By Aries Rufo, abs-cbnnews.com/Newsbreak | 08/17/2009 10:10 AM
How deep is the financial well of 2010 presidential aspirant Senator Manuel Villar and his wife?
While the P1.05 billion combined net worth reported in their 2008 Statement of Assets, Liabilities and Net Worth is an easy reference, a recent Supreme Court decision on the debts of a company they are associated with can make a dent on their wealth.
A company owned by the family of Senator Villar’s wife—Las Pinas Rep. Cynthia Aguilar Villar—is fending off a Supreme Court order to pay back rentals to a firm in the amount of P344.825 million.
Manuela Corp. is contesting before a Las Pinas court a motion to execute the High Court’s order, which was promulgated way back in September 2007. It argued that the property company is still undergoing rehabilitation, thus payment should be held in abeyance.
In other words, the company is still financially bleeding.
Sidebar: The rise and fall of Manuela Corp.
Doña Manuela Aguilar Riguera established Manuela Realty Development Corp. in 1972. It was later renamed as Manuela Corp. Doña Manuela is the grandmother of Las Piñas Rep. Cynthia A. Villar, the wife of 2010 presidential aspirant Sen. Manuel Villar.
Rep. Cynthia’s family—the Aguilars and Rigueras—are not just engaged in local business but also in local politics. Since 1988, most of the mayors of Las Piñas came from this family.
Doña Manuela’s brother, Rosalino Riguera, was the mayor of Las Piñas from 1988-1992. He is also the chairman of Manuela Corp. He has the single biggest stake (27%) in the company, according to latest company submissions to the Securities and Exchange Commission.
Rep. Cynthia’s mother, Lydia Aguilar, holds another 18%. She is also the company treasurer.
How the Villars are involved in the settlement of the P345 million obligations of Manuela Corp. may either reduce the financial well of the richest and most liquid solons in the country, or raise ethical questions again.
In-laws’ business
On paper, there is no link between Sen. Villar and Manuela Corp., a mall developer and operator.
Sen. Villar’s in-laws, the Aguilars, have been in the mall business for decades. Sen. Villar involved himself in the same industry, too, after he married Rep. Cynthia. His C&P Homes, which focused on affordable homes, became more profitable and high profile than Manuela.
In the aftermath of the 1997 Asian financial crisis, which brought many property companies to their knees, Sen. Villar’s own businesses have already recovered (Read: The Senator is also a big businessman) but Manuela has not.
In 2007, a follow on offering of listed Vista Land and Lifescapes Inc.—the new umbrella company of Sen. Villar’s family—raised some P20 billion in fresh funds from the stock market. Vista Land has been reporting double-digit growth rates in revenues every year.
Manuela, however, is still stuck in rehabilitation. (Read Sidebar: The Rise and Fall of Manuela Corp.)
The perception of some is that Manuela was actually Villar’s. The senator’s not-so-subtle promotional billboard with overseas Filipino workers is prominently displayed in Starmall (previously named Manuela) along EDSA in Mandaluyong City .
Villar also holds Christmas parties for the Senate press corps in Starmall.
Senator Joker Arroyo previously highlighted the link between Villar and Manuela. When Villar was a recently minted House Speaker, then Makati Rep. Arroyo who lost the race for the Speakership, accused Villar of violating ethical standards because of Manuela.
Arroyo had said that a P1-billion loan by the Social Security System (SSS) and a P2-billion loan from Government Service Insurance System were granted to the ailing Manuela. To Arroyo, it was an indirect financial accommodation to Villar by the two government financing institutions. He noted that Manuela paid P150 million of the P3 billion loan to Capitol Bank, which used to be the banking arm of Sen. Villar’s property companies. (Read: Jamby dubs Villar as "grandfather of scam")
Newsbreak previously learned from a former top SSS official that the loan proceeds were not released after word about it leaked out.
Nonetheless, top officials of C&P Homes—Villar’s own companies—were actively involved in how the loans of his in-law’s bleeding company was restructured. It was C&P Homes’ chairman and president who represented Manuela during the the 5-year negotiations with a consortium of banks for the restructuring of Manuela’s loans. (Read: Bleeding in Debt)
Manuela’s obligations
Manuela’s bank loans ballooned to over P3 billion in 2002 from the original P1.3 billion. These have already been settled—not with cash but with properties and stakes in the malls.
Some banks turned over their loan exposures to Special Purpose Asset Vehicles (SPAV), or firms that buy and sell distressed assets.
Creditors originally wanted to foreclose on Starmall, which was the most profitable in the pool of properties Manuela has mortgaged to the banks. But the court favored Manuela, which was only willing to offer as payment its 2 smaller malls in Las Pinas City—M Star One and M Star.
Manuela availed of these loans in 1995 to finance its expansion plans. That same year, it entered into a contract of lease with Leca Corp for 25 years for a 3-hectare property. The lease contract showed a graduated increase in rental rates.
Leca Corp is a company owned by the family of former Supreme Court justice Bernardo Pardo who retired in 2002.
The Tribunal’s decision in 2007 ordered Manuela to pay Leca Realty Corp. in unpaid rentals and arrears for the lease of a 3-hectare lot in Mandaluyong City where Starmall and Pacific Mall are located.
In January 2002, Manuela filed with the Las Pinas regional trial court a petition for rehabilitation. A month later, the court approved the request for a rehabilitation plan and appointed Marilou Adea as rehabilitation receiver. The court also issued a stay order to allow Manuela Corp a respite from its creditors.
For its part, Leca Corp. told the court that Manuela Corp. owed P194 million in unpaid rentals and penalty charges.
In September 2002, Adea submitted to the court her report and recommendation for Manuela Corp’s rehabilitation. Among others, the rehab plan proscribed a new rental rate for Starmall and Pacific Mall that was way beyond in the original contract. The report suggested that in the first year of the rehabilitation plan, Manuela Corp. occupies the property for free and pay P5 million in the next 3 years. This was approved by the lower court.
Expectedly, Leca Corp. opposed the rehabilitation plan. It asked the Court of Appeals to reject the rehab plan. It argued that the rehab impaired obligations in contract.
But the appellate court sustained the lower court’s decision, holding that the stay order issued by the lower court and the rehab plan resulted to a suspension on all claims on the distressed Manuela.
This prompted Leca Corp. to bring the issue to the Supreme Court.
P345-M rent
The SC’s first division, chaired by Chief Justice Reynato Puno, sided with Leca Corp.’s argument that the rehab plan violated obligations to contracts. It noted the “gross discrepancy between the amounts of rents agreed upon by the parties and those provided in the Rehab plan.â€
In its ruling penned by former justice Angelina Gutierrez, the First Division said that “the amount of rental is an essential condition of any lease contract. Needless to state, the change of its rate in the rehab plan is not justified as it impairs the stipulation between the parties. We thus rule that the rehabilitation plan is void in so far as it amends the rental rates agreed upon by the parties.â€
The ruling was also a one-two punch against Manuela Corp.
Noting that there had been a breach in obligation, the decision said that upon the finality of the case, the applicable rate of interest for the rentals shall be 12% per annum “until fully paid.â€
In its motion for the issuance of writ of execution, Leca Corp. computed that the unpaid rents have accumulated to P254 million as of December 2008.
To include legal interests, the amount has ballooned to P345 million.
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