Philam intramurals

There seems to be little rest for Philam Life president and CEO Rex Mendoza, who is in the middle of efforts to revitalize what was once the country’s biggest insurance firm.

Fresh from fending off criticism about draconian security measures at Philam’s new headquarters in Bonifacio Global City, Mendoza is again being criticized by some insiders for transferring to booming business hub Taguig City, even while space is supposedly available at the Philamlife Tower along Paseo de Roxas.

According to these critics, management imposed tough new terms on the tenants of Philamlife that several tenants just decided to pack up and relocate, instead of renewing their contracts (thus leaving the building with vacant space). Instead of taking up the space in its own building, however, the new Philam Life management chose to move its headquarters to BGC, renting several floors at the Net Lima building at premium prices.

The sources (who are obviously not fans of the new management) said that this resulted in a double whammy where Philam Life is paying more for rent while leaving a portion of its real estate asset idle (occupancy is down to 70 percent at Philamlife Tower, supposedly, while other grade A buildings in Makati are 95-percent occupied).

Mendoza thinks, however, that all this criticism is the by-product of the changes he has been implementing to bring Philam Life back on its feet (having struggled since its US parent firm was pummeled by the global financial crisis).

The CEO says that the Philamlife Tower is, in fact, 90 percent occupied—a number that will rise further when new tenants’ construction is completed in a couple of months. The move to BGC, he adds, is due to the insurer’s inability to get four contiguous floors at the building within the next five years (so moving was the only option).

In any case, Mendoza is so bullish on Philam Life’s prospects that they are going to build another tower in Cebu City and, after that, another one either in Makati or BGC. And what of his critics? Part and parcel of the firm’s transformation process, he says. Daxim L. Lucas

What Ayala wants…

The prospective Boulevard Holdings Inc.-Ayala Land Inc. deal involving prized seaside landbank south of Metro Manila has been the subject of a lot of speculation as both sides were unwilling to give details on how much of the beachfront property in Ternate, Cavite, will be acquired by the Ayalas, whether through an outright purchase or joint development.

BHI chair Marcel Panlilio Tuesday offered more clues. He said BHI was in “contractual” discussions with ALI for the sale or joint venture of land originally designated for it to build a 300-key (room) Fridays Beach Resort Hotel in Ternate. The lands are located outside Puerto Azul Golf Resort (but note that many people collectively refer to the vast Panlilio seaside landbank as the “Puerto Azul” complex).

Panlilio also issued a caveat: “in spite of any counter-party’s enthusiasm,” he said that the proposed agreement with ALI “may or may not succeed” while both parties are targeting May 10 to reach a definitive agreement. “Such agreement in percentage to BHI’s assets would be very material, hence our cautious and deliberate approach to attain a closing.”  Doris C. Dumlao

RVO at Sandiganbayan

Former Trade Minister Roberto V. Ongpin and banker Reynaldo David, along with other co-accused, were at the Sandiganbayan public hearing Tuesday to argue that there was no probable cause for them to be indicted for violating the Anti-Graft Law. This was in relation to two loans worth P660 million from the state-owned Development Bank of the Philippines during the Macapagal-Arroyo administration that was the subject of an earlier Senate inquiry.

The Office of the Special Prosecutor of the Ombudsman argued that the loans granted by DBP to Ongpin (when David was DBP president) were behest. David’s legal counsel countered that it has been settled in jurisprudence that for loans to be even considered “behest,” they must be in default or non-performing. In Ongpin’s case, defense argued that the two loans have been paid well before their respective maturity dates and with interest.

On the prosecution’s charge that the loans were under-collateralized because Ongpin used Philweb shares as collateral and since Philweb was “not a listed stock,” the collateral to loan ratio must be 4:1 instead of 2:1. Ongpin’s counsel pointed out that one just needs to look at the business page of any newspaper to see that Philweb is listed on the PSE (and listed as such since 2000). Defense thus said there was no doubt that Philweb shares were valid collateral, adding that at the time of the approval of the second loan in 2009, the total market value of the Philweb and Philex shares pledged as collateral amounted to more than P1.8 billion, or about 2.8 times the amount of loan, when DBP’s requirement was only twice the amount.

On the prosecution’s allegation that the grant of the subject loans constituted “unwarranted benefits” to Ongpin, defense said the prosecution had clearly overlooked the essence of banking, which is the exercise of credit decisions. “And in this case, the business judgment of the then DBP Board of Directors in granting the loans was proven correct as DBP earned profits of almost P1.4 billion from the transactions. Thus, not only is there absent any injury to DBP (and to government); DBP (and ultimately, the government) actually earned from these transactions with Ongpin. And to date, the record profits earned by DBP in 2009 during the watch of David as president and CEO has yet to be surpassed,” the defense said in a statement.

It added that the P660-million DBP loan represented 17 percent of the total financing Ongpin raised between 2007 and 2009 from seven financial institutions for his acquisition of shares in Philex Mining. “It has been made to appear that Ongpin raised the entire funds only from DBP,” the statement said.  Doris C. Dumlao

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