Villar profitably combined politics and housing

Villar profitably combined politics and housing

(Second of two parts)

One of Manuel Villar’s websites,, proclaims among other trivia his early legislative initiatives as a new member of the House of Representatives back in 1992: the New Foreign Investments Act and the restructuring of the Central Bank of the Philippines (now the Bangko Sentral ng Pilipinas).

The website is silent, however, on Villar’s active involvement, also during his first term, in the passage of a major bill that subsequently was enacted into a law, Republic Act No. 7835 or the “Comprehensive and Integrated Shelter Financing Act of 1994,” which mandated a massive increase in the capitalization of government agencies involved in programs on low-cost, affordable and socialized housing over a five-year period.

It was not a priority bill for the administration of then president Fidel Ramos but it gained support from most of the congressmen. Villar, one of the bill’s ardent proponents, not only authored two key sections of the bill and acted as one of its sponsors in the plenary deliberations, but also joined the House team in the bicameral conference committee with the Senate that reconciled the two chambers’ versions of the legislation ahead of its enactment into law.

In effect, Villar acted as a sort of “baby-sitter” for a state policy measure that would later stimulate the flow of financing into a sector that’s close to the real-estate magnate’s heart (and pockets): low-cost housing and residential subdivision development.

During the plenary discussion on House Bill No. 11184 that later became R.A. 7835, Villar argued for the inclusion into the sources of financing for low-cost and socialized housing the banking system’s mandatory lending allocations for agrarian and agriculture projects (the so-called “agri-agra credit scheme”).

When asked by Leonardo Montemayor, former agriculture secretary who was party-list congressman representing the peasants sector, how much would be raised for housing from that source, Villar made impromptu calculations based on a total loanable fund source of P400 billion, from which Montemayor estimated that about P80 to P100 billion could be channeled to housing.

Villar said that since the banks were not really using that huge fund for agri-agra projects but instead “using it for money market placements,” he said the banks would be given “an additional item on their menu”—housing—for their “leftover” agri-agra funds.

Then Negros Oriental Congressman and current Finance Secretary Margarito Teves, on the other hand, expressed apprehensions about the proposal’s impact on domestic interest rates, on banks’ financing for small and medium enterprises, and on food production. Villar skirted the issue by pointing out that “the financial institutions will be better off with this [the option to put their loanable funds in housing] because right now their only option is through the agri-agra law or money market placements.”

When the House was done with amendments to the bill, it also proposed, apart from the huge increases in the capitalization of the government’s agencies (NHMFC, from P500 million to P5.5 billion; Home Insurance Guaranty Corp., from P1 billion to P2.5 billion; Abot-Kaya Pabahay Fund, from P2.5 billion to P5.5 billion) these other sources of funds for housing: proceeds from forfeited customs bonds, proceeds from documentary stamp tax, proceeds equivalent to 20 percent of any excise tax on soft drinks, and savings from any government policy to reduce debt servicing.

The part on soft drinks taxes was apparently blocked by the Senate at the bicameral committee, but added were parts of proceeds from the National Government’s share of the gross earnings of Philippine Amusement and Gaming Corp. and from any sale of military camps in Metro Manila.

Apart from the provision on agri-agra funds, Villar was also the author of another earlier proposal, an increase in the capitalization of the National Home Mortgage Finance Corp. (NHMFC) that funds the mortgages on units sold by housing and subdivision companies. That was later incorporated into HB 11184, according to Makati Representative Joker Arroyo who slammed in a privilege speech later the benefits derived by Villar’s business from this bill.

Other congressmen would point out years later that the House of Representatives had virtually ignored the government’s program to boost the rural sector through viable agrarian reform undertakings, as well as agricultural projects that banks often avoid owing to the high risks perceived in such exposures.

‘Constitutional breach’

More pointedly, Joker Arroyo in 1998 made damaging accusations of alleged “constitutional breach” involving benefits that Villar’s businesses were said to have derived from certain government institutions and from legislation approved during his term as lawmaker.

In a privilege speech, Arroyo, listed these charges against Villar:

* that Villar-owned companies Camella and Palmera Homes and subsidiaries allegedly “were given financial accommodations” by such government banks or financial institutions as NHMFC and Pag-IBIG Fund from 1992 to 1998 while Villar was a member of the House of Representatives.

* that during that period his real-estate companies were allegedly getting financial accommodation from state institutions and banks, Villar “did not divest himself of his interests in, nor did he sever connections with,” these companies.

* that Villar family-owned Capitol Bank allegedly “received loans, financial accommodations and guarantees from the Bangko Sentral ng Pilipinas from 1992 to 1998 while he was a Representative.”

* that Villar allegedly “did not divest himself of his interest in his companies” when the bills that he introduced or co-authored were enacted into law as required by the Code of Conduct and Ethical Standards for Public Officials (Republic Act 6713).

* that a supposedly financially troubled company owned by Villar wife’s family, Manuela Corp., allegedly got a syndicated loan worth P3 billion from the Social Security System and the Government Service Insurance System even as SSS had never granted a direct loan to a private corporation before.

* that from the P3 billion syndicated loan from the state financial institutions, Manuela Corp. allocated P150 million to repay loan that it owed to Villar-owned Capitol Bank. Arroyo called that an “indirect financial accommodation.”

* that Villar-owned property companies allegedly developed land supposedly intended for Comprehensive Agrarian Reform Program coverage into residential subdivisions “without the appropriate [Department of Agrarian Reform] issuances that would authorize such [land conversions]”. Arroyo mentioned 5,950 hectares involved.

Arroyo, who delievered his speech after Villar defeated him for the speakership, lamented that “the House cannot reform itself, much less even operate effectively if a cloud of doubt hangs over the Speaker of the House.”

If Villar “wants to continue in business and deal with government financial institutions,” Arroyo said, “he can do so but he cannot also be a congressman, If he wants to be a congressman, then he must not be in business which deals with the government.”

When the government moved to reform the housing mortgage system, the state-funded NHMFC had released over P42 billion for mortgages over the four years to 1996. More than half of that amount went to two Villar housing developers, Camella Homes and Palmera Homes, according to Antonio Hidalgo, secretary general of the Housing and Urban Development Coordinating Council (HUDCC), the main supervisory agency for the government’s housing strategy.

And in the meantime, the shortage of housing units relative to the size of the population has remained unchanged at about 3.5 million over the same period. The government’s expensive housing program certainly cannot claim success.

The inspiration

This is one side of real-estate mogul Villar’s foray into politics that has ignited curiosity from both admirers and critics. Apart from that 1994 legislation—which stimulated the flow of financing into low-cost housing and residential subdivision development—recent reports of possible conflict of interest or even improprieties in the manner his businesses gained from his official acts could devalue his words of inspiration for people who entertain thoughts of someday rising to the same level of wealth he had achieved.

Entrepreneurship, Villar always points out, is the “only viable way out of poverty for most of our people, the only way for the country to join the region’s economic tigers.”

If that sounds familiar, it is because that was what former president Ferdinand Marcos also used to tell audiences when he was in power. But, as is now widely known, instead of empowering the citizens, Marcos crippled the Filipino entrepreneurial spirit by dispensing largesse and playing favorites in the distribution of business opportunities. Cronyism and nepotism prospered, and investors soon avoided the Philippines. We all know how that era ended.

These days, when Villar shows his “generosity” to the impoverished by selectively giving out cash and goodies, including houses in subdivisions he owns, he obviously is thinking that he is “empowering” those beneficiaries. He could be wrong. What many actually see is a culture of dependency and largesse that Villar seems to be propagating.

On the other hand, Villar’s participation in the drafting of RA 7835 was effectively an exercise in legislating rewards to a business sector where he belongs, according to his critics. It will be noted that when Villar was first elected to Congress, his declared net worth was only P75 million. That amount steadily expanded to billions while he occupied his positions in the House and in his real-estate companies.

A ‘twin’ in the Senate

The charges aired against Villar by a peer in the Senate showed a similarity in the nature of the allegations previously made by Arroyo in the House: that Villar’s businesses may have benefitted from his lofty position in Congress and his influence in allegedly skewing the balance of opportunities in his firms’ favor.

The Senate committee of the whole, following an investigation into an ethics complaint filed by Senator Ana Consuelo “Jamby” Madrigal, concluded that properties owned by Villar companies benefitted from a revision in the plans for a major infrastructure project, the C-5 road extension project in southern Metro Manila.

Initially, the accusation involved an alleged “double-insertion” of P200 million in the national budget for the contruction of that project. Later, evidence was presented that showed a realignment of the road project to make it pass through or close to properties owned by the Villar companies.

In the Senate committee report, Villar was alleged to have personally influenced the road realignment. Villar had denied the accusations but he steadfastly refused to make himself available to his peers during the investigation, criticizing the investigation as a “political” ploy by his opponents.

For Villar, these allegations in the House and the Senate were further exacerbated by reports of Villar-owned Camella Homes having erected a subdivision in Ilolilo province allegedly on rice farms covered by the Comprehensive Agrarian Reform Program, making the project allegedly illegal. In Bulacan province, a group of farmers filed a plunder case against Villar and his wife for allegedly having mortgaged their farm lands to the Bangko Sentral for the benefit of Villar-owned Capitol Development Bank (which also ran into debilitating financial troubles in the late 1990s). Villar and officers of his political party and his companies have denied all these allegations, but have not discussed any specific details.

There is a lingering theme in the accusations that have cropped up against Villar over these past years. They may or may not be directly related to his candidacy for the presidency. Whether they are politically motivated or not, at least they deserve to get some precise answers from Villar. He has consistently failed to address the issues raised against him.

An old ‘anarchy’

Economists who have observed this saga point to a phenomenon that brought about the “crony capitalism” of the Marcos era: “rent-seeking.” It is about the use of political power and influence to promote certain economic or business interests.

A rent-seeking political culture produces laws and government policies designed in such a way that a particular group incurs an advantage over competitors in the rivalry for market shares and profits.

Various studies have pointed to rent-seeking as a pervasive character of the Philippine economy so that development has failed to spread benefits to a wider section of the population, particularly to the poor citizens.

In his widely quoted 1994 book “An Anarchy of Families”, for instance, history professor Alfed McCoy noted that “the rise of ‘rents’ as a significant share” of the Philippine economy has been one of two key elements that contributed to the formation of “power political families” in the country. The other element is, according to McCoy’s thesis, a “simultaneous attenuation of central government control over the provinces.”

The synergy between these two elements, McCoy said, has led to the “privatization of public resources [that] strengthens a few fortunate families while weakening the state’s resources and its bureaucratic apparatus.”

By fusing politics and business, elite Filipino families “have proved adept and aggressive at rent seeking, subverting public institutions to promote private accumulation. These political families have accumulated sufficient power, prestige, skill, and wealth to perpetuate a system that serves their interests.”

“Indeed, any attempt to use the state to restrain these elites may, as it did in the Marcos era, merely mask a partisan attack by new, even more avariciouos families. This subversion of the public weal in the service of private, familial wealth may be a corruption under the law but it is also the dominant feature of politics as practiced in the Philippines,” McCoy said.

In the coming national election, voters will be looking for change that will ferry them to better living standards. Judging by his record as a businessman and a politician, Villar would probably deliver more of the same. – VS/HS, GMANews.TV

Ping Galang is a journalist who has been covering the Philippine economy since the Marcos era.

Karen Ang

A plebeian who is trying to make small changes in this world.