Press Release
July 18, 2011

TRANSCRIPT OF INTERPELLATION OF SEN. DRILON
Blue Ribbon committee hearing on PCSO anomalies
Questioning Morato on Perdana transaction

Drilon: What was your equity in TF Ventures?

Morato: Majority shareholder.

Drilon: 51%? 60%? How much?

Morato: I'll have to consult my lawyers what exactly. I don't want to invent. But when we sold the shares of stocks it was practically worthless because it was already taken over by Deutsche Bank.

Drilon: You said you received P70 million na binayad sa TF Ventures?

Morato: That's correct.

Drilon: Kayo po ang pumirma in behalf of TF Ventures. Tinatanong ko ano ang equity niyo sa TF Ventures, ang sabi mo majority. Hindi mo alam kung ilan ang majority. Sabihin na lang natin 51% yan ang majority e. Hindi po ba?

Morato: Yes.

Drilon: Minimum. Tama bang sabihin ko na samakatwid, dun sa P70 million ay P35 million and one peso ang inyong natanggap bilang majority stockholder sa TV Ventures?

Morato: No.

Drilon: Magkano po?

Morato: I cannot tell you right now. I have to refer to my lawyers.

Drilon: All that we're asking is that if you're the majority stockholder and if P70 million is the consideration, then you were saying that you received at least P35 million and one peso. Tama po ba?

Morato: It would look that way but that's not what happened.

Drilon: What happened?

Morato: I would tell you later on. I'm not prepared to disclose the figures here.

JPE: Mr. Morato, I would suggest, be careful in answering these questions. If you admitted that you owned at least a majority of the corporation, so you own to the extent of that participation... your corporate assets. Now, if you say that you did not receive your share of that P70 million which is at least a majority of that P70 million, where did it go? You donated it? You will be subjected to another tax.

Morato: It does not figure the way you think it should because we are not talking of assets here. It was already for foreclosure. There was really no asset. There was some money that they gave to us to pay the creditors. We owed some creditors and they coursed it through me to pay the creditors. So I will not be able to tell you how much I got, how much I gave away, to whom I gave away. I cannot tell you that right now. We really do not own it. It no longer had value because the Deutsche Bank had taken over the property. It was under receivership. It was the receiver that was running the hotel.

Drilon: Except that the amount was paid to TF Ventures.

Morato: That's correct.

Drilon: So let's not inject so many facts here. I'm telling you what we're trying to establish: we're trying to establish that you are in conflict of interest.

Morato: How?

Drilon: That's why I'm asking you all of these questions. Hindi ko naman tinatago ito e. There are common stockholders between Berjaya Phils., Phil. Gaming Management Corp. and Perdana Land Phils. Inc. Perdana had transactions with your company TF Ventures. Perdana is part of the group Berjaya Phils. and PGMC which are doing substantial amounts of business with PCSO and you are part of the board of PCSO. We are not saying that there was indiscretion here. We're just trying to establish certain facts. Now, the common officer of 2 corporations is Jose A. Bernas, who is a senior officer of Berjaya Phils. Inc and Perdana Land Phils. Inc. Is that correct?

Morato: I don't know the structure your honor. I don't belong to that group. All I know is that this sale happened through a court in Makati. It was through the RTC Branch 149 that did it all and packaged it all between Deutsche Bank and this group.

(2nd part)

Drilon: Mr. Morato, the court simply approved the dacion en pago. Don't say that it's up to he court because the court really did not make any decision, it only approved. So it was purely a transaction between the parties which was submitted to the court for approval. Assuming that your statements are correct, is it correct to say... you say that P785 million was paid to the creditors. In addition to the P785 million, TF Ventures got P70 million?

Morato: Pwede. It had to be given to the creditors...

Drilon: Ang maliwanag, maliban sa P785 million na binayad sa bangko ay kumita rin ng P70 million ang inyong kumpanya?

Morato: Binawas yun sa P785 million.

Drilon: Binawas sa P785 million, binigay sa TF Ventures?

Morato: That is correct.

Drilon: What did TF Ventures do with P70 million?

Morato: We divided it among all stockholders...

Drilon: Para pambayad sa utang at ang naiwan ay dineclare na dibidendo?

Morato: Yes, you're right.

Drilon: You would not know how much was paid to creditors?

Morato: I didn't know that it was going to be taken up.

Drilon: But did you receive dividends?

Morato: At the end... very little.

Drilon: Yes. Whether it's little or large maybe yung little mo malaki na para sa taumbayan.

Morato: Ako nalugi po ako.

Drilon: Hindi po ba nakatanggap kayo ng dibidendo?

Morato: Maski tumanggap ako ang laki po ng lugi ko. Ako ang pinakamalaki ang lugi.

Drilon: Hindi po natin pinag-uusapan kung gaano kalaki ang lugi niyo. Pinag-uusapan natin kung tumanggap kayo ng dibidendo mula sa bayad ng Perdana? Is that correct?

Morato: Yes. I admitted it. It had to be divided...

Drilon: And the P785 million discharged the obligation of TF Ventures under the loan agreement with the banks? Yes nabayaran e kaya wala nang liability ang TF Ventures.

Morato: Wala na. Bayad na po lahat. Liability to whom your honor?

Drilon: You said P785 million less P70 million was paid to the bank in payment of the loan. Now, with that payment, TF Ventures relieved itself of a liability in your balance sheet.

Morato: That's correct.

Drilon: Now, to that extent, TF Ventures' assets and financial situation vastly improved because your principal obligation was paid off.

Morato: Hindi na po kami ang owner niyan. We ceded all the shares of stocks. Sila na po ang nag take over. Wala na kaming interes diyan. Wala na kaming income.

Drilon: May interes po kayo dahilan sa may utang pa yung TF Ventures at kayo ang stockholder ng TF Ventures. Kahit nasa SPAV na yan, kahit nasa Deutsche Bank na yan, ang promissory note ay utang pa rin po yan. Yung creditors lang ang nag-iba. Kaya hindi mo pwedeng sabihin na 'wala na kami diyan'. Ang maliwanag TF Ventures, your company, benefitted to the extent of P785 million where P715 million was paid to the holder of the note which is the creditor and P70 million was paid to TF Ventures. Is that correct?

Morato: Yes. What's next your honor?

Drilon: What's next is that at the time these transactions were happening, you're in the PCSO board.

Morato: I was there but there was no important issue on the table that I could favor PGMC. I mean, you have to realize your honor. 2006 nangyari ang renewal nila, this was happening 2009 and 2010... Was I supposed to divest myself from being a mere director of PCSO? The power to decide (rests) on a director?

Drilon: There is a conclusion that you and I may not agree on pero mabuti siguro, can you just submit all the documents relative to this?

Morato: The lawyers would have to take care of that your honor.

Drilon: Do you want us to subpoena these documents? Because we have the power to subpoena documents... or you will voluntarily bring them at the next hearing?

Morato: It depends when the next hearing is. If it is tomorrow, I cannot.

Drilon: Then when can you submit to the committee all the pertinent documents on this transaction?

Morato: Please give me 3-5 days.

Drilon: I have no objection to that and reset the hearing a few days after Mr. Morato submits all the documents.

(3rd part)

Drilon: When you were board member, at any point in time, did any matter involving PGMC and/or Berjaya come before the board?

Morato: Yes.

Drilon: And you participated in the decisions on these matters pertaining to the 2 corporations?

Morato: Yes, pag tama po sila.

Drilon: I'm not saying that you favored. I am saying that you participated. In fact you may have denied. And these corporations at that point were transacting in real estate transfer in order to solve the problem of TF Ventures with the banks? At no point in time where the titles to these properties transferred to banks? It has always been with TF Ventures. Is that correct?

Morato: It was mortgaged to the bank.

Drilon: But the titles remain in TF Ventures?

Morato: With the bank because we mortgaged.

Drilon: Even if it was foreclosed, the titles still remain in TF Ventures. That's correct, right?

Morato: Yes, without our being true owner of those titles so hindi na sa amin yon.

Drilon: Now, the receiver was appointed by the court. Who were the officers of TF Ventures during the time the receivership was in existence?

Morato: We had 4 directors and myself.

Drilon: So you were still the officer?

Morato: Of course.

Drilon: In fact you had to enter into these transaction in order to sell this hotel in order that your corporation will be free of these liabilities? Hindi ba ganun yon?

Morato: What for your honor? I know what you are leading to that they unburdened us because of what they did. But by that time they bought the account to Deutsche Bank, we had surrendered the stocks. It was theirs already. We did not figure anymore as owners of TF Ventures. TF Ventures was already owned by a group already. Wala na kaming pakialam...

Drilon: Bakit kayo pa ang nag-represent sa TF Ventures sa Deed of Assignment kung wala na kayong pakialam?

Morato: That is correct. Pero nasa kanila na po, binili na nila yung notes sa Deutsche Bank. Yan ay nasa process of transfer na sa kanila. From the day they bought the notes hindi na kami may-ari niyan e.

Drilon: No. They bought the notes, not the shares.

Morato: No, we ceded the shares already, we sold the shares already.

Drilon: Anyway it's a little frustrating Mr. Chairman... if we can have all the documents so that we can clearly explain to the public what happened to this.

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