SHORTLY AFTER their wedding in September 1999, presidential daughter Jacqueline Ejercito and her husband Manuel ‘Beaver’ Lopez became the proud new owners of a choice 3,000-square meter property at 518 Buendia Street in snooty Forbes Park, Makati, the most exclusive among all the gated communities in the country.
The property was purchased from the Bank of Commerce, to which it had been mortgaged by the film director Luis Nepomuceno. The tag price: A cool P120 million.
The sale was unusual—and not only because it involved a celebrity couple and a large amount of money. The purchase, which was conducted in haste and utter secrecy late last year, also involved falsification of records, a mysterious and probably fictitious bank account, and tax evasion on a fairly large scale.
The key to all these is Edward S. Serapio, the former political affairs undersecretary who is also said to be President Joseph Estrada’s personal lawyer. It was likely, various sources say, that Lopez and his wife had little knowledge of the intricacies of the sale.
It was Serapio, according to Bank of Commerce president Raul de Mesa and Serapio’s former law partners at the De Borja Medialdea Bello Guevarra & Gerodias law firm, who worked on the papers involved in the transaction.
It was also Serapio, they said, who was ultimately responsible for forging public records and working with a syndicate at the Register of Deeds in Makati to transfer the title of property to the newlyweds without paying some P9 million in taxes. Asked why Serapio would resort to such measures, Pablo A. de Borja, the senior partner at the firm, said it was a case of “plain arrogance and recklessness.”
He described Serapio as a reclusive and secretive lawyer who took advantage of his association with the firm to work out illicit deals on the President’s behalf. Serapio, for example, asked his partners to form six shelf companies for clients that he would later refer.
Without the firm’s knowledge, said de Borja, two of those companies were eventually used to acquire property that was subsequently linked to the President—the New Manila, Quezon City mansion now known as “Boracay” and a 2,300-square-meter lot on Stanford Street in Wack-Wack Mandaluyong, which is adjacent to presidential mistress Laarni Enriquez’s current residence. Serapio also used the firm’s address to form the Erap Muslim Youth Foundation, which is the recipient of P200 million in jueteng payoffs.
The rather sordid tale of the acquisition of the Forbes Park property for a President’s daughter is one story whose basic facts are contested by those who are involved. There is consensus only on Serapio’s involvement and the forging of documents in order to evade taxes.
But the consensus falls apart when it comes to the complicity of other players. There is even no agreement on who actually paid for the property.
Bank of Commerce sources interviewed for this article say that the network of complicity extends beyond Serapio and Malacañang. De Mesa and the de Borja law office, they say, participated in a transaction that is not only marred by fraud but also shocking in its brazenness.
De Mesa insisted, however, that the sale of the property was above board. In an interview, he said that he offered the property to Lopez in August 1999, as part of an overall effort by the Bank of Commerce to sell off foreclosed property. But other bank officials interviewed for this story say that the bank president negotiated directly with Estrada for the sale of the Forbes Park property.
(Lopez was supposed to be interviewed by PCIJ and ABS-CBN’s ‘Correspondents’ on this issue last Saturday but he backed out.)
“It was a Malacañang transaction,” said a bank executive who asked not to be named. “De Mesa was often in Malacañang, and it was he who insisted on this sale despite the objection of bank officials.”
Ilocos Sur Governor Luis ‘Chavit’ Singson, the ultimate Palace insider, confirms de Mesa’s frequent visits to the President. He said that de Mesa and Bank of Commerce chairman Antonio ‘Tony Boy’ Cojuangco were meeting regularly with Estrada in late 1999, when the Bank of Commerce Investment Corp. was negotiating with a group of investors the takeover of the Mimosa resort and casino at Clark. “Pag gabi, nakikita ko silang dalawa doon (I would see them there at night),” he said. This was also the time when the sale of the Forbes Park property was being worked out.
The Mimosa deal fell through but eventually, Cojuangco’s group invested in the adjacent Fontana resort, together with Estrada crony Lucio Co, who also runs the duty-free shops at Clark. That was also not the first time the President struck a deal with the Bank of Commerce. The year before, Estrada, with de Mesa’s help, negotiated the purchase of an 800-square-meter lot at 6 Hayes St. in North Greenhills. The land was bought from the bank for P26 million and was intended for one of the President’s brothers, Paulino Ejercito, who is now having a house built there.
When de Mesa broached the sale of the Forbes Park property to the bank in November 1999, some bank officials objected. They pointed out that the bank, which had foreclosed the property and then bought it at an auction for P135 million in October, was selling it just weeks later at a loss of P15 million. Moreover, there was a P50-million mortgage, this time to Equitable-PCI Bank, attached to the property. A lawsuit was pending with PCI Bank and the property could not be sold until the case had been settled.
In an interview, de Mesa defended the sale price, saying that P120 million was reasonable considering the slump in real estate prices. He also said that the Equitable-PCI Bank lien on the property was moot once the Bank of Commerce had foreclosed it. Bank insiders, however, said that de Mesa had assured bank officials that Equitable-PCI Bank chief George Go, who was known to be close to the President, would withdraw the claim on the land.
De Mesa said Lopez put a deposit for the property as early as August 1999, and that it was the President’s son-in-law who paid for the purchase in several installments in succeeding months.
But two bank insiders say that the payments for the property were made by Becks Resources Corp., one of the shelf companies put up by the de Borja law firm at Serapio’s behest, and an Allied Bank check signed by one Kevin Garcia, believed to be a fictitious account. Allied Bank is controlled by Lucio Tan, another presidential crony.
In fact, knowledgeable bank sources say that the original deed of sale drafted by the bank for the property showed the buyer to be Becks, instead of the Lopez couple. “That was the original approach to layer the ownership of the property, but it was never followed,” said a bank executive. Instead, Becks was used as a corporate vehicle to acquire the Wack-Wack property supposedly for Enriquez.
If this is true, then the trail of payments leads toward Malacañang, rather than the Lopez family. The role subsequently played by Serapio leads further credence to the Palace’s involvement in the transaction.
After the deed of sale had been signed on December 8, 1999, said de Mesa, his bank dealt with Serapio, who was known to both the bank and the Lopez couple. “We issued two to three checks amounting to P7 or P8 million to pay for the transfer,” he said. “The checks were made payable to the de Borja law office because Ed Serapio was connected with that office. We gave the documents and the checks to Ed on the understanding that it would be their law office who would handle it.”
De Borja, for his part, admitted that the money—a check for P4.5 million and another for P3 million—was deposited in the firm’s account, but denied that his office was in any way involved in the transaction. He said that Serapio, who was once the firm’s partner for finance, had the checks deposited in the office account and then asked one of the firm’s associates to withdraw the money. The firm allowed this, various partners said, as a courtesy to Serapio, who was also allowed to retain his office and to make use of the firm’s facilities and staff even if he was by then employed by Malacañang and no longer in the partnership.
“We had no official engagement (with the bank) at all,” said de Borja. “We had no record, we have no file open, no billing, and except for these two checks which came in and out, no money came into the firm.”
De Mesa, however, contested this. “The billings were made by the De Borja law office because otherwise, why would we issue the checks to them? As far as I knew, Ed was still part of the De Borja law office. The understanding was that the money was going to be used for all the taxes and to process the documents that would be given to the owners.”
This detail is important, because it establishes the trail of responsibility for the tax evasion. It is clear that the money for the taxes was released by the bank and deposited in the law firm’s account, yet the taxes were not paid. Where did the money go?
Subsequent events provide clues. On December 14, 1999, six days after the signing of the deed of sale, de Mesa said he signed a certificate that showed Nepomuceno had redeemed the property from the bank for P135 million. The bank president explained that the certificate was issued so the property could be sold without waiting for the one-year period during which the owner can still redeem it from the bank.
There was nothing anomalous about this, he said, as it was merely a paper transaction. The Nepomucenos were also made to sign an agreement with the bank that the proceeds of any sale of the property would go to the Bank of Commerce. The certificate of redemption was merely a document to fast-track the sale of the land.
The problem was that the certificate of redemption was subsequently used to draft a deed of transfer, dated December 24, 1999, in which the Nepomucenos transfer the title of the property to the Lopez couple. De Mesa knows that there is a deed of transfer. What he denies knowledge of is that the deed carried fake signatures of Luis Nepomuceno, Lopez and his wife. This is obvious to anyone who compares the signatures in the document with the genuine signatures.
Yet it is this fake deed of transfer that is on file with the Register of Deeds in Makati. The genuine deed of sale was never submitted to the Register of Deeds, but it is what was kept in the bank record. Instead, a certificate of tax exemption supposedly issued by Edmundo Vasquez, Revenue District Officer of South Makati, was filed with the office. The certificate says that the property was exempt from tax because “it was a present…to the newlyweds.”
That certificate is also a forgery. “The document is fake and my signature is fake,” said Vasquez. “There is no record at all of this transaction in this office. Besides, Nepomuceno cannot transfer the property without paying taxes. If it is a donation or a present, taxes would amount to 30 percent of the value of the donated property.”
Moreover, the Nepomucenos, who are heavily in debt, were not in any position to redeem or to donate property. The Forbes Park house was also special to the family. “It’s a place we called home,” said a member of the family. “Do you think we would give it away just to win political favor? Besides, the family does not have any money to give away.”
In the end, records show that the only dues paid to transfer the title to spouses Manuel Lopez and Jacqueline Ejercito was P150,000 in transfer fees. Ordinarily, such a sale would have been subjected to rather hefty taxes: the government normally collects six percent of the sale price as capital gains tax and another 1.5 percent is charged for documentary stamps. Altogether, the taxes alone would have cost nearly P9 million.
Vasquez blamed a syndicate in the Makati register of deeds for the forgeries “There’s a big syndicate there that is able to transfer property using fake documents, forging people’s signatures just to transfer the property without paying the correct taxes,” he said.
Mila Flores, the register of deeds, denied this. She said it was not her responsibility to check on the authenticity of the documents submitted to her office. “Our office exercises purely ministerial functions,” she said. “It’s the BIR resident officers in the land registry offices who are responsible for checking on the documents. That is not my duty.”
When asked, the BIR resident officer and the examiner in the Makati registry said that they processed the papers on the insistence of a Dr. Chiong, who said that he was from Malacañang. It was this man, they said, who brought the papers and said that they had the endorsement of Palace. At one point, remembered examiner Corazon Ching, Dr. Chiong even used his mobile phone to call the presidential palace and speak to a certain attorney.
De Borja cleared up the mysterious Dr. Chiong who, it turns out, is Kelvin Chiong, a Chinese Malaysian who is the husband of the firm’s associate Michaela Rosales, who was employed by the firm on Serapio’s recommendation. It was Rosales who withdrew the money paid to the firm by the Bank of Commerce, said de Borja, and who assisted Serapio in the processing of the Forbes Park papers. “Ed asked her to handle it and Ed was coordinating directly with her,” said the lawyer. “If there was any forgery or falsification, we had no hand in it.”
Chiong died of cirrhosis of the liver last April. “I don’t even know the guy,” said de Borja, “I only saw him at the wake, but apparently he had connections to the BIR.”
Those connections served Chiong well, as the papers were processed with the minimum payment to the government and in record time. It can be surmised that those who assisted in the forgery and the processing got paid for their efforts. But who else shared the P7.5 million that was paid by the bank for the transfer fees is a secret that Chiong carried with him to the grave.
The interesting thing is that this is only the latest twist in the long and colorful history of the Nepomuceno property at 518 Buendia Street. Luis Nepomuceno, renowned for the award-winning “Dahil sa Isang Bulaklak” and “Igorota,” hocked the family home in the early 1970s when he fell victim to Imelda Marcos’s ire.
Nepomuceno had produced the forgettable “Maharlika,” a film starring the American actress Dovie Beams, with whom President Ferdinand Marcos was then having a well-publicized affair. Mrs. Marcos was livid and lured Nepomuceno to produce another film with the promise of financial support, which was subsequently withdrawn.
To pay for his debts from making the film, the director was forced to mortgage several properties, including the land in Malugay, Makati where the Ospital ng Makati now stands. For most of martial law, the properties were tied up in litigation. After the fall of Marcos, Nepomuceno won his case and several properties back.
But these again had to be mortgaged to finance the new family business, which included the production of cologne. The business fell into hard times with the 1997 Asian crisis, causing the Bank of Commerce to foreclose on the Forbes Park property and eventually sell it to the President’s daughter.