Monday, March 29, 2010


Tony Hidalgo responding to his friend named "Tong" (Part 2):


Dear Tong,

To believe in Manny Villar’s “cause”, whatever that may be, is certainly your prerogative, brod. But it does not allow you to distort the facts—to say that black is white or that greed is good.

Winnie Monsod’s writings on Villar’s anomalies on the Paranaque road projects are pretty clear. I don’t need to comment further on them.

But I will answer as briefly as I can the downright false and sometimes outrageous claims you make concerning Villar’s “heroic” role in the government’s low-cost housing program.

True, Villar built many thousands of low-cost houses over more than a decade under the Unified Home Lending Scheme (UHLP) of the socialized housing law (E.O. 90) that he and his CREBA minions drafted and got Cory to sign in 1986, during her emergency government when she had legislative powers, by promising the pie in the sky of solving homelessness in the Philippines once and for all. But he did this to rake in billions in profits at the expense of the government, not out of a concern for the homeless poor.

Look at the results of Villar’s thousands of houses under the UHLP from 1986 to 1997 (when we reformed the UHLP to prevent Villar from bankrupting the country). Villar became a billionaire. NHMFC, the financial coordinator of the program, was bankrupted. The funders (SSS, GSIS, Pag-Ibig) were stuck with billions in bad home mortgages covering Villar’s houses and flirted with bankruptcy for a while.

Eventually, these bad mortgages had to be covered by the national government using its tax revenues (including your taxes and mine) because the funders were covered by a sovereign guarantee. Subsequently (beginning 2003 or 2004), the losses on the bad mortgages had to be written off by selling them through special purpose asset vehicles (SPAVS) at a fraction of their face value.

Meanwhile, look around you. Nearly half of the residents of Metro Manila still live in squatter areas!

I repeat: Villar became a billionaire while the funders and the national government suffered many billions in losses and the housing problem is still there, as intractable as ever. Consequently, I strongly disagree with your admiration of Villar’s record in low-cost housing. It was motivated by greed and, in the end, enriched only himself and his cohorts at the expense of the government and, ultimately, the taxpayers.

These outcomes were inevitable because of how Villar and his buddies designed the UHLP. The roles of lenders, builders, and financing agencies were jumbled up on purpose to benefit only the developers. Billions were taken annually from the SSS, GSIS, and Pag-Ibig and given to the NHMFC to disburse. The owners of the funds lost all control over how they were lent out. But this control was not given to the NHMFC, which just allocated mortgage quotas to developers (the Villar companies had the biggest quotas) from the annual funds of the lenders and automatically released the face amount of mortgages to the lenders upon submission of the mortgage papers. No one checked the creditworthiness of the home buyers. The developers were “originators” of mortgages—meaning that they went around the malls with blank mortgage papers, waylaid passersby and enticed them to sign the papers, and then went to the NHMFC to cash in.

This diabolical system without any financial controls was designed by developers like Villar to rake in the profits. It resulted in default rates of more than 70% in the mortgages and nearly caused a Philippine economic crisis. It required the coordinated intervention of HUDCC, the Dept. of Finance, SSS, GSIS, Pag-Ibig, and HIGC to prevent a financial collapse. This was a very real danger then: we need only look at the recent US financial crisis to see how bad home mortgages can drive even the world’s largest economy to its knees.

Naging bilyonaryo si Villar sa low-cost housing at the expense of Filipino taxpayers. Kumita na siya, Tong. Huwag mo nang bigyan ng medalya.

Finally, you imply that I am inconsistent in my position on Villar’s role in this program because you say that HUDCC had “boasted” of its production of low-cost houses thanks to Villar’s “vision.”

This is not true. I was always critical of Villar’s profiteering in low-cost housing and never claimed credit for the houses his companies built. I was appointed HUDCC Secretary General by President Ramos in June, 1995. I spent a few months going through the documentation of the housing program and holding intensive discussions with the developers’ organizations, lenders, the Dept. of Finance, and the HUDCC financial agencies. Then I wrote a series of memos to President Ramos that explained the hopelessly flawed nature of the program, the extent of the financial problems it had created, and what needed to be done to prevent financial collapse. After getting the President’s instructions to proceed in 1996, I set up the inter-agency task force to reform the UHLP and we completed our work and stopped the profiteering of the developers in 1997.

Your brod,

Tony Hidalgo


Tony Hidalgo responding to his friend named "Tong":

Yesterday at 9:55am

Whatever the merits of your abstract argument about the presumption of innocence, let me assure you and the brods that Manny Villar is far from innocent. He is as crooked and greedy as they come.
Winnie Monsod has made a very good case about his crookedness in the Paranaque road projects that passed through his properties at his behest as a lawmaker, enabling him to sell some of his land to the government at much more than market prices and to reap many millions in property appreciation from the government roads.
He is also guilty of making billions out of government funds for socialized housing through a questionable, unsustainable scheme that nearly destroyed our financial system in the 90's.
It's a bit complicated, but I was right there, trying to stop what was essentially Villar's scheme as Secretary General of HUDCC (housing). Fortunately, we succeeded (Dept. of Finance, Pag-Ibig Fund, SSS, GSIS, HUDCC, HIGC-I was head of the multi-agency Task Force that did this) and avoided a financial disaster in the Philippines that would have preceded the similar one that recently hit the US and hurt the world economy.
It started when Cory became president. Villar, through the CREBA he controlled, drafted a socialized housing law to spur low-cost housing in the country. Cory approved it with her emergency powers, not seeing through Villar's scheme.
To oversimplify, the law required the SSS, GSIS, and Pag-Ibig Fund to put billions of pesos of their funds each year into a fund for mortgages for low-cost housing (defined initially as 150T max, later going up to 250T through the years). This fund would be managed by the National Home Mortgage Finance Corp. (NHMFC - an agency of HUDCC). The NHMFC then established quotas for allocating the annual common funds of SSS, Pag-Ibig, and GSIS based on the building capacities of registered developers. The largest quotas every year were for the Camelia and Palmera (C & P) company of Villar which got a very large chunk of the funds for their home mortgages.
Within the annual quotas under the law, builders could submit completed mortgages and NHMFC would promptly buy them at their face amounts and pay the builder. It was the builders actively sold mortgages in the malls and everywhere else, approved the papers, and submitted them to NHMFC. NHMFC only checked to see that the amounts of mortgages submitted by the builders were within their annual quotas before paying, it did not check the credit-worthiness of the borrower or even if the papers were genuine in that the stated borrower was a real person and the house being mortgaged actually existed.
The situation the law created was unique in the entire world. The pooled funds of SSS, Pag-Ibig, and GSIS were effectively put into the hands of developers, who built the houses, found buyers willing to take out mortgages, approved the mortgages, submitted them to the NHMFC, and got the money in a few months. In effect, the builder controlled the credit funds and approved the loans using funds that were not theirs but were funds of SSS, Pag-Ibig, and GSIS.
This was a clear conflict of interest, for the builder would maximize his profits from easy credit and would not bear the cost of mortgage defaults. Naturally, lots of problems arose in just a few years -- fake mortgages to ficititious borrowers, nonexistent houses sold to noexistent buyers, and the more common case: real, but substandard, houses, hastily sold to buyers who clearly did not have the capacity to pay back the loan during the agreed loan period. By the time HUDCC took action to correct the anomalous situation in 1996 under my coordination, some 42 billion had been disbursed in mortgages under the Villar scheme. Only a little more than 20 percent of the loans were being repaid by borrowers, more than 70 percent of the mortgages had been defaulted or were in serious arrears.
This drew the attention of the World Bank and the Dept. of Finance, for the SSS, GSIS, and Pag-Ibig Funds are retirement funds. The funds are commtted to future returement obligations to the contributing members. If the housing mess continued, the SSS, GSIS, and Pag-Ibig would default on its retirement obligations, creating a financial crisis for the country.
All of us who changed the housing program to give the control over their housing funds back to the SSS, GSIS, and Pag-Ibig, who would be more careful in screening mortgages to make sure they would be paid for they would bear the penalties of mortgage defaults -- we were all harrassed by Villar and his minions in the CREBA who slapped law suits on us and attacked us in the radio, TV, newspapers, etc.
The Makati regional trial court found in our favor and threw out the CREBA-Villar law suit. For a long while, we lost in the media wars and were painted as anti-poor bureaucrats. But the furor eventually died down and the reformed housing program we fashioned has stood the test of time. Since 1997, the repayment rates of socialized and low-cost housing mortgages have high enough to make the program sustainable. The looming financial crisis was averted and we are now in better shape than the US, which did nothing to reform its own defective housing mortgage system.
Of course, the share prices of C & P homes of Villar collapsed, for everyone knew that the company was profitable only for as long as it could bilk government funds. But then Villar found other rackets and the rest, as they say, is history.
Tony Hidalgo

Saturday, March 27, 2010

Get Real: Awesome (claims)

What's your take about this write-up?

By Solita Collas-Monsod
Philippine Daily Inquirer

AN ORGANIZATION I BELONG TO, THE Movement for Good Governance (MGG), has, as one of its objectives, raising the level of discussion and quality of information during the election campaign, so that the information that voters obtain on candidates are not just those provided by the candidates themselves (which are naturally going to be self-serving) but have been subjected to scrutiny for either feasibility (as in their platforms, which require the assessment of experts) or authenticity (in regard to their claims, which require investigation and drudgework). That way, the voter will be in a much better position to choose their leaders for the next three or six years.

Manny Pangilinan's TV5 has picked up on MGG's work and will jointly sponsor a five-part special series that will in effect showcase the results of this scrutiny. And since Sen. Manny Villar's TV and radio ads far outnumber the ads of his opponents, they provide much more grist for an investigator/evaluator's mill.

Take the ad, for example, which roughly translated goes something like this: "Have you experienced sleeping on a short bench in the market? Or the death of a brother because you had no money for medicine/proper health care, so you were helpless? Well, I, too, have experienced all that. Which is why, when God blessed me with a good life, it became my vow to help those who have nothing. If I really wanted to get richer, I would just go back to being a businessman. If I could get out of poverty, I can also do it for you. This is my vow: to end poverty." The TV ads are highlighted by a 1962 picture of the young Manny and his younger brother Danny-the year that Danny died-as well as a Villar family picture.

The message being conveyed is simple and powerful: he was dirt poor, but God got him out of poverty; and he has vowed to do the same for others. And he is sincere: he is not running for president to make money-because if he only wanted to get richer, all he needed to do was go back to being a businessman. It is indeed a great ad. One viewer's reaction was: Awesome.

Awesome, indeed. Because documents sent to me turn those assertions on their head, so that the only thing accurate about the ad may be the family pictures.

First there is the matter of the copy of a death certificate of Daniel Bamba Villar indicated as issued by the NSO. According to that document, Daniel Bamba Villar, son of Manuel Villar and Curita Bamba, address xx (number illegible) Bernardo Street, North Balut, Navotas, died at the Far Eastern University Hospital on Oct. 13, 1962, at the age of three years and eight months, of cardio-respiratory failure due to leukemia (there is something about red cells, but the writing again is illegible), after a 13-day hospital stay. In the space for informant, the signatory is Manuel Villar, father.

Now, that Daniel Villar was brought to a private hospital-FEUH had the same reputation then as Makati Medical or Manila Doctors or St Luke's would have now-rather than, say, a government hospital like the Philippine General Hospital, or San Lazaro, does not necessarily disprove the Villar ad contention that his family was poor. It is not unusual for families, however poor, to do what is necessary in order to secure the best care for their children, and damn the consequences. That it was Funeraria Paz (one of the two top funeral parlors at that time), as indicated on the same death certificate, that took care of the funeral arrangements, again does not necessarily contradict the "I was poor" contention, for the same reason.

But then, Villar does not just say in the ad that his family was poor. He said his brother died because there was no money for medicine or medical care. That appears to be clearly contradicted by the certificate.

Moreover, there is the matter of the address provided by Villar senior: apparently, from pictures and on-site investigation, Bernardo Street in North Balut is part of San Rafael Village, a gated community, equivalent at that time to FilAm Homes in Quezon City. A copy of the Transfer Certificate of Title for the property-which is a 560-square-meter lot-has also been provided. Now anyone who can afford to buy a 560-square-meter lot (the TCT shows that Villar senior borrowed P16,000 from the GSIS for the release of the title-which at current prices is roughly equivalent to P1.266 million) is not exactly consistent with being dirt poor.

Finally, there is the matter of Senator Villar's assertion that if he just wanted to get richer, all he needed to do was get back to being a businessman. Again, the documentary evidence: his Statement of Assets, Liabilities, and Net Worth (SALN) for 1992-the first year he joined government as a congressman-showed that his net worth was P75 million. After nine years of being a congressman, and eight years of being a senator, his most recent SALN (2008) shows a net worth of P1.047 billion. Being in public office surely has paid off for him.