By: Noel Esquela

Very recently, Manny Villar disclosed (nay, bragged!) to Karen Davila in an exclusive interview that the money he is spending on his campaign – wantonly, with reckless abandon – came from the IPO (Initial Public Offering) of Vista Land & Lifescape, Inc. He said that the total IPO proceeds amounted to P23.5BILLION, and P10BILLION of this went to him and his wife.

Soon after, former President Estrada and Senator Juan Ponce Enrile came with the stunning accusation that Villar arm-twisted and exerted influence on the Philippine Stock Exchange to exempt his corporations from the Lock-up Rule to enable them to sell their Vista shares during the IPO. But that’s another story best left to the accusers to pursue.

For now, the point of inquiry is how and why P10B of the Viata Land IPO went to the spouses Villar.

There are only three possible ways by which Villar could have possibly personallybenefited from the IPO proceeds:

(1) he traded Vista shares in the stock exchange;
(2) he received dividends from his corporations out of the IPO proceeds; or
(3) he is dipping into the funds of his corporations, as if they are his private piggy banks.

Trading Vista Shares

Corporate records of Vista and its IPO Prospectus do not list Villar or his wife as shareholders of Vista. For him to have traded Vista shares, he must have, therefore, subscribed to the IPO shares issued by Vista and then sold them in the exchange for the kill.

However, for him to have made P10B in such transaction/s, he should have subscribed, sold and traded more than 50% of the Vista shares. If so, he should have filed a Statement of Beneficial Ownership with the PSE and SEC, pursuant to the provisions of the Revised Securities Act that any person holding or owning as beneficial owner at least 10% of the shares of any listed company must disclose such fact. This Statement is a public record. However, a search of the PSE and SEC files yielded no such Statement from Villar or wife. So, did he trade Vista shares in violation of law?

Dividends

Per Vista Land Prospectus, the corporations that sold Vista shares (the “Selling Shareholders”) are Polar Property Holdings, Calveston Investments, Althorp Holdings, Cameron Global, Golden Haven Memorial Park, and Cambridge Group – all of which are publicly known to be Villar companies. Together, they sold a total of about P986M shares, with Polar having about P466M more shares “to be sold pursuant to exercise of over allotment option.” At P6.85 per share, total proceeds would be around P10B – the exact same figure quoted by Villar as having gone to him and his wife from the IPO.

But these are corporations with legal personalities separate and distinct from the spouses Villar, even if said spouses own them 100%. In law, their assets and funds are not the assets/funds of their owners, until the same are distributed by way of dividends. For the Villars to have gotten the P10B from these corporations, these corporations should have declared dividends of the same amount. However, SEC records, particularly the General Information Sheet that these corporations are required by law to submit annually, do not show that such amount/s of dividends were declared to the Villars

Corporate Dipping

The most plausible explanation then to Villar’s P10B from the Vista IPO is that he arrogated upon himself, in blatant violation of law, the Selling Shareholders’ – Polar, Golden Haven, etc – proceeds from the IPO, to spend on his campaign.

In other words, he disregarded the separate legal personalities of these corporations and helped (is still helping) himself with the corporate funds as if these corporations were at his whim and disposal.

The law accords separate personality and accounting of funds to corporations precisely to prevent the owners of said corporations from raiding their assets to the great detriment of the corporations’ minority shareholders and creditors. Apparently, this is what Villar has done – raid the corporate coffers to finance his campaign.

That Villar is corporate-dipping appears to have been confirmed by his own counsel, Atty. Nalen-Rosero Galang. In an interview with Maki Oreta on Business Nightly [22 April 2010], she replied – to Oreta’s inquiry on why, if Villar made 10B from the Vista IPO, this is not reflected in his SALN – that the funds “are in the books of the corporations.” This can only mean that such money has not been legally taken out or extracted from the corporate coffers and into Villar’s pocket (such as by way of dividend), but remain to be the property of these corporations, albeit being spent on Villar’s campaign.

Taxes and Other Implications/Consequences

If this is, in fact, the way that P10B of the Vista IPO proceeds went to him and his wife, his corporations may be deemed to have “donated” the funds to Villar’s campaign, and should, therefore, be accordingly reported by Villar to the COMELEC.

The problem is, if he would report the total amount of P10B – or even just half of it – he would be incriminating himself as having overspent in violation of law. For President, the limit on spending is about P10 per registered voter; with about 50M registered voters, he can admit to have spent only P500M or so, which is certainly just a small fraction of the P10B.

The P10B could also be regarded as “disguised dividends” under tax laws, considering specially that the Villars own the corporations funding his campaign. In this case, he should pay 10% of the amount thereof as dividend tax.

Viewed 11170 times by 2690 viewers

Uy! Ka barrio, kung first timer ka dito sa Barrio Siete o kaya naman ay napasaya ka ng aming mga writers, inaanyayahan ka naming mag subscribe sa RSS Feed namin! Pwede mong gamitin ang Google Reader para dito.

Powered by WP Greet Box WordPress Plugin

reynz is one Uragon and a Filipino-American, has many years of public accounting & auditing, broadcast investments, housing tax credits and equity investments as his background. Based in the US, he maintains his personal and humor blog at reyna elena dot com. A graduate of Aquinas U, he went to GWU and Temple U in the United States.