Can Prospero Nograles explain his wealth?

In 14 years, Speaker grows
wealth from P6.5M to P88M

OUT OF the last 14 years, lawyer Prospero Castillo Nograles spent 12 years as congressman of the first district of Davao City for five terms, and the last 27 months as Speaker of the House of Representatives of the 14th Congress.

A leader of the 12th and 13th Congresses as well, Nograles by 2008 authored 17 House bills and co-authored 86. He also helped pass laws, including the Rent Control Law, which limits increases in rentals, and the Anti-Money Laundering Act.

Last Friday, however, Nograles the Speaker failed to ratify the one legislation that he had repeatedly promised to be his personal priority, and even though he was among the 181 members of the 14th Congress who authored it: the Freedom of Information Act.

This is despite his declaration in February 2008, when he wrested the speakership from Pangasinan Rep. Jose de Venecia,  that “I will never make promises I cannot keep.”

On June 30, Nograles, a third-term legislator, is set to be replaced as Davao City 1st District representative by his son Karlo Alexei. But before he bows out of Congress, the least Nograles can do is bare the secrets to the enormous and rapid rise in his net worth.

PCIJ has learned that from 1995, when he first became a congressman, his net worth of P6.5 million had jumped to P 88.3 million by 2008, or a 1,258-percent increase in a span of almost 14 years.

This growth rate in Nograles’s wealth comes up to 89.89 percent per year on average, or nearly 10 times the average annual growth of the national economy during the same period.

Loans rising, too

The statements of assets, liabilities and net worth (SALNs) of Nograles that PCIJ has obtained yield yet another trend that defies logic: Nograles’s net worth kept rising over the years even as his “loans and other payables” also kept growing and growing, from just P4 million in 1995 to P45 million in 2008.

This represents a rise in his loan portfolio of 1,025 percent in 14 years. In other words, Nograles was incurring loans at an average of 73 percent more, by absolute amounts, year on year. He did not disclose, however, who or which banks and entities are his creditors.

By his own admissions in his SALNs, this is the mystery that Nograles presents: Over the last 14 years, he grew his wealth tenfold even as he became indebted tenfold as well. This means only that he managed to service his loans without suffering a dent in his net worth because his wealth was growing at an apparently much faster rate than he has acknowledged.

Nograles obtained a law degree with honors from the Ateneo de Manila University and placed second in the 1971 bar examinations with a grade of 90.95 percent. He was the president of his law class for four consecutive years. Among his law-school classmates were First Gentleman Jose Miguel ‘Mike’ Arroyo and local government secretary Ronaldo Puno.

Since 1980, Nograles has been a partner at his eponymous law firm.  By 2001, he was reportedly earning a hefty P300,000 per month. As a congressman, his lawful salary was only P35,000 a month, yet his net worth charted a meteoric rise over the last 14 years as the table below illustrates:

TABLE. Assets, Liabilities, Net Worth of Speaker Prospero Nograles, 1995 -2008

July 1995 P15,851,600 P9,541,600 P6,510,000
December 1995 P12,072,400 P4,000,000 P8,072,400
December 1996 P12,807,400 P3,500,000 P9,307,400
June 2001 P24,373,500 P6,700,000 P17,875,900
December 2001 P31,407,000 P6,800,000 P24,607,000
March 2003 P37,407,000 P8,000,000 P29,407,000
June 2004 P43,307,000 P11,000,000 P32,307,000
December 2005 P72,907,000 P26,400,000 P46,507,000
July 2007 P82,901,000 P31,000,000 P51,907,000
December 2007 P107,779,100 P40,300,000 P67,479,000
December 2008 P133,261,600 P45,000,000 P88,261,600

Source: Statements of Assets, Liabilities, and Net Worth (SALNs) filed by Speaker Prospero Nograles

Up, up in 6 months

There are other interesting details in the SALNs filed by Nograles.

For instance, in 1995, 2001, and 2007, the years when he filed two SALNs (June/July and December), Nograles showed a special gift for expanding his net worth by significant amounts across six-month periods.

In July 1995, he listed his net worth at just P6.5 million and grew this to P8.1 million by yearend.

In June 2001, he reported his net worth at P17.9 million then closed the year at P24.6 million, for a P7 million increase in just six months.

Again in July 2007, he said his net worth was P51.9 million, and by yearend, P67.5 million, or a P15.6-million mark-up in just five months, or a P3.1-million increase every month.

The PCIJ has requested but not yet secured the 2009 SALN on Nograles; the deadline for filing had lapsed last April 30. The 2008 SALN that Nograles released to the media did not reveal specific details but just a summary of the values of his assets, liabilities and net worth.

The pivot of Nograles’s wealth seems to come not so much from the 10 various real-estate properties he declared, but from his personal and other properties.

In his 2007 SALN, Nograles reported that he had four residential lots in Davao City, an agricultural lot in Digos City, a fishpond in Sta. Cruz, Davao City, and three prime properties in Metro Manila – a residential house and lot in Quezon City, with listed market value of  P9.1 million; a lot in Quezon City, P10.4 million; and a condominium in Makati City, P7.8 million. Altogether, these 10 real-property assets accounted for P26.5 million of Nograles’s assets in 2007.

The greater, if more mysterious, sources of his wealth are the “personal and other properties” that Nograles declared, as of his 2007 SALN:  P18.2 million “cash on hand;” P13 million worth of “jewelries;” P9.1 million worth of “households;” P10.4 million worth of motor vehicles; and a staggering but unexplained P26 million worth of “investments.”

Big cash cache

Over the years, the “cash on hand” that Nograles has reported in his SALNs had bouts of thinning. But it has since fattened quite well — from just P415,000 in December 1995, P650,000 in 1996, P4 million in December 2001, P6.5 million in 2003; P9.5 million in 2004; P12.4 million in 2005; and P14 million in 2006; and P18.2 million in 2007.

Similarly, his “jewelries” collection has become richer by the year – from P450,000 in December 1995; P450,000 in December 1996; P2 million in 2001; P3 million in 2003; P4 million in 2004; P7.6 million in 2005; P10 million in July 2007; and finally P13 million in December 2007.

But the most interesting detail in his list of personal and other properties are the so-called investments that Nograles has not cared to specify in any of the SALNs he has filed since 1995.

These “investments” accounted for roughly a third of his net worth over the years, but remain nebulous at best in terms of where the outgoing Speaker has put his money: P4.5 million in 1995; P4.5 million in 1996; P10.5 million in 2001; P12 million in 2003; P13 million in 2004; P17.9 million in 2005; P20 million in July 2007; and finally P26 million in December 2007.

To be sure, Nograles has named seven companies in which he and wife Rhodora Bendigo Nograles have business interests and financial connections, as the SALN law requires.

These corporate entities listed in his 2007 SALNs are the Heritage Art Gallery at the SM Megamall; Art Gallery Phils, at the Glorietta Mall; and the Apo Barber’s Shop, AMLO Corporation, Nograles Law Office, EVN Realty Corporation, and Selargon Realty Corporation, which are all based in Davao City. Selargon is a palindrome — the Speaker’s surname spelt backwards.

Undisclosed assets

A PCIJ review of these firms’ latest financial statements reveals that these could not have accounted for Nograles’s big “investments” portfolio. Most are just breaking even, and a few are even in the red.

Moreover, the PCIJ learned that Nograles has some other undisclosed but not really financially huge investments in some other companies.

A reverse search conducted by the PCIJ with the Securities and Exchange Commission (SEC) revealed the names of a few other companies in which Prospero and Rhodora Nograles, as well as their three children, remain enrolled as incorporators, stockholders, or directors/officers of the board.

The PCIJ’s research revealed that the Nograleses retain business interest and/or financial connections in the following corporate entities registered with the SEC:

Nograles, Prospero
Human Rights Scholarship Foundation of Davao City (registration revoked)
South Cuisine Corporation
Essensuals Ortigas Inc.

Nograles, Rhodora
New Gallery Phils. Co. Inc. (registration revoked)
South Cuisine Corporation
Essensuals Ortigas Inc.
Association of Psychologists and Helping Professionals Inc.

Nograles, Kristine Elizabeth
Selargon Realty and Development Corp.

Nograles, Karlo Alexei
Pacifican Security and Investigation Agency (PASIA) Inc.
Blue Lagoon Fareast and Allied Services Corporation
South Cuisine Corporation
Selargon Realty and Development Corp.
Maynila Philippine Specialties Inc.

Nograles, Jericho Jonas
Selargon Realty and Development Corp.
Maynila Philippine Specialties Inc.

Essensuals Ortigas Inc, registered with the SEC on Sept. 21, 2006, with Rhodora Nograles as an incorporator. Nograles did not disclose this in his 2007 SALN.

The Association of Psychologists and Helping Professionals Inc., is a non-stock corporation that registered with the SEC on March 7, 2005, again with Rhodora Nograles as an incorporator. Nograles did not list this entity at least his 2005 SALN.

South Cuisine Corporation, registered on October 24, 2001, enrolls the Nograles couple as incorporators, but is not listed in at least the 2001 SALN of the Speaker. – With additional reporting and research by Karol Anne Ilagan and JC Cordon, PCIJ, June 2010