Globe Asiatique case must lead to reforms

Special Report pag-ibig’s ga problem

Why did it take long to notice anomalies?

THE Home Development Mutual Fund (HDMF), more popularly known as the Pag-IBIG Fund, is the “Filipino Worker’s Fund” and his (or her) only way (besides the lotto or sweepstakes ticket) to have a first home.

It used to be compulsory for SSS and GSIS members to join. Now it is voluntary membership for all kinds of workers.

In the news are cases of syndicated estafa the National Bureau of Investigation’s (NBI) has filed against the real-estate developer, Globe Asiatique, its sister company, and its officials as well as an employee of Pag-IBIG.

It was only when Vice-President Jejomar Binay was appointed to his position as “Housing Czar”—chair of the Housing and Urban Development Coordinating Council (HUDCC) and concurrent head of the Pag-IBIG Fund—that the anomalies in the GA housing projects were investigated.

VP Binay as a result of the investigation has launched a reform program and changed the policy governing single-borrower limits for developers. Without a strict SBL, developers under the old policy could get multi-billion peso loans from Pag-IBIG.

The monitoring of loans—and the performance and actuations of Pag-IBIG employees—should also be made more rigorous. Otherwise, “incidents” (Mr.Binay’s sardonic term for what happened in the Xevera project) like that involving Globe Asiatique could recur.

The GA case involves P6-plus billion.

That amount is a tiny fraction of Pag-IBIG’s assets.

We learned that HDMF now (February 28, 2011) has assets of P282 billion. The money is deployed for the exclusive benefit of members as its charter’s demand.

Pag-IBIG tells us that P204.2 billion is “deployed” in housing related assets. P46.1 billion is in multi-purpose loans of members. P29 billion is in liquid assets temporarily parked in investment instruments (almost 98 percent of this in government securities) to answer for immediate liquidity needs as members avail themselves of housing and provident benefits from the Fund. And P2.7 billion is in other receivables and miscellaneous assets.

The demand for housing loans from its members has been increasing every year.

In 2010, Pag-IBIG released a total of P43.32 billion in housing related loans and an additional P35.86 billion in short-term loans to its members.

For 2011, the Fund is allocating a total of P54.50 billion for its housing related programs and P45.87 billion for its provident fund mandate.

What happened with Globe Asiatique?

Here is a digested timeline:

Analytical timeline: Pag-IBIG and GA from May-June 2008 to March 2011

Pag-IBIG entered into an agreement with Globe Asiatique Realty Holdings (GA) in 2008 in response to the need to provide housing for self-employed workers, househelps and Overseas Filipino Workers (OFWs). Pag-IBIG later categorized these workers as Other Working Groups (OWGs).

The Fund was already serving this segment of the population. But there was no program specifically geared for them. Globe Asiatique proposed to target this segment and the Fund approved a pilot project.

Globe Asiatique was granted a funding commitment line of P5 billion for a period of three years. In turn, GA committed to a buyback guaranty of 5 years instead of the regular 2 years, and a performing accounts ratio of 95 percent instead of 90 percent of no borrower failure required of other developers.

This was on top of the other warranties required under the Window 1 facility or express lane window for developers.

Under Pag-IBIG Fund’s Window 1 facility, developers are authorized to conduct loan counseling, and evaluate members’ loan applications. In turn, developers commit to certain warranties including warranties against ineligible and fraudulent borrowers, and non-completion of housing units, among others.

In May 2010, the Fund discovered multiple deficiencies in documentation in GA’s Xevera housing loan accounts.

These deficiencies included over 400 accounts from borrowers who denied getting any loan from Pag-IBIG and another 1,000 borrowers who could not be located.

Breach of these warranties require the developer to buy back the accounts.

VP Binay enters the picture

July 20 2010
Vice President Jejomar C. Binay, immediately after his appointment as Housing and Urban Development Coordinating Council (HUDCC) chair and concurrent head of the Pag-IBIG Fund, ordered a probe into the loans taken out by GA from the Pag-IBIG Fund for its Xevera Homes project in Mabalacat, Pampanga, totaling at least P 6,653,546,000. Reports of “ghost borrowers” uncovered by Pag-IBIG personnel in May had reached his attention.

August 2010-September 2010
Pag-IBIG conducted thorough investigation of GA loans.

September 16, 2010
In a speech before the Subdivision and Housing Developers Association (SHDA), the Vice President unveiled launching a system-wide reform program in Pag-IBIG Fund whose Board of Trustees he chairs.

The new policy would include in the ceiling computation for the single borrower limit (SBL) all the loans of developers, whether these are institutional or end-buyers financing loans. In the pre-reform SBL policy, developers may borrow up to P3 billion for an institutional loan and they may further be granted an end-buyer’s loan not subject to SBL.

It was this policy, Binay said, that allowed the Globe Asiatique to borrow around P8 billion from Pag-IBIG – P5 billion end-buyer’s loan on top of the P3 billion institutional loan.

The developer, which had accumulated over P1.1 billion in buyback accounts, was also supposed to receive another P6 billion for a project in Zambales, but this was stopped after the agency uncovered the existence of alleged ghost borrowers in GA’s Pampanga projects. [We say “alleged” because GAQ officials deny the existence of “ghost borrowers.”]

Binay also announced his plan to deploy Pag-IBIG’s loanable funds co-equitably per region, based on each region’s demand for housing loans and the good performance of developers.

“Walang palakasan, walang bibigyan ng pabor [No special relations, no favors will be given],” he said.

He said the “incident in Pampanga” alerts him and Pag-IBIG personnel to be cautious and keep in mind that the Fund’s money belong to members.

Binay also said it seemed to him that Globe Asiatique had been “favored” over other developers. News reports had quoted GA officers admitting that it had obtained a sizeable amount of the loanable housing funds for its projects in Bacolor and Mabalacat, Pampanga.

GA, it was observed, was also able to secure housing funds in just three to seven days while others had to wait for their take out for four to six months.

27 September 2010
Pag-IBIG Fund disputes claims made by Delfin Lee that it was he who first reported the existence of “ghost borrowers or buyers” in his Pampanga projects to the Fund.

Lee had admitted the existence of some 1,000 questionable buyers in his letter to the Fund dated May 27, 2010. This letter, however, was in response to Pag-IBIG Pampanga Branch’s letter to Lee three days earlier which informed him of the results of its partial validation of the Pag-IBIG member-buyers in his Xevera projects.

Emma Faria, Pag-IBIG Fund officer-in-charge (OIC), also clarified that the 99.98 percent rating received by GA for the period ending July 2010 actually referred to the Performing Accounts Ratio (PAR) of the housing loan accounts in the Xevera projects.

By Lee’s own admission, GA was actually the one paying the amortizations even of those buyers who have not made a single payment since their loans were approved. It is apparent that GA was paying even for the so-called ghost borrowers or buyers to show a high collection rate to avail himself of loans from the Fund,

After the Fund decided to stop funding GA projects, amortization remittances by GA went down to zero.

“Pag-IBIG’s housing program was adopted as a means to address the country’s housing backlog, which cannot be addressed solely through retail housing loans but requires mass housing projects,” Faria said.

The Pag-IBIG official also dismissed Lee’s claim that he is being singled out and that a conspiracy against him is underfoot involving Pag-IBIG officials.

“The steps being undertaken right now are a result of contractual violations of the Funding Commitment Agreement and the Collection Servicing Agreement between the Fund and Globe Asiatique,” she said.

A Funding Commitment Agreement is a written contract between Pag-IBIG Fund and a particular developer, in this case, Globe Asiatique. Under the FCA, the developer is empowered to receive, evaluate, pre-process and approve the housing loan applications of the Fund’s member-borrowers in accordance with the applicable guidelines of the Pag-IBIG Housing Loan Program.

The FCA likewise guarantees a developer a Funding Commitment Line or a specific amount which the Fund commits to lend out to eligible Pag-IBIG members who may wish to purchase housing units from a particular developer.

In return, a number of warranties and guarantees on the part of the developer are required, including the eligibility of the borrower and those against acts involving fraud and misrepresentation, as well as a buy-back guaranty.

“Evidently, some of these warranties have been breached by GA,” Faria said.

Faria again stressed that “the discovery of 351 bogus housing loan accounts made by ineligible borrowers under GA’s Xevera project is an isolated case and it will not affect our capability to meet our income and dividend targets for the year.”

30 September 2010
Pag-IBIG Fund advised Globe Asiatique home buyers who issued the developer post-dated checks pursuant to its collection servicing agreement with the Fund to immediately advise their respective banks to stop check payments to the developer.

Pag-IBIG Fund terminated Globe Asiatique’s collection servicing agreements with for failure to remit payments for three consecutive periods.

GA as a result could no longer collect amortizations from Pag-IBIG members who bought units from them through loans from the state financial institution.

Aside from canceling GA’s authority to collect amortizations from Pag-IBIG members, the Agency also suspended GA’s access to the housing loan express facility, cancelled its authority to conduct loan coun-seling, examined loan folders and conducted pre-inspections of housing units prior to release of loans.

Pag-IBIG advised member-borrowers who bought GA properties to pay their amortizations directly to Pag-IBIG offices.

7 October 2010
In a Senate hearing, Pag-IBIG said Globe Asiatique paid for the monthly amortizations of buyers whom it had admitted were “questionable” even after an Agency audit found these buyers to be non-existent.

“Globe Asiatique has been making the accounts of hundreds of questionable buyers current by paying for their monthly amortizations even though they did not receive a single payment from these supposed buyers since their loans were approved,” Pag-IBIG Officer in Charge Emma Linda Faria told the Senate.

After uncovering the existence of ghost borrowers in May, Faria said in response to a senator’s question, Pag-IBIG suspended GA’s access to Window 1 or the express lane facility, cancelled its authority to conduct loan counseling, mandated pre-inspection of all loan applications, and cancelled its Funding Commitment Line. The Funding Commitment Line is a committed budget extended to developers who have, in the past, delivered good accounts to the Fund, Faria explained.

Pag-IBIG has also cancelled GA’s Collection Servicing Agreement (CSA), which authorizes the developer to collect monthly payments from member-borrowers and remit these to the Fund.

Since the discovery of questionable borrowers, Pag-IBIG has issued 2,108 Notices of Buyback to Globe Asiatique with a value of P1.45 billion.

Faria said the Fund welcomed the Senate’s inquiry into the Xevera accounts. The OIC also assured Pag-IBIG members that their savings were safe and that added safeguards to protect the integrity of the Fund are being put in place upon the directive of Vice President and Housing and Urban Development Coordinating Council (HUDCC) Chairman JejomarBinay.

She added that the budget for serving and lending remains unaffected.

14 October 2010
Pag-IBIG Fund blacklisted Globe Asiatique and its officials.
In an order, HDMF “cancelled, revoked and nullified the Funding Commitment Line granted GA.” With the cancellation, the developer could no longer secure loans from the Agency. With the property developer stricken from the Fund’s list of accredited developers, it can also no longer deal with Pag-IBIG for the processing and release of housing loan applications for members, and has lost access to the agency’s express lane facility or Window 1.

The blacklisting also covers the developer’s key officials.

27 October 2010
Pag-IBIG then blacklisted Filmal Realty Corporation, a sister company of Globe Asiatique Realty Holdings Corporation, Inc. Delfin Lee is Filmal’s president.

The blacklisting stemmed from Filmal Realty Corporation’s failure to buy back accounts that have defaulted, a condition imposed by Pag-IBIG on accredited developers. The Lee-owned firm also failed to convert contract to sell accounts to real estate mortgage within the prescribed period.

Pag-IBIG added that Filmal also failed to remit the monthly installments paid by Pag-IBIG members in violation of its Collection Servicing Agreement with the Fund.

Previously, Filmal Realty had been remitting an average of P2.6 million every month to the Fund. A total of 1,538 housing loan accounts were taken out for members who purchased house and lot packages in Filmal’s St. Monique Valais housing project.

Like GA, Filmal has been removed from the Fund’s list of accredited developers, and can also no longer deal with Pag-IBIG for the processing and release of housing loan applications for members.

29 October 2010
Pag-Ibig Fund and the National Bureau of Investigation (NBI) filed charges of syndicated estafa constituting economic sabotage against officers of Globe Asiatique (GA) Realty Holdings Corporation, a former Pag-IBIG CEO, and a Pag-IBIG employee in connection with its scandal-ridden housing project in Pampanga.

Pag-IBIG said GA board chairman Delfin Lee and the other respondents, the accusation said, “comprise a syndicate consisting of more than five persons coming together with the intention of carrying out defraudation resulting in the misappropriation of moneys contributed by the Pag-IBIG members, i.e., the general public, to the Pag-IBIG Fund.”

Syndicated estafa is a non-bailable offense. The complaint was filed before the Department of Justice (DOJ).

Aside from Delfin Lee, charged before the DOJ were Dexter Lee, GA Executive vice president, chief finance officer, treasurer and board member; Ramon Palma-Gil, former Pag-IBIG CEO and member of GA Board; Cristina Salagan and Christina Sagun, heads of the Accounting/Finance Department and Documentation Department, respectively, of GA; and Lerma Vitug, Tintin Fonclara, Geraldine Fonclara, Revelyn Reyes, Atty. Rod Macaspac, Marvin Arevalo, Joan Borbon, Christian Cruz, Rodolfo Malabanan, Nannet Haguiling and Hon Tungol. The last are employees or agents of Globe Asiatique responsible for soliciting and paying off “Special Buyers” and/or creating “ghost borrowers.”

Also charged was Atty. Alex Alvarez, an employee of Pag-IBIG’s Legal Department, who notarized the majority of the fake and/or fraudulent loans submitted by GA to the Agency.

Pag-IBIG and the NBI filed the complaint following a directive from Vice President and Housing and Urban Development Coordinating Council (HUDCC) Chair Binay.

“In securing funding for the Xevera Projects…the respondents actually conspired with each other, with malice and evident bad faith, by willfully and feloniously employing a grand fraudulent scheme to deceive HDMF into releasing the aggregate amount of at least P 6,653,546,000 directly to Globe Asiatique, to the damage and prejudice of HDMF and its contributing members,” the complaint, filed by Pag-IBIG officer-in-charge Emma Faria, said.

“Based on the results of the validation conducted by HDMF, Globe Asiatique and the respondents falsely represented to HDMF that these borrowers/buyers were allegedly qualified and bona fide, when in truth and in fact they are not,” it added.

The complaint said several of the alleged borrowers/buyers admitted that they had not made a single contribution to Pag-IBIG Fund, a basic requirement for membership, “despite the fact that records of HDMF show that the required membership contributions for purposes of housing loan availment, which should be at least 24 monthly contributions, have been made under their name through Globe Asiatique.”

“This could only mean that Globe Asiatique itself, and not the alleged borrower/buyers, was the one who actually paid for said contributions,” it said.

A total of 1,576 of the houses paid for by Pag-IBIG “are occupied by persons other than those whose names appear as borrowers, some claiming to be tenants of Globe Asiatique while others are claiming that they are in-house buyers of Globe Asiatique.”

“Even stranger, about 4,579 completed units are unoccupied despite the fact that the loans for their purchase were fully taken out by HDMF, and the loans covering them are being paid for,” it added.

Despite the results of the occupancy report, the complaint said “almost all of these accounts remain current as Globe Asia-tique religiously maintained a near perfect 100 percent in its PAR for the Xevera Projects.”

“Truly, if the 8,790 borrowers endorsed by Globe Asiatique for loan take-out by HDMF are genuine Pag-IBIG borrowers of those housing units, they would be living on the houses they purchased instead of remaining in their original addresses, many of which are located in depressed areas in Pampanga and Metro Manila,” the complaint said.

Dec 10 2010
The NBI filed a second case of syndicated estafa constituting economic sabotage against Delfin Lee and eight others, including a manager of Pag-IBIG Fund.

Aside from Lee, who is president of Globe Asiatique (GA), charged also were GA employees Jacquline Magsumbol, Liaison Officer for the Xevera project in Mabalacat, Pampanga; Christina Sagun, Head of the Documentation Department; Jacqueline Gamboa, Property Manager; Helen Dizon, Marketing Coordinator; Elmer Nunag, clerk; Desiree Joy David, Billing and Collection; and Nanette Rose Haguiling, accountant.

Also included again was Atty. Alex Alvarez, Manager of Pag-IBIG’s, Foreclosure Department.

The new syndicated estafa case, a non-bailable offense, was based on separate complaints filed by Evelyn Niebres, Ronald Gabriel San Nicolas, and Catherine Banaci, all residents of Xevera Homes; and Pag-IBIG Deputy chief Executive Officer and former OIC Emma Linda Faria.

According to the NBI, the complainants filed separate complaints for estafa before the NBI over the double sale of their properties in Xevera. “They have no titles to protect their rights…and could not refund their money from Globe Asiatique,” the NBI said.

The NBI said Niebres, a walk-in client of GA, bought two units at Xevera Homes for P1,537,000 on September 16 2009 and was promised a title after one year from receipt of the payment. After failing to get the title, Niebres verified with the Pag-IBIG office and discovered that housing loans for the units she purchased were taken out under the names Girlie Santos Espanillo and LermaCariagaVillaflores through GA.

16 December 2010
Delfin Lee was positively identified by his employees as giving instructions to recruit fake buyers for his Xevera project, and had subsequently admitted to the existence of fake or fictitious buyers who took out fraudulent loans from Pag-IBIG Fund.

“In case of the fake Pag-Ibig borrowers, it was Globe Asia-tique who also paid for the required 24 monthly contributions amounting to P4,800 per member,” the agency said.

“Respondent Delfin Lee has admitted that it is GA itself that has been paying for the monthly amortizations of these fake borrowers of Pag-IBIG Fund. GA has admitted that it is the one that processed and submitted the loan applications of these fake buyers,” it added.

The Agency belittled Lee’s claim that he was unaware of the existence of 839 fake buyers.

January 2011
Pag-IBIG Fund denied allegations that further loan releases were made to Globe Asiatique despite an order from Vice President Jejomar C. Binay to “blacklist and investigate” the property developer.

18 February 2011
The NBI filed a third case of syndicated estafa constituting economic sabotage against Delfin Lee and eight others before the DOJ.

In a transmittal letter to Justice Secretary Lelia De Lima, NBI Director Magtanggol Gatdula recommended the prosecution of Lee based on complaints filed by another group of property buyers at Xevera Homes in Mabalacat, Pampanga whose properties were allegedly sold twice by Lee and his co-accused.

Gatdula said the buyers sought the help of the NBI after they found out that the properties they bought from Lee’s Globe Asiatique Realty Holdings (GA) were actually covered by another sale to borrowers in the Home Mutual Development (Pag-IBIG) Fund.

Aside from Lee, who is president of GA, some GA employees were also charged.

The new syndicated estafa case, a non-bailable offense, was based on separate complaints filed by Jennifer Gloria, Ferdinand de Guz-man, Gina Babula, Fatima Kanoya, Arlene Arca, and Pag-IBIG Fund represented by Emma Linda Faria. –Manila Times