Lectures &

News & Views

Law &



Trust Products
& Practice

About the Guru


Email Feedback

Guest Register










A Desecration of DBP’s Calling

(Article published in the Aug 24,2011 issue of Manila Standard Today) 

It was known as the Rehabilitation Finance Corporation (RFC) when I was a boy.  Every month my father used to send me to its office downtown  to pay the monthly amortization for the loans that we had taken out in order to  repair our humble house  in Tondo ever since I knew not when and up until, at long last, there was no more debt to pay.

 Before its creation by Republic Act No. 85 in 1947, RFC’s functions were performed by the Agricultural and Industrial Bank (AIB) which in turn took over the role of the National Loan and Investment Board (NLIB) that was established in 1935 to coordinate and manage government trust funds like the Postal Savings Fund and the Teachers Retirement Fund.

        But whether as NLIB, or as AIB, or as RFC, its mandate was to provide credit facilities, not to everybody nor for any purpose, but only for those needing assistance towards the development of agriculture, commerce and industry,  and, after 1946, the reconstruction of properties damaged by the war.

       Even in 1958, when the country was already back to its feet, its mandate continued to be “development”; hence it was known as the Development Bank of the Philippines (DBP) to more accurately reflect its  vision and mission broadened and expanded by the needs of the time.


No better articulation of its role in the financial system can be found than in Executive Order No. 81 issued in 1986 by President Corazon Aquino which in Section 2, in part provides, that “the primary purpose of the bank shall be to provide banking services principally to service the medium and long term needs of agricultural and industrial enterprises, particularly in the country-side and preferably in small and medium scale...”  The preferential option of the target market for its banking services is very clear: for agricultural and industrial enterprises, particularly in the country-side and preferably in small and medium scale. 

It was thus disheartening to learn, in these past days, of the loans granted by the DBP to an enterprise known as Delta Ventures Resources, Inc. (DVRI).  DVRI’s articles of incorporation, entered into on 24 January 1977, proclaimed its primary purpose as “to own, acquire, hold, purchase, receive, sell, lease, exchange, mortgage, dispose of, manage, improve real estate, real property of any type and/or kind or any interest therein or otherwise deal in, deal with or conduct as well as build, erect, construct, alter, or maintain buildings, structures and/or improvements thereof wherever situated.”

The mismatch between DBP’s calling and DVRI’s commission is very obvious: DBP was to service, primarily, small and medium scale agricultural and industrial enterprises in the country side; DVRI’s self-appointed objective is to hold in any way real estate of any kind wherever it may be found. 

DVRI, in fairness, was not wanting in telling the DBP what it was going to do with the money it was borrowing.  With flaunt and pride, it stated in its Credit Application N. 09-020 dated 07 April 2009, that it “will utilize the loan proceeds to purchase stocks of Philex Mining Corporation and or other listed companies for later trading at a profit to allied corporation.”

There was, to be expected a token nod to the developmental thrust of DBP.  “The increased stake will allow DVRI and its affiliate companies to gain majority control over Philex outstanding shares and empower them to undertake development activities...”  But the “development” was of a different kind, i.e. “...such as opening of new mining sites and equipment modernization that will ultimately improve Philex viability and stock share performance.”  In other words, the utilization of the funds was directly to buy controlling equity in Philex in order to indirectly enhance its fundamentals for the crowning opportunity for at the end of the day a market flip at most profitable gains. 

There is no romance in the proposal, or more aptly, in the proposition, at all.  Everything was commercial, not much different from the core transaction that is intended to end with a “bang, bang, Thank you Miss, good-bye.”

Perhaps, the only way to assuage the hurt and the insult of the transaction with DVRI was, however, to view DVRI, with a generous exertion of the imaginative stretch, as an honest to goodness small enterprise.  After all, in its 2007 financial statements, audited we read from media by one who is not even accredited with the Securities and Exchange Commission, DVRI’s net income appeared to be only P311,000.00.  For the following year, it reported a net loss of P98,760,916.00 resulting in a negative retained earnings of P2,355,742.00. Can any company be more in need of help?

Surely, then, DVRI deserved to be assisted more than, say, the micro-finance enterprises that, on account of the uncertainties in the economy, are in constant danger of having to resort to borrowing from 5/6 lenders.  Or worthier than the small and medium scale mom-and-pop ventures where the line between home and workplace is hardly discernible.  

         “Yeah, sure,” I can almost hear Zenaida Ongkiko-Acorda say, a worthy daughter of a worthy father, and very able external counsel and duly authorized spokesperson of the current DBP board.