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The fallen star of David

(Article published in the Dec 21,2011 issue of Manila Standard Today) 

He descended like a shooting star, initially seemingly very slowly approaching according to some preordained trajectory, then soon enough gathering speed upon entry into the atmosphere, and finally as it appeared to be touching the mountain peaks, burning out and exiting the evening stage as nothing more than a whiff of smoke in the December sky.

Reynaldo G. David was clearly a shooting  star last December 13 during the Senate Committees’ seventh joint hearing on the allegedly anomalous large scale financial transactions of the Development Bank of the  Philippines as his tenure as the bank’s president drew to a close.

David, for the nth time called upon to justify the transactions under consideration, was the first resource person interrogated.  Senator Serge Osmena asked him whether “as a matter of practice, did DBP normally engage in the buying and trading of shares in the stock market, or you only do that under special opportunities that you are able to spot.”  David’s answer was easy: securities trading is conducted by DBP under Credit Policy Memorandum No. 76 which distinguished between “proprietary trading” and “position taking”; the first to have and to hold, the other to take and sooner or later dispose to take a gain.


To conduct such refined activity however, DBP, as David subsequently admitted, did not have a formal and research analysis team devoted to that line of business; instead, opportunities were simply spotted by investment banking persons who then take up these opportunities with the Asset and Liability Committee and the bank’s officials authorized to trade, each one having specific trading limits.  But Rey David, the President, had no trading limit.  What limited his almighty power was simply the limit of P1 billion more than which no further trading can be conducted. Despite the magnitude of the volume of that trading activity, no bank director sat at the Asset and Liability Committee.

One would think that the bank’s trading in securities, apparently monopolized as it is in the President and his Asset and Liability Committee, could be conducted nowhere else.  Wrong. DBP, David had to admit, had a trading clone called DBP Management Corporation.  It was a 100% owned subsidiary of DBP which also traded with its own had investible funds.  It, too, did securities trading.

But strangely, the head of DBP Management Corporation could not recall whether the bank’s equity was P50 or P200 million.  In addition, how it came into being neither David nor its head seemed know.  And neither could David explain why it is still being presently kept alive doing did as a subsidiary what its mother company, the DBP proper, could do just as well, if not better.

All that, however, discomfiting though it might be to those familiar with corporate governance in the private section, is not unusual at all.  DBP, under David, lived in a galaxy different from non-government banks who orbit within the regulatory gravity of  the Bangko Sentral.  And so David, for a time, was not at all embarrassed admitting to the Committees the many peculiarities of DBP’s way of doing business under his  tenure.  But only for time.

Before David could enjoy basking in the splendour of his galactic stage, the big bang occurred.  Senator Osmena suddenly confronted him with inconsistencies in the testimony that he had given at the previous hearings. 

In answer to Senate President Juan Ponce Enrile’s questions, David was reminded that he swore swore to high heavens that he did not know, in the late 2009, that  Manny Pangilinan was accumulating Philex shares and that he (David) had no idea that the shares that DBP sold to Roberto Ongpin would be very quickly sold to Pangilinan.  Apparently, David was less than truthful.  In a board meeting in March 2009, David explained how DBP would unload its holdings at a profit.  He is recorded to have said “The exit we’re looking at here is either through SSS, if SSS wants to fortify its holdings, or we exit through Pangilinan.”  Obviously, David was banking on Pangilinan to be the ready buyer of DBP’s shares. 

After that explosion, David simply disintegrated.  Again and again, David was confronted with previous testimony, particularly in the instances that he was under examination from Senate President Juan Ponce Enrile, that was in stark and startling opposition to what the board records showed he had said during the board meetings of DBP. 

By the time the session ended on the 13th day of December,  David had had to confess, the stellar banker that Ongpin said he was, that he did not know Manny Pangilinan had, under the law, to refrain for a year from buying more Philex shares lest he be constrained to make a tender offer.  He had had to admit to a faulty understanding of what he role was as “independent director” of Philex in the face of having been nominated by Ongpin and exiting from the Philex board seemingly in studied tandem with Ongpin.  Worst, he was exposed to have leaked to the DBP board and senior official in attendance inside information that he had picked up from the mining company’s board room.

The star that David was in the first hearings was no more.  Just a formless mass of broken pieces of spatial debris losing themselves and adding to the stench and pollution that had enveloped his world.