mini-hydropower plants in Baler, Aurora.
PacificTech Solutions, Inc., an engineering and architectural services firm based in Mandaluyong City, lists Sea and Sierra as its client for a project that commenced in June 2011.
A project brief posted online by PacificTech on Feb. 2, 2013, said that it was “commissioned” by Sea and Sierra to do a “SSVI High-Level MHPP Site Assessment of Dicasalarin Cove” in Baler, Aurora.
In particular, Sea and Sierra asked PacificTech to “carry out specific studies and evaluations of potential mini-hydropower projects” in the area that “is being developed as a strategic tourist destination.”
APECO was created under Republic Act No. 9490 authored by Sonny Angara’s father, a law that was amended under R.A. No. 10083 sponsored by Sonny Angara himself. Sonny Angara is a member of the APECO board, while his aunt, former Aurora Governor Bellaflor Angara-Castillo, is board vice chairperson, according to the agency’s official website.
Oro East Mining
Just like Sea and Sierra, Oro East Mining Corp. Inc., which donated P100,000 in cash to the opposition United Nationalist Alliance (UNA) led by Vice President Jejomar ‘Jojo’ Binay, holds a mining exploration license from the government. Its SEC filings enrolled its cash assets at P3.4 million but also a negative P11.8 million in “comprehensive income” as of 2012.
While it donated a small amount, Oro East is actually a player in the mining sector and will be so while its mining exploration permit from government stretches on in the next 22 years.
Because it is into exploitation of natural resources, Oro East is explicitly prohibited from donating to candidates and political parties under Article 9, Section 95, of the Omnibus Election Code.
It states that among those banned from donating in elections are “natural and juridical persons operating a public utility or in possession of or exploiting any natural resources of the nation.”
Oro East operates a mining tenement covering 7,798 hectares in Manay and Tarragona towns in Davao Oriental, for exploration of gold, copper, silver, zinc, and associated mineral deposits.
Oro East president Benedicto T. Jalandoni resides in Belisario Heights in Lanang, Davao City, the same address listed for Oro East as a contributor in the SOCE of the UNA coalition.
According to a May 31, 2013 report of the Mining Tenement Management Division, of the Mines and Geosciences Breau (MGB), Oro East obtained its MPSA or mineral production sharing agreement (No. 320-2010-XI) on Feb. 10, 2010. It will expire on Feb. 20, 2035 yet.
In the middle of last year, news reports said a thousand small-scale miners had flocked to the tenement. To flush them out, the MGB regional office issued on June 19, 2012 a cease-and-desist order, which it even asked Oro East to enforce, with police and military assistance.
But since 2007, an Oro East prospectus for investors said the firm has been mining for gold and copper in three mining tenements covering a total combined area of 15,631 hectares in the Davao Oriental and Compostela Valley, where Typhoon Pablo left a wide swath of destruction last year, a tragedy blamed in part to mining operations in the area.
Four other donors are registered contractors of the Department of Public Works and Highways, according to the agency’s official website: Readycon Trading and Construction Corp., P.T. Limjoco Construction Co. Inc., PhilAsia Resources and Dev. Corp., and Prismodial Construction Corp.
Prismodial Construction gave P3 million and Readycon Trading, P500,000, to the Bagumbayan Volunteers for a New Philippines Movement, Inc. of defeated candidate Richard Gordon.
P.T. Limjoco gave P2 million to the Pwersa ng Masang Pilipino (PMP) party led by deposed president and now Manila Mayor Joseph Estrada.
Philasia Resources gave P2 million to re-elected Senator Loren Legarda.
In the case of two securities brokers that have also been listed as donors to two candidates, the question is, should they have been allowed to be campaign contributors when they are regulated financial entities?
The two are B.A. Securities Inc., which put P5 million in cash into re-elected senator Joseph Francis ‘Chiz’ Escudero’s campaign kitty, and Capital Wise Group Ltd. (listed in the SEC as Capitalwise Corp. but with the same taxpayers’ identification number as that appearing in reports to the Comelec), which donated P3 million in cash to Legarda’s senatorial campaign.
B.A. Securities seems to be in robust financial health with P588.8 million in total assets and P122.8 million in retained earnings as of its filings with the SEC for 2012.
Such is not the case for Capitalwise, though. Its latest available financial statement for 2009 said it had cash assets of only P4.91 million, total assets of P5.07 million, but also a loss of P41,174.58.
Hotdogs, hot donor
Another Escudero donor is Frabelle Corp., which had earlier employed him as a celebrity endorser of its hotdogs and other processed meat products. Frabelle donated P10 million in cool cash to Escudero, or half of its P20-million cash assets it declared in its 2011 financial statement. But that year, too, Frabelle had also reported P19.4 million negative retained earnings.
Senator Legarda, for her part, has another big donor, the JALCO Group of Companies, which has Ma. Cecilia L. Antonio, Mary Joyce Mangubat, Marie Antonette Leviste, Lorenzo Antonio Leviste, and Leandro Antonio Leviste as incorporators. Their total subscribed shares: only P63,125.
Despite its meager resources on paper, JALCO donated P10 million in cash to Legarda’s campaign, even as its cash assets was all of P366,953, its total assets only P10.8 million, and its income was only P748,504 in 2012, according to its latest filing with the SEC.
Like Legarda’s JALCO, Sonny Angara has another donor that gave big money even as its cash resources is so small: Delro Realty Corporation. In its 2007 financial statement, the latest on file with SEC, Delro reported having cash assets of only P10,000, total assets of P12.3 million, and retained earnings of negative P536,480.
It seems to have hit financial hard times. Yet in the May 2013 elections, Delro donated a whopping P9.7 million in cash to Sonny Angara’s campaign.
Pacific Royal for Jack
Then there’s the case of defeated senatorial bet Juan ‘Jack’ C. Ponce Enrile Jr., son of former Senate President Juan Ponce Enrile. Jack Enrile received a staggering P140.9 million in donations “in kind” from Pacific Royal Basic Foods, Inc., whose majority shareholder is another company, Sunripe Coconut Products, Inc.
Aside from Sunripe, the other owners of Pacific Royal Foods include the candidate’s relatives — his parents Juan and Cristina Ponce Enrile, sister Katrina, >>relation>> Juan Rodrigo Ponce Enrile — as well as Kara Pe Rhounmi, Jose Domingo Tan, Persiverando M. Lukban, John M. Cuatico, and Ma. Lisa M. Tupaz.
In its 2011 financial statement, its latest SEC filing, the company said it had cash assets of only P55.9 million, total assets of P309.6 million, and income of P81.5 million for the year. But it also reported its retained earnings by 2011 to be a negative P32.5 million.
Jose Domingo Tan, Pacific Royal Basic Foods corporate secretary, on Wednedsay sent by fax to PCIJ a certification that the firm had authorized the donation of P150 million to Jack Enrile at a board meting reportedly on Jan. 28, 2013.
The donation was being made “to help and support the candidacy” of Jack Enrile “by way of paying airtime charges of his campaign ads in television networks.”
The certification said that the only condition for the donation was that company officers Persiverando M. Lukban and Juan M.Cuatico would be the duly authorized signatories of all the contracts with the TV networks.
In truth, the ad contracts covering Jack Enrile’s TV ads on GMA-7 Network were placed by MediaForce Vizeum. The ads that aired from Feb. 27, 2013 to May 11, 2013 listed the name of Pacific Royal Foods as the buyer of ads worth P38.38 million.
Another media agent, Creative Concepts, Inc. also purchased TV ads for Jack Enrile worth P15.27 million more but this time, on behalf of JAKA Equities Corp., another Enrile family-controlled firm.
JV’s Great Wall
The situation of JV Ejercito, Estrada’s son who will now serve as senator together with half-brother Jose ‘Jinggoy’ Estrada, is similarly unusual.
Great Wall Advertising donated P5 million to JV Ejercito even as its cash assets in 2011 was only P1.47 million, and its income for the year, P2.17 million, or not even half the size of its donation.
Oks, Pinoy, Inc., another JV donor, gave him another P5 million; its cash assets as of its 2011 financial statement was only P1.07 million, and its income for the year, a negligible P336,501.
The bulk of JV’s campaign funds, though, came from the JV Para sa Bayan Movement, Inc., which gave him P43.68 million in cash.
A newly registered firm, JV Para sa Bayan Movement, has no financial or other corporate filings with the SEC as yet. It has a capital contribution of P90,000 according to its articles of incorporation.
Erap’s pauper firms
Meanwhile, PMP raised big donations from what seemed like pauper companies. One is the International Global Mining Exchange, Inc., which gave the deposed president’s party P5 million in cash. The entity registered with the SEC in 2012 only and has no financial filings as yet.
Another PMP donor in dire straits is New Life Plastic Surgery. It had cash assets of only P116,454, and posted net loss of P1.22 million, as of its latest SEC filing in 2008. Still and all, the entity gave PMP P2 million in cash donation in the last elections.
The figures above are taken from the SEC filing of “New Life Plastic Surgery and IVF Center Inc.” which bears a different TIN from the TIN of “New Life Plastic Surgery” in PMP’s SOCE. Both entities, however, hold address on the same building in Mandaluyong City.
As sparsely documented as the JV Para sa Bayan Movement is the Friends of Grace Poe Foundation, which footed most of the TV advertising bills of the daughter of ‘Da King’ of Philippine movies, Fernando Poe Jr.
Two other big donors of Grace Poe are her late father’s FPJ Productions, Inc., which donated P17.85 million in kind and P400,000 in cash, and Imus Productions, which also donated P675,203.20 in kind.
Imus Productions posted a P1.02-million income in 2011, and had cash assets of P3.05 million. In contrast, FPJ Productions registered net loss of P1.26 million, as of its latest filing with the SEC in 2005 yet, or eight years ago.
Approved by boards?
This week, PCIJ sent a query letter to these corporate donors in unusual situations, and requested quick response. After all, the letter raised just one question, and a side request: Did their respective governing boards or shareholders approve in resolution their donation to the candidates? If yes, could they give PCIJ a copy of the resolution?
Most of the companies have yet to reply. Two that did — JALCO and Sea and Sierra — asked for more time to respond in writing.
Rico Violeta, JALCO vice president for real estate and property development, said he is confirming that JALCO made the donation to Legarda, but that it has no comment to make on whether or not the JALCO board had issued a resolution approving the firm’s P10-million donation to Legarda. “Any company cannot release funds without the approval of the board,” he said.
The staff of Sea and Sierra referred the PCIJ inquiry letter to Ylagan, finance officer of Sonny Angara’s father, the former Senator Edgardo ‘Ed’ Angara.
Ylagan asked if Sea and Sierra could be given a few more days to respond, even though PCIJ’s query could be answered by a simple yes or no.
By some peculiar twist of events, PCIJ later got a call from Mina Pangandaman, Ed Angara’s chief of staff, who said that because the PCIJ request was made on such short notice, the company should be given more time to answer. Pangandaman said Sea and Sierra’s lawyers are in Cebu and would not be able to respond until Friday this week.— With additional research and reporting by Philippine Center for Investigative Journalism (PCIJ), Rowena F. Caronan, Fernando C. Cabigao Jr., Charmaine P. Lirio, Rosemarie Corpin, and Charmaine Manay, PCIJ, July 2013