The Duterte wealth: Unregistered law firm, undisclosed biz interests, rice import deal for creditor
MANILA, Philippines – Rich man, poor man, Mayor, President.
Back in 15th century England, this was how a traditional nursery rhyme and fortune-telling game ran. Later in the United States, it became a popular counting song of children playing tag as they called out who would be “it.” In the Philippines today, it could well be the riddle that is the state of wealth of the President’s family.
Honesty, full and unvarnished, is something that one could wish of the Dutertes, or more than the data that they have disclosed in their asset records.
On several occasions, President Rodrigo Duterte has claimed that he was born into poverty. Yet at other times, he has boasted that he was raised in wealth.
Is the President honestly poor or honestly rich? The disclosures in his asset records across 20 years are woefully inconsistent, or less than fully open.
Daughter Sara, Davao City mayor, and son Paolo, resigned Davao City vice mayor, are similarly ambiguous in the declarations they have made under oath in their respective Statements of Assets, Liabilities, and Net Worth (SALN) across 11 years.
Checked against records of the Securities and Exchange Commission (SEC) on the businesses they declared they own or have interests in, the President, Sara, and Paolo separately and together offer a muddled mix of token or opaque data that, under the law, they are required to reveal in “truthful and complete” SALN submissions.
Such requirement is aimed in part at surfacing any possible conflicts of interest that public servants may have gotten themselves into. Faced with the apparent lack of pertinent data and details in the Dutertes’ SALNs, PCIJ reviewed not only SEC documents on their business interests, but also provisions of relevant laws. Legal experts and other sources were also interviewed.
Among the findings are:
- The Carpio & Duterte Lawyers entity, which has Sara and husband Manases "Mans" R. Carpio as partners, was born over 10 years ago but has not registered at all with the SEC, as of this posting. The Supreme Court and the Local Government Code prohibit mayors and governors from practicing their professions, but Sara has not formally, publicly declared her leave of absence from the firm. Since 2016, however, Manases has appeared as legal counsel to big companies with big cases before government regulatory agencies. Last March, the firm opened a branch office in Cebu, its second after Davao City.
- Duterte, Sara, and Paolo have either a) belatedly disclosed their interests in certain companies; b) remained listed in some other companies as shareholders but kept these undisclosed in their SALNs; or c) remained part of certain companies not at all registered with the SEC or the Department of Trade and Industry.
- The President and Paolo have separately listed several “donated” real properties but do not identify their donors by name, to validate their donors’ potential or real conflicts of interest with their public functions.
- The Dutertes have reported “liabilities” in their SALNs as “various personal loans” (Sara) or “personal loans” or “miscellaneous payables” (Duterte, Paolo) that they owe Davao City-based businessmen who are apparently among their business partners and campaign donors.
- For 10 years running from 1999 to 2009, the President’s SALNs showed unchanged liability he called “miscellaneous payables” of an absolute P1 million. By 2013, he renamed this liability “personal loan” – from creditor “Sammy Uy.”
Creditor, biz pal
In his 2013 SALN, Paolo said that he got a P3-million loan from Nestor Ma, owner of the “San-Ei Group of Companies” that reportedly owns the San-Ei Building in Ma-a, Davao City, which had served as the national headquarters of the “Duterte for President Movement” in 2016.
Four years later in his 2017 SALN, Paolo said that he still had a “personal loan” from Ma amounting to P2.2 million.
Soon after Ma was appointed Philippine Judo Federation (PJF) chairman in 2016, the businessman offered a part of his 1,000-square-meter building along Ma-a Diversion Road as the new training center for judo and office of the Philippine Sports Commission-Philippine Sports Institute (PSC-PSI).
A SunStar report quoted Ma as saying that the center will accommodate all judokas not just in the city, but also from the entire region, starting 2017.
Meanwhile, the Bureau of Plant Industry (BPI) in 2017 granted Ma’s Davao San-Ei Trading Inc a certificate of registration as an importer of rice covering a 3-year period, or from March 15, 2017 to March 15, 2020.
In his LinkedIn profile, Ma said that he is president of Davao San-Ei Trading Inc, which does not seem to have prior involvement in rice importation. On its Facebook page, the firm said that it is engaged in “transportation, trucking, and railroad” services, and is a “direct importer, Japan & U.S.A surplus, light and heavy equipments (sic), light & heavy vehicle.”
The databases of both the SEC and DTI do not show any registration or other corporate documents for Davao San-Ei Trading Inc. Two other companies where Ma is listed as president and stockholder have records as of 2018 and 2019 with the SEC: Mindanao Allied Industrial Mining Sales (MAIMS) and Davao Rental Co Inc (Davrenco).
The President, for his part, could have confirmed or denied whether the Sammy Uy he identified as his creditor is the same Davao businessman Sammy Uy who donated P30 million to his presidential campaign in May 2016.
Businessman Uy runs a cockpit that counts some local officials and some police and military officers as patrons. SEC records also show that Uy and Duterte are incorporators and shareholders, since 1996, of Honda Cars General Santos Inc. Duterte, however, was 4 years late in reporting that he was an incorporator of the company; the information appears in his 2000 to 2016 SALNs, which say nothing about his being among its shareholders.
As for Mayor Sara, among her apparent holdings is a law firm she had set up with her husband months after they were married.
While it has not registered with the SEC, the “Carpio & Duterte Lawyers” entity was organized in 2008, according to Manases’ public profile on LinkedIn. In her 2008 SALN, Sara had also put Manases as a “Law Office Partner” in the “Carpio-Duterte Law Office.”
In her 2011 SALN, the reference to the firm was changed to “Carpio Duterte Lawyers.” The law firm, however, has yet to appear in Sara’s SALN declarations as among her business interests and financial connections.
Carpio & Duterte Lawyers is a hugely opaque matter in the Dutertes’ wealth records particularly because it has recently shown an appetite for big corporations with big controversial cases before government regulatory agencies.
PCIJ has secured a dozen written certifications from the SEC that the Carpio & Duterte Lawyers and 11 other possible derivative names (i.e. Carpio Duterte Lawyers, Carpio Duerte Law Office, etc.) are not registered entities at all as of this posting.
What sources in legal circles now call “The Firm” of note and influence under the Duterte administration lists Sara as a “partner” together with husband Manases Carpio in press releases and advertisements.
On February 13, 2019, the Cebu Daily News reported that Sara has been on leave from the firm – but with no details about when that happened. She herself has not made any explicit declaration ever since the firm was organized more than a decade ago.
At the time it was set up, Sara was vice mayor of Davao City (2007-2010). She was mayor of the city from 2010 to 2013 and was reelected in 2016. She is currently vying for another term as mayor. From 2013 to 2016, however, Sara did not have a public post.
Sara’s husband Manases has acknowledged that some of the firm’s clients “appear to have interest in politics…but the firm is not going to handle political cases.”
“If feeling ninyo lalapit kayo sa akin just to get close to (Mayor) Sara, pasensiyahan tayo,” the Cebu Daily News quoted him as saying. “I’m not a political person.”
According to the newspaper, Manases explained that mixing politics and legal cases would be difficult as his wife is a politician while he is “more inclined to the legal profession because both his parents are lawyers.”
Manases told Cebu Daily News that his firm specializes in “family law like annulment, nullity of marriage, adoption and custody cases, as well as labor and corporate cases.”
The firm, through Manases, is the lawyer on record of clients with big, controversial cases before state regulatory agencies. Two are most notable: cigarette manufacturer Mighty Corporation that, in August 2017, paid P30 billion to settle a P37.88-billion tax evasion case, and Panay Electric Co that, in September 2018, filed a petition to lobby for renewal of its franchise before the House of Representatives. Manases’ father, Lucas Carpio Jr, is also into lawyering for corporations with big cases before government agencies.
Sara married Manases on October 27, 2007, months after she was elected vice mayor on her first electoral run. She finished law at the San Sebastian College-Recoletos in May 2005, was admitted to the bar in May 2006, and for a few months worked as a court attorney at the office of then-Supreme Court Associate Justice Romeo Callejo Sr.
Manases finished law, also at San Sebastian College, in 2002, and was admitted to the bar in 2004. His mother, Agnes Reyes Carpio, was associate justice at the Court of Appeals until December 2016 and was a former regional trial court judge in Davao City, Manila, Parañaque, and Pasig. Manases’ father Lucas Jr is the brother of former Ombudsman Conchita Carpio Morales and cousin of Supreme Court Senior Associate Justice Antonio Carpio.
Lucas Carpio Jr co-founded the Carpio & Bello Law Offices with Labor Secretary Silvestre Bello III. The firm’s stationery reportedly states that Bello had retired as partner.
According to Philippine Star columnist Jarius Bondoc, Lucas’ name had appeared in “an official correspondence of Busan Universal Rail Inc (BURI)” dated April 27, 2017 to the Department of Transportation (DOTr) regarding the operations shutdowns since January 2016 of the Metro Railway Transit (MRT)-3.
BURI had won a P3.8-billion non-bid contract from the Aquino administration for the maintenance of the MRT-3 trains, tracks, and power supply, but has been blamed for frequent breakdowns of train system.
DOTr had issued 3 memoranda and had asked BURI to explain the maintenance issues, or the contract would be rescinded. BURI’s reply letter was signed by in-house lawyers Charles Mercado and Redentor Roque, as well as Lucas Carpio Jr.
No problem at all
But lawyering for big corporations with big cases before government regulatory agencies does not seem to bother President Duterte, even if it involves his daughter-mayor, son-in-law, and in-laws.
After it was exposed that Mans Carpio was confirmed to have visited then Customs Commissioner Nicanor Faeldon to discuss Mighty Corporation’s case, the President, in a loose-lipped moment in August 2017 said: “Ang anak ko was lawyering for the Mighty King. Siyempre piliin mo ‘yung kliyenteng may pera. Kaya sabi ko, kung hanggang diyan, okay lang, sabi ko.” (My daughter was lawyering for the Mighty King. Of course you will choose the client with money. So I said, if it’s just up to a certain point, it’s okay, I said.)
“It’s lawyering,” the President added. “Nobody can question us and even I, when as a matter of fact it is just part of our profession, our vocation as a lawyer. Alam naman natin ‘yang mga abogado (We lawyers know that).”
The President had also told reporters in 2017 that “the law firm of Sara and her husband, abogado Manases ‘Mans’ R. Carpio, had been the legal consultant of Mighty long before it was accused of using fake stamp taxes to avoid tax payments.”
“Si Mans Carpio, ang tatay niya kapatid niya si Ombudsman Morales (Conchita) Carpio-Morales,” he said as well. “Ito, abogado ito. Long before ‘yung Mighty ano – Mighty King, ang office nila ang nag-handle niyan.”
Mans’ FB post
In his social-media account, Manases himself has admitted to having “many clients” dealing with the Bureau of Customs. On his Facebook account in 2017, he wrote: “I represent many clients who have transactions with the Bureau of Customs.” That Facebook post had Manases confirming that he went to the agency because “I represent many clients who have transactions with the Bureau of Customs. It is my job as a lawyer to appear before government agencies for and on behalf of my principals.”
If, according to the President, Manases and Sara had represented or served as counsel for Mighty Corporation years earlier, that same period also marked the years Sara was vice mayor of Davao City (2007 to 2010), mayor (2010 to 2013), and mayor again (2016 to the present).
A sitting mayor cannot perform duties as a lawyer, or engage in the practice of his or her profession, according to the Supreme Court and the Local Government Code.
Provisions of the Code of Conduct and Professional Standards for Public Officials and Employees, or Republic Act No. 6713, on “conflict of interest” are just as relevant. The Code states that "conflict of interest arises when a public official or employee is a member of a board, an officer, or a substantial stockholder of a private corporation or owner or has a substantial interest in a business, and the interest of such corporation or business, or his rights or duties therein may be opposed to or affected by the faithful performance of official duty.”
Ambit of conflict
RA No. 6713 also says that such conflict of interest situations may involve the conduct of public officials vis-à-vis their “relatives” that include “any and all persons related to a public official or employee within the fourth civil degree of consanguinity or affinity, including bilas, inso and balae.”
Section 9 on “Divestment” of RA No. 6713 is equally important advisory in the case of the Carpio & Duterte Lawyers.
It reads: “A public official or employee shall avoid conflicts of interest at all times. When a conflict of interest arises, he shall resign from his position in any private business enterprise within thirty (30) days from his assumption of office and/or divest himself of his shareholdings or interest within sixty (60) days from such assumption. The same rule shall apply where the public official or employee is a partner in a partnership. The requirement of divestment shall not apply to those who serve the Government in an honorary capacity nor to laborers and casual or temporary workers.
On February 19, 2008, the Supreme Court’s First Division resolved Administrative Case No. 5738 (Wilfredo M. Catu, complainant, vs. Atty. Vicente G. Rellosa, respondent) and affirmed the ban on mayors and governors practicing law.
The high court’s resolution cited Section 90 of the Local Government Code, which “prohibits public officials and employees, during their incumbency, from engaging in the private practice of their profession unless authorized by the Constitution or law, provided that such practice will not conflict or tend to conflict with their official functions. This is the general law which applies to all public officials and employees.”
Ban on mayors, governors
For elective local government officials, the court affirmed, Section 90 of RA 7160 stipulates that “all governors, city and municipal mayors are prohibited from practicing their profession or engaging in any occupation other than the exercise of their functions as local chief executives.”
A lawyer with expertise in legal ethics told PCIJ that the Code’s provision is “a total proscription for local elected officials like a sitting mayor, Sara Duterte-Carpio. The reason behind this rule, from case law, is that a sitting mayor should fully devote her time and attention to the performance of her official duties.”
PCIJ asked the expert whether Sara might have violated any law or rule when she allowed her name to be listed as a partner of Manases, until the recent opening of its branch office in Cebu. Has the Davao City mayor sent a message, intended or unintended, that she is still a part of the firm because she has not expressly recused herself from it?
The legal expert replied: “Since the total proscription/prohibition to practice the legal profession adheres to Mayor Sara, then she should not allow her name to be printed or advertised as a name partner, holding out to the public that she, together with the partners of the firm, can practice law.”
By the Canons of Professional Ethics of lawyers, the expert said, Sara and Manases may have misrepresented or falsely advertised her role in the firm, despite one news report that she has taken a leave of absence.
Said the legal expert: “The Code of Professional Responsibility provides that a lawyer in making known his legal services shall use only true, honest, fair, dignified and objective information or statement of facts (Canon 3, CPR). He is not supposed to use or permit the use of any false, fraudulent, misleading, deceptive, undignified, self-laudatory or unfair statement or claim regarding his qualifications or legal services (Rule 3.01, CPR).”
Most important of all, the source said, “the standards of the legal profession condemn lawyers' advertisement in a manner similar to a merchant advertising his goods. The proscription against advertising of legal services or solicitation of legal business rests on the fundamental postulate that the practice of law is a profession, not a money-making enterprise (Mauricio C. Ulep vs. The Legal Clinic, Inc, Bar Matter No. 553, June 17, 1993).”
Carpio & Duterte Lawyers had a “grand opening” on February 13, 2019 at the City Times Square II in Mandaue City. At least 13 congratulatory half-page ads ran simultaneously in the SunStar Cebu newspaper from a variety of political and corporate well-wishers.
13 greeting ads
The identical greeting ads came from Presidential Assistant for the Visayas Michael Lloyd Dino; Cebu Vice Governor Agnes Almendras-Magpale; E.C. Labella & Partners Law Office that is owned by Cebu City Vice Mayor Edgardo Labella, Sara Duterte’s Hugpong ng Pagbabago candidate for mayor against incumbent Mayor Tomas Osmeña; Tuburan Mayor Democrito "Aljun" Diamante; Marty Pimentel; Representative Wilfredo “Willy” Caminero (Cebu, 2nd District.); Representative Peter John D. Calderon (Cebu, 7th Distict); Toyota Team Cebu (Talisay, Lapu-Lapu, Mandaue North, Mandaue South); motorcycle dealer Du Ek Sam Inc; Catalina Car Rentals; Topline Express Ferries; Stradcom Corporation; Roble Shipping Inc; and Hercules Transport Inc.
Another lawyer who teaches law ethics said, though, that if it is run as a “general practice partnership,” Carpio & Duterte Lawyers may not need to register with the SEC. That is, if its lawyers are rendering legal services on their own as officers of the law, and not as a business unit.
“The right to practice law, represent clients, file pleadings with the court is vested in the individual lawyer, and not in law firms,” the lawyer said. But the source said that it is important for Sara to explicitly state in the firm’s stationery that she has taken a leave of absence, because as a mayor she may not render legal services at all.
Yet how Carpio & Duterte Lawyers secured a business permit to operate, issue receipts to clients and in whose name/s, cover the social benefits of their employees, and pay business taxes are not quite clear for the unregistered law firm.
Civil Code: Must register
An ancient but still valid law enacted on June 18, 1949, Republic Act No. 386 or The Civil Code of the Philippines, spells out in various provisions the obligations of parties to various types of partnerships to register via public instruments when these start acquiring “immovable property” and deal in transactions affecting “real rights.” The Code also defines the rights of partners with regard to the distribution of profits, and transactions with creditors, debtors, and other parties.
“A partnership may be constituted in any form, except where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary,” according to the Civil Code.
Just as important, the Code says that “every contract of partnership having a capital of three thousand pesos or more, in money or property, shall appear in a public instrument, which must be recorded in the Office of the Securities and Exchange Commission.”
That is exactly what a sitting commissioner of the SEC told PCIJ: “To the extent that they are not single/solo practitioners, law partnerships register with the SEC.”
More than just a conjugal affair for “partners” Sara Duterte and Manases Carpio, Carpio & Duterte Lawyers has also hired other lawyers as associates at their offices in Davao City and Cebu. At the latter, its associates are Nikko Jay G. Gagno and Goldy Luck C. Dacal-Mayol, both of whom passed the bar only in 2017.
Duterte’s law firm
Mayor Sara, however, may be just taking a cue from her father. The President himself was a partner at the Fabiosa Duterte Cimafranca Carcedo Law Firm (FDC CO. LAW). The firm has never appeared in any of his SALNs.
At least, though, the SEC has records of its Articles of Partnership, which indicate that it was established on February 6, 2003 and that Duterte and 3 other lawyer-partners each put in P100,000 in subscribed capital. At the time, Duterte was mayor of Davao City.
In January 2017, President Duterte appointed the firm’s managing partner, Filemon S. Cimafranca Jr, then 70, as independent director of the United Coconut Planters’ Bank; he was later named director also of UCPB Securities Inc. The government has a 73.9% stake in UCPB. (Nicanor Gabunada Jr, Duterte’s social-media campaign manager in 2016, has also been appointed to the UCPB board and sits in the bank’s Executive Committee.)
In his public profile online, Cimafranca said that he had worked as consultant of the National Bureau of Investigation director’s office; consultant for Public Order and Security, Office of the Mayor, Davao City; special counsel and head, Philippine National Bank Legal, Mindanao Region; and agent of “Interpol National Bureau of Investigation.”
Another partner, Ricardo B. Fabiosa, is an Accredited Voluntary Arbitrator as of the 2013 list of the Department of Labor and Employment-National Conciliation and Mediation Board.
A 4th partner, Oscar A. Carcedo, was admitted to the roll of attorneys in 1981.
(By email, fax, and courier, PCIJ sent two batches of request letters to the President, Sara, and Paolo for comment and, if possible, sit-down interviews. The first batch moved in October 2018 and the second, in January 2019. The letters raised specific questions about the wealth, business engagements, and properties of the Dutertes.
Last March 26, a letter from the Office of Presidential Legal Counsel Salvador Panelo reached the PCIJ’s offices, although it was dated a month earlier. Panelo wrote that he had referred PCIJ’s queries to the office of Executive Secretary Salvador Medialdea. PCIJ checked with Medialdea and Deputy Executive Secretary Ryan Acosta; both said they would first have to consult with the President’s staff who helped prepare his SALNs. They asked for more time to respond to PCIJ. Medialdea’s office was actually furnished copies of the first letter that PCIJ sent in October 2018 to the President.
Until Tuesday, April 2, Medialdea’s office had not sent a reply, even as Acosta told PCIJ that it would be ready possibly next week.
PCIJ’s October 2018 letters were received and acknowledged by the Office of the President and the City Mayor’s Office of Davao City; Mayor Sara’s Office also acknowledged receipt of the January letter. PCIJ was less successful with that addressed to Paolo; it did not get any response at all.
The January 2019 letter to Paolo, who resigned as vice mayor in December 2017, was coursed through the office of his wife, Davao City Councilor January Duterte, and sent by courier to his residence. Attempts were also made to contact him through his business links.
Among the matters that Paolo may have helped clarify had he replied is that involving one of his personal creditors who had secured not just an appointment in 2016 as chairman of the Philippine Judo Federation, but also a certificate to import rice from the Bureau of Plant Industry in March 2017.) (To be continued)
– with research by Vino Lucero and infographics by Arnel Rival, PCIJ, April 2019